TMI Blog2017 (3) TMI 1705X X X X Extracts X X X X X X X X Extracts X X X X ..... case on hand also, on account of conversion, the erstwhile partnership firm ceased to exist while the company has come into existence. Therefore, the assets come to vest in the hands of the company and there is no cost of assets to the company on such vesting. When the transaction itself has been treated to be not a transfer, but is akin to succession, in our opinion the 5th proviso to sub-clause (ii) of sec. 36(1) applies and the depreciation has to be calculated as if there is no transfer. Further, as there is no transfer, there is no cost to the assessee. Depreciation is allowable on the WDV of the asset and WDV has been defined u/s 43(6) to mean in the case of assets acquired in the previous year, the actual cost to the assessee. As actual cost to the assessee was ‘Nil’, the WD value of the assets in the hands of the predecessor firm shall be considered for the allowance of depreciation. Year of assessment - Sub-sec(6) of sec. 43 defines ‘Written Down Value’ and it provides for both the acquisition of assets during the relevant previous year and acquisition of assets before the relevant previous year and both the clauses mention ‘actual cost to the assessee’. In the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the eye of law merely to rectify any omission or wrong statement made in the original return. It is clear from the notice u/s 143(2) that the AO noted down the filing of revised return on 12/12/2012, therefore, it cannot be said that notice was issued without considering the revised return. In our view, this contention of the assessee is baseless and is required to be dismissed. 7. We find that the reasoning given by the learned CIT(A) in paragraph 5 is the correct reasoning as the notice was issued by the AO within a period of limitation and there is no delay in issuing notice. Accordingly, the ground No.1 is decided against the assessee. 8. With respect to ground No.2, it is pointed out by the learned DR that this issue is covered against the assessee in the assessee s own case for earlier assessment years from 2005-06 to 2008-09 in ITA Nos.429 to 430/Bang/2013 dated 10/1/2014, wherein at paragraph 16 to 25 it has been held as under: 16. The first question for adjudication before us is whether the earlier partnership firm was required under law to revalue the assets before its conversion into a company. As rightly pointed out by the learned counsel for the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and distinct legal entities and it cannot be said that the assessee company has not acquired any assets from the erstwhile partnership firm. To appreciate these contentions of the assessee, we have to examine the procedure and effect of conversion of a partnership firm into a company. The Hon ble Bombay High Court in the case of CIT Vs. Texspin Engg and Manufacturing Works reported in (2003) 263 ITR 345 (Bom) has considered the effect of conversion of a partnership firm into a limited company by virtue of sec. 575 of the Companies Act and has held that under part IX of the Companies Act, when a partnership firm is converted to a limited company, the properties of the erstwhile firm vests in the limited company. It was observed that there is a difference in vesting of the property and distribution of the property. It was held that on vesting in the limited company under part IX of the Companies Act, the properties vest in the company as they exist while distribution of property on dissolution presupposes division, realization, encashment of assets and appropriation of the realized amount as per the priority and that this difference is very important. Having observed thus, the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there is no transfer. 19. Further, as there is no transfer, there is no cost to the assessee. Depreciation is allowable on the WDV of the asset and WDV has been defined u/s 43(6) to mean in the case of assets acquired in the previous year, the actual cost to the assessee. As actual cost to the assessee was Nil , the WD value of the assets in the hands of the predecessor firm shall be considered for the allowance of depreciation. 20. Therefore, we do not see any reason to interfere with the orders of the authorities below. 21. The learned counsel for the assessee had placed reliance upon the decision of ITAT at Ahmedabad in the case of Prakash Chemical Agencies Pvt. Ltd. reported in (2012) 136 ITD 222 (Ahd) but we find that it is the case of a takeover of the business of a partnership firm by the assessee company therein whereas in the case before us, it is the case of conversion of partnership firm into a company. Therefore, the said decision is not applicable to the case on hand. 22. The other objection of the learned counsel for the assessee is that the conversion has taken place in the previous year relevant to assessment year 2004-05 and hence it can be examine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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