9911796707
TMI Blog2016 (3) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... for bad debt created earlier, the details of which are filed by assessee at page 4 of assessee’s paper book and further at the year end the balance sheet of assessee has disclosed the sundry debtors at net of provision figure. In view of the facts and circumstances of the case and precedent cited above, we are of the view that bad debts claimed by the assessee are allowable and we allow accordingly. - Decided in favour of assessee Disallowance of write off on account of reduction in the value of stock - Held that:- he allegation of the lower authorities that the assessee company has not filed the details to substantiate that in the next year the obsolete stock of raw material were sold at reduced price as included in the closing stock in the AY 2003-04 has no basis as the assessee had not included the value of obsolete stock in the valuation of closing stock for the year ended 31.03.2003. This was done for the reason that such stock has become of nil value and question of selling the same in the next year does not arise. In view of these facts and circumstances, we are of the view that the action of the lower authorities in making addition and confirming the same in regard to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein 11 cost centre were engaged in rendering intragroup services to 14 group companies located in Australia, New Zealand, China, Malaysia, Taiwan, South Korea, Thailand, Japan, Philippines, Indonesia and India (i.e. the assessee) and the costs incurred by the respective cost centre were allocated to the group companies based on percentage of sales agreed between Nalco Pacific and the group companies. For instance, the assessee, under the agreement, agreed a net remittance to Nalco Pacific for the intra-group services up to a maximum of 2% of net sales for each calendar year. This method of allocation has been approved by the OECD Guidelines. Accordingly, the second ground of CIT (A) that the intra-group service charge under the agreement between the assessee and Nalco Pacific was fixed not with reference to any particular service and the intra-group service charge was calculated at a fixed percentage of sales of assessee, irrespective of which services were actually received by assessee or whether any services were received by it or not, has no leg to stand. Assesse made application dated 14th March, 2001 to the General Manager, Exchange Control Department, Reserve Bank of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Ltd on account of the differences in quality, reliability and availability of chemicals, volume of supply, geographical location, availability of raw material, demand and supply equation between the respective controlled transactions and the uncontrolled transactions in chemicals EC5300A/180 and EC3210A/198.Hence, we delete the addition/adjustment - Decided in favour of assessee Disallowance of ad hoc on the basis of amalgamation of Acqa Chemicals & Systems (Mfg.) Ltd. - Held that:- the changes as per the scheme of amalgamation approved by the Hon’ble High Courts were given effect to in the books of account for the AY 2003-04. Even Hon’ble ITAT in assessee’s own case for AY 2001-02 has held that the effect of amalgamation should be given effect to from the AY 2001-02 and not from AY 2003-04. and held that the AO should consider the revised return filed by assessee consolidating the financial results of both the entities for AY 2001-02. In view of these facts, we are of the considered view that the allegation of the lower authorities that the assessee has not given effect to the scheme of amalgamation in AY 2001-02 and 2002-03 is without any basis and accordingly, the ad hoc d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are exactly identical in both the years and the assessment order as well as order of CIT(A) in both the years are identically worded, hence we will take the issue in ITA No. 1256/Kol/2009 for AY 2004-05 and will decide the issue in both the years on these facts. 3. Briefly stated facts are that the assessee company was engaged in manufacturing and dealing with water treatment chemicals, industrial additives and oilfield chemicals etc. The AO during the course of assessment proceedings required the assessee to file the details in respect to claim of bad debts. The assessee has claimed bad debts of ₹ 4,68,90,427/- out of provisions and also written off a sum of ₹ 37,02,986/- directly to the P L Account. The AO asked the assessee whether the conditions for allowability of bad debts have been satisfied in term of the provisions of section 36(1)(vii) of the Act or not. The assessee filed details of bad debts in respect to the claim of provisions and write off made directly to P L Account. The AO observed from the details filed by the assessee that most of the bills were raised during the financial year itself and few bill relates to earlier periods like one party Southe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith any customer due to peculiar nature of the business carried on by assessee. The said sums have been accounted for as income in the profit and loss account of the previous year in which invoices were raised. Since the assessee