TMI Blog1984 (12) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... 1963 and 1964, the assessee was assessed to income-tax. In computing the taxable income of the assessee, the Income-tax Officer found that some of the assets of Belvedere jute Mills Co. Ltd., taken over by the assessee on amalgamation had been sold before putting them to use. On the basis of the written down value of the said assets, the Income-tax Officer held that the profits had accrued in the hands of the assessee under section 41(2) of the Income-tax Act, 1961. The said profits were computed respectively at Rs. 7,97,878, Rs. 1,00,600 and Rs. 8,270 for the said three assessment years. The Income-tax Officer further held that on sale of the assets of Belvedere jute Mills Co. Ltd., long-term capital gain had accrued in the hands of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als to the Income-tax Appellate Tribunal. In respect of profits under section 41(2) of the said Act, the Tribunal, following its earlier order in the case of the assessee for the assessment year 1967-68, rejected the contentions of the Revenue and upheld the order of the Appellate Assistant Commissioner. On capital gain, it was contended by the assessee before the Tribunal that, in view of the amalgamation, the assessee succeeded to the assets of Belvedere jute Mills Co. Ltd., within the meaning of section 49(1)(iii) and, therefore, the cost of acquisition of the assets should be taken as the cost at which the previous owner of the property had acquired it. It was contended further that for the purpose of substitution of the fair market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Tribunal was justified in holding that the capital assets became the property of the assessee by succession within the meaning of section 49(1)(iii) of the Income-tax Act, 1961, for the assessment year 1963-64 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee could not be assessed in respect of any profits arising under section 41(2) of the Income-tax Act, 1961, for the assessment years 1963-64 to 1965-66 ? " At the hearing, the decision of this court in CIT v. Budge Budge Amalgamated Mills Limited [1980] 122 ITR 561, was cited at the bar. In this case, the effect of amalgamation of two companies on the assets of the amalgamated company was considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finding is not challenged. " The question was answered in the affirmative and in favour of the assessee. In the instant case, the Tribunal has found, inter alia, that the assets and the business of Belvedere jute Mills Co. Ltd. were transferred to the assessee on amalgamation, that the identity of the business was preserved and that there was continuity of the business. The above findings have not been challenged. It also appears to us that section 49(1)(iii) of the Act of 1961 is in pari materia with section 12B(3) of the Act of 1922. Accordingly, we hold that the principles laid down in Budge Budge Amalgamated Mills Ltd. [1980] 122 ITR 561 (Cal), would apply to the facts of this case. In both the cases, there was devolution by ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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