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2018 (6) TMI 294 - AT - Income TaxAddition u/s. 68 - deduction u/s. 54F - addition of sale consideration u/s 45 - Held that - Entire sale consideration has been offered as gross income and thereafter deduction u/s. 54F has been claimed. Taxing sale consideration once u/s. 45 and again u/s. 68 amounts to double taxation. Therefore, the addition u/s. 68 is not called for as such because it is a case where one asset gets replaced by another asset and not of cash credit. AO has not doubted the possession of shares by the assessee through the gift as stated by the assessee. AO has raised the issue of taxability of income u/s. 64 as evident from the impugned order. However, she has not concluded this issue. The assessee received shares through the gift from her husband as detailed in the assessment order; thus, the income derived from transfer of such shares has to be assessed in view of the provisions of section 64(1)(iv) and not 68, which the Ld. CIT(A) has done. Thus, there in the assessee s case, the issues relating to the working of LTCG and deduction u/s. 54F loses relevance, therefore, Ld. CIT(A) refrained himself in deciding these issues. Accordingly, the addition u/s. 68 in the hands of the assessee was rightly deleted by the Ld. CIT(A). - Decided against revenue
Issues Involved:
1. Addition of income from transfer of shares under section 68 of the Income Tax Act. 2. Jurisdiction of the CIT(A) in deleting the addition and assessing income derived from transfer of shares under section 64(1)(iv) of the Act. Issue 1: Addition of income from transfer of shares under section 68 of the Income Tax Act: The case involved the appeal by the Department and the cross objection by the Assessee regarding the addition of income from the transfer of shares under section 68 of the Income Tax Act for the assessment year 2008-09. The Department contended that the Assessee received shares as a gift from her husband and subsequently sold them within a short period, suggesting a colorable device to bring black money into books. The Assessing Officer (AO) doubted the sale price of the shares and questioned the genuineness of the transfer. The AO concluded that the transfer was a means to launder black money and taxed the entire sale consideration. However, the CIT(A) deleted the addition, finding that the Assessee had proven the identity of the parties involved in the share transfer, and the sale consideration had been offered as gross income, with a deduction claimed under section 54F. The Tribunal upheld the CIT(A)'s decision, stating that taxing the sale consideration both under section 45 and section 68 would result in double taxation. The Tribunal also noted that the income derived from the transfer of shares should be assessed under section 64(1)(iv) and not section 68, as done by the CIT(A). The Tribunal found no need to interfere with the CIT(A)'s decision and dismissed the Revenue's appeal. Issue 2: Jurisdiction of the CIT(A) in deleting the addition and assessing income derived from transfer of shares under section 64(1)(iv) of the Act: The Assessee's Cross Objection raised concerns about the jurisdiction of the CIT(A) in deleting the addition under section 68 and assessing the income derived from the transfer of shares under section 64(1)(iv) of the Act. The Tribunal, after dismissing the Revenue's appeal, found the Cross Objection to be infructuous and dismissed it accordingly. The Tribunal's decision was based on the Assessee proving the identity of the parties involved in the share transfer and offering the entire sale consideration as gross income, with a deduction claimed under section 54F. The Tribunal upheld the CIT(A)'s decision to delete the addition under section 68 and assess the income under section 64(1)(iv), as it found no grounds for interference. In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the addition of income from the transfer of shares under section 68 and assessed the income under section 64(1)(iv) in the case of the Assessee for the assessment year 2008-09. The Tribunal dismissed both the Revenue's appeal and the Assessee's Cross Objection, finding no need for interference based on the facts and circumstances of the case.
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