TMI Blog2016 (5) TMI 1539X X X X Extracts X X X X X X X X Extracts X X X X ..... see is required to be examined a fresh in accordance with law. Therefore the finding of the learned CIT(A) on this account has been ordered to be set aside and learned Assessing Officer is hereby directed to decided the matter afresh in accordance with law. This issue is decided in favour of the Assessee against the Revenue. In the result the appeals of the assessee are allowed. Depreciation on plant and machinery as transferred from the holding company to subsidiary company -provisions of explanation 6 to sub-section (1) of section 43 - WDV in the books or in the block of assets of the transferor company shall be considered as the actual cost in the hand of the transferee company in respect of such assets - HELD THAT:- Considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the record. Learned representative of the assessee has argued that no administrative expenses were incurred to earn the exempt income therefore no expenses are required to be deducted in view of the provision u/s. 14A of the Act. It is also argued that the learned Assessing Officer had failed to do any exercise to connect the expenses incurred to earn the exempt income therefore in the said circumstances the expenditure which were not incurred to earn exempt income is not required to be assessed in view of the provision of section 14A of the Act. It is also argued that the Assessing Officer did not examine the correctness of the claim of the assessee with regard to incurring the expenditure to earn the exempt income whereas it seems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the claim of the assessee is required to be examined a fresh in accordance with law. Therefore the finding of the learned CIT(A) on this account has been ordered to be set aside and learned Assessing Officer is hereby directed to decided the matter afresh in accordance with law. This issue is decided in favour of the Assessee against the Revenue. In the result the appeals of the assessee are allowed. ITA No. 8324/Mum/2011 4. The sole point which has been raised by the revenue is that the learned CIT(A) has failed to appreciate the provisions of explanation 6 to sub-section (1) of section 43 of the Act where used plant and machinery is transferred from the holding company to subsidiary company, the WDV in the books or in the blo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferor company and in order to ensure that the transferee company does not claim depreciation on a higher cost, it was provided by the insertion of Explanation (6) to sub-section (1) of section 43 of the Act, that in such cases the WDV in the hands of the transferor company, shall be the cost of Acquisition in the hands of the transferee company. The Assessing Officer's action is right as far as the situation as on the date of transfer is concerned. But by 30-9-1994, the assessee company ceased to be the subsidiary of the transferor holding company. Section 47 grants exemption from section 45 while section 47A withdraws the exemption granted under section 47 on the occurrence of the events mentioned therein. Section 47 reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effect of such withdrawals? In the case of the transferor company, the income is to be treated as the income of the year in which the transfer has taken place. This shows that the subsequent event has the effect of withdrawing the emption granted under section 47 and the income goes back to the date of transfer. Thus, provisions of section 47 are withdrawn on occurrence of the events mentioned under section 47A and the transaction has to be treated as a transfer under section 47(v) or (vi) of the Act as the case may be and the transferor company is liable to pay the capital gains tax. In the present case due to ceasure of the assessee-company being a subsidiary of the transferor company, the provisions of section 47(iv) have ceased to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Motors Ltd. at the cost at which they have been acquired means the actual consideration paid by the assessee company and accordingly allow the depreciation claimed by the assessee. In result, the ground of appeal is allowed. 5. It is clear that the finding of the learned CIT(A) is based upon the observations made in Essar Oil Limited Vs. Deputy Commissioner of Income Tax, Special Range, [2007] 13 SOT 691, Income Tax Appellate Tribunal, Mumbai D bench and the finding of the said judgment has duly been confirmed by the Jurisdictional Bombay High Court in ITA No. 3160 of 2009 in case Commissioner of Income Tax 5 Vs. M/s. Essar Oil Ltd. decided on 7th July, 2011. Considering the facts of the case before us we agree that the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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