Income Tax Appellate Tribunal - IndoreSiel Financial Services Limited, ... vs Department Of Income Tax on 3 November, 20101



 IN THE INCOME TAX APPELLATE TRIBUNAL
          INDORE BENCH, INDORE

     BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER
                          And
        SHRI R.C. SHARMA, ACCOUNTANT MEMBER

                    ITA Nos.17 & 18/Ind/2011
                     A.Y. 1997-98 & 1998-99

ACIT-3(1), Bhopal                       ::   Appellant

Vs

M/s. Siel Financial Services Limited,
New Delhi
PAN - AACCS 0398 C                      ::   Respondent

      Appellant by          Shri Darshan Singh
      Respondent by         Shri Hitesh Chimnani
      Date of hearing       28.05.2012
      Date of pronouncement 28.05.2012


                           O R D E R
PER JOGINDER SINGH , judicial memberBoth these appeals are by the revenue against different

impugned orders dated 3.11.2010 passed by the learned first

appellate authority on the common ground that the CIT(A) erred in2holding that the assessee company is entitled to carry forward

and set off of business loss/unabsorbed depreciation relating to

earlier assessment years, as claimed, even though the sole idea

of amalgamation was         not the revival of the amalgamating

company but was only to take the benefit of carry forward losses.2.   During hearing of this appeal, we have heard Shri Darshan

Singh, learned CIT/DR and Shri Hitesh Chimnani, ld. Counsel for

the assessee. At the outset, the ld. Counsel for the assessee

claimed that the impugned issue is covered by the decision of the

Tribunal in the case of the assessee itself vide order in ITA No.

35/Ind/2005 dated 18th November, 2009. This factual matrix was

not controverted by the Revenue.3.   We have considered the rival submissions and perused the

