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TMI Blog2014 (6) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee’s pharma division carried out in the name of Vita Life (pharma division) and subsequent payments are also demonstrated in the books of account which have been duly verified - the relief has been granted after proper verification of the facts, there was no reason to interfere in the finding of CIT(A) – Decided against Revenue. - ITA No. 1486/Del/2010 - - - Dated:- 29-5-2014 - Shri R. P. Tolani And Shri Shamim Yahya,JJ. For the Appellant : Shri H. G. Sema Sr. DR For the Respondent : Shri Anoop Sharma Adv. Shri Manu K. Giri Adv. ORDER Per R. P. Tolani, J. M: This is revenue s appeal against CIT(A)-V, New Delhi s order dated 14-1-2010 in appeal no. 118/08-09 relating to A.Y. 2005-06. Following effective grounds are raised: 1. The Ld. CIT(A) has erred on facts and in law by directing to delete addition of Rs. 64,45,245/- on account of disallowance of bad debts/ advances written off ignoring that losses or debts of Fashion Brands International Inc. a subsidiary company and a separate legal entity, could not be allowed to be deducted from the profits of the assessee company. 2. The Ld. CIT(A) has erred on facts and in law by directing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of the view that it was a trite proposition that losses or debts of the assessee company alone can be allowed u/s 37 or 36(1)(vii). Therefore it was disallowed. 3.1. Aggrieved, assessee preferred first appeal where the assessee relied on catena of judgments in its support as under: - CIT Vs. Dalmia Cement (B) Ltd. (2002) 254 ITR 377; - Kejriwal Enterprises Vs. CIT 260 ITR 341 (Cal.); - Vassanji Sons Co. P. Ltd. 125 ITR 462 (Bom.); - Essen Pvt. Ltd. Vs. CIT 65 ITR 625 (SC); - CIT Vs. Amalgamations Pvt. Ltd. 226 ITR 188 (SC); - Turner Morrison Co. Ltd. Vs. CIT 245 ITR 724 (Cal.); - Phaltan Sugar Works Ltd. 208 ITR 989; - CIT Vs. Wood Ward Governor India P. Ltd. 312 ITR 254 (SC) - CIT Vs. Malayalam Plantation Ltd. 53 ITR 140 (SC) - S.A. Builders Vs. CIT 288 ITR 1 (SC) 3.2. Ld. CIT(A) after considering all the facts and circumstances allowed the assessee s claim by following observations: I have considered the submissions made by the appellant and on the basis of facts placed before me and the legal submissions made I hold that since, the amount of Rs. 64,45,245/- representing bad debts written off by the appellant company was advanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct about RBII having become financially unviable due to exigencies mentioned have not been disputed by the assessing officer. The fact that assessee advanced amount in its books of account which has been accepted by the department and the amounts have been actually written off as bad debt are clearly allowable u/s 36(1)(vii). We find merit in the alternative plea of the assessee also that in any case it becomes a business loss of the assessee. In view thereof, we see no infirmity in the order of CIT(A) on this issue which is upheld. This ground of the assessee is dismissed. 7. Apropos third ground i.e. addition qua the discontinued operations of pharma division sold under slump sale, brief facts are: The pharma division of the assessee company was sold by way of slump sale accepting the sundry creditors reflected in the books of accounts of the assessee totaling to Rs. 18,53,000/- which are listed in the CIT(A) s order. The assessing officer had disallowed the same on the grounds: (i) The slump sale of capital asset was based on net worth which is aggregate value of the total assets of the undertaking as reduced by the value of liabilities. It was implied that these liabiliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/11/2004 before the execution of the business transfer agreement. The amount was paid by the assessee company in the next financial year on 30/04/2005 to the creditor. Copy of account of Mitsua Boeki Ltd. in the books of Vita Life Division is placed in the paper book at pages 43 to 45. The amount of consideration paid by the vendee has been indicated in article 5 of the business transfer agreement at Rs. 39,65,45,000/- on the basis of Life Laboratories as handed over to the vendee. These sundry credits were transferred on 30/11/2004 to the head office as there were certain disputes regarding the quantification of the liability and it was considered expedient that the matter may be settled by the assessee itself and not by the vendee. The figure of sale consideration mentioned in article 5 of the agreement has been agreed after the exclusion of sundry credits as above. Had thee be no exclusion from the reference accounts taken over by the vendee, it is quite obvious that consideration agreed between the parties would have come down to the extent of these liabilities. To sum up, there is no effect whatsoever in the ultimate computation of capital gain on slump sale as per section 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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