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Tax Publishers Asstt. CIT v. Padma Logistics & Khanij Pvt. Ltd. [ITA No. 606/Kol/2018, dt. 22-5-2020] Carry forward and set off loss on de-merger by filing revised return -- Decision in favour of assessee *Facts:* One SYK Ltd., Mumbai agreed to demerge their loss making Vortal division in favour of the assessee with effect from 1-3-2010 in accordance with section 2(19AA) read with 72A(4). Approval petitions for demerger were moved before both Mumbai and Kolkata high courts who approved the demerger on 8-3-2011 and on 21-4-2011 respectively but with effect from 1-3-2010. Demerger thus takes effect from 1-3-2010. Assessee returned income on 28-9-2010 declaring Rs. 8.67 crores without cognisance of carry forward of losses and unabsorbed depreciation of would be demerged entity due to pendency of court approvals. Post court approval for demerger; On 9-6-2011 assessee filed revised return with NIL income, claiming brought forward loss and unabsorbed depreciation of the taken over Vortal division of SYK Ltd. Assessing officer in scrutiny assessment objected by considering original return negating assessee's revised return that -- 1. No mention of demerger pendency was in the audited accounts. 2. Loss return was not filed on time per section 139(3) to claim carry forward of losses. 3. Revised return was filed after notice under section 143(1) thus not as per section 139(5). 4. Alleged double claim of same losses by both demerging and resultant company. Commissioner (Appeals) allowed assessee's appeal on facts. An aggrieved department went in appeal to ITAT who held in favour of assessee holding that -- 1. Mention of demerger fact in notes to accounts of assessee is sufficient. 2. Is a revised return filed on time which cannot be ignored. It was filed before assessment as well. Original return was not a loss return as assessee could not have known outcome of court approval of demerger. 3. Section 143(1) notice not a bar to accept revised return if it is within time before assessment. 4. No alleged double claim duly corroborated with evidence. 5. Section 139(3) makes mention only of section 72A(3) and not of section 72A(4) under which demerger specifically gets covered. 6. Revised return was 'NIL' return not 'loss' return.

Tax Publishers

Asstt. CIT v. Padma Logistics & Khanij Pvt. Ltd. [ITA No. 606/Kol/2018, dt. 22-5-2020]

Carry forward and set off loss on de-merger by filing revised return -- Decision in favour of assessee

Facts:

One SYK Ltd., Mumbai agreed to demerge their loss making Vortal division in favour of the assessee with effect from 1-3-2010 in accordance with section 2(19AA) read with 72A(4). Approval petitions for demerger were moved before both Mumbai and Kolkata high courts who approved the demerger on 8-3-2011 and on 21-4-2011 respectively but with effect from 1-3-2010. Demerger thus takes effect from 1-3-2010.

Assessee returned income on 28-9-2010 declaring Rs. 8.67 crores without cognisance of carry forward of losses and unabsorbed depreciation of would be demerged entity due to pendency of court approvals.

Post court approval for demerger; On 9-6-2011 assessee filed revised return with NIL income, claiming brought forward loss and unabsorbed depreciation of the taken over Vortal division of SYK Ltd.

Assessing officer in scrutiny assessment objected by considering original return negating assessee's revised return that --

1. No mention of demerger pendency was in the audited accounts.

2. Loss return was not filed on time per section 139(3) to claim carry forward of losses.

3. Revised return was filed after notice under section 143(1) thus not as per section 139(5).

4. Alleged double claim of same losses by both demerging and resultant company.

Commissioner (Appeals) allowed assessee's appeal on facts. An aggrieved department went in appeal to ITAT who held in favour of assessee holding that --

1. Mention of demerger fact in notes to accounts of assessee is sufficient.

2. Is a revised return filed on time which cannot be ignored. It was filed before assessment as well. Original return was not a loss return as assessee could not have known outcome of court approval of demerger.

3. Section 143(1) notice not a bar to accept revised return if it is within time before assessment.

4. No alleged double claim duly corroborated with evidence.

5. Section 139(3) makes mention only of section 72A(3) and not of section 72A(4) under which demerger specifically gets covered.

6. Revised return was 'NIL' return not 'loss' return.