TaxTMI 
TaxTMI 
2013 (6) TMI 856
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....lding that the assets taken over by the assessee company as the amalgamated company did not arise from business or due to exercise of profession but on amalgamation, therefore, held to be not income, whereas it may be concluded that amalgamation is also an exercise carried out for the purpose of various requirements of business. 2. Ld. representatives fairly agree that the issue in appeal is squarely covered by a decision dated 06.03.2013 of the coordinate bench of this Tribunal in the case of ITO, Ward-7(3), Kolkata -vs.- Shreyans Investments (P) Ltd. in ITA No. 1485/Kol./2011 reported in [2013] 31 Taxman.com 11 (Kolkata-Trib.),wherein on materially identical facts similar action of ld. CIT(Appeals) was upheld. While doing so, the coordinate Bench through speaking order has observed as under :- ....
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....n". It is thus clear that besides the profits and gains from business and profession carried on by the assessee at any time during the previous year, any other benefit or perquisite, whether convertible into money or not, is also chargeable to tax under this head of income. A plain reading of this provision shows two conditions precedents for such taxability i.e. (i) that there should be benefits or perquisites; and that (ii) that such benefits or perquisites should arise from the business or exercise of the profession. The expression 'arising from the business' essentially implies that the benefit or perquisite must be in the nature of a business receipt or revenue receipt. No matter how wide be the scope of Section 28(iv), the difference between a capital receipt and revenue receipt cannot be overlooked. In the case of Mahindra & Mahindra Limited Vs CIT ( 261 ITR 501), Hon'ble Bombay High Court has, in the context of this significant distinction between revenue and capital receipts, held that waiver of principal amount in respect of imports of plant and machinery could, by no stretch of logic, be treated as 'business income', and, therefore, as an income taxable under section 28(....
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....nts would go to show that when a receipt is referable to fixed capital, it is not taxable, and it is taxable as a revenue receipt when it is referable to circulating capital or stock in trade". To sum up, unless it is a revenue receipt, it cannot be in the nature of income [except in a situations in which capital receipts are specifically included in the definition of income such as under section 2(24)(vi)], and unless it is in nature of income, it cannot be considered for taxation under section 28(iv). The reference to benefits which can be brought to tax under section 28 (iv) for benefits 'arising from the business' also indicates that such benefit must be a business receipt, or revenue receipt, in nature. 8. To find out whether or not the benefit, even if that be so, is on capital account or revenue account, it is necessary to understand the nature of transaction which has resulted in, what the Assessing Officer, perceives as 'benefit to the assessee'. This was a case of amalgamation in the nature of merger, and an amalgamation in the nature of merger, in corporate parlance, is the process of blending of two or more companies into one of these blending companies, the sh....
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....e Brothers (supra), also, we find that the benefit is referable to the capital, and is thus not of an income nature. Even if, as the Assessing Officer observes, "it can be surmised that the assessee is benefited in a myriad ways by way of amalgamation", it does not lead to the conclusion that the benefit is in revenue field which alone can be treated as income and thus be considered for taxability under section 28(iv) of the Act. The onus is on the Assessing Officer to demonstrate that the receipt is of the revenue nature. 9. We have noted that the Assessing Officer's observations to the effect that 'business' under section 28 has a very broad meaning and may be used in different connotations" and that it includes adventure in the nature of trade, as also his reliance on Hon'ble Supreme Court's judgment in the case of Rajputana Texitiles (Agencies) Ltd. Vs CIT 42 ITR 743 (SC), wherein it was held that where from the very beginning, purchase of shares is made with the intention of selling them, at a profit, it is an adventure in the nature of trade. However, we are unable to see any merits in these arguments either. Whatever be the scope of expression 'business', an advanta....