ACIT, CIRCLE-5(1), KOLKATA, KOLKATA V. EMAMI REALTY LIMITED, KOLKATA

ITA 1457/KOL/2024

AI Insights

The case revolves around the appeal by the ACIT, Circle-5(1), Kolkata against Emami Realty Ltd., concerning the assessment year 2021-22. The primary issue was the deletion of an addition of Rs. 374,53,83,754 made by the AO under section 56(2)(x) of the Income Tax Act, 1961, which pertained to the assets received by Emami Realty Ltd. from a demerger scheme with Oriental Sales Agencies (India) Pvt Ltd. The AO had contended that the demerger did not comply with the conditions set out in Section 2(19AA) of the Act, particularly regarding the transfer of liabilities and the valuation of shares. However, the CIT(A) found that the demerger was compliant and that the liabilities transferred were correctly reported, leading to the deletion of the addition. The Tribunal, after reviewing the submissions and evidence, concurred with the CIT(A)'s findings and dismissed the Revenue's appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829279 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Kolkata
• Assessment Year: misc
• Appeal Filed On: 01-07-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Capital Gains; TDS; Valuation report; Benefit of exemption; Non-deduction of tax
• Section: 143(3); 142(1); 56; 56(2); 50C

Judgement Text

"आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C”BENCH KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.1457/Kol/2024 Assessment Year: 2021-22 ACIT, Circle-5(1), Kolkata………..……..………………….……….……….……Appellant vs. Emami Realty Ltd.…………. …………………………..……......……...…..…..Respondent 13th Floor Acropolis, 1858/1, Rajdanga main road, Kol-700107. [PAN: AALCS5120P] C.O No.19/Kol/2024 (A/o ITA No.1457/Kol/2024) Assessment Year: 2021-22 Emami Realty Ltd…………. …………………………..…….....……...…..…..Cross-objector 13th Floor Acropolis, 1858/1, Rajdanga main road, Kol-700107. [PAN: AALCS5120P] vs. ACIT, Circle-5(1), Kolkata………..……..………………….…………………..…Respondent Appearances by: Shri Akkal Dudhwewala, FCA, appeared on behalf of the assessee. Shri S. B. Chakraborthy, Sr. DR, appeared on behalf of the Revenue. Date of concluding the hearing :November 21, 2025 Date of pronouncing the order :January 12, 2026 ORDER Per Rajesh Kumar, Accountant Member: The appeal filed by the revenue and a cross-objection filed by the assessee are directed against the order dated 26.02.2024 of the NFAC, Delhi (hereinafter referred to as the “CIT(A)”) passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the assessment year 2021–22. Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 2 2. We first take up the appeal of the Revenue wherein the grounds raised are as under:- “1. Whether on the facts and circumstances of the case and in law, the L’d CIT(A), has erred in deleting the addition of Rs. 374,53,83,754 made by the AO u/s 56(2) of the Act. 2. Without prejudice to the preceding ground, pertaining to the deletion of addition of Rs. 374,53,83,754 made by the AO u/s 56(2) of the Act by the L’d CIT(A), whether on the facts and circumstances of the case and in law, the L’d CIT(A) has erred in not holding that the liabilities relatable to the real estate undertaking had not been correctly transferred resulting in violation of the condition set out in Section 2(19AA)(ii) of the Act. 3. Whether in the facts and circumstances of the case and in law, the Ld CIT(A) erred in observing that the Rule 11UA only applied to Section 56 of the Act, and would be gross error in invoking and applying the same under Section 2(19AA)(iv) of the Act. 4. Whether in the facts and circumstances of the case and in law, the Ld CIT(A) erred in observing that NFAC cannot take a contrary view departing from the NOC even under instance that conditions under section 2(19AA) are not met. 5. Whether in the facts and circumstances of the case and in law, the Ld CIT(A) erred allowing the assessee’s appeal against the direction of the NFAC to the AO for making protective addition u/s 56(2)(x) of the Act in AY 2020-21 when the demerger is effective from 01.04.2019. 6. Whether in the facts and circumstances of the case and in law, the Ld CIT(A) erred in allowing the assessee’s appeal against the direction of the NFAC to the AO to inform the AO of M/s Oriental Sales Agencies Ltd (demerged entity) to make addition u/s 50C of the Act in line with the order u/s 143(3) for AY 2021-22 passed in the case of the respondent (Emami Realty Limited) when such action is in the interest of revenue of the Government 7. Whether in the facts and circumstances of the case and in law, the Ld CIT(A) erred in allowing the assessee’s appeal against the direction of the NFAC to the AO to inform the AO, TDS to ensure that there is no leakage of revenue on account of non-deduction of taxes at source u/s 194IC of the Act, on payment of Rs. 57.5 crores to M/s Orbit Corporation for the Joka Project when such action has been taken in the interest safeguarding the interest of revenue 8. Whether in the facts and circumstances of the case and in law, the Ld CIT(A) erred in observing that scheme of demerger only resulted in transfer of the rights & benefits accruing from the JDA and not the land itself. 