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TMI Blog2013 (1) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of the case in deleting the disallowance of loss of ₹ 1,56,46,552/-from Cement Segment and in directing the AO to rework the business profit from finance segment which was worked out by the AO at ₹ 3,65,34,251/- as against ₹ 2,39,05,495/- disclosed by the assessee in its books without appreciating the fact that the looses from cement manufacturing business cannot be set off against the profit from finance business. 2. On the facts and in the circumstances of the case ld. CIT (A) has erred in law in setting aside the issue of set off of losses from cement manufacturing business against the profit from finance business to the file of AO since as per the provisions of section 251 of the Act. Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company filed an appeal before the Commissioner of Income Tax(A)-X which was partly allowed in regard to the issue of adjustment of loss from the cement manufacturing segment. The operative part of the impugned order reads as under:- 7. After considering all the facts, Statutes, written submissions and arguments, as discussed above, it is held that the Finance Business remains the sanctioned legitimate Principal business of the appellant and Cement Manufacturing remains the permitted legitimate secondary or 'other than Principal' business of the appellant. Accordingly, appellant's Cement Manufacturing business will be considered as authorized or legitimate or legal business activity. Held accordingly. The ARs hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity. However, the ARs have not been able to explain how or why the said amount would form part of deployment of funds in Finance Segment. The AO has specifically given a finding that this deployment of funds is for strategic purposes and is not in the nature of trade or investment. This observation of the AO is supported by the fact that SMAS Ltd. is a sister concern of the appellant. Hence, the action of the AO is upheld in this regard. As regards the assessing officer's exercise of clubbing of expenses of both the businesses and the subsequent apportioning/ allocating of combined expenses between Finance, Investment and Cement Manufacturing business, the same has been claimed to be unwarranted - more so, when the same was don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Finance business has to be dealt with in accordance with the provisions of Sec 70 of the I T Act. The AO is directed to make necessary verification as per law, and the ground of appeal succeeds subject to such verification. Ground No.1 2 5. Ld. DR submitted that the Commissioner of Income Tax(A) was not justified in deleting the disallowance of loss of ₹ 1,56,46,552 from cement manufacturing segment and also in directing the Assessing Officer to rework the business profit from finance segment. The DR further submitted that the Commissioner of Income Tax(A) deleted the disallowance ignoring the fact that the losses from cement manufacturing business cannot be set off against the profit from finance business which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, we observe that the cement manufacturing activity is a core industrial activity which cannot be conducted without prior approval of various central and state government authorities. As far as legal authorization and empowerment of the assessee company is concerned, this is not an issue to be examined by the Assessing Officer. 8. We also observe that when the finance business of the assessee remains the sanctioned legitimate business of the appellant and cement manufacturing segment was permitted as legitimate secondary or other than the principal finance business, then the appellant s cement manufacturing business will be considered as authorized and legitimate business activity. In this situation, when admittedly the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in the nature of investment. The AR further submitted that the nomenclature of the business of the assessee company was mainly in the finance business and in addition to that, investment and cement manufacturing business were also important segments of the business of the assessee company, therefore, the Commissioner of Income Tax(A) was not justified in upholding the findings of the Assessing Officer that the cement segment business and advancement of funds for the same purpose was not part and parcel of the finance activity of the assessee company. 13. Ld. DR submitted that the cement manufacturing business was not a core business segment of the assessee company as assessee company being an NFBC registered with RBI engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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