AI Insights
The case involves Reckitt Benckiser Healthcare India Pvt. Ltd., which filed a Miscellaneous Application concerning an order from the Income Tax Appellate Tribunal dated 18-02-2025. The application pointed out apparent mistakes in the Tribunal's understanding of the facts related to the transfer of assets and liabilities during a demerger, and the subsequent tax implications. The Tribunal had initially treated the inter-unit balances as 'liabilities' of the Treasury segment, which the appellant contested. The Tribunal's decision on some grounds was found to be lacking in detailed discussion, leading to the recall of the order for those specific grounds.
Appeal details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 650958 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
20-06-2025
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2011-2012
Judgement Text
"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Reckitt Benckiser Healthcare India Pvt. Ltd. (Formerly known as Reckitt Benckiser Healthcare India Ltd.), Plot No. Institutional Area, Sector 32, Gurgaon-122001 PAN: AAACP9268J (Appellant) Vs The DCIT, Circle-3(1)(2) Ahmedabad (Respondent) Assessee by: Shri Dhinal Shah, A.R. Revenue by: Shri B.P. Srivastava, Sr. D.R. Date of hearing : 25-04-2025 Date of pronouncement : 20-06-2025 आदेश/ORDER PER: DR. B.R.R. KUMAR, VICE PRESIDENT: The applicant has filed the present Miscellaneous Application in respect of order dated 18-02-2025 passed by the Tribunal. 2. The Miscellaneous Application is reproduced hereunder:- M.A. No. 26/Ahd/2025 (In ITA No. 1184/Ahd/2018) Assessment Year 2011-12 M.A. No. 26/Ahd/2025 Reckitt Benckiser Healthcare India Pvt. Ltd., A.Y. 2011-12 2 “1. We have received the Appellate Order (downloaded from the online ITAT portal) for AY 2011-12 dated 18 February 2025. We observed that there are certain apparent mistakes on record in the said Order, which are summarized below. 2. Hon'ble Tribunal at Para 5.7 of the Order has concluded that Appellant has not transferred the liabilities of Treasury segment, hence the transaction has been rightly treated as transfer of assets. The relevant extract given below: “Thus it can be found that the assessee has only transferred the assets while keeping the liabilities with them.” However, Hon'ble Tribunal has misunderstood the facts (specifically when a ground has been raised and relevant facts/arguments were taken on record at para 5.7) and treated the inter-unit balances with other segments as \"liabilities\" of Treasury segment. In view of the said misunderstanding the following grounds of appeal need to be re- adjudicated again based on facts/material on record: Ground 1.3 On the facts and in the circumstances of the case and in law, Hon’ble CIT(A) has erred in proceeding on absurd proposition that non-transfer of inter-unit balance of earlier year results in violation of provisions of section 2(19AA) whereas section 2(19AA) of the Act only requires that if there are liabilities on the date of demerger of the undertaking, the same is required to be transferred to the resulting company. 3. Hon'ble Tribunal has erred in not adjudicating the following grounds of appeal raised in the original appeal: Ground 1.4 Without prejudice to above, on the facts and in the circumstances of the case and in law the Hon'ble CIT(A) has erred in observing that demerger of the undertaking was undertaken to avoid payment of taxes under the Act. Ground 1.5 Without prejudice to above, on the facts and in the circumstances of the case and in law, the Hon'ble CITIA) has erred in affirming the order of the learned AO seeking to tax fictional and non- existent income in the hands of the Appellant, which is against the principles of law. Ground 1.6-Without prejudice to above, on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in affirming the order of the learned AO and failed to appreciate that in order to levy capital gains tax on the Appellant, it is a condition precedent that the alleged capital gains must arise from transfer of capital assets by the Appellant to its shareholders, which condition is not satisfied in the present case. Ground 1.7-Without prejudice to above, on the facts and in the circumstances of the case and in law, the Hon’ble CITIA) has erred in affirming the order of the learned AO and failed to appreciate that in order to levy capital gains tax on the Appellant, a is a condition precedent that the consideration on transfer of alleged capital assets M.A. No. 26/Ahd/2025 Reckitt Benckiser Healthcare India Pvt. Ltd., A.Y. 2011-12 3 must have been received by the Appellant from the resulting company, which condition is not satisfied in the present case. Ground 1.8-Without prejudice to shove, on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in affirming the order of the learned AO and failed to appreciate that even if demerger of undertaking is treated as taxable transfer under section 45 of the Act, the consideration for the transfer of capital and is what the transferor receives in lieu of the asset he parts with, namely, money or money's worth and it cannot be an average book value of shares of Sterling (resulting company). 