GIC HOUSING FINANCE LTD, MUMBAI V. ADDL CIT RG 2(1), MUMBAI

ITA 22/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3499 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A M MITTAL
• Assessee Lawyers: AMIT KIRVE
• Keywords: Capital asset; Business income; Search and seizure; Share purchase agreement; Opportunity of being heard; Additional evidence; Wholly owned subsidiary; Wrong claim; Valuation report; Non compliance; Prejudicial to interest
• Section: 131; 143(3); 133(6)

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.22/ MUM/2016 ( / ASSESSMENT YEAR : 2011 - 12) GIC HOUSING FINANCE LTD. ROYAL INSURANCE BUILDING, 6 TH FLOOR, J. TATA ROAD, CHURCHGATE, MUMBAI - 400020 / V. A DDL. CIT RG 2(1) R.NO. 561, 5 TH F LOOR, AAYAKAR BHAVAN, NEW MARINE LINES, MUMBAI - 400020 ./ PAN : AAACG2755R ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. NITESH JOSHI & AMIT KIRVE REVENUE BY : SHRI A.M. MITTAL, DR / DATE OF HEARING : 23.07.2018 / DATE OF PRONOUNCEMENT : 21 .08.2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY ASSESSEE , BEING ITA NO. 22/MUM/2016, IS DIRECTED AGAINST APPELLATE ORDER DATED 21.10.2015 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 4, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2011 - 12 , THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM ASSESSMENT ORDER DATED 22.10.2013 PASSED BY LEARNED ASSESSING OFFICER (HEREI NAFTER CALLED THE AO) U/S 143 (3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2011 - 12 . I.T.A. NO.22/MUM/2016 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE I N THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 4, MUMBAI HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXPENDITURE AMOUNTING TO RS. 43,47, 723/ - INCURRED IN CONNECTION WITH THE SALE OF SHARES OF M/S LIC MUTUAL FUND ASSET MANAGEMENT CO. LIMITED AND M/S LIC MUTUAL F UND TRUSTEE CO. LIMITED, WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE SUBMISSIONS MADE DURING THE COURSE O F THE ASSESS MENT /REMAND/APPEAL PROCEEDINGS . 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMM ISSIONER OF INCOME - T AX - (APPEAL) - 4, MUMBAI ERRED IN NOT GIVING DIRECTION TO THE ASSESSING OFFICER TO SET OFF AND ADJUST THE UNABSORBED CARRY FORWARD LONG TERM CAPITAL LOSS FOR ASSESSMENT YEAR 2009 - 10 AGAINST THE LONG TERM CAPITAL GAINS EARNED ON TH E SALE OF SHARES OF LIC ASSET MANAGEMENT COMPANY LTD., AND LIC MUTUAL FUND TRUSTEE COMPANY LIMITED. 3) THE APPELLANT CRAVES LEAVE TO ADD TO, MODIFY OR DELETE THE ABOVE GROUNDS OF APPEAL EACH OF WHICH ARE INDEPENDENT OF THE OTHER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM HOUSING FINANCE BUSINESS . THE ASSESSEE IS A LISTED COMPANY HAVING ITS SHARES LISTED ON STOCK EXCHANGES. D URING THE COURSE OF ASSESSMENT PROCEEDINGS CONDUCTED BY THE AO U/S. 143(3) R.W.S. 143 (2) OF THE 1961 ACT , IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN S OF RS. 85,79,09 ,196/ - ON ACCOUNT OF SALE OF 1120 SHARES OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LTD. OF FACE VALUE OF RS. 10,000/ - EACH AND ON SALE OF 300 SHARES OF LIC MUTUAL FUND TRUSTEE CO. PRIVATE LTD. OF FACE VALUE OF RS. 10 EACH ( FOR SHORT SUCH SHAREHOLDING OF THE ASSESSEE IN THESE TWO ENTITIES COLLECTIVELY REFERRED TO AS LICMF - AMC ) , HELD BY THE ASSESSEE IN SAID TWO ENTITIES . THE AO OBSERVED W HILE COMPUTING LONG TERM CAPITAL GAINS ON SALE OF LICMF - AMC SHARES , THE ASSESSEE HAD CLAIMED LEGAL COST FOR TRANSFER OF THESE AFORE - STATED SHARES OF LICMF - AMC TO THE TUNE OF RS 96,73,108/ - WHICH WAS CLAIMED AS DEDUCTION WHILE I.T.A. NO.22/MUM/2016 3 COMPUTING LONG TERM CAPITAL GAINS ON SALE OF SHARES OF LICMF - AMC HELD BY ASSESSEE . THE ASSESSEE ON BEING ASKED BY THE AO SUBMITTED THAT IT SHARE D LEGAL COST , PROFESSIONAL ADVISORS COST , FINANCIAL ADVISORS COSTS WITH RESPECT TO TRANSFER OF THESE LIC MF - AMC SHARES WITH OTHER PARTIES TO THE SALE TRANSACTION OF THE SHARE S HELD BY THEM IN LICMF - AMC . T HE AO OBSERVED THAT TOTAL LEGAL COST, PROFESSIONAL ADVISORS, FINANCIAL ADVISORS COSTS INCURRED IN CONNECTION WITH THE TRANSACTION OF SALE WAS RS. 3,31,79,629/ - AND THE SHARE OF THE ASSESSEE T OWARDS THESE COSTS C AME TO RS. 96,73,108/ - WHICH WAS PAID BY THE ASSESSEE. THE DETAILS OF THESE EXPENSES WAS DETAILED BY THE ASSESSEE WHICH IS REPRODUCED HEREUNDER: - I. LEGAL CONSULTANT (AMARCHAND MANGALDAS RS.1 , 91,49,387/ - SURESH A SHROFF & CO.) II. CONSULTANT AND ADVISOR (PRICE WATERHOUSE RS.136,42,460/ - COOPERS P LTD. III. SCRUTINIZER TO THE POSTAL BALLOT OBTAINED RS.282,996 / - FROM UNITHOLDERS (RATHI & ASSOCIATES) IV. VALUATION AMC ( CHATUR VEDI & CO.) RS.46,878/ - V. VALUATION TRUSTEE CO. (SHAH GUPTA & CO.) RS 57,908 / - ___ RS.331 , 79,629 / - THE AO OBS ERVED THAT AS PER P ROVISION OF S ECTION 48 OF THE 1961 ACT , ONLY THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF CAPITAL ASSETS IS ALLOWED AS DEDUCTION WHILE COMPUTING CAPITAL GAIN S . THE AO OBSERVED THAT IN THE INSTANT CASE , THE EXPENSES INCURRED OF RS. 96,73,108/ - WERE IN THE FORM OF FEE PAID TOWARDS LEGAL CONSULTANCY , PROFESSIONAL ADVISORS AND FINANCIAL ADVISORS COSTS WHICH ARE NOT INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES OF LICMF - AMC . THE AO DISALLOWED THE CLAIM OF EXPENSES OF RS. 96,73,108/ - AS THE SAME CANNOT BE ALLOWED AS DEDUCTION U/S 48 OF THE 1961 ACT BEING NOT INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES OF LICMF - AMC, WHICH WAS CONSEQUENTLY ADDED I.T.A. NO.22/MUM/2016 4 BY THE AO TO THE INCOME OF ASSESSEE , VIDE ASSESSMENT ORDER DATED 22.10.2013 PASSED BY THE AO U/S 143(3) OF THE 1 961 ACT . 4 . AGGRIEVED BY THE ASSESSMENT ORDER DATED 22.10.2013 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT , THE ASSES SEE FI L E D FIRST APPEAL WITH LD. CIT(A) . THE ASSESSEE MADE DETAIL ED SUBMISSIONS BEFORE LD. CIT(A). THE ASSESSEE SUBMITTED ADDITIONAL EVID ENCES BEFORE LEARNED CIT(A) VIDE SUBMISSIONS DATED 30.08.2014(PB/PAGE 235) AND PRAYED FOR ITS ADMISSION VIDE RULE 46A(1)(D) OF INCOME - TAX RULES, 1962 AS THESE ADDITIONAL EVIDENCES IN THE OPINION OF THE ASSESSEE GOES TO THE ROOT OF THE MATTER. THE LD. CIT (A ) ADMITTED THESE ADDITIONAL EVIDENCES AND CALLED FOR REMAND REPORT FROM AO . THE AO SUBMITTED REMAND REPORT DATED 24.07.2015 AND RELEVANT EXTRACTS THEREOF ARE REPRODUCED AS UNDER: - 14.1. LEGAL CONSULTANT (AMARCHAND MANGALDS SURESH A SHROFF & CO.) - RS. 1,91,49,387/ - A. THE ASSESSEE HAS SUBMITTED LETTER OF THE PARTY AMARCHAND MANGALDAS DT. 06.08.2008 ADDRESSED TO LIC AMC. THE SAME IS A PROPOSED MANDATE OF THE FIRM AMARCHAND MANGALDAS FOR APPOINTMENT BY LIC AMC AS LEGAL COUNSELS FOR THE PROPOSED INVESTM ENT BY NOMURA HOLDINGS I NC IN THE COMPANY. THE SAID LETTER SPECIFIES THE SCOPE OF WORK AS NEGOTIATING, DRAFTING, ADVISING THE CLIENT AS WELL AS PROPOSED FEE CHARGEABLE BY THEM. B. THE ASSESSEE HAS SUBMITTED LETTER DT 1.11.2011 OF AMARCHAND MANGALDAS ADDR ESSED TO LIC AMC.GIC MFC, LIC MFC AND NOMURA( THE PURCHASER). THE SAME SPECIFIES THAT AMARCHAND MANGALDAS HAVE ACTED AS LEGAL ADVISERS TO LIC AMC AND PURSUANT TO INSTRUCTIONS FROM LIC AMC THEY HAVE ALSO ACTED AS LEGAL ADVISERS FOR AND ON BEHALF OF LIC, LIC HFL AND GIC HFL IN RELATION TO INVESTMENT BY NOMURA. THE SAID DOCUMENT PERTAINS TO THE LEGAL OPINION GIVEN BY AMARCHAND MANGALDAS W.R.T THE SAME. C. THE INVOICES/BILLS ENCLOSED AS ADDITIONAL EVIDENCE ARE AS UNDER: S NO REFERENCE AMOUNT REMARKS 1 LETTER OF LIC AMC DT 14.8.2008 W.R.T. ADVANCE PAYMENT AMOUNT. IT SPECIFIES THAT THE LETTER OF ACCEPTANCE OF MANDATE DT 8.8.2008. 8,42,700 ONLY LETTER DT 8.8.2008 IS MENTIONED. DETAILS OF SERVICES RENDERED AND PURPOSE ARE NOT SPECIFIED I.T.A. NO.22/MUM/2016 5 2 LETTER OF LIC AMC RECEIVED ON 20.4.2009 W.R.T PAYMENT VIDE CHEQUE NO - 1876 DT 17.4.2009 TOWARDS NET PAYMENT(AFTER TDS DEDUCTION) OF RS 19,12,878. 21,57,300 THE SAID LETTER MENTIONS THAT THE PAYMENT IS FEES FOR LEGAL COUNSELING FOR PROJECT LIFE WHICH AS PER THE LETTER OF THE PARTY IS THE NAME GIVEN TO THE SAID TRANSACTION 3 INVOICE RAISED FOR PROJECT LIFE DT 2.4.2009 AMT SAME AS ABOVE - AS ABOVE - 4 INVOICE RAISED FOR PROJECT LIFE DT 13.9.2010 78,54,827 - AS ABOVE - 5 INVOICE RAISED FOR PROJECT LIFE DT25.1.2011 82,94,560 - AS ABOVE - TOTAL 1,91,49,387 D. AS SPECIFIED ABOVE, THE INVOICES RAISED AS SPECIFIED IN S NO 2 TO 5 APPEAR TO BE IN ORDER. HOWEVER, FOR THE INVOICE SPECIFIED AT S NO 1 IT CANNOT BE ESTABLISHED THAT THE SAME WAS PAYMENT WAS RELATED TO THE RELEVANT TRANSACTION OF LONG TERM CAPITAL GAIN. 14.2. CONSULTANT AND ADVISOR (PRICE WATERHOUSE COOPERS P LTD) RS 1,36,42,460 A. THE ASSESSEE HAS SUBMITTED A LETTER DT 21.1.2008 OF PRICE WATERHOUSE COOPERS. THE S AME SPECIFIES THE SCOPE OF WORK WHICH COVERS MATTERS RELATING TO THE COMPLETION OF THE ENVISAGED TRANSACTION I.E. INDUCTION OF A STRATEGIC INVESTOR THROUGH EITHER A DIVESTMENT OF A MINORITY STAKE OR ISSUANCE OF FRESH SHARES IN LIC AMC. B. THE INVOICES/B ILLS ENCLOSED AS ADDITIONAL EVIDENCE ARE AS UNDER: C . T C T HUS AS IS CLEAR FROM THE ABOVE DISCUSSION, THAT THE BILLS /INVOICES DO NOT SPECIFY THE PURPOSE FOR WHICH THE SAID PROFESSIONAL FEE PAYMENT WAS MADE, AND AS SUCH IT CANNOT BE HELD THAT THE SAID EXPENDITURE WAS INCURRED BY THE ASSESSEE WHOLLY AND EXCLUSIVELY TOWARDS EARNING OF INCOME SHOWN UNDER THE HEAD LONG TERM CAPITAL GAIN BY IT. D. IT CAN ALSO BE SEEN T HAT THE TOTAL INVOICES SUBMITTED AMOUNT TO RS 1,42,04,260 WHEREAS THE CLAIM OF THE EXPENSE IS ONLY RS 1,3 6 ,42,460/ - . A CAREFUL EXAMINATION REVEALS SNO REFERENCE AMOUNT REMARKS 1 LETTER OF PWC DT 31,3.2008 ADDRESSED TO LIC AMC REGARDING INVOICES RAISED 11,23,600 THE SAID LETTER HAS A GENERAL REMARK THAT THE SAID PAYMENT IS TOWARDS PROFESSIONAL FEES. NO DETAILS AS TO THE PURPOSE FOR WHICH THE SAID SERVICES WERE RENDERED IS GIVEN. IN THE SUB IT IS MERELY MENTIONED THAT THE PROJECT IS 'PROJECT CASH I' 2 LETTER OF PWC OF 2008( DT IS NOT CLEAR IN THE XEROX) 5,61,800 - AS ABOVE - . IN THE SUBJECT LINE THE PROJECT NAME IS MENTIONED AS PROJECT ADDRESSED TO L/C AMC REGARDING INVOICES RAISED CASH 1 185421 3 LETTER OF PWC DT 24.9.2008 ADDRESSED TO L/C AMC REGARDING INVOICES RAISED 6,66,235 - AS ABOVE - 4 LETTER OF PWC DT 11.9.2009 ADDRESSED TO L/C AMC REGARDING INVOICES RAISED 1,17,01,727 - AS ABOVE - 5 LETTER OF PWC DT 24.2.2011 ADDRESSED TO L/C AMC REGARDING INVOICES RAISED 1,50,898 - AS ABOVE - TOTAL 1,42,04,260 I.T.A. NO.22/MUM/2016 6 THAT THE SAME IS DUE TO THE EXCLUSION OF INVOICE AMOUNTING TO RS 5,61,800/ - SPECIFIED IN THE TABLE ABOVE. HOW EVER EVEN THE OTHER INVOICES DO NOT ESTABLISH THAT THE EXPENDITURE WAS INCURRED FOR THE RELEVANT TRANSACTION AND THE EXPENDITURE CLAIM IS THEREFORE NOT ALLOWABLE. 14.3. SCRUTINIZER TO THE POSTAL BALLOT OBTAINED FROM UNIT HOLDERS (RATHI & ASSOCIATES) RS 2.82.996 A. IN THIS REGARD THE ASSESSEE HAS SUBMITTED COPIES OF BILLS/INVOICES RAISED BY RATHI AND ASSOCIATES WHICH ARE ANALYZED AS UNDER: S NO REFERENCE AMOUNT REMARKS 1 LETTER OF RATHI AND ASSOCI ATES DT 6.9.2010 ADDRESSED TO LI C AMC REGARDING INVOICES RAISED 2,20,600 THE SAID LETTER MENTIONS THAT THE INVOICE IS W.R.T PROFESSIONAL CHARGES RECEIVED WITH RESPECT TO POSTAL BALLOT PROCESS OF UNITHOLDERS. HOWEVER THE SAME IS REGARDING PROPOSED AMENDMENT OF TRUST DEED DT 20.4.1989, ALONGWITH DEED OF MODIFICATION DT 25.3.1004 AND 6.10.2003 ENTERED BETWEEN LIC AND LI C MF TRUSTEE CO AND IS UNRELATED TO THE CAPITAL GAIN TRANSACTION UNDER CONSIDERATION 2 LETTER OF RATHI AND ASSOCIATES DT 7.9.2010 ADDRESSED TO L/C AMC REGARDING INVOICES RAISED 62,396 THE SAME ARE INVOICES RAISED FOR REIMBURSEMENT OF AIR TRAVEL EXPENSES BY RATHI AND ASSOCIATES. IT ONLY MENTIONS THE NAME AND AMOUNT OF PERSONS. THERE IS NO REFERENCE OF THE PURPOSE FOR WHICH THE SAID AIR TRAVEL WAS MADE, HOW IT IS RELATED TO THE TRA NSACTION UNDER CONSIDERATION, DETAILS OF TRAVEL ETC. AND IT CANNOT BE ESTABLISHED THAT THE SAME WAS INCURRED FOR THE CAPITAL GAINS TRANSACTION UNDER CONSIDERATION. WITHOUT PREJUDICE TO THE SAME NO SUPPORTING BILLS/INVOICES ,TICKETS, BOARDING PASSES ETC ARE ENCLOSED TO SUPPORT THE GENUINENESS OF THE SAID EXPENDITURE. B. IT IS CLEAR FROM THE ABOVE DISCUSSION, THE BILLS/INVOICES DO NOT SPECIFY THE PURPOSE FOR WHICH SAID PAYMENTS WERE MADE AND AS SUCH IT CANNOT BE HELD THAT THE SAID EXPENDITURE WAS INCURRED THE ASSESSEE WHOLLY AND EXCLUSIVELY TOWARDS EARNING OF INCOME SHOWN UNDER THE HEAD LONG TERM CAPITAL GAINS BY IT. 14. 4. VALUATION AMC( CHATURVEDI & CO.) RS 46.878 A. ASSESSEE HAS FURNISHED VALUATION NOTE OF CHATURVEDI AND CO DT 24,7.2010 OF SHAR ES OF LIC AMC AS ON 31.3.2010. THE SAME SPECIFIES THAT THE PURPOSE OF VALUATION IS TO DETERMINE THE FAIR VALUE OF SHARES OF LIC AMC FOR THE PROPOSED ACQUISITION OF SHARES BY NOMURA IN LIC AMC. I.T.A. NO.22/MUM/2016 7 B. THE INVOICES/BILLS ENCLOSED AS ADDITIONAL EVIDENCE ARE AS U NDER: SNO REFERENCE AMOUNT REMARKS 1 LETTER OF CHATURVEDI & CO DT 25.8.2009 ADDRESSED TO LIC AMC REGARDING INVOICES RAISED 2,758 THE SAID LETTER MENTIONS THAT THE PAYMENT IS TOWARDS ASCERTAINING THE NET WORTH FOR FY 2008 - 09 AND IS CLEARLY NOT RELATABLE TO THE TRANSACTION UNDER CONSIDERATION 2 LETTER OF CHATURVEDI & CO DT 5.9.2009 ADDRESSED TO LIC AMC REGARDING INVOICES RAISED 22,060 THE SAID LETTER MENTIONS THAT THE PAYMENT IS TOWARDS VALUATION OF SHARES AS ON 31.3.2009 AND IS CLEARLY NOT RELATABLE TO THE TRANSACTION UNDER CONSIDERATION WHICH INVOLVED VALUATION OF SHARES AS ON 31.3.2010 AS STATED IN PARA 11.4(AJ ABOVE. 