TMI Blog1981 (11) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... e loosely described as sister-companies. It appears that Podar Plastics (P.) Ltd. had not been making profits in its business and that its assessments had resulted in determination of loss from business and the depreciation which was allowable was not set off and had to be carried forward in accordance with law. 2. By an agreement dated 26-12-1973 Podar Plastics (P.) Ltd. sold or transferred to Podar Shakti Plastics (P.) Ltd. certain assets (and also certain liabilities). The two companies are hereinafter referred to as "the transferor" and "the transferee", respectively. The name of the transferee was later changed to "Podar Plastics (P.) Ltd." and still later it was changed to "Bombay Household and Industrial Plastics Mfg. Co. (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00 Electrical installation 9,221.24 32,150.00 Air-conditioning plant 270.00 4,220.00 ------------------- ---------------------- Total 77,989.36 8,95,562.12 ------------------- ---------------------- The transferee (i.e., the assessee) paid the price or the consideration for the transfer in accordance with the valuation repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferee to the transferor. We have considered the relevant facts and circumstances, the order of the authorities below and the rival submissions. 6. It is common ground that the kind of adjustment which the department wants to make is possible only if the provisions of Explanation 3 to section 43(1) of the Income-tax Act, 1961, can be made applicable. The provisions of the said Explanation are as below: "Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the ITO is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income-tax (by claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that the main purpose of the transferor was to put an artificial value on the assets for claiming an inflated cost for the purpose of depreciation allowance. It may be another matter if the consideration was more than the market value itself, but this is not alleged in the orders of the authorities below and when we specifically requested the learned departmental representative whether it is suggested that such was the case, he has not suggested that such was the case nor has he brought to our notice any material to show that such was the case. Nor is there any other material to suggest that the transfer was made for the purpose of reduction of the income-tax liability of the transferee. We find that the provisions of Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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