TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 468
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....r debts of Fashion Brands International Inc. a subsidiary company and a separate legal entity, could not be allowed to be deducted from the profits of the assessee company. 2. The Ld. CIT(A) has erred on facts and in law by directing to delete addition of Rs. 98,196/- on account of Employee's contribution to PF/ESI fund made u/s 2(24)(x) read with section 36(1)(va) of the Act ignoring that the fact that these sums were deposited by the assessee in the employee's account in the relevant fund beyond the due dates prescribed under the relevant Acts. 3. The Ld. CIT(A) has erred on facts and in law by directing to delete addition of Rs. 18,53,000/- on account of sundry creditors of discontinued operations of Pharma Division of the company whic....
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....ad debt u/s 36(1)(vii) and claimed it. Before assessing officer an alternative plea was also made that in any case it was a business loss suffered by the assessee during the course of carrying on of its business. The assessing officer disallowed the claim on the ground that the loss was of a totally independent concern which was a separate entity i.e. FBII. The assessing officer was of the view that it was a trite proposition that losses or debts of the assessee company alone can be allowed u/s 37 or 36(1)(vii). Therefore it was disallowed. 3.1. Aggrieved, assessee preferred first appeal where the assessee relied on catena of judgments in its support as under: - CIT Vs. Dalmia Cement (B) Ltd. (2002) 254 ITR 377; - Kejriwal Enterprises Vs....
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....s to be upheld. 5. Ld. Counsel for the assessee on the other hand vehemently argues that it has not been disputed that the FBII was subsidiary of the assessee, established for promotion of assessee's leather business. The lower authorities have misconceived the facts in holding that the loss can be allowed only to FBII. The crucial fact which has been lost sight of by the assessing officer is that the entire financing to FBII was done by the assessee to promote its business of export of leather garments. In all the earlier years the transactions of the assessee with FBII have been allowed. Thus, the advances given by assessee to FBII on account of the expenses and working capital are simply business advances given by assessee to promote it....
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....e assessee is dismissed. 7. Apropos third ground i.e. addition qua the discontinued operations of pharma division sold under slump sale, brief facts are: The pharma division of the assessee company was sold by way of slump sale accepting the sundry creditors reflected in the books of accounts of the assessee totaling to Rs. 18,53,000/- which are listed in the CIT(A)'s order. The assessing officer had disallowed the same on the grounds: (i) The slump sale of capital asset was based on net worth which is aggregate value of the total assets of the undertaking as reduced by the value of liabilities. It was implied that these liabilities were already included in the sale and the assessee has necessarily claimed them. (ii) Business transfer ag....
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....aks the assessee duly explained the position vide letter dated 5/12/2008 filed before the AO (placed in the paper book at pages 1 & 2). Enclosures with the said letter relating to sundry creditors of Rs. 18,53,000 which are placed at pages 40 to 49. Details of liabilities aggregating to 18.53 lakhs which were not handed over to the vendee, as explained at page 40 of the paper book are: 1. Mitsuya Boeki Ltd. Rs. 15,13,382/- 2. Monarch Catalyst Pvt. Ltd. Rs. 78,398/- 3. Sundry creditor - Vita Life Rs. 1,64,805/- 4. Vita Misc. Collection Rs. 1,00,338/- 9.1. The amounts were due to the said company on account of raw material imported under LC opened by the assessee. The amount had been transferred from Vita Life books to the head office of....
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.... has been demonstrated to the assessing officer. The amount of sale consideration has been shown in article 5 of the business transfer agreement. Since these creditors were transferred on 30-11-2004 to the head office which is in the name of head of the assessee i.e. Apollo International Ltd., the liabilities have been clearly incurred by the assessee and they were not transferred by way of slump sale as misconceived by the assessing officer. Ld. CIT(A) has rightly appreciated the facts and after elaborate findings has allowed the claim of the assessee. 10. We have heard rival contentions and perused the material available on record. In our considered view the above mentioned facts have not been disputed by the assessing officer. The liabi....