TaxTMI 
TaxTMI 
2020 (4) TMI 812
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.... A copy of the same was also handed over to the ld. DR. After taking due cognizance of the said NOC, these appeals are taken up for hearing on hearing the present Counsel for the assessee Shri Ronak Joshi and the ld. DR. 3. The primary facts of the assessee are that it is engaged in manufacturing and sale of pharmaceuticals dealing in both prescription and OTC products as well as bulk drugs, chemicals and skin care products. The company has its registered office and head office at Lower Parel, Mumbai and its units at Deonar, Pithampur, Mahad, Thane, Mulund, Bhandup and Paithan. During the relevant previous year, the assessee company has amalgamated Rhone Poulenc (India) Limited (RPIL), Super Pharma Limited (SPL) and assets and liabilities (excluding certain assets and liabilities as per Schedule A of the Scheme) of amalgamation of NPIL Finvest Private Limited (NFL) with itself under the scheme of arrangement as approved by the Bombay High Court vide its order dated 29/09/2001. As per the scheme of arrangement, all the assets and liabilities of RPIL and SPL and certain specified assets of NFL stand transferred and vested with the assessee company w.e.f. 01/04/2001 being the effec....
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....nce of software expenses: Rs. 14,00,800/- 10. The assessee had during the year under consideration debited certain purchase of software license as a revenue expenditure, under the head "Repairs - Computers - Others", as under: REPAIRS - COMPUTERS - OTHERS A/C CODE 6286120 (B) Purchase & implementation of "Sapphire' software used by Quality Control Department Rs. 5,40,000 Purchase of Lotus notes web access licenses from Lauren Rs. 98,000 Information Technologies Purchase of Lotus notes web access licenses from Lauren Information Technologies Rs. 6,02,000 Purchase of Anti Virus Software from Softcell Technologies Rs. 1,60,000 Total Rs. 14,00,800 The A.O holding a conviction that the purchase of the aforesaid software licenses was in the nature of a capital expenditure, thus restricted the entitlement of the assessee towards claim of depreciation @ 25% of its value. In support of his aforesaid conviction, the A.O while concluding as hereinabove, was of the view that as a software license was a depreciable intangible asset under Sec.32(1)(ii) of the I.T Act, therefore, the same was only entitled for depreciation @ 25% under Part ....
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....ations direct the A.O to allow the software expenses of Rs. 14,00,800/- as claimed by the assessee. The Ground of Appeal No. 1 is allowed.' 4.2. Respectfully following the decision of this Tribunal in assessee's own case, we direct the ld. AO to grant deduction of expenditure on account of software in the sum of Rs. 61,24,779/- and accordingly, the Ground No. I raised by the assessee is allowed. 5. The Ground No.II raised by the assessee is with regard to the addition made u/s.145A of the Act in respect of unutilised MODVAT credit of Rs. 66,26,443/-. 5.1. We have heard rival submissions. We find that the ld. AO had recorded in the assessment order that in the tax audit report, the Tax Auditor mentioned that assessee is following EXCLUSIVE method of accounting for MODVAT with regard to inventory, purchases and consumption. The assessee vide letter dated 29/11/2004 had also contended that the aforesaid treatment had no impact on the profit at all. The ld. AO observed that unutilised balance of MODVAT credit on stock in trade is reflected in the balance sheet as an asset amounting to Rs. 152.83 lakhs and as per the proviso of Section 145A of the Act, the unutilised MODVAT nee....