could not recover the said sums from the customer concerned, it actually written off the said sums as irrecoverable in the books of accounts prepared for the relevant previous year and claimed deduction with respect to the same u/s 36(1 )(vii) of the Act, while computing business profits for the relevant AY. The assessee has also filed copy of relevant portion of books of accounts i.e. ledger account and details of bad debts written off amounting to ₹ 5,05,24,710/- have been enclosed at pages 1-13 of the assessee s paper book. The CIT (A) held that all the details relevant to allow the bad debt were produced by the assessee before the AO and further held that since the assessee fulfilled all the conditions required to be fulfilled, hence normally the deduction claimed by the assessee on account of bad debt should be allowed. However, being satisfied that the assessee had fulfilled all conditions required to get the bad debt allowed, he confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vijaya Bank v CIT 323 ITR 166 (SC) wherein Hon'ble Court has held that in order to allow the bad debt which is written off through the provision account, the only conditions that are required to be fulfilled may be stated as under: That the bad debt has to be actually written off through the provision account created earlier and That the sundry debtors balance at the year-end should be disclosed in the balance sheet as net of provision balance. 6. In the present case before us, the assessee had written off actual bad debt in the profit and loss account through the provision for bad debt created earlier, the details of which are filed by assessee at page 4 of assessee s paper book and further at the year end the balance sheet of assessee has disclosed the sundry debtors at net of provision figure. Ld. Counsel for the assessee also explained that the AO, after accepting the submissions of assessee, allowed the bad debt claimed for the later assessment years viz., 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. We have reproduced herein below the relevant information as under: Assessment Year Bad Debt Allowed (INR'OOO) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the Accounting Standard and the claim made by the appellant was fully allowable and has been accepted in earlier years by the department. 8. Briefly stated facts are that the assessee has claimed write off of stock in valuation of finished goods amounting to ₹ 60,00,622/-. The AO during the course of assessment proceedings required the assessee to explain the write off. The assessee informed that goods more than one year old are reduced from the value of stock. According to AO, the assessee could not file details of provision for goods in bond, godown and factory. As the assessee could not file details of sales of the same goods next year at a reduced price as included in closing stock, the AO made addition of this provision. Aggrieved assessee preferred appeal before CIT(A), who also confirmed the action of AO by holding that the assessee has not been able to prove that such stock has zero value or reduced value. Aggrieved, assessee came in second appeal before Tribunal. 9. We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO has added back this provision on the following three grounds: a) No details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the action of the lower authorities in making addition and confirming the same in regard to provision for obsolete stock with the value of closing stock correspondingly increasing the value of opening stock in the immediate next year would lead to double taxation as the assessee company has to pay tax on the additional amount without getting the benefit of increased value of stock in the immediate next year. Accordingly, we delete this addition and allow this issue of assessee s appeal. 10. The next issue in assessee s appeal in ITA No.529/K/2008 for the AY 2003-04 is as regards to disallowance of annual contribution of gratuity to Group Gratuity Scheme of LICI. For this, assessee has raised following ground no.7: 7. For that the appellant paid a sum of ₹ 33,00,000/- and claimed a sum of ₹ 10,57,680/- only on account of annual contribution of gratuity to Group Gratuity Scheme of LIC of India and the Assessing Officer erred in disallowing an ad hoc sum on estimate amounting to ₹ 10 lacs without any basis and/or material and should have allowed the amount as claimed. 11. Briefly stated facts are that the AO during the course of assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is confirmed and balance is deleted. This issue of assessee s appeal is partly allowed. 13. The next common issue in both the appeals of assessee is as regards to the order of CIT(A) confirming the addition being the adjustment made by Transfer Pricing Officer u/s. 92CA(3) of the Act. For this, assessee in ITA No. 529/K/2008 for AY 2003-04 has raised following ground nos. 11 to 17: 11. For that the CIT(A) erred in confirming the addition of ₹ 1,25,59,000/- being the adjustment made by the Transfer Pricing Officer (TPO) vide order passed under section 92CA(3) of the act without appreciating the fact that the report of TPO was not a part of the Assessment Order and the appellant has been denied the opportunity of making its objection against the said report. 