TaxTMI 
TaxTMI 
2020 (1) TMI 560
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are filed by the revenue and assessee against different orders of the Learned commissioner of Income-tax (Appeals) - 28, Mumbai [hereinafter for short "Ld. CIT(A)] for the A.Ys. 2012-13 to 2014-15. 2. The revenue in its appeals raised the following common grounds for all the assessment years i.e., A.Y. 2012-13 to 2014-15. 1. "On the facts & circumstances of the case and in law, the learned CIT(A) has incorrectly allowed the set off of unabsorbed depreciation of the deceased person in the hands of the legal heirs based on section 78(2) of the I. T. Act, whereas, under section 78(2) of the Act only losses are allowed to set off and not any unabsorbed depreciation in the hands of the legal heirs." 2. "On the facts & circu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng that Late Mr. Virchand Narshi Soni expired on 08.12.2008. He was carrying on the business under the name and style of Narshi Nanshi & Sons as a proprietor. Assessee submitted that after his demise his legal heirs continued the same business as a partnership firm w.e.f. 09.12.2008 under the same trade name using the same place of business, telephone lines etc. It was also submitted that business recoveries are affected in the firm's name and the subsisting transactions are cleared and the assets of the business are utilized in clearing the liabilities by the heirs in the process of carrying on the business as successors through partnership firm. Therefore, it was contended that as per the provisions of the section 78(2) of the Act the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cern against partnership firm has been denied by the Assessing Officer on the ground that the firm cannot claim setoff of unabsorbed depreciation of the proprietary concern. Ld. CIT(A) following the decision of the Hon'ble Supreme Court in the case of the CIT v. Madhukant M. Mehta (supra) allowed the claim of the assessee since there was a succession by the partnership firm from the proprietary concern and the provisions of the section 78(2) of the Act provides for set off of unabsorbed loss/depreciation in cases of inheritance. 8. The Hon'ble Supreme Court in the case of the CIT v. Madhukant M. Mehta (supra) held as under: - "4. Madhukant M. Mehta was carrying on proprietary business of speculation in shares, cotton and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed on under the partnership deed, there was an interval of less than one month between the death of the deceased and the date from which the assessee had carried on the business, and such interval even reckoning the partnership to have commenced from the date of the deed of partnership could not be regarded as longer unusual in a case where succession is claimed to have taken place by inheritance on the death of the deceased. (ii) The nature of the business was identical, namely, speculation business, which was being" carried on by the deceased. (iii) The business name continued to be the same. (iv) The business was carried on in the same premises. (v) The same telephone which was being used by the deceas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assets of the business were utilised in clearing the liabilities by the three heirs in the process of carrying on the business as successors." 6. Shri Shukla, learned senior counsel appearing for the Revenue, in support of the appeals, has invited our attention to the decision of this court in Saroj Aggarwal v. CIT [1985] 156 ITR 497, wherein this court has dealt with the question regarding applicability of Section 78(2) of the Act in the context of succession to the business of a deceased partner in the partnership. In that case, this court has approved the decision of the Bombay High Court in CIT v. Bai Maniben [1960] 38 ITR 80, wherein the High Court has observed that the conclusion of the Tribunal as to whether there was succ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bjections filed by the assessee for the Assessment Years 2012-13 to 2014-15. 12. The first common ground in the cross objection is that the Ld. CIT(A) erred in rejecting the additional ground in respect of expenses/debts which were not claimed in the return of income. 13. Ld. Counsel for the assessee submitted that Ld. CIT(A) did not admit the additional ground following the decision of the Hon'ble Supreme Court in the case of the Goetze ruling [284 ITR 323]. Placing reliance on the decision of the Hon'ble Bombay High Court in the case of the CIT v. Prudvi Brokers & Shareholders Pvt. Ltd [349 ITR 396], Ld. Counsel for the assessee submitted that additional ground raised by the assessee should have been admitted and disposed of....