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....unt of unutilized MODVAT credit will have no impact on the profits of the assessee. Apart there from, the assessee had also objected to the calculation of the "closing stock' and 'opening stock' by the A.O by multiplying the stock value by the ratio of purchases (including excise) and purchases (net of excise). It is further averred by the ld. A.R that insofar the valuation of inventories as per Sec. 145A was concerned, the raw material, packing material, stores and works-in-progress was valued at cost, while for the finished goods were valued at cost or net realisable value, whichever was lower. In fact, it is the claim of the assessee that the 'cost' has consistently been taken at net of MODVAT credit. On the basis of the aforesaid facts, it is stated by the assessee that the element of MODVAT was neither included in the consumption nor into cost for valuation of 'closing stock'. As such, it is the claim of the assessee that as it has debited its 'profit & loss a/c' with purchases of raw material net of MODVAT Excise duty, therefore, the valuation of 'closing stock' of raw material was also made at cost net of such excise duty. In sum and substance, it is the claim of the assesse....
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....the file of the ld. AO to decide the same in the light of directions issued by the Tribunal for the A.Y.2009-10. Accordingly, the Ground No. II raised by the assessee is allowed for statistical purposes. 6. Disallowance of expenditure on Interest of Rs. 27,10,63,014/- and Prepayment Charges of Rs. 8,62,00,000/- by treating it as capital expenditure Ground No. III of Assessee Appeal We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had incurred the aforesaid expenditure by way of interest payment and prepayment charges in respect of loans raised in the sum of Rs. 200 crores from ICICI Bank and the same has been duly paid within the financial year. We find that the assessee had claimed deduction for the aforesaid payment on account of interest u/s 36(1)(iii) of the Act. We find that the ld AR had alternatively pleaded that the same is otherwise allowable as deduction u/s 37 of the Act. For better appreciation of facts on record, the following datewise chronological sequence of events which led to incurrence of the aforesaid expenditure would be relevant :- S.NO. Date Event & document in support ....
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....crores plus own funds were utilized for the acquisition of shares of another pharma company with the sole intention of acquiring the running business of RPIL and to expand the existing business. 6.2. It is not in dispute that with effect from 01.01.2001, in order to implement the intention of expansion of existing business under a scheme of arrangement, entire assets and liabilities of RPIL and specific assets and liabilities of NFL were amalgamated with the assessee in accordance with the provisions contained in Sections 391 to 394 of the Companies Act, 1956. We find that the said scheme of arrangement was approved by the Hon'ble Bombay High Court vide order dated 27.09.2001. We find that pursuant to take over of specific assets and liabilities of NFL, it goes to prove beyond doubt that right from inception, it was the assessee company who had intended to acquire the shares through its subsidiary in order to enable it to expand the existing business of the company, as the aforesaid manner could alone be the method to acquire the business. 6.3. We find lot of force in the argument advanced by the ld AR that the business of RPIL, subsidiary of assessee's wholly owned subsidiar....
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....s, interest accrued on the loan amounting to Rs. 7.03 crores was debited by the assessee company in its share premium account as part of capital expenditure of Rs. 12691.59 lacs. c) By reason of the transfer of assets and liabilities of business of M/s RPIL, the nature and, character of the liability would not change and hence an expenditure incurred in relation to such a liability is capital expenditure. 6.6. We find that the ld AR submitted that RPIL was a well reputed and profit making company engaged in manufacturing and distributing of pharmaceutical products and that the primary objective of acquiring RPIL was to strengthen the assessee's pharma business and substantially increase the top line and bottom line of the assessee's business and making it the leading pharmaceutical company in India. It was further submitted that, combined entity as a result of merger of RPIL with the assessee company has led to increased production, higher sales and better profits to the assessee and the assessee has in fact only benefited from the economies of scale resulting in lower cost of manufacturing, achieving better cost efficiency etc. Infact, sales have increased from 566.76 cr....
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....ear 2001-02 be it in books or in their income tax returns, if any, prior to merger has got no relevance. 6.9. We find that in the instant case, the expenditure on interest and prepayment charge had been incurred by the assessee to expand the existing business of the assessee company. It was submitted by the ld AR that it was with the intent of acquiring the business of M/s RPIL that, subsidiary of the assessee company had purchased shares of M/s RPIL and, since the loan had been raised for purchase of the shares of subsidiary company so as to enable the assessee company to acquire the business of M/s RPIL, hence the expenditure incurred in respect of loan raised in the instant year is a revenue expenditure u/s 36(l)(iii)of the Act. We find lot of force in the said argument of the ld AR and we accept the same. 6.10. We find that when this point was put to the ld DR, he argued that in any case, the proviso to section 36(1)(iii) of the Act would come into operation which reads as under:- Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset (whether capitalized in the books of account or not) ; for any period beginning....
