DCIT Vs Larsen & Toubro Limited (ITAT Mumbai)
The case involves an appeal by M/s. Larsen & Toubro Limited (the assessee) against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2016-17. The main issue concerns whether certain expenses related to the transfer of business should be allowed as deductions while computing capital gains under section 48(1) of the Income Tax Act.
The appellant, Larsen & Toubro Limited, sought to deduct expenses amounting to Rs. 82,59,94,515/- incurred for the transfer of a port division through a slump sale. These expenses included differential lease rental premium paid to Tamil Nadu Industrial Development Corporation Limited (TIDCO) and stamp duty and registration charges.
The Commissioner of Income Tax (Appeals) partially allowed the appeal, holding that the expenses were related to the transfer and should be allowed as deductions. The Commissioner relied on the scheme of arrangement between Larsen & Toubro Shipbuilding Ltd. (the demerged company) and Marine Infrastructure Developer Pvt. Ltd. (the resulting company), which mandated the payment of expenses by the demerged company.
The Tribunal upheld the decision of the Commissioner, emphasizing that the expenses were necessary for completing the transfer as per the approved scheme of arrangement. It cited relevant case law to support its decision, including the precedent set by the Bombay High Court.
