DCIT 10(1), MUMBAI V. SYNCHEM CHEMICALS (I) P. LTD, MUMBAI

ITA 5907/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7905 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Scheme of amalgamation; Reassessment proceedings

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./5907/MUM/2013 , / ASSESSMENT YEAR: 2007-08 DCIT-10(1) 455, 4TH FLOOR, AAYKAR BHAVAN MUMBAI-400 020. VS. M/S. SYNCHEM CHEMICALS (I) P.LTD. 159, CST ROAD, KALINA SANTACRUZ (E),MUMBAI-400 019. PAN:AAECS 5576 Q ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI A.K. NAYAK- DR /ASSESSEE BY: SMT. VASANTI PATEL / DATE OF HEARING: 20/03/2017 / DATE OF PRONOUNCEMENT: 22.03.2017 PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 09/07/2013, OF THE CIT (A)-21,MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN THE BUSI NESS OF MANUFACTURING OF BULK DRUGS INVESTMENT AND DEALING IN SHARES, FILED ITS RETURN OF INCOME ON 02/06/2008, DECLARING INCOME OF RS.33.99 LAKHS.THE ASSESSING OFFICER (AO)COMPLET ED THE ASSESSMENT U/S.143(3) OF THE ACT,ON 31/12/2009, ASSESSING ITS INCOME AT RS.93.69 LAKHS.SUBSEQUENTLY,A NOTICE U/S.148 OF THE ACT WAS ISSUED ON 25/03/2011.THE AO COMPLETED T HE ASSESSMENT U/S.143R.W.S.147DETERMINING ITS INCOME AT RS.10.12 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING AN ADD ITION OF RS. 8.65 CRORES U/S.41(1) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUN D THAT THE ASSESSEE HAD CREDITED RS. 9.91 CRORES TO PROFIT AND LOSS ACCOUNT UNDER THE HEAD SU NDRY BALANCES WRITTEN BACK,THAT IN THE COMPUTATION OF INCOME WAIVER OF LOAN/DEBT OF RS. 8. 65 CRORES WAS REDUCED FROM THE NET PROFIT CLAIMING THAT SAME WAS NOT TAXABLE U/S.28(IV) OF 41 (1) OF THE ACT.HE DIRECTED THE ASSESSEE TO FURNISH THE DETAILS OF RECEIPTS RECOGNISED BY WAIVE R OF LOAN/DEBT WITH DOCUMENTARY EVIDENCES AND TO SHOW AS TO WHY THE SAME SHOULD NOT BE ADDED BACK TO ITS INCOME UNDER EITHER OF THE TWO SECTIONS. IN RESPONSE TO THE SAME, THE ASSESSEE FILED DETAILED REPLY VIDE ITS LETTER DATED 25/10/2009 ALONG WITH A COPY OF SCHEME OF AMALGAMAT ION AND THE ORDER OF HONBLE BOMBAY HIGH COURT SANCTIONING THE AMALGA -MATION OF LUPIN SECURITIES LTD., SAMIKSH INVESTMENTS PRIVATE LTD., SANTOSH LEASING PRIVATE LTD., VISHTOS H INVESTMENTS AND FINANCE PRIVATE LTD. AND ZUARI LEATHERS PRIVATE LTD.WITH THE ASSESSEE CO MPANY. IT ALSO FILED A COPY OF SCHEME OF AMALGAMATION OF LOVINCARE WITH ZYMA, DEED OF ASSIGN MENT OF BOOK DEBTS DATED 27/03/2004 AND BUSINESS TRANSFER AGREEMENT DATED 01/01/2004 BE TWEEN LOVINCARE AND ORGO. AFTER 5907/M/13(07-08) M/S. SYNCHEM CHEMICALS(I) PVT.LTD. 2 CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE AO DISALLOWED THE CLAIM MADE BY IT WITH REGARD TO WAIVER OF LOANS OF RS.8,65,55,958/-AND HE LD THAT SUCH A WAIVER BY THE THIRD-PARTY WOULD BE TAXABLE U/S.28(IV) OR 41(1) OF THE ACT. HE REFERRED TO THE JUDGEMENT OF TV SUNDRAM IYENGAR AND SONS (222 ITR 344). 