TMI Blog2009 (3) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... ned a total income of Rs. 12,26,213 for the impugned assessment year under appeal. The said income was set off against the brought forward loss of earlier assessment years. After the set off, a loss of Rs. 47,86,498 was effectively returned by the assessee. Initially, the return was processed under section 143(1) and the loss return filed by the assessee was accepted. Thereafter, notice under section 148 was issued and the case was taken up for reassessment on the ground of escapement of income. It was the case of the Assessing Officer that unabsorbed loss available for set off actually amounted to Rs. 3,17,191 alone and therefore the income for the impugned assessment year after the set off of the above amount should be recomputed. Thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-company is Rs. 7 lakhs. The assessee-company is having an aggregate unsecured loan liability of Rs. 5.3 crores. The net assets available in the hands of the assessee-company would not be sufficient to payoff its creditors. In the light of the above financial particulars, the Commissioner of Income-tax (Appeals) held that the assessee-company is a sick industrial company. Thereafter the Commissioner of Income-tax (Appeals) examined whether a sick industrial company is excluded from the ambit of restriction of the eight years period made applicable to the impugned assessment year 2001-02, for the purpose of carry forward and set off of unabsorbed depreciation. He examined the proviso to section 32 of the Income-tax Act, 1961, which states ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) ought to have found that the assessee has not filed any proof to the effect that the assessee-company is a sick industrial company and the auditors in their report have mentioned that 'the company has not made a reference for recognition as a sick unit' (Item XVI) of the audit report dated September 5, 2001." Sri C. Karthikeyan Nair, the learned Additional Commissioner of s Income-tax appearing for the Revenue contended that the question whether the assessee-company was a sick industrial company or not was not before the assessing authority and the assessing authority had no occasion to decide the issue and in such circumstances the finding of the Commissioner of Income-tax (Appeals) that the assessee-company is a sick industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of any financial year accumulated losses equal to or exceeding its entire net worth. The learned chartered accountant explained that as pointed out by the Commissioner of Income-tax (Appeals), the aggregate unsecured liability of the assessee is Rs. 5.23 crores with an accumulated loss of Rs. 2.3 crores and with a paid up capital of Rs. 7 lakhs. In the light of the loan liabilities and accumulated loss, the net worth of the assessee-company is apparently less than the accumulated loss and therefore the finding of the Commissioner of Income-tax (Appeals) that the assessee is a sick industrial company is justified. Once that position is accepted the learned chartered accountant submitted that exemption from the restriction of eight ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot bound by the restriction of eight year period. The failure on the part of the assessing authority, if any, to examine this vital statutory aspect cannot be used against the assessee. While the assessee is having liability under the Income-tax Act to file the return of income and pay tax thereon, the assessee is also having equal rights to enjoy all the benefits of exemptions, if any, provided in the Act. Moreover it is a settled law that the powers of the first appellate authority are coterminous with that of the assessing authority and therefore in order to dispose of a case on its merits and in accordance with law, the Commissioner of Income-tax (Appeals) can examine any relevant matter, even though for the first time, and if necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustry. Reference may be made to the decision of the Bombay High Court in the case of Abdulgafar A. Nadiadwala v. Asst. CIT [2004] 267 ITR 488. As film exhibition is characterized as an industry, the assessee is also satisfies the conditions of an industrial company. In these circumstances, the finding of the Commissioner of Income-tax (Appeals) on merits of the contention of the assessee is justified that the assessee is a "sick industrial company" entitled to exemption from the restrictive rule of eight year period. In the facts and circumstances of the case, we find that the order of the Commissioner of Income-tax (Appeals) is just and proper both in law as well as in facts. Therefore, the Revenue fails in its appeal. In result, this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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