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TMI Blog2021 (1) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, the same were charged to the continuing company and accordingly the Investment Division of EEPL incurred these expenses. Since these expenses do not pertain to the Investment Division in the computation of income of EEPL, the same has not been claimed as deduction. This fact is explained by assessee s counsel by drawing our attention to the computation of income filed in assessee s Paper Book. Computation of income of EEPL for AY 2013- 14 states that it had earned taxable income of ₹ 14,18,473/- and therefore, the loss finally available for set off in the hands of the assessee is ₹ 1,81,26,485/-. Even year-wise details of losses including the final loss available for set of in the hands of assessee after reducing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as CIT(A) erred in law as well as on the facts of the case in invoking the provisions of section 72A(A)(b) of the Act and thereby concluding that since 84.54% of the assets were retained by the appellant, being assets pertaining to demerged unit. Appellant is eligible to claim losses to the extent of 84.54% only amounting to ₹ 1,53,24,129/- in place of ₹ 1,81,26,485/- chimed by the appellant pertaining to the demerged unit. 2. That the AO and CIT(A) failed to appreciate that the entire loss of ₹ 1,81,26,485/-pertains only to the demerged unit and accordingly the facts of your appellant's case is squarely covered by provisions of section 72A(4)(a) of the Act. 3. The AO and CIT(A) failed to appreciate that the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r while framing assessment under section 143(3) of the Act made disallowance of set off of losses and restricted the claim of loss at ₹ 1,53,24,129/- as against claimed by assessee in the return of income at ₹ 1,81,26,485/-. Thereby the Assessing Officer disallowed the carry forward loss at ₹ 28,02,356/-. 5. Aggrieved, the assessee preferred appeal before the CIT(A) who also confirmed the action of Assessing Officer and dismissed the assessee s claim of carry forward of loss by observing common para-3.2.3 and 3.3 as under: 3.2.3 Along with present written submissions, the appellant has submitted ITR Computation of Income of EEPL since AY 2009-10 to AY 2014-15. The Business Income (Loss)/ Interest received offered u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been transferred to appellant company consequent upon said scheme of demerger/ amalgamation, the AO has correctly restricted the brought forward losses/unabsorbed depreciation of Sinnar Unit to 84.54% of total losses of EEPL, by invoking the provision of section 72A(4)(b) of the Act. 3.3 In view of above, the denial of set-off of losses to the extent of ₹ 28,02,356/- made by AO is hereby confirmed, and therefore, the grounds of appeal are dismissed. 6. Aggrieved against the action of Assessing Officer, assessee came in appeal before the Tribunal. 7. We have heard rival contentions and gone through the facts and circumstances of the case. Before us, the ld. counsel for the assessee first of all stated that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the unabsorbed business and depreciation loss pertains wholly and exclusively to the demerger unit and no part of the said expense is attributable to the investment division. It is not the case of the assessee which falls under the provisions of section 72A(4)(b) of the Act as EEPL was not maintaining separate books of account of its two units namely Investment Division and Sinner Unit, which is already the demerged unit, hence, it is not possible to said that the entire losses pertains to the said demerger unit. Even it is not mandatory as per section 72A(4)(a) of the Act that separate books of account are mandatorily required to be maintained and in this case assessee has clearly established that no part of the loss pertains to the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. The above facts discussed are very clear. It is a fact that this is a very small issue concerning disallowance of carry forward of loss of ₹ 28,00,000/-. We have noted that the Investment Division of EEPL has made profit in AY 2009-10 till AY 2012-13 as is seen from computation of income filed in the assessee s Paper Book. Hence, the question of reducing the losses of the Sinner Unit to the extent of losses pertaining to the Investment Division does not arise. We noted that the entire loss of ₹ 1,81,26,485/- set off of by assessee pertains only to the Sinner Unit of EEPL that was demerged with the assessee. The effective date of demerger is 01.4.2013 by the order of Hon ble High Court dated 01.08.2014. Accordingly, the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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