9911796707
TMI Blog2013 (9) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants, the application is allowed, and legal representatives mentioned in paragraph 2 of the application are impleaded as appellants in place of Harbir Singh Khurana, deceased. The amended memorandum of parties is taken on record. Income Tax Appeal No.293 of 2012 By way of this order, we shall decide Income Tax Appeal Nos.293 and 294 o f 2012, as they relate to the same transaction and involve adjudication of the same questions. Facts are being taken from Income Tax Appeal No.294 of 2012. The appellants, challenge orders dated 26.12.2008 (Annexure A-1), 14.10.2009 (Annexure A-2) and 08.06.2012 (Annexure A-3), passed by the Assessing Officer, Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, Chandigarh Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er referred to as 'the ITAT'), which was also dismissed. Counsel for the appellant submits that the impugned orders are illegal, and void as Income Tax authorities have ignored the explanation added to Section 2(14) of the Act, introduced with retrospective effect to clarify that "property" includes any rights in or relation to an Indian Company" including right of management or control or any other rights whatsoever. The explanation clearly places the disputed transaction, within Section 2(14) and, therefore, cannot be treated as a business transaction or income from business, so as to place it within Section 28(va) of the Act. The findings recorded by authorities, to the contrary, are based upon a misreading of the sale-purchase agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 28(va)? (iv) Whether in fact and circumstances of the case, the action of the authorities below, the impugned orders Annexures A-1 to A-3 are legally sustainable in the eyes of law?" Counsel for the revenue submits that findings of fact recorded by the Assessing Officer, affirmed by the CIT(Appeals) and the ITAT, do not give rise to any substantial question of law much less the questions of law framed by the appellant. A perusal of the agreement leaves no manner of doubt that the transaction involves sale of the entire business as is not a simple transfer of shares. The Assessing Officer, the CIT (Appeals) as well as the ITAT have examined each and every clause of the agreement and have only, thereafter, recorded findings of fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal reads as follows:- "10. The only issue arising in the present appeal is in respect of the treatment of the amount received on sale of equity shares of the private limited company held by the assessee, which were transferred during the year under consideration. The plea of the assessee in respect of the said transaction is that it is a mere sale and purchase of investment held by the assessee and consequently gain arising on the said transaction is to be assessed under the head income from capital gains. After recording as above, the ITAT proceeded to narrate the facts, which we need not to reproduce, referred to Articles 2, 3, 4.2, 4.3, 5 and 6 of the agreement, which relate to transfer of shares, a non compete clause that restra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitments, Banking information, software/licences and any other property that was acquired under the tenure of the Sellers working with the Company. Because of the complexity of the handing over operation by the seller i.e. the shareholders of the company to the Managing Director of the new company. The parties entered into agreement on 26.3.2005 and had completed the process on 24.7.2005. If it was mere sale of the investment by way of shareholding by the assessee then the said exercise was not required. Even the sale consideration agreed upon between the parties including the consideration on account of non-compete convenant was paid in installment over a period of time. Further the transfer of shares in effect translated into renunciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchaser. 17. In view thereof we are in agreement with the orders of the authorities below that the transaction in question was not mere transfer of capital asset within the meaning of section 2(14) of the Act but was in fact transfer of business as it was the assessee who was prevented from doing business." A perusal of Sections 2(14) and 28(va) of the Act including the explanation to Section 2(14) relied by the appellant does not enable us to record an opinion contrary to the opinion recorded by the Assessing Officer, affirmed by the CIT (Appeals) and the ITAT. The mere fact that the agreement contains a noncompete clause, payment in respect whereof may not be chargeable to tax in accordance with the aforesaid provisions, does not e ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