4 Further, Hon'ble Tribunal has erred in not passing speaking order in respect of the following grounds of appeal raised in the original appeal and merely dismissed the said grounds jointly with Ground no 1 without any separate discussion: Ground No. 2. Levy of dividend distribution tax Ground 2.1 On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) has erred in affirming the order of the learned AO considering demerger of the treasury undertaking pursuant to a scheme of arrangement under section 391 to 394 of the Companies Act, 1956 sanctioned by Hon’ble Gujarat High Court as one-qualifying demerger and artificially rewriting the transaction of demerger of an undertaking as deemed release I distribution of assets by the Appellant to shareholders as dividend under provisions of section 2(22) of the Act. Ground 2.2 Without prejudice to above, on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in affirming the order of the learned AO and artificially rewriting the transaction of demerger of an undertaking without appreciating the provisions of section 2(19AA) of the Act which mandates issuance of shares by the resulting company directly to the shareholders of the Appellant and not to the Appellant. Ground 2.3 Without prejudice to above, on the facts and in the circumstances of the case and in law the Hon'ble CIT(A) has erred in affirming the order of the learned AO that shares allotted by the resulting company to the shareholders of demerged company pursuant to court approved scheme of demerger is distribution of shares by Appellant to its shareholders. Ground 2.4 Without prejudice to above, on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in affirming the order of the learned AO and not appreciating that even if the allotment of shares of Sterling (resulting company) to the shareholders of Appellant is considered as distribution of dividend under section 2(22) of the Act, quantum of dividend which is paid by way of specie distribution of assets needs to be considered as market value on the date of distribution and not average book value of shares of resulting company. 5. The Hon'ble Tribunal ought to have adjudicated the above grounds along with other grounds of appeal based on facts and M.A. No. 26/Ahd/2025 Reckitt Benckiser Healthcare India Pvt. Ltd., A.Y. 2011-12 4 material available on record. The Appellant therefore, respectfully prays that the order on the above points may kindly be recalled and the above mistakes in order dated 18 February 2025 may kindly be rectified. The Appellant also prays opportunity may kindly be given to make submissions during the course of hearing.” 3. The ld. A.R. submitted that the Tribunal has not passed speaking order in respect of the alternative grounds as well as the other grounds that of ground nos. 2, 2.1, 2.2, 2.3 and 2.4. Therefore, the ld. A.R. submitted that the order dated 18-02-2025 be recalled. 4. The ld. D.R. submitted that the applicant is seeking review of the order and therefore the same should not be allowed. The ld. D.R. relied upon the order dated 18-02- 2025 passed by the Tribunal. 5. We have heard both the parties and perused all the relevant material available on record. The contention of the ld. A.R. that the Tribunal mis-understood the facts is not correct as the Tribunal has given its own finding in respect of ground no. 1. The Tribunal has given finding after going through the assessee’s Profit and Loss Account, Balance Sheet and audit report-figures/calculations. In fact, the finding given by the Tribunal has set facts in consonance with the figures/calculations mentioned in Profit and Loss Account, Balance Sheet notes to the same. Thus, ground no. 1 was categorically dismissed with the elaborate finding. Therefore, it cannot be stated that there is a mistake apparent on record. Thus, to that extent order dated 18- M.A. No. 26/Ahd/2025 Reckitt Benckiser Healthcare India Pvt. Ltd., A.Y. 2011-12 5 02-2025 cannot be interfered with and the Miscellaneous Application to that extent will not sustain. 6. As regards to non-speaking order in respect of ground nos. 2, 2.1, 2.2, 2.3 and 2.4, the same has not been categorically mentioned but it is an imbibed finding in para 5.9 itself of the order dated 18-02-2025. But since the separate finding has not been given to that extent, order dated 18-10-2025 is recalled and the same may be placed for hearing. The registry is directed to place for hearing only to the extent of ground no. 2 and 2.1 to 2.4. Both the parties be given notice accordingly. Thus, Miscellaneous Application filed by the assessee is partly allowed. 7. In result, the Miscellaneous Application filed by the assessee is partly allowed. Order pronounced in the open court on 20-06-2025 Sd/- Sd/- (Suchitra Kamble) (Dr. BRR Kumar) Judicial Member Vice President Ahmedabad : Dated 20/06/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "
