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TMI Blog2022 (1) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... company. In our considered opinion, on the facts and circumstances of the case matter needs to be remitted to the file of AO. The AO shall examine the issue afresh keeping in light of the finding of the Ld.CIT(A) that there should have been two returns for the period and for the part of the period the AO may not have jurisdiction. Furthermore, the provision of section 170 dealing with succession to business otherwise than on death has to be kept in mind by the AO. Accordingly, we direct the at the AO to examine the issue as per law without being influenced by other observation of the Ld.CIT(A) as above. Needless to add, assessee should be granted adequate opportunity of being heard. Revenue Appeal is allowed for statistical purpose. - I.T.A. Nos. 2696 And 2697/Mum/2019 - - - Dated:- 21-1-2022 - Shri Shamim Yahya (AM) And Shri Kuldip Singh (JM) For the Assessee : Shri Vijay Mehta For the Department : Shri Mehul Jain ORDER PER SHRI SHAMIM YAHYA (AM) :- These appeals by the revenue are against orders of learned Commissioner of Income Tax (Appeals)-33 and pertains to assessment years 2013-14 2014-15. 2. Since the issues are common and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt in the business of the company in any of the 3 previous year preceding the previous year in which the conversion took place should not exceed ₹ 60 lakhs AO further noted that the company, M/s Aachal Housing Pvt. Ltd. has not filed its return of income and the provisions of the Section 47(xiii)(b) remained to be examined in the hands of the Company i.e M/s Aachal Housing Pvt. Ltd. That in view of the above, the Assessing Officer of the Company is being informed accordingly. He held that since, during the year, the expenses in the hands of Company are shown to have been incurred in the hands of the M/s Aachal Housing LLP., the Work-in-progress at the end of the year is reduced to that extent. Hence the closing WIP is worked out as below:- Closing WIP in the hands of LLP as on 31/03/2013 ₹ 46,86,59, 329/- Less: Opening WIP in the hands of Company as on 01/04/2012 ₹ 38,56,25,373/- ₹ 8,30,33,956/- Less: Expenses in the hands of ₹ 30,11,532/- LLP during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet and profit and loss account for the period 01/04/2012 to 18/03/2013 belonging to company and for the period 19/03/2013 to 31/03/2013 belonging to LLP was filed separately. d) On perusal of copies of various letters submitted to the AO during course of assessment, it is found that the details of expenses for the entire financial year were submitted to the AO at different points of time. e) I am of the view that two different returns should have been filed i.e. one for the tenure of the company and second for the tenure of the LLP. This is obvious for the reason that the LLP cannot show transactions in its returns for the period when it was not in existence. Moreover, the form of ITR for filing return in case of company and LLP are different. However, this should be treated as procedural/ technical lapse and to correct the same, the AO in the assessment order had mentioned to inform the AO of the company to examine the requirements of section 47(xiii)(b). However, the balance sheet as on 31/03/2013 related to LLP reflecting position of assets and liabilities would remain the same unless there is adverse findings in case of company or LLP. The work-in- progress transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod 1.4.2012 to 18.03.2013 or any other period is given by the AO of the Company. The outcome of violation of provisions of section 47(xiii)(b) on conversion from company to LLP, if any, will have no impact on closing work in progress in the hands of the assessee LLP as on 31.03.2013. It can only create a separate tax liability. To change the figure of work in progress, a finding has to be given that certain expenses booked in work in progress was bogus or inflated. Without that, it is not-possible to change the figure of work in progress for any other reasons. In view of above, the disallowance of expenses of ₹ 8,00,22,424/- in the hands of the assessee LLP is hereby deleted. As a result, the assessee LLP is allowed to carry forward work in progress of ₹ 46,86,59,3297- as on 31/03/2013. The grounds are allowed. 6. We have heard both the parties and perused the records. We note that in this case, there was a conversion of the company into a limited liability partnership firm. Consequent upon the disallowances made by the AO, Ld.CIT(A) has given the finding that two different returns should have been filed. One for the tenure of the company and second for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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