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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM
आदेश / O R D E R Per Dr. A.L. Saini, AM:
The captioned appeal filed by the Revenue and the cross objection filed by the assessee, pertaining to assessment year 2009-10, are directed against the order
M/s Hindusthan Udyog Ltd. ITA No.1776/Kol/2018& C.O. No.108/Kol/2018 Assessment Year:2009-10 passed by the Commissioner of Income Tax (Appeal)-4, Kolkata in appeal no. 115/CIT(A)-4/16-17 which in turn arise out of an assessment order passed by the Assessing Officer u/s 147 / 143(3) of the Income Tax Act, 1961 (in short the Act) dated 21/03/2016.
The grounds of appeal raised by the Revenue are as follows:
That on the fact and in the circumstances of the case the ld. CIT(A) erred in deleting the disallowance made by the Assessing Officer u/s 72A and Section 79 read with Rule 9C of the I.T. Act on account of brought forward loss from depreciation of amalgamated company.
That on the fact and in the circumstances of the case the ld. CIT(A) erred acknowledging and accepting all the contention made before him by the assessee without acknowledging the point raised by the Assessing Officer in assessment order.
The appellant craves for leave to add, alter / or amend any of the grounds of appeal before or at the time of hearing.
Brief facts qua the issue are that the assessee claimed set-off of carry forward business loss and unabsorbed depreciation in A.Y. 2009-10 to the tune of Rs. 569,45,331/- by filing Return of Income on 24.09.2009 and subsequently revised on 30.09.2009. The Assessing Officer issued notice u/s 148 dated 16.10.2014 and reopened the assessee`s case on the ground of claim of excessive set-off of carry forward business loss and unabsorbed depreciation. The main contention of the Assessing Officer is that in the immediately preceding A.Y. 2008-09, the return of income furnished by the assessee did not reflect the carry forward business loss or unabsorbed depreciation to the extent claimed by the assessee in A.Y. 2009-10. Therefore, the Assessing Officer proposed to disallow the same. However, in reassessment proceedings, the assessee explained to Assessing Officer that reopening of assessment u/s 147 of the Act is bad in law. The assessee filed written submission before AO, which is reproduced below:
M/s Hindusthan Udyog Ltd. ITA No.1776/Kol/2018& C.O. No.108/Kol/2018 Assessment Year:2009-10 By letter dated 28.01.2016: 4. The allegation against the co. is that it has claimed business loss and unabsorbed depredation in A.Y. 2009-10 without having corresponding claims in preceding assessment year. The assessee states that in A.Y. 2009-10 corresponding to previous year ending on 31.03.2009, a company named ACC Nihon Castings Ltd. (PAN: AACCA4961B) was merged with assessee-company by amalgamation through Calcutta High Court order dated 23.03.2009 and the carry forward loss and unabsorbed depredation of this company was available to the assessee-company and shown in return for future claim. Copy of High Court order, computation of income of assessee-company and copy of assessment order u/s. 143(3) dated 29.12.2010 showing working of carry forward loss are endorsed for your perusal and record. In view of this, it is apparent that the claim of carry forward of business loss and unabsorbed depredation have been rightly made by the assessee. By letter dated 03.02.2016: 2. The carry forward of loss and depreciation from the erstwhile ACC Nihon Castings Ltd. was claimed in the return of income as per direction of Calcutta High Court in the order of amalgamation dated 01.04.2009. The claim was made from copies of return of income of respective years of that company. Later, these losses, in the process of assessment varied to some extent This variation obviously was not known to the assessee at the time of filing ret urn of income. This became known only on completion of assessment of the said company - ACC Nihon Nirman Ltd. Thus, the assessee filed the claim of losses on the basis of genuine and true data available at the time of filing return of income. The variation of such loss due to variation on assessed income or loss cannot be submitted in the Return of income earlier. This action cannot be called concealment nor inaccuracy, inviting issuing of notice u/s. 148. 3. The allowance of set-off of business loss/depredation are within the domain an prerogative of the AO to be exerted during assessment proceedings. The assesseerequired to inform the AO about the A. Yrs. and claim of loss/depredation. Assesse loss/depredation cannot be shown in timely submitted returns of income, as the assessment results are available much later. In any case, the adjustment/set-off carry forward business loss or unabsorbed depredation in A.Y. 2008-09 are not beyond the amount of benefits assessed for carry forward as per last assessment order of ACC Nihon Castings Ltd. Thus, the allegation that in A.Y. 2008-09, any extra benefit has been availed by the assessee is not tenable.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the following:
“I have heard the A/R at length, considered all arguments and perused all records available including the case records. The assessee company is engaged in the business of manufacture and sale of casting materials. For the purpose of expanding its geographical and operational capacity, and to achieve economy of Page | 3
