TMI Blog2023 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... VI at Rs.10/- and also under 80G, 80IA or 80HHC, then that Rs. 10/- has to be excluded from Rs.100/- and from the balance Rs. 90/-, apportionment of 40:60 has to be made. AO did not accept this contention. However, the ld. First Appellate Authority has accepted this contention on the strength of the decision of the Hon ble Madras High Court in the case of Periakaramalai Tea and Produce Co. Ltd. [ 1971 (8) TMI 46 - MADRAS HIGH COURT] After going through this well reasoned finding of the ld. CIT(A) based on the decision of the Hon ble Madras High Court, we do not find any error in it. Accordingly, this ground of appeal is dismissed. Allowable business expenses - foreign of travel expenses of the wife of the Managing Director - CIT-A deleted the addition - HELD THAT:- No error in the finding of the ld. CIT(A) because various Hon ble High Courts, namely, George Williamson (Assam) Ltd. [ 1998 (8) TMI 80 - GAUHATI HIGH COURT] , Glaxo Laboratories (India) Ltd. [ 1986 (5) TMI 46 - ITAT BOMBAY-A] and Appolo Tyres Ltd.[ 1998 (8) TMI 68 - KERALA HIGH COURT] are unanimous in their opinion that presence of wife with the top level executives is to assist him for discharging his social ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, then it will be applicable from that date which is finalized by the parties. In the present case, that date is 31/05/1993. The amalgamated company DDIL ceased to exist on 01/06/1993. Whatever, it has deposited will be falling to its successor i.e. Brooke Bond India Limited (amalgamated company and it is entitle for deduction u/s 33AB of the Act. The ld. CIT(A) has not committed any error in this regard. Accordingly, this additional ground of appeal is dismissed. Deduction u/s 32AB(1)(b) and 32AB(7) r.w.s. 33AB(8) - whether merger of two companies under the scheme of amalgamation would be construed as transfer of assets for denying benefit of Section 33AB and 33AB(8) r.w.s. 32AB(7)? - HELD THAT:- AO under the scheme of Section 33AB of the Act, the amalgamated company has made certain deposits and also purchased certain machineries which was required to be used for eight continuous years as contemplated in the Act. But since before completion of those eight years, the amalgamated company which had made deposits has been amalgamated with Brooke Bond India Ltd. and, therefore, all those benefits are to be treated as of the assessee company i.e., Brooke Bond India Ltd. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll-versed with the complete fact. However, during dictation, we find that Revenue has raised additional grounds of appeal also and if quantum in those grounds is being taken, then it will exceed the monetary limit for challenging the order of ld. CIT (Appeals). Therefore, we re-fix it for hearing tomorrow, i.e., 29th September, 2022. The emphasis for this exercise is that it is twenty-two years old and without our endeavor, the assessee is not going to argue this appeal. The parties be informed telephonically. Hearing will be taken through Virtual Mode and no adjournment will be given. Copy of this order- sheet be supplied to both sides electronically. In response this order, the assessee has filed an application for adjournment on the ground that the counsel for the assessee is not keeping good health. A prescription issued by the doctor has also been placed on the record to this effect. Harshita Jain, submitted that Ms. Nitu Hawelia is not well and has sought for adjournment. We find that it is a 22 years old appeal. Even on 27th September, 2022, a request for adjournment was made by Ms. Nitu Hawelia. We did not grant the adjournment because on that date the ld. D/R had po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Produce Co. Ltd. and others (84 ITR 643). 3.2. After going through this well reasoned finding of the ld. CIT(A) based on the decision of the Hon ble Madras High Court, we do not find any error in it. Accordingly, this ground of appeal is dismissed. 