9. Whether in the facts and circumstances of the case and in law, the Ld CIT(A) erred in observing that there is no case for application of section 50C. 10. The appellant craves leave to add, alter, amend, modify or rescind the grounds herein above before or during the course of hearing this appeal.” Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 3 3. The issue raised in Ground Nos. 1 to 4 is against the order of the Ld. CIT(A) deleting the addition of Rs.374,53,83,754/- made by the AO u/s 56(2)(x) of the Act in relation to the assets received by the assessee pursuant to scheme of demerger. 3.1 The facts in brief are that, the assessee is a publicly listed company which is engaged in the business of real estate development. The assessee was, inter alia, involved in real estate project titled ‘Emami City’ in Jessore Road, Kolkata, for which the assessee has entered into a Joint Development Agreement with Oriental Sales Agencies (India) Pvt Ltd [in short ‘OSAIPL’], a private limited company which was also ,inter alia, involved in the business of real estate. A Scheme of Arrangement between the assessee and OSAIPL and their respective shareholders was filed before the NCLT, Kolkata in terms of which the ‘real estate undertaking’ of OSAIPL was demerged into the assessee as approved by the Hon’ble NCLT with effect from 01.04.2019 (AY 2020-21) and the effective date of the order passed by the Hon’ble NCLT was dated 10.08.2021 (AY 2022-23), pursuant to which necessary steps were taken to give effect to the terms of the scheme of demerger. The assessee accounted the demerger of the real estate undertaking into its books of accounts from 01.04.2019 onwards. 3.2 The assessee filed return of income on 7.3.2022 declaring total income of Rs. 3,11,97,970/-. The case of the assessee for AY 2021-22 was selected for scrutiny and statutory notice u/s 143(2) and notices u/s 142(1) along with questionnaire were issued and duly served upon the assessee. The AO vide several notices issued u/s 142(1) of the Act had raised issues regarding the scheme of demerger and according to the AO, the demerger was not in compliance with the provisions of Section 2(19AA) of the Act. The AO is found to have held that, though all the current assets of Rs.112.38 crores pertaining to the real estate undertaking was transferred, but according to him, the liabilities of Rs.112.38 crores which corresponded to these assets were not transferred by the assessee resulting in violation of the condition laid down in Section 2(19AA)(ii) of the Act. The AO has further observed that, the valuation exercise undertaken to ascertain the swap ratio for allotment of shares to the shareholders of OSAIPL pursuant to the scheme of demerger was neither fair nor in accordance with Rule 11UA of the Income-tax Rules, 1962, which resulted in violation of Section 2(19AA)(iv) of the Act. With these observations, the AO issued show cause notice to the assessee as to why the scheme of demerger should not be treated to be in violation of Section 2(19AA) and therefore why the benefit of exemption set out in Section 47(vi) of the Act should not be denied to the assessee. 3.3 After considering the explanation put forth by the assessee, though the AO agreed that the liabilities of Rs.112.38 crores had indeed been transferred to the assessee, as per the NCLT’s order, but according to him, the correct value of liabilities pertaining to the real estate Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 4 segment was Rs.20.28 crores and not Rs.112.38 crores. For this, the AO majorly relied on the segmental information contained in the Notes to audited financial statements for the year ended 31st March 2019 wherein the liabilities pertaining to the real estate segment was reported to be Rs.20.28 crores. The AO further held that, Section 2(19AA)(iv) required the resulting company to allot shares in a proportionate manner and because the assessee did not follow Rule 11UA of the IT Rules, 1962 to value the allotted shares, the said condition also stood violated. Referring to the said Rule 11UA, the NFAC noted that, the lowest traded value of the shares of the assessee as on 05.03.2020 was Rs.38.1 per share whereas the registered valuer had valued the shares of the assessee at Rs.93 per share, which according to the NFAC, resulted in over valuation of the assessee’s shares and thereby resulting in under-payment to