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2018 (12) TMI 1932 - AT - Income TaxAddition u/s. 68 - investment in share capital of amalgamating companies - CIT(A) has deleted the addition taking note that the AO has made the addition in the hands of the amalgamated company (assessee company) - HELD THAT:-The identity of the amalgamating 14 companies were lost and it effaces away for all practical purposes and is no longer in-existence and so non-est in the eyes of law. And since the assessee company is different juristic entity cannot be taxed by applying sec. 68 of the Act for the share capital and premium which these 14 amalgamating companies have shown in their respective books from FY 2008-09 onwards. CIT(A) has correctly taken note of the judicial precedence to come to the conclusion that on the date of transfer taking effect, the corporate entity of the transferor company ceased to exist and from that date the amalgamating companies is non-est in the eyes of law and the amalgamated assessee company is a different corporate entity and cannot be saddled with the share capital introduced by 14 different amalgamating companies in FY 2008-09, therefore, we are inclined not to interfere with the order passed by the Ld. CIT(A) and for the reasons discussed above and the reasons given by the Ld. CIT(A) we concur and, therefore, we uphold the same and dismiss the Revenue’s ground of appeal for AY 2012-13. Disallowance u/s. 14A of the Act read with Rule 8D - HELD THAT:- As brought to our notice that the assessee has not earned any dividend income which is exempt from tax, so according to Ld. AR, no disallowance could have been made applying sec. 14A read with Rule 8D of the Rules. We note that Hon’ble High Court of Delhi in the case of CIT Vs. Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] has held after taking note that assessee company in that case also did not earn any dividend income. Thus as per law, the receipt of the income exempted from tax is necessary for any disallowance u/s 14A of the Act read with Rule 8D. If there is no exempted income received during the year, there can be no disallowance made applying section 14A of the Act read with Rule 8D. Hence, in the instant case of the assessee company, question of any disallowance does not arise, as it has not received any exempt income. Therefore, in view of the case laws discussed hereinabove, no disallowance is warranted in the instant case as no exempted income has been earned by the assessee. Therefore we confirm the action of ld CIT(A) on this issue and dismiss the ground of appeal of revenue. Claim of assessee in respect to “Preliminary Expenses written off.” - disallowance on the reason that assessee has not filed any details before him in respect to this claim made by assessee - HELD THAT:- CIT(A) has not deliberated on this issue while allowing the claim of the assessee. Therefore, for the interest of justice and fairplay, we set aside this order of Ld. CIT(A) and remit this matter back to the file of AO to decide de novo the claim of the assessee and the assessee is directed to file all details before the AO. And the AO to decide this issue after hearing the assessee in accordance to law. This ground of appeal of revenue is allowed for statistical purposes.
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