12. For that in view of the finding by the TPO that there was no benefit, service of facility provided by the Associated Enterprise (A.E.) to the appellant, the computation of arms length price and the order passed by the TPO is against the provisions of law and not covered by Chapter-X of the Act. 13. For that various findings and observations made by the TPO in his order have been arrived at witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- by the appellant to its Associated Enterprise is not at arm's length and determining the arm's length price in this regard as nil without applying any of the methods for determining arm's length price as prescribed under Section 92C(1) of the Income-Tax Act, 1961 (ITA), being the most appropriate method as prescribed under Section 92C(2) of the ITA read with rule 10C of the Income-tax Rules, 1962 (ITR) as well as erred in rejecting the method and approach adopted by the appellant for justifying the arm's length nature of the transaction referred to hereinabove without assigning any valid reasons and without due consideration to the relevant factual and commercial aspects underlying the impugned transaction. 15. The facts and circumstances and issues are exactly identical, hence we will decide the issue by taking the facts from ITA No. 1256/K/2009 for AY 2004-05. Brief facts relating to this issue are that this issue is directed against the disallowance made by AO and confirmed by CIT(A) in respect of the intra-group service charge at an amount of ₹ 1,51,74,980/- paid by the assessee to its associated enterprise, namely, Nalco Pacific Pvt. Ltd., Singa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the pricing of the aforesaid agreement in respect of technical consultation fees amounting to ₹ 15,174,980/- paid by assessee to Nalco Pacific for AY 2004-05 was justified on the basis of Transactional Net Margin Method. But the TPO had raised the following objections: a) First objection: The TPO noted that the services rendered by Nalco Pacific were more in the nature of directions/management decision/routine advice which were provided by Nalco Pacific to the assesse to take care of its own interests rather than to meet the identified needs of the assessee. b) Second objection: The TPO further noted that though some incidental benefits accrued to the assessee, yet such benefits would not be ones for which an independent enterprise would be willing to pay. c) Third objection: The TPO noted that the aforesaid international transaction was not at arm's length and the arm's length price in this regard would be taken at NIL value. 16. The AO made the disallowance of ₹ 1,51,74,980/- in respect of the intra-group service charge paid by the assessee to Nalco Pacific as per the recommendations made by the TPO in his order. Aggrieved, assesse preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re referred to section 92 of the Act provides that any income arising from an international transaction between associated enterprises shall be computed having regard to the arm's length price and any expense or outgoing in an international transaction is also to be computed having regard to the arm's length price. As per the provision of section 92C of the Act read with rule 10B and 10C of the Rules, the arm's length price in relation to an international transaction shall be determined by any of the following methods, being the most appropriate method, such as(a) comparable uncontrolled price method; or (b) resale price method; or (c) cost plus method; or (d) profit split method; or (e) transactional net margin method; or (f) any other method which may be prescribed by the Board. 18. Ld. Counsel for the assesse explained that the assesse had discharged its onus by filing all the relevant data and the data used for determining the arm s length price is reliable and correct, there can be no intervention by the AO without pointing out any defect in the same. This is made clear by sub-section (3) of section 92C which provides that the AO may intervene only if he is, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO has power to restrict the value of an international transaction to nil when he was supposed to have determined the arm's length price of the international transaction. The Hon'ble High Court after examining the facts of the case held as under: 19 In CIT v. Walchand Co. etc. [1967] 65 ITR 381, it was held by the Supreme Court that in applying the test of commercial expediency for determining whether the expenditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged from the point of view of the businessman and not of the Revenue. . . 22. Even Rule 10B(1)(a) does not authorize disallowance of any expenditure on the ground that it was not necessary or prudent for the assessee to have incurred the same or that in the view of the Revenue the expenditure was un-remunerative or that in view of the continued losses suffered by the assessee in his business, he could have fared better had he not incurred such expenditure. These are irrelevantconsiderations for the purpose of Rule l0B. Whether or not to enter into the transaction is for the assessee to decide........ So long as the expenditure or payment h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national transactions under review at 'NIL' value based on his main allegation that the benefits claimed to have been received by the assessee from Nalco Pacific under the aforesaid agreement would not be ones for which an independent enterprise would be willing to pay. The CIT (A) also confirmed his order. 21. Attention was further invited to the decision of Hon'ble Delhi Tribunal of McCann Erickson India (P.) Ltd vs. Addl. CIT [2012] 24 taxmann.com 21 (Delhi), wherein the Tribunal, following the aforesaid decision of the Hon'ble Delhi High Court, has interalia held that: 9. We have heard both sides and have also gone through the orders of the AO, TPO and DRP . The evidences have been submitted before the authorities below showing rendering of the certain services against the payments made to the associated enterprises. In the arena in which the assessee company is functioning, it will be difficult to imagine a successful business entity in the global environment without receipt of the services which carries huge intrinsic and creative value. In our considered view, it is only a particular business expert who can evaluate the true intrinsic and creative val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d selected a set of external comparables. As per this analysis, the international transactions covered under the TNMM, were at arm's length. The aforesaid analysis by assessee was not disputed by the TPO. The assessee was called upon by TPO to provide the basis of pricing of these transactions. The assessee was also required by the TPO to provide necessary details along with allocation keys and basis of calculation of payment made for I.T. support services. According toTPO, the assessee, however, failed to comply with these requirements and the ALP of the relevant transactions therefore wasdetermined by TPO at 'nil' value. The CIT(A) held that the action of TPO in arriving at the ALP of the relevant international transactions at nil was without any basis and accordingly he deleted the addition made on account of the transfer pricing adjustments made by A.O./TPO holding the same to be unsustainable. The Tribunal observed that the exercise of benchmarking made by the assessee to show that the price charged by its associated enterprise for providing IT support services was at arm's length had not been disputed by TPO. It was also observed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (including the intra-group service charge paid /payable to Nalco Pacific) adhered to the arm s length principle Transfer Pricing Regulation. 24. Further, it is also a fact that the aforesaid intra-group service charge was allowed as deduction by TPO for the assessment years 2005-06, 2006-07, 2007-08 and 2008-09. In this connection, Ld. Counsel referred to the decision of the Hon'ble Calcutta High Court in the case of CIT vs. Britannia Industries Ltd 257 ITR 225, wherein Hon'ble Calcutta High Court has held that the Department cannot take a contrary view in respect of any issue which has been accepted by the Department for succeeding assessment year based upon the similar set of facts. Thus, by following the above principle laid down by the Hon'ble Calcutta High Court, we feel that the action of TPO in making disallowance of the intra-group service charge paid/payable by assesse to Nalco Pacific for the assessment year 2004-05, after allowing the same for the assessment years 2005-06,2006-07,2007-08 and 2008-09 based on the same facts, has no leg to stand. Ld. Counsel referred to the relevant information in the tabular format: Intra-group Service Charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al employees. We find that the services rendered by Nalco Pacific to assessee under the agreement were similar to the services mentioned in paragraph no. 7.14 of the DECD Guidelines. In view of this, we appreciate that the services rendered by Nalco Pacific to assessee were intra-group services for which independent enterprises would have been willing to pay for or to perform in-house for themselves and hence, the value of the aforesaid services in comparable uncontrolled transactions could not be 'nil'. The paragraph no. 7.12 of the OECD Guidelines provides that there are some cases where an intra-group service performed by a group member such as a shareholder or coordinating centre relates only to some group members but incidentally provides benefits to other group members. Examples could be analysing the question whether to recognise the group, to acquire new members, or to terminate a division. These activities may constitute intra-group services to the particular group members involved, for example those members who will make the acquisition or terminate one of their divisions, but they may also produce economic benefits for other group members not involved in the obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions with associated enterprises. It is accepted, however, that this approach may not always be appropriate if, for example, the services to independent parties are merely occasional or marginal. Further it has been provided in paragraph no. 8.2.2 of the OECD Guidelines that a direct-charge method for charging for intra-group services is so difficult to apply in practice in many cases for the MNE groups that such groups have developed other methods for charging for services provided by parent companies or group service centres. In such cases, the MNE groups may find that they have few alternatives but to use cost allocation and apportionment methods which often necessitate some degree of estimation or approximation, as a basis for calculating an arm's length charge. Such methods are generally referred to as indirect-charge methods. The allocation might be based on turnover, or staff employed, or some other basis. Whether the allocation method is appropriate may depend on the nature and usage of the service. 