shareholders of OSAIPL. With these findings, the AO held that, the assessee had violated the conditions set out in Section 2(19AA)(ii) & (iv) of the Act and therefore the assessee was not entitled to the benefit of exemption set out in Section 47(vi) of the Act. 3.4 Having held so above, the AO further held that, the assets received by the assessee pursuant to the scheme of demerger was excessive than the value of shares allotted to the shareholders and hence he invoked Section 56(2)(x) of the Act. The AO ascertained the fair value of the undertaking at Rs.412.27 crores which inter alia comprised of (a) Land at 2, Jessore Road, Kolkata valued at Rs.400.51 crores and (b) Shares of Delta PV valued at Rs.11.76 crores. According to the AO, the fair value of consideration paid by the assessee for these assets by way of issuance of shares to the shareholders of OSAIPL was Rs.37.73 crores [99,05,000 X Rs.38.per share] and accordingly, taxed the net shortfall of Rs.374.53 crores [400.51 crores + 11.76 crores – 37.73 crores] u/s 56(2)(x) of the Act. 3.5 In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee after taking into consideration, the contentions and submissions of the assessee. Aggrieved, the Revenue is now in appeal before us. 3.6 After hearing the rival contentions and perusing the materials available on record, we find that though the Revenue has not disputed the fact that the ‘real estate undertaking’ of OSAIPL had been demerged into the assessee, but it is the Revenue’s case that the correct value of liabilities which were relatable to the undertaking was not transferred, which resulted in violation of condition laid down in Section 2(19AA)(ii) of the Act. The Ld. DR appearing for the Revenue relied on the AO’s findings that, though the Scheme of Arrangement contained details of liabilities of Rs.112.38 crores by way of liabilities relatable to the demerged undertaking, but the actual value of liabilities which ought to have been transferred was Rs.20.28 crores, as had been quantified by the auditor in the Segment Reporting of OSAIPL in the Notes forming part to Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 5 audited financial statements for the earlier year ended 31st March 2019 [FY 2018-19]. We find that this aspect has been carefully analyzed by the Ld. CIT(A) who noted that, this was a mistaken reporting by the auditor in the Notes to financials for the year ended 31st March 2019, and the same had been rectified and acknowledged by the auditor in their certificate dated 05.03.2020, which was also filed before the lower authorities, copy of which was placed before us at Pages 639 to 643 of Paper Book. The Ld. CIT(A) also observed that, this mistaken reporting had been subsequently corrected (much prior to the assessment proceedings) in the Notes to audited financial statements of OSAIPL for year ended 31st March 2020 [FY 2019-20], copy of which is found placed at Pages 668 to 699 of Paper Book, which also contained the restated figure of previous year figures’ for 31st March 2019 viz., the liabilities relatable to the real estate undertaking of the demerged entity OSAIPL was Rs.112.38 crores.Further, the Ld. AR appearing for the assessee also took us through the details of the liabilities of Rs.112.38 crores which were transferred by OSAIPL to the assessee, placed at Pages 121 of Paper Book. Having gone through the same, we find that the liabilities transferred by OSAIPL majorly comprised of the security deposit received towards the real estate project at Joka and the advances received from customers towards sale of flats. The summary details are noted to be as follows:- Particulars Amount (in Crores) Security Deposits in relation to Real Estate Project 20 Advance from customers (Jessore Road Project) 92.05 Provision for employee benefits 0.29 Liability for expenses 0.04 Total Liabilities of real estate undertaking 112.38 3.7 We are in agreement with the Ld. CIT(A) that, even on facts, the liabilities worth Rs.112.38 crores transferred pursuant to the scheme of demerger in fact pertained to the real estate undertaking of the demerged entity OSAIPL. The Ld. DR was also not able to pin point any infirmity in the above details of liabilities nor was he able to show as to which of these liabilities did not relate to the demerged undertaking. We thus find no reason to interfere with the following findings of the Ld. CIT(A) holding that, the there was no violation of section 2(19AA)(ii) of the Act, in the given facts of the present case. “6.1.1 The first reasoning of the NFAC for holding the scheme of demerger to be in violation of Section 2(19AA) of the Act was on the premise that excess liabilities had been transferred by the demerged entity OSAIPL to the appellant resulting in violation of condition set out in Section 