Indian Kanoon - Search engine for Indian Law

The Tribunal vide common order dated 25/01/2010, restored the issues to the file of the ld. Assessing Officer with respect to treatment of loss of Rs.1,57,05,886/-

arising from foreign exchange fluctuation in the appeal of the assessee and in the appeal of the Revenue with respect to deletion of disallowance of Rs.3,35 lakhs claimed under section 35D and allowed under section 35DD of the Act and further the disallowance of Rs.3.76 crores claimed under section 35DD and further deletion of disallowance of Rs.57.33 lakhs on account of foreign exchange fluctuation.

23. We heard both the Parties. Allowability of relief u/s 35DD has been made for the first time before the CIT(A). The AO has not been given an opportunity to examine the matter. The issue is set aside to the files of the AO for considering the alternate ground of the Assessee for deduction u/s 35DD in accordance with law. The appeal of the revenue is allowed for statistical purposes.

24. The next ground of appeal of the revenue is against Learned CIT(A) deleting the disallowance of Rs 3.76 crores claimed u/s 35DD.The Assessee had incurred expenses of Rs 376,39,137/- u/s 35DD of the Income Tax Act being expenses incurred wholly and exclusively for the purpose of de-merger of the training division of Hexxaware Technologies Limited under a scheme of arrangement and reconstruction under sec 391 to 394 of the Companies Act 1956.

(d) That the fact of such expenses being claimed was disclosed in the following documents filed along with the return of income for AY 2002- 03,AY 2003-04 and AY 2004- 05.

Computation of taxable income as "Deductions u/s 35DD 1/5th of aggregate expenses of Rs 18,81,95,686 wholly and exclusively in connection with demerger. In a statement showing computation of deduction u/s 35DD was annexed to return of income. And that during the assessment proceedings that appellant was vide questionnaire dated 1.12.2006, called upon to explain the deduction claimed u/s 35DD and vide letter dated 11.12.2006, asked to furnish the details and supporting in respect of the demerger expenses in response to which the explanation as given above was given to the Learned ACIT vide letter dated 19.12.2006. The appellant has also furnished copies of the order of demerger and other documents. But certain vouchers regarding expenses could not be furnished as they were washed away by floods in July 2005."

5917/Mum/2017 M/s Aptech Ltd.

6.3. As claimed by the assessee, the Ld. counsel place before us the order of the Ld. Assessing Officer for Assessment Year 2002-03 along with the computation of income wherein deduction under section 35DD of the Act, the amount of Rs.37,76,39,137/- (1/5th of aggregate expenses) was allowed by the Revenue, therefore, the remaining deduction, in our view is automatic within the specified successive years. So far as, the contention of the Ld. DR that it was allowed under section 143(1) of the Act and not under section 143(3) of the Act is concerned, if the Ld. Assessing Officer was not satisfied then nothing prevented him to initiate the proceedings under section 148 of the Act. So far as, the decision in the case of Rajesh Jhaveri Stock Brokers (291 ITR 500)(Supreme Court) is concerned, we are agree with the same and rather bound to follow the same from Hon'ble Apex Court which is with respect to passing the order as intimation under section 143(1) of the Act, however, as mentioned earlier, still the Ld. Assessing Officer was empowered to issue notice under section 148 of the Act, which was not done. The provision of the Act (section 35DD) is very much clear, therefore, we 5917/Mum/2017 M/s Aptech Ltd.