Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (7) TMI 461 - AT - Income TaxCarry forward and set of the unabsorbed depreciation u/s 32(2) of the Act Effect of amendment under Finance Act 2001 w.e.f. 01.04.02 Held that:- The decision in GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT] followed - any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001, thus once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever Revenue was not able to brought out any contrary decision Decided against Revenue. Validity of re-assessment proceedings u/s 147/148 of the Act - Deduction incurred on payment of compensation for re-rating of shares Held that:- The AO has made the addition in respect of the income for which reasons for escapement of assessment were recorded by him i.e. unabsorbed depreciation - Merely the additions so made stand deleted by the CIT(A) will not make the action of the assessing officer illegal if he has added any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently, in the course of the proceedings u/s 147 - reasons u/s 148 was duly recorded for escapement of the income in respect of unabsorbed depreciation - section 147 of the Income Tax Act talks of AO not of the appellate authority - there is no illegality as per the provision of section 147 of the Income Tax Act Decided against Assessee. Amortization of expenses u/s 35DD of the Act Held that:- The true nature of the expenditure is that the company has compensated the lenders as they agreed to take the shares in ICCL at a higher price than what was proposed by them in their structured settlement during the year 2003 - expenditure so incurred is clearly on capital account, it cannot be regarded to have been incurred for serving the debt or to have been incurred for the purpose of the amalgamation - This expenditure can also not be regarded to have been incurred for the purpose of the amalgamation as the debts has been converted into the equity shares at a lesser value prior to the merging of the ICCL into IMFA and compensation has been paid to the lenders on conversion of the debts into equity shares at a higher value - compensation paid is directly linked with the loss suffered by the lenders on account of conversion of debts into equity shares due to the amended proposal - The assessee gets benefited in consequence that it has to allot less shares in its company to the erstwhile shareholder of ICCL - Thus this expenditure has clearly being incurred by the assessee on capital account for the purpose of share capital- the expenditure cannot be allowed as a revenue expenditure u/s 37(1) as it is a capital expenditure. The assessee also cannot get deduction u/s 35DD of the Income tax Act as this expenditure has nothing to do with the amalgamation and incurrence of this expenditure was made for allotting the shares in ICCL not for the purpose of amalgamation of ICCL with the assessee Decided against Assessee.
|