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM IT MADE ELABO RATE SUBMISSIONS AND RELIED UPON NUMBER OF CASE LAWS.AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE AND THE ASSESSMENT ORDER, THE FAA REFERRED TO THE PROVISIONS OF SECTIO N 28(IV) AND 41(1) OF THE ACT. HE HELD THAT SECTION 28(IV) WOULD COME INTO PICTURE ONLY IF THE BENEFIT/PERQUISITE WERE RECEIVED IN-KIND, THAT IT HAD NO APPLICATION WHERE BENEFIT WAS RECEIV ED IN CASH/MONEY OR THE AMOUNT WAS A REVENUE RECEIPT, THAT THE PROVISIONS OF SECTION 41( 1) WERE APPLICABLE IF THE ASSESSEE WOULD CLAIM ANY DEDUCTION/ ALLOWANCE AND EARLIER YEARS AN D IN THE SUBSEQUENT YEARS THERE WAS AN OMISSION OR CESSATION OF SUCH ALONG/DEDUCTION, THAT INITIALLY THE ASSESSEE SHOULD CLAIM BENEFIT OF DEDUCTION OR ALLOWANCE. HE ANALYSED THE VARIOUS TRANSACTIONS ENTERED INTO WITH FOR ENTITIES NAMELY SAMIKSH INVESTMENTS PRIVATE LTD., SANTOSH LE ASING PRIVATE LTD., VISHTOSH INVESTMENTS AND FINANCE PRIVATE LTD. AND ZUARI LEAT HERS PRIVATE LTD. HE REFERRED TO THE CASES OF MAHINDRA AND MAHINDRA (261 ITR 501)XYLON HOLDING S (P)LTD. (211 TAXMAN 108) AND TOSHA INTERNATIONAL LTD. (176 TAXMAN 187) AND HELD THAT LOAN WAS UTILISED FOR CAPITAL PURPOSES AND WAS NOT EXTENDED FOR ANY TRADING PURPO SES, THAT THE CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 41(1) WERE NOT EXISTING, THAT BENEFIT/PERQUISITE WERE NOT RECEIVED IN- KIND, THAT SECTION 28(IV) WAS NOT APPLICABLE, THAT THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION/ALLOWANCE IN RESPECT OF THE LOAN IN THE E ARLIER YEARS. HE ANALYSED THE ACCOUNTS OF THE ABOVE-MENTIONED FOR ENTITIES. HE FURTHER HELD T HAT FACTS OF THE CASE OF SUNDRAM IYENGAR AND SONS (SUPRA) WERE DISTINGUISHABLE AND WERE NOT APPLICABLE TO CASE UNDER CONSIDERATION. FINALLY, HE ALLOWED THE APPEAL FILED BY THE ASSESSE E. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO AND STATED THAT THE ASSESSEE IT SELF HAD ADMITTED THAT OUT OF THE LOAN AMOUNT OF RS. 10.01 CRORES RS. 1.48 CRORES WAS ON A CCOUNT OF DISCOUNTING CHARGES CLAIMED IN THE ASSESSMENT YEAR 2007 08, THAT OUT OF THE SAID AMOUNT RS. 1.26 CRORES WAS ALREADY OFFERED TO TAX, THAT THE SETTLEMENT/WAIVER OF THE A MOUNTS PAYABLE BY THE ASSESSEE WAS ON ACCOUNT OF LOANS TAKEN BY THE AMALGAMATING COMPANY WHICH NO LONGER EXISTED, THAT THE PROVISIONS OF SECTION 41(1) WERE CLEARLY APPLICABLE WITH REGARD TO THE DISPUTED TRANSACTIONS. THE AUTHORISED REPRESENTATIVE (AR) ARGUED THAT THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION/ALLOWANCE IN THE EARLIER YEARS, THAT THE LOAN WERE OF CAPITAL NATURE, THAT THE 5907/M/13(07-08) M/S. SYNCHEM CHEMICALS(I) PVT.LTD. 3 PROVISIONS OF SECTION 28(IV) OR 41(1) WERE NOT APPL ICABLE. SHE FURTHER STATED THAT IN ONE OF THE GROUP ENTITIES THE TRIBUNAL HAD DELIBERATED UPON TH E IDENTICAL ISSUE AND HAD DISMISSED THE APPEAL FILED BY THE AO. SHE RELIED UPON THE CASES O F VS DEMPO COMPANY LTD. (233 TAXMAN 41(1)7) AND VELOCIENT TECHNOLOGIES LTD. (376 ITR 13 1). