Tribunal remits case back for fresh assessment after considering exclusion of demerged units' financials.

The Tribunal allowed the appeal for statistical purposes, remitting the issues back to the Assessing Officer for fresh adjudication. The Tribunal held that the CIT(A) should have considered the grounds seeking exclusion of income and expenditure related to demerged units to implement the Rehabilitation Scheme approved by BIFR. The importance of assessing revised financial information in cases involving regulatory schemes like BIFR was emphasized, highlighting the necessity for fair evaluation based on updated financial data and proper consideration of additional grounds raised by the assessee.

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Issues:
Admission of additional grounds of appeal seeking exclusion of income and expenditure relating to demerged units to implement a Rehabilitation Scheme sanctioned by BIFR.

Analysis:
The appeal pertains to the assessment year 2007-08 and challenges the orders of CIT(A) dated 25.11.2011. The assessee sought admission of additional grounds of appeal related to the exclusion of income and expenditure concerning demerged units to give effect to a Rehabilitation Scheme approved by BIFR. The assessee company, declared a sick industrial company by BIFR, submitted a revised rehabilitation scheme involving the demerger of 3 units. Despite delays, the rehabilitation scheme was eventually implemented. The original return of income filed by the assessee did not reflect the revised scheme's impact, resulting in a loss declaration of Rs. 1472.56 lacs, later revised to Rs. 43.58 lacs. The assessing officer's assessment order was based on the original return figures. The revised financial statements were submitted to the CIT(A) as additional evidence under Rule 46(A) of the Income Tax Rules, but the CIT(A) did not adjudicate the additional grounds.

The Tribunal found merit in the assessee's plea to consider the issues in light of the revised return and figures. Consequently, the additional grounds were admitted, and it was held that the CIT(A) should have adjudicated the grounds seeking exclusion of income and expenditure related to demerged units. The issues were remitted back to the Assessing Officer for fresh adjudication, with instructions to provide the assessee a proper opportunity to be heard and consider the revised submissions. As a result, the appeal was allowed for statistical purposes.

This judgment emphasizes the importance of considering revised financial information in assessing income and expenditure, especially in cases involving rehabilitation schemes sanctioned by regulatory bodies like BIFR. It underscores the need for proper adjudication of additional grounds raised by the assessee to ensure a fair and accurate assessment based on updated financial data.

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