TaxTMI 
TaxTMI 
2026 (4) TMI 562
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....after set-off of brought forward loss of Rs. 54,28,32,725/-. The assessment was completed u/s. 143(3) on 19.12.2018 at Nil income. Thereafter, the AO had noticed that the assessee had earned short term capital gain (STCG) of Rs. 8,15,38,458/- u/s 50 of the Act on sale of depreciable assets which was adjusted with brought forward business loss. As per provision of section 72(1) of the Act, the brought forward business loss can be set-off only with the business profit. Therefore, the set-off of the current year STCG with brought forward business loss was not in accordance with the provisions of the Act, which was allowed in the original assessment. As this was a mistake apparent from the record, the AO had passed an order u/s. 154 r.w.s. 143(3) of the Act on 06.08.2021 determining income of Rs. 8,15,38,458/- being STCG on sale of assets. 3. Aggrieved with the rectification order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. Now the assessee is in second appeal before us. The following grounds have been taken in this appeal: ....
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.... towards liability of DICGC claim out funds realized by liquidator Therefore, all funds/income realized by such bank are diverted at source towards repayment obligations, at threshold on account of overriding title As such the bank under liquidation cannot have any taxable income till the liability of DICGC is fully paid off Therefore, profit on sale of assets of Rs. 8,15,38,458/- is diverted income at source and appellant has no discretion/authority to apply such funds as per its own wishes, when it had o/s liability of Rs 400.84 crores towards DICGCI as on 31 03 2016. 3. Without prejudice to the other grounds of appeals, Ld. CIT(A) has erred in law and on fact in not appreciating the fact that impugned rectification order u/s 154 is passed by ACIT Circle 1(1)(1), without holding valid jurisdiction of case, when in the case of appellant scrutiny notice u/s 143(2) was issued by ITO Ward 1(2)(4) and assessment order u/s 143(3) was passed by ACIT Circle 1(2), Ahmedabad The appellant did not receive any communication/ order for transfer of case from one jurisdiction to another As such impugned order passed by ACIT Circle 1(1)(1) is without having valid jurisdiction. ....
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....035/2008) dated July 01, 2015, the income of the bank under liquidation does not belong to it. He submitted that due to overriding title the income of the bank under liquidation is diverted to DICGC and, therefore, the same cannot be brought to tax as held by the Hon'ble Supreme Court in the case of Associated Power Co. Ltd. Vs. CIT reported in [(1996) 218 ITR 195 (SC)]. He further submitted that the Co-ordinate benche of Ahmedabad Tribunal had taken identical view in the following cases: 1. The Pragati Co-op. Bank Ltd. V. PCIT-5, Ahmedabad (ITA No. 596/Ahd/2019) 2. DCIT v. The Janta Commercial Co. Op. Bank Ltd. (ITA No. 538/Ahd/2018) 3. The JCIT(OSD), Circle -2(2), A'bad v. The General Co. Op. Bank Ltd. (ITA No. 373 & 374/Ahd/2020) 6. On the other hand, Shri R P Rastogi, the Ld. CIT-DR, submitted that there was no diversion of income by the assessee as no overriding title was created in this case. He has drawn our attention to the balance sheet wherein DICGC claim of Rs. 4,00,84,19,066/- was acknowledged by the assessee. He submitted that once the assessee had accounted for the claim of DICGC in the balance sheet it cannot take a plea that its entire ....
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....tatute to suggest, as argued, that the amount standing to its credit cannot be taken into consideration in arriving at the purchase price. For the purposes of sale to a State Board or Government, a different statute lays down how the price is to be fixed, and with it we are not here concerned. 18. We must add that we asked Mr. Sachar to whom, in his submission, the amounts credited to the contingencies reserve were diverted. Mr. Sachar replied that they were diverted to and vested in the State Government. This, for the reasons set out above, is quite unacceptable. 19. We hold that the amount credited to the contingencies reserve is not diverted by reason of an overriding obligation or title and, in determining the business profits of the assessee, it must be taken into account. 20. Mr. Sachar contended that if the amount credited to the contingencies reserve was includible in the computation of the business income of the assessee, the amount so appropriated should be allowed as a business deduction, being expenditure necessary to carry on the assessee's business. As the Calcutta High Court has pointed out, there is no expenditure. The amount appropria....
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....his hands, after making provision for expenses payable by that time, are sufficient to enable him to declare a dividend of not less than one paisa. in the Rupee to each depositor (b) the insured bank or the transferee bank, as the case may be, as soon as the realisations and other amounts in its hands, after making provision for expenses payable by that time in respect of such realisations or other amounts in its hands are sufficient to enable it after the date of coming into force of the scheme referred to in section 18 of the Act, to pay or credit in respect of each depositor a sum not less than one paisa in the Rupee. 28 The aforestated Regulation 22 also provides that the Official Liquidator, after making necessary provision for the expenses in relation to the liquidation proceedings and for declaration of dividend, as prescribed in the Regulations, has to make payment to the Corporation. 10. It is evident from the above judgment that Hon'ble Supreme Court did not hold that the income of the bank under liquidation does not belong to it, as contended by the Ld. AR. What the Hon'ble Court had held is that DICGC had first preference to receive the amount from ....
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.... the concerned depositor/s to the extent of Rs. 1 Lac each, however after making necessary provisions for the expenses in relation to the liquidation proceedings and for declaration of dividend.... Thus, the Jurisdictional High Court has also held that DICGC shall only have first preference over the payment/amount available with the Official Liquidator. Therefore, the legal ground taken by the assessee that no income had accrued to the assessee bank, is rejected. 12. On merits, the Ld. AR submitted that the income derived on sale of depreciable assets, though considered as STCG u/s. 50 of Act, was in fact business income accrued u/s. 41(1) of the Act. Therefore, the assessee had rightly claimed set-off of brought forward business loss with the gain derived on sale of depreciable assets which was in the nature of business income. The Ld. AR further submitted that even if the gain derived by the assessee is considered as STCG, the sum was liable to be set-off with brought forward business loss. In this regard, he relied upon the decision of Co-ordinate bench of Mumbai Tribunal in the case of M/s. Hickson & Dadajee Pvt. Ltd. in ITA No. 5882/Mum/2012 dated 28.02.2014. The Ld. AR ....
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....IT(A), vide the impugned order and the appeal of the assessee was dismissed. Th 18. Now the assessee is in second appeal before us. The following grounds have been taken in this appeal: 1.1. Ld. CIT(A) is unjustified and erred in law and on facts, in confirming the action of Ld. AO in making addition of Rs. 54,36,703/- by disallowing bad debts claim written off as irrecoverable in profit & loss account of appellant, without appreciating the fact that appellant bank was in the course of winding up proceedings and affairs of bank are being managed by Liquidator appointed by Central Government. 1.2 Ld. CIT(A) is unjustified and erred in both on law and facts, in confirming the disallowance of claim of bad debts of Rs. 54,36,703/- made by Ld. AO, without appreciating the fact that, Ld. AO has not given any reasons/evidences or brought any adverse finding on the assessment records, to justify the rejection of claim of bad debts made by the appellant. 1.3 Without prejudice to other grounds of appeal, Ld. CIT(A) has erred in law & on facts, in confirming the action of AO, in treating the impugned addition of Rs. 54,36,703/- as taxable income of the previous y....