28. In the instant case, the main allegation of CIT (A) was that the intra-group service charge was calculated at a fixed percentage of sales of assessee, irrespective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel referred to page no. 52 of the assessee s paper book, wherein the Reserve Bank of India (Exchange Control Department) vide letter (Reference No. 1068/03.19.0007 (XI) / 2000-01 dated 3rd April, 2001 intimated their in-principle approval for remittance of consultancy charges to Nalco Pacific @ 2% of net sales for the calendar year 2001. It is a fact that the rate at which intra-group service charges was paid / payable to Nalco Pacific for the assessment year 2004-05 remained the same (i.e. 2% of net sales) as the rate mentioned in the aforesaid approval letters. Ld. Counsel also referred to decision of Mumbai Tribunal in the matter of Thyssenkrupp Industries India (P.) Ltd. vs ACIT [2013] 33 taxmann.com 107 (Mumbai - Trib.), wherein the assessee company entered into collaboration agreement with its associated enterprise for payment of 2% of contract value for manufacturing, drawing and engineering services and 5% of the selling price as royalty. The assessee company applied to the RBI seeking approval in respect of payment of royalty and technical fee through Central Bank of India. It was in pursuance to the deemed approval by RBI under the automatic approval scheme that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The appeals of the assessee are allowed. 30. The next issue in ITA No. 1256/K/2009 for AY 2004-05 is as regards to the order of CIT(A) confirming the adjustment made by TPO in respect to disallowance of export of chemicals to associated enterprises valued ₹ 39,78,196/-. . For this, assessee has raised following ground nos. 3(a) and 3(b): 3(a) That on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in confirming the addition made by the TPO/ AO amounting to ₹ 39,78,196/- to the returned income of the appellant for the previous year relevant to the assessment year 2004-2005 in regard to export of chemicals by the appellant to its associated enterprises during the period under consideration. 3(b) That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition made by the TPO/ AO amounting to ₹ 39,78,196 which was based on erroneous application of the Comparable Uncontrolled Price (CUP) method wherein appellant's prices of export transactions with Associated Enterprises were compared to prices of sales transactions with unrelated parties in India without due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gaon Refinery Petrochemicals Ltd and Haldia Petrochemicals Ltd. Accordingly, an adjustment of ₹ 39,78,196/- was recommended to the income of assessee. 32. Assessee before CIT(A), contended that the functions performed by the associated enterprises and unrelated parties were different and geographical difference also caused significant variation in international transactions. But he rejected the contentions of assessee. His main allegation was that there was no rationale for price differentials between controlled and uncontrolled transactions. The CIT (A) further held that the findings of the TPO were not to be interfered with. He confirmed the aforesaid addition / adjustment to income made by the AO based on the recommendation of the TPO. Aggrieved, assessee preferred an appeal before Tribunal. 33. Before us, Ld. Counsel for the assessee argued that there was rationale for price differentials between controlled and uncontrolled transactions. He referred to page no. 56 of assessee s paper book, the assessee vide letter dated 20.11.2006 stated that the product EC5300A/180 was manufactured to cater to the Indian customers but in course of time the demand for the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property transferred or services provided in either transaction'. Specific attention was invited to rule 108(1)(a) of the Rules, which interalia reads as under: Determination of arm's length price under section 92C 10B.