The Assessing Officer pointed out that the assessee had made a back-door entry to claim unabsorbed depreciation of the amalgamating company through Explanation 2A and Explanation 3, which was not permissible. In the circumstances, the Assessing Authority pointed out that the carry forward and set off of accumulated loss and unabsorbed depreciation of the amalgamating company on the amalgamated company would be available to the amalgamated company only on satisfying the conditions enumerated under Section 72A. Considering the difference in the provision of law, there was no scope of any adjustment to be made in the written down value as appearing in the books of accounts of the amalgamating company. The Assessing Authority, however, rejected the plea, by holding that the decision of the Bombay High Court was rendered prior to the amendment to Explanation 2 to Section 43(6) under the Taxation Law Amendment Act, 1986, which was effective from The Assessing Officer pointed out that the new Explanation 2 clearly stated that the written down value of the stock of assets of the amalgamating company would be the actual cost of the asset minus the amount of depreciation actually allowed in relation to the preceding previous year before the date of amalgamation. The assessee contended that Section 72A has no relevance to the case.Ĥ. Placing emphasis on the provisions of Section 43(6) Explanation 2(b), the assessee submitted that as held in the decision of the Bombay High Court referred to above, Explanation 3 to Section 43(6) has no relevance in the matter of arriving at the written down value of the assets and the assessee had properly computed the value of the assets taken over from the amalgamating company by adding the unabsorbed depreciation to the written down value of the assets. In other words, the written down value at the hands of the amalgamated company would be the written down value as arrived at by the actual cost of the assets as reduced by the depreciation actually allowed to the amalgamating company. The assessee contended that as per Section 43(6) Explanation 2(b), the written down value of the assets at the hands of the amalgamated company would be the written down value of the assets at the hands of the amalgamating company. Falcon Gulf Ceramics Limited was amalgamated with the assessee company with effect from In arriving at the written down value of the assets at the hands of the amalgamated company, namely, the assessee herein, the Assessing Authority noted that the assessee had made the written down value based on the decision of the Bombay High Court reported in 187 ITR 1 ( Commissioner Of Income-Tax v. It is seen from the facts herein that M/s. 1311 of 2005 is in respect of the orders passed in the assessee's appeal, regarding the written down value to be arrived at the hands of the amalgamated company, the assessee herein. The Tribunal passed a common order in the assessee's appeal and in the Revenue's appeal. (iii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding, on the alternative claim of treating the expenditure under Section 37, that the euro issue expenses should be disallowed as capital expenditure?ģ. (ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding disallowance of deduction under Section 35D in respect of issuance of euro shares? And (i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that as per the Explanation 2 to Clause (c) of Section 43(6), the unabsorbed depreciation of FGCL - Amalgamating Company cannot be added to the written down value? The following substantial questions of law are raised in T.C(A) No. (ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that as per the Explanation 2 to Clause (c) of Section 43(6), the unabsorbed depreciation of FGCL - Amalgamating Company cannot be added to the written down value?Ģ. (i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the investment allowance cannot be carried forward? and The following are the substantial questions of law raised in the Tax Case Appeal filed by the assessee - T.C(A) No. The assessee is on appeal as against the order of the Income Tax Appellate Tribunal in respect of the assessment year 1994-96. (Judgment of the Court was delivered by CHITRA VENKATARAMAN, J.) 13 of 2005 is filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, ‘A’ Bench, Chennai dated made in I.T.A Nos.
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