2(19AA)(ii) of the Act. For arriving at this inference, the NFAC Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 6 has relied upon the segmental reporting appearing in the “Notes to the audited stand- alone financial statements of OSAIPL for the year ended 31.03.2019” which stated the segmental liabilities of ‘real estate undertaking’ at Rs.20,28,82,370/-. The NFAC therefore held that the liabilities worth Rs.112.38 crores which were transferred to the resultant entity i.e. the appellant was excessive and was thus not in compliance of section 2(19AA) (ii) of the Act. During the Video conference, the AR admitted that it was a mistaken reporting, but stated that this mistake has been corrected in subsequent audited segmental results filed with statutory authorities and subsequent annual financial statements. He drew attention to the fact that appellant had inter alia furnished the audited segmental results of the ‘real estate undertaking’ as on 01.04.2019 as certified by statutory auditor vide audit certificate dated 05.03.2020 [Pages 639 to 643 of Factual PB], which was filed before all relevant statutory authorities. On perusal of the same, it is noted that the liabilities of the real estate undertaking of OSAIPL was stated at Rs.112.38 crores in the segmental balance sheet of OSAIPL as on 01.04.2019. Further, the “Notes to audited financial statements for the year ended 31st March 2020” for OSAIPL, which was audited on 16.10.2020 [Pages 668 to 699 of Factual PB], also contained the restated previous year figures’ for 31st March 2019 which also reflected that the liabilities relatable to the real estate undertaking of the demerged entity OSAIPL was in fact Rs.112.38 crores. These submissions were also made before the assessment unit, but it ignored the same. He also drew attention to Schedule I comprising of the ‘Details of assets and liabilities of the demerged real estate undertaking’, set out in the order of the Hon’ble NCLT [Page 121 of Factual PB](extracted in submissions above) and Note No. 51 titled as ‘Scheme of Arrangement for demerger of Real Estate undertaking of OSAIPL into Emami Realty Limited’ [Page 121 of Factual PB] appearing in the Notes to Audited Financial Statements of the appellant company for the year ended 31st March 2021.These had also set out the details of liabilities pertaining to real estate undertaking, to elucidate that along with the assets of Rs.112.38 crores, liabilities of Rs.112.38 crores which pertained to the real estate undertaking of the demerged entity was in fact transferred to the appellant company, pursuant to the scheme of demerger approved by the Hon’ble NCLT. Contemporaneous documents submitted during assessment and appeal proceedings clearly evidenced that liabilities worth Rs.112.38 crores transferred pursuant to the scheme of demerger in fact pertained to the real estate undertaking of the demerged entity OSAIPL. Accordingly, I agree with the appellant’s contention that that there was no violation of section 2(19AA)(ii) of the Act and therefore denial of benefit of Section 47(vib) on this count was wholly unjustified.” 3.8 The Ld. DR supporting the order of the AO further argued that, the assessee ought to have issued shares to the shareholders of OSAIPL upon demerger, in accordance with valuation as per Rule 11UA of the IT Rules, 1962 and not having done so violated the provisions of Section 2(19AA)(iv) of the Act. Having gone through the relevant provisions of law and the Ld. CIT(A)’s order, we firstly agree with the argument of the ld counsel for the assessee that, Section 2(19AA)(iv) only stipulates proportionate share allotment of resulting company to shareholders of demerged company and there is no mention of any share valuation therein and therefore the case sought to be made out by the Revenue is wrong and misplaced. Also, it is Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 7 seen that, Rule 11UA has been notified only for the purposes of Section 56 of the Act and not for other provisions. Therefore the AO is not justified in importing the said Rule into Section 2(19AA)(iv) of the Act, even when the provision itself does not stipulate so. We further note that, the Ld. CIT(A) has also examined the valuation exercise undertaken by the registered valuer of the assessee in light of the observations of the AO and found the valuation to be fair. Rather, the Ld. CIT(A) observed that, the valuation arrived at by the registered valuer [Rs.90 per share] was higher than the prevailing market value on the appointed date of demerger i.e. 01.04.2019 [Rs.120.55 per share] and therefore there was no inadequacy of consideration paid to the shareholders of OSAIPL. The relevant findings of the Ld. CIT(A) taken note of by us, is as follows:- “6.1.2 The second reasoning of the NFAC