9911796707
TMI Blog2016 (1) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri S. Bharath, ld. Departmental Representative submitted that the assessee-company engaged itself in manufacture and sale of cement. The company is also engaged in real estate, property development and generation of wind power. During the year under consideration, M/s Visaka Cement Industry Ltd. merged with the assessee-company with effect from 1.7.2006 pursuant to a scheme of amalgamation framed u/s 391 of the Companies Act. The amalgamation was approved by the Madras High Court by judgment dated 25.7.2007. According to the ld. DR, M/s Visaka Cement Industry Ltd. applied sales tax deferral scheme framed by Government of Andhra Pradesh. Under the deferral scheme, the sale tax collected was required to be remitted to the Government after a period of 14 years in the State of Andhra Pradesh. Similarly the assessee-company has also availed deferral scheme of Government of Tamilnadu and the sales tax collected was deferred for a period of 12 years. The ld. DR further pointed out that the assessee-company and M/s Visaka Cement Industry Ltd. entered into a separate agreement in respect of sales tax payable under the deferral scheme. As per this agreement, the obligation of payment of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the payment was made wholly and exclusively for the purpose of business of the assessee. According to the ld. DR, the CIT(A) is not justified in deleting the addition made by the Assessing Officer. 5. On the contrary, Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the assessee-company, admittedly, engaged in manufacture and sale of cement. In pursuance to the judgment of the Madras High Court dated 25.7.2007, M/s Visaka Cement Industry Ltd. was amalgamated with assessee-company with effect from 1.7.2006. It is also an admitted fact that both assessee-company and M/s Visaka Cement Industry Ltd. availed itself sales tax deferral scheme for a period of 12 years and 14 years respectively. The assessee-company as well as M/s Visaka Cement Industry Ltd entered into another agreement with M/s Trishul Investments Pvt. Ltd. assigning the liability/obligation of payment of sales tax to Government of Tamilnadu and Andhra Pradesh. In fact, the obligation of payment of sales tax was assigned to M/s Trishul Investments Pvt. Ltd. by paying the net present value of the future obligation. The assessee subsequently cancelled the agreement with M/s Trishul Investments Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled, the liability will not arise for the year under consideration. The CIT(A), however, found that the profit of the assessee-company shall be debited with the amount of income recognized in the earlier years upon sanction of the scheme of amalgamation. The CIT(A) in fact, extracted the relevant clause from the agreement. The CIT(A) further found that the difference between the deferral amount and the net present value of the assigned amount was shown as income and offered to taxation. If that is so, this Tribunal is of the considered opinion that the reversal of the amount on cancellation of such assignment consequent upon the amalgamation of M/s Visaka Cement Industry Ltd with assessee-company is only a loss in the course of normal business, therefore, as rightly found by the CIT(A), it has to be allowed. The loss resulted to the assessee is due to cancellation of assignment of sales tax deferred. Since the profit resulting from the agreement has already been treated as income of the assessee, this Tribunal is of the considered opinion that the loss arising out of the cancellation of the agreement has also to be treated as loss in the course of regular business. Therefore, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the CIT(A). In fact, the CIT(A), by following the decision of this Tribunal in assessee's own case for the assessment years 2003-04 and 2004-05 and the judgment of the Apex Court in S.A Builders(supra) allowed the claim of the assessee. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 11. The next ground of appeal is with regard to computation of book profit u/s 115JB of the Act. 12. Shri S. Bharath, ld. DR submitted that the assessee has reduced a sum of Rs. 294,05,22,507/- being the reversal of income arising on cancellation of sales tax assignment agreement. According to the ld. DR, the assessee claimed the reduced amount as revenue expenditure. Since the reversal of income on cancellation of the assignment does not arise during the year under consideration and it has to be considered only when the amount was due for payment, it cannot be reduced while computing the book profit u/s 115JB of the Act. Referring to sec. 115JB of the Act, the ld. DR pointed out that the said section does not provide for deduction of net profit on account of reversal of income. Referring to the judgment of Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. This Tribunal do not find any infirmity in the order of the CIT(A) and accordingly, the same is confirmed. 