Cost of transfer arising out of a slump sale demerger whether claimable subsequent to the slump sale made post facto a court approved NCLT merger via revised return

Facts:

Assessee a ship building entity got demerged on slump sale basis to one Marine Infrastructure Developer Pvt. Ltd. (resultant company) wherein, they had to pay foreclosure/transfer charges of Rs. 82.59 crores on a leasehold land taken from TIDCO. This was claimed as cost incurred in relation to the transfer of the slump sale under a NCLT approved demerger/merger scheme as subsequently the assessee merged with L&T. A revised return was filed offering NIL income due to carry forward of losses and also claiming the Rs. 82.59 crore as an expenditure as cost incurred in relation to the transfer. Revenue disallowed the Rs. 82.59 crores on plea that it arose after the deal was done and by filing a revised return and at the time of assessment assessee claiming the same cannot be allowed besides the fact that the expenditure did not crystallize in the year of the slump sale/demerger. On higher appeal -

Held in favour of the assessee that they were entitled to claim Rs. 82.59 crores as expenditure in relation to transfer.

Ed. Note: It is not clearly mentioned in the agreement as to why Section 50B was not applied in the computation. If Section 50B (as mentioned by the Departmental Representative) was to be invoked then whether the belated  lease foreclosure charges to TIDCO can form part of the networth computation would have become an interesting discussion. It is also not adequately mentioned in the verdict whether the slump sale was structured as a demerger via NCLT.

Case: Dy. CIT v. Larsen & Toubro Ltd. 2024 TaxPub(DT) 1449 (Mum-Trib)