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2019 (8) TMI 734

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..... he shares held by the assessee in the transferor-companies. For all the above reasons it was held that, there was not extinguishment of any right of the assessee as holder of the shares in the transferor-companies. The CIT(A) while allowing the appeal filed by the assessee and rightly held that the assets in respect of which relief was allowed u/s 32AB are still held by the amalgamating company even after amalgamation and gets fused by one company. - Decided in favour of the assessee. Machinery maintenance charges which was paid by LGB - AO disallowed the same for want of proof - HELD THAT:- A perusal of paragraph no.(iv) of the assessement order dated 23.03.1994 shows that the AO at no point of time accepted the stand taken by the assessee, in fact, the AO comes to the conclusion that the assessee has not been able to place any material to substantiate the stand and in the absence of any evidence the amount was disallowed and added back. Therefore, the findings of the CIT(A) is contrary to record. CIT(A) further states that there can be no benefit of any kind whatsoever in the assessee's accounting the expenditure for repairs at an inflated figure and paying the tax at a reduc .....

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..... be withdrawn since the appellant was amalgamated with its parent company M/s.L. G.Balakrishnan & Bros.Ltd.? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the amalgamation of company would amount to otherwise transferred the assets of the company for the purpose of section 32AB(7) of Income Tax Act, 1961? 3.Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that machinery maintenance charges paid to M/s.L.G.Balakrishnan & Bros.Ltd. was not an allowable expenditure? 4. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in not holding that the disallowance/addition in the hands of appellant in respect of the claim of expenditure by payment of the same to the parent company M/s.L.G.Balakrishnan & Bros.Ltd., was not warranted since it would amount to double taxation? 3. We have heard Mr.M.P.Senthil Kumar, learned counsel for the appellant/assessee and Mr.T.R.Senthil Kumar, learned Senior Standing Counsel for the respondent/revenue. 4. Substantial question of law nos .....

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..... & Co.Ltd. Vs. Commissioner of Income Tax reported in [(1979) 119 ITR 0399(Cal], the Court examined the effect of amalgamation and it was held that the entire capital and assets of the transferor-companies having vested in the assessee, as a result of the said amalgamations, the assessee became the sole owner of the capital of the transferor-companies. There was, therefore, no extinguishment of the right of the assessee in participating in the capital on the liquidation of the transferor-companies. The share held by the assessee in the transferor-companies represented the capital invested by the assessee in the said companies and by the said amalgamation the assessee became the sole owner of the entire capital of the transferor companies. By virtue of the said amalgamations the assessee as the transferee-company became the sole repository of all the rights which flowed from or were embedded in the shares held by the assessee in the transferor-companies. For all the above reasons it was held that, there was not extinguishment of any right of the assessee as holder of the shares in the transferor-companies. 9. In Commissioner of Income Tax Vs. Renuga Textile Mills Ltd. reported i .....

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..... eserve, Investment allowance Reserve, General Reserve, Capital Reserve and Investment Deposit account of LGB respectively on and from the appointed date. 14. In the light of the above, the Tribunal fell in error in reversing the decision of the CIT(A). Accordingly, substantial question of law nos.1 and 2 are answered in favour of the assessee. Consequently, the findings of the Tribunal on the said issue is set aside. 15. Substantial question of law no.3 is with regard to machinery maintenance charges which was paid by LGB. The Assessing Officer disallowed the same for want of proof. The assessee preferred appeal before the CIT(A), who accepted the plea raised by the assessee and deleted the disallowance. In paragraph no.9 of the order passed by the CIT(A), we find that the CIT(A) has recorded that the Deputy Commissioner of Income Tax (Assessing Officer) does not dispute the factum of repair having been carried out by LGB. A perusal of paragraph no.(iv) of the assessement order dated 23.03.1994 shows that the Assessing Officer at no point of time accepted the stand taken by the assessee, in fact, the Assessing Officer comes to the conclusion that the assessee has not been able to p .....

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