3 LETTER OF CHATURVEDI & CO DT 30.7.2010 ADDRESSED TO LIC AMC REGARDING INVOICES RAISED 22,060 T HE SAID LETTER MENTIONS THAT THE PAYMENT IS TOWARDS VALUATION OF SHARES AS ON 31.3.2010. . 14.5. VALUATION TRUSTEE CO(SHAH GUPTA & CO.)RS57.908 IN THIS REGARD THE ASSESSE HAS ONLY SUBMITTED COPIES OF BILLS/INVOICES RAISED BY RATHI AND ASSOCIATES WHICH ARE ANALYZED AS UNDER: SNO REFERENCE AMOUNT REMARKS 1 LETTER OF SHAH GUPTA & CO DT 1.10,2009 ADDRESSED TO LI C AMC REGARDING INVOICES RAISED 28,954 THE SAID LETTER MENTIONS THAT THE INVOICE IS W.R.T VALUATION ANALYSIS AS ON 11.7,2009AND SIMILAR TO THE DISCUSSION IN PARA 11.4 ABOVE IS UNRELATABLE TO THE TRANSACTION UNDER CONSIDERATION 2 LETTER OF SHAH GUPTA & CO DT 6.9.2010 ADDRESSED TO UC AMC REGARDING INVOICES RAISED 28,954 THE SAID LETTER MENTIONS THAT THE INVOICE IS W.R.T VALUATION ANALYSIS AS ON 11.7.2010. NO DETAILS SUCH AS SHARE VALUATION NOTE ARE FURNISHED TO ESTABLISH IF THE SAME WAS DONE IN REGULAR COURSE OF BUSINESS OR FOR THE SPECIFIC PURPOSE OF EARNING INCOME UNDER THE HEAD CAPITAL GAINS AND AS SUCH THE SAID DOCUMENT CANNOT BE TREATED AS PROOF THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING OF INCOME UNDER THE HEAD CAPITAL GAINS 14.6. AUTHORISED DEALER( LCLCL} CHARGES FOR FC - TRS DOCUMENTATION AS PER RBL REQUIREMENT FOR AMC AND TRUSTEE CO. RS 33,090 ASSESSES HAS FURNISHED LETTER OF RBL DT 24.5.2010, STATING THAT THERE IS NO OBJECTION TO THE ACQUISITION BY NOMURA OF SHARES OF LIC AMC FROM GIC HFL, UC HF AND CARE HOMES. NO PROOF OF PAYMENT HAS BEEN SUBMITTED BY THE ASSESSEE IN THIS REGARD. 14,7. OTHER EVIDENCE FURNISHED BY THE ASSESSEE THE ASSESSEE HAS FURNISHED LETTER DT 28.4.2011 OF NOMURA ADDRESSED TO THE ASSESSEE REGARDING THE SHARING OF COSTS RELATING TO THE JV WITH SELLING SHAREHOLDERS WHICH GIVES A BREAK UP OF COSTS INCU RRED W.R.T THIS TRANSACTION WHICH IS TO BE SHARED BY IT. THE I.T.A. NO.22/MUM/2016 8 FIGURES ARE THE SAME AS SPECIFIED IN THE COLUMN GIVING THE TOTAL EXPENSES INCURRED IN TABLE 1, PARA 7 ABOVE. 15. THIS REPORT IS SUBMITTED AFTER DUE EXAMINATION OF ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSE. THE LACUNAE IN THE ASSESSEE'S SUBMISSIONS ARE CLEARLY POINTED OUT. OTHER THAN THE INVOICES AS DISCUSSED IN PARA 14.1(D) ABOVE, WHICH APPEAR TO BE IN ORDER, THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE REMAINING EXPENDITURE CLAIMED A S DEDUCTION HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING THE INCOME TAXED UNDER THE HEAD LONG TERM CAPITAL GAIN,AND THEREFORE ITS CLAIM REMAINS UNSUBSTANTIATED.' THE COPY OF REMAND REPORT OF THE AO WAS FURNISHED BY LD. CIT(A) TO THE ASSESSEE FOR R EJOINDER. THE ASSESSEE IN REJOINDER SUBMITTED FOLLOWING REPLY WHICH IS REPRODUCED HERE UNDER: - ON THE BASIS OF THE REMAND REPORT RECEIVED AND SUBSEQUENT TO THE EXAMINATION OF THE ADDITIONAL EVIDENCE SUBMITTED, THE APPELLANT REQUESTS YOU TO CONSIDER THE CLAIM OF RS.96,73,108/ - BEING EXPENSES INCLUDED BY THE APPELLANT ON SALE OF SHARES, THE BREAK UP OF WHICH IS AS UNDER: - A DETAILED RESPONSE PERTAINING TO THE GENUINENESS OF THE CLAIM OF EACH ITEM OF EXPENDITURE SPECIFIED IN (I - VI) ABOVE IS MADE HEREUNDER: L E G A L C O N S U L A DETAILED RESPONSE PERTAINING TO THE GENUINENESS OF THE CLAIM OF EACH ITEM OF EXPENDITURE SPECIFIED IN (I - VI) ABOVE IS MADE HEREUNDER: I ) LEGAL CONSULTANT (AMARCHAND MANGALDAS SURESH A SHROFF & CO) - R$, 1,91.49,387 (OUT OF WHICH A N AMONT OF RS. 8,42,700 IS DISALLOWED): SR NO. ASSESSING OFFICER'S FINDING APPELLANT'S RESPONSE SI.NO. PARTICULARS TOTAL AMOUNT (RS.) EXPENDITURE BORNE BY GIC AND CLAIM DISALLOWED (RS.) I. LEGAL CONSULTANT (AMARCHAND MANGALDAS SURESH A. SHROFF & CO.) 1,91,49,387 96,51,417 A. CONSULTANT AND ADVISOR (PRICE WATERHOUSE COOPERS PRIVATE LTD.) 1,36,42,460 HI. SCRUTINIZER TO POSTAL BALLOT (RATHI & ASSOCIATES) 2,82,996 IV. VALUATION OF AMC (CHATURVEDI& CO.) 46,878 13,637 V. VALUATION TRUSTEE CO. (SHAH GUPTA & CO.) 57,908 4,964 VI. AUTHORISEDDEALER CHARGES FOR FC - TRS DOCUMENTATION AS PER RB! REQUIREMENT FOR AMC AND TRUSTEE CO, (ICICI BANK) NIL 33,090 TOTAL 3,31,79,629 96,73,108 I.T.A. NO.22/MUM/2016 9 1. AMOUNT OF RS. 8,42,700 FOR INVOICE 1 TOWARDS ADVANCE PAYMENT NOT ALLOWED AS IT CANNOT BE ESTABLISHED THAT THE SAME WAS PAYMENT RELATED TO RELEVANT TRANSACTION OF LONG TERM CAPITAL GAIN. ALSO DETAILS OF SERVICE RENDERED HAS NOT BEEN SPECIFIED IT MAY BE NOTED THAT A MANDATE WAS GIVEN BY THE PARTIES(NAMED AS 'PROJECT LIFE')TO THE TRANSACTION {FOR SALE OF SHARES IN LIC MUTUAL FUND ASSET MANAGEMENT C OMPANY AND LIC MUTUAL FUND TRUSTEE CO. LTD. TO NOMURA MUTUAL FUND) TO THE LEADING LAW FIRM, AMARCHAND MANGAIDAS.THE SCOPE OF WORK TO BE CARRIED OUT BY THE LEGAL CONSULTANT A!ONG WITH THE TERMS OF PAYMENT WERE COMMUNICATED VIDE LETTER NO. 7647 DATED A UGUST 6, 2008 WHICH LETTER HAS BEEN CONFIRMED BY THE ASSESSING OFFICER IN THE REMAND REPORT. PAGE 2 OF THE SAID MANDATE CLEARLY SPECIFIES THE REQUIREMENT OF MAKING AN ADVANCE PAYMENT (OF RS. 7,50,000 ADD SERVICE TAX AT 12.36% AMOUNTING TO RS. 92,700 AND TH E AGGREGATE IS RS. 8,42,700/ - ) ON THE ACCEPTANCE OF THE MANDATE IN ORDER TO ENABLE THEM TO START PROVIDING THE ADVISORY AND LEGAL SERVICES. ACCORDINGLY, UC MUTUAL FUND ASSET MANAGEMENT COMPANY MADE THE ADVANCE PAYMENT OF RS. 8,42,700/ - UNDER THE COVER OF T HE LETTER DATED AUGUST 14, 2008 - THE SUBJECT OF THE LETTER WAS 'PROJECT LIFE - ADVANCE PAYMENT'. THIS MAKES IT ABUNDANTLY CLEAR THAT THE PAYMENT IS TOWARDS THE ADVANCE DUE FOR THE MANDATE GIVEN FOR 'PROJECT LIFE'. II) CONSULTANT AND ADVISOR_( _PRICE WATERHOUSE COOPERS PRIVATE LIMITED} - RS. 1,36,42,460 SR NO. ASSESSING OFFICER'S FINDING APPELLANT'S RESPONSE 1. AN AMOUNT OF RS. 5,61,800/ - HAS BEEN EXCLUDED FROM THE TOTAL AMOUNT OF RS. 1,42,04,260/ - WITH RESPECT TO THE INVOICES SUBMITTED PARA 1 OF PAGE 5 OF THE ENGAGEMENT LETTER DATED 21.01.2008 WITH PRICE WATERHOUSE COOPERS PRIVATE LIMITEDSTATES THAT 'AN AMOUNT OF RS. 5,00,000 IS PAYABLE ON ACCEPTANCE OF NON - BINDING PRICED PROPOSAL FROM THE INVESTOR.' THE SAID AMOUNT WAS EXCLUDED ON ACCOUNT OF THE REIMBURSEMENT OF SAME BEING RECEIVABLE FROM THE INVESTOR (IN THIS CASE NOMURA MUTUAL FUND - PURCHASER). THEREFORE, THE SAME WAS EXCLUDED FROM THE CLAIM OF EXPENSES AS THE COST PERTAINING TO THE SAME WAS REQUIRED TO BE BORNE BY THE INVESTOR. 2. WITH RESPECT TO THE BALANCE INVOICES AMOUNTING TO RS. 1,36,42,4607 - , THE LETTER CONTAINS A GENERAL REMARK OF PAYMENT TOWARDS PROFESSIONAL FEES AND IN THE SUBJECT IT IS MENTIONED AS PROJECT CASH THE ENGAGEMENT LETTER DATED 21.08.2008 WITH PRICE WATERHOUSE COOPERS PRIVA TE LIMITED CLEARLY SPECIFIES THE ADVISORY SERVICES TO BE PROVIDED FOR DIVESTMENT OF MINORITY STAKE IN LIC ASSET MANAGEMENT COMPANY, THEREFORE, RAISING OF INVOICES AND ITS PAYMEN T THEREON WAS MERELY A FORMALITY ,BASED ON THE MILESTONES AS AGREED IN THE ENGAGEMENT LETTER. HENCE, FEES PAID TOWARDS INVOICES WERE ONLY IN ADHERENCE TO THE TERMS OF ENGAGEMENT. IT MAY BE NOTED THAT, THE ASSESSING OFFICER HAS NOT RAISED ANY QUESTION AS TO THE AUTHENTICITY OR GENUINENESS OF PAYMENT TO PRICE WATERHOUSE COOPERS PRI VATE LIMITED. HOWEVER, THE CONCLUSION DRAWN BY ASSESSING OFFICER QUESTIONING THE NATURE OF SERVICES RENDERED BY PRICE WATERHOUSE COOPER PRIVATE LIMITED IS BASED ON THE FACT THAT THE SERVICES ARE NOT CLARIFIED NOR ARE THE INVOICES IN ANY WAY LINKED TO THE M ANDATE GIVEN FOR THE SAID TRANSACTION. ACCORDINGLY, THE APPELLANT CONFIRMS THAT THE SAID EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY TOWARDS EARNING OF INCOME SHOWN UNDER THE HEAD LONG TERM CAPITAL GAIN BY IT. III) SCRUTINIZER TO THE POSTAL BALLOT F ROM UNIT HOLDERS (RATHI & ASSOCIATES) - RS. 2,821996_ I.T.A. NO.22/MUM/2016 10 SR NO. ASSESSING OFFICER'S FINDING APPELLANT'S RESPONSE 1. THE EXPENSES INCURRED IN RELATION TO THE CAPITAL GAIN TRANSACTION PERTAINS TO THE AMENDMENT OF TRUST DEED DATED 20.04.1989, ALONG WITH DEED OF MODIFICATION DATED 25.03.2004 AND 06.10.2003 ENTERED BETWEEN LIC AND LIC MUTUAL FUND TRUSTEE COMPANY. ACCORDINGLY IT WAS CONTENDED THAT IT IS UNRELATED TO THE TRANSACTION THE APPELLANT STATES THAT THE ASSESSING OFFICER HAS TAKEN A NARROW VIEW AND C ONTENDS THAT MERELY BECAUSE THE DEED PERTAINS TO YEAR 1989 AND 2004, SUBSEQUENT AMENDMENT TO THE SAME WAS THE REQUIREMENT FOR CARRYING OUT THE SAID TRANSACTION OF SALE OF SHARES AND HENCE APPROVAL FROM UNIT HOLDERS WAS A PREREQUISITE. THUS PAYMENT MADE TO M/S RATHI& ASSOCIATES FOR SCRUTINIZING THE POSTAL BALLOT WAS THUS AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 2. ONLY INVOICES PERTAINING TO REIMBURSEMENT OF EXPENSES PROVIDED WITHOUT EXPLAINING THE PURPOSE FOR WHICH TRAVEL WAS MADE AND HOW IT IS RELATED TO THE CAPITAL GAIN TRANSACTION UNDER CONSIDERATION. FURTHER, NO SUPPORTING BILLS/ INVOICES, TICKETS, BOARDING PASSES ETC WERE ENCLOSED TO SUPPORT GENUINENESS OF SAID EXPENDITURE THE APPELLANT CONTENDS THAT THE CLAIM FOR REI MBURSEMENT OF EXPENSES IS SUPPORTED BY THE INVOICE OF M/S RATHI& ASSOCIATES AND AS AGREED BETWEEN THEM AS REGARDS THE SERVICES RENDERED BY THE PROFESSIONALS OF THE SAID FIRM. ALSO THE APPELLANT CANNOT BE MADE LIABLE FOR DISALLOWANCE OF EXPENDITURE ON ACCOU NT OF THE INVOICES, TICKETS AND BOARDING PASSES BEING NOT PROVIDED BY THE SAID FIRM FOR EACH AND EVERY TRIP INCURRED BY THE SAID COMPANY WITH RESPECT TO THE SERVICES PROVIDED. IV) VALUATION AMC (CHATURVEDI & CO.) - RS. 46,878/~ SR NO. ASSESSING OFFICER'S FINDINGS APPELLANT'S RESPONSE 1. INVOICE INCLUDE PAYMENT MADE TOWARDS ASCERTAINING NET WORTH FOR F.Y 2008 - 09 AND IS NOT RELATABLE TO THE TRANSACTION UNDER CONSIDERATION THE APPELLANT SPECIFIES THAT IT HAD ENTERED INTO ARRANGEMENT WITH THE LIC HOUSING FINANCE LIMITED, LIC ASSET MANANGEMENT COMPANY IN FINANCIAL YEAR 2008 - 09 ITSELF. A VALUATION OF THE NET WORTH AND THE SHARES WAS REQUIRED CONSIDERING THE STRATEGIC NATURE OF INVESTMENT, ALTHOUGH THE SALE OF SHARES W AS CARRIED OUT ONLY IN FINANCIAL YEAR 2010 - 11. ALSO THE VALUATION OF SHARES HAS BEEN CARRIED OUT AS PER GUIDELINES OF RESERVE BANK OF INDIA THUS, THE EXPENDITURE INCURRED BY THE APPELLANT IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF CARRYING OUT THE TRANSA CTION PERTAINING TO THE SALE OF SHARES - THE APPELLANT FURTHER DRAWS YOUR ATTENTION TO SECTION 48 OF THE ACT WHICH IS AS UNDER: THE INCOME CHARGEABLE UNDER HEAD 'CAPITAL GAINS' SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF CAPITAL ASSET NAMELY: - 2. THE INVOICE INCLUDES VALUATION OF SHARES AS ON 31,03.2009 AND IS NOT RELATABLE TO TRANSACTION UNDER CONSIDERATION I.T.A. NO.22/MUM/2016 11 I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER II) THUS, THE WORD 'EXPENDITURE' USED IN SECTION MANDATES IT SHOULD BE DISTINCTLY RELATED AND INTEGRALLY CONNECTED WITH THE TRANSFER OF SHARES. IT DOES NOT SPECIFY THAT THE EXPENDITURE INCURRED WILL BE ELIGIBLE FOR DEDUCTION IF IT IS MADE DURING THE YEAR IN WHICH THE SALE OF SHARES IS CARRIED OUT. ALSO, THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHAKUNTALAKANTILAL (190 ITR 56,59), HAS HELD THAT THE EXPRESSION 'IN CONNECTION WITH SUCH TRANSFER' IS WIDER AND MORE LIBERAL IN MEANING THAN THE PHRASEOLOGY 'FOR THE TRANSFER.' BY REASON OF EMPLOYING SUCH A WIDE EXPRESSION I.E. 'IN CONNECTION WITH', SOMETHING MORE THAN WHAT IS ATTRIBUTABLE TO THE FINAL ACT OF TRANSFER OF SHARES IS ALSO ADMISSIBLE FOR DEDUCTION PROVIDED THE INTIMATE CONNECTION BETWEEN THE EXPENDITURE AND THE ACT OF TRANSFERRING SHARES IS ESTABLISHED. FOR INSTANCE, IF THE SERVICES OF LE GAL OR OTHER PROFESSIONAL SERVICES EXTENDED TO THE PROCESS OF VALUATION OF SHARES OR THE PARTICIPATION IN THE DELIBERATIONS THAT LED TO THE SETTLEMENT CONCERNING THE TRANSFER OF SHARES, THE LEGAL CHARGES ON THAT ACCOUNT WILL ALSO BE ALLOWABLE AS DEDUCTION. 3. THE INVOICES SPECIFIED THE PAYMENTS IS MADE TOWARDS VALUATION OF SHARES AS ON 31.03.2010 THE ASSESSING OFFICER HAS MERELY STATED THAT THE PAYMENT IS MADE TOWARDS THE VALUATION OF SHARES AS ON 31.03.2010 THROUGH INVOICE DATED 30.07.2010. THE SHARE VALUATION NOTE ISSUED BY CHATURVEDI& CO. CLEARLY SPECIFIES THAT THE VALUATION WAS CARRIED OUT IN R ELATION TO THE SALE I.T.A. NO.22/MUM/2016 12 TRANSACTION UNDER CONSIDERATION AND ACCORDINGLY NO DISALLOWANCE OF EXPENDITURE CAN BE MADE SINCE THE EXPENDITURE IS WHOLLY AND EXCLUSIVELY INCURRED IN CONNECTION WITH SUCH TRANSFER. V.) VALUAT ION TRUSTEE CO.