TMI Blog2020 (6) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... tments which have yielded tax free income during the year. We find that this direction of the Ld. ClT(A) is in accordance with the decision rendered by this Tribunal in the case of REI Agro Ltd. Vs. DClT [ 2013 (9) TMI 156 - ITAT KOLKATA] which has since been upheld by the Hon'ble Calcutta High Court. Since the Ld. CIT(A) adjudicated the issue, as stated above, by following the decision the Tribunal, Kolkata Benches following the dictum of law laid in REI Agro Ltd. (supra), we do not see any reason to interfere with the order of the Ld. CIT(A) on this issue. Therefore, this ground of the Revenue is dismissed. Deduction u/s 43B - employees' contribution deposited by employer beyond the prescribed due date - HELD THAT:- We note that this issue is no longer res integra. We note that the Hon ble Calcutta High court [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] has held that employees contribution to PF and ESI paid on or before the due date of filing of return of income u/s. 139(1) of the Act should be allowed as deduction. - I.T.A. Nos. 114 to 116/Kol/2019 - - - Dated:- 10-6-2020 - Shri A. T. Varkey, JM And Dr. A.L. Saini, AM For the Appellant : Shri Supriyo Pal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Kolkata Undertaking, as are movable in nature or incorporeal property or are otherwise capable of transfer by manual delivery or by endorsement and delivery or by vesting and recordal pursuant to this Scheme shall stand transferred and vested by AHL to Transferee Company-II and shall become the property and an integral part of Transferee Company-II. The transfer and vesting pursuant to this sub-clause shall be deemed to have occurred by manual delivery and possession or negotiation and endorsement, as appropriate to the property being vested and title to the property shall be deemed to have been transferred and vested accordingly. No stamp duty shall be payable on the transfer of such movable properties (including shares and other investments, which are in dematerialised form) upon its transfer and vesting in Transferee Company-II ii. any and all movable properties of AHL relating to the Kolkata Undertaking, other than those specified in sub-clause (i) above, including sundry debtors, outstanding loans and advances, if any, recoverable in cash or in kind or for value to be received, bank balances and deposits, if any, with Government, semi-Government, local and other au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed copy of the orders of the High Court sanctioning this Scheme being filed with the Registrar of Companies, National Capital Territory of Delhi and Haryana by AHL, Transferee Company-I and Transferee Company-II, respectively. 6. It is noted that the Department of Urban Development Govt. of West Bengal granted permission for transfer of leasehold rights in respect of Plot No. I in Block JA, Sector-III, Saltlake on which the hotel is situated vide communication ref. no.402-UD/O/M/SL(AL/NR)6L-39/95(PT-II) dated 08.02.2010. The said permission was subject to payment of fees of ₹ 10,89,84,900/- which was also deposited on 18.12.2009 and the fact duly acknowledged by the said State Department. Accordingly, the pre-condition set out in Clause 6.11(ii) to make the Scheme operational was satisfied. 7. It is further noted that Clause 6.12 contained the terms and conditions for giving effect to the Scheme of arrangement which reads as follows: 6.12 This Scheme shall become effective on the date of filling Form 42 of the Companies (Court) Rules, 1959 of the High Court in relation to the Scheme (as amended by the present amendment) along with Form 21 with the Registrar of Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In arriving at the assessable income, l/5th of the demerged expenses i.e. ₹ 2,26,32,327/- [11,31,61,184/5 years] was claimed by way of deduction u/s 35DD of the Act. The said claim was allowed by the AO while framing assessment u/s 143(3) of the Act for AY 2010-11. In AY 2011-12 as well, the AO in the assessment completed u/s 143(3) on 18.12.2013 allowed the deduction so claimed u/s 35DD of the Act. 10. For AY 2012-13, the assessee had filed a return of income showing total income of ₹ 25,61,87.230/-. The case of the assessee was selected for scrutiny through CASS. In the course or assessment u/s 143(3) of' the Act, the AO required the assessee to substantiate the claim being made u/s 35DD of the Act. Referring to note no. 34 of the annual accounts wherein it was stated that, Pursuant to the Scheme of Arrangement Demerger, the company had obtained approval of the Govt. of West Bengal for the vesting of the leasehold property upon which Hotel Hyatt Regency is situated. Liabilities for registration of the same will be determined as and when the registration is done., the AO observed that the registration of leasehold property transferred through the Scheme o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an undertaking as a whole. It is, however, the AO's case that the registration of leasehold property on which the hotel was situated yet has to be done in the name of the assessee and therefore in his view the transfer of such leasehold land remained incomplete and to that extent the Scheme of demerger remained incomplete. It is observed that this inference drawn by the AO emanated from clause 6.11(ii) of the Scheme. It is, therefore, imperative to extract the relevant clause of the Scheme ones again which reads as under: 6.11 This Scheme is conditional upon and subject to : ii. The vesting of the leasehold property belonging to the Kolkata Undertaking shall be subject to the approval of the Government of West Bengal; and 12. As rightly pointed out by the assessee, nowhere does the above clause makes the demerger conditional upon the 'registration ' of the leasehold property in the name of the assessee. It is observed that the AO has imported a condition into the Scheme of arrangement which was neither prescribed by the Parties to the Scheme or by the Hon'ble High Court. We note that the only condition for 'vesting ' of the leasehold prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of subsidiary companies for furtherance of its hotel activities. During the previous year ended on 31-3-2010, relevant to the present Assessment Year, the Hon ble High Court of Delhi has by its order dated 13th January 2010 the scheme came effective from 16.02.2010 a copy of which is placed on record, sanctioned the demerger of Asian Hotels Ltd into the following three companies, on the terms and conditions elaborated in the Scheme of Arrangement and Demerger (hereafter referred to as Scheme for short) which forms a part of the Court s Order. 