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE ORIGINAL ASSESSMENT THE AO HAD NOT INVOKE THE PROVI SIONS OF SECTION 28(IV)/41(1) OF THE ACT, THAT IN THE REASSESSMENT PROCEEDINGS HE MADE AN ADD ITION OF RS. 8.66 CRORES HOLDING THAT THERE WAS CESSATION OF LIABILITY WE FIND THAT THE AO HAS NOT GIVEN ANY FINDING ABOUT THE NATURE OF THE LOAN. AS PER THE SETTLED PRINCIPLES OF TAXATION IF THE LOAN IS OF CAPITAL NATURE THE PROVISIONS OF SECTION 41(1) ARE NOT APPLICABLE. SECONDLY FOR I NVOKING THE SAID PROVISION THE ASSESSEE SHOULD HAVE CLAIM DIRECTION/ALLOWANCE IN THE EARLIE R ASSESSMENT YEARS. THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT LOANS EXTENDED BY VARIOUS CONCERNS WERE CAPITAL IN NATURE AND THAT THERE WAS NO DEDUCTION/ALLOWANCE FOR ANY OF TH E EXPENDITURE IN ANY OF THE YEAR. NOTHING HAS BEEN BROUGHT TO OUR NOTICE THAT THE FINDING GIV EN BY THE F AA IS PERVERSE OR IS SUFFERING FROM ANY FACTUAL OF LEGAL INFIRMITY. WE FIND THAT I N THE CASE OF ZYMA LABORATORIES LTD.,A SISTER CONCERN OF THE ASSESSEE, (ITA/5379/MUM/2013-AY.2007 -08,DATED 13/01/2016), THE TRIBUNAL HAS DEALT WITH THE SIMILAR ISSUE.WE WOULD LIKE TO R EPRODUCE THE RELEVANT PORTION OF THE SAID ORDER AND IT READS AS UNDER: 6.WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 7.THE AO WHILE MAKING THE ADDITION HAS OBSERVED TH AT THE ASSESSEE IN HIS PROFIT & LOSS A/C CREDITED RS. 4,04,87,771/- BEING BALANCES WRITTEN BACK. HOWEVER, IN THE COMPUTATION OF INCOME WAIVER OF LOAN OF RS. 4,04,02,671/- IS RED UCED FROM THE NET PROFIT TAXABLE U/S 28(IV) OR 41(1) AND THE AO SOUGHT THE DETAILS OF RECEIPT B Y WAY OF WAIVER OF LOAN ALONG WITH DOCUMENTARY SUPPORT. 8.THE ASSESSEE EXPLAINED BEFORE THE AO THAT ABOU T THE GENESIS OF LOAN THAT ZYMA LABORATORY LTD. AND M/S LOVIN CRAE PRODUCT PVT. LTD WAS AMALG AMATED W.E.F. 01.03.2004 IN ZYMA LABORATORY LTD AND EARLIER TO THIS AMALGAMATION M/ S LOVIN CRE LTD. BY BUSINESS TRANSFER AGREEMENT 01.04.2004 ACQUIRED MANUFACTURING PLANT A ND LIABILITY FROM ORGO PHARMA CHEMICALS WHICH WAS A PARTNERSHIP FIRM. M/S ORGO FA RMA CHEMICALS AFTER TRANSFER OF MANUFACTURING PLANT AND LIABILITY IS ALSO CARRIYING OTHER BUSINESS. THUS THE ASSETS AND LIABILITY INCLUDING MANUFACTURING PLANT WAS TAKEN OVER BY M/S LOVIN CARE PRODUCT PVT. LTD IN THE SAID AGREEMENT FOR A CONSIDERATION FOR A CONSIDERATION OF RS.100,000/-, AND THE CONSIDERATION OF RS. ONE LACKS WAS IN EXCESS OF ASSETS AND LIABILITY OF ORGO PHARMACEUTICALS. AND AS PER THE DETAILS OF ASSEST AND LIABILITY OF ORGO CHEMICALS , THE ASSEST WAS OF RS. 