TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 931
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....e, the appeal filed by revenue and cross objection filed by assessee were heard together and are being disposed off, by this consolidated order. 2. The Revenue has raised following grounds of appeal:- "1. The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case. 2. The CIT(A) erred in deleting the addition made on Long Term Capital Gains for Rs. 3,64,11,990/- by holding that the calculation of net worth as claimed by the assessee in its computation is as per law. 3. The CIT(A) ought to have appreciated the fact that when the liabilities are with the assessee and not taken over by the buyer which is contradiction of explanation of 'net worth' as per provision of Sec. 50B of the....
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....computation of capital loss and argued that as against aggregate value of assets only liability which has been taken over by the transferee company has been considered. The assessee had also explained difference in liabilities noticed by the Assessing Officer and argued that liabilities consisting of unsecured loans taken from directors and relatives, share application money pending allotment and advance sale consideration received from purchaser of unit and deferred tax liability. The loans and advances taken from director has not been taken over by the purchaser of undertaking. Therefore, same was not considered as liability for ascertaining net worth of the undertaking share application money pending allotment has been converted into sha....
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....eration received from buyer of undertaking and also share application money and thus, both cannot be considered as liabilities for purpose of determination of net worth. The assessee also seeks to exclude deferred tax liability on the ground that it is only notional entry created in books of account on taxes payable by the entity/undertaking and thus, it cannot be considered as liability for computing net worth. The learned CIT(A), after considering relevant submissions of the assessee and also taken note of facts brought out by the Assessing Officer deleted additions made by the Assessing Officer towards recomputation of long term capital gain by holding that certain liabilities were not taken over by the buyer and further, major liabiliti....
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.... Rs. 69,01,185/-, ignoring substantial amount of liabilities of Rs. 9,83,54,127/-. Therefore, she argued that the learned CIT(A) has erred in deleting additions made towards short term capital gain, without appreciating proper facts and thus, order of the Assessing Officer should be upheld. 6. The learned A.R for the assessee, on the other hand, submitted that as has been explained before the authorities below, long term borrowings in earlier financial year includes share application money pending allotment, advance sale consideration received from prospective buyer of undertaking and thus, those two items have been rightly excluded for computation of net worth of undertaking, because both are not liabilities of the undertaking. Similarly,....
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....eing share application money received pending allotment amounting to Rs. 3,12,55,200/- and sale consideration received for transfer of undertaking from prospective buyer of the undertaking amounting to Rs. 4,80,75,931/-. According to the assessee, share application money received pending allotment is not a liability, but shareholders funds and thus, cannot be considered as liability for computing net worth. We find substance in the arguments of the assessee for simple reason that share application money received pending allotment which was part of long term borrowings has been subsequently converted into equity share capital by allotment of shares aggregating to Rs. 3,12,55,200/-, which is evident from financial statements filed by the asse....