(SHAH GUPTO & CO) - RS. 57,908/ - SR NO. ASSESSING OFFICER'S FINDINGS APPELLANT'S RESPONSE 1. INVOICE MENTIONS VALUATION ANALYSIS ON 11.07.2009 AND ACCORDINGLY IT IS UNRELATABLE TO THE TRANSACTION THE APPELLANT SPECIFIES THAT IT HAD ENTERED INTO ARRANGEMENT WITH THE CONCERNED PARTIES IN FINANCIAL YEAR 2008 - 09 ITSELF. THUS VALUATION OF SHARES WAS REQUIRED CONSIDERING THE STRATEGIC NATURE OF INVESTMENT, ALTHOUGH THE SALE OF SHARES WAS CARRIED OUT ONLY IN FINANCIAL YEAR 2010 - 11 ALSO THE VALUATION OF SHARES HAS BEEN CARRIED OUT AS PER THE GUIDELINES OF RESERVE BANK OF INDIA. THUS, THE EXPENDITURE INCURRED BY THE APPELLANT IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF CARRYING OUT THE TRANSACTION PERTAINING TO THE SALE OF SHARES. SIMILARLY, DISCUSSION FOR ELIGIBILITY OF CLAIM OF EXPE NSE IS ALREADY SUPPORTED BY THE JUDGEMENT AS DISCUSSED ABOVE. 2. THE INVOICE IS WITH RESPECT TO VALUATION ANALYSIS AS ON 11.07.2010. NO DETAILS INCLUDING THE SHARE VALUATION NOTE IS FURNISHED TO ESTABLISH THE FACT THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING INCOME UNDER THE HEAD CAPITAL GAINS THE APPELLANT CONTENDS THAT THE INVOICE SPECIFIES THE VALUATION ANALYSIS CARRIED OUT ON 11.07.2010, THE ASSESSING OFFICER CANNOT TAKE A STAND THAT SINCE NO SHARE VALUATION NOTE IS FURNISHED TH E EXPENDITURE HAS NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING OF INCOME UNDER THE HEAD CAPITAL GAINS. YOUR ATTENTION IS HIGHLIGHTED TO CLAUSE 3.2(K) OF PAGE 48 OF THE SHARE PURCHASE AGREEMENT WHEREIN IT HAS BEEN AGREED BY THE PARTIES TO THE VALUAT ION CERTIFICATE TO BE ISSUED BY A REGISTERED CHARTERED ACCOUNTANT AS PER THE RESERVE BANK OF INDIA GUIDELINES. THUS THE OPINION FORMED BY THE ASSESSING OFFICER THAT THE I.T.A. NO.22/MUM/2016 13 EXPENDITURE IS NOT WHOLLY AND EXCLUSIVELY FOR CARRYING OUT THE SALE TRANSACTION IS INCO RRECT.. VI) AUTHORISED DEALER (ICICI) CHARGES FOR EC TRS DOCUMENTATION AS PER RBI REQUIREMENT FOR AMC AND TRUSTEE CO. RS. 33,090/ - SR NO. ASSESSING OFFICER'S FINDINGS APPELLANT'S RESPONSE 1. ASSESSE HAS ONLY FURNISHED NO OBJECTION CERTIFICATE FROM RESERVE BANK OF INDIA DATED 24.05 2010 NO PROOF OF PAYMENT HAS BEEN SUBMITTED BY THE ASSESSE IN THIS REGARD. THE APPELLANT STATES THAT THE RESERVE BANK OF INDIA IS THE STATUTORY AUTHORITY RESPONSIBLE FOR MANAGEMENT OF FOREIGN EXCHANGE TRANSACTIONS IN INDIA. THE APPELLANT HAS FURNISHED THE NO OBJECTION CERTIFICATE RECEIVED FROM RESERVE BANK OF INDIA FOR WHICH IT HAD APPOINTED ICICI BANK FOR CARRYING OUT THE FC - TRS DOCUME NTATION. THUS, MERELY REJECTING THE CLAIM OF ASSESSE ON ACCOUNT OF NOT FURNISHING THE PROOF OF PAYMENT WOULD BE PREJUDICIAL TO THE APPELLANT SINCE THE EXPENDITURE IS WHOLLY AND EXCLUSIVELY RELATED TO THE CAPITAL GAIN TRANSACTION. VII) OTHER EVIDENCES: - THE APPELLANT HAS FURNISHED THE LETTER FROM LIC NOMURA MUTUAL FUND DATED 28.04,2011 WHEREIN ALL THE ABOVE FEES BEING PAID TO THE PROFESSIONALS ENGAGED BY THE SELLING SHAREHOLDERS (INCLUDING THE APPELLANT) HAVE BEEN AGREED TO BE SHARED ON PRO - RATA BASIS. FU RTHERMORE, THE ASSESSING OFFICER HAS ALREADY ACKNOWLEDGED THE SUBMISSION REGARDING THE SHARING OF COST WITH RESPECT TO THE TRANSACTION WITH LIC AMC VIDE LETTER DATED 05.09.2013 AND THE SHARE ACQUISITION TERMS AGREEMENT DARED 11.07.2009.THIS LETTER FURTHER SATISFIES THE CLAIM MADE BY THE APPELLANT THAT THE COST INCURRED BY THE SELLING SHAREHOLDERS RELATES TO THE CAPITAL GAIN TRANSACTION UNDER CONSIDERATION AND IS WHO LL Y AND EXCLUSIVELY CONNECTED WITH THE SALE OF SHARES AND HENCE ELIGIBLE FOR DEDUCTION UNDER SE CTION 48(I) OF THE ACT. 5 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY GRANTED RELIEF TO THE ASSESSEE VIDE APPELLATE ORDERS DATED 21.10.2015, BY HOLDING AS UNDER: - I.T.A. NO.22/MUM/2016 14 I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER A S WELL AS RIVAL SUBMISSION OF THE APPELLANT AND ALSO REMAND REPORT & COUNTER REPRESENTATION OF THE LD. AUTHORISED REPRESENTATIVE. I FIND THAT DURING THE YEAR APPELLANT HAS SOLD OUT 1120 SHARES OF LIC ASSET MANAGEMENT CO. LTD. AND 300 SHARES OF LIC MUTUAL F UNDS TRUSTEE CO. LTD.. THESE SHARES WERE SOLD IN A CONSORTIUM OF ARRANGEMENT MADE BY LIFE INSURANCE CORPORATION OF INDIA AND WERE SOLD OUT TO M/S. LIC NOMURA MUTUAL ASSETS MANAGEMENT CO. LTD. AT THE AGREED PRICE BY ALL THE MEMBERS OF THE CONSORTIUM. BECAUS E OF SALE OF INVESTMENT, THERE IS A CAPITAL GAIN OF RS.85,79,09,196/ - . AGAINST THIS CAPITAL GAINS, APPELLANT HAS SHOWN EXPENDITURE OF RS.96,73,108/ - U/S.48 OF THE INCOME - TAX ACT. THE ASSESSING OFFICER HAS DISALLOWED THE EXPENDITURE ON THE GROUND THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE HAS NOT EXPLAINED THE EXPENDITURE RELATED TO SALE OF INVESTMENTS. BY LETTER DATED 05.09,2013, APPELLANT HAS ONLY GIVEN INFORMATION RELATED TO SHARING OF COST, TOTAL LEGAL COST COMPRISES LEGAL CONSULTANCY CHARGE, ADVISORY CHARGE, FEES OF SCRUTINIZER AND VALUATION AMC CHARGE, TOTALING TO RS.3,31,79,629/ - . THE APPELLANT PROPORTIONATELY CLAIMED THE EXPENDITURE TO THE EXTENT OF RS.96,73,108/ - HOWEVER, THE ASSESSING OFFICER HAS HELD THAT APPELLANT HAS FADED TO ES TABLISH THAT THE LEGAL COST CLAIMED TO BE EXPENDITURE INCURRED IN CONNECTION WITH TRANSFER OF SHARES, HENCE HE HAS DISALLOWED ENTIRE EXPENDITURE CLAIMED BY THE APPELLANT. DURING THE COURSE OF APPELLATE PROCEEDINGS, APPELLANT HAS SUBMITTED VARIOUS DETAILS A ND EVIDENCES, HENCE MATTER WAS REMANDED TO THE ASSESSING OFFICER BY LETTER DATED 08.09.2014. IN COMPLIANCE THE ASSESSING OFFICER HAS SUBMITTED A REMAND REPORT DATED 24.07.2015 WHICH HAS BEEN REPRODUCED EARLIER. THE COPY OF REMAND REPORT WAS GIVEN TO THE AP PELLANT AND APPELLANT HAS GIVEN REJOINDER BY LETTER DATED 08.09.2015. A CAREFUL PERUSAL OF REMAND REPORT AS WELL AS COUNTER REPRESENTATION REVEALS THAT FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT FULLY APPROVABLE. THE LD. ASSESSING OFF ICER HAS MENTIONED IN REMAND REPORT PARA 14.1. D THAT SI.NO.2 TO 5 APPEAR TO BE IN ORDER WHICH MEANS AN AMOUNT OF RS.8,42,700/ - OUT OF RS.1,91,49,387/ - IS NOT AT ALL RELATED TO TRANSACTION. AS REGARDS RECEIPT OF THE EXPENDITURE SHOWN IN THE NAME OF 'PRICE WATERHOUSE COOPERS P. LTD. & OTHER EXPENDITURE', THE STAND OF THE ASSESSING OFFICER IS FOUND TO BE CONVINCING ONE. IT CAN BE SEEN FROM THE REJOINDER THAT LD. AUTHORISED REPRESENTATIVE HAS OBJECTED THE DISALLOWABLE EXPENDITURE BUT IT IS VERY EVIDENT FROM TH E REPORT OF LD. ASSESSING OFFICER THAT THIS EXPENDITURE OF RS. 1,36,42,4607 - IS NOT DIRECTLY RELATED TO THE 'TRANSFER OF ASSETS'. THE INVOICES/BILLS POSSESSES GENERAL INFORMATION LIKE PAYMENT S TOWARDS PROFESSIONAL FEES. IT MEANS THERE IS NO SPECIFIC REFERE NCE TO THE HERE, IS NOT THE QUESTION RELATED TO AUTHENTICITY OF THE BILL, IS NOT RELEVANT. IT DOES NOT EXPLAIN THE CONNECTION OF EXPENDITURE WITH TRANSFER OF SHARES. THIS MAY BE BUSINESS I.T.A. NO.22/MUM/2016 15 EXPENDITURE BUT CERTAINLY NOT RELATED TO TRANSFER OF SHARES. SIMILARL Y, THE EXPENDITURE SHOWN IN THE NAME OF RATHI & ASSOCIATES OF RS.2,82,996/ - DOES NOT PERTAIN TO THE TRANSFER OF SHARES. FURTHER IN REJOINDER, IT HAS BEEN MENTIONED THAT SUCH EXPENDITURE IS INCURRED FOR BUSINESS PURPOSES WHICH MEANS, APPELLANT ADMITS THAT TH ESE EXPENDITURE IS NOT AT ALL RELATED TO TRANSFER OF SHARES. IF APPROVAL FROM SHAREHOLDERS WAS PRE - REQUISITE THAT DOES NOT MEANS THAT SUCH BILL RAISED BY RATHI & ASSOCIATES IS NECESSARILY RELATED TO TRANSFER OF INVESTMENTS. THUS, I FIND NO CONVINCING REASO N OR VERIFIABLE EVIDENCE TO SUPPORT THE CONTENTION OF THE APPELLANT THE CONTENTION THAT APPELLANT CANNOT BE MADE LIABLE FOR DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF INVOICES, TICKETS AND BOARDING PASSES BEING NOT PROVIDED BY RATHI & ASSOCIATES, IT IS PE RTINENT TO MENTION THAT IF ANY EXPENDITURE IS CLAIMED, IT IS THE RESPONSIBILITY OF THE CLAIMANT TO FURNISH ALL THE RELIABLE EVIDENCE. APPARENTLY, APPELLANT HAS NOT SUBSTANTIATED THE CONTENTION WITH NECESSARY EVIDENCES, HENCE THE STAND OF THE ASSESSING OFFI CER DESERVES APPROVAL. SIMILARLY, EXPENDITURE OF RS.46,878/ - CLAIMED TO BE VALUATION OF AMC IS NOT AT ALL RELATED TO TRANSFER OF SHARES. IF ANY VALUATION IS DONE, AN EXPENDITURE INCURRED, SAME MAY BE RELATED TO THE BUSINESS ACTIVITIES AND DEFINITELY IS NOT RELATED TO TRANSFER OF SHARES, HENCE SUCH EXPENDITURE CANNOT BE ALLOWED U/S.48 OF THE INCOME - TAX ACT. SIMILAR IS THE FACT IN RESP ECT OF EXPENDITURE OF RS.57,908/ - RELATED TO VALUATION TRUSTEE CO. AS REGARDS AUTHORISED DEALER (ICICI) CHARGES FOR FC - TRS, NO PROOF HAS BEEN SUBMITTED BY THE APPELLANT BEFORE THE ASSESSING OFFICER, HENCE SUCH EXPENDITURE ALSO CANNOT BE ALLOWED. NOW, ACTUAL EXPENDITURE RELATED TO SUCH TRANSFER IS TO BE WORKED OUT FOR ALLOWANCE. 5.6. DURING THE COURSE OF APPELLATE PROCEEDING, IT WAS REVIEWED AND FOUND THAT ALL THE EXPENDITURE CLAIMED BY THE APPE LLANT TOTALLING TO RS.96,73,108/ - IS NOT ALLOWABLE, HENCE AS DISCUSSED HEREINABOVE, DISALLOWABLE EXPENDITURE HAS TO BE WORKED OUT. THE WORKING OF DISALLOWABLE EXPENDITURE IS AS UNDER: - HEAD AMOUNTFRS.) EXPENDITURE TO BE BORNE BY GIG HFL LEGAL CONSULTANT (AMARCHAND MANGALDAS SURESH A. SHROFF & CO.) 1,91,49,387 96,21,417 CONSULTANT AND ADVISOR (PRICE WATERHOUSE COOPERS P. LTD.) 1,36,42,460 SCRUTINIZER TO THE POSTAL BALLOT OBTAINED FROM UNIT HOLDERS (RATHI & ASSOCIATES) 2,82,996 VALUATION AMC (CHATURVEDI & CO.) 46,878 13,637 I.T.A. NO.22/MUM/2016 16 VALUATION TRUSTEE CO. (SHAH GUPTA & CO.) 57,908 4,964 AUTHORISED DEA LER (ICICI) CHARGES FOR FC - TRS DOCUMENTATION AS P ER RBI REQUIREMENT FOR AMC AND TRUSTEE CO. --- 33,090 TOTAL . 3,31,79,629 96,73,108 TOTAL SALE CONSIDERAT ION (A) = 3,08,01,61,151 ASSESSEE'S SHARE O F SALE (B) = 89,60,13,813 CONSIDERATION RATIO (B/A) = 0.290898 OUT OF TOTAL COST OF RS.3,30,74,843 [1,91,49,387 + 1,36,42,460 + 2,82,996] ASSESSEE'S SHARE OF COST = RS.3,30,74,843 X ( B/A ) = RS.3,30,74,843 X 0.290898 = 96,21,417 ________ (I) OUT OF TOTAL COST OF RS.3,30,74,843, THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH ITS CLAIM W.R.T. RS.1,47,68,156 [8,42,700+1,36,42,460 + 2,82,906]____(II) ASSESSEE'S SHARE OF COST WHICH IS TO BE D ISALLOWED = (II) X (B/A) = 1,47,68,156 X 0.290898 = 42,96,032 FURTHER BALANCE SUMS AS PER THE TABLE ABOVE HAVE ALSO FOUND TO BE DISALLOWABLE. HENCE TOTAL DISALLOWANCE AMOUNTS TO = 42,96,032 + 13,637 +4,964 + 33,090 =43,47,723/ - 5.7. THE ABOVE WORKING IS BASED ON SAME PROPORTION AS ADOPTED BY THE APPELLANT FILE SUBMITTED LETTER DATED 13.04.2011 TO THE ASSESSING OFFICER THAT COVERING LETTER TED 06.06.2011 THUS THE TOTAL DISALLOWABLE EXPENDITURE IS RESTRICTED TO R S.43,47,723/ - . THUS, APPELLANT GETS RELIEF OF RS.53,25,385/ - . 6 . THE ASSESSEE HAS FILED SECOND APPEAL BEFORE TRIBUNAL BEING AGGRIEVED BY APPELLATE ORDER DATED 21.10.2105 PASSED BY LEARNED CIT(A) IN PARTLY UPHOLDING THE ADDITIONS AS WE RE MADE BY THE AO BY REJECTING CLAIM OF THE ASSESSEE W.R.T. SHARING OF COSTS INCURRED TOWARDS TRANSFER OF SHARES OF LICMF - AMC ALBEIT CLAIMED BY THE I.T.A. NO.22/MUM/2016 17 ASSESSEE TO BE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES OF LICMF - AMC . THE ASSESSEE HAS ALSO COME BEFORE TRIBUNAL BY FILING APPEAL BEING AGGRIEVED BY DECISION OF LEARNED CIT(A) IN NOT ALLOWING ASSESSEE TO CARRY FORWARD AND SET OFF OF LONG TERM CAPITAL LOSS OF RS. 75,83,082/ - INCURRED IN EARLIER ASSESSMENT YEAR 2009 - 10 AGAINS T LONG TERM CAPITAL GAIN S EARNED BY THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR UNDER CONSIDERATION . THE LD. CIT(A) VIDE APPELLATE ORDER DATED 21.01.2015 OBSERVED THAT THE AO HAS NOT DENIED SET OFF OF CARRIED FORWARDS OF LO NG TERM CAPITAL LOSS AND THE GRIEVANCE OF THE ASSESSEE IS NOT GENUINE AND NO PREJUDICE IS CAUSED TO THE ASSESSEE WHICH REQUIRES ADJUDICATION BY LEARNED CIT(A) . IT WAS OBSERVED BY LD. CIT(A) THAT IF THE CLAIM OF THE ASSESSEE IS CORRECT AND LONG TERM CAPITA L LOSS WAS THERE OF RS. 75,83,082/ - INCURRED BY THE ASSESSEE IN AY 2009 - 10, THEN T HE AO IS DUTY BOUND TO ALLOW S ET OFF OF SAID LOSS AGAINST LONG TERM CAPITAL GAINS EARNED BY THE ASSESSEE DURING THIS YEAR. IT WAS OBSERVED BY LEARNED CIT(A) IN HIS APPELLAT E ORDERS DATED 21.01.2015 THAT NO PLAIN ADMINISTRATIVE DIRECTIONS CAN BE GIVEN TO THE AO UNDER THESE CIRCUMSTANCES UNLESS THERE IS A DENIAL OF GENUINE CLAIM. 