2009 (8) TMI 72

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....business. ii) Whether in the facts and circumstances of the case, the Ld. ITAT misconstrued and misinterpreted the material on record while coming to the conclusion that the expenditure incurred by the respondent on repairs and renovations was revenue expenditure and not capital expenditure." The facts of the case are that the assessee- M/s. Hotel Panchrattan is a Private Limited Company engaged in the business of running of a hotel at Manali.  All the shares of this company belonged to the Kapoor family. The management of the company also vested with members of the Kapoor family. During the assessment year 1993-94, i.e., accounting year 1992-93, 100% shareholding of the company was sold by the Kapoor family to M/s.General Sal....

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.... succession took place up to the date of succession. (b) The successor shall be assesseed in respect of the income of the previous year after the date of succession." The Apex Court in Commissioner of Income Tax, Madras v. K.H. Chambers, ITR, Volume 55, 1965 considered the import of Section 25(4) of the Income Tax Act, 1922 which corresponds to the provisions of Section 170 of the Income Tax Act, 1961. It held as follows:- "Succession involves change of ownership; that is, the transfer goes out and the transferee comes in; it connotes that the whole business is transferred; it also implies that substantially the identity and the continuity of the business are preserved. If there is a transfer of a business, any arrangement between ....

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....any Law, a company is a juristic person. The share holders are not the owners of the company. It is the company itself which is its own owner having its own seal and succession. Where shares are transferred, at best this would be a transfer vis-à-vis, the person who was the holder of the shares to the person to whom the shares are transferred. Therefore, individually when Mr.Kapoor has sold his share to M/s.General Sales Limited then it may amount to a transfer when considering the incomes of Mr.Kapoor or M/s.General Sales Limited. Section 170 may be attracted to both the previous and subsequent owner of the shares but cannot apply to the company itself. This is no transfer as far as the assessee, i.e., M/s.Panchratan Hotel is concerned. ....