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TMI Blog2016 (5) TMI 1499X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with law. Therefore the finding of the learned CIT(A) on this account has been ordered to be set aside and learned Assessing Officer is hereby directed to decided the matter afresh in accordance with law. This issue is decided in favour of the Assessee against the Revenue Depreciation on capital asset transferred by a holding company to its subsidiary company - exemption under section 47(iv) applicability of provisions of explanation 6 to sub-section (1) of section 43 - plant and machinery is transferred from the holding company to subsidiary company - HELD THAT:- It is clear that the finding of the CIT(A) is based upon the observations made in Essar Oil Limited Vs. Deputy Commissioner of Income Tax, Special Range [ 2007 (1) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The assessee challenged the disallowance u/s. 14 of the Income Tax Act, 1961(in short the Act ) before the Commissioner of Income Tax (Appeals)-4, Mumbai [hereinafter referred to as the CIT(A) ] which was confirmed therefore the assessee has filed the present appeal before us. ITA NO. 6199/Mum/2011 8469/Mum/2011 3. We have heard the arguments advanced by the learned representative of the parties and perused the record. Learned representative of the assessee has argued that no administrative expenses were incurred to earn the exempt income therefore no expenses are required to be deducted in view of the provision u/s.14A of the Act. It is also argued that the learned Assessing Officer had failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income specifically. The balance sheet of both the years are on the file as annexure -1 and 2 which speaks that the assessee was having sufficient surplus amount in comparison to the investment made in mutual fund to earn the exempt income. Therefore, the said circumstances and in view of the above mentioned law settled in [2009] 313 ITR 340 (Bom) in the case of Bombay Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. We are of the view that the claim of the assessee is required to be examined a fresh in accordance with law. Therefore the finding of the learned CIT(A) on this account has been ordered to be set aside and learned Assessing Officer is hereby directed to decided the matter afresh in accordance with law. This issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany had continued to hold the capital assets for the purpose of its subsidiary. Where a 100 per cent holding company of a subsidiary company transfer certain assets to such subsidiary company even for a price or consideration higher than the WDV, the capital gains on such transfer has been exempted under section 47(iv). The reason being the identity of the ownership of the companies precluded its being considered as involving any gain to the transferor company. As capital gain was exempt in the hands of the transferor company and in order to ensure that the transferee company does not claim depreciation on a higher cost, it was provided by the insertion of Explanation (6) to sub-section (1) of section 43 of the Act, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer during the assessment proceedings but he rejected the same on the ground that the subsequent events will not have e any material change with respect to changing of cost of acquisition of the capital assets acquired from the holding company. But, in our opinion, the Assessing Officer should have considered the subsequent events. The application of the provisions of section 47 is not final but is subject to the occurrence of events under section 47A. if the events mentioned in section 47A occur, the exemptions granted under section 47 of the Incometax Act are withdrawn. What is the effect of such withdrawals? In the case of the transferor company, the income is to be treated as the income of the year in which the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection(3) provides that in the hands of the transferee, the valuation/cost of the asset regarding which the exemption granted under section 47(iv) has been withdrawn under section 47A of the Act, it shall be the cost for which such asset was acquired by it. Thus, in the present case, the cost for which the assessee has acquired the asset should be the cost of acquisition for the purpose of computation of deprecation. The decision in the case of Essar Oil Ltd. as above squarely covered the case of the assessee. Therefore, the A.O. is directed to take the cost of acquisition of such assets as have been acquired by it from M/s. Tata Motors Ltd. at the cost at which they have been acquired means the actual consideration paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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