7 . T HE LD. COUNSEL FOR THE ASSESSEE OPEN ED ARGUMENT BEFORE THE BENCH BY SUBMITTING THAT THERE WAS SALE OF SHARES OF LIC MF - AMC BY ASSESSEE TO NOMURA ASSETS MANAGEMENT STRATEGIC INVESTMENT PTE. LIMITED , SINGAPORE ( IN SHORT NOMURA) ( NOMURA IS WHOLLY OWNED SUBSIDIARY OF NOMURA ASSET MANAGEMENT CO., LTD WHICH IN TURN IS WHOLLY OWNED SUBSIDIARY OF NOMURA HOLDING INC.), ON WHICH LONG CAPITAL GAINS WERE EARNED BY THE ASSESSEE AND THE DISPUTE HAS ARISEN BETWEEN RIVAL PARTIES AS TO T HE INCURRING OF CERTAIN COSTS IN CONNECTION WITH THE TRANSFER /SALE OF SAID SHARES OF LICMF - AMC TO NOMURA . IT WAS SUBMITTED THAT SHARES OF LICMF - AMC WERE ALSO HELD BY OTHER ENTITIES SUCH AS LIC HOUSING FINANCE LIMITED (IN SHORT LICHFL) AND LIC HFL CARE HOM ES LIMITED , WHO WERE ALSO SIMULTANEOUSLY SELLING I.T.A. NO.22/MUM/2016 18 THE SHARES IN LICMF - AMC IN CONSORTIUM WITH ASSESSEE TO NOMURA AS DESCRIBED IN SHARE ACQUISITION TERM AGREEMENT S(SATA) AND SHARE PURCHASE AGREEMENT(SPA) RESPECTIVELY, BOTH DATED 11.07.2009 . THE SAID AGREEME NTS ARE PLACED IN PAPER BOOK/PAGE 42 - 166 FILED WITH TRIBUNAL. IT WAS SUBMITTED THAT THE ASSESSEE TOOK COMPLETE EXIT FROM ITS SHAREHOLDING IN LICMF - AMC WHILE LICHFL CONTINUED WITH ITS PART HOLDING IN LICMF - AMC WHICH REMAINED UNSOLD EVEN AFTER OFFLOADING PAR T OF ITS HOLDING IN FAVOUR OF NOMURA . OUR ATTENTION WAS DRAWN TO VARIOUS CLAUSES OF THESE AGREEMENTS PLACED IN PAPER BOOK . IT WAS SUBMITTED THAT THE ASSESSEE ALONG WITH OTHER CONSORTIUM PARTIE S JOINTLY APPOINTED PROFESSIONALS TO AVOID DUPLICATION OF WORK AND COSTS IN CONNECTION WITH THE ADVISE S FOR INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC THROUGH DIVESTMENT / ISSUANCE OF SHARES OF MINORITY STAKE IN LICMF - AMC , DUE DILIGENCE OF LICMF - AMC, DOCUMENTATION WITH RESPECT TO TRAN SACTION OF DIVESTMENT AND INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC , VALUATION OF THE SHARE S OF LICMF - AMC AND A LSO S EEKING NECESSARY REGULATORY APPROVALS /CLEARANCES FROM RELEVANT AUTHORITIES FOR SUCCESSFULLY COMPLETING THE AFORESAID TRANSACTION OF SALE OF SHARES OF LICMF - AMC TO NOMURA BY ASSESSEE AND CONSORTIUM PARTIES . IT WAS SUBMITTED THAT T HE SAID EXPENSES FOR HIRING PROFESSIONALS FOR INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC, VALUATION OF SHARES OF LICMF - AMC , DOCUMENTATION RELATED TO THE TRAN SACTION FOR SALE OF SHARES, DUE DILIGENCE AND FOR SEEKING REGULATORY APPROVALS/CLEARANCES FOR THE TRANSACTION WERE SHARED BY ALL CONSORTIUM PARTIES IN RATIO OF SALE PROCEED S RECEIVED BY EACH OF THESE CONSORTIUM PARTIES OF RESPECTIVE SHARES OF LICMF - AMC SOLD BY THEM TO NOMURA . IT WAS SUBMITTED THAT SO FAR AS DISTRIBUTION SHARE RATIO AMONGS T CONSORTIUM PARTIES IS CONCERNED , THE MATTER RELATED TO DISTRIBUTION SHARE RATIO IS NOT IN DISPUTE AS LEARNED CIT(A) HAS ACCEPTED SAID RATIO OF DISTRIBUTION OF COSTS AMONGS T CONSORTIUM PARTIES AS ADOPTED BY ASSESSEE AND REVENUE IS NOT IN APPEAL BEFORE THE TRIBUNAL AGAINST SUCH ADOPTION OF RATIO OF SHARE OF DISTRIBUTION OF EXPENSES NOR ANY CROSS OBJECTIONS ARE FILED BY REVENUE AGAINST THE I.T.A. NO.22/MUM/2016 19 APPEAL FILED BY THE ASSESSEE . OUR ATTENTION WAS DRAWN TO PAGE 170/PB WHEREIN LETTER DATED 06 - 06 - 2011 WAS WRITTEN BY ASSESSEE TO LIC NOMURA MUTUAL FUND ENCLOSING ITS SHARE OF CHEQUE OF RS. 96,73,108/ - TOWARDS EXPENSES RELATING TO COSTS INCURRED IN CONNECTION WITH SALE OF SHARE OF LICMF - AMC. OUR ATTENTION WAS ALSO DRAWN TO LETTER DATED 13.04.2011 WRITTEN BY LIC NOMURA MUTUAL FUND ASSET MANAGEMENT CO. LIMITED TO ASSESSEE RELATING TO SHARING OF COSTS WITH SELLING SHAREHOLDERS, WHEREIN TOTAL SALE CONSIDERATION OF THE ENTIRE TRANSACTION OF S ALE OF SHARES OF LICMF - AMC BY ALL THREE CONSORTIUM PARTIES OF THEIR RESPECTIVE SHARES SOLD IS STATED TO BE RS. 308.01 CRORES AND THE TOTAL ASSESSEES SHARE OF COST INCURRED TOWARDS LEGAL/PROFESSIONAL FEES/EXPENSES WA S STATED TO BE RS. 96,73,108/ - BASED ON RATIO OF SALE PROCEEDS RECEIVED BY ASSESSEE VIS - A - VIS TOTAL SALE CONSIDERATION . THE SAID LETTER DATED 13.04.2011 IS PLACED IN PAPER BOOK/PAGE 171 - 173 . THE OTHER LETTER DATED 28.04.2011 WRITTEN BY LIC NOMURA MUTUAL FUND ASSET MANAGEMENT CO. LIMITED TO AS SESSEE IS ALSO PLACED IN PAPER BOOK/PAGE174 - 175 WHEREIN DETAILS OF BILLING DONE BY THESE PROFESSIONALS IS MENTIONED AND INVOICES OF THESE PROFESSIONALS ARE ENCLOSED . THE ITEMISED INVOICES ISSUED BY AMARCHAND & MANGALDAS & SURESH A. SHROFF & CO., P RICE W A TEHOUSE C OOPERS PRIVATE LIMITED(HEREINAFTER CALLED PWC) , RATHI & ASSOCIATES, CHATURVEDI & CO.AND SHAH GUPTA & CO. ARE ALL PLACED IN PAPER BOOK / PAGE 176 - 192. THE SAID INVOICES ARE ALL ISSUED BY THESE PROFESSIONALS IN FAVOUR OF LIC MUTUAL FUND ASSET MA NAGEMENT CO. LIMI TED . THE AGREEMENTS WITH PWC , AMARCHAND & MANG ALDAS & SURESH A. SHROFF & CO. & CHATURVEDI & CO. ARE ALSO PLACED IN PAPER BOOK/PAGE 193 - 232. THESE AGREEMENTS ARE ENTERED INTO BY THESE PROFESSIONALS WITH LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED . THE AO VIDE ASSESSMENT ORDER DATED 22.10.2013 HAS D ISALLOWED THE ENTIRE EXPENSES INCURRED BY THE ASSESSEE WHICH WAS IN THE FORM OF SHARE OF COST BORNE BY THE ASSESSE E ALONG WITH CONSORTIUM PARTIES TOWARDS FEES /EXPENSES PAID TO THES E PROFESSIONALS FOR ADVISES IN CONNECTION WITH INDUCTION OF STRATEGIC INVESTOR IN I.T.A. NO.22/MUM/2016 20 LICMF - AMC, DUE DILIGENCE OF LICMF - AMC, DOCUMENTATION , VALUATION OF SHARES OF LICMF - AMC , REGULATORY CLEARANCES/APPROVALS TOWARDS TRANSFER/SALE OF SHARES OF LICMF - AMC , WHE REIN THE AO HELD THAT THESE EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES OF LICMF - AMC BY ASSESSEE . W HILE IN REMAND R EPORT , THE LEARNED AO ACCEPTED THAT PARTLY THESE COSTS WERE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES AND ACCORDINGLY PART RELIEF WAS GRANTED BY LD. CIT(A) WHICH WAS MAINLY TOWARDS SHARE OF ASSESSEE IN PAYMENTS MADE TO AMARCHAND & MANGADAS AND SURESH A SHROFF TO THE TUNE OF RS. 1.83 CRORES OUT OF TOTAL PAYMENT OF RS. 1 .91 CRORES MADE TO SAID PROFESSIONAL FIRM . THUS, SO FAR AS AMARCHAND & MANGADAS AND SURESH A SHROFF IS CONCERNED , THE DISPUTE WHICH NOW REMAINS IS WITH RESPECT TO SHARE OF ASSESSEE IN THE PAYMENT TO THE TUNE OF RS. 8,42,700/ - MADE TO SAID CONCERN. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TO THE BEST TO THEIR KNOWLEDGE NO APPEAL WAS FILED BY THE DEPARTMENT AGAINST THE PART RELIEF GRANTED BY THE LD. CIT(A). THE LEARNED DR ALSO COULD NOT PLACE ON RECORD ANY EVIDENCE TO SUBSTANTIATE THAT REVENUE HAS FILED ANY APPEAL AGAINST PART RELIEF GRANTED BY LEARNED CIT(A). OUR ATTENTION WAS DRAWN TO THE ORDER OF AUTHORITIES BELOW. OUR ATTENTION WAS ALSO DRAWN TO VARIOUS AGREEMENT S ENTERED INTO IN CONNECTION WITH PROFESSIONALS ENGAGED BY ASSESSEE THROUGH LIC A SSET M ANAGEMENT C OMPANY FOR INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC , UNDERTAKING VALUATION OF THE SHARES OF LIC MF - AMC , DUE DILIGENCE OF LICMF - AMC, DOCUMENTATION OF THE TRANSACTION AND FOR SEEKING NECESSARY REGULATORY APPROVAL/ CLEARANCES IN CONNECTI ON WITH THE SALE OF SHARES BY CONSORTIUM PARTIES IN FAVOUR OF NOMURA . OUR ATTENTION WAS DRAWN TO VARIOUS INVOICES RAISED BY THESE PROFESSIONAL W . R . T . AGREEMENTS ENTERED INTO IN CONNECTION WITH INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC, VALUATION OF SHAR ES OF LICMF - AMC AND FOR OBTAINING REGULATORY APPROVAL/CLEARANCES IN CONNECTION WITH THE SALE OF SHARES OF LICMF - AMC BY CONSORTIUM PARTIES IN FAVOUR OF NOMURA . THE SAID AGREEMENTS AND INVOICES ARE I.T.A. NO.22/MUM/2016 21 PLACED IN PAPER BOOK FILED BY ASSESSEE WITH TRIBUNAL. I T WAS SUBMITTED THAT ALL THE CONSORTIUM PARTIE S WHO TRANSFERRED/SOLD THEIR SHARES IN LICMF - AMC TO NOMURA SPECIFIED IN SATA AND SPA DECIDED TO JOINTLY APPOINT PROFESSIONAL S TO DO NECESSARY JOB IN ORDER TO INDUCT STRATEGIC INVESTOR NAMELY NOMURA IN LICMF - AMC BY DIVESTING OF THEIR SHAREHOLDING AS SPECIFIED IN SATA AND SPA IN ORDER TO SUCCESSFULLY CONCLUDE TRANSFER /SALE OF SHARES HELD BY THEM IN LICMF - AMC TO NOMURA IN COMPLIANCE WITH VARIOUS APPLICABLE LAWS , RULES AND REGULATIONS AND TO GET BEST VALUATION FOR THE SHARE S WHICH THEY PROPOSED TO SELL INSTEAD OF APPOINTING SEPARATE PROFESSIONAL S TO AVOID DUPLICA TION OF WORK AND INCREASED COSTS. THE LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE ORDER OF LEARNED CIT(A) AND EXPLAINED PART RELIEF GRANTED BY LEAR NED CIT(A) B ASED ON REMAND REPORT OF THE AO . IT WAS SUBMITTED THAT SO FAR AS FEES/EXPENSES PAID TO AMARCHAND & MANGALDAS & SURESH A.SHROFF CO IS CONCERNED, THE ONLY DISPUTE IS WITH RESPECT TO THE SHARE OF ASSESSEE S COST IN PAYMENT OF RS. 8,42,700/ - TO S AID CONCERN WHILE ASSESSEES SHARE IN REST OF PAYMENT OF RS.1,83,06,607/ - TO AMARCHAND & MANGALDAS & SURESH A.SHROFF CO STOOD ALLOWED BY LEARNED CIT(A) BASED ON REMAND REPORT SUBMITTED BY THE AO. IT WAS SUBMITTED THAT REVENUE IS NOT IN APPEAL BEFORE TH E TRIBUNAL AGAINST PART RELIEF GRANTED BY LEARNED CIT(A). IT WAS SUBMITTED THAT SAID CONCERN NAMELY AMARCHAND & MANGALDAS & SURESH A.SHROFF CO CODENAMED THIS ASSIGNMENT AS PROJECT LIFE AND THEY WERE INSTRUMENTAL IN DOCUMENTATION OF THE ENTIRE TRANSACTI ON FOR SALE/TRANSFER OF SHARES HELD IN LICMF - AMC BY CONSORTIUM PARTIES TO NOMURA AND ADVISING THAT THE SAID TRANSACTION IS LEGALLY COMPLIANT OF ALL APPLICABLE LAWS . WITH RESPECT TO ASSESSEES SHARE IN PAYMENT OF RS. 1,36,42,460/ - MADE TO PWC , IT WAS SUBMI TTED THAT THE ENTIRE SHARE OF THE ASSESSEE COSTS BY WAY OF FEES/EXPENSES PAID TO PWC STOOD DISALLOWED BY LEARNED CIT(A). IT WAS SUBMITTED THAT PROJECT WAS CODENAMED PROJECT CASH I BY PWC AND THEY WERE LEAD ADVISOR TO TRANSACTION OF INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC THROUGH A DIVESTMENT/ISSUANCE OF MINORITY STAKE IN LICMF - AMC IN FAVOUR OF I.T.A. NO.22/MUM/2016 22 STRATEGIC INVESTOR , ASSISTING IN DUE DILIGENCE OF LICMF - AMC AND VALUATION . IT WAS ALSO SUBMITTED THAT ASSESSEES SHARE IN PAYMENT OF FEES/EXPENSES OF RS. 2,82, 996/ - PAID TO RATHI AND ASSOCIATES ALSO STOOD DISALLOWED BY LEARNED CIT(A).IT WAS SUBMITTED THAT RATHI AND ASSOCIATES WERE UNDERTAKING PROFESSIONAL WORK OF ORGANISING POSTAL BALLOTS FOR SEEKING SHAREHOLDERS APPROVAL FOR TRANSACTION UNDER CONSIDERATION WHIC H IS NECESSARY BEFORE SALE/TRANSFER OF SHARES AS PER REQUIREMENTS OF LAW. THE LEARNED CIT(A) UPHELD DISALLOWANCE OF THE EXPENSES PAID TO RATHI AND ASSOCIATES ON GROUNDS OF BEING NOT BEING INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHA RES. SIMILARLY , THE ASSESSEES SHARE IN PAYMENTS TOWARDS FEES/EXPENSES OF RS. 57,908/ - PAID TO SHAH GUPTA AND COMPANY AND RS. 46,878/ - PAID TO CHATURVEDI AND COMPANY STOOD DISALLOWED BY LEARNED CIT(A) ON THE GROUNDS THAT THESE ARE NOT EXPENSES INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES. OUR ATTENTION WAS DRAWN TO TWO RBI APPROVAL S BOTH DATED 24 - 05 - 2010 VIDE APPROVAL NUMBER FE.CO.FID.CO.NO. 29155/10.21.176(VOL.II)/2009 - 10 AND APPRO VAL NUMBER FE.CO.FID.CO.NO.29169 / 10.21.176 (VO L.II)/2009 - 10 WHICH WERE OBTAINED IN CONNECTION WITH THE TRANSACTION OF SALE OF SHARES OF LICMF - AMC HELD BY THE ASSESSEE AS WELL BY CONSORTIUM PARTIES AS SPECIFIED IN SATA AND SPA IN FAVOUR OF NOMURA . BOTH THE AFORESAID RBI APPROVALS DAYED 24 - 05 - 2010 ARE PLACED IN PAPER BOOK/PAGE 233 - 234. IT WAS ALSO SUBMITTED THAT SHAREHOLDER APPROVALS THROUGH POSTAL BALLOTS WERE OBTAINED FROM SHAREHOLDERS OF SELLING COMPANIES AS REQUIRED UNDER THE PROVISIONS OF THE C OMPANIES ACT, 1956 AND COMPLIANCES OF OTHER SECURITIES LAWS WERE ALSO UNDERTAKEN . OUR ATTENTION WAS ALSO DRAWN TO VALUATION REPORT DATED 24 - 07 - 2010 (PB /PAGE 227 - 232) ISSUED BY CHATURVEDU & CO. CHARTERED ACCOUNTANTS, MUMBAI VALUING SHARES IF LICMF - AMC WHIC H IS PLACED IN PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUNAL. OUR ATTENTION WAS ALSO DRAWN TO ASSESSMENT ORDER DATED 29 - 01 - 2014 PASSED BY ADDL. CIT, RANGE(2)(2), MUMBAI U/S 143(3) OF THE 1961 ACT IN THE CASE OF LIC HOUSING FINANCE LIMITED FOR AY 2011 - 12 WHO ALSO OFFLOADED I.T.A. NO.22/MUM/2016 23 PART OF THEIR SHAREHOLDING IN LICMF - AMC IN FAVOUR OF NOMURA IN THE SAME TRANSACTION , WHEREIN IT WAS HIGHLIGHTED THAT NO ADDITIONS WERE MADE BY THE ASSESSING OFFICER WITH RESPECT TO THE EXPENSES INCURRED IN CONNECTION WITH SALE OF SH ARES OF LICMF - AMC BY LIC HFL. THE ASSESSEE RELIED UPON DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V . SMT. SHAKUNTALA KANTILAL REPORTED IN (1991) 58 TAXMAN 106 (BOM.) : (1991) 190 ITR 56(BOM.). WITH RESPECT TO THE SECOND ISSUE RELATED TO NON AL LOWABILITY OF LONG TERM CAPITAL LOSS SUFFERED BY ASSESSEE OF RS. 75,83, 0 82/ - IN EARLIER YEARS WHICH WAS NO T ALLOWED TO BE SET OFF BY AO AGAINST LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE DURING THE PREVIOUS YEAR UNDER CONSIDERATION , O UR ATTENTION WAS D RAWN TO APPELLAT E ORDER OF THE LD. CIT(A) , WHEREIN LD. CIT(A) HAS REFUSED TO GIVE ADMINISTRATIVE DIRECTION S TO THE AO TO ALLOW THE SAID LOSS AND RATHER HELD THAT IF THE LOSS IS GENUINE, THE AO IS DUTY BOUND TO ALLOW SET OFF OF THE SAID LONG TERM CAPITAL LOSS OF THE EARLIER YEARS AGAINST LONG TERM CAPITAL GAINS OF THIS YEAR. ON BEING ASKED BY THE BENCH ABOUT THE BACK GROUND OF THIS LONG TERM CAPITAL LOSS OF RS. 75,83,082/ - INCURRED BY THE ASSESSEE IN EARLIER ASSESSMENT YEARS , THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT SAID LOSS WAS DUL Y CLAIMED TO BE SET OFF AGAINST THE LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR . O UR ATTENTION WAS DRAWN TO PAGE NO. 1 OF THE PAPER BOOK W HEREIN COMPUTATION OF INCOME FOR THE IMPUGN ED ASSESSMENT YEAR UNDER CONSIDERATION BEFORE US IS PLACED WHEREIN THE ASSESSEE HAS SOUGHT TO SET OFF SAID CARRIED FORWARD LONG TERM CAPITA L LOSS OF RS.75,83,082/ - AGAINST LONG TERM CAPITAL GAINS EARNED BY THE ASSESSEE FOR RELEVANT PREVIOUS YEAR UNDER CONS IDERATION BEFORE US . THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW .OUR ATTENTION WAS DRAWN TO THE ASSESSMENT ORDER PASSED BY THE AO, REMAND REPORT SUBMITTED BY THE AO AND FINALLY THE APPELLATE ORDER PASSED BY LEARNED CIT(A) AND PRAYER WAS MADE TO CONFIRM THE APPELLATE ORDER PASSED BY LEARNED CIT(A). THE LD. DR SUBMITTED THAT I.T.A. NO.22/MUM/2016 24 LEARNED CIT(A) HAS RIGHTLY DISALLOWED THE EXPENSES BEING FEES/EXPENSES PAID TO PROFESSIONALS AS THESE EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES OF LICMF - AMC BY THE ASSESSEE. OUR ATTENTION WAS DRAWN TO PAGE NO. 210 OF THE PAPER BOOK WHEREIN LETTER DATED 06.08 .2008 WRITTEN BY AMARCHAND & MANGADAS AND SURESH A SHROFF IS PLACED WHICH IS IN FAVOUR OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY WHEREIN THEY HAVE REFERRED TO WORK RELATED TO SOME PROJECT L IFE AND THERE IS REFERENCE TO PROPOSE D INVESTMENT BY NOMURA IN LIC MF. THE LEARNED DR RELIED UPON THE APPELLATE ORDER PASSED BY LEARNED CIT(A). 