163,44,43,978/- AND LIABLITY OF RS. 163,44,43,978/-. M/S ORGO CHEMICAL WAS EXTENDED A LOAN OF RS. 4,04,02,671/- BY M/S LANDMARK BUILDER WHICH IS UNIT OF M/S SYNCHE M CHEMICAL(I) PVT. LTD. AND THIS LOAN WAS ADVANCES TO M/S KHANDELWAL ESTATE BY ORGO, WHIC H WAS USED FOR THE PAYMENT OF LOAN OF HDFC. 5907/M/13(07-08) M/S. SYNCHEM CHEMICALS(I) PVT.LTD. 4 9.IT WAS FURTHER EXPLAINED TO THE AO THAT THE LOAN WHICH ZYMA LAB LTD HAS WRITTEN OFF IS A PART OF LIABILITY WHICH IT HAS RECEIVED FROM PART NERSHIP FIRM OF ORGO PHARMA CHEMICAL THROUGH LOVIN CARE PRODUCT PVT LTD WHICH WAS AMALGA MATED AND LATER THIS ZYMA DISCHARGED THIS LIABILITY OF LOAN OF RS. 40402671/-ON SETTLEME NT WITH KOTAWALA INDIA LTD BY PAYING A CONSIDERATION OF RS. 32,00,000/-. AND AFTER THE AMA LGAMATION OF LOAN OF LOVIN CARE PRODUCT P LTD AND ZYMA LABORATORY LIABILITY INITIATED TO DISC HARGE THIS LIABILITY AND SYNCHEM CHEMICALS WHICH WAS THE ORIGINAL CONCERN WHICH HAD ADVANCED T HE LOAN WHICH WAS ASSIGNED TO KOTAWAL INDIA LTD AND WAS ENTITLED TO RECOVER AN AMOUNT OF RS. 4,60,75,285/- FROM ZYMA LABORATORY LTD. 10.THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY T HE AO AND TREATED THIS AMOUNT AS INCOME CHARGEABLE TO THE TAX WAS ADDED TO THE BUSINESS INC OME. 11.THE CIT(A) WHILE DEALING WITH THE GROUND HAS OBS ERVED THAT TO SATISFY THE CONDITION OF SECTION 41(1), THREE CONDITION MUST BE SATISFIED (I ) THE LOAN IS FOR CAPITAL PURPOSE OR TRADING PURPOSE, (II) IS THERE ANY DEDUCTION OR ALLOWANCE I N THE EARLIER YEAR WHICH ACCRUES BENEFIT IN RESPECT OF LOAN, EXPENDITURE, OR TRADING BY WAY OF REMISSION OF CESSATION (III) WHETHER THERE IS A SUCCESSION TO BUSINESS ON THE FACT OF THE CASE AN D FURTHER OBSERVED THAT THE EXEMPTION WHETHER THE LOAN ADVANCED BY LANDMARK BUILDERS TO O RGO PHARMA CHEMICALS IN FY-2002-03 IS FOR TRADING PURPOSE OR CAPITAL PURPOSE, THE LOAN OF RS. 4.04 CRORE ADVANCED BY LANDMARK BUILDER WHICH WAS UNIT OF SYNCHEM CHEMICAL TO ORGO PHARM CHEMICAL WHICH IS PARTNERSHIP FIRM OF ORGO PHARMA CHEMICAL IN TERM OF ADVANCE THI S LOAN TO KHANDELWAL ESTATES PVT. LTD. HAS UTILIZED THIS AMOUNT FOR PAYMENT OF LOAN TO HDF C. THE CIT(A) FURTHER OBSERVED THAT M/S ORGO PHARMA ENTERED IN BUSINESS TRANSFER AGREEMENT FROM 01.01.2004 AND SOLE CERTAIN ASSETS AND LIABILITY TO M/S LOVIN CARE PVT. LTD. FOR A CON SIDERATION OF RS. 1,00,000/- AND THAT LOVIN CARE PVT. LTD. AMALGAMATED W.E.F 01.03.2005 WITH ZY MA LABORATORY LTD.. M/S ORGO AFTER TRANSFER OF LIABILITY AND ASSETS WAS ALSO CONDUCTIN G THEIR OWN BUSINESS ON EXAMINATION OF ABOVE DETAILS AND EXAMINING THE DETAILS IT HAD TO B E SEEN WHETHER THE LOAN WAS FOR TRADING PURPOSE OR CAPITAL PURPOSE AND CONCLUDED THE LOAN W AS UTILIZED ONLY AT THE END OF THE RE- PAYMENT OF LOAN WHICH IS CAPITAL IN NATURE AS IT IS TREATED AS A LOAN STANDARD FOR ANY