material available on the record. In view of the above assertion,

we are reproducing hereunder the relevant portion from the

aforesaid order of the Tribunal dated 18th November, 2009 :-"3. In this appeal, in ground no. 1, the Revenue is
     aggrieved by the decision of Ld. CIT(A) directing the A.O. to3allow the carry forward of the loss of Rs. 2,83,85,937/-
disallowed by the Assessing Officer while framing the
assessment.4. The facts, in brief, are that the returned income was
shown Nil by the assessee company after setting off
brought forward losses to the tune of Rs. 2,83,85,937/-. The
A.O. required the assessee to explain regarding the
eligibility of such set off. The assessee submitted that the
quantum of carry forward loss and unabsorbed depreciation
was subject to pending assessment/appeals for earlier
years. It was also submitted that the company was liable to
pay tax on book profit u/s 115JA. The assessee also
submitted the details of assessment of earlier years which
in the opinion of A.O. revealed that in the earlier years of
unabsorbed losses./dep0reciation had been set off up to
assessment year 1999-2000. Hence, the company was not
eligible for set off of brought business loss. The assessee
submitted that there were two companies, namely, Shri
Ram Agro Tech Private Limited Company and Siel Financial
Services Limited, M/s Siel Financial Services Limited was
merged with M/s Shri Ram Agro Tech Industries Limited
with effect from 1.4.1996 i.e. relevant to assessment year
1997-98. Subsequently, the name of Shri Ram Agro Tech
Industries Limited was changed to Siel Financial Services
Limited. It was also brought to the notice that the orders of
the Hon'ble High Courts of Delhi and Madhya Pradesh
approving the amalgamation were received subsequent to
filing of returns by both the companies separately for
assessment year 1997-98. However, revised return of the
amalgamated entity was filed on 28.11.1997 declaring a
loss of Rs. 2,56,39,053/-, which comprised of business loss
of unabsorbed depreciation. The A.O. noted that in the
revised return, three were no brought forward business loss
or unabsorbed depreciation pertaining to erstwhile Siel
Financial Services Limited and unabsorbed depreciation
and business loss brought forward to the tune of Rs.
8,03.98,393/- and Rs. 8,68,35,217/- pertained to M/s Shri
Ram Agro Tech Industries Limited. The A.O. held that such
business loss was not eligible for carry forward and set off4in subsequent years as the revised return i.e. return for
merged entity was filed beyond the statutory limit, hence,
violation of provisions of section 80 of the Act. He further
held that business activities and production activities of M/s
Shri Ram Agro Tech Industries Limited had been closed
before amalgamation and the amalgamated entity (the
assessee ) basically carried forward the losses of erstwhile
Shri Ram Agro Tech Industries Limited merely for taking
advantage of the same in the assessment year after its
disposing of the fixed assets of Company and hence in A.Y.
1999-2000 it had no further existence and, therefore, for this
reason, the assessee was not eligible for set off losses
pertaining to Shri Ram Agro Tech Industries Limited
suffered by that Company in assessment year 1993-94 to
1997-98. Aggrieved by this, the assessee carried the
matter into appeal before the ld. CIT(A) wherein the detailed
submissions were made regarding the status of both the
Companies independently and amalgamation thereof and
change of name of new company. The attention of the ld.
CIT(A) was also drawn to the provisions of section 72 as
amended with effect from 1.4.2000 to argue that since that
date it was not required that the same business should
continue for the purpose of availing set off of earlier years'
losses. The Ld. CIT(A) after considering the submissions
made by the assessee held that the assessee was eligible
for carry forward and set off of such brought forward losses.
The relevant findings of the ld. CIT(A) are as under :-"I have examined the contentions of the A.O. as
     well as the AR and also the explanation during the
     appellate stage. It appears that there has been
     some confusion regarding the name of the
     company, losses of which are available to the
     appellant company for set off. In case there were
     losses duly assessed for earlier year's available in
     case of Shriram Agro Tech Industries Limited
     which was the company being assessed with the
     A.O. at Bhopal and whose name has been
     changed to Siel Financial Services with effect from
     23.6.1998 the appellant would be entitled to set off5of such losses upto the assessment year 1996-97
only from assessment year 1997-98 one
assessment order was passed by the Assessing
Officer which was in respect of the company Delhi
based      company       subsequently      merged.
Accordingly, contention of the appellant for set off
of brought forward losses, as per assessments for
the company based at Bhopal, namely, Shriram
Agro Tech Industries Limited is correct.The
assessments     for    the   amalgamating      and
amalgamated companies were made separately
up to the assessment year 1996-97.It would be relevant to mention at this
juncture, the CBDT Circular No. 779 on the
subjectFinance Act, 1999, explanatory Notes on
the provisions relating to direct taxes quoted
hereunder :-"(xxi)Section 72of the Income-tax Act, 1961
     relating to carry forward and set off of
     business loss has been amended deleting
     the proviso to clause (i) of sub section(1)
     which stipulated that the business or
     profession for which the loss was computed
     has to be continued in order to avail carry
     forward and set off of loss. With this
     omission, business loss can be carried
     forward and set off even if the assessee is
     engaged in a different business"5.    Aggrieved by this, the Revenue is in appeal
before us.6.    The ld. Departmental Representative
narrated the facts and placed strong reliance on
the order of the A.O.7.   The learned counsel for the assessee
submitted that there was no dispute on facts.6Thereafter, he contended that the order of
amalgamation was approved by the concerned
Hon'ble High Courts on 5.12.1997 and only
thereafter a consolidated return was filed for the
amalgamated entity and original returns of both
the entities prior to such amalgamation had been
filed within the due date i.e. 28.11.1997. Hence,
there was no violation of provisions ofsection 80,
as the return of new entity had to be related back
to their separate returns. It was also contended
that the provisions of section 72A were not at all
attracted because the assessee had not claimed
any set off of unabsorbed brought forward loss or
unabsorbed       depreciation     of   amalgamating
company i.e. Siel Financial Services Limited. He
further contended that as per the amended
provisions ofsection 72, now there was no
requirement of same business to be in existence
to claim set off of such carried forward losses.8.   We have considered the submissions made
by both the sides, material on record and the
orders of the authorities below.9.    It is noted that the return of both
amalgamating and amalgamated company have
been filed within the time period specifiedu/s
139(1). It is also noted that consolidated return of
the amalgamated entity has been filed for the
assessment year 1997-98, after amalgamation
being approved by the concerned Hon'ble High
Courts.      Thus, in our opinion, in these
circumstances, the assessee cannot be expected
to do an impossible thing i.e. filing of return of
amalgamated entity before it is coming into legal
existence and, therefore, such return should relate
back to the original returns filed by these
companies individually. It is not in dispute that
original returns have been filed within the time
specifiedu/s 139(1). Hence, we hold that there is7no default of provisions ofsection 80as held by
          the Assessing Officer. We also find that the
          provisions of section 72A are not applicable as
          such brought forward losses pertain to
          amalgamated company. It is noted that due to
          amendment of provisions ofsection 72, in the year
          under consideration, there is no requirement that
          same business i.e. business operations of M/s
          Shri Ram Agro Tech Industries Limited should
          have been continued. In view of these facts and
          legal position as narrated above, we hold that the
          order of the ld. CIT(A) is correct in law.
          Accordingly, we dismiss this ground of the
          Revenue."3.1 If the observation made in the assessment order, conclusion

drawn in the impugned order, assertion made by the learned

respective counsel and the conclusion drawn in the aforesaid

order, are kept in juxtaposition and analysed, we find that there is

categorical finding, which is based upon the submission of the

assessee, that the Hon'ble jurisdictional High Court and also the

Hon'ble Delhi High Court have duly approved the scheme of

amalgamation. Even otherwise, the learned CIT(A) has followed

the aforesaid decision of the Tribunal dated 18th November, 2009.The Hon'ble Madras High Court in the case ofPentamedia

Graphics Limited v. ITO; 43 DTR 256 held as under :-8"      Once the scheme of amalgamation had been
            sanctioned with effect from a particular date, it is binding
            on every one including the statutory authorities and the
            only course open to the Revenue would be to act as per
            the scheme sanctioned, the tax authorities are bound to
            take note of the state of affairs of the applicant as on the
            effective date i.e. Ist Jan 2004 and a revised return filed
            reflecting the same cannot be ignored on the strength of
            s. 139(5)."In view ofthe above decisionfrom Hon'ble Madras High Court

and the decision of the Tribunal that too in the case of the

assessee itself, we find no infirmity in the impugned order. It is

affirmed.Finally, both these appeals of the Revenue are dismissed.Order pronounced in open Court in the presence of learned

representatives from both the sides at the conclusion of the

hearing on 28.5.2012.SD                                 SD

     (R.C.SHARMA)                         (JOGINDER SINGH)
ACCOUNTANT MEMBER                          JUDICIAL MEMBER
Dated: 01.6.2012Copy to: Appellant, Respondent, CIT, CIT(A), DR, Guard File
Dn/-