TaxTMI 
TaxTMI 
2015 (1) TMI 1447
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....oned all this in the statement of accounts could not necessarily amount to disclosure within the meaning of explanation Ito the Proviso. 1.3. He also erred in relying upon the decision of jurisdictional High Court in the case of Dr. Amin's Pathology Laboratory (252 ITR 673) in as much as the same was distinguish -able on the facts and in law. 1.4. The Appellant prays that it be held that initiation of reassessment proceedings was bad-in-law or otherwise void and as such liable to be quashed. 2. 1The CIT (A) erred in confirming the action of the A. O. in not reducing the amount of Rs. 2, 96, 83, 027/-being lower of the brought forward business loss or unabsorbed depreciation of SSAPL taken over by the appellant at the time of amalgamation of SSAPL with the assessee while computing the book profit u/s. 115JB of the Income-tax Act, 1961("the Act") on the alleged ground that the said amount had been capitalized and considered as goodwill. 2.2. He also erred in not appreciating the correct fact that the write off of Goodwill amount was not claimed as deduction under the I. T. Act in the subsequent years and as such not resulted into double benefit to the assessee. 2.3. The App....
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.... 03. 2008. Reasons recorded by the AO read as under: "Assessee Company filed its Return of Income on 28. 11. 2003 declaring total loss of Rs. 9, 04, 45, 2081-. Order u/s. 143(3) was passed on 30. 11. 2005 assessing loss of Rs. 4, 01, 18, 369/-. As per section 115JB of the Income-tax Act, 1961 We computing hook profits for the purpose of this section, one of the deduction allowable from net profit is the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of accounts. Return filed by the assessee for A. Y. 2003-04 was assessed u/s. 143(3) on 30. 11. 2005 determining nil income under normal provisions and at Rs. 10, 71, 26, 930/- under spec/at provisions of Section 1 I5JB, a deduction of Re. 8, 85, 53, 473/- was a//owed to the assessee towards unabsorbed depreciation as per books. From the books of accounts for the year ended 31. 03. 2003 (after merger of Schenectady Specialties Asia P. Ltd(SSAPL w. e. f. 27. 09. 2002), it was seen that unabsorbed depreciation brought forward as per books of accounts was only Rs. 6, 88. 70, 446/-. Hence there was excess deduction allowed to the assessee amounting to Rs. 2, 96, 83, 027/-. As there is a fai....
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....f the assessee, the FAA held that the assessment had been reopened for the reason that excess deduction was allowed to the assessee amounting to Rs. 2, 96, 83, 027/-, that it was not legally entitled to get the deduction, that the reasoning for reopening the assessment fell within the ratio of the judgment of the Hon'ble Bombay High Court in the case of Dr. Amin's Pathology Laboratory (252 ITR 673). He held that the Hon'ble Court had held that mere production of Balance Sheet or accounts books would not amount to disclosure of material facts necessary for assessment, that after introduction of changes in section 147 of Act w. e. f. 1.4. 1989 the scope of re-assessment had been widened, that the only restriction put in the section was "reason to believe", that reason had to be a reason of a prudent person and under explanation 1 to the proviso mere production of the Balance Sheet, P&L A/c or account books would not necessarily amount to disclosure within the meaning of the proviso. Deliberating upon the facts of the case the FAA held that the AO had overlooked the afore-stated item, that the AO noticed the mistake subsequently, that at the time of passing the original order of asses....
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....n the company's account was not eligible for claiming the benefit of section 115JB(2)of the Act, that the AO was legally wrong in holding that brought forward UD of the amalgamating company amounting of Rs. 2, 96, 83, 027/- was in excess and had to be disallowed. It was stated that the amount of Rs. 2, 96, 83, 207/- represented the lower of brought forward loss or depreciation of SSAP Ltd., under "Goodwill Account". The assessee relied upon the decision of ITAT, 'C' Bench, Bangalore in the case of M/s VST & Tractors Ltd. (ITA No588/Bang/2008 AY. 2003-04 dt. 21/11/2008) in this regard. 6. After considering the assessment order and the submissions of the assessee, the FAA held that the assessee had reduced unabsorbed loss of 15. 43 Crores or UD of Rs. 2. 96 Crores whichever was lower as available in the books of the transferor company upto 31. 3. 2002, while computing the book profit u/s. 115JB, that in the scheme of merger said losses/ UD including loss incurred for the period from 1. 4. 2002 to 26. 9. 2002 aggregating to Rs. 19. 21 Crores had been capitalised, that the difference between the accumulated losses and fresh capital issued by the assessee-company was capitalised, that ....
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....esh capital issued by it. Not only this the difference was treated as goodwill and the goodwill was a mortised equally over a period of 60 months in the books of the accounts of the assessee. The AO allowed the claim made by it without considering the above facts. On a specific query by the Bench the AR admitted that the goodwill was a mortised and that the difference of loss and fresh capital was capitalised in the books. It was a clear case of claiming double deduction. Considering the facts that the difference between the accumulated losses as on 26. 9. 2002 [of Rs. 19. 21 Crores less value of share capital of SSAPL of 11. 50 Crores (representing share capital extinguished of SSAPL)], capitalization of fresh capital, aggregating to Rs. 8. 86 Crores and treatment of goodwill in the books of the assessee, we are of the opinion that the FAA was justified in upholding the reassessment. It is said that double taxation/double deduction is not permissible under the Act. In the case under consideration the assessee had claimed the amount of Rs. 2. 96 Crores as goodwill and had amortised it in the books of accounts. In addition to it, the assessee wanted it to the part of unabsorbed los....