for rejecting the scheme of demerger as not being tax compliant u/s 47(vib) of the Act was based on the premise that the Share Valuation Exercise and the valuation report obtained for issuance of shares to shareholders of OSAIPL was not fair and thus violated Section 2(19AA)(iv) of the Act. The relevant clause (iv) of Section 2(19AA) of the Act reads as under:- “the resulting company issues, in consideration of the demerger, its shares to the shareholders of the demerged company on a proportionate basis [except where the resulting company itself is a shareholder of the demerged company];” 6.1.2.1 The clause stipulates proportionate share allotment of resulting company to shareholders of demerged company and share valuation is not discussed. The AR submitted that the appellant had provided the relevant valuation report which clearly showed that the shares of the appellant company had been valued by an expert holding necessary qualification as mandated by the law under the Companies Act, 2013. The said valuation report was also corroborated by a Fairness Opinion obtained from SEBI registered Merchant Banker in terms of SEBI Circular No. 21 dated 10.03.2017. The provision of Section 247 of Companies Act, 2013 mandated appointment of registered valuer to ascertain fair share entitlement ratio, without which the scheme of arrangement could not be proceeded with. The share valuation report was approved by shareholders of both OSAIPL, the appellant, ROC, Stock Exchange, Income-tax Department etc. and thereafter even the NCLT had accorded its stamp of approval in the order dated 10.08.2021. By virtue of the exception set out in clause (IX) to the proviso to clause (c) of Section 56(2)(x), the purported Rule 11UA referred to by the NFAC was not applicable to a scheme of demerger. The appellant has brought my attention to several decisions holding that AO is not empowered to change the method of valuation adopted by the appellant from DCF Method to NAV Method. Moreover, the reliance placed by NFAC on Rule 11UA for the purposes of ascertaining purported compliance to Section 2(19AA)(iv) of the Act is misplaced for the reason that this rule has been notified only for the purposes of Section 56 of the Act and no other provision. In view of discussion above, I hold that AO has erred on facts and in law in holding the scheme of demerger to be in violation of Section 2(19AA)(ii) & (iv) of the Act to deny the benefit of Section 47(vib) of the Act, and thereby making the impugned addition of Rs.374,53,83,754/- u/s 56(2)(x) of Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 8 the Act. It is explicitly clear that the provisions of Section 56(2)(x) of the Act does not apply to scheme of demergers by virtue of the exception set out in clause (IX) of proviso (c) to Section 56(2)(x) which clearly states that transactions covered u/s 47(vib) are outside the purview of Section 56(2)(x) of the Act. Hence, no addition is permissible u/s 56(2)(x) of the Act in relation to the assets received pursuant to the scheme of demerger between the appellant and OSAIPL. 6.1.2.2 Though the NFAC claim to have followed rule 11UA, it has not adhered to the clause(c)(a)(i) of the said rule which states that fair market value of quoted shares shall be the transaction value as recorded in such stock exchange. It also committed another mistake, instead of adopting the value of shares of appellant prevailing as on the Appointed Date of demerger i.e. 01.04.2019,it had erroneously chosen to adopt the traded value of Rs.38.1/share as on 05.03.2020 as the fair value of shares. Before the NFAC, vide reply letter dated 09.11.2022, the appellant has brought on record that the traded price as on 01.04.2019 (the appointed date of demerger) was Rs.120.55/share [corroborating screenshot of the NSE website at Page 366 of Factual PB]. This is higher than the valuation price of Rs.90/share and therefore even going by the logic propounded by NFAC, there was no undervaluation of shares and thus it could not be alleged that the appellant had issued inadequate value of shares in lieu of the real estate undertaking received under the scheme of demergerto invoke the rigors of Section 56(2)(x) of the Act.” 3.9 In view of the above findings, we are of the considered view that, the scheme of demerger in question was compliant with Section 2(19AA) r.w. Section 47(vi) of the Act.Hence, the assessee was covered by the exception carved out in Clause (IX) to Section 56(2)(x) of the Act and thus the Ld. CIT(A) had rightly deleted the impugned addition made u/s 56(2)(x) of the Act. 3.10 In so far as the Ld. CIT(A)’s observations at Para 6.1.3 of the order regarding the binding value of the NCLT order is concerned, we agree with the Ld. DR that, mere sanction of scheme by NCLT does not bind the Income-tax