TRADING PURPOSE AND FOR FULFILLING THE CONDITION NO. 2 & 3 OF SECTION 41(1), THE CIT(A) OBSERVED THAT WHETHER ASSESSEE CLAIMED ANY DEDUCTION OR ALLOWANCE IN RESPECT OF LOAN EXPENDITURE OF TRADING LIABILITY AND EXAMINED THE RETURNS OF ORGO PHARMA CHEMICALS TO WHICH LOAN WAS ADVANCED BY LANDMARK BUILDERS AND AFTER EXAMINING T HE RETURN OF INCOME FOR FY-2002-03 OF M/S ORGO PHARMA CHEMICAL CONCLUDED THAT IT HAD NOT PAID ANY INTEREST TO THE LANDMARK BUILDER NOR CLAIM ANY INTEREST AND FURTHER CONCLUDE D THAT NEITHER THE ASSESSEE CLAIMED DEDUCTION IN FY-2002-03 NOR ORGO PHARMA CHEMICAL CL AIMED AS INTEREST AS DEDUCTION FOR FY-2005-06 & 2006-07 BY M/S ORGO PHARMA CHEMICALS A ND FURTHER CONCLUDED THAT IF DEDUCTION IS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME THEN SECTION 41(1) IS NOT ATTRACTED. 12.THE CIT(A) FURTHER CONCLUDED THAT M/S ORGO PHAR MA CHEMICALS ENTERED INTO BUSINESS TRANSFER AGREEMENT IN WHICH CERTAIN LIABILITY AND A SSETS WERE TRANSFERRED TO M/S LOVIN CARE PVT. LTD. ON 01.01.2004 FOR A CONSIDERATION OF RS. 1,00,000/-. 13. WHILE CONSIDERING THE VARIOUS TRANSACTIONS IN B ETWEEN ORGO PHARMA TILL THE ASSESSEE, THE CIT(A) CONCLUDED AS UNDER: 4.3(V) FURTHER TO SATISFY THE CONDITION FOR SUCCES SION OF BUSINESS IN THIS CASE, AS PER I. T. ACT EXPLANATION 1 TO SEC.41(1) EXAMINE THE DETAILS OF TRANSFER OF M/S.ORGO PHARMA CHEMICALS ENTERED BUSINESS TRANSFER AGREEMENT IN WH ICH CERTAIN LIABILITIES AND ASSETS WERE TRANSFERRED TO M/S. LOVIN CARE PRODUCTS P. LTD. ON 01.01.2004 FOR A CONSIDERATION OF RS.1,00,000/-. THE ASSETS TRANSFERRED FROM PARTNERS HIP FIRM M/S. ORGO PHARMA CHEMICALS TO M/S. LOVIN CARE PRODUCTS P. LTD. 1S RS.163,44,34,97 1/- AND AGGREGATED LIABILITIES ARE RS.163,43,34,970/-. AFTER THE TRANSFER ALSO M/S.ORG O PHARMA CHEMICALS IS EXISTING AS A BUSINESS CONCERN AND CONDUCTING THE BUSINESS AND IT IS ALSO FILING INCOME-TAX RETURNS IN ITS OWN NAME I.E. M/S. ORGO PHARMA CHEMICALS, PARTNERSH IP FIRM. IF WE EXAMINE SEC.170 OF I. 5907/M/13(07-08) M/S. SYNCHEM CHEMICALS(I) PVT.LTD. 5 T. ACT IN WHICH SUCCESSION WAS DEFINED, IT IS EVIDE NT THAT AFTER THE SUCCESSION OF BUSINESS EXISTING UNIT FULLY LOOSES ITS IDENTITY AND INCOME- TAX RETURN WILL BE FILED UP TO THE DATE OF SUCCESSION ONLY, LATER SUCCESSOR FILES THE INCOME-T AX RETURN? .IT 'DOES NOT EVEN EXIST AS BUSINESS CONCERN. BUT WE EXAMINE THE ABOVE DETAILS ORGO PHARMA CHEMICALS WAS CONTINUING AS BUSINESS CONCERN AFTER TRANSFERRING CERTAIN ASSE TS AND LIABILITIES, .HENCE, A.O'S CONTENTION THAT THERE IS SUCCESSION IS NOT FACTUALLY CORRECT A S PER LAW. THIS ISSUE HAS COME INTO CONSIDERATION IN THE CASE OF ORIENTAL FIRE & GENERA L INSURANCE CO LTD V. CIT (2000) 244 ITR 631 (DEL). THE DELHI HIGH COURT HELD AS UNDER: SUCCESSION IMPLIES THAT THERE IS END OF AN ENTITY CARRYING ON THE BUSINESS, AND