9911796707
TMI Blog2014 (2) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... of slow down or lull in the business does not exist in the case of appellant and in any case such a reason cannot be a valid ground for several years - the appellant claimed to have sold its entire manufacturing business to one of its related concern named Sigma Laboratories Ltd. on w.e.f. 01-04- 2009 - The expenses have been claimed by the appellant for F.Y.2008-09 and immediately thereafter the entire business was transferred by the appellant to its related concern - This means that the business was closed immediately after the relevant previous year as far as the case of the appellant is concerned - Relying upon M.M. Ipoh V. CIT [1967 (7) TMI 8 - SUPREME Court] that facts of each year are only important in order to decide the income of that year – thus, there is no reason to interfere with the findings of the CIT(A) – Decided against Assessee. - I.T.A. No. 4463/Mum/2013 - - - Dated:- 7-2-2014 - Shri Vijay Pal Rao, JM And Shri N. K. Billaiya, AM,JJ. For the Appellant : Shri Rajesh Athavale For the Respondent : Shri Ravi Prakash ORDER Per N. K. BILLAIYA, AM: This is an appeal by the assessee against the order of the Ld. CIT(A)-29, Mumbai dt.20.3.2013 pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the form of purchasing, manufacturing, distributing, selling etc. drugs, chemicals, pharmaceuticals etc of all kinds. It is the claim of the assessee that from 2005 to 2008, there was lull in the business but the business was never discontinued. The main contention of the assessee is that it has set up a manufacturing plant at Goa which is in continuation of its existing business activity therefore, it cannot be said that assessee is out of business and accordingly all the expenses claimed by the assessee for the impugned year should be allowed as revenue expenditure and accordingly losses deserves to be allowed to be carried over. In support of its claim, the assessee relied upon its application for registration with Government authorities which included Vat registration, registration with Central Excise Board, Sales tax registration and Goa State Pollution Control Board registration. The assessee also supported its claim by stating that it has also been registered with standard of weight and measure and Food and Drug administration. It is the claim of the assessee that it has shown processing charges to the tune of Rs. 1.25 lakhs which is supported by excise gate pass. It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of 10 years from M/s. Sigma Laboratories Ltd. The assessee has claimed this setting up of manufacturing activity as continuation of its existing business activity for which the assessee incurred expenses to the tune of Rs. 3.72 crores. The assessee has also claimed depreciation of Rs. 153.05 lakhs during the financial year 2008-09 which is the year under consideration. The entire business of the assessee was transferred to M/s. Sigma Laboratories Ltd. with effect from 1.4.2009. This act of the assessee clearly show that it was pre-decided that the assessee would incur all the expenses and claim depreciation and then transfer the entire business to its sister concern M/s. Sigma Laboratories Ltd., because by preponderance of probabilities such capital decisions are not taken overnight. 6.1. Further the agreement of transfer of business was executed somewhere in February, 2010 and was given a retrospective effect from 1.4.2009. There is nothing on record to show in whose books of accounts the business transacted between 1.4.2009 till the date of the execution of the sale of business was entered. The assessee has received a net consideration of Rs. 6,21,70,019/- on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business when he has sold the entire business to M/s. Sigma Laboratories Ltd. One more important factor to be considered here is that the assessee has taken the building and the land appurtenant from M/s. Sigma Laboratories Ltd. only for a period of 10 years and that too by an unregistered deed. It goes against the commercial produce of sanity where in a businessman would spend 3.72 crores in a year and install plant and machinery on a land only for 10 years that too by an unregistered deed. Such conduct of the assessee clearly show that the entire business activity in the disguise of earning processing charges is nothing but an eye wash. The assessee has during the course of hearing relied upon several judicial decisions which have been considered by us but we failed to persuade ourselves to rely on those decisions in favour of the assessee because of the conduct of the assessee as explained hereinabove clearly distinguishable on the facts . 7. The Ld. CIT(A) has well appreciated the above stated facts. The Ld. CIT(A) has also given very sound reasons for not accepting the order of the Tribunal in assessee s own case for A.Y. 2006-07. The findings of the Ld. CIT(A) in this mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the appellant from M/s. Mokul Finance Pvt. Ltd. Further, it is held by Hon ble Supreme Court in the case of M.M. Ipoh V. CIT (1968) 67 ITR 106 (SC) that facts of each year are only important in order to decide the income of that year. The relevant portion is quoted as under: The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment; the findings on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year, but they are not binding and conclusive In view of all the above observations, it is held that the judgement of Hon ble ITAT, Mumbai, rendered in the case of the appellant for A.Y.2006-07, is not applicable to the relevant A.Y. 2009-10 as the facts of both the years are completely distinguishable. We, therefore, do not find any reason to interfere with the findings of the Ld. CIT(A). Ground No. 1 and 5 are accordingly dismissed. 8. For the reasons discussed hereinabove, we also do not find any infirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