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....uld be squarely allowable as deduction u/s 36(1)(iii) of the Act itself. Accordingly, the Ground No. III raised by the assessee is allowed. 7. The Ground No. IV and IV(i) of assessee appeal and Ground No. 4 of revenue appeal are with regard to challenging the action of the ld. CIT(A) granting deduction only in respect of 1/5th of expenditure incurred in respect of payment made to M/s. Accenture by applying provisions of Section 35DD of the Act as against the claim of deduction of the whole expenditure u/s.37(1) of the Act by the assessee. 7.1. We have heard rival submissions and materials available on record. We find that under the head legal and professional fees, the assessee had claimed deduction in respect of payments made to Accenture in the sum of Rs. 522.97 Lakhs. The assessee submitted that payment of Accenture was mainly pertaining to successful integration of RPIL with the assessee company. The assessee submitted that this expenditure has been incurred on the grounds of commercial expediency allowable as deduction u/s.37(1) of the Act. The ld. AO however, disregarded the contentions of the assessee and disallowed the claim of the assessee by treating it as capital e....
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....Ground No.4 raised by the revenue is dismissed. 8. Write off of Stocks / receivables - Rs. 679.67 lacs Ground Nos. V and V(i) of assessee appeal The ld AO observed from the details filed by the assessee in respect of write off of receivables and stocks vide letter dated 29.11.2004 that the break up of the sum of Rs. 679.67 lacs are as under:- Expired / Destroyed Stocks - Rs. 133.40 lacs Write off of stocks on discontinuation Of Joint Venture - Rs. 77.02 lacs Write off of receivables from Voltas - Rs. 195.20 lacs Compensation paid to CFA's - Rs. 63.03 lacs Closure of Hospital Products Division - Rs. 210.92 lacs Total Rs. 679.67 lacs 8.1. The ld AO observed that the details filed by the assessee in this regard are very sketchy in earlier year, the expenditure relating to the Thane Factory closure expenses were disallowed. The ld AO observed that the assessee had not furnished any details in support of its claim of deduction in this regard. Accordingly, he proceeded to disallow the sum of Rs. 679.67 lacs during the year under consideration also. 8.2. Before the ld CITA, the assessee requested for an opportunity to be provided to it fo....
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....equent write off of the stock worth Rs. 77.03 lakh; 4.1.3 As regards the stock written off amounting to Rs. 1,33,46,833/-, a perusal of the details filed shows that expiry date of al number of products falls before the F. Y. 2001-02 relevant to A.Y. 2002-03. Hence, the assesses company was requested to explain as to how &to3y expired before the beginning of the relevant previous year can be written year under consideration. Further, the assesses company was also requested of the relevant portion of the stock register in respect of the stock. 4.14. In response, the assessee company has mentioned that stock worth only an significant amount of Rs. 1,41,698/- expired prior to the relevant assessment year. However, the assessee company has not produced the copies of the relevant portion of the stock register in respect of the stock written off. 4.1.5 In view of the above, it is seen that the assessee company has not been able to file the necessary documentary evidence to back up its claim of write off' of 'stock worth Rs. 210.50 lakhs. In the absence of the necessary documentary evidence, the assessee company'$ /claim cannot be verified. 4....
