TMI Blog2022 (8) TMI 1452X X X X Extracts X X X X X X X X Extracts X X X X ..... eceivables' appearing in the accounts of an entity which may have dealings with the foreign AEs, would automatically be characterized as an international transaction. There can be a delay in the collection of monies for the supplies made, even beyond the agreed limit, due to various factors which would be investigated on a case to case basis and also the case of Gillette India Limited [ 2017 (7) TMI 1188 - RAJASTHAN HIGH COURT ] wherein affirmed the order of the Tribunal wherein it was held that the transaction of allowing credit period to the AE for realization of its sale proceeds is not an independent international transaction but is closely linked with the sale transactions of the AE. Decided in favour of assessee. Deduction u/s 43B - assessee being the legal successor claimed deduction to discharge of liabilities taken over by the Appellant from companies as pursuant to their amalgamation with the Appellant - HELD THAT:- From April 1, 2015 onwards, all assets, rights, powers, liabilities and duties of the Amalgamating companies were transferred to the Appellant and the Appellant stepped into the shoes as the legal successor of Convergys Stream and Convergys In fow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be done in accordance with the method prescribed under Rule 11UA of the Income Tax Rules. It is settled law that where the Act prescribes a rule, it has to be strictly and mandatorily followed and further, if the statute has conferred a power to do an act and has laid down the method in which that power is to be exercised, it necessarily prohibits the doing of the act in any other manner than that has been prescribed. The adoption of the face value at INR 250 by the AO/DRP with respect to the above transaction is not inconformity with Rule 11UA which prescribes that in order to arrive at FMV of the unquoted shares. FMV of unquoted equity shares shall be the value, on the valuation date, of such unquoted equity shares as determined applying formula (A-L)/(PE) * (PV) - The adoption of the value at Rs.250/- per share by the ld. DRP is not in accordance with prescribed Rule 11UA of the Rules, hence, we hold that the addition made is liable to be deleted. Granting of TDS and Advance Tax Credit - HELD THAT:- As pertaining to ad judication on the issues of Section 43B and MAT credit u/s 115JAA, we hereby direct that the credit for TDS and credit for advance tax pertaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Ld. AO/ Ld. DRP has erred in disallowing the deduction under Section 43B of the Act amounting to INR 1,49,07,493 in relation to discharge of liabilities taken over by the Appellant (with effect from April, 2015) from Convergys Stream Private Limited ( Convergys Stream ) and Convergys Infowavz Private Limited ( Convergys Infowavz ) pursuant to their amalgamation with the Appellant. 5. That on the facts and in the circumstances of the case and in law, the Ld. AO/ Ld. DRP has erred in disallowing the claim of credit under section 115JAA of the Act (MAT Credit) amounting to INR 99,61,130 that was taken over by the Appellant from Convergys Infowavz pursuant to its amalgamation with the Appellant. 6. That on the facts and in the circumstances of the case and in law, the Ld. AO/ Ld. DRP has erred in disregarding the valuation report issued by an independent chartered accountant and making an addition of INR 31,00,122 under section 56(2)(viia) of the Act in relation to the purchase of equity shares of Digital Think (India) Private Limited. 6.1. That on the facts and in the circumstances of the case and in law, the Ld. AO/ Ld. DRP has erred in considering the face va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of IT enabled customer care back-office support services. CIS operates remote customer interaction call centres for providing services to its Group Companies like outbound call services, web-based support, technical help desk, e-mail customer care support services, in bound call services and other miscellaneous back office services like transaction processing. 5. Ground Nos. 7, 8, 10 11 not pressed. Notional Interest Outstanding receivables: 6. The ld. DRP directed to allow the credit of 60 days resulting which an amount of Rs.16.24 lacs has been added on account of interest on outstanding receivables by taking 6 months LIBOR + 400 basic points. The similar issue has been a matter of adjudication by this Tribunal in assessee s own case for the A.Y. 2015-16. For the sake of ready reference the relevant portion of the said order is reproduced as under: 15. It is settled principle that there is no need to benchmark the interest on receivables wherein the interest has not been charged from either of the parties i.e. payables and receivables. In the instant case, period of 90 days has been allowed and the amounts have been received within the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee u/s 43B of the Act holding, that section 43B of the Act is qua 'an assessee that the Act contains specific provisions in other sections to entitle the amalgamated company to claim the deductions to which the amalgamating company was entitled to and such language is missing in section 43B of the Act. 10. The Ld. DRP concurred with the view of the AO and confirmed the addition proposed by the AO. 11. From April 1, 2015 onwards, all assets, rights, powers, liabilities and duties of the Amalgamating companies were transferred to the Appellant and the Appellant stepped into the shoes as the legal successor of Convergys Stream and Convergys Infowavz from such date. The Scheme of Amalgamation provided that all debts, liabilities, contingent liabilities, duties, obligations and guarantees of the Amalgamating companies shall be taken over by the Appellant with effect from April 01, 2015. 12. It is a settled law that an order of a High Court approving a scheme of arrangement and amalgamation under Section 391 of the Companies Act does not operate as a mere arrangement, but it becomes a statutory force and thus, becomes statutorily binding on everyone inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legal successor, claimed in its return of income, the MAT credit amounting to Rs.99,61,130/- taken over from Convergys Infowavz pursuant to the amalgamation while computing its tax liability. 16. The AO contended that only the company which paid tax under section 115JB of the Act is entitled to carry forward and set-off the MAT Credit. The AO held that there is no express provision in Section 115JAA which allows an amalgamated company to carry forward and claim the MAT credit which was available to the amalgamating company. The AO held that the Act contains specific provisions in other sections to entitle the amalgamated company to claim the deductions to which the amalgamating company was entitled to and such language is missing in section 115JAA of the Act. 17. The ld. DRP unfortunately concurred with the view of the AO and confirmed that non-allowance MAT credit. When all assets and liabilities, rights and obligation of Convergys Infowavz stood transferred to the assessee with effect from April 01, 2015, the MAT credit being an asset of the earlier company would be available to the assessee at its disposal for utilization. There cannot be any dispute on the utilization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the relevant information / documents which included the Trial Balance upto July 31, 2015, the audited financial statements of Digital Think as on March 31, 2014, the unaudited financial statements as on March 31, 2015 and necessary explanation and information while carrying out the valuation and the report has been duly stamped and signed by him. Further, only after analysis of such information / documents, the independent chartered accountant arrived at a valuation of INR 242.03 per share on the basis of Net Asset Value (NAV) Method. Accordingly, it was argued that the valuation report remains verified and rejecting such valuation carried out by an independent chartered accountant will be incorrect. 23. It was argued that the increase in face value was carried out pursuant to the approval of shareholders at their Extraordinary general meeting dated February 29, 2016. This fact is evident from point (b) of Note 4 to the audited financial statements of Digital Think for FY 2015-16. 24. It was submitted that the provisions of section 56(2)(viia) of the Act is applicable in cases where the consideration for the acquisition of shares of another company is below the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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