2022 (3) TMI 1036

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....e Tax Appellate Tribunal (for short 'the Tribunal'), Cochin Bench filed I.T.A. No. 18/2014 in this Court. The controversy in the appeal relates to the Assessment Year 2005-06. 2.1. At the first instance, the assessee was a partnership firm and the firm was converted into a Private Limited Company. The assessee before such conversion as Private Limited Company revalued the land belonging to the firm and the enhanced value of the land was credited to the current account of the partners of the firm. Upon conversion as a Private Limited Company, the enhanced value of land as reflected in the current account of the partners was shown as loan from the partners at the hands of Private Limited Company. The Assessing Officer treated the e....

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....swering the question, particularly question no. 3, held that the enhanced value of land held by the firm credited to the current account of partners does not attract capital gain. Hence, the review petition at the instance of Revenue. 3. Learned Standing Counsel Mr. Jose Joseph argues that the findings recorded by the judgment under review, on question nos. 1 and 2, have bearing on question no. 3 and an independent finding recorded in favour of assessee suffers from patent error on the face of the record. The question of law is, whether crediting the enhanced value to the current account of partners is correct or it should have been credited to capital account? Unless and until all the ingredients of Section 47 are complied with the asse....

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.... provisions contained in the proviso to Section 47(xiii) of the Act. We are not impressed with this contention. It is true that exemption already granted can be withdrawn by virtue of the provision contained in Section 47A(3) of the Act on discovery of violations of the conditions provided in the proviso to Section 47(xiii) of the Act. But, if the assessing authority finds at the time of assessment, that there is violation of the provisions contained in the proviso to Section 47(xiii) of the Act, then transfer of capital assets made in that manner, comes within the ambit of Section 45 of the Act and assessment has to be done accordingly. In making such assessment, the authority concerned is obliged to take note of the provisions contained i....