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2022 (7) TMI 399 - HC - Income TaxDepreciation on the WEGs for the year ending 31.03.2006 - whether assessee was eligible for depreciation for the year ending 31.03.2006. Revenue’s case is that the transaction has not taken place in March because no documents such as bills or invoices were produced during survey conducted on 28.03.2006? - ITAT allowed the claim - HELD THAT:- ITAT has recorded that the Managing Director of the assessee company was not questioned during the survey but enquires was made only with the accountant. ITAT has also noted that assessing officer had lost sight of this vital aspect. It is not in dispute that WIL has admitted the transaction. It has not claimed depreciation for the year ending 31.03.2006. The Managing Director of the assessee company has not been questioned. Thus the ITAT, based on records, having recorded a finding of fact that the transaction had taken place in March 2006; and the assessee having offered the income generated from the WEGs between 15.03.2006 ending on 31.03.2006 to tax, in our considered view, the first substantial question raised by the revenue needs to be answered in favour of the assessee. Benefit of set off of brought forward losses - as per AO undertaking taken over, MOL was not a 'going concern' the condition specified under section 2(19AAA) (vi) has not been satisfied and therefore the assessee is not eligible for the claim of set off of brought forward losses under section 72(A) - Assessee argued that Revenue has misconstrued sub-clause (vi) of Section 2(19AA) to mean as a running unit - HELD THAT:- Shri. Shankar is right in his submission that if a unit were to be running and profitable one, the same would not be available for demerger. Tribunal has relied upon its order in the case of JCIT Vs Valdel Engineers and Constructors Pvt. Ltd. [2012 (10) TMI 612 - ITAT BANGALORE]. It was submitted by Shri. Aravind that ITA [2018 (7) TMI 2267 - KARNATAKA HIGH COURT] filed against ITAT’s order in Valdel case was withdrawn by the Revenue. In our considered view, it would be incongruous to construe sub -clause (vi) of section 2 (19AA) as to mean a running unit. Second substantial question of law raised by the Revenue also deserves to be answered in favour of the assessee and is accordingly answered.
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