TaxTMI 
TaxTMI 
2017 (11) TMI 1662
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....ff of the carried forward business losses by holding that there is a common management, administration, organization, funds, employees and unity of control thus there is a interlacing, interdependence and interconnection between the manufacturing, trading and commission activity of the assessee, merely on the basis of written submissions specifically when the assessee failed to substantiate its claim by way of documentary evidences during the set aside assessment/Appellate proceedings? (iv) Whether the tribunal was legally justified in allowing the set off of business loss when for the immediately preceding year i.e. AY 1993- 94 the Assessing Officer disallowed the set off of brought forward business loss which was confirmed by the CIT(A) and no appeal was preferred by the assessee before the tribunal? 3. The facts of the case are that the assessee company was earlier carrying on three activities i.e. manufacturing, trading of manufacturing goods and commission. In the A.Y. under consideration, the assessee could not carry out any activity of manufacturing and trading of manufactured goods. It had earned profit of Rs. 70,63,640/- from commission and some other sources. The asse....
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....manager and other staff of the company who were looking after the manufacturing and commission activity were same during the earlier assessment years. To look into the set aside issue, the assessee's AIR was asked to specifically produce minutes books of the company and loan agreements from the bank for loans taken and documents of the subsidy received. The assessee's AIR vide his reply dt. 16.11.06 submitted that the issues set aside do not require production of minutes book and he did not produce the same. The minutes book was required to see that regarding the various activities of the assessee, who took all the decisions. It would have also shown that who was entrusted the job of carrying out the various activities at the managerial level. This would have provided insight that whether the assessee had common form of organization and common management. Moreover, the unity of control in the organization would also have been verifiable from the minutes book. The non submission of Minutes book despite specifically having been asked to do the same shows assessee's reluctance in getting the facts verified despite the Hon'ble ITAT directions for the same. The assessee's AIR also....
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....fore the ld. CIT(A) and Hon'ble ITAT also. The Hon'ble ITAT set aside the matter to the file of the Assessing Officer to verify from records the substance in the claim of the assessee. As discussed above the assessee has failed to prove the same. Moreover, assessee did not prefer second appeal against the first appellate order denying the similar claim in the A.Y. 1993-94. Therefore, it is deduced that the assessee does not have common fund, common form of organization, common management and unity of control and hence, no interconnection, inter-locking and interdependence between the two activities of the company." 5. However, the CIT(A) has observed as under:- (c) Now coming on the merit of the case, the arguments of the counsel carries much substance in regard to the "closure of the business" and the "closure of the unit". The "Unit" and the "business" of the assessee are two separate and distincy entities. One business may have several units and the closure of one unit necessarily will not lead to the inference that there is a closure of the business. In the instant case, it is indisputable fact that the factory of the assessee company has been taken over by RFC in the month ....
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.... in the case of Setab Gunj Sugar Mills v/s Commissioner of Income- Tax 41 ITR 72 (SC) as relied upon by the learned counsel. These information goes to establish in an unequivocal terms that there is a common management, unity of control, common funds, common place of business, common set of books of accunts, common organization and common administration and thus there is a interdependence, interlacing and interconnection between the activities carried on by the assessee company. The facts of the case of CIT v/s SM Ahmed Hussain's case 164 ITR 525 (Mad) (para number 26.a supra) squarely applies to the case in hand, wherein distribution of cinema films and purchase and sale of national Defence Remittance Scheme certificate were being carried on by the assessee. After the closure of the sale and purchase of National Defence Remittance Scheme and the loss suffered therein, it was allowed by Tribunal and confirmed by Honourable madras High Court on the ground that transaction of both the business had been entered in a single set account books and the funds required for the two activities had also come from a common source, there was unity of control and management in respect of the two ....