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TMI Blog2020 (1) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 - - - Dated:- 10-1-2020 - Shri C.N. Prasad, Hon'ble Judicial Member And Shri Rajesh Kumar, Hon'ble Accountant Member For the Assessee : Shri Ronak G. Doshi And Ms. Niyanta Mehta For the Department : Ms. Kavita P.Kaushik ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the revenue against the order of the Learned Commissioner of Income-tax (Appeals) 12, Mumbai [hereinafter for short Ld. CIT(A) ] dated 01.09.2016 for the A.Y. 2009-10. 2. Revenue has raised the following grounds in its appeal: - 1. On the facts and circumstances of case and in law, the Ld.CIT(A) erred in deleting the addition made by the assessing Officer on account of Bogus purchase of ₹ 31,200/-ignoring the fact that the party, M/s Ritesh Corporation had indulged in providing accommodation entries only. . 2. On the facts and circumstances of case and in law, the Ld.CIT(A) erred in quashing the reopening proceedings without appreciating the fact that the several courts have accepted that mere calling for of information and keeping the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessment and therefore Ld. CIT(A) is not justified in holding that reopening is bad in law. On the other hand, the Ld. Counsel for the assessee supported the order of the Ld.CIT(A) and also filed submissions. 6. We have heard the rival submissions and perused the orders of the authorities below. On a perusal of the assessment order, we find that assessment was reopened for the reason that the assessee made bogus purchases to the extent of ₹.31,200/- and also set off of its carry forward and brought forward unabsorbed loss and deprecation relating to amalgamating company which according to the Assessing Officer is not permissible. The Ld. CIT(A) considering the submission of the assessee and taking note of the fact that the assessment was completed u/s. 143(3) of the Act originally and during the course of such assessment proceedings assessee has filed all the relevant details in respect of set off of unabsorbed losses and depreciation relating to amalgamating company and also furnished copy of the High Court order approving the scheme of amalgamation, Ld. CIT(A) held that reopening was done merely on change of opinion and not based on any material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mated company are the 10% cumulative redeemable preference shares. The AO has noted that the preference share do not carry voting right except on the matter of fixed dividend, therefore, AO held that the amalgamating company does not have voting right, hence section 79 of the I T Act are not satisfied. Hence, incorrect allowance of loss of ₹ 7.03 cr has resulted in under assessment of income by ₹ 2.68 cr under normal provision and thereby resulted in excess carry forward of MAT credit by the same amount to succeeding assessment year. It is also noticed that the AO has taken separate working for setting off of carried forward of loss, unit wise, first set off the loss against the 80IC unit and balance loss against 80IB unit and 30% profit arrived after setting of the balance loss under chapter VA is reduced and arrived at taxable profit of 80IB and A.O. has worked out the tax at the rate of 33.99% at ₹ 1.20 cr. This is not taken at the time of finalization of the reassessment order. The AO has not discussed the issue of change in opinion in the order for rejecting the objection for reopening the assessment. The AO has relied on the decision of Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion though it was not mentioned in the assessment order. Now, it is necessary to consider, whether it was overlooked or A.O. has plainly ignored the material in arriving at the assessment. Therefore, it is necessary to reproduce section 79, at the relevant time here, which is as under :- Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested, no loss~ incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless- (a) on the last day of the previous year the shares of the company carrying not less than fifty-one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred [ * * *]: -[Provided that nothing contained in this section shall apply to a case where a change in the said voting power takes place in a previous year conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses accumulated profits- ; In section 2(22)(e), the words are same but it specifies that it is not applicable to the shares entitled to a fixed rate of dividend. But this is not appearing in section 79. If the intention of Legislature is to give benefit only to the person having 51% voting power who held only the equity shares, then it must be mentioned in section 79 but section 79 does not speak about the equity shares, only, it speaks about the beneficiary held the shares having 51 % voting power. It also , does not specify which voting power. Further, in my opinion, principal of beneficial interpretation would apply in such circumstance. The Hon'ble Bombay High Court in the case of Indian Rayon Corporation reported in 231 ITR 26 held that The principle of beneficial interpretation applies only when there is reasonable and genuine doubt in regard to the interpretation of a particular provision. It has no application to a case where the provision is clear and the law is well-settled. It cannot be stretched too far. It cannot be used to misinterpret a statutory provision which is otherwise clear and brooks no doubt about its meaning or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes effect on date of transfer specified in scheme and not on date of courts order. From the date, income of subsidiary company belongs to holding company- during the period of effective date as provided in the scheme of amalgamation to the date of order of High Court approving such scheme, amalgamating company is deemed to have conducted business on behalf on the amalgamated company. Similarly, Hon'ble Kolkata IT AT in the case of NLC Nalco India Limited v/s DCIT (2015(10) TMI 2236) held that revised return reflecting the consolidated result of the amalgamated entity was filed beyond the permissible time limit u/s 139(5) of the Act, was due to the fact of delayed passing of the order of the High Court approving the scheme of merger. This delay is definitely not attributable to the assessee and it is not within the control of the assessee. In view of the aforesaid decision and the peculiar facts circumstances of the instant case, it cannot be held that the AO has not made opinion but it is clear in view of the above discussion, I find merit in the submission of the appellant. Therefore, Ground No.1 of the appeal is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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