TaxTMI 
TaxTMI 
2026 (1) TMI 195
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....9 and 160 of 2012) and 2006-07 (T.C.(A) No.161 of 2012) where the assessee is the Tamil Nadu State Transport Corporation, Kumbakonam Limited (TNSTC Kumbakonam), and AY 2003-04 (T.C.(A) No.881 of 2013), 2007-08 (T.C.(A) No.938 of 2015) and 2008-09 (T.C.(A) No. 939 of 2015) where the assessee is the Tamil Nadu State Transport Corporation, Villupuram Limited (TNSTC Villupuram). 2. We have heard V.Mahalingam, learned Senior Standing Counsel for the appellant/Department and Mr.A.S.Sriraman, learned counsel for the respondent/assessee (TNSTC Kumbakonam Limited) in T.C.A.No.154 of 2012 and batch and Dr.S.Sathiya Narayanan, learned Senior Standing Counsel for the appellant/Department and Mr.J.Balachander, learned counsel for Ms.K.Kavitha for the respondent/assessee (TNSTC Villupuram Limited) in T.C.A.No.881 of 2013 and 938 & 939 of 2015. 3. The substantial questions of law are common across the assessment years and we set out below the questions, the assessment years in which that question arises, the discussions and our answer thereto, in seriatim below. 4. Substantial question of law No.I: Whether on the facts and in the circumstances of the case, the Income Tax Appella....
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....d Employees' Provident Fund Trust, Trichy, (ii) Marudhu Pandiyar Transport Corporation Ltd Employees' Provident Fund Trust, Karaikudi (iii) Veeran Azhagumuthukone Transport Corporation Employees' Provident Fund Trust, Pudukottai and (iv) Tamil Nadu State Transport Corporation (Kumbakonam) Limited Employees had been amalgamated by order of the Company Court dated 30.12.2003 setting out the effective date for amalgamation as 31.03.2001. 11. Consequently, the Commissioner of Income-Tax, Trichirappalli, vide proceedings dated 30.01.2006 approved the merger of the provident funds of the four units, approving and recognizing the same in terms of Rule 3 (4) of Part A/Schedule IV of the Income-Tax Act, 1961. His order reads as follows:- "Government Of India Office of the Commissioner of Income Tax-II, No.4, Williams Road, Cantonment, Tiruchirappalli - 620 001. C.No.7162p(1)/2005-06/CIT-II/TRY Dated :30.01.2006 PROCEEDINGS OF THE COMMISSIONER OF INCOME TAX - II, TIRUCHIRAPALLI Present : G.Muthuramakrishnan, IRS Commissioner of Income Tax - II, Tiruchirapalli. Sub : Merger of Dheeran Chinnamalai Transport Corporation Ltd Employees' Pro....
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....count of retirement benefits and not contributions to provident fund at all. 14. Mr.Mahalingam would thus suggest that the matter be remanded to the file of the Tribunal for its consideration, but we are not inclined to consider this request in light of the fact that the assessment years under consideration are more than two decades old. There is no dispute in relation to the approval granted by the CIT for the Fund (post amalgamation), and in light of the same, the finding of the authorities that the Fund is unapproved cannot be sustained. 15. The approval has been granted only with effect from 01.07.2007. However, since the effective date of amalgamation per order of the High Court is 31.03.2001, the recognition must take effect from 2001 - 02 onwards. We hence answer this question in favour of the assessee and adverse to the revenue. 16. Substantial question of law No. III : Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the addition towards insurance fund and no-fault liability even though the amounts represented contributions to an unrecognised fund and in any case the provisions for no-fault....
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....ties to verify this factual aspects, we set aside the order of the lower authorities and remand back the issue to the file of the Assessing Officer. The Assessing Officer shall verify the details of the accident and thereafter decide the issue as indicated above. While considering the facts filed by the company and circumstance of the case, we request you to your goodselves to allow the expenditure. The company has followed mercantile system of accounting and the same principle is followed in the subsequent years also. As allowed in the earlier assessment years and the same basis be allowed in the subsequent years also. Since it is a routine type of expenditure and the payment made as per the Provisions of Motor Vehicles Act. In the notes and accounts and also the details about the payment mentioned in the Asst. Year 2004-05, in Kumbakonam Division, the Assessing Officer duly considered the above facts and passed the order not making any additions on this account. The whole payment in respect of insurance fund (No fault Liability payable) mentioned in the Annual accounts is not only related to the respective financial years and it is a cumulative amount of various financial years. ....
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....ue. 23. Substantial question of law No. IV: TNSTC Kumbakonam Limited 'Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in allowing the benefit of set off of unabsorbed business loss and depreciation of earlier years amalgamated companies under a broad interpretation of the term 'business' even though transport units are not covered under the specific definition given in Section 72A(7)(aa)? 24.TNSTC Villupuram Limited In T.C.(A).No. 881 of 2013 relating to AY 2003-04, the following questions had been admitted on 01.09.2014:- "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the claim of the assessee for set off of brought forward losses for the assessment years 1983-84 to 1993 - 94 for the amalgamating company which was not originally claimed in the return of income field against profits for the assessment year 2003 -04 but on the basis of the revised computation were claimed which was not accompanied by valid revised return as per Sec.139(5) is to be allowed? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right....
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.... on hire, but opines that the concept of 'business' has to be understood in a broad sense, having regard to the object of Section 72A. In fine, the conclusion was the assessee qualified to be an 'industrial undertaking', eligible to the benefit of Section 72A of the Act. 29. We have heard rival contentions on this issue. Section 72A, to the extent to which it is relevant, reads as follows: 'Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc. 72A. (1) Where there has been an amalgamation of- (a) a company owning an industrial undertaking or a ship or a hotel with another company; or . . . . . . . then, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to the loss or, as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected, and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply a....
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.... other thing required for activities of the Company." 32. Hence one of the main objects of the assessee is to 'manufacture ... vehicles ... or .. or any other thing for the activities of the company'. The assessee admittedly, has units relating to manufacture of bus bodies that are assembled with the chassis purchased from the third parties, and must thus, be taken to be an industrial undertaking. This is true in the case of TNSTC Villupuram as well, though the memorandum of association of that assessee is not before us. In any event the Revenue does not dispute that this assessee is also engaged in similar lines of businesses. 33. The Bombay High Court in the case of Commissioner of Income Tax v Jayanand Khira & Co. [170 ITR 31], considered the grant of Developmental Rebate under Section 33 of the Act. The rival contentions of the assessee and department in that case were that the assessee, engaged in the manufacture of bus body manufacture as in the present case, should be entitled to Developmental Rebate. 34. The Department argued that mere assembling of bus body and chassis would not amount to manufacture, and, in any event, only the chassis manufacturer is entitled to....
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....have been taken by the company for rehabilitation or revival of the business of the amalgamating company. To get the confirmation from the "Specific authority" (Secretary of Department of Industrial Development or Department of Company Affairs or Ministry of Labour or Additional Secretary of Department of Banking Affairs or Department of Economic Af- fairs or Member, CBDT), the amalgamated company should address to the Secretary, Department of Industrial Development, a letter giving relevant information regarding the steps taken. On verification of the details filed and records it is seems that there is no certificate from specific authority (Secretary of Department of Industrial Development, Department of Company Affairs, Ministry of labour; Additional Secretary of Department of Banking Affairs or Department of Economic Affairs or Member, CBDT) nor a letter addressed to Secretary, Dept. of Industrial development by the amalgamated company. On account of discussion made above, provisions of Sec.72A cannot be applied in assessee's case and hence set off of business loss and unabsorbed depreciation made in the original order u/s 143(3) is disallowed." 36. The ass....