8. WE HAVE CONSIDER ED RIVAL CONTENTION S AND PERUSED THE MATERIAL ON RECORD INCLUDING CITED CASE LAWS. W E HAVE OBSERVED THAT THE ASSESSEE DERIVES INCOME FROM HOUSING F INANCE BUSINESS . IT IS PERTINENT TO MENTION THAT T HE ASSESSEE IS A LISTED COMPANY HAVING ITS SHARES LISTED ON STOCK EXCHANGES. I T ALL HAPPENED THAT THE ASSESSEE WAS HOLDING SHARES AS INVESTMENT S IN LIC MF - AMC . THE ASSESSEE SOLD ITS SHAREHOLDING IN LICMF - AMC TO NOMURA AND EARNED LONG TERM CAPITAL GAINS ON SALE OF SUCH SHARES . THE ASSESS EE TOOK COMPLETE EXIT BY SELLING ENTIRE SHAREHOLDING HELD BY IT IN LICMF - AMC TO NOMURA . THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS OF RS. 85,79,09,196/ - ON ACCOUNT OF SALE OF 1120 SHARES OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LTD. OF FACE VALUE OF RS. 10,000/ - EACH AND ON SALE OF 300 SHARES OF LIC MUTUAL FUND TRUSTEE CO. PRIVATE LTD. OF FACE VALUE OF RS. 10 EACH OF LICMF - AMC HELD BY ASSESSEE IN THE SE TWO ENTITIES , WHICH WERE SOLD BY ASSESSEE TO NOMURA. APART FROM ASSESSEE , T HERE WERE OTHER SELL ING SHAREHOLDERS OF LICMF - AMC NAMELY LICHFL AND LIC CARE HOMES LIMITED WHO ALSO SOLD THEIR SHAREHOLDING IN LICMF - AMC TO NOMURA UNDER A CONSORTIUM ARRANGEMENT ENTERED INTO WITH ASSESSEE AND NOMURA . LICHFL SOLD PART OF ITS SHAREHOLDING IN LICMF - AMC TO NOMURA WHILE ON THE OTHER HAND LIC HFL CARE HOMES LIMITED SOLD ITS ENTIRE SHAREHOLDING IN LICMF - AMC TO NOMURA BY TAKING COMPLETE EXIT FROM LICMF - AMC . LIC THROUGH ITS SEVEN I.T.A. NO.22/MUM/2016 25 NOMINEES WAS MAJOR SHAREHOLDER OF LICMF - AMC WHO CONTINUED IN LICMF - AMC ALONG WITH LICHFL A ND INCOMING STRATEGIC INVESTOR NOMURA . NOM URA NOW CAME IN AS A NEW STRATEGIC INVESTOR IN LICMF - AMC WHEREIN IT TOOK MINORITY STAKE IN LICMF - AMC BY BUYING S TAKE FROM EXIS T ING SHAREHOLDER S NAMELY ASSESSEE, LICHFL AND LICHFL CARE HOMES LIMITED AS WELL ALONG SI DE NEW SHARES WERE ALLOTTED TO NOMURA BY LICMF - AMC. THE ASSESSEE EARNED LONG TERM CAPITAL GAINS OF RS. 85,79,09,196/ - ON SALE OF SHARES OF LICMF - AMC . SO FAR SO GOOD AS THERE IS NO DISPUTE BETWEEN RIVAL PARTIES TILL THIS POINT . THE DISPUTE AROSE BETWEEN RIVAL PARTIES WHEN ASSESSEE SOUGHT TO ADJUST CERTAIN LEGAL AND PROFESSIONAL COSTS INCURRED BY IT FROM LONG TERM CAPITAL GAINS EARNED BY ASSESSEE FROM SALE OF SHARES OF LICMF - AMC TO NOMURA WHEREIN ASSESSEE INVOKED PROVISIONS OF SECTION 48 OF THE 1961 ACT TO CLAIM ADJUSTMENT OF SUCH COST S AGAINST LONG TERM CAPITAL GAINS EARNED BY IT . THE BACKGROUND OF THIS LEGAL AND PROFESSIONAL COSTS SO CLAIMED TO BE INCURRED BY THE ASSESSEE AND SOUGHT TO BE ADJUST ED AGAINST LONG TERM CAPITAL GAINS EARNED ON SALE OF SHARE S OF LICMF - AMC TO NOMURA IS WITH RESPECT TO PAYMENTS MADE TOWARDS FEE S /EXPENSES TO CERTAIN LEGAL AND FINANCIAL PROFESSIONALS /ADVISORS WHO WERE APPOINTED IN CONNECTION WITH THE COMPLETION OF TRANSACTION OF INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC THRO UGH DIVESTMENT OF MINORITY STAKE OR BY WAY OF ISSUANCE OF FRESH SHARES IN LICMF - AMC TO NOMURA . THESE LEGAL AND FINANCIAL PROFESSIONALS WERE ENGAGED TO ASSIST AND ADVISE CONSORTIUM PARTIES TO THE AGREEMENT IN DUE DILIGENCE AS WELL ENSURING THAT THE TRANSA CTION FOR INDUCTION OF STRATEGIC PARTNER IN LICMF - AMC AND CONSEQUENTLY DIVESTMENT OF SHARES OF LICMF - AMC BY EXISTING SHAREHOLDERS INCLUDING ASSESSEE IN FAVOUR OF NOMURA COMPLIES WITH VARIOUS APPLICABLE LAWS, RULES AND REGULATIONS CONCERNING SECURITIES LAW, TAXATION LAW, FOREIGN EXCHANGE REGULATIONS , COMPANY LAW ETC . AND ASSIST IN OBTAIN ING ALL NECESSARY REGULATORY AND LEGAL CLEARANCES /APPROVALS IN CONNECTION WITH THE AFORESAID TRANSACTION OF INDUCTION OF NEW STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUE NTIAL SALE OF SHARES OF LICMF - AMC BY SELLING SHAREHOLDERS INCLUDING I.T.A. NO.22/MUM/2016 26 ASSESSEE TO NOMURA . IT WAS DECIDED BY ALL THE SELLING SHAREHOLDERS OF LICMF - AMC TO JOINTLY APPOINT THESE LEGAL AND FINANCIAL PROFESSIONALS /ADVISORS IN CONNECTION WITH INDUCTION OF NEW ST RATEGIC INVESTOR TO HOLD MINORITY STAKE BY DIVESTMENT OR BY WAY OF ISSUE OF FRESH SHARES IN LICMF - AMC , TO CONCLUDE THE AFORESAID TRANSACTION THROUGH A SYNCHRONISED COLLECTIVE DECISION AND ACTION AMONGST EXISTING SHAREHOLDERS OF LICMF - AMC AND ALSO IN ORDE R TO AVOID DUPLICATION OF WORK AND COSTS . ALL THE SELLING SHAREHOLDERS ENTERED INTO SHARE ACQUISITION TERMS AGREEMENT(SATA) AS WELL SHARE PURCHASE AGREEMENT(SPA) , BOTH DATED 11 - 07 - 2009 ALONG WITH NOMURA TO GIVE EFFECT TO THE SAID INDUCTION OF NOMURA AS A NEW STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT SALE OF STAKE BY EXISTING SHAREHOLDERS INCLUDING ASSESSEE IN FAVOUR OF NOMURA , WHEREIN THESE SELLING SHAREHOLDERS AGREED TO SHARE LEGAL AND PROFESSIONAL COSTS BY WAY OF FEES/EXPENSES PAID TO THESE PROFESS IONALS AND ADVISORS IN CONNECTION WITH THE AFORESAID SALE/ TRANSFER OF SHARES OF LICMF - AMC TO NOMURA . PARA 10.3 OF SATA CLEARLY SPEAKS OF SHARING OF THE COSTS OF PROFESSIONALS/ ADVISORS BORNE BY LIC ASSET MANAGEMENT COMPANY LIMITED(FOR SHORT LIC AMC) IN CONNECTION WITH THIS TRANSA CTION AMONGST LIC AMC , LICHFL AND THE ASSESSEE. SIMILARLY, PARA 10.3 OF SPA SPEAKS OF SHARING OF COSTS OF PROFESSIONALS / ADVISORS BORNE BY LIC AMC AMONGST LICHFL, LIC CARE HOMES LIMITED AND THE ASSESSEE. THUS, UNDER SATA A ND SPA , THE ASSESSEE WAS OBLIGATED UNDER CONTRACT TO SHARE THESE LEGAL AND PROFESSIONAL COSTS ALONG WITH OTHER SELLING SHAREHOLDERS AND THE ASSESSEE IN DISCHARGE OF ITS CONTRACTUAL OBLIGATION PAID ITS SHARE OF SAID COSTS TO LIC ASSET MANAGEMENT COMPANY LIMITED. PERUSAL OF AGREEMENTS ENTERED INTO WITH THESE PROFESSIONALS /ADVISORS WHICH ARE PLACED IN PAPER BOOK FILED WITH THE TRIBUNAL CLEARLY REVEAL S THAT THESE PROFESSIONALS/ADVISORS PROVIDED SERVICES BY WAY OF ADVISE/ASSISTANCE IN CONNECTION WIT H INDUCTIO N OF NEW STRATEGIC INVESTOR INTO LICMF - AMC , DUE DILIGENCE, VALUATION OF SHARES, REGULATORY APPROVALS/CLEARANCES , COMPLIANCES OF VARIOUS APPLICABLE LAWS , RULES AND REGULATIONS AS APPLICABLE TO TRANSACTION , I.T.A. NO.22/MUM/2016 27 DOCUMENTATION OF THE TRANSACTION , APPROVAL S OF SHAREHOLDERS FOR THIS TRANSACTION ETC. SO THAT THE ENTIRE TRANSACTION OF INDUCTION OF NOMURA AS STRATEGIC INVESTOR INTO LICMF - AMC IS COMPLETED AND CONCLUDED SUCCESSFULLY BOTH COMMERCIALLY AS WELL THE SAME IS COMPLIANT WITH ALL APPLICABLE LAWS , RULES AND REGULATIONS INCLUDING SECURITIES LAW, COMPANY LAW, LAW GOVERNING AND REGULATING FOREIGN EXCHANGE , TAX LAWS AND OTHER APPLICABLE LAWS WHICH COULD WITHSTOOD SCRUTINY OF LAW . THESE PROFESSIONALS/ADVISORS WERE AL SO REQUIRED TO IDENTIFY AND THEREAFTER ENSURE THAT SEVERAL REGULATORY CLEARANCES/APPROVALS AS ARE REQUIRED FOR THE PROPOSED TRANSACTION ARE DULY OBTAINED TO AVOID ANY ADVERSE LEGAL CONSEQUENCES AT A LATER STAGE . THE LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED FRONT ENDED AND THUS ENTERED INTO AGREEMENTS WITH THESE LEGAL AND FINANCIAL PROFESSIONALS /ADVISORS ON BEHALF OF CONSORTIUM PARTIES AND THEREAFTER COSTS WERE ALLOCATED BY LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED AMONGST SELLING SHAREHOLDING IN PROPORTION TO THEIR RATIO OF SALE PR OCEEDS RECEIVED BY THEM FROM SELLING SHARES OF LICMF - AMC TO NOMURA IN ACCORDANCE WITH THE TERMS OF CONTRACT ENTERED INTO WITH CONSORTIUM PARTIES . THESE RATIO OF DISTRIBUTION OF EXPENSES AMONGST VARIOUS SELLING SHAREHOLDERS IN THE RATIO OF SALE PROCEEDS OF SHARES RECEIVED BY THEM IS NOT IN DISPUTE AS LEARNED CIT(A) ACCEPTED THIS RATIO OF DISTRIBUTION ADOPTED BY THE ASSESSEE AND THE REVENUE HAS NOT COME IN APPEAL BEFORE THE TRIBUNAL CHALLENGING SAID RATIO OF DISTRIBUTION AS IS ADOPTED BY THE CONSORTIUM PARTIE S NOR ANY CROSS OBJECTIONS ARE FILED BY R EVENUE BEFORE THE TRIBUNAL . T OTAL EXPENSES WHICH WERE INCURRED BY WAY OF FEES/EXPENSES PAID TO THESE LEGAL AND OTHER PROFESSIONALS/ADVISORS WHICH WERE CLAIMED TO BE INCURRED IN CONNECTION WITH THE SALE OF SHARES OF LICMF - AMC BY THESE SELLING SHAREHOLDERS TO NOMURA WAS RS. 3,31,79,629/ - AND THE ASSESSEE SHARE CAME TO BE RS. 96,73,108/ - WHICH WAS DULY REIMBURSED BY ASSESSEE VIDE BANKING CHANNEL THROUGH CHEQUE . THE DETAILS OF THESE EXPENSES ARE REPRODUCED HEREUNDER: - I.T.A. NO.22/MUM/2016 28 I. LEGAL CONSULTANT (AMARCHAND MANGALDAS RS.1 , 91,49,387/ - SURESH A SHROFF & CO.) II. CONSULTANT AND ADVISOR (PRICE WATERHOUSE RS.136,42,460/ - COOPERS P LTD. III. SCRUTINIZER TO THE POSTAL BALLOT OBTAINED RS.28 2,996 / - FROM UNITHOLDERS (RATHI & ASSOCIATES) IV. VALUATION AMC ( CHATURVEDI & CO.) RS.46,878/ - V. VALUATION TRUSTEE CO. (SHAH GUPTA & CO.) RS 57,908 / - ___ RS.331 , 79,629 / - THE AO DISALLOWED THE ENTIRE EXPENSES OF RS. 96,73,108/ - CLAIMED BY THE ASSESSEE TOWARDS ITS SHARE OF EXPENSES CLAIMED TO BE INCURRED IN CONNECTION WITH TRANSFER OF SHARES OF LICMF - AMC TO NOMURA , WHILE LEARNED CIT(A) BASED ON REMAND REPORT SUBMITTED BY THE AO DURING APPELLATE PROCEEDINGS GRANTED PART RELIEF AND FINALLY AN AMOUNT OF RS. 43,47,723/ - STOOD DISALLOWED WHICH WAS HELD TO BE NOT ALLOWABLE AS EXPENSES INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES BY LEARNED CIT(A). THE MAJOR RELIEF WAS GRANTED BY LEARNED CIT(A) WITH RESPECT TO PA YMENTS MADE TO AMARACHAND AND MANGALDAS & SURESH A. SHROFF WHEREIN ONLY RS. 8,42,700/ - WAS HELD TO BE NOT ALLOWABLE AND ACCORDINGLY SHARE OF ASSESSEE IN RS. 8,42,700/ - STOOD DISALLOWED BY LEARNED CIT(A) SO FAR AS PAYMENTS TO AMARACHAND AND MANGALDAS & S URESH A. SHROFF ARE CONCERNED . WITH RESPECT TO PAYMENTS OF FEES/EXPENSES PAID TO OTHER FINANCIAL AND LEGAL PROFESSIONALS NAMELY PWC, CHATURVEDI & CO. , RATHI AND ASSOCIATES AND SHAH GUPTA & CO. , THE ENTIRE AMOUNT OF PAYMENTS MADE TO THEM WERE DISALLOWED BOTH BY THE AO AND LEARNED CIT(A) ON THE GROUNDS THAT THESE EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES OF LICMF - AMC BY THE ASSESSEE AND NEXUS OF THE SERVICES RENDERED BY THESE PROFESSIONALS WITH THE TRANSFER/SALE OF SHARES OF LICMF - AMC TO NOMURA COULD NOT BE PROVED AS THE INVOICES RAISED BY THESE PROFESSIONALS/ADVISOR DOES NOT SPECIFY I.T.A. NO.22/MUM/2016 29 THE PURPOSES FOR WHICH THESE SERVICES WERE RENDERED . TH US, THE MAIN BONE OF CONTENTION OF THE REVENUE IS THA T THESE EXPENSES WERE NOT INC URRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER/SALE OF SHARES OF LICMF - AMC BY THE ASSESSEE TO NOMURA AND ALSO NEXUS WITH TRANSFER/SALE OF SHARES COULD NOT BE PROVED . IT IS ALSO THE ALLEGATION OF REVENUE THAT THESE PRO FESSIONALS ARE USING CODENAMES FOR THE ASSIGNMENT EXECUTED BY THEM WHEREIN IT IS NOT CLEARLY EMANATING AS TO THE PURPOSES FOR WHICH SERVICES WERE RENDERED AS INVOICES COULD NOT BE CO - RELATED TO THIS ASSIGNMENT OF INDUCTION OF STRATEGIC INVESTMENT IN LICMF - AMC AND CONSEQUENTLY SALE OF SHARES BY SELLING SHAREHOLDERS IN FAVOUR OF NOMURA. IT IS ALSO ALLEGED BY REVENUE THAT THE INVOICES RAISED BY THESE PROFESSIONALS DO NOT BORE THE DETAILS OF SERVICES RENDERED BY THESE PROFESSIONALS. BEFORE WE PROCEED FURTHER, I T IS IMPORTANT TO UNDERSTAND THE BACKGROUND AND HIGHLIGHT HERE THAT THE ASSESSEE IS A LISTED COMPANY WHEREIN SHARES OF THE ASSESSEE COMPANY ARE LISTED ON RECOGNISED STOCK EXCHANGES. SINCE , THE ASSESSEE IS A LISTED COMPANY WHEREIN SEVERAL COMPLIANCES AS WEL L APPROVALS/CLEARANCES UNDER SEBI ACT, 1992, STOCK EXCHANGE RULES AND R EGULATIONS , SECURITIES L AW S , THE COMPANIES ACT , 1956 ETC ARE RE QUIRED TO BE OBTAINED WRT TO THE S E TYPE OF TRANSACTION ENVISAGING DIVESTMENT OF EXISTING STAKE . IT IS ALSO PERTINENT TO MENTION THAT NOMURA IS A NON RESIDENT ENTITY WHO ACQUIRED MINORITY STAKE AS STRATEGIC INVESTOR IN LICMF - AMC THROUGH DIVESTMENT BY ASSESSEE , LICHFL AND LICHFL HOME CARE LIMITED . SINCE THE STAKE IS ACQUIRED BY NON RESIDENT ENTITY, VARIOUS COMPLIANCES AND A PPROVALS/CLEARANCES AS ARE REQUIRED UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999 AS WERE APPLICABLE SUCH AS RBI , FIPB APPROVALS , AS APPLICABLE ARE REQUIRED TO BE OBTAINED AS REQUIRED UNDER LAW . IT IS ALSO A MATTER OF FACT THAT NOMURA IS AN INTERNATIONAL COMPANY HAVING LARGE PRESENCE IN THE FIELD OF FINANCIAL SERVICES. THE OTHER SELLING SHAREHOLDER VIZ. LICHFL IS ALSO LISTED COMPANY WHOSE SHARES ARE ALSO LISTED ON RECOGNIZED STOCK EXCHANGES. IT ALSO NEEDS TO BE STATED THAT MUCH HYPE IS CREATED BY REVENUE W HEN IT HIGHLIGHTED THAT THESE P ROFESSIONALS I.T.A. NO.22/MUM/2016 30 HAVE CODENAMED THESE ASSIGNMENTS AS PROJECT LIFE OR PROJECT - CASH - I ETC AND IT IS SAID THAT THERE IS NO CORRELATION BETWEEN T HESE CODENAMED PROJECTS WITH THE S E ASSIGNMENT OF INDUCTION OF NEW STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT DIVESTMENT BY SELLING SHAREHOLDERS INCLUDING ASSESSEE . IT IS ALSO PERTINENT TO MENTION HERE THAT PROCEEDINGS HAVE ALREADY PASSED THROUGH THREE STAGES VIZ. FIRSTLY ASSESSMENT PRO CEEDINGS U/S 1 43(3) R.W.S. 143(2) BEFORE AO, S ECONDLY REMAND REPORT PROCEEDINGS BEFORE THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) A ND T HIRDLY THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A). IT IS NO MORE RES - INTEGRA THA T THE P OWERS OF LEARNED CIT(A) ARE CO - TERMINUS WITH THE POWERS OF LEARNED AO. REFERENCE IS DRAWN TO PROVISIONS OF SECTION 251(1)(A) OF THE 1961 ACT. NONE OF THE AUTHORITIES BELOW VIZ. AO AND LEARNED CIT(A) DURING THE COURSE OF THESE THREE PROCEEDINGS HAD CONSIDE RED IT WORTHWHILE AND NECESS ARY TO EXERCISE THEIR POWERS UNDER THE PROVISIONS OF SECTION 131 OF THE 1961 ACT OR SECTION 133(6) OF THE 1961 ACT TO ISSUE SUM MONS/NOTICES TO RELEVANT PROFESSIONALS/ADVISORS OR TO CONSORTIUM PARTIES TO UNEARTH AND UNRAVEL THE T RUTH. AS WE WILL SEE LATER IN THIS ORDER THAT T HE ASSESSEE ON ITS PART HAS PLACED ALL NECESSARY AND RELEVANT DOCUMENTS /EVIDENCES VIZ. AGREEMENTS, INVOICES , CORRESPONDENCES ETC TO SUBSTANTIATE ON ITS PART THAT THESE EXPENSES/COSTS BY WAY OF FEES/EXPENSES P AID TO THESE LEGAL AND FINANCIAL PROFESSIONALS/ADVISORS WERE INCURRED IN RELATION TO THE TRANSACTION OF INDUCTION OF NOMURA AS NEW STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT DIVESTMENT BY SELLING SHAREHOLDERS INCLUDING ASSESSEE OF THEIR SHAREHOLDING I N LICMF - AMC IN FAVOUR OF NOMURA . PAPER BOOK CONTAINING 254 PAGES SPEAKS VOLUME ABOUT THE SINCERE EFFORT S MADE BY ASSESSEE IN EXPLAINING ITS CONTENTIONS BEFORE THE AUTHORITIES BELOW BUT TO NO AVAIL . NOW IT IS TIME FOR US TO SEE WHAT ALL DOCUMENTS /EVIDENCES DID THE ASSESSEE PRODUCED BEFORE THE AUTHORITIES BELOW TO SUPPORT ITS CONTENTIONS AND ARE THEY SUFFICIENT TO DISCHARGE ONUS CASTE ON THE ASSESSEE BY AN ACT OF 1961 TO TAKE IT OUT I.T.A. NO.22/MUM/2016 31 OF LIABILITY WHICH WAS SOUGHT TO BE FASTENED BY REVENUE WITHIN PROVISIONS OF THE 1961 ACT , WHICH ARE AS UNDER : A ) THE ASSESSEE VIDE PAGE 42 TO 105/PAPER BOOK HAS FILED SHARE ACQUISITION TERMS A GREEMENT (SATA) DATED 11 - 07 - 2009 ENTERED INTO BETWEEN LICHFL , THE ASSSSSEE , NOMURA AND LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED. THIS SATA PROVIDES FOR ACQUISITION OF 3850 EQUITY SHARES OF RS.10,000/ - EACH OF LIC MUTUAL FUND ASSET MANAGEMENT COM PANY LIMITED BY NOMURA AT A PRICE OF RS. 8,00,000/ - PER EQUITY SHARE FIRSTLY BY ACQUIRING 1120 EQUITY SHARES OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED FROM THE ASSESSEE , SECONDLY BY ACQUIRING 1730 EQUITY SHARES OF LIC MUTUAL FUND ASSET MANAGEME NT COMPANY LIMITED FROM LICHFL AND REST BY FRESH ISSUE OF 1000 EQUITY SHARES OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED . LIC ALONG WITH ITS 7 NOMINEE SHAREHOLDERS WILL CONTINUE TO HOLD 4,950 EQUITY SHARES OF LIC MUTUAL FUND ASSET MANAGEMENT COMPA NY LIMITED , WHILE LICHFL WILL HOLD 2200 SHARES POST CONCLUSION OF THIS TRANSACTION . THIS SATA SETS OUT COMPLETE UNDERSTANDING BETWEEN THE PARTIES WITH RESPECT TO INDUCTION OF NOMURA AS STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT DIVESTMENT BY EXISTING STAKE HOLDERS AS SET OUT ABOVE. THE CONDITION PRECEDENTS AND WARRANTIES OF THE PARTIES TO THE AGREEMENT ARE SET OUT IN THIS AGREEMENT . THE SAID CONDITION PRECEDENT PROVIDED THAT THE PARTIES TO THIS AGREEMENT HAVE OBTAINED REQUISITE APPROVALS VIDE CORPORAT E RESOLUTIONS AND ALSO SPECIAL RESOLUTIONS FROM SHAREHOLDERS AUTHORISING THE EXECUTION AND IMPLEMENTATION OF THIS TRANSACTION. THE CONDITIONS PRECEDENT ARE AGREED BY SELLING SHAREHOLDERS THAT THERE ARE NO CHANGES IN SHAREHOLDING PATTERNS AND NO CHANGES IN APPLICABLE LAWS HAVE TAKEN PLACE. IT IS ALSO AGREED THAT LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED AND LICHFL HAVE AGREED TO FIRST BUSINESS PLAN PRESENTED BY NOMURA. IT ALSO SPECIFIES THAT T HE DOCUMENTS RELATED TO THIS TRANSACTIONS WERE DULY EXECUT ED AND APPROVED DELIVERED TO NOMURA . IT IS ALSO SPECIFIED THAT APPROPRIATE I.T.A. NO.22/MUM/2016 32 AMENDMENTS TO MEMORANDUM AND ARTICLES OF ASSOCIATION SHALL BE APPROPRIATELY CARRIED OUT WHICH ALSO INCLUDED THAT LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED SHALL CARRY OUT SU CH ACTIVITIES AS ARE PERMITTED UNDER THE SEBI(MUTUAL FUNDS) REGULATIONS, 1996 AND GUIDELINES FROM TIME TO TIME SHALL BE APPLICABLE. THIS SATA AGREEMENT ALSO REFERRED TO VARIOUS REGULATORY APPROVALS FOR THE TRANSACTIONS BY WAY OF APPROVAL FROM SEBI UNDER MUTUAL FUND REGULATION S , PORTFOLIO MANAGERS REGULATION FOR A CHANGE OF STATUS AND CONSTITUTION OF LIC MUTUAL FUND ASSET MANAGEMENT C OMPANY LIMITED PURSUANT TO TRANSACTION, APPROVAL OF FIPB, IF APPLICABLE AND APPROVAL OF RBI WHICH IS REQUIRED TO BE OBTAINED . IT ALSO REFERS TO CHANGE OF NAME OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED TO LIC NOMURA MUTUAL FUND ASSET MANAGEMENT C OMPANY LIMITED. THIS AGREEMENT ALSO SPEAKS OF VAL UATION CERTIFICATE ISSUED BY A CHARTERED A CCOUNTANT CERTIFYING FAIR VALUATION OF SHARES IN ACCORDANCE WITH GUIDELINES ISSUED BY RBI FOR FOREIGN DIRECT I NVESTMENT IN EQUITY SHARES OF LIC MUTUAL FUND ASSET MAN AGEMENT COMPANY LIMITED WHICH IS DELIVERED BY LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED TO NOMURA. IT ALSO REFERS TO AN OPINION ISSUED BY LEGAL ADVISORS OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED AND SELLING SHAREHOLDERS BEING DELIVERED TO NOMURA. SIMILARLY, IT SPEAKS OF NO MURA HAVING DELIVERED RELEVANT R ESOLUTIONS AUTHORISING THIS TRANSACTION. IT ALSO SPEAKS OF FIRST BUSINESS PLAN BEING APPROVED BY NOMURA. IT ALSO SPEAKS OF DUE DILIGENCE INVESTIGATIONS BEING UNDERTAKEN BY NOMURA OF LIC MUT UAL FUND ASSET MANAGEMENT COMPANY LIMITED. IT ALSO LAID DOWN ROAD MAP AND TIME PLAN FOR EXECUTING AND CONCLUDING THE TRANSACTION SUCCESSFULLY INCLUDING TRANSFER OF SHARES IN DEMATERIALISED FORM IN THE ACCOUNT OF NOMURA AND TRANSFER OF CONSIDERATION TO THE BANK ACCOUNTS OF SELLING SHAREHOLDERS. THERE IS A REQUIREMENT OF ISSUING A CERTIFICATE FROM SELLING SHAREHOLDERS AND LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED JOINTLY TO NOMURA CONFIRMING THAT THE REPRESENTATION AND WARRANTIES PROVIDED IN SATA ARE T RUE AND CORRECT AS ON CLOSING DATE. SIMILAR CERTIFICATE ON THE SAME LINES IS REQUIRED TO I.T.A. NO.22/MUM/2016 33 BE ISSUED BY NOMURA TO LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED AND SELLING SHAREHOLDERS. IT ALSO PROVIDED FOR EXECUTION OF FC - TRS FORM DULY STAMPED BY AUTHORI SED DEALER TO MAKE COMPLIANCES UNDER FEMA WITH RBI AND SEEK RBI APPROVALS/CLEARANCES UNDER FEMA. IT ALSO SPEAKS OF WHEN THE ANNOUNCEMENT OF THE TRANSACTION SHALL BE MADE WHICH SHALL BE MADE ONLY IN CONSULTATION WITH OTHER PARTIES IN WRITING OR REQUIRED BY LAW OR BY GOVERNMENT AUTHORITIES. VIDE CLAUSE 10.3, THE AGREEMENT SATA SPEAKS OF SHARING OF COST AND EXPENSES ASSOCIATED WITH THIS TRANSACTION BORNE BY LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED WHICH SHALL BE BORNE PRO - RATA AMONGST LIC MUTUAL FUND A SSET MANAGEMENT COMPANY LIMITED , LICHFL AND THE ASSESSEE. THUS , IN NUTSHELL IT ELABORATELY LAID DOWN UNDERSTANDING ARRIVED AT AMONGST CONSORTIUM PARTIES AND THE MANNER OF CONCLUDING TRANSACTION OF INDUCTING NOMURA AS STRATEGIC INVESTOR IN LICMF - AMC AND C ONSEQUENT DIVESTMENT BY SELLING SHAREHOLDERS . SIMILAR IS THE SPA DATED 11 - 07 - 2009 WHICH IS BY AND BETWEEN LICHFL,LICHFL CAREHOMES LIMITED, THE ASSESSEE , NOMURA AND LIC MUTUAL FUND TRUSTEE COMPANY PRIVATE LIMITED WHICH DEALS WITH ACQUISITION OF EQUITY SHAR ES OF LIC MUTUAL FUND TRUSTEE COMPANY PRIVATE LIMITED OF RS. 10 EACH HELD BY LICHFL , THE ASSESSEE AND LICHFL CAREHOMES LIMITED BEING ACQUIRED BY NOMURA. BROADLY THE TERMS ARE SIMILAR TO SATA AND HENCE THE SAME ARE NOT REPEATED AND IT BROADLY REPRESENTED T HE COMPLETE UNDERSTANDING BETWEEN AND AMONGST THE CONSORTIUM PARTIES AND THE MANNER IN WHICH THE TRANSACTION SHALL BE EXECUTED. THE SPA IS PLACED IN PAPER BOOK/PAGE 106 - 169. B ) AT PAGE 170/PB IS PLACED A LETTER WRITTEN BY THE ASSESSEE TO LIC NOMURA MUTUAL FUND WHICH IS DATED 06 - 06 - 2011 WHEREIN ASSESSEE ENCLOSED CHEQUE NUMBER 900606 DATED 07 - 06 - 2011 DRAWN ON HDFC BANK FOR RS. 96,73,108/ - RELATING TO ITS SHARE OF COST PAYABLE TO THESE LEGAL AND FINANCIAL PROFESSIONALS/ADVISORS IN CONNECTION WITH SALE OF I.T.A. NO.22/MUM/2016 34 SHARES OF LIC MUTUAL FUND ASSETS MANAGEMENT CO. LIMITED AND LIC MUTUAL FUND TRUSTEE CO. PRIVATE LIMITED TO NOMURA . C ) AT PAGE 171 - 173 /PB IS A LETTER DATED 13 - 04 - 2011 WRITT EN BY LIC NOMURA MUTUAL FUND ASSET MANAGEMENT CO. LIMITED TO THE ASSESSEE IN CONNECTION WITH SHARING OF COSTS AMONGST SELLING SHAREHOLDERS AS PER CONTRACTUAL OBLIGATION UNDER SATA AND SPA . REFERENCE WAS DRAWN IN THIS LETTER ITSELF TO CLAUSE 10.3 OF SATA AN D SPA WITH RESPECT TO SHARING OF COST TOWARDS FEES/EXPENSES OF THESE LEGAL AND FINANCIAL PROFESSIONALS/ADVISORS AMONGST SELLING SHAREHOLDERS UNDER CONSORTIUM ARRANGEMENT . IT DETERMINED THE TOTAL SALES CONSIDERATION WITH RESPECT TO LICMF - AMC ACCRUING TO THE SELLING SHAREHOLDERS UNDER CONSORTIUM AGREEMENT TO THE TUNE OF RS. 308.02 CRORES AND THE TOTAL COSTS INCURRED TOWARDS PROFESSIONAL FEES/EXPENSES WHICH WAS PAID BY LIC MUTUAL FUND ASSET MANAGEMENT COMPANY PRIVATE LIMITED TO THE TUNE OF RS. 3.31 CRORES TO THESE LEGAL AND FINANCIAL PROFESSIONAS AND THE ASSESSEE SHARE IN ACCORDANCE WITH CLAUSE 10.3 OF SATA AND SPA WAS WORKED OUT AT RS. 96,73,108/ - AND FINALLY REQUEST WAS MADE TO REIMBURSE THE COST TO LIC NOMURA MUTUAL FUND ASSET MANAGEMENT COMPANY PRIVATE LI MITED AS PER TERMS OF CONTRACT I.E. SATA AND SPA. D ) AT PAGE 174 - 175/PAPER BOOK IS LETTER DATED 28.04.2011 WRITTEN BY LIC NOMURA MUTUAL FUND ASSET MANAGEMENT COMPANY PRIVATE LIMITED TO ASSESSEE IN REPLY TO LETTER DATED 13.04.2011 WRITTEN BY THE ASSESSEE . IN THIS LETTER DATED 28.04.2011 WRITTEN BY LIC NOMURA MUTUAL FUND ASSET MANAGEMENT COMPANY PRIVATE LIMITED TO THE ASSESSEE, ITEMISED BILLING BY THESE PROFESSIONALS ARE SPECIFIED AND COPY OF INVOICES RAISED BY THE ASSESSEE ARE ENCLOSED FOR REFERENCE AND RECORD OF THE ASSESSEE(PAGE 176 - 192/PB ). IN THIS LETTER DATED 28.04.2011 WRITTEN BY LIC NOMURA MUTUAL FUND ASSET MANAGEMENT COMPANY PRIVATE LIMITED TO ASSESSEE , AGAIN REQUEST IS MADE TO THE ASSESSEE TO MAKE ITS SHARE OF COST TOWARDS FEE/EXPENSES PA YABLE TO THESE LEGAL AND FINANCIAL PROFESSIONALS/ADVISORS AMONGST SELLING SHAREHOLDERS IN TERMS I.T.A. NO.22/MUM/2016 35 OF CLAUSE 10.3 OF SATA AND SPA. THIS LETTER ALSO SPECIFIED THAT THESE PROFESSIONALS CHARGED SERVICE TAX ON SERVICES RENDERED BY THEM WHILE LIC NOMURA MUTUAL FUN D ASSET MANAGEMENT COMPANY PRIVATE LIMITED DEDUCTED INCOME - TAX AT SOURCE AS PER PROVISION OF THE 1961 ACT WHILE MAKING PAYMENTS TO THESE LEGAL AND FINANCIAL PROFESSIONALS /ADVISORS . WHILE DETAILING ITEMISED BILLING DONE BY THESE PROFESSIONALS , BROAD REFER ENCE TO TYPE OF SERVICES SUCH AS LEGAL SERVICES, CONSULTANT AND ADVISOR SERVICES , SCRUTINIZER TO THE POSTAL BALLOT OBTAINED FROM UNIT HOLDERS , VALUATION(AMC) SERVICES , VALUATION (TRUSTEE COMPANY) SERVICES AND CHARGES FOR SERVICES BY AUTHORISED DEALER FO R FC - TRS DOCUMENTATION AS PER RBI REQUIREMENT FOR AMC AND TRUSTEE COMPANY ARE FOUND MENTIONED IN THESE INVOICES . THEN COMES THE ITEMISED INVOICES ISSUED BY THESE PROFESSIONALS AND WE FOUND ME NTION OF THE NAMES OF THE PROFESSIONAL WHO WORKED FOR THE ASSIGNM ENT AND THE NAME OF THE ASSIGNMENT IS CODE NAMED AS PROJECT LIFE OR PROJECT CASH I . THEN COME INVOICES RAISED BY THESE PROFESSIONAL FOR VALUATION, ACTING AS SCRUTINZER FOR POSTAL BALLOTS , SERVICES IN CONNECTION WITH AMENDMENT IN TRUST DEED ETC WHICH ARE CLEARLY INDICATING THAT THESE EXPENSES HAVE THEIR ROOTS AND NEXUS TO THE WORK CONCERNING INDUCTION OF NOMURA AS STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT DIVESTMENT OF STAKE BY EXISTING STAKEHOLDERS. E ) AT PAGE 193 - 28/PB IS PLACED AN OFFER LETTER DA TED 21.01.2009 WRITTEN BY PWC TO LIC ASSET MANAGEMENT CO. TO PROVIDE LEAD ADVISORY