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2019 (11) TMI 1042 - ITAT DELHILong term capital gain - process of sale of shares by holding company to the subsidiary company - time can gap between the formation of the companies and the transfer of shares to them - HELD THAT:- It could be seen from the impugned order that the CIT(A) adverted to this aspect and made an observation that nowhere in the Act it is provided that certain time difference is required before which the provision of section 47(iv) could not be invoked with reference to the case of the assessee. It was the observation of the CIT(A) that sale of shares by holding company, i.e. the assessee company to the subsidiary companies is not in the nature of a transfer as provided by section 47(iv). Therefore, the same cannot be subjected to capital gain as per provision of section 45 of the Act. A bare reading of the provision of section 45 and 47(iv) clearly shows that the law does not require any time can gap between the formation of the companies and the transfer of shares to them. However, the suspicion of the AO that inasmuch as the company was formed in the month of October, 2007 and within the span of three months in January, 2008 the shares were transferred, the same was construed as a same transaction. But in the absence of any law such finding is unwarranted and the finding of the Learned AO on this aspect cannot be sustained. No illegality or irregularity in the finding of the Learned CIT(A) that in view of the provision of section 47(iv) the process of sale of shares by holding company to the subsidiary company cannot be subjected to capital gain u/s 45. We, therefore, do not find anything illegal or irregular in the finding of the CIT(A) and accordingly they are confirmed. Addition in respect of the professional expenses those are not verifiable - HELD THAT:- By placing reliance on the report of the auditors in form 3CD, AO were called for the details of the professional expenses and held that if the liability of these expenses was received by the assessee on transfer from its sister concern M/s. Sahara India, the assessee company which is claiming the expenses in its profit and loss account was required to substantiate its claim by production of relevant bills, vouchers along with justification for the expenses and since same was not being done, mere production of form 16A is not assessee’s claim. CIT(A) recorded that assessee argued before him that at no stage of proceedings the AO required the assessee to produce such material, and as a matter of fact the assessee produced all the materials like certificate from M/s. Sahara India showing that they have deducted tax at source on the payments and they have not claimed the expenditure in their books of accounts, and the claim which was not made in respect of expenses incurred by them for and on behalf of the assessee company and, therefore, no disallowance was called for in this respect. CIT(A) considered the material and opined that obviously when the payment was made by account payee cheque, due tax was deducted at source and was squarely proved that the payment was made on behalf of the assessee by M/s. Sahara India who also claimed the payment as an expenditure in their account. No material is brought on record by the Revenue running contrary to this factual findings written by the CIT(A) on verification of the record. Since it is a factual finding basing on the material proceed by the assessee like the certificate from M/s. Sahara India and in the absence of any contrary allegation made by the Revenue, we are of the considered opinion that no interference is warranted with such finding. We, accordingly find this ground of appeal is devoid of any merit and is liable to be dismissed. Addition u/s 14A - AO disallowed 10% of the dividend income earned by the assessee as expenditure relatable to earning of such income by invoking the provisions of section 14A - HELD THAT:- CIT(A), however, observed that since the assessee had already disallowed the relatable expenditure voluntarily, the same cannot be disallowed. On the fact of voluntary disallowance made by the assessee, no further disallowance is warranted. We agree with the Learned CIT(A) and dismiss this ground of appeal. Claim of expenses - HELD THAT:- CIT(A), on a consideration of this submission made by the assessee, directed the Learned AO to allow the expenditure of ₹ 34,90,243/- after verification of the fact that the same relates to the previous year relevant to the A.Y. 2008-09 which is under appeal. Since the Learned CIT(A) gave a direction to allow such an expenditure only after verification, no prejudice is caused to Revenue and it is always upon for the Revenue to verify whether are not such expenditure relate to the previous year relevant to the A.Y. 2008-09. Hence, we do not find any merit in this ground and same is accordingly dismissed.
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