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TMI Blog2022 (8) TMI 1377X X X X Extracts X X X X X X X X Extracts X X X X ..... , by a notification published in Part II, Section 3 (ii) of the Gazette India Extraordinary dated 19.02.1990 issued by the Government of India, Ministry of Finance, Department of Economic Affairs, the Central Government sanctioned a scheme for amalgamation of the Bank of Thanjavur Limited, Thanjavur with the Indian Bank. One of the clauses contained in the said Gazette notification dated 19.02.1990 reads thus: "4(I)... (e) premises and all other immovable properties and any assets acquired in satisfaction of claims shall be valued at their market value. (f) Furniture and fixtures, stationery in stock and other assets, if any, shall be valued at the written down value as per books or the realisable value as may be considered reasonable." Subsequently, for the assessment years under consideration, in the returns of income filed by them, the appellant claimed depreciation in respect of the assets taken over from the Bank of Thanjavur, as per the scheme of amalgamation formulated by the Central Government, with effect from 20.02.1990. However, the assessing officer disallowed the depreciation on the ground that the assessee should have taken the written down value of the Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of Thanjavur pursuant to the scheme of amalgamation formulated by the Ministry of Finance, Government of India? (2) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in invoking Explanation 7 to Section 43 (1) of the Income Tax Act in regard to the aforesaid issue and confirming the disallowance of depreciation? 6. Mr. Baskar, learned counsel for the appellant/assessee would contend that the Tribunal erred in holding that the transaction involved in the present case, falls under Explanation 7 to Section 43 (1) of the Act; and that, the amalgamating bank namely Bank of Thanjavur ceased to exist and therefore, the provisions come into operation and disallowance of depreciation by the Assessing Officer is justified. According to the learned counsel, such a conclusion arrived at by the Tribunal is incorrect, by contending that the banking business of Bank of Thanjavur Limited was taken over by the appellant on 20.02.1990 under a scheme of take over formulated by the Government of India, with the approval of the Reserve Bank of India; as per the scheme, the value of assets of the banking business taken over by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Per contra, the learned counsel for the respondent/revenue submitted that consequent upon the coming into force the scheme of amalgamation, the transferor bank ceased to exist and therefore, the Tribunal rightly held that the case of the assessee clearly comes within the purview of Explanation 7 to Section 43 (1) of the Act and accordingly, allowed the appeals preferred by the Revenue, by the order impugned herein, which does not require any interference at the hands of this court. In support of his contention, the learned counsel referred to a decision of the Bombay High Court in Habib Hussein v. Commissioner of Income Tax [(1963) 48 ITR 859 (Bom)], in which it was held thus:- "If Mr. Joshi's contention is accepted, in cases where depreciable assets are purchased not at a fixed price but on percentage basis of gross returns of the business, the assessee would not be entitled to claim any depreciation at all in any year because the price payable would get determined at the end of the year or years and naturally, therefore, would not be an amount expended or a liability incurred for a certain amount by an assessee at the commencement of the year for acquisition of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee took over only the part of the business of Bank of Thanjavur and the Bank of Thanjavur is still existing and not completely got merged with the assessee bank, the Tribunal was of the view that no evidence was produced to substantiate the said contention and accordingly, rejected the claim of the appellant / assessee, seeking depreciation in respect of the assets taken over from the transferor bank. In this regard, the observation of the Tribunal is usefully extracted below: "6. Shri. Meenakshisundaram, learned counsel for the assessee vehemently contended that the nomenclature is not decisive. In the instant case the word 'amalgamation' is loosely used. Actually, it is not a case of amalgamation as contemplated under Explanation 7 to section 43. Assessee took over only the part of the business of Bank of Thanjavur. Bank of Thanjavur is still existing and not completely got merged with the assessee Bank, albeit no evidence in regard to the same was furnished before us. We have given time to the learned counsel for the assessee to substantiate this fact. But no evidence in this regard was brought before us. We have examined the scheme of amalgamation formulated by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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