TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 740
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.... assessee converted the said proprietary concern into a Public Limited Company i.e. M/s. Overseas Plastic Moulder India Limited (OPMIL). Thus the business of the proprietary concern was succeeded by a public limited company. On succession of business, the assessee transferred all the assets (including self generated goodwill) and liabilities of the proprietary concern and in consideration for the said transfer received 33,59,064 fully paid up equity shares of face value of Rs. 10/- each of the public limited company. The assessee had entered into an Assignment Deed with the public limited company dated 17.09.2008 wherein the assessee had recorded the terms and conditions of succession of business from proprietary concern into public limited company. The succession of business from a proprietary concern to a public limited company resulted in transfer of all the assets of the business including Plant and Machinery, Goodwill and also Leasehold rights of a factory land situated at Pune. The said transfer was liable for capital gains tax under section 45 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). However, the said transfer was also eligible for exemptio....
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....overed by the exemption under section 47(xiv) of the Act. c ) The assessee got allotment of shares of Rs. 2,29,84,701/- without actually subscribing to it in any form, money or otherwise except for transferring self generated goodwill. d) The shares have to be allotted only to the extent of amount lying to the credit of the proprietor. 3.3. This action of the ld AO was upheld upto the level of tribunal on merits. Accordingly, the ld AO levied penalty u/s 271(1)( c) of the Act for filing inaccurate particulars of income read with Explanation 1 thereon. 3.4. The ld CITA observed that the proprietory concern of the assessee was carried on for the past 30 years and considerable Goodwill has been earned thereon. The ld CITA observed that merely because there was no balance mentioned towards the 'Goodwill' in the balance sheet of the proprietory concern, it cannot be brushed aside that there was no Goodwill at all in the said business which was in existence for 30 years. The ld CITA also appreciated the contention of the assessee that once the value of a particular item (Goodwill in the instant case) is Nil as there was no cost associated with it and is only an intangible asset , ....
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....kground, it has to be seen whether the denial of exemption u/s 47(xiv) of the Act to the extent of Goodwill which was self generated in the books of the proprietory concern, would amount to furnishing of inaccurate particulars of income. We find that the assessee had given reasonable explanation as to why there was no value reflected in his balance sheet of proprietory concern in respect of self-generated Goodwill. It is not in dispute that the assessee was in business for the past 30 years which had earned substantial Goodwill to the assessee. Even the ld AO had accepted this fact and had partially granted exemption in respect of the same u/s 47(xiv) of the Act in the assessment. The assessee also had a bonafide belief that since there was no value for the self-generated Goodwill in terms of section 55(2) of the Act, the allotment of shares for the same pursuant to conversion of proprietory concern into public limited company would also not be considered as transfer within the meaning of section 2(47) of the Act, as the computation mechanism fails in the absence of cost of the asset. Infact the ld AO had accepted the value of self-generated Goodwill to be Rs Nil. This goes to pro....
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....etermining the penalty dispute before us. These findings are not controverted by the revenue. The observations of the ld CITA in this regard are as under:- "A claim of deduction can be said to be bonafide if a legally sustainable view on its allowability exists in the given facts. Such a view need not be necessarily cent percent foolproof. If chances are there that a person, properly instructed in law, can form an opinion about his deduction, then it will be considered as bonafide. A claim shall lack bonafide if the facts are manufactured to give a colour of genuineness to the deduction, or if there is not even a far flung possibility of forming a legally sustainable opinion about the deduction, either because of the facts prevailing in a particular case or because no judicial precedent in favour of allowability of such deduction or if an issue is still virgin and had not received attention of the Courts so far, then simple and plain interpretation of the provision leaves no chance to a reasonably prudent person to form an opinion that such a deduction is allowable. In simple words, the term "bonafide‟ means : in good faith or without fraud or deception and honestly as dist....
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....1(1) (c ) of the Act was levied by the ld AO was on account of denial of deduction u/s 54 of the Act. 4.1. The brief facts as narrated in the order of the ld CITA are that the assessee sold a house property for a sum of Rs. 2,40,00,000/- and claiming long term capital gains of Rs. 2,32,12,393/- after reducing cost of acquisition. The assessee claimed deduction u/s 54 of the Act to the tune of Rs. 92,80,083/-. The ld AO observed from the details filed, that purchase of new property was entered into on 26.5.2006 while original property was sold vide agreement dated 11.9.2008. Thus it was clear that purchase was outside the period stipulated in section 54 of the Act and further perusal of new property shows that it was jointly held by assessee and his wife. The ld AO relied on judicial pronouncements and CBDT Circular No. 471 dated 15.10.1986 and rejected the claim of deduction u/s 54 of the Act. The ld AO levied penalty u/s 271(1)(c ) of the Act on the same on the ground that the assessee had furnished inaccurate particulars of income. 4.2. The ld CITA deleted the penalty on both the grounds. Aggrieved, the revenue is in appeal before us. 4.3. We have heard the rival submissions. ....