Department regarding the tax implications arising from the scheme. Instead, it is open to the Revenue to examine the Scheme w.r.t. the tax implications and such examination would be the exclusive domain of the tax authorities at the time of assessment even if during the subsistence of the Scheme before the NCLT, the Revenue did not object to the Scheme or provide objections. For this, we refer to the decision of the Hon’ble Bombay High Court in the case of Thomas Cook Insurance Services (India) Ltd., In re vs. [2015] 60 taxmann.com 253 and ITAT, Ahmedabad in the case of Reckitt Benckiser Healthcare India (P.) Ltd. v. Dy. CIT [2025] 171 taxmann.com 694. In our opinion , the reliance placed by the Ld. CIT(A) on the decision of Hon’ble Calcutta High Court in the case of CIT vs. Purbanchal Power Co. Ltd (145 Taxmann.com 215) was factually distinguishable as in that judgment, the scheme was approved by the High Court and not the NCLT. To this extent, we not in agreement with the Ld. CIT(A). Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 9 3.11 Further, the Ld. DR was also unable to controvert the fact that the scheme of demerger became effective from the Appointed Date 01.04.2019 i.e. AY 2020-21 and that there was no event of demerger in FY 2020-21 relevant to impugned AY 2021-22. It is also seen that, the order of NCLT was passed on 10.08.2021 and the assets were received by the assessee pursuant to issuance of shares to shareholders of OSAIPL only on 15.09.2021, i.e, during AY 2022-23. We are therefore in agreement with the Ld. CIT(A)’s findings that there was no event which took place pursuant to the scheme of demerger, in the relevant AY 2021-22, for which any tax consequence could have been legally inferred or arisen in the relevant AY 2021-22. We are therefore, also in agreement with the following findings of the Ld. CIT(A), which is as under:- “6.1…….. It is seen that during the assessment proceedings, NFAC has issued a notice u/s 142(1) on 31.10.2022 wherein the NFAC categorically observed that, ‘the NCLT order dated 10.08.21 effective from AY 2020-21’. In other words, NFAC was duly seized of the jurisdictional fact that the scheme of demerger became effective from the Appointed Date 01.04.2019 i.e. AY 2020-21 and that there was no event of demerger in the FY 2020-21 relevant to impugned AY 2021-22, so no adverse inference could have been legally drawn in the relevant year. On perusal of the copy of Form PAS-3 [Pages 653 to 658 of Factual PB] filed by the appellant company with the ROC, MCA upon issuance of 99,05,000 shares to the shareholders of the demerged entity OSAIPL, it is evident that the 99,05,000 shares in question were issued only on 15.09.2021, i.e, during AY 2022-23. Even the purported assets of the real estate undertaking of OSAIPL were received in FY 2021- 22 relevant to AY 2022-23 in as much as the order of the Hon’ble NCLT sanctioning the scheme of demerger was passed on 10.08.2021, i.e, AY 2022-23. I agree with the appellant’s contention that there was neither any transaction nor transfer nor receipt which took place pursuant to the scheme of demerger, in the relevant AY 2021-22, for which any taxable event could be inferred in the relevant AY 2021-22. The levy of tax on income is specific to the year to which it pertains, and hence an income which pertains to a particular year can only be taxed in that year and cannot be brought to tax in any other year. From the facts put forth by the appellant along with the supporting documents both during the assessment and appeal proceedings, it is evident that neither was the scheme of demerger deemed to be effective from the relevant AY 2021-22, nor was the NCLT order passed during the financial year 2020-21, nor was the shares issued, or the assets received by the company in the relevant AY 2021-22. In that view of the matter, when the impugned transaction did not occur in the relevant AY 2021- 22, no income could be legally inferred or brought to tax in the relevant year. Accordingly, I agree with the appellant’s contention that addition of Rs.374,53,83,754/- made by the Assessment unit,NFAC u/s 56(2)(x) in relation to the assets received pursuant to the scheme of demerger, in the relevant year AY 2021-22 suffered from fundamental infirmity and is unsustainable and untenable on facts and in law.” Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 10 3.12 For the reasons set out above, we uphold the order of Ld. CIT(A) deleting the addition made by the AO u/s 56(2)(x) of the Act. These ground Nos 1 to 4 are dismissed. 4. The issue raised in Ground No. 5 is against the Ld. CIT(A)’s finding quashing the direction given by AO to make protective addition u/s 56(2)(x) of the Act in AY 2020-21. After hearing the rival contentions, since we have upheld the Ld. CIT(A)’s deleting the substantive addition on merits, we concur with the Ld. CIT(A) vacating this direction and dismiss this ground no. 5 of the Revenue. 