ITS PLACE HAS BEEN TAKEN BY AN ENTIRELY NEW ENTITY TO RUN IN CONTINUITY AND AS A GOING CONCERN, THE SAME BUSINESS. SUBSTANTIAL IDENTITY AND CONTINUITY OF THE BUSINESS MUST BE PRESERVED. THE TESTS OF CHANGE OF OWNERSHIP, INTEGRITY, IDENTITY A ND CONTINUITY OF A BUSINESS HAVE TO BE SATISFIED BEFORE IT CAN BE SAID THAT A PERSON SUCC EEDED TO THE BUSINESS OF ANOTHER IT IS CLEAR FROM THE ABOVE DECISION ALSO THAT THE O RIGINAL CONCERN WILL LOOK THE IDENTITY AND NEED NOT FILE I.T. RETURN. AS ORGO PHARMA CHEMI CALS IS EXISTING AFTER THE TRANSFER OF CERTAIN ASSETS AND LIABILITIES, HENCE, THE CONDITIO N NO.(III) THAT THERE IS SUCCESSION IN BUSINESS IS NOT FACTUALLY CORRECT. AS THERE IS NO S UCCESSION BUSINESS AS PER SEC.41(1) EXPLANATION OF SEC. 170 OF I.T. ACT, HENCE CONDITIO N NO. (II) WAS NOT FULFILLED. A.OS ADDITION IS NOT TENABLE IN LAW. 14. THE AO WHILE MAKING THE ADDITION RELIED UPON TH E CASE OF CIT VS. T.V. SUNDRAM IYNGAR & SONS REPORTED VIDE 222 ITR 344(SC) AND SOLID CONTAI NERS LTD. VS. DCIT 308 ITR 417 ON THE ISSUE OF TREATING THE LOAN AS TRADING LIABILITY. TH E FACT OF THE T.V. SUNDRAM IYNGAR CASE ARE ENTIRELY DIFFERENT FROM THE FACT OF THE CASE IN OUR HAND THE CASE IN OUR HAND IN RESPECT OF RE- PAYMENT OF LOAN WHICH WAS ASSIGNED ON ACCOUNT OF SC HEME OF AMALGAMATION WHICH WAS APPROVED BY HONBLE BOMBAY HIGH COURT AND IN THE CA SE OF T.V.SUNDRAM, THE ASSESSEE WAS GIVEN TRADING ADVANCES WHICH WERE ADJUSTED BY CARRY ING ON THE BUSINESS AND CREDIT BALANCE STANDING IN FAVOUR OF THE ASSESSEE WERE CLAIMED BY THE CUSTOMER, THE ASSESSEE TRANSFERRED THE SAID AMOUNT TO PROFIT & LOSS A/C AND THE CASE OF SO LID CONTAINERS PVT. LTD., THE FACT OF THE PRESENT CASE IS ALSO AT THE VARIANCE AND SOLID CONT AINERS, THE ASSESSEE HAS TAKEN A LOAN FOR PURCHASE OF CAR AND DEDUCTED THE AMOUNT FROM PROFIT & LOSS A/C AND FURTHER CLAIMED DEDUCTION BUT IN THE PRESENT CASE THERE WAS NO DEDU CTION FROM RETURN OF INCOME FROM ANY OF THE PREDECESSOR INTEREST OF THE ASSESSEE RATHER IT IS AN ASSIGNMENT OF LIABILITY ON TRANSFER/AMALGAMATION OF COMPANY AND ASSETS AND THE CIT(A) AFTER CONSIDERING THE ENTIRE FACT AVAILABLE BEFORE HIM, THE ADDITION WAS DELETED. 15. SO AS DISCUSSED ABOVE, WE DO NOT FIND ANY INFIR MITY OR ILLEGALITY IN THE ORDER PASSED BY CIT(A) WHILE DELETING THE ADDITION OF RS. 4,04,0 2671/- 16.IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. CONSIDERING THE ABOVE DISCUSSION AND RESPECTFULLY F OLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST TH E AO. A RESULT, APPEAL FILED BY THE AO STANDS DISMISSED. ORDER PRONOUNCED IN TH E OPEN COURT ON 22 ND MARCH , 2017. 22 ,2017 SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 22.03.2017. JV.SR.PS. 5907/M/13(07-08) M/S. SYNCHEM CHEMICALS(I) PVT.LTD. 6 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.