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....isfactory performance. The discontinuance has definitely given a benefit to the assessee company and the same is enduring in nature as the assessee company does not have bear the losses due to unsatisfactory performance of the CFAs. Further, the assessee has not offered any explanation as to how the compensation paid can be treated as an admissible expense as no services have been rendered by the CFAs in lieu of the same, during the relevant previous year. 4.3.4. In view of the above, the expenditure on account of discontinuance of CFA should be treated as capital expenditure. 4.4. Closure of Hospital Products Division: (Rs. 210.92 lakhs) 4.4.1. USS Subdivision:- It is mentioned that the losses in USS subdivision were on of high sales returns. A perusal of (he annexure A shows (hat the sales return of 1.56,82,89 5/- have been reduced from the total sales. However, the stock has not been increased by a corresponding amount. In view of the above, the assessee company was requested to file details of the goods returned back and their treatment in the books if accounts. In response the assessee company has submitted that the sales return, of Rs. 1,56,82,695 h....
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....able on record. We find from the details submitted in respect of amount disallowed towards Thane Factory expenses, that the same were incurred only in respect of retrenchment and related expenses which had been consistently allowed by the ld CITA in the earlier assessment years upto Asst Year 2001-02. The assessee had filed detailed submissions dated 16.3.2006 as per the details in the paper book filed before us in response to the queries raised by the ld AO vide letter dated 3.3.2006 during the remand proceedings. We also find from the details enclosed in page 249 of the paper book I before us, that the assessee had duly furnished the details such as code, description, product line, quantity, expiry date etc. When all these details are available both before the ld AO and ld CITA, it would be unjust and unfair to conclude that no details were furnished by the assessee. Moreover, from the said details, we also find that the stocks contained only those stocks, the period of which was beyond the prescribed expiry date, thereby making the stocks unsaleable and useless. Hence the assessee being in pharmaceutical industry, has no other option but to write off the same in its books and cl....
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....micals in October 1993. The assessee supplied stocks to Voltas Ltd during the periods 1993 to 2001 and sales were duly credited for the same and offered to tax in respective assessment years with corresponding debit to debtors account. Admittedly, with effect from 1.10.2001, the distributorship arrangement was discontinued. Pursuant to this, a settlement was reached between the two parties as is evident from the settlement letter dated 23.5.2002, as a result of which, a sum of Rs. 195.22 lacs was written off by the assessee. The assessee had also furnished the invoice wise statement of the amounts written off. These details are available in pages 251 to 257 of paper book I. Since Voltas Ltd did not pay the sum due to the assessee company , it became irrecoverable pursuant to settlement letter dated 23.5.2002 as stated supra, the assessee had no other option but to write off the same which was duly done in its books. Accordingly, the assessee would be entitled for deduction u/s 36(1)(vii) of the Act in respect of the same. 8.7. With regard to compensation paid to Cost and Freight Agents (CFAs) amounting to Rs. 63.01 lacs, we find that as a result of merger of RPIL with assessee c....
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.... closure of USS Subdivision - Rs. 129.01 lacs Loss on closure of STYR Subdivision - Rs. 77.63 lacs Loss on closure of G2 Subdivision - Rs. 4.28 lacs -------------------- Rs. 210.92 lacs -------------------- 8.10. We find that the losses in USS Subdivision were on account of high sales returns, which are duly reflected in the closing inventory of the assessee company. The closing stock of inventory disclosed by the assessee has been accepted by the lower authorities in the instant case without raising any dispute thereon. It is not in dispute that the sales made in respect of these items were offered to tax in the earlier year. In any case, when the stocks come back to the assessee, the same are included in the closing inventory and hence there cannot be any grievance for the revenue. Hence there is no artificial loss as claimed by the revenue in the instant case. Hence we direct the ld AO to grant deduction towards loss on closure of USS Subdivision amounting to Rs. 129.01 lacs. 8.11 With regard to loss on closure of STYR Subdivision, we find that the assessee had submitted that the same was on account of demonstration sto....
