TMI Blog2007 (10) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... rd cannot be taken into account. Held that- the Tribunal was right in holding that the amalgamated company was entitled to depreciation on the written down value of asset as increased by the unabsorbed depreciation carried forward in the hands of amalgamating company. - 340 of 2004 - - - Dated:- 4-10-2007 - RAVIRAJA PANDIAN K., CHITRA VENKATARAMAN MRS. JJ JUDGMENT The judgment of the court was delivered by 1. K. Raviraja Pandian J .-The Revenue has filed appeal against the order of the Income-tax Appellate Tribunal in I. T. A. No. 2091(Mds)/95 for the assessment year 1992-93 dated September 10, 2003. 2. The relevant assessment year is 1992-93. The facts culminated in filing of the appeal are as follows: The assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f unabsorbed depreciation of the amalgamating company. 5. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). In respect of the depreciation, the Commissioner of Income-tax (Appeals) held that depreciation could be allowed only on the written down value as appearing in the balance-sheet and there was no provision for enhancing the same by adding unabsorbed depreciation carried forward in the case of the amalgamating company. Regarding deductions under sections 80HH and 80-I, the Commissioner of Income-tax (Appeals) by referring to the circular issued by the Central Board of Direct Taxes No. F. 15/5/63-IT(A-I) dated December 13, 1963, wherein it was clarified that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Ltd. [1995] 212 ITR 1. The correctness of the said order is now canvassed before this court. 7. The appeal was admitted on the following questions of law: "1. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that the amalgamated company was entitled to depreciation on the written down value of assets as increased by the unabsorbed depreciation carried forward in the hands of the amalgamating company ? 2. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that the assessee-company being the amalgamated company was entitled to deductions under sections 80HH and 80-I in respect of the units set up by the ama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 10. From the reading of Explanation 2A extracted above, it is patently clear that the written down value of the transferred capital asset to the amalgamated company would be the same as it would have been if the amalgamating company continue to hold the capital asset for the purpose of its business. The statutory provision makes it clear that the written down value of the asset would be the actual cost of the assets of the assessee less depreciation allowed to the company. Any unabsorbed depreciation which was not set off for carry forward could not be taken into account. A similar view was taken by the Bombay High Court in the case of CIT v. Hindustan Petroleum Corporation Ltd. [1991] 187 ITR 1 which has been applied by this court in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar view has been taken by the Bombay High Court in the case of CIT v. Dandeli Ferro Alloys P. Ltd. [1995] 212 ITR 1, in which the Bombay High Court held that the facts on record clearly established that the amalgamated company was already incorporated and formed and had come into existence on March 30, 1973 and had become an industrial undertaking carrying on industrial and commercial activities on and from June 20, 1973, i.e., prior to the amalgamation of the amalgamating company with the amalgamated company, which had become effective from October 31, 1973. The amalgamated company was not formed by the splitting up, or the reconstruction, of a business already in existence. Therefore, the Tribunal was right in holding that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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