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TMI Blog2024 (3) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... d cost of acquisition and also expenditure incurred for transfers are to be considered. When the income of the assessee is chargeable under the head capital gains qua the years in which transfers was affected, the expenses pertaining to the transfer, they crystallized later on but as per scheme of arrangement it has to be allowed. So when the assessee has incurred the amount in question to complete the transfer as per scheme of arrangement approved by the Hon'ble NCLT, without which transfer could not have been effected, the Ld. CIT(A) has rightly and validly decided the issue in favour of the assessee. Eligibility of deduction claimed by the assessee on account of stamp duty and registration charges for the purpose of computing the gains arising on demerger of port business - In view of the findings returned on the earlier issue when it is proved on record that the assessee is entitled for upfront lease rental expenses incurred in relation to the transfer of slump sale business while computing the capital gains under section 48(i) of the Act the assessee is also entitled for deduction of stamp duty and registration charges. CIT(A) despite thrashing the facts has denied this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly wrong in as much as the assessee is following mercantile systems of accounting and as such expenses crystallized in AY. 2019-20 cannot be allowed during the assessment year in question? 5. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) is right in not appreciating the decision of the High Court of Delhi in Commissioner of Income Tax Versus Exxon Mobil Lubricants Private Limited [2010] 8 taxmann.com 249 (Delhi) wherein it was held that where Liability of the assesses arose and was crystaltized in the current year, the assessee was entitled to allowance of that expenditure only in the current assessment year. Similarly in the assessee's case, the liability of Rs. 82,59,94,515/- arose and was crystallized in A. Y. 2019- 20, the assessee was entitled to allowance of that expenditure only in the A. Y. 2019-20 and not in A.Y. 2016-17? 6. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) has erred in not considering the fact that the amount of liability also rises by Rs. 82,59,94,515/- on account of differential lease rental premium payable/paid to TIDCO, in computing the net worth of undertaking or division within the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 5. Undisputedly the assessee company M/s. Larsen Toubro Shipbuilding Ltd., engaged in the shipbuilding and port business filed its return of income at loss of Rs. 8,34,19,92,805/-, which was subsequently revised admitting nil income. It is also not in dispute that the assessee company M/s. Larsen Toubro Shipbuilding Ltd. got merged with M/s. Larsen Toubro Ltd. w.e.f. 01.2019 and by virtue of the scheme of order dated 16.03.2020 and 24.04.2020 respectively passed by the National Company Law Tribunal (NCLT). It is also not in dispute that revised return filed by the assessee M/s. Larsen Toubro Shipbuilding Ltd. on 28.03.2018 to include the capital gain/loss on slump sale in accordance with the scheme of arrangement. It is also not in dispute that the AO while framing the assessment under section 143(3) of the Income Tax Act, 1961 (for short the Act ) has not considered the revised return filed by the assessee M/s. Larsen Toubro Shipbuilding Ltd. on 28.03.2018. It is also not in dispute that the AO has not considered the additional expenditure of Rs. 82,59, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eloper P. Ltd. ('resulting company'), Part 5 Para 5.8 all costs, charges and expenses of the companies in relation to or in connection with negotiations leading up to the Scheme and of carrying out and completing the terms and provisions of this Scheme and in relation to or in connection with the Scheme and incidental to the completion of this Scheme shall be borne and paid by the Demerged Company . The 'Appointed Date' as per the scheme is close of the business hours of March 31, 2016 , i.e. relevant to the AY 2016-17. This scheme has been approved by the Hon'ble NCLT, Chennai vide its order dated 20.03.2017. In view of the above, the appellant has sufficiently demonstrated that although these expenses have been subsequently crystallized, they are related to the transfer and that the appellant is eligible for such a deduction. 8. The Ld. D.R. for the Revenue challenging the impugned findings returned by the Ld. CIT(A) contended that the Ld. CIT(A) has erred in not considering the fact that the amount of liability also enhanced by Rs. 82,59,94,515/- on account of differential lease rental premium payable/paid to TIDCO in computing the net worth of undertaking or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains qua the years in which transfers was affected, the expenses pertaining to the transfer, they crystallized later on but as per scheme of arrangement it has to be allowed. 14. The Ld. A.R . for the assessee also relied upon the decision rendered by the Hon ble Bombay High Court in case of Commissioner of Income Tax vs. Smt. Shakuntala Kantilal reported in 190 ITR 56 qua the identical issue, the operative port of which is extracted as under: The expression 'in connection with such transfer is, in our view, certainly wider than the expression for the transfer. Here again, we are of the view that any amount the payment of which is absolutely necessary to effect the transfer will be an expenditure covered by this clause. In other words, if without removing any encumbrance including the encumbrance of the type involved in this case, sale or transfer could not be effected, the amount paid for removing that encumbrance will full under clause (i). Accordingly, we agree with the Tribunal that the sale consideration requires to be reduced by the amount of compensation. The first question is, therefore, answered in the affirmative and in favour of the assessee. 15. So when the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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