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TMI Blog2011 (3) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... .V. Vasudevan: M.A. No. 785/Mum/08 is an M.A. filed by the Assessee and M.A.No.668/mum/08 is an M.A. filed by the Revenue and both these M.A.'s are filed for rectification of certain apparent errors in the order dated 15/5/2008 passed by the Tribunal. 2. First we shall take up M.A.No.668/Mum/08 by the Revenue. The M.A. arises under the following facts and circumstances. 3. The Assessee in the above appeal is a company. It was earlier known as M/S.Morkutir Investments and Trading Company Private Ltd. It is engaged in the business of manufacturing and selling beer. During the Financial year 2000-2001, 6 companies namely (1) Haryana Breweries Ltd., (2) East Coast Breweries and Distilleries Limited, (3) Charminar Breweries Ltd. (4) SICA Breweries Ltd., (5) Techno Pulp and Paper Board Products Ltd., (6) New Millennium Health Care Products and Equipments Ltd., got amalgamated with SKOL Breweries Ltd. We can call this first amalgamation 4. As on 1-4-2002, SKOL Breweries Ltd. Amalgamated with M/S. Morkutir Investments and Trading Company Private Ltd. Simultaneously the Beer Business of M/S.Maharastra Breweries Ltd. Demerged and merged with M/S. Morkut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was again revised. The computation of income reveals that assessee computed income Rs.13,60,59,096/- and set off of unabsorbed brought forward business loss of Rs.4,56,28,025/- (same as in the original return) and unabsorbed depreciation of Rs. 9.04,31,071/- (as against Rs. 1,98,24,078/- in the original return) thereby reducing the income to Rs. Nil. 7. The unabsorbed Depreciation and Business Loss as per Tax Audit Report (TAR) was as follows: Total in Rs. S.No. Asst. Year Unabsorbed depreciation Carried forward business loss Amount as Assessed (See Note 3 below) Reference of the Relevant AO 1. 1980-1981 172,355 2. 1981-1982 2,905,000 3. 1982-1983 2,501,615 4. 1983-1984 3,116,154 5. 1984-1985 3,926,651 6. 1985-1986 2,273,437 7. 1986-1987 2,827,965 8. 1987-1988 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leries Ltd., and Charminar Breweries Ltd.) As per the condition mentioned in Sec. 72A(2)(b) erstwhile SKOL Breweries Ltd. ought to hold continuously for a minimum period of 5 years atleast 3/4th of the value of the assets of the amalgamating companies. Since erstwhile SKOL Breweries Ltd. Merged again with M/S. Morkutir Investments and Trading Company Private Ltd. on 1-4- 2003, this condition according to the AO was violated. In such case u/s.72A(3), the AO is empowered to treat set off of loss or allowance of depreciation made in any previous year in the hands of the amalgamated company as deemed income of the amalgamated company chargeable to tax for the year in which such conditions are not complied with. The AO invoked those provisions and added as sum of Rs.4,93,56,473 which was brought forward business loss of the six amalgamating companies which was allowed in the hands of erstwhile M/S.SKOL Breweries Ltd. 11. The claim of set off u/s.72A(2) is a positive claim made by the Assessee which was rejected by the AO. Apart from the above, the AO treated the allowance of set off allowed in the earlier year to erstwhile SKOL Breweries Ltd. deeming it as income u/s.72A(3). Thus th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off in the hands of the resulting company ; (b) where such loss or unabsorbed depreciation is not directly relatable to the undertakings transferred to the resulting company, be apportioned between the demerged company and the resulting company in the same proportion in which the assets of the undertakings have been retained by the demerged company and transferred to the resulting company, and be allowed to be carried forward and set off in the hands of the demerged company or the resulting company, as the case may be. (5) The Central Government may, for the purposes of this Act, by notification in the Official Gazette, specify such conditions as it considers necessary to ensure that the demerger is for genuine business purposes. (6) Where there has been reorganization of business, whereby, a firm is succeeded by a company fulfilling the conditions laid down in clause (xiii) of section 47 or a proprietary concern is succeeded by a company fulfilling the conditions laid down in clause (xiv) of section 47, then, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the predecessor firm or the proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken place. 1. Substituted by FA 1999, wef 1-4-2000. 2. FA 2001, wef. 1-4-2000. 3. F.A. 2002, w.e.f. 1-4-2003. 