2017 (11) TMI 808 - SCH - Income Tax

Capital gain computation - consideration paid for free-hold - Assessee transfers his land by way of capital contribution and becomes a partner in the firm, does it result in transfer in terms of Section 2 (47) of Act, 1961 or the term transfer has to be construed in the light of Act, 1882 - Whether Tribunal has erred in law in holding that full value of consideration shall be determined as per Section 45 (3) and not under Section 50C of Act, 1961? - Held that - SLP dismissed. HC order confirmed. 2017 (1) TMI 1471 - ALLAHABAD HIGH COURT HC has held that Tribunal failed to appreciate that the entire land came to be acquired by Assessee only on 31st March, 2002. Prior thereto, it had no lawful right or interest in the property in dispute which belonged to State of U.P. Even as per book value, cost of land determined and share profits determined between the parties and their capital contribution is so negligible, as it did not conform to even any normal business transaction entered into by a person of ordinary prudence, and, therefore, there existed all the facts and circumstances to show prima facie that entire transaction of contribution to partnership is a sham and fictitious transaction and an attempt to device a method to avoid tax. Even the terms and conditions of partnership fortify the above inference. Tribunal has not looked into the matter with regard to colorable device and sham transaction of partnership, which was an issue directly raised by Revenue right from the stage of ACIT and onwards, and for that purpose matter requires to be remanded to Tribunal. - Decided against assessee.

Summary

The Supreme Court dismissed the Special Leave Petition in the case of Rohinton Fali Nariman and Sanjay Kishan Kaul. Citation: 2017 (11) TMI 808 - SC Order. Petitioner represented by Mr. Ajay Vohra and others.