(1) For the purposes of sub-section (2) of section 92C, the arm's length price in relation to an international transaction shall be determined by any of the following methods, being the most appropriate method, in the following manner, namely :- (a) comparable uncontrolled price method, by which,- (i) the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction, or a number of such transactions, is identified; (ii) such price is adjusted to account for differences, if any, between the international transaction and the comparable uncontrolled transactions or between the enterprises entering into such transactions, which could materially affect the price in the open market; (iii) the adjusted price arrived at under sub-clause (ii) is taken to be an arm's length price in respect of the property transferred or services provided in the international transaction; ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no differences have a material effect on price. Even a minor difference in the property transferred in the controlled and uncontrolled transactions could materially affect the price even though the nature of the business activities undertaken may be sufficiently similar to generate the same overall profit margin. In the instant case, the characteristics of EC5300A/180 sold to Bongaigaon Refinery Petrochemicals Ltd were significantly different from those of EC5300A/180 sold to Ondeo Nalco (Sanghai) Trading Co. Ltd and Nalco Hong Kong Ltd on the account of the following reasons: Difference in Quality, Reliability and Availability: EC5300A/180 became part of obsolete stock, had shelf life issues and therefore was not in normal saleable condition in the market when the same was transferred to Ondeo Nalco (Sanghai) Trading Co. Ltd and Nalco Hong Kong Ltd. The personnel of the appellant company were planning to sell the obsolete chemical at a discounted rate. However, EC5300A/180 was of standard / good quality and in saleable condition in the local market when the same was transferred to Bongaigaon Refinery Petrochemicals Ltd. Difference in Volume of Supply: The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all comparable to the characteristics of EC3210A/198 transferred in controlled transactions between assessee and Ondeo Nalco Thailand. The TPO did not adjust the price charged by assessee in the uncontrolled transaction in order to account for the aforesaid differences between controlled transaction and uncontrolled transaction. Hence, the application of the CUP Method made by the TPO in the above case was inappropriate. 37. The decision of Mumbai Tribunal in the matter of Gharda Chemicals Ltd vs. DCIT in 2009 TIOL 790 (ITAT-Mum.) and [2010] 35 SOT 406 (MUM.) which inter alia reads as under: 15. Now we come to CUP method by which the price charged or paid for property transferred in comparable uncontrolled transaction is identified. Such price is adjusted to account for differences which could materially affect the price in the open market . . 16 The essence of determining ALP under CUP method is to ensure that the price charged by the Indian Enterprise from its AE should be consistent with that charged from unrelated parties under similar circumstances. The importance of the similar circumstances cannot be lost sight of in this context because a round cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the aforesaid independent parties were determined by the free interplay of demand and supply forces in the open market. We further find that the TPO did not adjust the prices charged by assessee in uncontrolled transactions with Bongaigaon Refinery Petrochemicals Ltd and Haldia Petrochemicals Ltd on account of the differences in quality, reliability and availability of chemicals, volume of supply, geographical location, availability of raw material, demand and supply equation between the respective controlled transactions and the uncontrolled transactions in chemicals EC5300A/180 and EC3210A/198.Hence, we delete the addition/adjustment of ₹ 39,78,196/- made by the AO and confirmed by CIT (A). 39. The next issue in the appeal of assessee in ITA No.529/kol/2008 for the assessment year 2003-04 is as regards to the order of ld. CIT(A) confirming the disallowance of ad hoc on the basis of amalgamation of Acqa Chemicals Systems (Mfg.) Ltd. amounting to ₹ 5 Cr. 40. Briefly stated facts are that by virtue of scheme of amalgamation, the subsidiary of the assessee Acqa Chemicals Systems (Mfg.) Ltd. merged with the assessee-Company as approved by the Hon ble Calcutt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n receiving the amalgamation order, the revised return consolidating the financial results / accounts was filed incorporating the effect of amalgamation. The assessee company following the mandatory AS-14 issued by ICAI has given full effect to the scheme of amalgamation issued by Hon ble High Courts in the books of account of the assessee in the year of sanction from the Court, i.e. 31.3.2003. The same was duly reported in the Director s report as well as in the notes to accounts for FY 2002-03. In the books of account for earlier FY 2001-02 and 2002-03, the same was not incorporated for the reason that at the time of sanction of the scheme, the accounts for both the years were closed. As a result of the same, the changes as per the scheme of amalgamation approved by the Hon ble High Courts were given effect to in the books of account for the AY 2003-04. Even Hon ble ITAT in assessee s own case for AY 2001-02 has held that the effect of amalgamation should be given effect to from the AY 2001-02 and not from AY 2003-04. and held that the AO should consider the revised return filed by assessee consolidating the financial results of both the entities for AY 2001-02. In view of these ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
