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TMI Blog2019 (1) TMI 1599X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 filed by the assessee. We observe that the appointed date 01- 01-2006 is the date on which the assets and liabilities of the transferer company vest in transferee company. The assessee has made compliance to the conditions stipulated in Rule 9C of the I.T. Rule which is the requirement of section 72A. After considering the above facts and circumstances, we are inclined with the decision of the CIT(A) that the date of amalgamation is 01-01- 2006, therefore, the brought forward losses and the unabsorbed depreciation have been rightly set off in assessment year 2006-07. Accordingly this ground of appeal of the Revenue is dismissed. Disallowance of sale promotion expenses - CIT(A) has deleted the said addition on the ground that in the aforesaid order u/s. 154 the addition was already made - HELD THAT:- It is noticed the aforesaid addition on account of disallowance of sale promotion expenses was made in the assessment order on 28-01-2013 u/s. 143(3)/153A/263 by the assessing officer stating that disallowance on sale promotion expenses was made as mentioned in the order u/s. 154. CIT(A) has deleted the said addition on the ground that in the aforesaid order u/s. 154 the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment order, the Assessing Officer will also consider the following points:- (i) On verification of the scheme of rehabilitation, it was noticed that the 'cut of date', the date for consideration of relief and concessions as envisaged In the scheme was taken as 30.9.2006. The 'appointed date' or the date of amalgamation was 1.1.2006. Effective date was the date on which the copy of sanctioned scheme by BIFR would be filed with ROC. It is noticed that M/s. Intas Pharmaceuticals Ltd has claimed brought forward losses of M/s. Dolphin Laboratories Ltd. in return of A.Y. 2006-07. The claim of such business losses amounts to ₹ 43,49,59,470/-. The A.O. has allowed the above claim of the assessee vide order u/s. 143(3)/153A dated 3O.I2.2009. The A.O. has also allowed the claim of unabsorbed depreciation of Dolphin Laboratories in AY 2006-07 and in A.Y. 2007-08. Thus the total benefit availed by the assessee company as a result of amalgamation of Dolphin Laboratories is of ₹ 51,53,11,326/-. In the reassessment proceedings, the A.O. would consider all the points as mentioned in the instant order and rework out allowable brought forward losses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward and set off of unabsorbed losses and depreciation; condonation of delay in filling of audited accounts. The BIFR has not directed as to what is to be done except regarding waiver of interest on penalty of delayed payment of income-tax dues. It has only directed the department of income-tax 'to consider' various aspects. On verification of details available with this office it appears that the then A.O. has not verified the following aspects and issues. Accordingly, the A.O. is directed to also verify and take note of the following points in reassessment proceedings :- (a) In pursuance of BIFR' directions, the D1T (Recovery) has issued direction vide their letter No. 2(1739)/DIT(R)/BIFR/2006-07/396 dated 28.04.2010. In these 'directions, the BIFR has clarified that field authorities may take necessary action as per law in the light of fact that no relief and concession has been allowed to the sick company or healthy company by this Directorate beyond the provisions of IT. Act. The A.O. should follow the directions of DIT(R). (b) As per the Scheme, the liabilities of loans from bank and creditors have been reduced from 11.39 crores to 3.90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was as per section 2(1B) of the income tax act. It was further stated that by the assessee that the accumulated losses and unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or as the case may be allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected and other provisions of this act relating to set off and carry forward loss and allowance for depreciation shall apply accordingly. The assessee has also placed reliance on the decision of Hon ble Supreme Court in the case of Marshal Sons Com. Ltd 223 ITR 809(SC). The assessing officer has not accepted the submission of the assessee. He has stated that the cut-off date for consideration of relief and concession as envisaged in the scheme has been taken as 30th Sep, 2006. The assessing officer was of the view that the assessee was not eligible for set off of brought forward losses of Dolphin Laboratory Ltd. in assessment year 2006-07.He stated that in the case of the assessee the date of amalgamation was 1.1.2006, however, the cut - off date was 30.09.2006 and the appointed date cannot be considered as cut off date. Consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the date of amalgamation and that the amalgamation has to be considered as effective from that date. It is submitted that the cut off date as envisaged in the scheme is for the concerned agencies to consider the relief and concessions before such cut off date i.e. 30-9-2006 and to raised objections, if any, before such date. However, since date of amalgamation i.e., appointed date is 1-1-2006, the appellant is entitled for set off of brought forward losses and depreciation of Dolphin Laboratories Ltd. as per said date of amalgamation. It is pointed out that it is not in dispute that the appellant had provided all the details as per rule 9C and that no defect has been pointed out by the A.O. in the assessment order. The A.R. has pointed out that the A.O. has in para 9.6 of the assessment order stated that the appellant had furnished details regarding fulfillment of condition as mentioned in Rule 9C of the income-tax Rules along with relevant details and such details are verified and placed on record. 