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.... a) Hon'ble Bombay High Court in the case of CIT vs Pfizer Ltd reported in 330 ITR 62 (Bom) in respect of insurance claim. b) Hon'ble Punjab and Haryana High Court in the case of R N Gupta Co Ltd vs CIT reported in 351 ITR 369 in respect of sale of scrap. c) Decision of Pune Tribunal in the case of ACIT vs GKN Sinter Metal P Ltd reported in 153 ITD 311 in respect of cash discount. 9.1. Respectfully following the aforesaid decisions, we decide the Ground No. VI raised by the assessee in favour of the assessee. 10. Ground Nos. VII, VIII and IX of assessee appeal and ground No.6 of revenue appeal relate to computation of capital gains on arising out of transfer of property styled as "Rhoni Poulenc House". 10.1. Brief facts of this issue relevant to the computation of capital gains are as under:- "That on 7th of May' 2000 in financial year 2000-01 relevant to assessment year 2001-02, M/s Rhone Poulenc India Ltd. (hereinafter referred to as "RP1L") entered into a Memorandum of Understanding with M/s Grasim Industries Ltd. (hereinafter referred as "GIL"), M/s Hindalco Industries Ltd. (hereinafter referred as "HIL") and, M/s Indo Gulf Corporati....
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.... Amount Amount Total Sale Proceeds received on transfer (partial) of RPIL House at Worli, as per Agreement dated 23.11.2001 33,13,84,129/- Sale Proceed received (pertaining to land as per Valuation Report) (40% of total sale proceeds) 13,25,53,652/- Fair Market Value of RPIL House as on 01.04.1981 as per Valuation Report 8,56,00,000/- Total Fair market Value pertaining to Land (40% of total FMV) 3,42,40,000/- Fair Market Value pertaining to Land transferred (being ratio of sale Proceeds realized to total consideration) 1,34,27,920/- Indexed Cost of Acquisition of Land (1,34,27,920 x 426/100) 5,72,02,940/- Long Term Capital Gain on the portion of Land sold (13,25,53,652 - 5,72,02,940) 7,53,50,712/- 10.1.3. The assessee in their notes to the computation of income with regard to the subject mentioned capital gains had stated as under:- "During the relevant previous year, RPIL had entered into an Agreement for sale dated 23.11,2001 with Grasim Industries Limited (GIL), Hindalco Industries Limited (HIL) & Indo Gulf Corporation Limited (IGCL) for sale of RPIL Ho....
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....,462/- iii) Other Additions 6,24,39,848/- 3) Total 41,67,04,498/- 4) Sales i) RPH of M/s. RPIL 19,88,30,477/- ii) Other Assets 2,86,50,000/- 22,74,80,477/- 5) WDV at close of year (3-4) 18,92,24,021/- 6) Depreciation Claimed 1,66,73,144/- 10.1.5. The assessee submitted before the ld. AO that the sale proceeds of the property was Rs. 7,897/- per sq.ft. whereas the fair market value as on 01.04.1981 had been determined on the basis of the Valuation Report @ Rs. 800/- per sq. ft. Similarly, the sale value of land was Rs. 4,740/- per sq. ft. as compared to Rs. 480/- per sq. ft. of fair market value determined as on 01.04.1981. Likewise, the corresponding sale value and fair market value of building was Rs. 3157/- per sq. ft. and. Rs. 320/- per sq. ft. respectively. 10.1.6. Later during the course of assessment proceedings, assessee filed the revised computation of long term capital gains and arrived at the revised long term figure at Rs. 11.03 Crores as against original long term gain declared at 7.53 Crores. The assessee submitted that the revised ....
