TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 550
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....bmissions of the appellant, as well as the material on record substantiating that the appellant company had rightly and legally claimed the extra depreciation of Rs. 94,27,541/- by allocating the value of shares amounting to Rs. 7,42,69,500/- issued to the shareholders of M/s J.K. Synthetics Limited, to the cost of the fixed assets acquired by the appellant company from M/s J.K. Synthetics Limited. C. Whether on the facts and circumstances of the case the Tribunal has failed to appreciate that the appellant had also taken over the trade mark of the Cement Division of JKSL and the goodwill attached to the trade mark, being an intangible asset within the meaning of section 32(I), (II) of the Act and the depreciation is allowable over the same as prescribed in Appendix 1 to the I.T. Rules, 1962. As such alternatively, if the stand of the Revenue is accepted that the amount of Rs. 7,42,69,500/- is in respect of the goodwill, even then, the appellant is legally entitled for the extra depreciation of the amount as claimed by it in the revised return. D. Whether on the facts and circumstances of the case, the appellant, having acquired the business of M/s J.K. Synthetics Limited as a go....
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....ng Agency. A draft rehabilitation scheme was circulated, which envisaged the transfer of cement undertakings of the sick company to the assessee on the payment of the outstanding dues of the financial institutions and banks as consideration for the transfer. The scheme which was sanctioned by the AAIFR defined the expression 'Demerger' to mean the transfer by a slump sale through vesting under Section 18(6A) of the Sick Industrial Companies (Special Provisions) Act, 19856. The cost of the scheme was shown in Clause 'C' to be Rs. 510.39 crores including the issuance of equity shares of the assessee to the existing shareholders of JKSL in the amount of Rs. 7.44 crores. The means for financing the cost of the scheme, included goodwill in the cement undertaking for allotment of equity shares of the assessee to the existing shareholders of JKSL of Rs. 7.44 crores. Clause 'E' of the scheme, which was titled 'Rehabilitation Strategy', provided that the demerger of the cement undertaking of JKSL into the assessee was as a 'going concern' on as-is-where-is basis including all fixed assets and current liabilities and is as follows:- "(b) The demerger ....
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....e course of hearing, the learned AR of the assessee has submitted a copy of Balance Sheet as on 04.11.2004 with figures of assets and liabilities on that date being pre acquisition and post acquisition. As per the same, pre acquisition Fixed assets were nil and post acquisition fixed assets are shown at Rs. 56762.41 lacs and capital work in progress at Rs. 1423.60 lacs. Depreciation is not allowable on capital work in progress. So, maximum depreciation allowable is on assets of Rs. 56762.41 lacs. As per original chart of depreciation available on page 58 of the paper book, depreciation is calculated on assets of Rs. 567,62,40,544.27 with amount of depreciation of Rs. 72,32,58,987. But on page 59 of the paper book in the revised depreciation chart, the assessee has taken the value of asset at Rs. 575,05,10,044.63 with amount of depreciation of Rs. 73,26,86,528.73. We fail to understand that when as per the balance sheet, the value of post acquisition assets is shown at Rs. 56762.41 lacs, how it can go up for depreciation purpose. Therefore, in our considered opinion, maximum depreciation allowable is on assets of Rs. 56762.41 lacs, which is already allowed by the A.O. also. Extra de....
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.... Rs. 567.62 crores. However, a revised return was filed after the allotment of shares valued at Rs. 7.44 crores (the date of allotment being 10 March 2005), as a result of which, the value of the fixed assets increased to Rs. 575.05 crores, according to the assessee. The submission is that there was no reason or basis for the Tribunal not to allow the claim for depreciation and to allow the appeal of the Revenue merely on the ground that the value of the fixed assets had increased in the revised return from Rs. 567.62 crores to Rs. 575.05 crores. Reliance has been placed on the definition of the expression 'demerger' under Section 2(19AA) of the Act, which includes in Clause (iv), the issuance of shares in consideration of the demerger by the resulting company to the shareholders of the demerged company. On the other hand, it has been urged on behalf of the Revenue that the scheme defines the expression 'demerger' to mean a transfer by way of a slump sale through vesting under Section 18(6A) of the SICA. Reliance has been placed on the provisions of Section 18(6A) of the SICA which reads as follows :- "(6A) Where a sanctioned scheme provides for the transfer of an....