Tribunal allows appeal for statistical purposes, remits case to Assessing Officer for fresh adjudication. Order pronounced on 13th December 2017.

The tribunal allowed the appeal for statistical purposes, remitting the case to the Assessing Officer for fresh adjudication in accordance with specific directions provided by the tribunal. The order was pronounced on 13th December 2017.

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Issues Involved:
1. Legality of the assessment order under section 143(3) dated 28.12.2010.
2. Claim for deduction of Rs. 4,83,48,034 for the assessee's share of brought forward deficiencies.
3. Applicability of section 72A(4)(a) versus section 72A(4)(b) for bifurcation of brought forward deficiencies.

Issue 1: Legality of the Assessment Order
The appellant contended that the assessment order under section 143(3) dated 28.12.2010 was "bad in law and deserved to be quashed." However, this specific issue was not elaborated upon in the judgment, implying that the primary focus was on the subsequent issues regarding the bifurcation of deficiencies.

Issue 2: Claim for Deduction of Rs. 4,83,48,034
The appellant argued for the deduction of Rs. 4,83,48,034 as their share of brought forward deficiencies. The Assessing Officer (AO) and the CIT(A) both rejected this claim. The AO noted that the appellant had not maintained separate accounts for the two divisions (B2B and B2C) and had only provided a "working of bifurcation" post the show-cause notice. The AO deemed this bifurcation as arbitrary and an afterthought, lacking substance and merit. The CIT(A) concurred, stating that the bifurcation of expenses was without basis, not audited, and unverifiable due to the absence of separate accounts for the demerged and remaining businesses over the years.

Issue 3: Applicability of Section 72A(4)(a) vs. Section 72A(4)(b)
The core dispute revolved around whether section 72A(4)(a) or section 72A(4)(b) applied for bifurcating the brought forward deficiencies. The AO applied section 72A(4)(b), which requires apportionment based on the ratio of assets retained and transferred, resulting in a 3:2000 ratio in this case. The appellant claimed that section 72A(4)(a) should apply, arguing that the losses were directly relatable to the B2B operations retained by the demerged company. The AO and CIT(A) rejected this, emphasizing that the appellant had not maintained separate accounts and that the bifurcation provided was an afterthought. The CIT(A) further noted that the appellant's effort to bifurcate expenses lacked any basis and could not be verified, thus upholding the AO's approach.

Tribunal's Analysis and Decision
The tribunal examined the legal basis for bifurcation under section 72A(4). It highlighted that if the brought forward losses and unabsorbed depreciation are directly relatable to the transferred undertakings, they should be carried forward in the hands of the resulting company per section 72A(4)(a). The tribunal criticized the lower authorities for dismissing the appellant's explanations without proper examination and for relying on generalizations. It stated that the explanations should be examined on merits, and if found valid, should be accepted.

The tribunal concluded that the matter required a fresh adjudication by the AO, considering the tribunal's observations. The AO was directed to issue a speaking order, addressing specific justifications for bifurcation provided by the appellant, after giving a fair and reasonable opportunity of hearing.

Conclusion
The appeal was allowed for statistical purposes, and the case was remitted to the AO for de novo adjudication in accordance with the tribunal's directions. The order was pronounced in the open court on 13th December 2017.

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