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TMI Blog2012 (10) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... e cross appeals arise out of the assessment completed under section 143(3) of the Income-tax Act, 1961. 2. First we will consider the appeal filed by the assessee in ITA No.1616(Mds)/2011. 3. The first issue raised by the assessee is that the Commissioner of Income-tax(Appeals) has erred in confirming the addition of ₹ 158,43,81,853/-. This addition related to 40% of the membership fees deferred by the assessee company against future years. This issue has been considered by us in the appeals filed by the assessee for the earlier assessment years 2006-07 and 2007-08. Following the said common order of even date, we find that the addition is not justified. Accordingly this issue is decided in favour of the assessee and the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that wherever the losses were pertaining to the business operations carried on by the assessee, those losses were allowed as deduction by the Assessing Officer. It is only in the case of the US concern M/s. MHR(USA) that the Assessing Officer has disallowed the claim made by the assessee. The Commissioner of Income-tax(Appeals), after examining the relevant case laws, held that if the foreign exchange loss was incurred on a capital asset or against a fixed asset, the loss would be capital in nature and cannot be allowed as a deduction. Accordingly, the Commissioner of Income-tax(Appeals) confirmed the disallowance made by the Assessing Officer. 4.3. On going through the facts of the case, we are inclined to agree with the finding of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the Commissioner of Income-tax(Appeals) has erred in confirming that the excess of assets over the liabilities amounting to ₹ 80,76,889/- was taxable as short-term capital gains. This amount of ₹ 80,76,889/- is only a balancing figure arising out of the entries passed as a result of the amalgamation. The excess of assets over liabilities is notional and is the result of revaluation of assets and liabilities on amalgamation. Therefore, the lower authorities are not justified in treating the amount of ₹ 80,76,889/- as the income of the assessee company. The said addition is deleted. This issue is decided in favour of the assessee. 7. The next ground raised by the assessee is that the Commissioner of Income-tax(Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions of section 194J are not attracted. The assessee has already paid the amount. Therefore, in view of the Special Bench decision of the Income-tax Appellate Tribunal, Vizhakapatnam, in the case of Merilyn Shipping and Transports vs. ACIT, 16 ITR (Trib) 1(SB), the provisions of law stated in section 40(a)(ia) will not apply. The disallowance is, therefore, deleted. 10. The appeal filed by the assessee is partly successful. 11. Next we will consider the appeal filed by the Revenue for the assessment year 2008-09 in ITA No.1764(Mds)/2011. 12. The first issue raised by the assessee is that the Commissioner of Income-tax(Appeals) has erred in directing the deduction of expenditure incurred for purchasing furniture. This issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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