The Income Tax Appellate Tribunal (ITAT) directed to allow the stamp duty and registration charges after due verification. It was viewed that when the assessee has incurred the amount in question to complete the transfer as per the scheme of arrangement approved by the NCLT, without which the transfer could not have been effected.
M/s. Larsen & Toubro Limited (Successor to L & T Shipbuilding Limited), the assessee company filed its return of income claiming a loss of (-) Rs.834,19,92,805/- which was subsequently revised to admitting nil income. The assessee has set off the entire business loss of Rs.671,92,92,951/- against the Long-Term Capital Gains (LTCG) of Rs.692,96,32,554/- and income from other sources of Rs.6,78,351/- and remaining taxable LTCG to the extent of Rs.21,10,17,954/- was set off against brought forward unabsorbed depreciation loss of Rs.1,20,35,171/- & Rs.4,17,09,985/-. The assessee company has been merged. The AO after declining the contentions raised by the assessee framed the assessment at a taxable income of Rs. Nil and the current year loss was assessed at Rs.3,28,99,74,519/- instead of nil.
The Bench noted that the company has incurred these charges to complete the transfer of property as per the scheme of agreement and leasehold rights in the land were part of the port undertaking which was transferred as per the scheme of arrangement.
A two-member bench comprising Kuldip Singh (Judicial Member) and Padmavathy S (Accountant Member) observed that when it is proved on record that the assessee is entitled for upfront lease rental expenses incurred in relation to the transfer of slump sale business while computing the capital gains under section 48(i) of the Act the assessee is also entitled for deduction of stamp duty and registration charges.
“When the amount has been crystallized in the books of account and facts have been brought on record before the Ld. CIT(A) which have not been disputed the claim of the assessee, otherwise admissible, cannot be denied on the basis of hyper technical reasons”, added the Bench.
The ITAT stated that when the income of the assessee is chargeable under the head capital gains qua the years in which transfers were affected, the expenses about the transfer, crystallized later on but as per the scheme of arrangement it has to be allowed.
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