5. The issue raised in Ground Nos. 6, 8 & 9 is against the Ld. CIT(A)’s action of deleting the direction given by the AO of the assessee to the AO of OSAIPL to make addition u/s 50C of the Act by denying the benefit of Section 2(19AA) r.w. Section 47(vi) of the Act. Since we have upheld the Ld. CIT(A)’s findings holding the scheme of demerger to be compliant with Section 2(19AA) r.w. Section 47(vi) of the Act, we agree with the Ld. CIT(A) deleting this direction issued by the AO and dismiss these grounds as well. 6. This issue raised in Ground No. 7 relates to non-deduction of tax at source u/s 194-IC of the Act in relation to payment made to M/s Orbit Projects Pvt Ltd [in short ‘OPPL’] for acquisition of their Joka Project. The facts relating to this issue are that, the assessee had entered into a Memorandum of Understanding dated 25.03.2021 pursuant to which it had acquired the real estate business viz., Joka Project from OPPL. According to the AO, the payment made pursuant to this MOU qualified for tax deduction u/s 194-IC of the Act and the assessee not having withheld the same was held to be in default for non-deduction tax. 7. After hearing the rival contentions and the material placed before us, we find that the Ld. CIT(A) had rightly held that provisions of Section 194-IC had no application to the impugned payment made pursuant to the MOU dated 25.03.2021, by observing as under:- “10.1 DECISION: I have gone through the submissions and the facts of the case. During the relevant FY 2020-21, the appellant had entered into an agreement with Orbit Projects Private Limited (OPPL) dated 25.03.2021 in terms of which OPPL sold their ‘Joka project undertaking’ to the appellant on slump sale basis for an aggregate consideration of Rs.57.25 crores. (page 325 to 344 of factual paper book). Reading of the terms of the MOU dated 25.03.2021 between the appellant and OPPL indicate that the appellant had acquired a business undertaking viz., Joka Project from OPPL. This is not a ‘specified agreement’ or a ‘joint development agreement’ so as to attract withholding tax u/s 194-IC of the Act. Instead, it is seen that it was a transaction involving sale of “real estate undertaking” between two companies engaged in the business of real estate which rather qualifies as ‘slump sale’ within the meaning of Section 50B of the Act. The transferor OPPL is to pay capital gains tax as per law. For attracting application of Section 194-IC, it Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 11 is necessary is to show that the payment being made by the appellant is pursuant to an agreement i.e. a ‘specified agreement’ which comes within the ambit of Section 45(5A) of the Act. Only those joint development agreements, that fulfill each of the following criteria, can be said to be a 'specified agreement': (i) the agreement has to be registered. (ii) the land / building owner allows another person, being a developer, to develop a real estate project on such land / building. (iii) the consideration is in the form of a share in the area of the real estate project, with / without consideration in the form of cash. In other words, what is commonly referred to as area sharing is a prerequisite for the agreement to qualify as a 'specified agreement'. In the instant case, it is undisputed that the said agreement was 'unregistered' and that the consideration is in the form of cash alone. It is seen that the criteria (i) & (iii) cited above are not met, and thus the agreement dated 25.03.2021 fails to qualify as a 'specified agreement' as defined in Explanation (ii) to Section 45(5A) of the Act. Accordingly, the applicability of provisions of Section 194-IC fails. Therefore, I agree with the appellant’s contention that NFAC’s direction to the JAO to refer the matter to AO, TDS for alleged non-deduction of TDS u/s 194- IC of the Act is unjustified. Appeal is allowed on these grounds.” 7.1 The Ld. DR was unable to point out any infirmity in the above findings of the Ld. CIT(A). We thus see no reason to interfere with the order of Ld. CIT(A) and hence dismiss this ground of appeal. 8. Since all the grounds raised by the Revenue have been dismissed, the cross objections filed by the assessee are rendered academic and is therefore dismissed as infructuous. 9. In the result, both the appeal of the Revenue and cross objections of the assessee are dismissed. Kolkata, the 12th January, 2026. SD/- SD/- [Pradip Kumar Choubey] [Rajesh Kumar] Judicial Member Accountant Member Dated: 12.01.2026. RS Printed from counselvise.com ITA No.1457/Kol/2024 Emami Realty Ltd.; A.Y. 2021-22 12 Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "