1983 (6) TMI 38 - AT - Income Tax

Capital Gains, Certain Assets, Deduction In Respect, Equity Shares, Sale Proceeds, Words And Phrases

Summary

Issues:
1. Claim of relief under section 54E read with section 80CC of the Income-tax Act, 1961 based on investment in specified assets.
2. Determination of whether the individuals are promoters of the company for tax relief eligibility.

The judgment involves two appeals arising from the same facts regarding the claim of relief under section 54E read with section 80CC of the Income-tax Act, 1961. The assessee sold shares and land, investing in equity shares of a company, claiming relief as the shares were allotted due to being a promoter. The Commissioner directed withdrawal of the exemption, stating the promoters were the assessee's HUF. The assessee's counsel argued individuals were also promoters, citing legal commentaries defining promoters. Evidence presented included individuals as signatories to key documents and acquisition of shares from the promoters' quota. The departmental representative contended the prospectus named the HUF as promoter, emphasizing the seriousness of the document. The Bench questioned a clause in the prospectus distinguishing between individuals and promoters. Legal interpretations of 'promoter' were provided, emphasizing the wide scope and factual determination. The Tribunal held the individuals as promoters, entitled to the relief, setting aside the Commissioner's order.

The central issue in the judgment was the determination of whether the individuals were promoters of the company, impacting their eligibility for tax relief under specified provisions of the Income-tax Act, 1961. The assessee claimed relief based on the investment in equity shares, asserting they were allotted shares as promoters. The Commissioner disagreed, citing the prospectus naming the HUF as promoter. The assessee's counsel argued individuals also qualified as promoters, supported by legal commentaries defining the role of promoters. Evidence included individuals signing key documents and acquiring shares from the promoters' quota. The departmental representative emphasized the prospectus's significance, stating the HUF was named as the promoter. The Tribunal analyzed legal interpretations of 'promoter,' highlighting the broad scope and factual basis for determining promoter status. Ultimately, the Tribunal held the individuals were promoters, thus entitled to the claimed relief, overturning the Commissioner's decision.

The judgment delves into the interpretation of the term 'promoter' in the context of tax relief eligibility under specific provisions of the Income-tax Act, 1961. The assessee claimed relief based on the investment in equity shares, contending they were promoters of the company. The Commissioner disagreed, pointing to the prospectus naming the HUF as the promoter. The assessee's counsel argued individuals also met the criteria for being promoters, citing legal commentaries and presenting evidence to support their claim. The departmental representative emphasized the prospectus's legal weight in designating the HUF as the promoter. The Tribunal examined various legal interpretations of 'promoter,' emphasizing the factual determination required. Ultimately, the Tribunal concluded that the individuals qualified as promoters, entitling them to the claimed relief under the applicable provisions, thereby overturning the Commissioner's decision.