11. Having considered the scheme of amalgamation as sanctioned by BIFR and the facts of the case and the relevant court decisions relied upon by the appellant, I am of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of asssesse to set off of business losses of M/s. Dolphin Laboratory ( the company which was merged with the assessee company) to the extent of ₹ 43,49,59,470/-. Subsequently, vide order u/s. 143(3)/153A r.w.s. 263 passed on 28-01-2013 the assessing officer has disallowed the claim of the set off of business losses of Dolphin Laboratories Ltd. on the ground that cut off date for amalgamation was 30-09-2006 and not the appointed dated 01-01-2016 for amalgamating Dolphin Laboratories Ltd. with the assessee company. It is noticed that BFIR has approved the scheme of rehabilitation of Dolphin Laboratory vide order dated 7th May, 2007. The assessee had claimed brought forward business losses and depreciation of said Dolphin Laboratory Ltd. The detail of such losses and deprecation claimed before/allowed in the assessment order are given as under:- Particulars Amount of Losses/ unabsorbed depreciation of Dolphin Laboratories Ltd. carried forward to A.Y. 2006-07 (in Rs.) Year in which the losses are allowed to be set off against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee was not eligible for the set off of the brought forward losses of Dolphin laboratories Ltd. in assessment year 2006- 07. The assessing officer has further held that total amount of ₹ 6,21,69,232/- as unabsorbed depreciation of Dolphin Laboratories Ltd and business loss of ₹ 40,07,36,522/- of Dolphin Laboratories is allowed to be carried forward in assessment year 2007-08. At the outset, we will discuss the nature of cut off date 30-09-2006. It is undisputed fact that it is the cut off date for consideration of following relief and concessions envisaged in the scheme:- A) Secured creditors B) Unsecured creditors C) The company (Dolphin Laboratories Ltd.) D) New promoters workers staff members of DLL. E) Central Govt. 1) Central Excise., Ahmedabad 2) D.G.F.T. Mumbai, Calcutta, Ahmedabad 3) Drug price equdiration cell, New Delhi 4) DGIT, New Delhi 5) DIT (Recovery), Department of Income-tax, New Delhi 6) Department of company affairs, New Delhi 7) Central provident fund commissioners F) State Govt. 1) Govt. of Guja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 250.00 (OTS) Working Capital from Laxmi Viias Bank 108.00 70.00 (OTS) Total Secured Loans 429.00 320.00 (OTS) Unsecured creditors 710.00 71.00 (OTS) Total Liabilities 1139.00 390.00 (OTS) 12. Rehablitation proposal through Merger The rehabilitation proposal submitted by DLL contemplates merger of DLL with IPL. DLL's performance over the years was not been satisfactory. DLL has been inclining operating losses and cash losses since 1997 mainly on account of gross under utilisation of installed manufacturing capacities. Since DLL is enviable on a stand-alone basis, it has been proposed to merge DLL with IPL. Any permanent employee of DLL, if found technically competent and suitable for the work culture of IPL and willing to join the employment of the IPL, shall become its employee' from the effective date of the merger without interruption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the transferee company. It was an amalgamation as per the Income Tax Act, 1961 therefore the assessee is entitled to set off of brought forward losses and depreciation of amalgamating company as per the provisions of section 72A of the act. The purpose of the cut of date of 30-09-2006 was the time limit for submission of objections/suggestions in respect of relief and concession. It is further noticed that the assessee company has also fulfilled all the conditions mentioned in Rule 9C of the I.T. Rule. The assessee has also submitted complete information in Form No. 62. The assessing officer has not disputed the non-fulfillment of any conditions after verification of the Form No. 62 filed by the assesse. In the light of the above facts, we observe that the appointed date 01- 01-2006 is the date on which the assets and liabilities of the transferer company vest in transferee company. The assessee has made compliance to the conditions stipulated in Rule 9C of the I.T. Rule which is the requirement of section 72A of the act. After considering the above facts and circumstances, we are inclined with the decision of the ld. CIT(A) that the date of amalgamation is 01-01- 2006, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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