15. In the result, the appeal of the Revenue in I.T.A.No. 1343/Mds/2010 is dismissed. 16. Now coming to assessment year 2008-09, first we take Revenue's appeal I.T.A.No.604/Mds/2012. 17. The first ground is with regard to interest on the advances made to subsidiary companies to the extent of Rs. 20.08 crores. 18. We heard the ld. DR and the ld. Counsel for the assessee. 19. The Assessing Officer found that the borrowed funds were advanced to subsidiary companies and no interest was charged. Accordingly, the Assessing Officer computed notional @ 6% on the advances made to subsidiary companies. While hearing the appeal of the Revenue for assessment year 2007-08 in I.T.A.No. 1343/Mds/2010 in the earlier part of this order, this Tribunal found that the subsidiary companies used the funds advanced by the assessee for business purposes. Therefore, in view of the judgment of the Apex Court in S.A. Builders Ltd (supra) even if the borrowed funds were diverted for making advances to subsidiary companies, there cannot be any disallowance of interest. In view of the above, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri R. Vijayaraghavan, ld. Counsel submitted that the assessee-company was a successful bidder of Chennai Superking franchisee for a period of 10 years. The assessee is entitled to exploit the right for a period of 10 years. Admittedly, the franchise rights is an intangible right and entitled for depreciation @ 25%. This is not in dispute. The only dispute is whether the depreciation is allowable on the entire amount of Rs. 364 crores or Rs. 36.4 crores. According to the ld. Counsel, the assessee has claimed the depreciation @ 25% at Rs. 45.50 crores on the entire amount of Rs. 364 crores. However, the Assessing Officer disallowed the claim of the assessee to the extent of Rs. 40.95 crores by taking cost of franchise rights at Rs. 36.4 crores. 23. According to the ld. Counsel, when the assessee becomes a successful bidder, the assessee has to pay the entire amount of Rs. 364 crores to the Board of Cricket Control in India. According to the ld. Counsel, the franchisee agreement enables the assessee to make payment of aggregate consideration over a period of time. This does not mean that the cost of franchise rights is only that much of the amount which has been paid during the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The cost of the franchise rights is Rs. 364 crores which has to be paid in 10 years @ 36.4 crores per annum. The assessee is entitled for depreciation on the franchise right being an intangible asset under Explanation (3) to sec. 32(1) of the Act. This is not in dispute. The only dispute is whether the assessee is entitled for depreciation on the cost of the franchise rights or on the amount paid during the year under consideration. We have gone through the provisions of sec. 32 of the Act. Sec. 32(1) clearly says that in case of an asset used for generation or generation and distribution of power, depreciation has to be allowed on the actual cost of the asset at the rate prescribed. In case of block of assets, depreciation has to be allowed on the written down value at the rate prescribed. In this case, the prescribed rate for franchise rights is 25%. It is not in dispute that the assessee acquired the franchise rights during the year under consideration. The cost of block of assets was increased to the extent of Rs. 364 crores. Since the cost of the franchise rights is admittedly Rs. 364 crores, as per the terms and conditions of the bid, the assessee has to pay Rs. 364 crores in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent introduced sub clause (f) in section 43B with effect from 1.4.2002 by Finance Act, 2001. The constitutional validity of sec. 43B(f) was challenged before the Calcutta High Court in Exide Industries Ltd vs Union of India, 292 ITR 470. The Calcutta High Court in fact struck down sub-clause(f) of section 43B as unconstitutional. The ld. Counsel further submitted that even though the Apex Court stayed operation of the judgment of the Calcutta High Court in Exide Industries Ltd (supra), on identical set of facts, the other benches of the Tribunal are remanding the matter back to the file of Assessing Officer to decide afresh after the judgment of the Apex Court which is pending against the judgment of the Calcutta High Court. 29. On the contrary, Shri S. Bharath, ld. DR submitted that section 43B(f) clearly says that the sum payable by the assessee as an employer in lieu of any leave at the credit of his employee cannot be allowed as deduction unless it is actually paid. In this case, admittedly, the amount is not actually 'paid' and it remains to be 'payable'. Therefore, section 43B(f) has to be applied and the Assessing Officer has rightly disallowed the claim of the assessee. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not enjoy the benefit over a period of time, therefore, depreciation is allowable only for the first year and for the rest of the years, the payment has to be allowed u/s 37 of the Act. Referring to the provisions of sec. 32 of the Act, the ld. Counsel submitted that depreciation has to be allowed on the written down value of the block of assets therefore, there is no question of allowing the same as revenue expenditure. Referring to the assessment order, the ld. Counsel submitted that the Assessing Officer himself accepted that the franchise rights acquired by the assessee is block of assets on which depreciation is allowable @ 25%. Therefore, the CIT(A) ought to have allowed the claim of the assessee for depreciation @ 25% instead of allowing the franchise rights as revenue expenditure u/s 37 of the Act. 33. We heard Shri S. Bharath, ld. DR also. 34. As discussed earlier in the Department's appeal, the assessee has acquired the asset of franchise rights for Rs. 364 crores and therefore, the cost of the asset is Rs. 364 crores. What was paid by the assessee for the year under consideration is only Rs. 36.4 crores. The depreciation has to be allowed on the written down val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court and dispose of the same on merit. 38. The next ground of appeal is with regard to depreciation on the asset of IPL Franchise rights. 39. We heard the ld. Counsel for the assessee and the ld. DR. 40. This issue is also elaborately considered in the earlier part of this order. Since the cost of asset was to be taken into consideration for granting of depreciation, this Tribunal is of the considered opinion that the entire cost has to be taken irrespective of the payment made by the assessee during the year under consideration. Accordingly, the order of the lower authority is set aside and the Assessing Officer is directed to allow depreciation on the IPL franchise rights by taking the cost of asset at Rs. 364 crores. The Assessing Officer shall also reduce the depreciation granted in the earlier year for arriving at the written down value. 41. The next issue for consideration is disallowance of Rs. 2,50,00,000/- paid to M/s Rishi Vidhya Consultants Pvt. Ltd. 42. Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the assessee paid a sum of Rs. 2,50,00,000/- to M/s Rishi Vidhya Consultants Pvt. Ltd. According to the ld. Counsel, M/s Rishi Vidhya Consultants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the ld. Counsel for the assessee, vastu is depending upon the belief of the individuals like astrology. The CIT(A) found that performing pooja would benefit basically on the psychological and mental field rather than subjective in the nature of business. The assessee claims that M/s Rishi Vidhya Consultants Pvt. Ltd. performed the following services: "Nature and services rendered by M/s Rishi Vidhya Consultants Pvt. Ltd to all our plants and colonies:- 3. They had visited all Plants/Colonies and suggested us to perform special yagnams and homams to increase the production and profitability and improve the harmony amongst the workers thereon. 4. They suggested the various homams and yagnams that were performed on the auspicious dates. 5. They have helped us in identifying the good prohit to carry out homams and yagnams. 6. They also identified the sources for procurement of various materials for homams and yagnams. 7. They suggested preethis to be performed periodically at various locations. 8. They also examined and advised us about the items to be consumed in the homams/yagnams. 9. They have guided us in establishment of new temples/installation of Deity to ward of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- is highly excessive. Irrespective of the belief and faith, the payment shall be reasonable. This Tribunal is of the considered opinion that vastu is just like astrology and the opinion of an expert in the field may be one of the guiding factors. Therefore, the payment for such opinion shall not be unreasonable and arbitrary. The claim of Rs. 2,50,00,000/- is highly excessive and unreasonable. However, this Tribunal is of the considered opinion that the claim to the extent of Rs. 50,00,000/- may be reasonable. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow the claim of the assessee u/s 37 of the Act to the extent of Rs. 50,00,000/-. Hence, the disallowance to the extent of Rs. 2,00,00,000/- is confirmed. 46. In the result, the appeal of the assessee in I.T.A.No. 1070/Mds/2012 is partly allowed. 47. Now coming to Revenue's appeal I.T.A.No.1299/Mds/2012, the first issue arises for consideration is disallowance of interest on the advances made to subsidiary companies to the extent of Rs. 20.08 crores. 