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....sp; 42,25,00,000/- Fair Market Value of RPIL House as n 01.04.1981 as per Valuation Report 8,56,00,000/- Total Fair market Value pertaining to Land 4,28,00,000/- Cost of Acquisition of Land (no indexation allowable) 4,28,00,000/- Long Term Capital Gain on the portion of Land sold : (42,25,00,000-4,28,00,000) 37,97,00,000 10.1.9. From the above computation it could be seen that (1) Ld. AO had allocated the sale consideration towards land and building in the ratio of 50:50. (2) The ld. AO had considered the total sale consideration at Rs. 84.50 Crores instead of 33.13 Crores which was the sale consideration actually received by the assessee during the year. (3) The ld. AO did not grant indexation benefit on the fair market value of land as on 01/04/1981. (4) Further the ld. AO computed the short term capital gain on sale of building of RPH property of Rs. 12,78,10,122/- worked out as under:- Sr. No. Particulars Amount Total Amount 1) Opening WDV i) WDV as on 01. 04.2001 21,34,13,284/- 2) Additions i) WDV as on 01.04....
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....ns and perused the materials available on record. From the detailed facts narrated hereinabove including the enhancement made by the ld. CIT(A) on the computation of long term and short term capital gains, on sale of land and building of RPH property, the following issues arise for our consideration:- (a) Whether the sale consideration should be adopted at Rs. 84.50 Crores or Rs. 33.13 Crores which was the sum actually received during the year in the facts and circumstances of the case ? (b) What would be the proper allocation of sale consideration towards land and building i.e. whether the ratio of allocation No.50:50 or 60:40 in respect of land and building respectively in the facts and circumstances of the case ? (c) Whether assessee is entitled to adopt the fair market value of land as on 01/04/1981 as cost of acquisition and claim benefit of indexation thereon while computing long term capital gains on sale of land of RPH property or the actual cost of acquisition on land and claim benefit of indexation thereon, in the facts and circumstances of the case ? 10.5. We find that as a result of agreement entered between RPIL i.e. the company which stoo....
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....co Industries Ltd., and sale consideration received thereon was Rs. 33,13,84,129/- which was duly offered for capital gains tax in the year under consideration. We find that on perusal of Clause 5 of the said agreement, the assessee had to place the purchasers in possession of the remaining area within 30 days of the dates which are set out in Annexure-A to the agreement. In other words, the perusal of Annexure-A shows that possession was to be made on or after 31/03/2002 and upto 30/09/2005. In fact it is seen that possession was to be handed over in respect of items 12-33 of the Annexure to the agreement in the second year, items 24-27 in the third year, items 28-32 in the 4th year and items 34-35 in the 5th year. We find that assessee had submitted that the instant property which was to be sold to three purchasers namely M/s. Grasim Industries Ltd., M/s. Hindalco Industries Ltd., and M/s. Indo Gulf Corporation Ltd and on perusal of the Annexure to the agreement to sell, the following details required attention:- V.No. Intending vendor A/Y Area to be transferred (sq.ft) Consideration in Rs. A Grasim Industries Ltd. 03-04 17310 156351017 ....
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....ear 03-04 S.NO Unit No. Area Amount Received i B-ll 3900 35226399 2 B-31 3900 35226399 3 B-41 3900 35226399 4 B-51 3900 35226399 5 1710 15445421.1 TOTAL 17310 156351017.1 Assessment year 05-06 S.NO Unit No. Area Amount Received i B-01 3900 35226399 2 427.5 3861355.28 TOTAL 4327.5 39087754.28 Assessment year 06-07 S.NO Unit No. Area Amount Received i B-21 3900 35226399 2 427.6 3862258.52 TOTAL 4327.6 39088657.52 10.7. Based on the above, the ld. AR submitted that the assessee had declared capital gains on sale of above properties in the respective years as under:- V.NO. Intending vendor A.Y Area to be transferred (sq.ft) Consideration (Rs.) Capital Gain (Rs.) A Grasim Industries Ltd. 03-04 17310 15,63,51,017 5,13,31,390/- Grasim Industries Ltd. 05-06 8655 7,81,75,508 2,33,27,942/- TOTAL 25965 23,45,26,525 7,46,59,332/- B Hindalco Ltd. 02-03 36688.3 3....