4. Ground Nos. 2 4:- These grounds are interconnected with each other. In these grounds of appeal, grievance of the revenue is that the ld. CIT(A) has erred in deleting the disallowance of Rs.18,182/- on account of travelling expenses and further allowed the expenses of Rs.1,57,330/- claimed by the assessee on foreign of travel expenses of the wife of the Managing Director, Shri D. Sen. The Assessing Officer was of the view that these expenses were not incurred for the purpose of business. However, the ld. CIT(A) has deleted both the disallowances. The ld. CIT(A) was of the view that the Board of Directors had approved that the expenses incurred on foreign tours of the wife of the Managing Directors would be reimbursed by the company. It is further observed that the wife of the director has performed secretarial services and was supposed to attend social gathering in business tour. 5. We do not find any error in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n repairs and maintenance. It claimed depreciation at Rs.26,723/- and a sum of Rs.5,26,969/- is meant for transit flats. Out of the total amount of Rs.94,905/-, Rs.20,000/- is debited towards food for guests. The Assessing Officer has added back this Rs.20,000/- The ld. First Appellate Authority has gone through the details of all these expenditure and held that no disallowance u/s 37(4) of the At can be made out of the above expenditure except Rs.20,000/-. The finding recorded by the ld. CIT(A) is reproduced as under:- (10.3) I have considered the matter. Repair and maintenance depreciation on guest house cannot be brought under the purview of section 37(4) as there are specific provisions for allowance of the same. The said items of expenditure are not governed by the provisions of section 37(1) which is pre-condition for applying section 37(4). Therefore, respectfully following the decisions cited above, it delete the disallowance of Rs.2,65,723/- . (10.4) Regarding disallowance of Rs.5,26,969/-, I find that the facts of the case warrant that these expenses cannot be treated as amounts disallowable under section 37(4) as the expenditure is necessary for accommodation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. For that the CIT(A) was not justified in deleting addition of Rs.2,19,13, 300/-on the grounds that amalgamation is not hit by provisions of Sec 32 AB (7) and 33 AB (8). 3. For that the CIT(A) was not justified in deleting addition of Rs. 1,31,81, 134/- u/3 33 AB without appreciating the fact that Doom Dooma India Ltd. ceased to exist on 1-1-93 and the deposit, with NABARD was made on 24-5- 93. 10. First of all, we take additional Ground No. 3 wherein the grievance of the revenue is that the ld. CIT(A) has erred in deleting the addition of Rs.1,31,81,134/-. Brief facts of the case are that the assessee company had claimed deduction u/s 33AB of the Act on a sum of Rs.1,31,81,134/-. Section 33AB(1) of the Act contemplates a pre-condition for the assessee claiming deduction under this Section that, it has to deposit a sum which is atleast equivalent to the quantum of deduction in an account maintained in accordance with the scheme approved by the Tea Board. Earlier, there was Doom Dooma India Ltd. (DDIL), who has deposited a sum of Rs.1,60,00,000/- in its account with NABARD maintained in accordance with the Tea Developments Accounts Scheme, 1990. The details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable, then it will be applicable from that date which is finalized by the parties. In the present case, that date is 31/05/1993. The amalgamated company DDIL ceased to exist on 01/06/1993. Whatever, it has deposited will be falling to its successor i.e. Brooke Bond India Limited (amalgamated company and it is entitle for deduction u/s 33AB of the Act. The ld. CIT(A) has not committed any error in this regard. Accordingly, this additional ground of appeal is dismissed. 13. Additional Ground Nos. 1 2:- Both these grounds of appeal are interconnected with each other. The grievance of the revenue in these grounds is that the ld. CIT(A) has erred in deleting the addition of Rs.1,27,27,520/- which was claimed as deduction u/s 33AB (1) and a sum of Rs.2,19,13,300/- which was claimed as deduction u/s 32AB(7) and 33AB(8). In other words, the assessee has claimed deduction of these amounts u/s 32AB(1)(b) and 32AB(7) r.w.s. 33AB(8) of the Act. These deductions were disallowed to the assessee by the Assessing Officer whereas the ld. CIT(A) has allowed the deduction. The discussion made by the ld. CIT(A) on this aspect reads as under:- GROUND NO. 14 is against the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lgamation of Doom Dooma India Limited with Brooke Bond India Limited the provisions of section 32AB (7) was attracted in view of the fact that there was transfer of the assets acquired in terms of section 32AB and as such the