TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 913
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....ern M/s. Ravi Jalan to a Private Limited Company, M/s. J.S. Tradex Pvt. Ltd. Consequent to the denial of the benefit u/s 47(xiv), the Assessing Officer alternatively computing the income in question under the head "Income from other sources", by invoking the provisions of Section 56(2)(vii)(c) of the Act. A sum of Rs. 1,24,54,080/- was brought to tax. Disallowance was made u/s 14A of the Act r.w.r. 8D. An addition was also made on the ground that there was suppression of closing stock being gold. The Assessing Officer also made an addition on account of notional rent. 2.1 Aggrieved the assessee carried the matter in appeal. The ld. First Appellate Authority confirmed the additions made by the Assessing Officer. He granted part relief only on the issue of notional rent. 3. Aggrieved the assessee is before us on various grounds. 4. The ld. Counsel for the assessee, Shri Subash Agarwal, submitted that, all the grounds except Ground No. 2(a), Ground No. 3 and Ground No. 4, are not pressed. Hence, we dismiss the Ground Nos. 1, 2(b), as not pressed. 5. We have heard Shri Subash Agarwal, the ld. Counsel for the assessee and Mr. Altaf Hussain, JCIT, ld. Sr. D/R on behalf of the revenue....
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....r the head "Income from capital gains". He held that consequently the transaction attracts Section 56(2)(vii)(c) of the Act. He computed short term capital gains at Rs. 1,24,54,080/- and while doing so, the consideration was computed as under:- (A) FMV of shares of M/s. J.S. Tradex (P) Ltd. As per Rule 11UA(1)(c)(b) Rs. 51.51. x3 lac shares: (the value comes to Rs. 1,54,53,000) Rs. 1,54,54,080/- (A) Amount of consideration received in Cash as per agreement dt. 27.03.12: Rs. 2,40,69,200/- Rs. 3,95,23,280/- 6.3 The Fair Market Value (FMV) of each share as on 31/03/2012 was fixed at Rs. 51.51./- under Rule 11UA(1)(c)(b) of the Income Tax Rules, 1962 ('Rules'), instead of face value of Rs. 10/- per share declared by the assessee. He also mentions, without giving any reason that, the short term capital gain is also assessable under the head "income from other sources". The ld. CIT(A) upheld the findings of the Assessing Officer that the assessee is not entitle to the benefit u/s 47(xiv) of the Act for the detailed reasonings given at page 15 to 18 of his order. On the issue of computation of capital gains, the ld. CIT(A) at para 9 page 18 of his order held as....
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.... the full value of consideration received and if done so, the capital gain would be Nil. He submitted that the cost of acquisition and the price of assets, as reduced by the liabilities, is reflected in the balance sheet on 26/03/2012. He pointed out to the total assets and liabilities, which is reflected in the balance sheet as on 26/03/2012. He submitted that out of the total assets and liabilities, as reflected in the combined balance sheet of M/s. Ravi Jalan, prepared on 26/03/2012, only those assets and liabilities, pertaining to business of trading in gold should be considered for transfer under the agreement to the company. He relied on the decision of the Kolkata Bench of the Tribunal in the case of M/s. Aravali Polymers LLP v. JCIT, order dt. 27.06.2014, where it was held that, the value of the assets taken-over as per the agreement would be the sale price and the value of the assets appearing in the books of the erstwhile entity would be the cost of acquisition and the difference would be either capital gain or capital loss. He submitted that as the value of assets taken-over by way of agreement and the value of these assets in the balance sheet of the assessee company be....
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.....99 Crores, transferred, the Assessing Officer alleges that there is a suppression of Rs. 1,38,690/-, which is less than 1% of the total value. He further submitted that there is no provision in the Act which mandates that stock in trade has to be transferred at market value and that the Assessing Officer wrongly applied the judgment of the Hon'ble Supreme Court in the case of ALA Firm v. CIT [1991] 189 ITR 285 (SC). 9. The ld. D/R, Mr. Altaf Hussain, on the other hand, supported the order of the Assessing Officer as confirmed by the ld. CIT(A). As the assessee has not pressed for benefit u/s 47(xiv) of the Act, he submitted that capital gains have to be computed after determining the FMC of the assets u/s 56(2)(vii)(c) of the Act. He argued that the assessee has acquired shares in consideration for sale of his proprietary concern as a growing concern. He pointed that ld. CIT(A) has recorded that the assessee has not disputed or raised any objection on the computation of the sale consideration at Rs. 3,95,29,280/- and submitted that it is not correct for the assessee to raise this issue before the Tribunal. He relied on the order of the Assessing Officer as well as the ld. CIT....
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....lity Partnership firm, would be the sale price and the cost of acquisition thereof is to be as per books of the erstwhile Company. In these circumstances, the issue of computation of the capital gains under section 45 is restored to the file of the Assessing Officer, who shall take the sale consideration as on 12.10.2010 at the figure, at which the assets of the erstwhile firm has been acquired or taken over by the appellant Aravali Polymers LLP." 12. Applying the propositions of law laid down in the case, to the facts of the case on hand, the value of the assets taken over by the company should be considered as the full value of consideration for the purpose of computation of capital gains under the Act. In this case, the full value of consideration is Rs. 2,70,69,200/-. This is also, the cost of acquisition of assets. As the cost of acquisition and the full value of consideration received on sale are the same figure, no capital gains has accrued or was received by the assessee. Thus, the addition under the head capital gains is hereby deleted. 13. We now deal with the findings of the Assessing Officer that the income in question is assessable as "income from other sources" afte....