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.... the assessee till the date of handing over of the possession to the purchasers. Hence, it only reflects the divergent stand taken by the revenue. We find that the ld. AR before us also drew our attention to Clauses 7,8,13,14,27,29 & 31 of the agreement to drive home the point that the whole of the property was not transferred by the assessee during the year under consideration. The said clauses are not reproduced herein for the sake of brevity. Hence, it could be safely concluded that assessee had duly transferred only 36,688/- per sq.ft to M/s. Hindalco Industries Ltd., during the A.Y.2002-03 for which capital gains had been duly offered to tax in the year under consideration and the remaining portions have been sold in A.Yrs. 2003-04, 2004-05 and 2005-06 for which also capital gains had been duly offered to tax by the assessee in those respective assessment years. The details of capital gain tax offered by the assessee in all these years and the assessments framed thereon are as under:- Assessment Year Area Sold Sq. Ft Sale consideration received Capital Gain declared on Land Capital Gain assessed u/s 143(3) Remarks 2002-03 36688 33,13,84,129 11,30,....
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....Chartered Engineer (Government registered valuer) dated 14/10/2003. From the perusal of the said valuation report enclosed in page 358 of the paper book-1 dated 23/12/2008, we find that there is proper justification for the assessee to allocate 60% of the total consideration towards value of land. We find that there is absolutely no basis for the revenue to simply take the bifurcation on sale consideration towards land and building at 50:50. Hence, we answer the second question raised hereinabove in favour of the assessee. 10.12. The next aspect of this issue is with regard to adoption of fair market value of land as on 01/04/1981 for the purpose of computation of capital gains on sale of lease hold land forming part of RPH property. We find that the following background facts would be relevant for better appreciation of the issue in dispute before us. This could be understood as under:- • On 23/01/1946 under indenture of lease, Municipal Corporation of the City of Bombay had granted a lease of land measuring 8000 sq.yards being plot No.216 together with Buildings thereon in perpetuity from 04/04/1938 to one Shri Haridas Kasal Chand Maniar in consideration of amount....
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.... under consideration at its own whims and fancy and there is no diversion of such income by over riding title warranting the need to pass on some portion of such sale consideration to any other party including the main lessor who had given perpetual lease to the assessee i.e. Municipal Corporation of City of Bombay. In other words, the assessee need not to transfer any part of its sale consideration to Municipal Corporation of City of Bombay. This itself goes to prove that assessee had not acquired any tenancy rights pursuant to perpetual lease granted by Municipal Corporation of City of Bombay on 04/04/1938 as dated supra. We find that Section 105 of Transfer of property Act 1882, defines the term "lease" as under:- "A lease of immoveable property is a transfer of right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. " 10.14.1. From the above definition, it could be inferred that lease crea....
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.... the same while framing the assessments for the said respective years. After the merger, the assessee company in its returns of income filed for the subsequent years claimed depreciation on the assets of BMIL after taking into account their Written down value (for short "WDV") as was reflected in the books of accounts of BMIL on 31.03.1994. In other words, the depreciation which though was allowable to BMIL for A.Y 1995-96 & A.Y 1996-97, but was not claimed by it, was not reduced by the assessee from the WDV as on 31.03.1994. Similarly, the assessee company had taken over the assets of PHL w.e.f 01.06.1996 under a scheme of arrangement duly sanctioned by the Hon'ble High Court of Bombay, vide its order dated 14.08.1997. In respect of the assets of PHL also the WDV was adopted by the assessee on the basis of the Income Tax records. Further, the assessee in the period relevant to A.Y. 1999-2000 had sold its glass division and bulk drug division. The A.O declined to accept the claim of the assessee that it was a slump sale transaction and considering the same as an itemised sale of assets worked out the WDV of the "block of assets by reducing the sale value as recorded in the books of....
