Income Tax Appellate Tribunal - Delhi
Mmtc Ltd. vs Deputy Commissioner Of Income Tax on 13 July, 2007
Equivalent citations: (2007)110TTJ(DELHI)600
ORDER
Pramod Kumar, A.M.
1. The short issue that we are required to adjudicate in this appeal is whether or not the CIT(A) was justified in holding that his order dt. 22nd July, 2004 was vitiated by mistake apparent on record to the extent that assessee was entitled to the benefit of set off of accumulated losses and depreciation, amounting to Rs. 663.12 lakhs, in the asst. yr. 1996-97, whereas, in the order dt. 22nd July, 2004, it was held by the CIT(A) that the assessee was entitled to the said benefit in the asst. yr. 1995-96.
2. The assessee is a public sector undertaking, fully owned by the Government of India, and has duly obtained the clearance of the Committee on Disputes (Cabinet Secretariat), in terms of the Hon'ble Supreme Court's judgment in the case of ONGC v. CCE (1992) 104 CTR (SC) 31.
3. In order to properly appreciate the controversy requiring our adjudication, it is necessary to take a look at the relevant material facts. A scheme of amalgamation between the assessee and the Mica Trading Company Ltd. (MITCO, in short) was approved by the Board for Industrial and Financial Reconstruction (BIFR, in short). This scheme was effective from 1st April, 1994, i.e. beginning of previous year relevant to the assessment year in appeal before us. A declaration under Section 72A of the IT Act pursuant to which it was ordered that notwithstanding anything contained in any other provision of the IT Act, the accumulated losses and unabsorbed depreciation of MITCO shall be deemed to be loss/depreciation of the assessee for the previous year in which the amalgamation was effected. The tax benefit was, however, restricted to Rs. 663.12 lakhs, under the said scheme approved by the BIFR. The AO, in purported compliance with this order, restricted the set off to Rs. 663.12 lakhs, as against the assessee's claim that the assessee should be entitled to the tax credit to the extent of Rs. 663.12 lakhs. When the matter travelled to CIT(A), the contention of the assessee was upheld and, accordingly, the AO was directed to "give the credit of unabsorbed losses/depreciation of MITCO against the income of MMTC for the asst. yr. 1995-96, subject to the restriction that in doing so, the tax benefit to the MMTC is restricted to Rs. 663.12 lakhs as per the order of the BIFR". The order so passed by the CIT(A) was dt. 22nd July, 2004, and it is this order which was later subjected to rectification proceedings which are now subject-matter of consideration by us. The rectification was resorted to on the ground that the assessment year stated in the BIFR certificate was 1996-97, and, therefore, the benefit of set off of accumulated Josses and unabsorbed depreciation could only be given in the year 1996-97. The CIT(A) noted that the benefit granted to the assessee in the asst. yr. 1995-96 was a mistake apparent on record and that the assessee "is not entitled to the set off in the asst. yr. 1995-96". The assessee is aggrieved of the rectification order so passed by the CIT(A) and is in appeal before us.
4. We have conscientiously heard Shri Vohra, learned Counsel for the assessee, and Smt. Nambiar, distinguished CIT Departmental Representative. We have also carefully perused the material on record and duly considered factual matrix of the case as also the applicable legal position.
5. We find that there is no dispute about the fact that the merger of the MITCO with the assessee company took place on 1st April, 1994 which falls in the previous year relevant to the asst. yr. 1995-96. The provisions of Section 72A(1) are quite unambiguous and categorical in the sense it is specifically provided that the accumulated loss of the amalgamating company and unabsorbed depreciation of the amalgamating company shall be deemed to be loss and depreciation of the amalgamated company "for the previous year in which amalgamation was effected" and, accordingly, the provisions of the Act relating to set off and carry forward of loss and depreciation Will apply. Under these circumstances, there cannot be any doubt about the legal position that the benefit of set off and carry forward of accumulated losses and unabsorbed depreciation of amalgamating company, i.e. MITCO, under Section 72A, could only be given in the asst. yr. 1995-96. The scheme of the Act does not visualize or permit such benefit in any year other than the year in which the amalgamation has taken place. Yet, in the impugned order, the CIT(A) has held that his allowing this benefit of set off in the asst. yr. 1995-96 was a mistake rectifiable under Section 154, as the benefit could only be granted in the asst. yr. 1996-97 as stated in the certificate dt. 4th March, 1997. This certificate is issued by the BIFR under Section 72A(2)(ii) of the Act. Section 72A(2)(ii), as it then stood, provided that notwithstanding the provisions of Section 72A(1), the said benefit of set off and carry forward of loss and depreciation shall not be allowed unless the assessee submits, along with the IT return, a certificate from the prescribed authority (i.e. BIFR) that "adequate steps have been taken by that company for the rehabilitation or revival of the business of the amalgamating company". The provisions of Section 72A(2), under which admittedly the certificate is issued, do not govern or influence the assessment year in which tax benefit under Section 72A(1) is to be allowed. Therefore, the CIT(A) was clearly in error in being guided by this certificate to decide the question as to in which assessment year the benefit of set off and carry forward of accumulated losses and unabsorbed depreciation of the amalgamating company are to be given. In any event, when the undisputed facts of the cases are considered in a harmonious manner, the mention of asst. yr. 1996-97 in the said certificate appears to be nothing more than a typographical error. The assessee was eligible for the benefit of Section 72A in the asst. yr. 1995-96 since it was in the previous year relevant to this assessment year that the amalgamation took place and Section 72A(1) clearly provides that the benefit under Section 72A is to be granted in the assessment year relevant to the previous year in which amalgamation takes place. There was thus no mistake, leave aside mistake apparent on record, in the order dt. 22nd July, 2004--so far as the year in which Section 72A benefit is to be allowed is concerned. The grievance of the assessee is thus quite justified and we uphold the same.
6. For the reasons set out above, we set aside the impugned rectification order passed by the CIT(A). The assessee gets the relief, accordingly.