TaxTMI 
TaxTMI 
1981 (11) TMI 73
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....sted in both the companies and they may be loosely described as sister-companies. It appears that Podar Plastics (P.) Ltd. had not been making profits in its business and that its assessments had resulted in determination of loss from business and the depreciation which was allowable was not set off and had to be carried forward in accordance with law. 2. By an agreement dated 26-12-1973 Podar Plastics (P.) Ltd. sold or transferred to Podar Shakti Plastics (P.) Ltd. certain assets (and also certain liabilities). The two companies are hereinafter referred to as "the transferor" and "the transferee", respectively. The name of the transferee was later changed to "Podar Plastics (P.) Ltd." and still later it was changed to "Bombay Household an....
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....nd the Commissioner (Appeals) have taken the view that the actual cost of the assets in question may be taken at the amounts represented by the written down values of the respective assets as available from the assessment record of the transferor. The relevant particulars are as below : Item W. D. V. Rs. Machinery 17,026 Water tank 4,342 Dies & moulds 38,223 Elec. installation 9,221 Air-conditioner 647 Exhaust fans 3,567 5. Other points raised in the grounds of appeal having been specifically given up by Shri Doshi at the time of hearing of this appeal, the only question for decision is whether the original cost of the assets in question could be determined for a sum less than the consideration paid by the transferee to the....
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....he transfer could be the reduction of liability to income-tax of the transferee. 7. The specific requirement of the said Explanation is that it must be shown that the main purpose of the transfer was the reduction of liability to income-tax by claiming depreciation with reference to an enhanced cost of the assets in question. In the case under consideration, the cost which is adopted is no more than the market value of the assets. Even parties who may be strangers would transfer assets at the market rate. If sister-concerns should do so, simply because the market rate may be higher than the written down value as determined for the purpose of income-tax assessments or as shown in the books of account of the transferor, it cannot be said tha....