TaxTMI 
TaxTMI 
2011 (5) TMI 1055
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....of account in the current year which has now been reversed. It was verified from ITMR 2000-01 that the amount claimed as advertisement expenditure was Rs. 1,26,43,819/- and not Rs. 12,64,381/- as stated by the assessee. In view of the above position, the amount to be added to the total income on account of this reason, worked to Rs. 1,13,79,438/-. Against this proposed addition, the assessee has made the following submission: (Rs. in lakhs) Actual expenses Treatment in Books of A/cs Advertisement expenses treated as expenditure (in books A.Y 2000- 01) 189.66 63.22 Treated as deferred revenue (in the books of account for A.Y 2000-01) 126.44 Amount claimed in income tax memo(189.66 - 63.22 lakhs) (Pertaining to A.Y 2000-01 expenses) 126.44 Deferred revenue expenses considered in books (18.66/5x(75.8663.33) 12.64 Amount reversed in income tax memo 12.64 4.3 In response to the assessee's reply the Assessing Officer has stated that "However the issues has been examined with the details furnished by the assessee. The assessee claimed advertisement expenses in dual manne....
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....er to determine the correct quantum of carry forward loss and has also directed to allow the same. In that way of the matter, the Revenue cannot be said to be aggrieved. Hence, we do not find any reason to interfere in this finding of the ld. CIT(A). 7. In the result, the appeal of the Revenue for assessment year 20001-02 is partly allowed for statistical purposes. I.T.A.No. 1389/Mds/2009 A.Y 2002-03 8. This appeal is directed against the order of the ld. CIT(A) dated 9.6.2009. 9. The first issue taken vide ground No.2 of this appeal is regarding bad debt written off amounting to Rs. 5,69,40,649/-. In the statement filed alongwith the return of income, the assessee has claimed this amount as bad debt. The Assessing Officer wanted the assessee to show that the debt has really become bad and any action taken on the part of the assessee to make recoveries of these debts but it is a fact that the amount has been written off as per the requirement of law. The ld. CIT(A) has agreed with the claim of the assessee because the assessee has written off the bad debt in its books of account as per the requirement of law and the issue now stands covered in favour of the assessee by ....
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....uired in a scheme of amalgamation; Fulfilled Fulfilled Fulfilled Fulfilled Fulfilled ii) Continues the business of the amalgamating company for a minimum period of five years from the date of amalgamation. Fulfilled Fulfilled Fulfilled Fulfilled Fulfilled iii) Fulfills such other conditions as may be prescribed to ensure the revival of the business of the amalgamating company or to ensure that the amalgamation is for genuine business purpose. Refer conditions under Rule 9C Conditions under Rule 9C: Y1 Y2 Y3 Y4 Y5 a) The amalgamated company, owning an industrial undertaking of the amalgamating company by way of amalgation, shall achieve the level of production of atleast fifty percent of the installed capacity of the said undertaking before the end of four years from the date of amalgamating and continue to maintain the said minimum level of production till the end of five years from the date of amalgamation; 50% level of production to be achieved before the end of 4^th year. No mandatory requirement for achieving the level of production in the first three years Fulfilled for some of....
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....id down in subsection(2) are not complied with, the set off of loss or allowance of depreciation made in any previous year in the hands of the amalgamated company shall be deemed to be the income of the amalgamated company chargeable to tax for the year in which such conditions are not complied with. From the above, it is clear that there is no mandatory requirement for achieving the level of production in the first year itself and the test starts only in the fourth year. As the assessee could not fulfill one of the condition under Rule 9C i.e. maintaining 50% level of production during the 5th year, the assessee has made an application to CBDT. Subsequently a Review Petition has been filed with CBDT. The matter is pending at their end. Thus for the Assessment Year in appeal (2002-2003) the appellant has satisfied all the requirements of Sec. 72A and Rule 9C and therefore the Carry Forward Loss/Unabsorbed Depreciation of the amalgamating company should be allowed to be taken over by the amalgamated company. As per Sec. 72A(3) the compliance/non compliance of the conditions have to I be seen every year and only in the year in which the conditions ....
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....g the provisions of Rule 9C of the Income-tax Rules, 1962 which would disentitle the assessee for the carried forward and set off of the business loss in respect of TTKL Biomed Ltd. due to the applicability of section 72A. The assessee also very well knew that it has violated the provisions of Rule 9C of the I.T. Rules insofar as on 29-03-2005 the assessee has approached the CBDT with the request for waiver of the conditions under Rule 9C of the I.T.Rules/72A of the I.T.Act and this was also rejected by the CBDT. After the issue of notice u/s.148 on 29.3.2007 the assessee had requested that the return originally filed may be considered as the return in response to the 148 notice after knowing fully well that it had made the request to the CBDT for the waiver of the condition imposed under Rule 9C of the I.T. Rules read with section 72A of the I.T.Act. The fact that the assessee has made the application to the CBDT for the waiver clearly shows that all the material facts necessary for the assessment were not truly and fully placed before the AO in the course of original assessment or in the return originally filed. In the circumstances, the reopening on this count would be valid eve....
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.... has failed to attain the requisite 50% production and the assessee has failed to comply with the provisions of section 72A of the I.T.Act read with Rule 9C of the I.T. Rules and consequently the assessee would not be entitled to the carried forward and set off of the depreciation and business losses. In the circumstances, the finding of the learned CIT(A) on this issue stands reversed and that of the AO restored. Thus ground Nos. 2.1, 2.2 and 3.3 of the Revenue's appeal stand allowed. 23. In regard to the submission that the unabsorbed depreciation was liable to be added to the written down value and depreciation granted thereon by following the decision of the Madras High Court in the case of CIT v. Silical Metallurgic Ltd., referred to supra, it is noticed from the agreement entered into by the assessee with London International Group (LIG) that the assessee has agreed in para 6 of the said agreement that the equipment relating to the manufacture of the rubber contraceptives lying with TTK Biomed Ltd. shall be dismantled and rendered unsuable for manufacture of rubber contraceptives and at the option of LIG the equipment may be sold/transferred to LIG or any of their as....