TaxTMI 
TaxTMI 
2014 (1) TMI 1734
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.... of the case and in law, the AO failed to appreciate that the appellant received redeemable preference shares against valuable consideration i.e., against outstanding capital balance lying with the partnership firm into a private limited company. 3. In the facts and circumstances of the case and also in law, the Ld CIT (A) erred in appreciating the fact that the redemption is made out of the original amount of shares allotted to the appellant for valuable consideration and therefore, there is no distribution of any profits by the company to its shareholders on reduction of capital. 4. In the facts and the circumstances of the case and also in law, the Ld CIT (A) also erred in confirming addition of Rs. 20,74,170/- u/s 2(22)(d) which is ....
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....hat the assessee‟s transaction falls within the exceptions provided in subclause (i) of section 2(22)(d) of the Act. Assessee relied on the commentary of Sampat Iyengar Law of Income Tax, 10th Edition to advance his case. CIT (A) examined the above submissions of the assessee and verified the capital account structure of the partners in the firm‟s accounts and found that the credit balance to the tune of Rs. 25,75,116/-, which constitutes of Rs. 19.7 lakhs on account of „goodwill‟ and Rs. 6,05,116/- on account of „interest payment‟ on the capital balance of the assessee, constitutes an inflated capital balance. The assessee did not actually paid to the firm. Thus, the preference shares received by the ass....
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.... not taken as reducing the amount of its authorized share capital . The same was mentioned in the context of power to issue redeemable preferential shares under the provisions of the Company Act. These arguments were raised for the first time before the Tribunal. Further, Ld Counsel also brought out attention to the page 29 of the paper book the provisions of section 100 of the Company Act, 1956 and mentioned that for reduction of share capital, there is a requirement of Special Resolution by the company which would be confirmed by the Court. Admittedly, these aspects were not placed before the lower authorities. On fairer said, Ld Counsel brought our attention to Schedule-1, where the said shares were placed on part of the paid up capital ....
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....f the Revenue Authorities as well as the relevant material placed before us. It is an admitted fact that the assessee did not make payments as such to the firm / company to the extent of Rs. 25,75,116/-. It includes the sum of Rs. 19.7 lakhs, which is obviously the goodwill, appearing on the credit side for the first time on 31.3.2001. Effectively, Rs. 20,74,170/- was paid by the company to the assessee is obviously against the non-payment by the assessee to the firm / company through the mode of allotment of redeemable preferential shares. These aspects were not examined deeply considering the relevant legal provisions under the Companies Act, 1956. Further, it is an admitted fact that the assessee has not raised the arguments relevant to ....