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TMI Blog2016 (3) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ggest that undoubtedly, there was improvement in the value of the asset being shares of Zandu held by the assessee company. During the course of hearing, both the parties fairly agreed that even if impugned expenses may not be allowable as revenue expenses but these were, for sure, aimed for providing enhancement to the value of the shares. Under these circumstances, we do not find any hesitation in holding that these expenses should be added to the cost of shares as cost of improvement. The AO is directed to recompute the amount of capital gain earned by the assessee. - Decided partly in favour of assessee - ITA No. 5226/Mum/2012 - - - Dated:- 20-1-2016 - Sanjay Garg, JM And Ashwani Taneja, AM For the Appellant : Shri Rashesh V Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue. 3. The only effective issue raised in this appeal is with regard to disallowance for a sum of ₹ 1,85,10,887/- being the amount of legal costs on account of fees paid to M/s. AZB Partners. 3.1. The brief facts noted from the records brought before us are that during the year under consideration the assessee company was engaged in the manufacture and processing of Ayurvedic medicines. The assessee company had a substantial stake in M/s Zandu Pharmaceutical Works Ltd. (in short Zandu). During the year under consideration, one Emami Group acquired substantial holding of Zandu, and as required under SEBI Law, it was required to acquire further 20% stake from open market by way of open offer. It made open offer of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. The legal fees were paid to safeguard the investment made by the assessee. It was further submitted that the assessee wanted to protect its business with Zandu. Thus, the impugned expenses have been incurred to maintain the business and to protect the investment. It should be allowed as revenue expenditure. Alternatively, it can be allowed to be added to the cost of shares towards cost of improvement. On the other hand, Ld. DR supported the orders of the lower authorities. 3.5. We have gone through the orders of the lower authorities and submissions made before us by both the sides. At the very outset, it is noted by us that Ld. CIT(A) has given a finding in last para of his order that the impugned expenses relates to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger amount of capital gains as initial open offer of ₹ 7,315/- per share was eventually enhanced to ₹ 16,500/- per share. The totality of facts and circumstances of the case and documentary evidences brought before us clearly suggest that undoubtedly, there was improvement in the value of the asset being shares of Zandu held by the assessee company. During the course of hearing, both the parties fairly agreed that even if impugned expenses may not be allowable as revenue expenses but these were, for sure, aimed for providing enhancement to the value of the shares. Under these circumstances, we do not find any hesitation in holding that these expenses should be added to the cost of shares as cost of improvement. The AO is directe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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