TaxTMI 
TaxTMI 
2019 (10) TMI 1453
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....es of the case and as per law, the Ld. CIT(A) has erred in not appreciating the importance of the insertion of word "assessable" in Section 50C, which makes it even more clear that even in the absence of registration of the deed, the stamp duty value/market value has to be adopted as deemed full value of consideration in Section 48 of the Act. 3. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the addition of deemed dividend made u/s. 2(22)(e) of the Income-tax Act, 1961 in the hands of the assessee in respect of advance of Rs. 5,37,46,284/- received by M/s. Gayatri Films & Music Pvt. Ltd., (for sake of brevity, GFMPL) from M/s Sagar Entertainment Pvt. Ltd., (for the sake brevity, SEPL) was perverse, since the finding of fact given in the order in the order of Ld. CIT(A) are inconsistent with the material on record? 4. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in holding that the assessee did not have the more than 20% beneficial shareholding in GFMPL whereas the Audited Annual Report of GFMPL clearly states that the assessee holds 25.34% of shareholdin....
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....7.03.1998] [applicable index 331 x 785] assesses shae in property 20.04% hence indexed cost Rs. 2030078/- - copy of purchase deed already placed on your record 20,30,078 Cost of transfer/ cost of improvement - Amount payable to SEL for reimbursing capital expenditure by SEL incurred on plot no. 33 Rs. 200357/- and plot no. 19 Rs. 400713/- copy of MOU enclosed 6,01,070 Long Term Capital Gain 2,22,53,129 Being of the view, that the LTCG on the transfer of the aforesaid property was to be supposedly worked out as per Sec. 50C of the Act, the A.O called upon the assessee to put forth his explanation as regards the same. In reply, the assessee tried to impress upon the A.O that the provisions of Sec. 50C were not attracted in his case for two fold reasons, viz. (i). that, as per Sec. 45(3) the amount credited to the partners account was deemed to be the full value of consideration accruing or received by the partner; and (ii). that, as introduction of asset by the partner in a firm by way of his capital contribution was not a transfer, therefore, the provisions of Sec. 50C were not attracted. However, the A.O not being persuaded to subscribe to the aforesaid contention....
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....,46,284/- that was made by the A.O u/s 2(22)(e) of the Act, it was observed by the CIT(A), that none of the shareholder of M/s Gayatri Films & Music Pvt. Ltd. was having more than 20% of equity capital and was simultaneously having more than 10% shareholding in the lending company. Also, it was observed by the CIT(A), that as Sec. 2(22)(e) referred to the beneficial ownership of the shareholder, therefore, the holding of the assessee in his individual capacity could not be clubbed with the holding of his HUF. On a similar footing, it was observed by him, that the holding of the other shareholder i.e Sh. Jyoti Sagar in his individual capacity could also not be combined with his shareholding in the capacity as that of Executor to the Estate of Late Subhash Sagar. In the backdrop of his aforesaid deliberations, it was concluded by the CIT(A) that the addition made by the A.O u/s 2(22)(e) was not sustainable and was liable to be vacated. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. Order of the CIT(A) has been assailed by the revenue before us on two grounds, viz. (i). that, the CIT(A) was in error in vacating the addition o....
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....ate government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purpose of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. As observed by us hereinabove, both of the aforesaid statutory provisions i.e Sec. 45(3) and Sec. 50C envisages a deeming provision for the purpose of adopting the "full value of consideration" received or accruing as a result of transfer of the "capital asset", in order to work out the "capital gain" in the hands of the assessee. In our considered view, the deeming provisions of Sec. 45(3) would be rendered as otiose and the working of the said statutory provision would stand jeopardised, in case, the deeming provisions of Sec. 50C are allowed to be transposed and read into the same. For the purpose of resolving the controversy involved, it would be relevant to consider the circumstances which had led to insertion of Sec. 45(3) on the statute w.e.f 01.04.1988. As can be gathered from a perusal of CBDT Circular No. 495, dated 22.09.1987 (para 24.1), Sec. 45(3) was made available on the statute in order to overcome....
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....sociation of persons or body of individuals; and (ii). the second limb, is a deeming fiction which enables adoption of the amount recorded in the "books of accounts" of the firm or other association of persons or body of individuals, as the "full value of consideration" received or accruing as a result of the transfer of the capital asset. As can be gathered from a perusal of Sec. 45(3), the "charging" of the transaction therein envisaged to levy of capital gain tax and quantification of such tax, both go hand in hand for facilitating quantification of the capital gains tax. Now, in case the quantification of the capital gain tax as envisaged in Sec. 45(3) is substituted by Sec. 50C, then, in our considered view, the charging to tax of the transaction under consideration would in itself stand jeopardised and the section would be rendered as inoperative. In sum and substance, the provisions of Sec. 45(3) cannot be substituted. In other words, the deeming of the amount recorded in the "books of accounts" of the firm or other association of persons or body of individuals, as the "full value of consideration" received or accruing as a result of the transfer of the capital asset in Sec.....
