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Tax Publishers
Cost of transfer arising out of a slump sale
demerger whether claimable subsequent to the slump sale made post facto a court
approved NCLT merger via revised return
Facts:
Assessee a ship building entity got demerged on slump sale
basis to one Marine Infrastructure Developer Pvt. Ltd. (resultant
company) wherein, they had to pay foreclosure/transfer charges of Rs. 82.59
crores on a leasehold land taken from TIDCO. This was claimed as cost incurred
in relation to the transfer of the slump sale under a NCLT approved
demerger/merger scheme as subsequently the assessee merged with L&T. A
revised return was filed offering NIL income due to carry forward of losses and
also claiming the Rs. 82.59 crore as an expenditure as cost incurred in
relation to the transfer. Revenue disallowed the Rs. 82.59 crores on plea that
it arose after the deal was done and by filing a revised return and at the time
of assessment assessee claiming the same cannot be allowed besides the fact
that the expenditure did not crystallize in the year of the slump
sale/demerger. On higher appeal -
Held in favour of the assessee that they were entitled to
claim Rs. 82.59 crores as expenditure in relation to transfer.
Ed. Note: It is not
clearly mentioned in the agreement as to why Section 50B was not applied in the
computation. If Section 50B (as mentioned by the Departmental Representative)
was to be invoked then whether the belated lease foreclosure charges to
TIDCO can form part of the networth computation would have become an
interesting discussion. It is also not adequately mentioned in the verdict
whether the slump sale was structured as a demerger via NCLT.
Case: Dy. CIT v.
Larsen & Toubro Ltd. 2024 TaxPub(DT) 1449 (Mum-Trib)
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