9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (7) TMI 1125 - AT - Income TaxApplication under Rule 27 - reopening of the assessment - opening stock of TTK Biomed Ltd.- HELD THAT - A perusal of the Balance Sheet and Schedule 7 thereto of TTK Biomed Ltd. as on 30.6.1999 clearly shows that the closing balance shown is as on 30.6.1999 at ₹ 6,91,58,608/-. Thus the opening stock as on 1.7.1999 would be at ₹ 6,91,58,608/-. In the circumstances we are of the view that the assessee has adopted the opening stock of TTK Biomed Ltd. as on 1.7.1999 at ₹ 6,91,58,608/- and such figure is not the opening stock as on 1.4.1999. Therefore the issue as noted in the assessment order being the first issue is held against the Revenue. Consequently, Revenue s appeal stand dismissed. excess grant of depreciation - HELD THAT - From the facts, it cannot be said that income chargeable to tax has escaped assessment on account of the excess grant of depreciation on the plant and machinery transferred by TTK Biomed Ltd to the assessee company. We may also mention here that the learned CIT(A) has deleted the addition made on this count and the Revenue has not preferred any ground against such deletion. subsidy received by the assessee - HELD THAT - From the facts as the subsidy received are not the income of the assessee for the relevant assessment year the finding of the learned CIT(A) in deleting the same is found to be correct and also the same does not result in escapement of income which gives room for reopening. We may also mention here that the order of the learned CIT(A) in deleting this addition has also been accepted by the Revenue insofar as no ground has been raised against such deletion. In the circumstances, the appeal of the Revenue is partly allowed and the application under Rule 27 of the ITAT Rules raised by the assessee is admitted for adjudication and dismissed on merits. Consequently the reopening of the assessment is upheld and the Revenue s appeal stands partly allowed.
Issues Involved:
1. Jurisdiction of reopening the assessment. 2. Adoption of the opening stock of TTK Biomed Ltd. 3. Excess grant of depreciation on plant and machinery. 4. Subsidy received by the company. 5. Set off of unabsorbed business loss and carry forward of depreciation. Issue-wise Detailed Analysis: 1. Jurisdiction of Reopening the Assessment: The assessee argued that the reopening of the assessment was without jurisdiction as it was done after the expiry of four years and there was no failure on their part to disclose fully and truly all material facts necessary for the assessment. The Tribunal noted that the reasons recorded for reopening were not placed before them and that the assessee did not claim that the reasons recorded were not provided to them. The Tribunal upheld the reopening of the assessment, stating that the assessee had not truly and fully disclosed all material facts necessary for its assessment, particularly regarding the non-compete agreement with London International Group (LIG), which indicated an intention to discontinue the business of TTK Biomed Ltd. Therefore, the reopening was valid even after the four-year period due to the applicability of the proviso to section 147. 2. Adoption of the Opening Stock of TTK Biomed Ltd.: The Revenue contended that the company adopted the opening stock of TTK Biomed Ltd. as on 1.4.1999 instead of 1.7.1999, resulting in under-assessment. The Tribunal found that the closing balance as on 30.6.1999 was Rs. 6,91,58,608/-, and this figure was correctly adopted as the opening stock as on 1.7.1999. Thus, the issue was held against the Revenue, and grounds No. 3.1 and 3.2 of the Revenue's appeal were dismissed. 3. Excess Grant of Depreciation on Plant and Machinery: The AO claimed that there was an excess grant of depreciation on plant and machinery transferred by TTK Biomed Ltd. to the assessee company. The Tribunal noted that the assessee had complied with the fifth proviso to section 32, and the working of the depreciation as brought out by the learned CIT(A) was not disputed by the Revenue. Therefore, the Tribunal held that income chargeable to tax had not escaped assessment on this account, and the deletion of the addition by the learned CIT(A) was upheld. 4. Subsidy Received by the Company: The AO contended that the subsidy received by the assessee company of Rs. 19,52,760/- was not assessed to tax. The Tribunal found that the subsidy was received by TTK Biomed Ltd. during the years 1982 and 1991 and was shown under capital reserves after amalgamation. As the subsidy was not the income of the assessee for the relevant assessment year, the Tribunal upheld the deletion of the addition by the learned CIT(A). 5. Set Off of Unabsorbed Business Loss and Carry Forward of Depreciation: The Revenue argued that the assessee was not entitled to set off the unabsorbed business loss and carry forward depreciation of TTK Biomed Ltd. due to non-compliance with section 72A and Rule 9C. The Tribunal noted that the assessee had entered into a non-compete agreement with LIG, indicating an intention to discontinue the business of TTK Biomed Ltd. The Tribunal found that the assessee had failed to attain the necessary 50% level of production as required under section 72A and Rule 9C. Consequently, the Tribunal reversed the finding of the learned CIT(A) and restored that of the AO, disallowing the set off of the unabsorbed business loss and carry forward depreciation. Conclusion: The Tribunal upheld the reopening of the assessment and partly allowed the Revenue's appeal, reversing the CIT(A)'s findings on the set off of unabsorbed business loss and carry forward depreciation. The Tribunal dismissed the grounds related to the adoption of opening stock, excess grant of depreciation, and subsidy received by the company. The application under Rule 27 of the ITAT Rules raised by the assessee was admitted for adjudication and dismissed on merits.
|
