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TMI Blog2009 (8) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... pfirm is not different from its partners and it is not a distinct legal entity. Since the asssessee is a limited liability company change in the ownership of its shares will have no effect on the legal identity of the company - Appeal is dismissed - 13 of 2004. - - - Dated:- 26-8-2009 - Mr. Justice Deepak Gupta, Mr.Justice V.K.Ahuja, JJ. For the appellant: Mr.Vinay Kuthiala, Advocate For the respondent: M/s.K.D.Sood and Sanjeev Sood, Advocates. Deepak Gupta, J.(Oral) This appeal has been admitted on the following substantial questions of law:- "i) Whether the sale of 100% share-holding of the Respondent Company to the New Management constitutes a 'transfer' as envisaged by Section 2(47) of the Income Tax Act, 1961 and wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be made in the hands of the old company and subsequent assessment from the period 31.7.1992 to 31.3.1993 in the hands of the new company. The moot question which arises for consideration is whether the transfer of the share-holding would amount to transfer of business in terms of Section 170(1) of the Income Tax Act which read as follows:- "170 (1) Where a person carrying on any business or profession (such person hereinafter in this Section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession- (a) the predecessor shall be assesseed in respect of the income of the previous year in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contends that in view of the definition of transfer under Section 2(47) of the Act even a transfer of shares or the right to enjoy a capital asset is a transfer and by transferring the shares, there has been a transfer in the right to use the capital assets of the company and, therefore, the case is covered under Section 170 of the Act. Even if for the sake of arguments, we accept that the transfer of shares amounts to transfer of capital assets in terms of Section 2(47), then also in our considered view, Section 170 will not apply. A bare reading of Section 170 shows that the transfer of the business should be from one asssessse to another. Person under Section 2(31)(iii) of the Income Tax Act includes a company. Under Company Law, a compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee whose entire shareholding and management was transferred by one group of people to another. The company is a juristic person having its distinct legal entity separate from that of the shareholders. The change in the share-holders of the company does not change the legal identity of the company. Therefore, Section 170 had no application to the facts of the case. Reliance in this behalf may be placed on the judgment of the Allahabad High Court in Commissioner of Income Tax v. Mass Products (Ind.) Ltd. ITR 221, 1996 wherein it was held as follows:- "In our opinion, the first question referred to us has to be answered in the negative and against the Department because it is settled law that a limited liability company is a distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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