TMI Blog2017 (12) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... f the considered view that the matter is required to be remitted to the file of the Assessing Officer for adjudication de novo in the light of our observations above, in accordance with the law, by way of a speaking order dealing with specific justifications for bifurcation, as may be given by the assessee, after giving a fair and reasonable opportunity of hearing to the assessee. - I.T.A. No.2177/Ahd/2011 - - - Dated:- 13-12-2017 - Pramod Kumar AM And Mahavir Prasad JM For The Appellant : S N Soparkar For The Respondent : Sonia Kumar ORDER Per Pramod Kumar, AM: 1. This appeal is directed against the order dated 3rd August 2011, passed by the learned CIT(A)-VI, Ahmedabad, in the matter of assessment under section 143(3) of the Income-tax Act, 1961, for the assessment year 2008-09. 2. Grievances raised by the appellant are as follows: 1. On the facts and in the circumstances of the case, the CIT(A) erred in not upholding the assessee s plea that the impugned assessment order u/s 143(3) dated 28.12.2010 was bad in law and deserved to be quashed. 2. Without prejudice, on the facts and in the circumstances of the case, the CIT(A) er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve continued with the demerged company (assesseecompany). The assessee-company has submitted that the said losses are directly relatable to the demerged company, thus, the same are allowable as per the provisions of 72A(4)(a) of the Act. The assessee-company in support of its claim has prepared a 'working of bifurcation of Profit Loss between B2B B2C' wherein it has apportioned the total expenses incurred by the assessee-company between the retail business (B2C) and the wholesale business (B2B). Further, based on this' working of profits and losses, consequent to the show-cause notice, the assessee-company has provided a year-wise working of the losses and unabsorbed depreciation and has claimed that losses and unabsorbed depreciation aggregating to ₹ 4,83,48,034/- are directly relatable to the B2B business of the assessee-company (demerged-company). It is noteworthy that the assessee company has not submitted separate profit loss accounts for the two undertakings but 'a working of bifurcation of profit loss'. 2.15 The contentions of the assessee-company are highly misplaced and lack any substance and merit and are thus, rejected for the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere afterthought so as to prevent the taxability of the income of ₹ 199 Crores which has been set-off by the assessee-company against the wrongly brought forward losses and unabsorbed depreciation. 2.20 Moreover, the assessee-company has not explained the basis for the apportionment of the expenses between the B2B and B2C business operations. However, the assessee-company vide letter dated 24.12.2010 has submitted a certified copy of the same 'working of bifurcation of profit and losses between B2C B2B certified by a practicing chartered accountant. The same cannot be of any help to the assessee-company as it is a fact that the assessee-company has not maintained separate accounts for the two undertakings. Moreover, The Hon'ble High Court of Delhi in the case of Goodyear India Ltd. vs: CIT 112 Taxman 419 has held that: Merely because an audit report is available there is no fetter on the power of the ITO to require me assessee to justify its claim with reference to records, materials and evidence. Such a power is inherent in an Assessing Officer in the scheme of the Act 2.21 As the assessee in the present case has failed to prove that separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts or at least final accounts of existing and transferred undertakings for past many years since beginning, the loss or depreciation cannot be directly related to the transferred undertaking. The appellant's effort in bifurcating expenses is without any basis. The same is not audited or authenticated. The allocation of expenses for past several years at this stage is not possible and cannot be verified. Since appellant had not prepared division wise final accounts including P L account for all the years from where unabsorbed depreciation or brought forward business losses relates to, such bifurcations of expenses and working out of losses and depreciation is not generated from the records available with the Department. Needless to mention that both brought forward business loss and unabsorbed depreciation are determined by the assessing officer after assessment and it is not just what is submitted by the appellant. In the present case appellant has not even prepared separate P L accounts computing separate losses or unabsorbed depreciation. None of these assessments are open at this stage in which the details now submitted by the appellant can be examined and verified. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the units transferred to resulting company, is to be examined on merits and, if no defects are found in the same, it is to be accepted. These explanations cannot be brushed aside on the ground that separate books of accounts are not maintained, which is not a condition precedent for invoking section 72A(4)(a) anyway, or that these explanations were not furnished at the time of demerger. Nor, for that purpose, rejection of the explanation on the basis of sweeping generalizations or vague reasons can meet our approval either. The approach adopted by the authorities below, thus, does not meet our approval. 9. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the matter is required to be remitted to the file of the Assessing Officer for adjudication de novo in the light of our observations above, in accordance with the law, by way of a speaking order dealing with specific justifications for bifurcation, as may be given by the assessee, after giving a fair and reasonable opportunity of hearing to the assessee. 10. In the result, the appeal is allowed for statistical purposes. Order pronounced in the open Court on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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