SERVICES FOR THE DIVESTMENT OF MINORITY STAKE IN LIC ASSET MANAGEMENT COMPANY. IT SPEAKS OF THE PROPOSED TRANSACTION OF INDUCTING STRATEGIC INVESTOR THROUGH A DIVESTMENT/IS SUANCE OF SHARES OF A MINORITY STAKE IN LIC ASSET MANAGEMENT COMPANY LIMITED AND INTEREST OF PWC TO ACT AS LEAD ADVISORS TO THE AFORESAID TRANSACTION. IT SPEAKS OF THE PWC BEING RETAINED FOR THIS PROPOSED TRANSACTION AND SUMMARISES THEIR UNDERSTANDING OF T HE ENGAGEMENT , SCOPE OF WORK AND PROFESSIONAL FEE FOR SAID SERVICES. THE SCOPE OF WORK AT PARA 4 REFERS TO ENGAGEMENT AS I.T.A. NO.22/MUM/2016 36 LEAD ADVISOR TO COMPLETION OF THE ENVISAGE D TRANSACTION IN THE CAPACITY OF EXCLUSIVE LEAD ADVISORS FOR INDUCTING STRATEGIC INVESTOR IN LICMF - AMC . THE SCOPE OF WORK INCLUDED ARRIVING AT A FAIR VALUATION OF SHARES OF LICMF - AMC WHICH WILL ENTAIL REVIEWING MANAGEMENT PROJECTIONS , REVIEWING AUDITED FINANCIAL STATEMENTS AND THEN ARRIVING AT A FAIR VALUATION OF THE BUSINESS. THE SCOPE OF WORK ALSO INCLUDED PLANNING AND COMMUNICATION WITH INVESTOR WHICH WIL L INCLUDE ASSISTING LICMF - AMC IN PREPARING INFORMATION M EMORANDUM AND ALSO ASSISTING IN COMMUNICATION AND DISCUSSIONS WITH THE INVESTOR , ASSISTING LICMF - AMC IN DUE DILIGENCE REVIEW, RECOMMEND ATION/ADVISE IN CONNECTION OF STRUCTURING OF THE DEAL IN THE CAPACITY AS FINANCIAL ADVISORS , ASSISTANCE IN REVIEW OF TRANSACTION DOCUMENTATION ETC . . THE SAID OFFER LETTER PROVIDED FOR FEES PAYABLE TO PWC AND PERSONNEL TO BE DEPLOYED ETC BY PWC FOR SUCCESSFULLY RENDERING THE SERVICES. THIS AGREEMENT ALSO PROVIDED FOR CONFIDENTIALITY CLAUSES ABOUT PWC MAINTAINING STRIC T CONFIDENTIALITY . AT PAGE 209/PB IS THE LETTER DATED 21.07.2008 WRITTEN BY PWC TO LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED E XTENDING THE TENURE OF THEIR ENGAGEMENT TO ACT AS LEAD ADVISOR TO PROPOSED DISINVESTMENT PROCESS BY ANOTHER SIX MONTHS. F ) AT PAGE 210 - 212 /PB IS A LETTER DATED 06 - 06 - 2008 WRITTEN BY AMARCHAND & MANGALDAS & SURESH A SHROFF & CO. (SIGNED ON 08 - 08 - 2018) TO LI C NOMURA MUTUAL FUND ASSET MANAGEMENT COMPANY PRIVATE LIMITED IN CONNECTION WITH PROPOSED INVESTMENT BY NOMURA HOLDINGS, INC. IN LIC - MF. IT OUTLINED SCOPE OF WORK OF AMARCHAND & MANGALDAS & SURESH A SHROFF & CO. WHICH INCLUDED PROVIDING ADVICE AND LEGAL SERVICES TOWARDS NEGOTIATING , DRAFTING , REVIEWING AND FINALISING TERM SHEET, SHARE PURCHASE SUBSCRIPTION AGREEMENTS , SHARE PURCHASE AGREEMENTS AND SHAREHOLDERS AGREEMENT ALONG WITH ANCILLARY DOCUMENTS , IF ANY REQUIRED TO COMPLETE THE TRANSACTION. THE SCOPE OF WORK ALSO INCLUDED ADVISING ABOUT LEGAL PERSPECTIVE IN INDIA REGARDING THE TRANSACTION AS WELL ALSO NEGOTIATING WITH INVESTORS COUNSEL AND ANALYSIS OF ALL ASPECTS OF ALL LAWS NECESSARY TO COMPLETE I.T.A. NO.22/MUM/2016 37 AND CONCLUDE THE TRANSACTION. IT ALSO STIPULATE L EGAL TEAM WHO WILL WORK ON THIS ASSIGNMENT AND IT OUTLINED THE FEE CHARGEABLE FOR THE ASSIGNMENT. IT ALSO PROVIDED FOR ADVANCE PAYMENT OF RS. 7,50,000/ - ON ACCEPTANCE OF THIS OFFER BY AMARCHAND & MANGALDAS & SURESH A SHROFF & CO. TO ENABLE SAID PROFESS IONALS TO START THE WORK IN RELATION TO THE TRANSACTION. THE SHARE OF THE ASSESEE IN THE COSTS TO BE SHARED BETWEEN SELLING SHAREHOLDERS ATTRIBUTABLE TO THIS ADVANCE PAYMENT OF RS. 7,50,000/ - + SERVICE TAX ( TOTALLING RS. 8,42,700/ - ) PAID TO AMARCHAND & MANGALDAS & SURESH A SHROFF & CO. ALONG WITH LETTER DATED 14 - 08 - 2008 ISSUED BY LIC ASSET MANAGEMENT COMPANY LIMITED IS UNDER DISPUTE BETWEEN RIVAL PARTIES WHICH WAS FINALLY DISALLOWED BY LEARNED CIT(A) SO FAR AS PAYMENTS TO AMARCHAND &MANGALDAS & SURESH A SHROFF & CO . ARE CONCERNED. G ) AT PAGE 213 - 226 IS PLACED LETTER DATED 11.01.2011 WRITTEN BY AMARCHAND & MANGALDAS & SURESH A SHROFF & CO. WHICH IS WRITTEN TO LIC MUTUAL FUND TRUSTEE COMPANY LIMITED , LIC, LICHFL, THE ASSESSEE AND LICHFL CARE HOMES LIMITED AND NOMURA , CONFIRMING THAT SAID AMARCHAND & MANGALDAS & SURESH A SHROFF & CO . ACTED AS LEGAL ADVISORS TO LIC MUTUAL FUND TRUSTEE COMP ANY PRIVATE LIMITED AND ALSO LEGAL ADVISORS ON BEHALF OF LIC, LICHFL, CAREHOMES AND THE ASSESSEE, IN RELATION TO THE INVESTMENT MADE BY NOMURA BY WAY OF SHARE PURCHASE IN THE COMPANY PURSUANT TO VARIOUS AGREEMENTS AND LETTERS AS SET OUT IN THE ANNEXURE HER ETO. IT ALSO STIPULATES THAT LICHFL, THE ASSESSEE AND CAREHOMES WERE SELLING THEIR SHARES TO NOMURA. H ) AT PAGE 227 - 232/PB IS PLACED VALUATION REPORT DATED 24 - 7 - 2010 ISSUED BY CHATURVEDI AND COMPANY VALUING SHARES OF LIC MUTUAL FUND ASSET MANAGEMENT COMPA NY LIMITED AS ON 31 ST MARCH 2010. I.T.A. NO.22/MUM/2016 38 I ) AT PAGE 233 - 234/PB ARE PLACED TWO RBI APPROVALS BOTH DATED 24 - 05 - 2010 APPROVING THE PROPOSED TRANSACTION FOR ACQUISITION BY NOMURA ASSET MANAGEMENT S TRATEGIC INVESTMENT PTE. LTD. , A NON - RESIDENT ENTITY OF THE FULLY PAID UP EQUITY SHARES OF FACE VALUE OF RS. 10,000 EACH OF LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED AT A PRICE OF RS. 8,00,000/ - PER SHARE FROM (A) 1120 EQUITY SHARES FROM GIC HOUSING FINANCE LIMITED(THE ASSESSEE) (B) 1730 EQUITY SHARES FROM LIC HOUSING FINANCE LIMITED. THE SECOND RBI APPROVAL DATED 24 - 05 - 2010 IS WITH RESPECT TO APPROVING THE PROPOSED TRANSACTION FOR ACQUISITION BY NOMURA ASSET MANAGEMENT STRATEGIC INVESTMENT PTE. LTD. , A NON - RESIDENT ENTITY OF THE FULLY PAID UP EQUITY SHARES OF FACE VALUE OF RS. 10 EACH OF LIC MUTUAL FUND TRUSTEE COMPANY PRIVATE LIMITED AT A PRICE OF RS. 46.04 PER SHARE FROM (A) 300 EQUITY SHARES FROM GIC HOUSING FINANCE LIMITED(THE ASSESSEE) (B) 2000 EQUITY SHARES FROM LIC HOUSING FINANCE LIMITED AND (C) 1200 EQUITY SHARES FROM LICHFL CARE HOMES LIMITED. WITH THIS BACKGROUND , WE HAVE TO PROCEED TO SEE THAT WHETHER THESE COSTS TOWARDS LEGAL AND FINANCIAL PROFESSIONAL FEES/EXPENSES WHICH WERE CLAIMED TO BE INCURRED IN CONNECTION WITH TRANSFER/SALE OF SHARES OF LICMF - AMC BY THE ASSESSEE TO NOMURA CAN BE CONSIDERED TO BE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER/SALE OF SHARES SO AS IT COULD BE CONSIDERED TO SATISFY MANDATE OF SECTION 48 OF THE 1961 ACT AND ALSO IT IS TO BE SEEN WHETHER THE ASSES SEE BY PRODUCING THE SE DOCUMENTS/EVIDENCES WHICH IT PRODUCED BEFORE THE AUTHORITIES BELOW HAD DISCHARGED ITS ONUS AS IS CAST UNDER THE PROVISIONS OF THE 1961 ACT AND WHETHER NOW THE ONUS HAS SHIFTED TO REVENUE TO BRING ON RECORD COGENT INCRIMINATING MATER IAL TO DISCREDIT THE VERSION OF THE ASSESSEE TO FASTEN TAX LIABILITY ON THE ASSESSEE . THIRDLY, WE HAVE TO SEE WHETHER THESE COSTS WERE INCURRED IN CONNECTION WITH TRANSFER/SALE OF SHARES BY ASSESSEE AND WHETHER THE I.T.A. NO.22/MUM/2016 39 NEXUS OF THESE COSTS WITH THE ASSIGNMENT OF INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENTLY WITH THE SALE OF SHAREHOLDING IN LICMF - AMC BY THESE CONSORTIUM PARTIES TO NOMURA STOOD PROVED . BEFORE WE PROCEED FURTHER , IT IS PERTINENT TO MENTION THAT THE ASSESSEE IS A COMPANY WHOSE SHARE S ARE LISTED ON BOURSES. THE ASSESSEE IS HOLDING SHARES IN LICMF - AMC AS STRAT EGIC INVESTOR WHEREIN LIC AND ITS AFFILIATES ARE THE MAIN PROMOTING COMPANIES OF LICMF - AMC. IT IS ALSO PERTINENT TO MENTION THAT LICHFL IS ALSO A LISTED COMPANY. NOMURA IS AN INTER NATIONAL COMPANY HAVING LARGE PRESENCE IN FINANCIAL SERVICES SECTOR. IT IS TO BE UNDERSTOOD THAT INDUCTION OF NEW STRATEGIC INVESTOR EITHER THROUGH DIVESTMENT OF EXISTING SHAREHOLDER S OR THROUGH ISSUANCE OF FRESH SHARES INVOLVES SEVERAL STEPS , INTER - ALIA , INCLUDING IDENTIFYING THE VALUE OF SHARES OF THE INVESTEE COMPANY. IT IS TO BE UNDERSTOOD THAT THE PRICE /VALUATION OF BLOCK OF SHARES WHICH IS TO BE OFFERED TO STRATEGIC INVESTOR EITHER BY WAY OF DIVESTMENT OF EXISTING SHARES OR BY WAY OF ISSUE OF FRESH SHARES DEPENDS UPON INTER - PLAY OF SEVERAL COMPLEX FACTORS AND NEED NOT NECESSARILY BE A PRICE S OF SHARES PREVAILING ON BOURSES BUT SEVERAL OTHER CONSIDERATI ON WEIGHS FOR ARRIVING AT PRICE OF BLOCK OF SHARES SUCH AS INTRINSIC WORTH, PRESENT VALUE OF ASSETS , FUTURE GROWTH POTENTIAL, PREMIUM WHICH MANAGEMENT OR INCOMING STRATEGIC INVESTOR COMMANDS, CONTROLLING PREMIUM ETC. . THE PROCESS OF IDENTIFYING A STRATEGIC INVESTOR WHO HAS SYNERGIES WITH THE INVESTEE COMPANY AND WHO CAN ADD SIGNIFICANT VALUE IN THE GROWTH OF INVESTEE COMPANY IN ITSELF IS A HIGHLY COMPLEX TASK WHICH NEED PROFESSIONAL SKILLS AND EXPERIENCE APART FROM DIS COVERING THE TRUE VALUE OF SHARES WHICH ITSELF IS A COMPLEX TASK . THE REGULATORY AUTHORITIES SUCH AS SEBI HAS PLACED SEVERAL CONDITIONS AND RESTRICTIONS ON PROFESSIONALS/ADVISORS INCLUDING MANDATORY REGISTRATIONS WITH SEBI THROUGH WEB OF REGULATIONS TO ENS URE THAT ONLY WELL QUALIFIED, EXPERIENCED AND REGISTERED INTERMEDIARIES ARE ONLY ALLOWED TO RENDER SUCH SERVICES. THE LICMF - AMC WAS AN UNLISTED COMPANY AND ITS VALUATION IS TO BE UNDERTAKEN BY PROFESSIONALS WHO ARE INDEPENDENT AND ARE LEGALLY I.T.A. NO.22/MUM/2016 40 QUALIFIED AN D EXPERIENCED TO HANDLE VALUATION . THE REGULATORY REQUIREMENTS ALSO REQUIRES VALUATION AS PER PRESCRIBED METHODS SUCH AS DISCOUNTED CASH FLOWS WHICH ARE TO BE CERTIFIED BY QUALIFIED INDEPENDENT PROFESSIONALS. THE ENGAGEMENT OF THESE INDEPENDENT QUALIFIED AND EXPERIENCED PROFESSIONALS TO UNDERTAKE THESE ASSIGNMENTS NOT ONLY ENSURES THAT THE WELL VERSED EXPERIENCED PERSONNELS ARE DEPUTED TO CONCLUDE THESE COMPLEX TRANSACTION BUT ALSO ADDRESSES CONFLICT OF INTEREST ISSUE SO THAT VALUATIONS ARE ARRIVED AT BY INDEPENDENT PROFESSIONALS HAVING NO BENEFICIAL INTEREST EITHER IN INVESTEE COMPANY OR INCOMING STRATEGIC INVESTOR OR OUTGOING SHAREHOLDRES . AFTER GETTING VALUATION DONE FROM INDEPENDENT VALUERS, THE SELLING SHAREHOLDERS CAN NEGOTIATE PRICE WITH THE INCOMIN G INVESTOR SUBJECT TO APPLICABLE REGULATORY PRICING GUIDELINES . SIMILARLY, NEW INVESTOR WILL ALSO HAVE COMFORT WITH A PRICE DISCOVERED BY INDEPENDENT QUALIFIED AND EXPERIENCED PROFESSIONALS WHO ARE WELL VERSED WITH THE TASK OF VALUING ENTERPRISES AND ALSO IT ADDRESSES CONFLICT OF INTEREST ISSUES . THE INDUCTION OF STRATEGIC INVESTOR ALSO REQUIRES DUE DILIGENCE DONE OF THE INVESTEE COMPANY AND SEVERAL WARRANTIES ARE TO BE GIVEN BY THE SELLING SHAREHOLDERS TO THE INCOMING STRATEGIC INVESTOR AS TO THE STATE O F AFFAIRS OF THE INVESTEE COMPANY AND VICE VERSA , WHICH ALSO INVO LVES EXECUTION OF SEVERAL DOCUMENTATIONS WHICH ARE REQUIRED TO BE HANDLED BY THESE INDEPENDENT EXPERIENCED , WELL VERSED AND QUALIFIED PROFESSIONALS WHO CAN GIVE INDEPENDENT OPINION AND ASS ESSMENT BASED ON THEIR INDEPENDENT EVALUATION AND ASSESSMENT OF EXISTING STATE OF AFFAIRS OF THE INVESTEE COMPANY WHICH GIVE ASSURANCE TO INCOMING STRATEGIC INVESTORS AND ASSIST THEM IN MAKING DECISION AS TO MAKING INVESTMENT IN THE INVESTEE COMPANY AS AL SO ABOUT THE CORRECTNESS OF FAIR VALUATION PAID FOR ACQUIRING STRATEGIC INVESTMENTS IN INVESTEE COMPANY AND ALSO ADDRESSES CONFLICT OF INTEREST ISSUES . THE INDEPENDENT PROFESSIONALS WHO ARE EXPERIENCED , WELL VERSED AND SPECIALISES IN THESE TYPE OF STRATEG IC DISINVESTMENTS AND CAPITAL /MONEY MARKET TRANSACTIONS ALSO GAVE ASSISTANCE TO MANAGEMENT IN IDENTIFYING AND THEREAFTER COMPLYING WITH VARIOUS I.T.A. NO.22/MUM/2016 41 APPLICABLE LAWS, RULES AND REGULATIONS AND ALSO HELP IN IDENTIFYING AND SEEKING SEVERAL REGULATORY CLEARANCES/APPROVALS FROM AUTHORITIES WHICH ARE REQUIRED TO BE OBTAINED FROM VARIOUS AGENCIES IN ORDER TO ENSURE THAT TRANSACTIONS ARE SUCCESSFULLY CONCLUDED WHICH IS COMPLIANT OF LAW . THE ASSESSEE IS A LISTED COMPANY WHOSE SHARES ARE LISTED ON BOURSES AND THE ASSESSEE WAS STRATEGIC INVESTOR IN LICMF - AMC WHILE NOMURA IS A NON RESIDENT ENTITY WHO CAME IN AS STRATEGIC INVESTOR BY ACQUIRING STAKE FROM SELLING SHAREHOLDERS INCLUDING ASSESSEE UNDER CONSORTIUM AGREEMENT S VIZ. SATA AND SPA . T HIS TRANSACTION OF ACQUISITION UNDER FACTUAL MATRIX OF THE CASE COULD POSSIBLY REQUIRED SEVERAL LAWS TO BE COMPL IED WITH SUCH AS SECURITIES L AWS, SCRA, SEBI ACT ETC, , COMPLIANCES UNDER COMPANIES ACT, 1956, COMPLIANCES OF REGULATIONS AND RULES OF STOCK EXCHANGES, COMPLIANCE S AND APPROVALS FROM RESERVE BANK OF INDIA UNDER FEMA AND APPLICABLE REGULATIONS FOR SELLING SHARES TO NON RESIDENT ENTITY , CLEARANCES FROM FOREIGN INVESTMENT PROMOTION BOARD, CLEARANCES UNDER CCI ACT , COMPLIANCES OF VARIOUS TAX LAWS SUCH AS INCOME - TAX AC T, 1961, TDS COMPLIANCES, GST COMPLIANCES , STAMP DUTY COMPLIANCES AND REGISTRATION REQUIREMENTS ETC. , WHICH ALL ASPECTS ARE TO BE PROPERLY ANALYSED AND DOCUMENTED WELL IN ADVANCE BY THESE PROFESSIONALS /ADVISORS ON BEHALF OF CONSORTIUM PARTIES IN CONTEX T OF TRANSACTION PROPOSED TO BE UNDERTAKEN BY TAX - PAYER AND THEN ADVISE THE IR CLIENT S AS TO THE APPLICABLE LEGAL COMPLIANCES TO BE UNDERTAKEN AND APPROVALS/CLEARANCES REQUIRED TO BE OBTAINED FROM REGULATORY AUTHORITIES . THESE INDEPENDENT QUALIFIED AND EXPE RIENCED PROFESSIONALS WHO ARE WELL VERSED IN EXECUTING THESE TRANSACTIONS IN CONTEXT OF DOCUMENTATIONS, LEGAL AND REGULATORY COMPLIANCES PLAY A VERY CRUCIAL ROLE