48. The Assessing Officer disallowed the notional interest @ 6% on the advances made to subsidiary companies. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own funds, there is no question of any disallowance u/s 14A of the Act. 55. On the contrary, Shri S. Bharath, ld. DR submitted that there is no material available on record with regard to availability of assessee's own funds. The assessee has made huge investment in the shares of other companies for earning the exempted income. In fact, the assessee earned Rs. 2,11,76,000/- in assessment year 2010-11 and Rs. 1,65,32,000/- in assessment year 2011-12. According to the ld. DR, while making investment, the assessee has to necessarily utilize the manpower and infrastructure facility. Therefore, the assessee cannot say that there was no expenditure incurred for earning the exempted income. The Assessing Officer by applying third limb of Rule 8D, computed the expenditure at 0.5% of the average investment. According to the ld. DR, this expenditure computed by the Assessing Officer at 0.5% has to be necessarily incurred in the manpower and infrastructure facility of the assessee-company. Therefore, the CIT(A) has rightly confirmed the order of the Assessing Officer. 56. We have considered the rival submissions on either side and also perused the material available on record. As rightly su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer restricted the depreciation on the amount actually paid for the year under consideration. The assessee claimed depreciation on the total cost of Rs. 364 crores. As already discussed in the earlier part of this order, depreciation has to be allowed on the cost of the asset and not on the amount paid by the assessee. Since the franchise rights is also one of the capital asset on which depreciation has to be allowed u/s 32 of the Act, this Tribunal is of the considered opinion that the Assessing Officer has to allow depreciation on the entire cost of Rs. 364 crores without restricting the same to the amount actually paid for the year under consideration. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow depreciation on the written down value of the entire cost of IPL franchise fee of Rs. 364 crores. 61. The next issue arises for consideration is with regard to disallowance of payment made to Dr. K. Venkatesan. 62. Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that the assessee has made a payment of Rs. 75 lakhs for the assessment year 2010-11 to Dr. K. Venkatesan and another sum of Rs. 63,75,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Venkatesan for the same services. The assessee is expected to incur certain expenditure on the belief that the art of vastu may increase the productivity or profit of the assessee. However, claiming such expenditure year after year cannot be for business purpose. Therefore, this Tribunal is of the considered opinion that payment for Rs. 75 lakhs for the year under consideration to Dr. K. Venkatesan cannot be considered to be for business purpose. Therefore, the CIT(A) has rightly confirmed the disallowance. 65. Now, coming to the payment made to M/s Rishi Vidhya Consultants Pvt. Ltd to the extent of Rs. 2,50,00,000/-, this Tribunal has allowed the claim of the assessee for assessment year 2009-10 as revenue expenditure to the extent of Rs. 50,00,000/-. It is not known why such a huge payment was made to the very same company M/s Rishi Vidhya Consultants Pvt. Ltd for the year under consideration. The assessee cannot make such a payment year after year in the name of vastu consultancy, therefore, it lacks bonafideness of the services rendered by M/s Rishi Vidhya Consultants Pvt. Ltd for the year under consideration. Hence, this Tribunal is of the considered opinion that the CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s SERI Infrastructure Finance Ltd.. Therefore, the CIT(A) has rightly confirmed the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 70. The next issue for consideration is with regard to addition of expenditure attributable to earning exempt income while computing the book profit u/s 115JB of the Act. 71. Since the disallowance under rule 8D was confirmed at 0.5% of the average value of investment, income from which does not form part of total income, both for regular computation as well as computation u/s 115JB of the Act, the Assessing Officer has rightly made the addition. However, the orders of the lower authorities are modified and the Assessing Officer is directed to disallow 0.5% of the average value of investment, income from which does not form part of total income. 72. The next issue arises for consideration is provision for leave encashment while computing the book profit u/s 115JB of the Act. 73. As already discussed, sec. 43B(f) of the Act was declared unconstitutional by the Calcutta High Court in the case of Exide Industries Ltd.