The Income Tax Appellate Tribunal (ITAT) Mumbai bench directed readjudication in respect of treatment of legal cost incurred by Hindustan Unilever on merger of erstwhile Industrial Perfumes Limited.
Assessee, Hindustan Unilever Limited is a company engaged in the manufacture, trading and marketing (including export) of fast moving consumer goods (FMC goods). After filing the return assessee’s case was selected for scrutiny.
During the assessment proceedings AO found that the assessee had claimed a sum of Rs.6,63,778/- as legal expenses incurred towards amalgamation of M/s.Industrial Perfumes Ltd.
The Assessing Officer disallowed this expenditure for the reason that the same does not pertain to the year under consideration and also for the reason that it is capital in nature.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax Appeals, CIT(A), who dismissed the appeal. Therefore the assessee filed another appeal before the tribunal.
Before the bench Nishant Thakkar, counsel for the assessee submitted that expenditure towards amalgamation of M/s.Industrial Perfumes Ltd. are to be considered as per provision of Section 35DD of the Income Tax Act.
Madhu Malti Ghosh, Counsel for the revenue, supported the decision of lower authorities.
The tribunal observed that the identical issue was already decided in favor of the assessee.
After considering the facts submitted by both parties, the two member bench of Padmavathy S (Accountant Member) and Chandra Vikas Awasthy (Judicial Member) observed that expenditure as per the provisions of Section 35DD of the Income Tax Act is required to be examined by the A.O on the basis of relevant material after providing opportunity to the assessee.
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