AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 68
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.... passed by the ld AO u/s 253/143(3) of the Act dated 5.9.2014 wherein the short term capital gains of Rs. 53,56,69,88/- was brought to tax, in the facts and circumstances of the case. The only effective issue to be decided in the appeal of the assessee is as to whether the ld CITA was justified in passing certain comments about the taxability of short term capital gains as above after having struck down the addition made by the ld AO in the facts and circumstances of the case. 3. The brief facts of this issue are that the assessee LLP came into existence on 13.8.2010 by conversion of Aravali Polymers Pvt Ltd (APPL) In terms of the provisions of section 58(4) of the LLP Act, 2008, all the tangible, movable or immovable, and intangible properties vested in APPL , all assets, interest, rights, privileges, liabilities and obligations relating to APPL and the whole of the undertaking of APPL stood transferred to and vested in the assessee LLP and APPL was deemed to be dissolved and removed from the records of the Registrar of Companies. All the assets and liabilities of APPL stood transferred and vested in the assessee LLP at its cost or book value in the hands of APPL. The assessee th....
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....et values is not in accordance with law as the conversion from private limited company into LLP had happened at book values only. Hence there is no question of replacing the consideration figure at market values. The tribunal upheld the action of the ld AO in rejecting the claim of exemption u/s 47(xiiib) of the Act in respect of conversion of private limited company into LLP. However, the tribunal having held that the assessee is not entitled for exemption u/s 47(xiiib) of the Act and accordingly held that the consideration thereon should be adopted only at book values instead of market values, restored the matter back to the file of the ld AO for computation of capital gains by adopting book values for assets. 5. The present proceedings framed by the ld AO u/s 254/143(3) of the Act dated 5.9.2014 were in pursuance of the aforesaid order of this tribunal. 6. Hence it could be seen from the above, that there was absolutely no dispute with regard to the claim of long term capital gains of Rs. 53,56,69,888/- on sale of 30 lakh equity shares of EIH ltd post conversion into LLP by the assessee in the original assessment proceedings. In other words, the said issue never travelled to a....
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.... tax the gain as short term capital gain if he thinks that as legally proper. I take this opportunity to point out that the A.O. is also free to take recourse to the proceedings to levy tax on capital gain in respect of conversion of shares in the erstwhile Aravali Pvt Ltd in the shares of Aravali Polymers LLP in the hands of the shareholders of the said erstwhile company as pointed out in para 2.4. above. 4. Grounds 1,2,3&4 are decided thus in the favour of the appellant. As regards, grounds of appeal no. 5 & 6, I do not agree with the claim of the appellant and therefore, these grounds are not allowed. 10. Aggrieved, both the revenue as well as the assessee are in appeal before us on the following grounds:- ITA No. 267/Kol/2015 - Revenue Appeal 1. On the facts & circumstances of the case and in law, the ld. CIT(A) erred in strucking down the Order of the AO treating the transfer of EIH shares as short term capital gain. 2. On the facts & circumstances of the case and in law, the ld. CIT(A) erred in not appreciating the fact that the Hon'ble ITAT has given specific finding that "the assessee has not complied with the proviso to section 47(xiiib) is not available to....
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....he order of CIT(A) are not in respect of the matter appearing and/or arising in the appeal decided by him and were beyond his jurisdiction and further none of the said findings and observations are brought out from the assessment order, earlier CIT(A) order dated 11th April, 2014, ITAT order and the order of the Assessing Officer giving effect to the order of the Tribunal dated 5th September, 2014 and all such allegations, purported findings and perverse observations had been arrived at on surmises and conjectures, extraneous and irrelevant considerations and are erroneous and liable to be deleted. 4. For That the CIT(A) exceeded his jurisdiction in guiding the Assessing Officer to take recourse to various proceedings to levy tax somehow on the appellant even when no such tax is legally liable to be paid by the appellant and such guidance and/or observation in para 3 are without jurisdiction, illegal and are liable to be deleted and/or reversed. 5. For That the CIT(A) erred in dismissing the grounds No. 5 and 6 raised by the appellant without any discussion whatsoever and without noting any of the arguments of the appellant and/or giving any finding of his own on such argumen....
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....ction 47A94) does not apply. (iii) The capital gains in respect of the transfer of the assets in the hands of M/s Aravali Polymers Pvt Ltd to the appellant firm Aravali Polymers LLP is to be computed under section 45 of the Income Tax Act for which purpose, the issue is restored to the file of the Assessing Officer. 14. In the result, the appeal of the assessee is partly allowed for statistical purposes. Pursuant to the aforesaid directions, the ld AO did compute the capital gains on conversion of private limited company into LLP at Rs Nil by fixing the consideration at book values as directed by the tribunal. Admittedly, this was computed in the hands of Aravali Polymers LLP (i.e the assessee herein) by treating the assessee LLP in the capacity of successor to private limited company. In our considered opinion, the ld AO ought to have stopped the proceedings with this action which would be in strict consonance with the directions of the tribunal supra. We are in complete agreement with the arguments of the ld AR that the issue as to whether the sale of 3000000 lakh equity shares of EIH Ltd post conversion into LLP, would result in long term or short term capital gains , was....