Assessee Has Incurred Expenses For Transfer As Per Scheme Of Arrangement Approved By NCLT; Mumbai ITAT Directs To Allow Stamp Duty & Registration Charges
On finding that when the assessee has incurred the amount in question to complete the transfer as per the scheme of arrangement approved by the NCLT, without which the transfer could not have been effected, the Mumbai ITAT held that the CIT(A) has rightly and validly decided the issue in favour of the assessee and directed the AO to allow the stamp duty and registration charges after...
On finding that when the assessee has incurred the amount in question to complete the transfer as per the scheme of arrangement approved by the NCLT, without which the transfer could not have been effected, the Mumbai ITAT held that the CIT(A) has rightly and validly decided the issue in favour of the assessee and directed the AO to allow the stamp duty and registration charges after due verification.
The Bench of the ITAT comprising of Kuldip Singh (Judicial Member) and Padmavathy S (Accountant Member) observed that “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.” (Para 17)
“When the amount has been crystallized in the books of account and facts have been brought on record before the Ld. CIT(A) which have not been disputed the claim of the assessee, otherwise admissible, cannot be denied on the basis of hyper technical reasons”, added the Bench. (Para 17)
As per the brief facts of the case, the assessee company filed its return of income claiming a loss of (-) Rs.834,19,92,805/- which was subsequently revised to admitting nil income. The assessee has set off the entire business loss of Rs.671,92,92,951/- against the Long-Term Capital Gains (LTCG) of Rs.692,96,32,554/- and income from other sources of Rs.6,78,351/- and remaining taxable LTCG to the extent of Rs.21,10,17,954/- was set off against brought forward unabsorbed depreciation loss of Rs.1,20,35,171/- & Rs.4,17,09,985/-. The assessee also set off brought forward unabsorbed depreciation to the extent of Rs.1,57,27,298/- out of Rs.4,56,16,57,266/-. It is also a fact on record that the assessee company has been merged. The AO after declining the contentions raised by the assessee framed the assessment at a taxable income of Rs. Nil and the current year loss was assessed at Rs.3,28,99,74,519/- instead of nil.
The CIT(A) partly allowed the appeal filed by the assessee.
The Bench noted that the company has incurred these charges to complete the transfer of property as per the scheme of agreement and leasehold rights in the land were part of the port undertaking which was transferred as per the scheme of arrangement.
The Bench observed by the plain reading of section 48(i) that in computing the taxable capital gains deduction can be claimed for expenses incurred (wholly and exclusively in connection with the transfer of capital assets).
The Bench further observed that to compute the capital gains provisions contained u/s 48 are applicable which provides that while computing the capital gain the value of consideration is reduced by the cost of improvement and cost of acquisition and also expenditure incurred for transfers are to be considered.
The Bench stated that when the income of the assessee is chargeable under the head capital gains qua the years in which transfers were affected, the expenses about the transfer, crystallized later on but as per the scheme of arrangement it has to be allowed.
Therefore, ITAT dismissed the appeal filed by the revenue.
Counsel for Appellant/Department: Ajay Chandra
Counsel for Respondent/Taxpayer: Nitesh Joshi
Case Title: Dy. Commissioner of Income Tax verses Larsen & Toubro Limited
Case Number: ITA No.2350/M/2023
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