Capital Reserve from Share Allotment in Amalgamation Not Income; Section 28(iv) Deemed Inapplicable by Tax Authority.

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....Concerning the addition u/s 28(iv) for the amount credited to Capital Reserves on account of allotment of shares by the amalgamated company with respect to the shares held in the amalgamating company, it was held that such allotment of shares is not a voluntary transaction. The benefit accruing to the assessee due to amalgamation by way of merger is not in the revenue field and not of an income nature. Therefore, there was no occasion to invoke Section 28(iv) of the Act. The amalgamation is not an adventure in the nature of trade, and this transaction is clearly a capital account transaction. Consequently, the capital reserve could not be considered as a benefit accrued to the assessee u/s 28(iv), and the order of the CIT(A) deleting the addition was upheld.....