2007 (7) TMI 352 - AT - Income Tax

Summary

Issues involved: Determination of whether the CIT(A) was justified in holding that the order regarding set off of accumulated losses and depreciation was a mistake apparent on record and whether the benefit should be granted in the assessment year 1995-96 or 1996-97.

Summary:

Issue 1 - Benefit of set off of accumulated losses and depreciation:
The appeal concerned the question of whether the CIT(A) was correct in determining that the order granting the benefit of set off of accumulated losses and depreciation to the assessee in the assessment year 1995-96 was a mistake apparent on record. The amalgamation between the assessee and Mica Trading Company Ltd. (MITCO) was approved by the Board for Industrial and Financial Reconstruction (BIFR), with the tax benefit restricted to Rs. 663.12 lakhs. The CIT(A) initially allowed the benefit in 1995-96 but later rectified the order based on a certificate from BIFR mentioning the assessment year as 1996-97. However, the ITAT Delhi-I found that the benefit should indeed have been granted in 1995-96 as per the provisions of section 72A(1) of the IT Act, which governs the set off and carry forward of losses and depreciation in cases of amalgamation. The ITAT held that the CIT(A) was mistaken in relying on the certificate from BIFR to determine the assessment year for granting the benefit, as the certificate was issued under a different provision and the relevant year was clearly 1995-96. Therefore, the rectification order by the CIT(A) was set aside, and the assessee was granted the relief accordingly.

Keywords and Phrases:
- CIT(A) order
- Accumulated losses and depreciation
- Mistake apparent on record
- Assessment year 1995-96
- Amalgamation with MITCO
- Board for Industrial and Financial Reconstruction (BIFR)
- Tax benefit restriction
- Section 72A of the IT Act
- Rectification proceedings
- Legal position
- ITAT Delhi-I decision
- Certificate from BIFR
- Section 154 rectifiable error
- Set off and carry forward provisions
- Rehabilitation or revival of business
- Typographical error
- Eligibility for benefit
- Harmonious interpretation
- Relief granted