13. Aggrieved by the order of the AO, the Assessee filed appeal before CIT(A). In ground No.2.1 to 2.4 the Assessee projected its grievance against the order of AO, by raising the following grounds: "2.1 That on the facts and circumstances of the case and in law, the ld. A.O has erred in law in holding that amalgamation of SKOL Breweries Ltd. with the Appellant (earlier know as Morkutir Investment and Trading Company Private Ltd.) violates conditions specified under section 72A(2)(b) of the Act. 2.2 That on the facts and in the circumstances of the case and in law, the ld. AO has erred in law in treating losses of Rs. 49,356,473 set off by the Appellant Company under section 72A of the Income Tax Act, 1961 ("Act") for the Assessment Year 2002-03 as its income for the Assessment year 2003-04 under section 72A(3) of the Act following the directions given by the Learned Commissioner of Income Tax (Appeals) [CIT(A)] in his order. 2.3 That on the facts and in the circumstances of the case and in law, the ld. A.O has erred in law in denying the carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case." 1.1 However, it filed the revised grounds of appeal in accordance with Income Tax Appellate Tribunal Rules on June, 20, 2007. The ground No.3 of the revised grounds of appeal reads as under:- "That the ld. CIT(A) erred on facts and in law in not allowing the benefit of unabsorbed depreciation allowance of Rs.2,38,77,193 of SKOL Breweries Ltd. (i.e. the first amalgamated company) pertaining to assessment year 2001-02". 2. The appellant in amplification and clarification to the aforesaid Ground as stated in the revised Ground No.3 and, in the original Ground of appeal No.2.3 seeks to urge and, argue the following round: "That the ld. CIT(A) erred on facts and in law in not allowing the benefit of unabsorbed business losses of Rs.4,11,61,355 and unabsorbed depreciation of Rs. 9,97,83,291 aggregating to Rs. 14,09,44,626/- of erstwhile SKOL Breweries Ltd." 3. It is respectfully submitted that, inadvertently on account of typographical error, the figure stated in the aforesaid ground No.3 of revised grounds of appeal was not correctly stated. It is submitted that, the claim of the appellant vis- -vis the revised grounds of appeal is regarding the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue as set out in the M.A. The learned counsel for the Assessee on the other had submitted that the AO, after receiving the order of the Tribunal in appeal issued a show cause notice to the assessee on October 8, 2008 seeking clarification on the same very issue. The assessee as a measure of cooperation responded vide its letter dated Oct. 31, 2008 and explained the entire factual position as well as submitted a detailed explanation as to how the unabsorbed business loss and depreciation amount to Rs. 14,09,44,926. No infirmity has been found in such explanation. 19. He also drew our attention to the order of the AO dt.31-12-2009 giving effect to the order of the ITAT (which is subject matter of this MA) wherein the AO has after due scrutiny of the details filed by the Assessee has held as follows: "The assessee was also asked to submit the details of business losses and unabsorbed depreciation of amalgamating companies along with documentary evidence to justify the same. The assessee submitted the details vide its letters dated 04/12/2009, 12.12.2009 and 17.12.2009 and the same are taken on record. From a perusal of the said details it emerges that out of the total loss of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised computation filed by the Assessee during the course of assessment proceedings. In our view this claim of the revenue is without any basis. As we have already seen the unabsorbed depreciation and loss as per annexure 11 to the Tax Audit report filed along with the return of income was Rs. 10,48,35,810 and Rs.4,56,28,025 respectively. In the revised computation of income filed by the Assessee along with letter dated 11-1- 2006 the claim for set off was restricted to Rs.13,60,59,096 comprising of Rs.4,56,28.025 being unabsorbed brought forward business loss and Rs.9,04,31,071 being unabsorbed depreciation. This was because to this extent if set off is allowed, the profit as per computation which was Rs.13,60,59,096 would get reduced to nil and therefore the claim was restricted to the extent of profit. Therefore it is not correct to state that the Assessee did not make any claim before the AO. The next allegation in the M.A. is that the claim of the Assessee was not supported by details furnished by the Assessee and the ITAT has allowed the claim without proper verification. On this allegation we find the Assessee has already filed the necessary details before the AO in proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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