(supra). However, the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el is that the assessee is having sufficient interest free funds for making investment in the shares of other companies, therefore, there is no question of any disallowance u/s 14A of the Act. For the assessment year 2009-10, the Assessing Officer has disallowed 0.5% of the average investment as notional expenditure by following limb (iii) of Rule 8D of the Income-tax Rules. During the year under consideration rule 8D is very much applicable. Therefore, by applying the 3rd limb of Rule 8D, 0.5% of the average value of investment, income from which does not form part of total income, has to be construed as expenditure for earning the exempted income. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to disallow 0.5% of the average value of investment, income from which does not form part of total income. 82. The next ground of appeal with regard to provision for leave encashment to the extent of Rs. 4,95,96,000/-. 83. We heard the ld. Counsel for the assessee and ld. DR also. As rightly submitted by the ld. Counsel for the assessee, the Calcutta High Court in the case of Exide Industries Ltd (supra) has held that sec. 43B(f) is unco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the disallowance of Rs. 63,75,000/- is confirmed. 88. The next ground is with regard to disallowance of Rs. 2,50,00,000/- said to be paid to M/s Rishividya Consultants Pvt. Ltd. 89. According to the ld. Counsel, M/ Rishividya Consultants Pvt. Ltd provided vastu service and suggested the rituals and poojas to be performed in the premises of the assessee. 90. We heard Shri S. Bharath, ld. DR also. 91. For the assessment year 2009-10, an identical issue came before this Tribunal. This Tribunal allowed the claim of the assessee to the extent of Rs. 50,00,000/-. However, for the assessment year 2010-11, the assessee has paid another sum of Rs. 2,50,00,000/-. This Tribunal found that such a huge amount was paid for the earlier assessment year also, therefore, there is no reason for making payment of such a huge amount for the subsequent assessment year. In the absence of any special reason for making such payment year after year, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed. 92. The next issue is with regard to addition of expenditure attributable to earning of exempted income while computin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 100. The next issue for consideration is with regard to depreciation on IPL franchise rights. 101. As discussed earlier, the assessee is entitled for depreciation on the cost of IPL franchise rights irrespective of the payment made during the year under consideration. Therefore, the assessee is entitled for depreciation on the written down value of the IPL franchise rights. In other words, the cost of the asset shall be taken at Rs. 364 crores and depreciation which was allowed in the earlier year shall be reduced to arrive at the written down value. Accordingly, the order of the CIT(A) is modified. 102. The next ground of appeal is with regard to disallowance of advertisement charges paid to M/s Kalaignar TV Pvt. Ltd. 103. Shri S. Bharath, ld. DR submitted that the assessee entered into agreement with M/s Kalaignar TV Pvt. Ltd. on 12.1.2011 for telecast of its advertisement. The assessee claimed that a sum of Rs. 60 crores was paid in two installments of Rs. 30 crores each on 19.1.2011 and 20.1.2011. The assessee has claimed proportionate amount of Rs. 1,59,38,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vertise its product through M/s Kalaignar TV Pvt. Ltd. hence, the amount claimed by the assessee has to be allowed. 105. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, there was an agreement between the assessee and M/s Kalaignar TV Pvt. Ltd. It is an electronic era and advertisement has to be made through electronic media. Even though conventional method of advertising is available in the country, the effective method to reach people is to make advertisement in the TV. The Revenue is objecting in choosing M/s Kalaignar TV Pvt. Ltd. when other channels are available. It is not for the Assessing Officer to suggest the television channel through which the assessee has to advertise its product. The assessee being a businessman knows very well in which manner he has to advertise its product to earn maximum profit. When the assessee decided to make advertisement through M/s Kalaignar TV Pvt. Ltd. the Assessing Officer cannot doubt the genuineness of the decision taken by the assessee for choosing M/s Kalaignar TV Pvt. Ltd. It is open to the assessee to select any channel including M/s Kalaignar TV Pvt. Ltd. Admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serves account. The Assessing Officer allowed the claim of the assessee. However, the CIT found that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. The assessee has also claimed unabsorbed loss of Rs. 1,53,16,83,957/- as deduction while computing book profit which includes the book loss of the amalgamated company of Rs. 40,55,32,878/-. The Assessing Officer allowed the claim of the assessee. However the CIT found that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. The CIT directed the Assessing Officer to examine all the facts and thereafter to reframe the assessment. 