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TMI Blog2013 (6) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer of reserve so created to the capital account. In view of the above, agreeing with the CIT(A) that by transfer of reserve to the capital account, no income is generated. However, merely because there was a debit balance of the assessee in the books of account of M/s Loreto & Company, then also the addition cannot be made to the extent of debit balance. Transfer of reserve to the capital account and debit balance in the capital account are two different things. Therefore, there is no justification for sustaining the addition to the extent of debit balance i.e. Rs.8,14,073/-. In favour of assessee. - ITA No.5829/Del/2012 - - - Dated:- 31-5-2013 - G. D. Agrawal And Shri Rajpal Yadav,JJ. For the Appellant : Shri K. V. S. R. Kr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above discussion, the addition of Rs.4,15,618/- being the appellant's share in the reserve u/s 80HHC in the books of M/s Jyoti Apparels which is transferred and credited to the capital account of appellant partner is not justified. Therefore the addition made by the Assessing Officer amounting to Rs.4,15,618/- is hereby deleted. 5.3 It is also seen that the business of M/s Loreto and Company which is proprietary concerns of the appellant was closed in the year under consideration and an amount of Rs.10,48,460/- being the amount of reserve u/s 80HHC is shown transferred to the appellants' capital account in the books of account of M/s Loreto and Company. On this issue, I agree with the Assessing Officer that the benefit of the entire reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . By transfer of such reserve to the capital account, there cannot be any income unless the provision of Section 80HHC so provides. Admittedly, there is no provision in Section 80HHC prohibiting the transfer of reserve so created to the capital account. In view of the above, we agree with the learned CIT(A) that by transfer of reserve to the capital account, no income is generated. However, in our opinion, merely because there was a debit balance of the assessee in the books of account of M/s Loreto Company, then also the addition cannot be made to the extent of debit balance. Transfer of reserve to the capital account and debit balance in the capital account are two different things. Therefore, there is no justification for sustaining th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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