TaxTMI 
TaxTMI 
2024 (3) TMI 732
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....te Limited (NCPL) by way of a gift in terms of Transfer Deed dated 26th February 2010. Since the shares were transferred by way of a gift, admittedly no consideration was received by petitioner. We say admittedly because it is also respondents' case that petitioner had transferred those shares without consideration. The cost of the shares to petitioner was Rs. 1,02,27,547/-. 3. On 22nd July 2010 petitioner filed its return of income for Assessment Year 2010-2011 declaring total income as Nil. This was because the income of petitioner was distributed in the hands of the beneficiaries. Petitioner also claimed refund of tax deducted at source of Rs. 547/- in the return of income. In the return of income, petitioner had disclosed the investment of Rs. 8,92,335/- standing as of 31st March 2010 in the balance sheet and also the sum of Rs. 1,02,27,547/- as gift which was debited to the profit and loss account. 4. Petitioner did not receive any communication after the return of income was filed and since no communication or order was received within the prescribed time, petitioner has proceeded on the basis that the said return of income is deemed to have been processed under Section....
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....that the Respondent-assessee had transferred shares without consideration to M/s. Nerka Chemicals Pvt Ltd by transfer deed dated 26th February, 2010. It is the case of the Assessing Officer that these transfer of shares without consideration i.e. gift are chargeable to tax as capital gains. The Petitioner in its objection besides relying upon the decision of this Court in respect of similarly based transferrers (belonging to the same group) i.e. M/s. Nivi Trading Limited v/s Union of India(Writ Petition No. 2314 of 2015 rendered on 7th April, 2015) also placed reliance upon Section 47(iii) of the Act which provides that no capital gain would be payable on transfer of capital asset as a gift. However, the order disposing of the objections does not even refer to the objection based on Section 47(iii) of the Act much less deal with it. Besides nothing has been shown to us which would permit the Assessing Officer to substitute the nil consideration received on gifts by the market value of the shares i.e. movable. 5. Be that as it may, the reasons recorded for issuing the impugned notice, prima facie, do not indicate in the face of Section 47(iii) of the Act that the Assessing ....
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....ble to cases where assessment has been made but income chargeable to tax has been under assessed. In the present case, the regular assessment has not been done by the Assessing Officer and the return of income is deemed to have been processed under Section 143(1) of the Act. Hence, the reliance by respondent no. 2 on Explanation 2(c)(i) of Section 147 of the Act to the facts of the present case is not correct. (f) In the affidavit in reply filed through one Ranjeet Kumar Sinha and affirmed on 13th October 2015, there is no stand taken to speak of. The Officer has only explained that according to him Explanation 2(c)(i) of Section 147 of the Act was correctly invoked and there was prima facie facts which gave reason to believe income has escaped assessment. 9. Mr. Sharma submitted that that the Court has to only consider whether the Assessing Officer in the reason to believe has relied on some tangible material and if that is the case, assessee should be directed to go through the process of reopening. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. 10. We are conscious that in this case return was accepted under Section 14....
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....uing as a result of the transfer of the capital asset the following amounts, namely : (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto; (iii) in case of value of any money or capital asset received by a specified person from a specified entity referred to in sub-section (4) of section 45, the amount chargeable to income-tax as income of such specified entity under that sub-section which is attributable to the capital asset being transferred by the specified entity, calculated in the prescribed manner: xxxxxxxxxxxx 13. Therefore, under Section 45 of the Act any profits or gains arising from the transfer of a capital asset shall be chargeable to income tax under the head "capital gains" and shall be deemed to be the income of the previous year in which the transfer took place. Therefore, (a) there has to be a capital asset, (b) there has to be a transfer of such a capital asset and (c) there has to be a profit or gain arising from the transfer. Only when these three conditions are fulfilled, can the profit....
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....while accepting return under section 143(1) of the Act without scrutiny. Consequently, therefore, the question of change of opinion would not arise. This is in sum and substance held by the Supreme Court in the case of Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers P. Ltd. (supra). It is on this ground that the Supreme Court had in the case of Commissioner of Income Tax and another Vs. Zuari Estate Development and Investment Company Ltd. (supra) reversed the judgment of the High Court. However, even in the case of assessment previously framed without scrutiny which is sought to be reopened by issuance of notice under section 148 of the Act, the principle requirement that the Assessing Officer has reason to believe that the income chargeable to tax had escaped assessment would still survive. Of course, this formation of belief by the Assessing Officer must be prima facie and at the stage when the Court is testing validity of such a notice; it would not be necessary for the Assessing Officer to conclusively establish that the income chargeable to tax had escaped assessment. xxxxxxxxxxxx 10. For multiple reasons we are convinced that these reas....
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....or Scheme. Admittedly, this is not such a case. This proviso is in the nature of exclusion to main provisions of sub-clause (iii) of section 47 of the Act. Under the circumstances, the case on hand would be governed by the main body of sub-clause (iii) of section 47 of the Act and consequently, the provision of section 45 of the Act pertaining to capital gain would not apply. 12. An attempt was made by the Assessing Officer to apply further to proviso to section 48 of the Act. Section 48 of the Act pertains to mode of computation. It essentially provides that the income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely, expenditure incurred wholly and exclusively in connection with such transfer, and the cost of acquisition of the asset and the cost of any improvement. Further proviso to section 48 of the Act which the respondents want to press into service reads as under: Provided also that where shares, debentures or warrants referred to in the proviso to clause (iii) of section 47 ....