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....ntribution or otherwise shall be chargeable to tax. The profit or gain would arise only when the transfer has been made at a price which is more than the cost price and the difference between the cost price and amount at which transfer has taken place can be charged under section 45(3). In the instant case the purchase price of land as recorded in the transferor's book and recorded in the books of the joint venture are the same. As per provisions of section 45(3) price of land recorded in the books of joint venture is required to be considered as receipt of full value of consideration received or accrued as a result of transfer of capital assets. Once the price recorded in the joint venture's books is treated as full value of consideration, the provisions do not permit substitution of any value so as to make addition under section 45(3). In fact the approach of the A.O. is also not correct in the sense that under section 45(3) once the full value of consideration is taken as the amount recorded in the books of the joint venture, the capital gain can be worked out by reducing the cost of purchase as per the books of as sessee. In case the A.O. substitutes the cost of purchas....
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....nd" u/s 2(22)(e) in the hands of the assessee. On appeal, the CIT(A) observed that none of the shareholders of M/s Gayatri Films & Music Pvt. Ltd. was having more than 20% of equity capital and was simultaneously having more than 10% shareholding in the lending company. Also, it was observed by the CIT(A), that as Sec. 2(22)(e) referred to the beneficial ownership of the shareholder, therefore, the shareholding of the assessee in his individual capacity could not be clubbed with the holding of his HUF. On a similar footing, it was observed by him, that the shareholding of the other shareholder i.e Sh. Jyoti Sagar in his individual capacity could also not have been combined with his shareholding in his capacity as that of an Executor to the Estate of Late Subhash Sagar. Accordingly, in the backdrop of his aforesaid deliberations, the CIT(A) holding a conviction that the requisite conditions for bringing the transaction within the sweep of Sec. 2(22)(e) were not satisfied, therefore, vacated the addition of Rs. 5,37,46,284/- that was made by the A.O by invoking the said statutory provision. 8. We have perused the orders of the lower authorities in context of the issue under consid....
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....apacity as that of an Executor of the Estate of Shri. Subhash Sagar, could not have been clubbed for working out his individual shareholding in M/s Sagar Arts Pvt. Ltd and M/s Gayatri Films & Music Pvt. Ltd. The tribunal while concluding as hereinabove, had observed as under : "6. We have given a thoughtful consideration to the issue before us and are unable to persuade ourselves to subscribe to the claim of the ld. Departmental representative (for short "D.R"). Admittedly, as is borne from the records, the assessee company is not a shareholder in M/s Gayatri Films & Music Pvt. Ltd. In fact, the entire issue hinges around the aspect as to whether any shareholder of M/s Gayatri Films & Music Pvt. Ltd. (holding not less than ten percent shares) was simultaneously during the year holding not less than twenty percent of equity shares in the assessee company viz. M/s Sagar Arts Pvt. Ltd., or not. As per the revenue, one common shareholder viz. Mr. Jyoti Sagar who was holding 21.06% shares in M/s Gayatri Films & Music Pvt. Ltd., was simultaneously having a 26.94% shareholding in the assessee company. We have perused the records and are unable to persuade ourselves to subscribe to the ....
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....ore than 20% of its shareholding were simultaneously holding more than 10% interest in M/s Gayatri Films& Music Pvt. Ltd. The Tribunal while concluding as hereinabove, had observed as under: "8. We notice that the Ld. CIT(A) had rightly pointed out that the appellant company is not a shareholder the lending company and none of the shareholders is having more than 20% equity and simultaneous holding more than 10% interest in the lending company. Therefore, the appellant company M/s Sagar Arts Pvt. Ltd. cannot be held as concern in which any shareholder is having more than 20% of stake. Since, the findings of the Ld. CIT(A) are based on evidence on record and as per the decisions of the Tribunal relied upon, we do not find any infirmity in the said order to interfere with. We therefore uphold the findings of he Ld. CIT(A) in deleting the addition of Rs. 2,51,50,000/-." As the shareholding pattern of the assesse company and that of M/s Gayatri Films & Music Pvt. Ltd had not witnessed any change during the year under consideration, as in comparison to that of the immediately preceding year viz. A.Y 2012-13, and the facts therein involved also remain the same, therefore, we uphold....