2025 (12) TMI 1520

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....of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961 (in short 'Act'). 2.The proceedings relate to Assessment Year (AY) 2007-08 in respect of which the assessee had filed a return of income that culminated in an order of assessment dated 18.12.2009. A copy of the assessment order is produced before us. It does not contain anything to indicate that the assessing authority had taken note of the scheme of demerger sanctioned by this Court in Company Petition Nos.146 to 149 of 2008 and Company Petition Nos.201 and 202 of 2009 dated 28.07.2008 and 15.09.2009. 3.The CIT hence issued a show cause notice dated 14.02.2012, calling for a response from the assessee as to the treatment of unabsorbed depreciation and unabsorbed busine....

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....tted on 07.11.2013: '1. Whether in law and in the facts and circumstances of the case, the Tribunal was right in holding that the CIT has erred in revising the assessment order in the case of the assessee as erroneous prejudice to the interests of revenue? 2. Whether in law and in the facts and circumstances of the case, the Tribunal was right in holding that the CIT had travelled beyond the reasons stated in the show cause notice issued by him? 3. Whether in law and in the facts and circumstances of the case, the Tribunal was justified in allowing the appeal of the assessee in holding that the jurisdiction of the CIT is confined to the reasons stated in the notice under Section 263? 4. Whether in law and....

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....othing Private Limited and the manufacturing division of Cotton Base Clothing India Private Limited with Eastman Exports Global Clothing Private Limited. Under order dated 15.09.2009 in Company Petition Nos.201 and 202 of 2009, the Court has sanctioned a scheme of demerger between Essorpe Mill Limited and Eastman Exports Global Clothing Private Limited. 11.Hence, the arrangement sanctioned qua the parties is not one of amalgamation as defined under Section 2(1B) of the Act, but one of demerger per under Section 2(19AA) of the Act. That is the fundamental error committed by the CIT that has been pointed out by the assessee in its reply to the notice u/s 263 of the Act. 12.Section 72A deals with the carry forward and set-off of accumula....

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....2) is conditional upon the amalgamating company having been engaged in the business in which the accumulated loss occurred or depreciation remained unabsorbed, for three or more years. The three entities in this case i.e. Tangible Textiles Private Limited, Cotton Base Clothing India Private Limited and Essorpe Mill Limited have been in business for less than three years. 14. However, this would not be fatal to the claim of carry forward, since the applicable provision in this case is not Section 72A(2), but Section 72A(4) that reads as follows: '......... (a) where such loss or unabsorbed depreciation is directly relatable to the undertakings transferred to the resulting company, be allowed to be carried forward and....