2013 (8) TMI 1118

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....led C.O. which is in support of the said order of the CIT(A).    2. Briefly the facts of the case are that in case of the  assessee  an assessment u/s 143(2) was completed on 14.11.2007 determining the book profit u/s. 115JB at Rs. 6,48,29,629/- and NIL under normal provisions of the Act for the Asst. Year 2005-06. The book profit u/s 115JB was computed after allowing the deduction of Rs. 1,71,88,763/- which included the loss of Rs. 1,51,06,838/- relating to a firm. Since the loss of Rs. l,71,88,763/- included the loss of Rs. 1,51,06,838/- relating to the firm which could not be allowed in the hands of the company u/s 115JB, the Assessing Officer issued notice u/s 154 of the Act.  3. Further, the Assessing Off....

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....nbsp;        ============ 4. In response to the notice u/s 154, the assessee filed letter dated 25.10.2010 enclosing therewith a copy of letter dated 25.5.2009 in which it was contended that as per provisions of Sec. 72A(6) of the Act, the losses erstwhile firm which was converted into a Company in accordance with provisions of Section 47(xiii) of the Act can be claimed set off while computing the income of the successor company.    5. The Assessing Officer did not accept the explanation of the assessee and held that there was a mistake apparent from record, and rectification order was passed by adding losses relating to 'firm' which was given set off in the computation for book profit u/s 115 ....

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....tus of a "Firm". The partnership firm was converted into a private limited company as M/s Shiv Keshav Transport Pvt. Ltd. w.e.f. 21.11.2000. As per the submissions of the appellant before the AO, during the assessment proceedings, the appellant has clearly stated that as per the provisions of Sec.72A(6), the accumulated loss and unabsorbed depreciation shall be deemed to be the loss/allowance of the Successor Company, and the appellant has calculated the book profit as per section 115JB and explanation 1 and 2 of section 115JB and as per parts of II and III of schedule VI of companies act, 1956, the accumulated loss and unabsorbed depreciation were taken into account as appeared in the balance sheet of the company i.e M/s Shiv Keshav Transp....

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....fit as per the provisions of section 115JB of the Act.  9. Aggrieved, the revenue is in appeal before us and the substantive grounds raised by the revenue are as under: "2. The learned CIT(A) erred in holding that action u/s 154 is not in accordance with law. 3. The learned CIT(A) also erred in allowing the appeal on merits holding that in view of provisions of section 72A(vi) r.w.s. 47(xiii), the loss of the firm has to be taken for the purpose of book profits computed u/s 115JB of the IT Act. 4. The learned CIT(A) ought to have confirmed the disallowance of set off of loss of the firm as the provisions u/s 115JB are separate in nature and normal provisions are not applicable." 10. We have heard the ar....