TaxTMI 
TaxTMI 
2004 (10) TMI 72
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....se, the depreciation was correctly allowed on factory and non-factory buildings purchased from Dalmia Cement (Bharat) Ltd. which had ceased to be a holding company in the assessment year 1976-77?" The same question has been raised for other assessment years, namely, 1977-78, 1978-79, 1979-80, 1980-81, 1981-82 and 1982-83. The undisputed facts are required to be noted, which are as under: For the previous year ending on June 30, 1974 relevant to the assessment year 1975-76, the assessee purchased on payment, factory buildings for Rs. 16,24,355 and non-factory building for Rs. 3,75,202 from its holding company, namely, Dalmia Cement (Bharat) Ltd. Since the written down value of these buildings in the hands of the holding company was ....
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....equired to be examined by the Tribunal. The reasoning given in paragraph 3 of the Tribunal's order for the assessment year 1976-77 is as under: "After examining the provisions of law and carefully going through the decision of the Supreme Court in the case of Maharana Mills [1959] 36 ITR 350, we find that the claim of the assessee-company is not tenable. The decision of the hon'ble Supreme Court would be applicable in a case where the working of WDV in an earlier assessment was wrongly made. In the present case the working of WDV and allowance of depreciation in the assessment year 1975-76 was in accordance with law. The Delhi Bench 'A' of the Income-tax Appellate Tribunal had in its decision in I.T.A. No. 4606 (Delhi)/80 dated August 11....
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....olding company? Chapter IV of the Act refers to computation of business income and section 43 is required to be examined for the purpose of deciding this matter. Section 43(1) of the Act which defines actual cost reads as under: "(1) 'actual cost' means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority: Provided that where the actual cost of an asset, being a motor-car which is acquired by the assessee after the 31st day of March, 1967 but before the 1st day of March, 1975, and is used otherwise than in a business of running it on hire for tourists, exceeds twenty-five thousand rupees, the excess of the actual cost....
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....company had continued to hold the capital asset for the purpose of its business." There is no dispute that the case falls under clause (iv) of section 47. Therefore, it is clear that the actual cost would be the written down value of the transferor-company. This aspect is required to be borne in mind while considering the question. We will now have to turn to Explanation 6 to section 43(1) which reads as under: "Explanation 6.- When any capital asset is transferred by a holding company to its subsidiary company, or by a subsidiary company to its holding company, then, if the conditions of clause (iv) or, as the case may be, of clause (v) of section 47 are satisfied, the actual cost of the transferred capital asset to the transferee....
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.... as suggested by counsel for the assessee ..." Thus in view of Explanation 6 the written down value of the holding company is required to be taken into consideration. Learned counsel for the assessee submitted that the difference between the WDV and the price received for the property has been taxed in the hands of the holding company in the relevant assessment years and there is no dispute on this issue. In view of this, it was submitted that the Revenue cannot have tax benefit at both the places, namely, in the hands of the parent company and at the hands of the assessee. It was thus submitted that there is no evasion of tax. On behalf of the assessee it was contended that actual cost is not static and it is required to be determ....