109. On a query from the Bench whether the Assessing Officer has discussed all the three issues in the assessment order, the ld. Counsel very fairly submitted that there is no discussion in the assessment order about these three issues raised by the CIT. However, the Assessing Officer has taken one of the possible views and allowed the claim of the assessee , therefore, the CIT cannot take a different view which amounts to change of opinion. 110. On the contrary, Shri S. Bharath, ld. DR submitted that the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erational lease, the assessee is expected to deduct tax. Since the asset was acquired for right to use basis, hence, the payment has to be construed in the nature of rent, therefore, the assessee is very much liable to deduct tax u/s 194I of the Act. This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 116. In the result, the assessee's appeal I.T.A.No. 159/Mds/2015 is dismissed. 117. Coming to Revenue's appeal I.T.A.No.237/Mds/2015, the first issue arises for consideration is with regard to reducing the amount from the net profits shown in the Profit & Loss Account for the purpose of computing the book profit u/s 115JB of the Act. 118. According to the ld. DR, the principle behind the exclusion is that what was already taxed should not be taxed again. In this case, the amount shown in the Profit & Loss Account was not subjected to tax at all, therefore, it cannot be reduced from the book profit. 119. On the contrary, the ld. Counsel submitted that the assessee has created Rs. 50.66 crores as provision in the books of account and debited to Profit & Loss Account in all the relevant assessment year. During the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee-company effectively debited the above employees benefit to the extent of Rs. 50.6 crores in the Profit & Loss Account by setting off against the employee benefits of the current year. Therefore, the CIT(A) has rightly directed the Assessing Officer to examine the claim of the assessee about withdrawal of the amount of Rs. 50.66 crores from the reserves and setting off the same against the employee benefits of the year under consideration and debiting only the net amount in the Profit & Loss Account. Therefore, the direction of the CIT(A) to allow deduction of Rs. 50.66 crores while computing book profit u/s 115JB cannot be found faulted with. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly the same is confirmed. 121. The next ground of appeal is with regard to disallowance made on brought forwarded losses consequent to amalgamation. 122. Shri S.Bharath, ld. DR submitted that the assessee claimed brought forward losses and depreciation pertaining to amalgamating company M/s Visaka Cement Industries Ltd. while computing book profit u/s 115JB of the Act. The Assessing Officer found that there were no real losses in the ama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee-company, the entire assets and liabilities included the unabsorbed losses and depreciation has to be taken into consideration while computing the book profit. As rightly submitted by the ld. Counsel for the assessee, the unabsorbed losses and depreciation to the extent of Rs. 40.55 crores in the hands of M/s Visaka Cement Industries Ltd. before amalgamation will not get reduced or neutralized on account of revaluation, therefore, the assets and liabilities at the fair value during the course of amalgamation has to be considered in the hands of amalgamated company. In view of the above, this Tribunal is of the considered opinion that the brought forward losses and depreciation to the extent of Rs. 40.55 crores has to be allowed while computing the book profit in the hands of the assesseecompany. Accordingly, this Tribunal do not find any infirmity in the order of the CIT(A), hence the same is confirmed. 125. The next issue arises for consideration is with regard to mine development expenses. 126. The assessee claimed Rs. 20,80,753/- towards mine development expenses and claimed the same as deferred revenue expenditure. According to the ld. DR, income-tax does not recognize an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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