TMI Blog2015 (2) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... contributions are made before the due date of filing the return no disallowance is to be made. In this case we note that the actual dates of payment are not available on record. Hence we remit this issue to the file of AO. AO shall examine the actual date of payments and allow the payments if the same are done before the due date of filing the return. - Decided in favour of revenue for statistical purposes. - I.T.A No.1295/Kol/2011 - - - Dated:- 12-2-2015 - Hon ble Shri Mahavir Singh And Hon ble shri Shamim Yahya JJ. For the Appellant : Shri Debasis Roy, JCIT For the Respondent : Shri R.P.Agarwala, Sr.Advocate Shri K.K.Chhaparia, FCA ORDER Per Shri Shamim Yahya, AM : This appeal by the department is directed against the order of ld.CIT(A)-VIII, Kolkata dated 07.07.2011 and pertains to Assessment Year 2006-07. 2. The grounds of appeal read as under :- 1. (a) That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing set off of brought forward business loss and unabsorbed depreciation amounting to ₹ 84,22,538/- in the assessee of the amalgamated company for assessment year 2006-07, even the amalgamation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.78,01,808/- 2005-06 ₹ 16,20,251/- Rs.16,20,251/- Total ₹ 1,78,44,597/- Rs.84,22,538/- Rs.94,22,059/- In the return, the losses of amalgamating company was treated as loss of the assessee company u/s 72A of Income tax Act read with Rule 9C of Income tax Rules. Before the AO, the assessee vide its letter dated 08-12-2008 has stated that both the companies have satisfied the conditions of amalgamation. As per the provisions of Section 72A, the amalgamating company has to satisfy the following two condition in order that loss/unabsorbed depreciation of such company shall be treated as loss/unabsorbed depreciation of amalgamated company : 1) The amalgamating company should be engaged in the business in which the accumulated loss occurred or depreciation remains unabsorbed, for three or more years. 2) The amalgamating company has held continuously as on the date of amalgamation at least 3/4th of the Book value of the Fixed Assets held by it for two years prior to the date of amalgamation. 3.2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business. The assessee also submitted that the Court s order became effective on 05.09.2005 (the date when certified copy of the order was filed with the Registrar of Companies). The assessee also referred to section 391(3) of the Companies Act. The assessee also referred to ITAT decision in the case of DCIT vs Gujarat NRE Coke Limited 115 TTJ 822. Considering the above the ld. CIT(A) decided the issue in favour of the assessee holding as under :- I have gone through the assessment order and submissions made by the appellant. I agree with the A/R that the phrase engaged in the business cannot be interpreted narrowly in view of the jurisdictional ITAT decision in the case of Gujarat NRE Coke Limited (supra). Thus, I held that the amalgamating company was engaged in the manufacturing of ball pen tips for more than three years. Regarding the second condition as to whether the amalgamating company was carrying three-fourth of the book value of fixed assets continuously for two years or more, the A/R referred to the audited final accounts of amalgamating company for the year ended 31-03-2002, 31-03-2003 and 31-03-2004. He pointed out that Section 72A(2)(ii) require 75% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve date should be taken as the date when the order sanctioning the scheme of amalgamation is filed with the Registrar of Companies and as soon as in this case the same was filed on 05.09.2005, the Court s order became effective on 05.09.2005. Hence the date incorporation of the business of the amalgamated company should be taken up to this dated i.e. 05.09.2005. Further the ld. Counsel supported the order of ld. CIT(A). 5. The ld. DR, on the other hand, relied upon the order of the AO. 6. We have carefully considered the submissions and perused the records. At the outset, we may gainfully refer to the provision of section 72A(2) of the Act as under: [(2) Notwithstanding anything contained in sub-section (1), the accumulated loss shall not be set off or carried forward and the unabsorbed depreciation shall not be allowed in the assessment of the amalgamated company unless - (a) The amalgamating company - (i) Has been engaged in the business, in which the accumulated loss occurred or depreciation remains unabsorbed, for three or more years; (ii) Has held continuously as on the date of the amalgamation at least three-fourths of the book value of fixed assets held by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition that the company can be said to be engaged in the business from the point in time when the business is said to have commenced. As soon as an activity which is the essential activity in the course of carrying on the business is started the business must have commenced. Now after referring to the assessee s submissions on the above decision of the ITAT ld. CIT(A) has laconically held as under :- I have gone through the assessment order and submissions made by the appellant. I agree with the A/R that the phrase engaged in the business cannot be interpreted narrowly in view of the jurisdictional ITAT decision in the case of Gujarat NRE Coke Limited (supra). Thus, I held that the amalgamating company was engaged in the manufacturing of ball pen tips for more than three years. 6.3. Now we find that in the decision referred by the ld. CIT(A) of the ITAT the proposition was that as soon as an activity which is the essential activity in the course of carrying on the business which is started the business can be said to have commenced. Further it was submitted that the ITAT judgment was passed in line with the principle laid down by Hon ble Gujarat High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is 1st April, 2004 which is the date of transfer as approved by the Hon ble High Court. It cannot be said that three years have elapsed between this period. Hence from this angle also the amalgamating company cannot be said to have been engaged in business in which the loss or depreciation occurred for three or more years. Hence the assessee is not liable for the benefit u/s 72A(2)(a)(i) of the Act on this plank as well. 6.6. As regards the contention of the ld. Counsel of the assessee that the effective date of the order should be the date when the certified copy of the sanctioning scheme of amalgamation is filed with the Registrar of Companies Act, we find that the same does not support the case of the assessee. What is to be considered for the purpose of benefit u/s 72A(2)(a)(i) of the Act is what is the effective date of transfer. In other words what is the date of amalgamation. The date of transfer as approved by the Hon ble High Court for the purpose of amalgamation is 01.04.2004. This is the date of amalgamation as approved by the Hon ble High Court. The subsequent filing of return registering merger order with the R.O.C. cannot have the effect of extending the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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