aforesaid amount was to be added back to the income of the year under appeal. On the same ground as above, the Assessing Officer has also added back a sum of Rs. 2,19,13,300/- by applying the provisions of section 32AB (7)/ 33AB (8) of the Income Tax Act. The aforesaid amount has been arrived at by deducting from the aggregate amount of Rs. 9,27,85,000/- deposited during the undernoted assessment years, the sum of Rs. 7,08,71,700/- which was the balance in the NABARD account as on 31.12.92. Assessment Year Amount deposited 1986-87 Rs. 1,52,00,000 1987-88 Rs. 90,43,000 1988-89 Rs. 83,42,000 1989-90 Rs. 74,00,000 1990-91 Rs. 1,83,00,000 1991-92 Rs. 2,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position of the expression sold or otherwise transferred it stands to reason that the expression otherwise transferred must be read in consonance with the expression sale i.e. it postulates the existence of two parties and it must also involve payment of consideration for such transfer. Admittedly in the present case there has been an amalgamation. Amalgamation does not amount to a sale. Further, amalgamation does not fall within the expression otherwise transferred as there are no two parties to the transaction and there is no consideration involved. A scheme of amalgamation does not amount to a transfer as under the scheme of amalgamation the whole undertaking of the amalgamating company stands transferred to and vested in the amalgamated company by an order of the High Court in terms of section 391 and 394 of the Companies Act, 1956 i.e. by operation of law, without any conveyance and/ or without any bilateral transaction. It is therefore a case of legal transmission and not transfer. The learned CIT(Appeals) will note that as a result of amalgamation in terms of section 2(1B) of the Income Tax Act all the properties i.e. the whole undertaking of the amalgamating co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not with a view to evade tax. Further, amalgamation being a procedure which has to pass through the scrutiny of High Courts, there can not be any case of tax evasion where an amalgamation has taken place pursuant to an order of the High Court. If there is any such objection, the High Court is empowered to reject an amalgamation scheme. In the appellant's case the scheme has passed through the scrutiny of the High Courts at Calcutta and Guwahati. There is therefore no question of any tax evasion. Such being the fact, the provision of section 32AB (7) and 33AB (8) cannot be applied to cases of amalgamation per se as also to the appellant's case. 5. The fact that the proviso to sections 32AB (7) and 33AB (8) specifically provide for exemption of cases of succession in the business of a firm a company is also not material. Succession cannot be equated with amalgamation. Amalgamation is a case of legal transmission and there is no further requirement for providing for exclusion of the same from transfer. Further, a case of succession does not go through the scrutiny of High Courts which, as mentioned above objects to tax evasion. As such, there is no merit in the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d expression has to take its colour from word sale. There must be a consideration involved in the transactions. In an amalgamation there is no consideration involved as the amalgamating company does not get anything in return for the vesting of its whole undertaking in the amalgamated company. There is no individual transfer of any particular asset. It is a case of transmission rather than transfer. (12.6) The non-existence of any provision like section 33A(5) and section 32A(6) in section 32AB and 33AB do not have any materiality. The said sub-section in section 33A and 32A make it compulsory for the amalgamating company to continue satisfying the conditions required for allowance under the sections for the benefit of carry forward of the unabsorbed allowances in the hands of the amalgamated company. None of the said requirements/benefit exist in case of sections 32AB and 33AB. There is no provision for continuing fulfilment of any conditions, nor is there any carry forward benefit available for the allowances under sections 32AB and 33AB. (12.7) I also agree with the submission of the appellant that there is no specific exemption necessary for amalgamation similar to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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