2022 (6) TMI 1158 - AT - Income Tax

Tribunal upholds Commissioner's decision on short term capital gain, emphasizes need for concrete evidence in tax matters

ITO, Ward-6 (1) (4) Ahmedabad. Versus Shri Gondaliya Kamleshbhai Keshavbhai (HUF)

ITO, Ward-6 (1) (4) Ahmedabad. Versus Shri Gondaliya Kamleshbhai Keshavbhai (HUF) - TMI Issues:1. Addition of short term capital gain2. Addition on account of share transaction by resorting Clint Code ModificationIssue 1: Addition of Short Term Capital GainThe appeal was filed by the Revenue against the order passed by the Commissioner of Income-tax (Appeals)-6, Ahmedabad for the Assessment Year 2009-10. The assessee, a Hindu Undivided Family (HUF), engaged in trading in investment, finance, and securities, filed a return declaring NIL income which was later reopened under section 147 of the Income Tax Act, 1961. The Assessing Officer (AO) made an addition of short term capital gain of Rs.5,98,73,450/- relating to the revaluation of land in the books of the assessee. The assessee contended that there was no transfer of asset from the partnership firm to the partners, and hence, no capital gain should be applicable. The Commissioner of Income-tax (Appeals) relied on judicial precedents and held that the revalued amount of the capital asset transferred to the partners' capital account was not liable to capital gain tax under section 45(4) of the Act. The addition made by the AO was subsequently deleted based on this reasoning.Issue 2: Addition on Account of Share Transaction by Resorting Clint Code ModificationRegarding the addition made on account of a share transaction due to Clint Code Modification (CCM), the assessee argued that they were not a beneficiary of CCM and any modifications were not made with malicious intent. The AO, however, made an addition as capital gain on the revaluation of land and also added an amount on account of share transaction due to CCM. The Commissioner of Income-tax (Appeals) noted that the entire addition was based on information received by the AO for alleged CCM, without concrete evidence of malpractice. Relying on various decisions, the Commissioner deleted the addition made by the AO on account of CCM.In conclusion, the Revenue's appeal was dismissed, and the order passed by the Commissioner of Income-tax (Appeals) was upheld. The Tribunal found no necessity to interfere with the decision as the facts presented did not warrant any changes. The judgment highlighted the importance of concrete evidence and legal precedents in determining the tax implications of transactions, especially in cases involving revaluation of assets and share transactions.