M/s Hindusthan Udyog Ltd. ITA No.1776/Kol/2018& C.O. No.108/Kol/2018 Assessment Year:2009-10 scale, it decided to amalgamate ACC Nihon Castings Ltd., an existing company engaged in same line of casting business. The amalgamation was approved by an order of Calcutta High Court dated 23.-3.2009 where the appointed date of amalgamation is 01.04.2008. The amalgamating unit, ACC Nihon Castings Ltd, before amalgamate on, was not running well and had carry forward business loss as per assessment order dated 29.12.2010 passed by ACIT, Circle-7, Nagpur. The assessee, being the amalgamated company, claimed this carry forward business loss for set-off against its profit, for the first time in A.Y. 2009-10 on the ground that the effective date of amalgamation is 01.04.2008 and corresponding previous year ending is 31.03.2009. This basically is the reason why, without having any business loss or unabsorbed depreciation in earlier A. Yrs., the assessee company has claimed set-off of carry forward business loss or unabsorbed depreciation for the first time in A.Y. 2009-10. Thus, the assessee has correctly made its claim of set-off business loss and unabsorbed depreciation of erstwhile ANCL in its return of income for A.Y. 2009-10 as provided in s. 72A, specifically in cases of amalgamation.The conditions prescribed in s. 72A have also been fulfilled as explained by the assessee and supported by documentary evidence. The respective audited statement of accounts of both Hindusthan Udyog Ltd. (HUL) and ACC Nihon Castings Ltd.(ANCL) for the relative periods show that 75% of fixed assets of either company have not been disposed off during a period of three years before or five years after the date of amalgamation. From the audited statement of accounts of ACC Nihon Castings Ltd. it is evident that the company continued with its casting business in preceding three financial periods which are year ending 31.12.2005, 31.12.2006, and fifteen months ending 31.03.2008. It is similarly evident from the audited accounts of HUL that the business of casting has been continued for all five years of F.Y. 2008-09 to 2012-13. It has also been shown that the amalgamated company HUL has reached a production level of 2981 MT which is more than 50% of the capacity of the amalgamating company ANCL. The capacity of production of ANCL is 3000 MT per year and the production of HUL in the years 2008-09 onwards is more than 2000 MT of casting as shown in the audited statement of accounts. In respect of stipulation contained in 72A(2)(b)(iii) regarding furnishing of CA Certificate in Form 62 as per Rule 9C, the same was furnished before me. It was explained that the certificate could not be filed with Return of Income as at the relevant year, the scheme of furnishing of return was made annexure less. The filing of Form 62 in terms of Rule 9C, being only directory and not compulsory, it is not mandatory to file the same alongwith the return, particularly when the filing of return has been made annexure less. In this view, the filing of Form 62 is accepted. The compliance of this Rule 9C is, therefore, considered complied with. 3.4. In the backdrop of aforesaid findings which are essentially finding of fact, the answer of the quest on that why the assessee claimed set-off of balance loss and unabsorbed depredation in A.Y. 2009-10 in spite of having no such loss or depreciation in earlier A.Y. 2008-09, is found and that is because of the process of amalgamation. Thus, the initial reasons recorded in writing as expressed in assessment order to the effect that income escaped assessment because of claim of set-off of business loss and depreciation in A.Y. 2009-10 is found to be not based on facts. The fact that the carry forward balance loss and unabsorbed depreciation are available to assessee because of amalgamation with ANCL as per High Court Order dated 23.03.2009 is also within the knowledge of the AO. After obtaining this information with documentary backup, the assessee was not Page | 4
M/s Hindusthan Udyog Ltd. ITA No.1776/Kol/2018& C.O. No.108/Kol/2018 Assessment Year:2009-10 given opportunity to establish its claim by way of compliance of legal provisions. Now that the same has been established, I am inclined to hold that the set-off of carry-forward business loss and unabsorbed depreciation as claimed by assessee in its return of income for A.Y. 2009-10 is correct. The ground of appeal No. 3 and 4 are therefore allowed. The AO is directed to allow set-off of business loss as claimed by the assessee.
Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us and assessee is in cross objection before us.
The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the ld. Counsel for the assessee has defended the order of the ld. CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that assessee company is engaged in the business of manufacture and sale of casting materials. For the purpose of expending its geographical and operational capacity and to achieve economy of scale, it decided to amalgamate ACC Nihon Castings Ltd., an existing company engaged in same line of casting business. The amalgamation was approved by an order of Hon’ble Calcutta High Court dated 23.03.2009 where the appointed date of amalgamation is 01.04.2008. The assessee claimed set off of balance loss and unabsorbed depreciation in A.Y. 2009-10 because of process of amalgamation. The amalgamation with ANCL as per High Court order dated 23.03.2009 was also within the knowledge of the Assessing Officer, hence there is no tangible material to reopen the assessment. Therefore, we do not find any infirmity in the order of ld. CIT(A), his order on this issue, is hereby accepted and grounds of appeal raised by Revenue is dismissed.
We note that the ld. CIT(A) has deleted the addition made by the Assessing Officer andwe have confirmed the order of the ld. CIT(A) and dismissed the appeal of the revenue. The assessee in its cross objection has raised the grounds
M/s Hindusthan Udyog Ltd. ITA No.1776/Kol/2018& C.O. No.108/Kol/2018 Assessment Year:2009-10 relating to technical issue of reopening of assessment u/s 147 of the Act. Since, we have confirmed the order of the ld. CIT(A) therefore, the technical grounds raised by the assessee in its cross objection becomes infructuous and does not require any adjudication.
In the result, the appeal of the Revenue is dismissed and the cross objection of the assessee is also dismissed as rendered infructuous.
Order pronounced in the Court on 21.02.2020
Sd/- Sd/- (S.S.GODARA) (A.L.SAINI) �या�यकसद�य / JUDICIAL MEMBER लेखासद�य / ACCOUNTANT MEMBER �दनांक/ Date: 21/02/2020 (SB, Sr.PS)
Copy of the order forwarded to: 1. DCIT, Circle-11(1), Kolkata 2. M/s Hindusthan Udyog Ltd. 3. C.I.T(A)- 4. C.I.T.- Kolkata. 5. CIT(DR), KolkataBenches, Kolkata. 6. Guard File.