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....laim of depreciation raised by the assessee on the assets of PHL which w.e.f 01.06.1996 were taken over by the assessee under a scheme of arrangement duly sanctioned by the Hon'ble High Court of Bombay, vide its order dated 14.08.1997, we find that the assessee subsequent to the takeover had taken the WDV on the basis of the Income Tax records of PHL. As is discernible from the orders of the lower authorities and admitted by the assessee in its objections raised before the DRP, though PHL had not claimed depreciation on its assets, however, the A.O while framing the assessment in its hands for A.Y 1996-97 had allowed the same. Apart there from, the assessee had during the year relevant to A.Y 1999- 2000 sold its two divisions viz. (i). Glass Division (GGL); and (ii). Bulk Drug Division (BDD) on a slump sale basis. As such, the assessee company in A.Y 1999-2000 while computing the deprecation had dropped the WDV of the aforesaid two undertakings from the respective block of assets on the date of such slump sale. As observed hereinabove, the A.O declined to accept the claim of the assessee that it was a slump sale transaction and considered the same as an itemised sale of assets. On ....
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....) of the Act. We find that the ld. CIT(A) had deleted the said disallowance by placing reliance on the order of his predecessor passed for the A.Y.2001-02 in assessee's own case. We find that the case of the revenue is that pursuant to the retrospective amendment made in the Act w.e.f. 01/06/1976 in the provisions of Section 9 of the Act by way of insertion of Explanation thereon, the subject mentioned payment should be liable for deduction of tax at source. We hold that the retrospective amendment in the Act cannot fasten any TDS liability on the payer as the TDS application would lie on the payer only based on the law prevailing at the time of payment or incurrence of the expenditure. Obviously the payer i.e. assessee herein could not have pre-empted the retrospective amendment in the statute while making the payment. It is well settled that the retrospective amendment could fasten income tax liability but not TDS liability on the payer herein. Hence, no disallowance could be made in the hands of the payer u/s.40(a)(i) of the Act based on retrospective amendment in the statute. Accordingly, the ground No.2 raised by the revenue is dismissed. 13. The ground No.3 raised by the r....
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....mately 3 months. As we discussed the current plan is that Nicholas will provide high quality individuals who should be relatively self standing with limited support from us at the end of phase I. Should we jointly feel at the end of Phase I that these individuals still need additional support beyond the one individual budgeted at this point, we could jointly discuss this support at that point. The project would entail a large data gathering exercise to create the national doctor database; a pilot in 3-4 centres where more details retail audits will be conducted; market research CPs/GPs; and significant field analytical to craft the divisions, the DVLs, the brand priorities and the segmentation criteria. Naturally, this would need to be led and driven by the Nicholas sales and marketing team, with dedicated resources and leverage of the sales force and trainees, with McKinsey facilitation. External resources may also be deployed to facilitate and hasten the data collection. In parallel with this, we continue to provide counselling support to the brand management and new product initiatives, to ensure appropriate speed and quality of those key initiatives. ....
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....ion 37 of the Act. We do not find any infirmity in the action of the ld. CIT(A) granting relief to the assessee in this regard. Accordingly, the ground No.3 raised by the revenue is dismissed. 14. The ground No.5 raised by the revenue is challenging the action of ld. CIT(A) in holding that 90% of the processing charges should not be reduced while computing deduction u/s.80HHC of the Act. 14.1. We have heard rival submissions and perused the materials available on record. We find that other income of the assessee included processing charges of Rs. 3,48,64,000/- and the assessee had not reduced 90% of the said processing charges to work out the profits of the business while computing deduction u/s 80HHC of the Act. The ld. AO accordingly re-worked deduction u/s.80HHC of the Act on the premise that the said receipt is in the nature of receipt covered by the Explanation (baa) to Section 80HHC of the Act. We find that this issue is covered by the decision of Hon'ble Supreme Court in the case of Southern Sea Foods Ltd., vs. JCIT reported in 225 CTR 256 (SC) wherein one of the questions raised before the Hon'ble Apex Court is as under:- "(2) Whether on the facts and in the ....