TMI Blog2020 (8) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... r VIIIA has been included to provide for fresh issue of shares to comply with minimum shareholding requirement in Rule 19(2) and 19A of SCRR. Reg. 91B defines IPP as a further public offer made only to QIBs. These regulations provide that when a company has a public shareholding lower than the requirements specified, then the company may issue IPP to QIBs and raise the public shareholding to the required levels. It thus implies that QIBs form part of public. Further, even Reg. 82 which gives conditions for QIP, provides that the same must be in compliance with the requirements of public shareholding. That a section of public qualifies as public has been clarified in Nitta Gelatine India Ltd. [ 2016 (10) TMI 406 - KERALA HIGH COURT] and Andhra Chamber of Commerce [ 1964 (10) TMI 19 - SUPREME COURT]. Facts being identical, we follow the order of the Tribunal in the case of Deccan Chronicle Holdings Ltd [ 2015 (8) TMI 914 - ITAT HYDERABAD and in view of the discussion hereinabove hold that the appellant is eligible for deduction u/s 35D - Decided in favour of assessee. - IT APPEAL NO. 3497 (MUM.) OF 2018 - - - Dated:- 14-7-2020 - C.N. Prasad, Judicial Member And N.K. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the ITAT and sent back to the file of the ld. CIT(A) to decide the matter after affording an opportunity to the appellant in accordance with law. It was the contention of the appellant before the ld. CIT(A) that the said issue is directly covered in favour of the assessee by the order of the ITAT Hyderabad Bench 'A' in the case of DCIT v. Deccan Chronicle Holdings Ltd. [2015] 60 taxmann.com 240 (Hyderabad-Trib.). However, the ld. CIT(A) has held that the said decision does not apply in the appellant's case on the ground that the question before the Tribunal was not whether the issue of shares to QIB tantamount to public and secondly, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 ( SEBI ICDR ) were not considered by the Tribunal, which specifically deal with QIPs. Thus the ld. CIT(A) has held that the expenditure of ₹ 14,14,01,453/- was not incurred in connection with the issue for public subscription of shares 3,83,62,709 within the meaning of section 35D of the Act. Thereby holding that the assessee is not entitled to any deduction u/s 35D of the Act, the ld. CIT(A) rejected its claim for deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Holdings Ltd. (supra), the Tribunal has not dealt with specifically the other provisions of SEBI-ICDR 2009 and even the provisions of section 80 to 88 of SEBI-ICDR 2009 and its rules and schedules, which put restriction on its classification as a public issue. Thus the Ld. DR submits that the order of the Ld. CIT(A) be confirmed. 6. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. The appellant is a banking company. It filed its revised return of income for the AY 2010-11 on March 30, 2012 declaring total income at ₹ 7,90,10,18,157/-. As mentioned earlier, the question involved in this appeal is whether QIB can be regarded as public and whether the offer made to them can be regarded as offer made to public for the purpose of section 35D of the Act. In Deccan Chronicle Holdings Ltd. (supra), the Tribunal has held as under : 6. With respect to ground No. 4 for the assessment year 2008-09, we find that the Assessing Officer has not disallowed for the assessment years 2006-07 and 2007-08. However, the Assessing Officer has disallowed the expenditure on the issue of qualified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against this decision was dismissed. There is also merit in the argument of the appellant-company that the facts of its case are distinguishable from those in the case of Brooke Bond, for the detailed reasons submitted by it, and therefore its claim cannot be denied by relying on that decision. It was further claimed that though the entire expenditure was allowable in one year under section 37, the same was treated as deferred revenue expenditure and claimed over five years, starting from the assessment year 2007-08. The concept of deferred revenue expenditure is now legally recognised by various judicial authorities and in fact, this was upheld even in the case of the appellant by my predecessor, while deciding the appeal for assessment year 2006-07. In view of the above facts, I hold that the expenditure of ₹ 2,07,00,112 claimed for assessment year 2008-09 is allowable under sections 35D and 37. As the claim of this expenditure under section 35D read with section 37 is in order, the disallowance on this account is deleted. 7. We find that during the year 2007-08, the company incurred debenture expenses of ₹ 2.07 crores and QIB issue expenditure of ₹ 8.28 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are QIBs are classified under public shareholding . The terms are defined in clause 40A of the SEBI Listing Agreement. Further, the listing agreement takes us to Securities Contracts (Regulation) Rules, 1957 (in short SCRR ). Also Rule 19(2)(b) and Rule 19A of the SCRR provide that companies are required to maintain minimum public shareholding of 25% in case of first time listing and in case of continuous listing agreement respectively. In this context, we may refer to section 2(d) of SCRR defining the term public . It (public) is defined to mean any person other than the promoter, promoter group, subsidiaries and associates of the company. Thus any person other than these four qualify to be considered as public. As can be seen from the list of QIBs to whom shares are issued, the shares are not issued to any of the aforesaid category. Thus QIBs, not being promoters, promoter group, subsidiaries and associates of the company would qualify as public . As specified in clause 40A(ii) of the listing agreement, public shareholding can be increased by any of the modes specified therein to comply with Rule 19(2) and 19A of SCRR. One such note is the issue of IIP in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6-5-2020 read with order dated 23-3-2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15-3-2020 then the period from 15-3-2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly , and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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