1) Asian Hotels Ltd., 2) Chillwinds Hotels Ltd., 3) Vardhaman Hotels Ltd., 3. The order being voluminous, only the salient/relevant points are described hereunder: a) The Appointed date, for the demerger to become effective is 31st October 2009. b) c) Vardhman Hotels Ltd., (the name of which has been approved to be changed on demerger to Asian Hotels (East) Ltd., by the High Court referred as Transferee Company No.2 in the High Courts order is to become the owner of the hotel undertaking at Kolkata namely Hyatt Regency Kolkata along with all its assets (including certain investments listed in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2010-11 was ₹ 41,21,54,895/- . 14. It is further observed that the said deduction was also allowed in the order passed u/s. 143(3) of the Act for AY 2011-12. In view or the foregoing facts, we, therefore, agree with the Ld. CIT(A)'s observation that the deduction u/s 35DD of the Act is a continuing one and when the said deduction was allowed in the initial year of claim, then in absence of change in the factual matrix, the Revenue could not disturb the continuing claim in the subsequent years. In this regard, we may usefully refer to the decision of the Hon'ble Supreme Court in the case of M/s Shashun Chemical Drugs Ltd reported in 388 ITR 1. In this case [M/s Shashun Chemical Drugs Ltd], the assessee had raised fresh equity capital for expansion of its business. The share issue expenses were amortized and claimed over a period of ten years in terms of Section 35D of the Act, starting from AY 1995-96 and onwards. The AO, after examining the materials produced, allowed the claim of the assessee in the initial assessment year being AY 1995-96. The AO disallowed the claim in the subsequent AY 1996-97. On appeal, the First Appellate Authority directed the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in the case of Brook Bond India Ltd (supra). In the said case it was held that the expenditure incurred on public issue for the purpose of expansion of the company is a capital expenditure. However, in spite of the argument raised to the effect that the aforesaid judgment was rendered when Section 35D was not on the statute book and this provision had altered the legal position, the High Court still chose to follow the said judgment. It is here where the High Court went wrong as the instant case is to be decided keeping in view the provisions of Section 35D of the Act. In any case, it warrants repetition that in the instant case under the very same provisions benefit is allowed for the first two Assessment Years and, therefore, it could not have been denied in the subsequent block period. We, thus, answer question No. 1 in favour of the assessee holding that the assessee was entitled to the benefit of Section 35D for the Assessments Years in question . 15. For the reasons discussed above, therefore, we do not see any reason to interfere with the order of the Ld. CIT(A). Therefore, ground no. 1 of the Revenue s appeal is dismissed. 16. Ground No. 2 relates to disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PF contributions which the assessee had paid beyond the statutory date as provided in the Provident Fund Act [PF Act], but within the due date of filing of Income Tax Return u/s. 139(1) of the Act. On appeal, the Ld. CIT(A) following the decision of the Hon'ble jurisdictional Calcutta High Court in the case of CIT Vs. M/s. Vijay Shree Ltd. in ITAT No. 245 of 2011 held that the disallowance of ₹ 13,57,305/- made on account of payment of Employees PF contributions after due date as prescribed in the PF Act but before the filing return of' income satisfies the requirement of Section 43B of the Act and therefore the disallowance was unwarranted and ordered to delete the same. Aggrieved, the Revenue is in appeal before us. 19. We have heard rival submissions and gone through the facts and circumstances of the case. We note that this issue is no longer res integra. We note that the Hon ble Calcutta High court has held that employees contribution to PF and ESI paid on or before the due date of filing of return of income u/s. 139(1) of the Act should be allowed as deduction. In this regard we gainfully refer to the decisions of Hon'ble Calcutta High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions, it is observed that the issue involved in this ground is similar to the Ground no. 1 of Revenue's appeal in A.Y. 2012-13. Following our conclusion drawn in A.Y. 2012-13, we dismiss this ground of the Revenue. 22. Ground no. 2 of the Revenue is against the action of Ld. CIT(A) in restricting the disallowance u/s 14A read with Rule 8D(2)(iii) with reference to investments which actually yielded dividend income. After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. 2 or Revenue's appeal in A.Y. 2012-13. Following our conclusion drawn in A.Y. 2012-13, we dismiss these grounds of the Revenue. ITA No. 116/Kol/2019 [ AY 2014-15] 22. Ground no.1 of the appeal relates to the Ld. CIT(A)'s action of deleting the disallowance on account of the amortization of demerger expenses of ₹ 2,26,32,237/- claimed by the assessee u/s 35DD of the Act. After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. 1 of Revenue's appeal in A.Y. 2012-13. Following our conclusion drawn in A.Y. 2012-13, we dismiss this ground of the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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