TaxTMI 
TaxTMI 
2013 (2) TMI 350
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....s. Kamala Mansion P. Ltd. was not required to be registered with stamp authorities and in determining the sale value at Rs. 4,12,16,5000/- against agreement value of Rs. 3,46,71,609/- while working out the capital gain on sale of shares of M/s. Kamala Mansion P. Ltd. The purchasers of the shares of the company are not relatives of the Directors/Shareholders of the company nor they have any business relationship with the Directors/Shareholders or any associates thereof. 2. On the facts and circumstances of the case and in law the Ld CIT(A) erred in confirming addition of Rs. 55,28,500/- to the sale consideration being separate payment to the company for repayment of loan taken by the company for purchase of property. 3. Without prejudice on the facts and circumstances of the case and in law the Ld CIT(A) erred in not considering the ground of the appellant to substitute indexed cost of the immovable property while computing capital gains on sale of immovable property. 4. Each of the above grounds of the appeal is without prejudice to one another." 2. There are two core issues raised in the grounds for our consideration and they are: if the pro....
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.... of the company vis-à-vis the Directors. Proportionately, the sale consideration for assessee's share of 306 shares works out to Rs. 37,51,369/-. AO adopted the same for arriving at the capital gains of Rs. 36,38,131/- in place of Rs. 27,82,458/-returned by the assessee. The long term capital gains arrived at by the assessee on account of all these transfer of shares works out to Rs. 36,38,131/-. Brief computation is as under: "The capital gains would be worked out as follows: Sale consideration apportioned to the assessee as Discussed above ............. Rs. 37,51,369/- Less: Indexed cost of the cost of acquisition of the property, as discussed above ............. Rs. 1,13,238/- Taxable capital gain ............. Rs. 36,38,131/-" 5. Finally, AO concluded that by engineering the sale of the shares of all other shareholders of the company i.e. M/s. KMPL, the assessee effectively transferred the immovable property belonging to the assessee, therefore, it is an indirect way of transferring the immovable properties i.e. flats no 1901B and 2001B, for lesser consideration and, therefore, the provisions of section 50C of the Act have application t....
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....ration is sustainable. 7. Before us, Dr. Shivaram, Ld Counsel for the assessee narrated the facts of the case and argued stating that the provisions of section 50C has no application to the facts of this case. As per Ld Counsel, the capital assets transferred here are the shares of the company and not the land or building or the both. Provisions of section 50C are the deemed provisions and the meaning of the same cannot be extended as the deemed provision has to be strictly interpreted as held in a judgment in the case of CIT v. Shrishakti Trading Co. [1994] 207 ITR 442 Ld Counsel filed written submissions narrating the legal submissions mentioning that the expression "full value consideration" received or accruing as a result of the transfer as fully explained by various decision which are as follows. 1. CIT v. George Henderson & Co. Ltd [1967] 66 ITR 622 (SC) 2. CIT v. Gillanders Arbuthnot & Co [1973] 87 ITR 407 (SC) 3. Rupee Finance & Management (P.) Ltd. v. Asstt. CIT [2008] 22 SOT 174 (Mum.) ITAT -Affirmed by Bombay High Court ITA No.1208 dated 20.10.2008. Vishal P. Mehata v. Dy. CIT [ITA No. 3586/Mum/2009, dated 26.10.2010] 8. Further,....
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....d values report. h. Immovable asset continue to be in the name of KMPL" 10. On the other hand, Ld DR for the Revenue relied on both the orders of the AO and CIT(A) and argued stating that this is a case of tax evasion and there is a need for piercing of corporate veil which rightly done by the AO. Ld CIT-DR is of the view that the order of the CIT(A) should be confirmed. 11. We have heard both the parties, perused the order of the Revenue and the material available before us. There is no dispute on the facts and therefore, the dispute relates to the applicability of provisions of section 50C of the Act. For examining the validity of the applicability of the said provisions, we proceed to examine relevant provisions and the provisions of section 50C of the Act read as follows. "Section 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such trans....
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....ct. The provisions of section 50C are deemed provisions which are required to be strictly interpreted, it is not covered by the expressions of the present case. Therefore, we are of the opinion that order of the CIT(A) is required to be reversed with a direction to the AO to allow the claim of the assessee. Accordingly, ground no.1 raised by the assessee is allowed. 13. Ground no.2 relates to the additional consideration of money of Rs. 55,28,500/- paid by the transferees to the company, who utilized the same for repayment of loans of the company to its Directors. On finding that the transferees paid the said amount to the company in the context of the transfer of shares and the beneficiaries are the Directors of the company, AO made an addition of Rs. 55,28,500/- at the time of computation of the chargeable capital gains. But AO ignored the basic fact that the transaction of payment of Rs. 55,28,500/- took place between the transferee and the assessee-company and the assessee only received his dues from the company. The dues received by the assessee cannot be equated with the additional sale consideration. Ld DR relied on the orders of the Revenue. 14. We have heard the parties ....
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....id provisions, being deemed provisions have to be interpreted strictly. We have also held that it is not a fit case for lifting of corporate veil. Considering the commonness of the facts, the above said decisions apply to the appeal under consideration too. Accordingly, grounds raised by the assessee in this appeal are partly allowed. 18. In the result, appeal of the assessee is partly allowed. I.T.A. NO.8835/M/2011 (AY: 2007-2008) 19. This appeal filed by the assessee named Shri Iqbal Abdul Kader Fazlani is against the order of CIT(A)-38, dated 14.9.2011 for the AY 2007-2008. Grounds raised in this appeal revolve around the issue of applicability of provisions of section 50C of the Act to the full value consideration received by the assessee on transfer of shares of other company named M/s Kamala Mansion P. Ltd., and also on the issue of taxation of additional consideration of Rs. 55,28,500/-. Of course, there are other issues relating to indexation and also deeming long term capital gains as short term capital gains. In principle, the issues raised in this appeal are identical to the ones adjudicated by us vide ITA NO.8831/M/2011. In said decision above, we have held that the ....
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....n this appeal revolve around the issue of applicability of provisions of section 50C of the Act to the full value consideration received by the assessee on transfer of shares of other company named M/s Blue Diamond Realtors P. Ltd., and also on the issue of taxation of additional consideration of Rs. 94,08,637/-. Of course, there are other issues relating to indexation and also deeming long term capital gains as short term capital gains. In principle, the issues raised in this appeal are identical to the ones adjudicated by us vide ITA NO.8831/M/2011. In said decision above, we have held that the provisions of section 50C will not apply to the sale of the shares transferred by the assessee on the ground that provisions of section 50C deals with transfer of land or building or both and therefore, the said provisions have no application to the facts of the instant case as the said provisions, being deemed provisions have to be interpreted strictly. We have also held that it is not a fit case for lifting of corporate veil. Considering the commonness of the facts, the above said decisions apply to the appeal under consideration too. Accordingly, grounds raised by the assessee in this a....