FOR SUCCESSFULLY CONCLUDING THESE TRANSACTIONS WHICH ARE COMPLIANT OF LAW , OTHERWISE LATER O N NON COMPLIANCES OF LAW CAN PROVE TO BE VERY EXPENSIVE AND COSTLY AFFAIR WHICH MAY BE VISITED WITH PENALTIES, PROSECUTIONS, CLASS ACTION SUITS ETC AS LITIGATION IS VERY EXPENSIVE AND TIME CONSUMING AFFAIR . NO DOUBT SOME OF THESE WORK CAN BE EXECUTED IN - HOUSE BY TAX - PAYER BY AVAILING SERVICES OF ITS LEGAL I.T.A. NO.22/MUM/2016 42 AND PROFESSIONAL TEAM EMPLOYED BY TAX - PAYER BUT ONCE THE COMMERCIAL DECISION IS TAKEN BY TAX - PAYER TO HIRE OUTSIDE AND INDEPENDENT PROFESSIONAL S TO RENDER SUCH SERVICES , THE REVENUE CANNOT BE ALLOWED TO SIT IN THE ARM CHAIR OF BUSINESS AND QUESTION THE PRUDENCE OF THE TAX - PAYER DECISION IN HIRING OUTSIDE INDEPENDENT PROFESSIONALS INSTEAD OF UTILISING THE SERVICES OF IN - HOUSE LEGAL TEAM . HONBLE SUPREME COURT DECISION IN THE CASE OF HERO CYCLES PRIVATE LIMITED V. CIT REPORTED IN (2015) 379 ITR 347(SC) IS RELEVANT TO THAT EFFECT . IT IS ALSO TO BE UNDERSTOOD THAT ASSESSEE BEING A LISTED COMPANY THESE DIVESTMENTS DECISIONS ARE PRICE SENSITIVE INFORMATION AND ANY BREACH OF CONFIDENTIALITY OF THIS PRICE SEN SITIVE INFORMATION CAN HAVE HUGE REPERCUSSION, VOLATILITY AND FLUCTUATIONS IN SHARE PRICES OF THE ASSESSEES SHARES ON BOURSES AND SUCH BREACH OF CONFIDENTIALITY OF PRICE SENSITIVE INFORMATION CAN BE VISITED WITH HEAVY PENALTIES AND PROSECUTION UNDER S EBI ACT, 1992 , SECURITIES LAW AND OTHER APPLICABLE CORPORATE LAWS AND MAY EVEN LEAD TO CLASS ACTION SUITS BY INVESTORS AGAINST ASSESSEE AND EVEN AGAINST THESE PROFESSIONALS . THESE PROFESSIONALS CAN ALSO BE VISITED BY SUIT FOR DAMAGES/COMPENSATION BY THE CONTRACTING PARTIES FOR BREACH OF CONFIDENTIALITY. THUS, MERE USE OF CODE NAME BY THESE PROFESSIONALS TO THE ASSIGNMENT OR NON MENTIONING OF THE EXACT SERVICES IN THE INVOICES CANNOT BE CAUSE OF BLAME AS THESE PROFESSIONALS ARE BOUND TO MAINTAIN SECRECY AN D CONFIDENTIALITY OF THE ASSIGNMENT AWARDED TO THEM W . R . T . INDUCTION OF STRATEGIC INVESTOR AND DIVESTMENT OF THE STAKE BY EXISTING SHAREHOLDERS AND CODE NAME CAN ALSO BE GIVEN FOR ADMINISTRATIVE CONVENIENCE. ON THE OTHER HAND IF THE DETAILS ARE OPENLY DIVULGED IN CORRESPONDENCES OR IN INVOICES CONCERNING INDUCTION OF STRATEGIC INVESTOR OR DIVESTMENT BY EXISTING STAKEHOLDER WILL BEAR THE RISK OF LEAKAGES OF PRICE SENSITIVE INFORMATION AND BREACH OF CONFIDENTIAL ITY WHICH COULD HAVE WIDE RANGING SERIOUS ADVERSE RAMIFICATIONS FOR THE ASSESSEE AS WELL FOR THESE PROFESSIONALS. WHAT IS RELEVANT TO BE SEEN IS THAT WHETHER THESE EXPENSES TOWARDS PROFESSIONAL FEES / EXPENSES PAID TO THESE PROFESSIONALS BY CONSORTIUM I.T.A. NO.22/MUM/2016 43 PART IES ARE IN CONNECTION WITH THE ASSIGNMENT OF INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENTLY SALE OF SHARES BY THE SELLING SHAREHOLDERS INCLUDING ASSESSEE WHETHER OR NOT THE PROJECT NAME WAS CODED BY THESE PROFESSIONALS OR THE EXACT DETAILS O F SERVICES ARE NOT MENTIONED IN THE INVOICES. THE REVENUE CANNOT OPERATE IN A VACUUM DEHORS THE FACTUAL REALITIES OF PRESENT DAYS COMPLEX BUSINESS AND LEGAL ENVIRONMENT WHEREIN BOTH DOMESTIC AND INTERNATIONAL LAWS HAVE APPLICATION TO COMPLEX FINANCIAL TRA NSACTION BECAUSE OF PARTICIPATION OF CROSS BORDER ENTITIES . THE ASSESSEE ON ITS PART HAS BROUGHT SUFFICIENT MATERIAL/EVIDENCE ON RECORD TO EVIDENCE THAT THE PROJECT CODENAMED AS PROJECT LIFE AND PROJECT CASH 1 BY THESE PROFESSIONALS ARE NOTHING BUT TH E ASSIGNMENT AWARDED BY CONSORTIUM PARTIES TO THESE PROFESSIONALS IN CONNECTION WITH INDUCT ION OF STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT EXIT OF ASSESSEE FROM LICMF - AMC , WHICH ASSIGNMENTS WERE CODED BY THESE PROFESSIONALS FOR VARIED REASONS OUTLINE D ABOVE . THUS , HUGE HUE AND CRY MADE BY REVENUE AS TO CODENAMING OF PROJECT BY PROFESSIONALS OR NON MENTIONING OF DETAILED SERVICES IN THE INVOICES HAS NO LEGS TO STAND. THERE ARE VALID REASONS AND JUSTIFICATIONS OF CODE NAMING THE PROJECT OR NOT MENTION ING OF THE DETAILS OF SERVICES IN THE INVOICES. IF THE REVENUE WAS SO PARTICULAR AND WAS NOT SATISFIED WITH THE CONTENTIONS OF THE ASSESSEE BACKED WITH EVIDENCES PLACED BY THE ASSESSEE AS TO THE SERVICES RENDERED BY THESE PROFESSIONALS IN CONNECTION WITH THE TRANSACTION RELATING TO INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT EXIT OF ASSESSEE FROM LICMF - AMC BY SELLING ITS ENTIRE SHAREHOLDING IN LICMF - AMC TO NOMURA , THEN NOTHING PREVENTED REVENUE FROM ISSUING SUMMONS U/S 131 OR NOTICES U/S 13 3(6) OF THE 1961 ACT TO THESE PROFESSIONALS OR TO OTHER CONSORTIUM PARTIES TO PRODUCE EVIDENCE S DIRECTLY AS TO WHAT THESE CODE NAME STANDS FOR AND WHETHER THE SERVICES RENDERED BY THESE PROFESSIONALS ARE DIRECTLY AND INEXTRICABLY CONNECTED WITH TRANSACTION OF INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENT EXIT OF ASSESSEE FROM LICMF - AMC. THE S E PLEA S OF THE REVENUE ARE OUT RIGHTLY REJECTED. WE HAVE I.T.A. NO.22/MUM/2016 44 ALSO OBSERVED THAT REVENUE HAS ENTERED INTO AN ARENA OF SUSPICION WHILE UPHOLDING DISALLOWANCE OF THESE COSTS AND WE WOULD LIKE TO LAY STRESS THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF PROOF WHICH IS A WELL SETTLED PROPOSITION OF LAW . SO FAR, T HREE STAGES HAVE PASSED AND NONE OF THE AUTHORITIES HAVE CONSIDERED PROPER AND APPROPRIATE TO ISS UE NOTICES U/S 133(6) OR SUMMONS U/S 131 OF THE 1961 ACT TO THESE PROFESSIONALS OR TO CONSORTIUM PARTIES TO UNEARTH TRUTH AND WE ARE AFRAID THAT NOW AT THIS STAGE NO MORE OPPORTUNITY CAN BE PROVIDED TO THE REVENUE TO RE - START THE EXERCISE OF DENOVO ASSESS MENT AND TO BURDEN THE ASSESSEE WITH ONE MORE ROUND OF LITIGATION WHICH IS NOT WARRANTED AT THIS STAGE MORE - SO SUFFICIENT MATERIAL /EVIDENCES BY WAY OF AGREEMENTS, INVOICES , CORRESPONDENCES ETC ARE ALREADY BROUGHT ON RECORD BY THE ASSESSEE WHICH IS SPEAK ING LOUDLY THAT THESE PAYMENTS WERE TOWARDS THE FEE/EXPENSES PAID TO THESE LEGAL PROFESSIONALS AND FINANCIAL ADVISORS FOR HANDLING THE TASK OF INDUCTION OF STRATEGIC INVESTOR IN LICMF - AMC AND CONSEQUENTLY EXIT OF ASSESSEE AS SHAREHOLDER OF LICMF - AMC WHEREIN ASSESSEE SOLD ITS SHARES TO NOMURA WHILE THE CASE OF REVENUE IS BUILT ON SUSPICION . THE PARTIES TO SALE OF SHARES TO NOMURA ACTED AS CONSORTIUM PARTIES AND THEY HAVE VIDE SATA AND SPA AGREEMENTS BOTH DATED 11 - 07 - 2009 , CLAUSE 10.3 IN BOTH THE SE AGREEMENTS AGREED TO SHARE THE COST OF THESE PROFESSIONA LS WHICH FALLS WITHIN ARENA OF THEIR CONTRACTUAL OBLIGATION . THERE IS NO DISPUTE AS TO THE INTER - SE AGREEMENT BETWEEN CONSORTIUM PARTIES TO SHARE THESE COSTS OF PROFESSIONALS AS WELL TO DISTRIBUTION RATIO OF SHARE OF ASSESSEE TO BEAR THE SE COST. THE LEARNED CIT(A) HAS ACCEPTED THE SHARE DISTRIBUTION RATIO ADOPTED BY CONSORT IUM PARTIES AND REVENUE IS NOT IN APPEAL BEFORE US WITH ACCEPTING OF SHARE DISTRIBUTION RATIO BY LEARNED CIT(A) NOR ANY CROSS OBJECTIONS ARE FILED BY REVENUE . NOW , AFTER ANALYSING THE WHOLE SPECTRUM OF SERVICES RENDERED BY THESE INDEPENDENT , QUALIFIED AN D EXPERIENCED PROFESSIONALS , WE ARE OF CONSIDERED VIEW THAT THESE SERVICES ARE INEXTRICABLY LINKED TO THE TRANSACTION OF SALE OF SHARES OF LICMF - AMC BY ASSESSEE TO NOMURA BASED ON MATERIAL ON RECORD AND THESE SERVICES I.T.A. NO.22/MUM/2016 45 WERE RENDERED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER/SALE OF SHARES BY THE ASSESSEE W ITHIN MANDATE OF SECTION 48 OF THE 1961 ACT AS WITHOUT AVAILING OF THESE LEGAL AND FINANCIAL SERVICES FROM THESE LEGAL PROFESSIONALS AND FINANCIAL ADVISORS , IN OUR CONSIDERED VIEW , THE TRANSFER/ SALE OF SHARES OF LICMF - AMC HELD BY THE ASSESSEE IN FAVOUR OF STRATEGIC INVESTOR NOMURA COULD NOT HAVE BEEN SUCCESSFULLY CONCLUDED AS THE MOST IMPORTANT AND CRUCIAL ASPECT IN THESE TYPE OF PRICE SENSITIVE TRANSACTION S IS TO CONCLUDE THEM SUCCESSFULLY WITH CONFIDENTIALITY IN TRANSPARENT MANNER WHICH IS IN COMPLIANCE WITH ALL RELEVANT AND APPLICABLE LAWS, RULES AND REGULATION S BOTH DOMESTIC AND CROSS BORDER LAWS WHICH CAN WITHSTAND THE TESTS OF SCRUTINY BY COURTS FOR WHICH PROPER DOCUMENTATIONS, TERM SHEETS, AGREEMENTS , VALUATION, DUE DILIGENCE , REGULATORY APPROVALS/CLEARANCES ETC ARE MUST WHICH CAN ONLY BE EXECUTED IN THESE TYPE OF COMPLEX TRANSACTIONS WHICH ARE GOVERNED AND REGULATED BY SEVERAL WEB OF COMPLEX LAWS HAVING INTER - PLAY BY THESE WELL VERSED, QUALIFIED AND EXPERIENCED INDEPENDENT LEGAL AND FINANCIAL PROFESSIONALS/ADVISORS TO NOT ONLY SATISFY TECHNICAL COMPETENCIES TO EXECUTE THESE TRANSACTIONS SUCCESSFULLY BUT ALSO AVOID CONFLICT OF INTEREST . THE ASSESSEES TRANSACTIO N OF SALE OF SHARES IN LICMF - AMC WERE APPROVED BY RBI, SHAREHOLDER CONSENTS WERE OBTAINED THROUGH POSTAL BALLO TS, SATA AND SPA WERE EXECUTED , VALUATION REPORTS FROM QUALIFIED CHARTERED ACCOUNTANTS WERE OBTAINED, DUE DILIGENCE WAS UNDERTAKEN ETC.. THE ABOV E RELEVANT DOCUMENTS ARE PLACED IN PAPER BOOK FILED WITH TRIBUNAL. THE PAYMENT OF ITS SHARE OF SUCH COST TO THE TUNE OF RS.96,73,108/ - BY ASSESSEE VIDE CHEQUE THROUGH BANKING CHANNEL AND IT IS NOT THE CASE OF THE REVENUE THAT NO PAYMENTS WERE MADE BY AS SESSEE AND THE BOGUS CLAIM IS SET UP BY THE ASSESSEE. IN OUR CONSIDERED VIEW KEEPING IN VIEW FACTUAL MATRIX OF THE CASE AS IS EMANATING FROM RECORDS BEFORE US , THE ASSESSEE HAS DULY DISCHARGED ITS BURDEN CAST UNDER PROVISIONS OF 1961 ACT BY PRODUCING ALL RELEVANT EVIDENCES TO SUBSTANTIATE ITS CLAIM THAT THE PAYMENTS WERE MADE TOWARDS SHARE OF COST WHICH THE ASSESSEE WAS OBLIGATED UNDER AN AGREEMENT TO PAY I.T.A. NO.22/MUM/2016 46 TO WARDS FEES/EXPENSES OF THE SE LEGAL AND FINANCIAL PROFESSIONALS AND ADVISORS FOR RENDERING SERVICE S IN CONNECTION WITH TRANSACTION OF INDUCTION OF NOMURA AS STRATEGIC INVESTOR IN LICMF AND CONSEQUENTLY COMPLETE EXIT OF ASSESSEE BY WAY OF SALE OF ITS SHAREHOLDING IN LICMF AMC TO NOMURA AND WE ALSO HOLD THAT THESE SERVICES ARE INEXTRICABLY LINKED TO AF ORESAID SALE OF SHARES BY ASSESSEE TO NOMURA AND THESE EXPENSES ARE WHOLLY AND EXCLUSIVELY INCURRED IN RELATION TO TRANSFER/SALE OF SHARES BY ASSESSEE TO NOMURA WHICH SATISFIED THE MANDATE OF SECTION 48 OF THE 1961 ACT AS TRANSFER/SALE OF SHARES OF LICMF - A MC BY ASSESSEE TO NOMURA WHICH IS COMPLIANT WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS COULD NOT HAVE BEEN POSSIBLE WITHOUT THESE SERVICES RENDERED BY QUALIFIED , EXPERIENCED AND INDEPENDENT PROFESSIONALS AND HENCE THESE COSTS ARE ALLOWABLE AS COST WI THIN PROVISIONS OF SECTION 48 WHILE COMPUTING LONG TERM CAPITAL GAINS EARNED BY THE ASSESSEE . THE ASSESSEE SUCCEEDS IN THIS APPEAL . WE ORDER ACCORDINGLY. 9. WITH RESPECT TO THE SECOND ISSUE RELATED TO NON ALLOWABILITY OF LONG TERM CAPITAL LOSS SUFFERED BY ASSESSEE OF RS. 75,83,082/ - IN EARLIER YEARS WHICH WAS NOT ALLOWED TO BE SET OFF BY AO AGAINST LONG TERM CAPITAL GAIN S EARNED BY THE ASSESSEE DURING THE PREVIOUS YEAR UNDER CONSIDERATION AND WHEREIN LD. CIT(A) HAS REFUSED TO GIVE ADMINISTRATIVE DIRECTIONS TO THE AO TO ALLOW THE SAID LOSS AND RATHER HELD THAT IF THE LOSS IS GENUINE, THE AO IS DUTY BOUND TO ALLOW SET OFF OF THE SAID LONG TERM CAPITAL LOSS OF THE EARLIER YEARS AGAINST LONG TERM CAPITA L GAINS OF THIS YEAR , W E HAVE OBSERVED THAT IN ONE OF THE CORRESPONDENCE FILED BY THE ASSESSEE WITH REVENUE VIDE LETTER DATED 26.12.2013 WHICH IS POST ASSESSMENT ORDER , THE ASSESSEE HAS CLAIMED THAT THIS LONG TERM CAPITAL LOSS OF RS. 75,83,082/ - WAS INCURRED ON SALE OF SHARES OF M/S RAMANASEKHAR STEE LS LIMITED IN AY 2009 - 10 WHICH WAS DULY DECLARED IN THE RETURN FOR AY 2009 - 10 AS ALSO THE SAME WAS DULY CLAIMED IN THE RETURN OF INCOME FOR IMPUGNED AY 2011 - 12 BY WAY OF SET OFF AGAINST LONG TERM CAPITAL GAINS EARNED ON I.T.A. NO.22/MUM/2016 47 S ALE OF SHARES OF LICMF - AMC. THESE C ONTENTION OF THE ASSESSEE NEED VERIFICATION FROM THE RECORDS AVAILABLE WITH REVENUE AND WE ARE OF THE CONSIDERED VIEW THAT THE MATTER NEED TO BE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR VERIFICATION OF THE CLAIM OF THE ASSESSEE ON MERITS IN ACCORD ANCE WITH LAW AND ALLOW RELIEF IF CONTENTIONS OF THE ASSESSEE ARE FOUND TO BE CORRECT AND THE SAID LOSS IS OTHERWISE ELIGIBLE FOR SET OFF AGAINST LONG TERM CAPITAL GAINS EARNED BY THE ASSESSEE WITHIN MANDATE OF PROVISIONS OF THE 1961 ACT IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE AO SHALL GRANT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE VERIFYING THE CLAIM OF THE ASSESSEE ON MERITS IN ACCORDANCE WITH LAW AND EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTIONS SHALL B E ADMITTED BY THE AO WHICH SHALL THEREAFTER BE EVALUATED BY THE AO ON MERITS IN ACCORDANCE WITH LAW WHILE ADJUDICATING CLAIM OF THE ASSESSEE . THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1 .08.2018. 2 1 - 08 - 2018 S D / - S D / - (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 1 .08.2018 NISHANT VERMA SR. PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE I.T.A. NO.22/MUM/2016 48 // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI