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Showing contexts for: takeover in M/S. Aptech Ltd., Mumbai vs Jt. Cit. (Osd), - 8(1), Mumbai on 4 January, 2019Matching Fragments
AO disallowed the deduction of Rs 335,605/- (being 1/5th of Rs 16,78,025/- ) towards preliminary expenses on account of increase in authorized share capital.
19. Aggrieved the assessee preferred an appeal before the Learned CIT(A). Before the First Appellate authority, the assessee submitted as under:
(a) That the appellant company was known by the name "Aptech Training Limited" during the year ended 31.3.2001. It was a subsidiary of Hexaware Technologies Limited (Erstwhile Aptech Limited). During the previous year 2001-02, the training division of Hexaware was transferred by way of a demerger to and vested in the appellant company pursuant to a Scheme of arrangement and reconstruction which became effective on 28.12.2001 from the appointed date i.e. 1.4.2001. And this led to substantive expansion of appellant company. The appellant company had incurred expenses of Rs 16,78,025 towards stamp duty and ROC filing fees for increase in authorized share capital in connection with the demerger/ takeover of training division being a substantive expansion.
(b) The expenses were incurred in respect of increase in authorised share capital in connection of takeover of training division from Hexaware Technologies Limited which is an extension of its industrial undertaking i.e. an undertaking providing IT Education and training which is in itself a separate industry. Therefore the appellant first claimed deduction of Rs 335,605 for AY 2002-03, being 2/5th of stamp duty and ROC fees of Rs 16,78,025/- as per the provisions of section 35D of the Act. The assessment year under consideration is the third year in which the appellant has claimed deduction for 1/5th of such expenses.
In the case of the appellant, the authorized share capital of the appellant company was increased after incorporation of the company and after commencement of the business of the company. The takeover of the training and education business of Hexaware Ltd cannot be said to be extension of industrial undertaking or setting up a new industrial unit. Therefore the said expenditure have been rightly disallowed u/s 35D (2)(c) of the Act.
The appellant has claimed that alternatively the said expenses of Rs 16,78,025/- be allowed u/s 35DD since the expenses have been incurred wholly and exclusively for the purpose of demerger of training division of Hehaware Ltd into the appellant company.
25. The AO in the assessment proceedings found that the assessee company has claimed deduction u/s 35DD of the IT Act being 15th of Rs 18,81,95,686/- on account of expenses incurred in respect of demerger/takeover for expansion of the assessee company. The AO in the order has stated that the assessee has failed to furnish even the basic details i.e the nature of expenses the break up of the amount and purpose of such expenses etc and further that it did not state anything nor produced any corroborating evidence in support of its claim of expenses. In the AY 2003-04, the assessee was not allowed the deduction u/s 35DD as the assessee had failed to furnish the details of the de-merger expenses and the assessee has not filed any appeal against the disallowances.