TMI Blog2019 (12) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... for the appellant-Income Tax Department. 2. Instant appeal is against the order passed by learned Income Tax Appellate Tribunal, Cuttack Bench, Cuttack in ITA No.160/CTK/2013, dated 06.06.2014, dismissing the appeal filed by the revenue. 3. Perused the impugned order in detail. Learned Tribunal while dismissing the appeal has rightly discussed the contention raised by the revenue and has held in favour of the assessee. For ready reference, relevant paragraphs-9 to 11 of the impugned order are reproduced hereunder: 9. We heard the rival submission and carefully considered the same along with the orders of tax authorities below. So far the technical issue relating to the power of the assessing officer in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded for escapement of the income in respect of unabsorbed depreciation. The disallowance of unabsorbed depreciation was deleted by the Appellate Authority that does not mean no addition was made by the assessing officer on the basis of the reason to believe recorded by him. The section 147 of the Income Tax Act talks of assessing officer not of the appellate authority. These decisions in our opinion are not applicable to the facts of the case. In our opinion, there is no illegality in this case as per the provision of section 147 of the Income Tax Act. We accordingly dismiss this technical plea of the ld. A.R. 10. Now, we will deal with the plea of the ld. A.R. whether the expenditure incurred by ICCL which got amalgamated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the lenders amounting to ₹ 7,41,74,113/- therefore can by no stretch of imagination be regarded to be on revenue account. This amount has been paid in our opinion to compensate the lenders because they got shares in ICCL on conversion of debt at a higher price. Consequently, at the time of amalgamation the lenders will get less shares in IMFA as in place of 14 equity shares of ICCL, one equity share of IMFA was allotted was allotted. In case the shares would have been (ineligible) rated by 95%, the lenders would have got more shares in ICCL on conversion of part of the debt into equity. In consequence thereof on amalgamation, the lenders would have got more shares in IMFA in exchange of shares in ICCL. No person of ordinary pruden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure cannot be allowed as a revenue expenditure u/s 37 (1) as it is a capital expenditure. The assessee also cannot get deduction u/s 35DD of the Income tax Act as this expenditure has nothing to do with the amalgamation and incurrence of this expenditure was made for allotting the shares in ICCL not for the purpose of amalgamation of ICCL with the assessee. 11. We have gone through the case laws as relied on by ld. A.R. The decision of Hon ble Supreme Court in the case of Empire Jute Co. Ltd vs CIT [1980] 124 ITR 455 (SC) in our opinion will not assist the assessee as the issue involved in that case does not relate for paying the compensation to the lender on conversion of the long term debt into equity share at a highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r increase in producing but for compensating the share capital. This decision therefore is not applicable in the case of the assessee. We have also perused the case of Chennai bench in the case of ACIT vs WS Industries, 128 ITR 98. This decision relate to the claim made by the assessee for discharging the corporate guarantee given for its subsidiary company under the settlement with the banks by affecting one time settlement. This decision has not to deal with the compensation paid on capital account. Thus this decision is also not applicable to the facts of the case before us. We therefore, dismiss the ground nos.8 to 11. 4. Considering the submission made and keeping in view the observations made by the learned Tribunal as qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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