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TMI Blog2015 (1) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... finding that there was no distribution of assets does not lead to a conclusion that there is no transfer at all, particularly when it is not even disputed that the sale as such has taken place, with the participation of the appellant. In the instant case, the consideration in the form of allotment of shares was paid to the partners of the appellant on its instructions. There was no direct transaction between the partners on the one hand and the transferee company, on the other. An attempt is made to apply the concept underlying Clause (xiii) of Section 47 of the Act. Firstly, the provision was not in vogue in the relevant assessment year. Secondly, assuming that the concept was in the offing and in a given case, it may be applied if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer processed the same and passed an order, dated 26.12.2000, taking the view that the appellant sold its assets, worth ₹ 33,02,349/-; the actual sale value thereof is ₹ 1,12,93,389/- and that it is liable to pay the capital gains tax on ₹ 79,91,040/-. It was held that the transaction is covered by Section 45 (4) of the Act. Aggrieved by that, the appellant filed an appeal before the Commissioner of Income Tax (Appeals). The appeal was rejected through order, dated 27.02.2002. Thereafter, the appellant filed IT(SS)A No.74/Hyd/2002 before the Tribunal. That was dismissed by the Tribunal on 31.10.2003 and it was held that even if the transaction does not fall under Section 45 (4) of the Act, it would get att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly on the basis of the record and applied the relevant principles of law. The basic facts are not in dispute. Notice under Section 158BD of the Act was issued to the appellant on 25.11.1998 and in response to that, a return with nil income was filed. It is in the course of processing of the return, that it was found that the appellant sold its assets on 05.05.1995 in favour of a company. Capital gains tax in relation to the said transaction was not paid on the ground that the trensfaree company has only allotted some shares to the partners of the firm and no transfer as such, has taken place. Section 45 of the Act reads as under: Section 45. Capital gains (1) Any profits or gains arising from the transfer of a capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into, or its treatment by him as, stock- in- trade of a business carried on by him shall be chargeable to income- tax as his income of the previous year in which such stock- in- trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. (2A) Where any person has had at any time during the previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by the depository or participant of such beneficial interest in respect of securities shall be chargeable to inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or body, of the previous year in which the said transfer takes place and, for the purposes of section 48, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration received or accruing as a result of the transfer. From a perusal of this, it becomes clear that the obligation to pay capital gains tax arises once, a citizen or assessee transfers a capital asset, owned by him. Certain exceptions are provided for it and the appellant is not able to bring its case within the purview of those exceptions. As regards the plea of the appellant that the consideration for the assets was paid in the form of shares to the respective partners, the Assessing Officer took the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stratum, in this regard, would be the consideration, in terms of money value. Once the money value of the asset is fixed, the tax is to be paid thereon notwithstanding the fact that the actual consideration was paid in different form, albeit, to a third party. In the instant case, the consideration in the form of allotment of shares was paid to the partners of the appellant on its instructions. There was no direct transaction between the partners on the one hand and the transferee company, on the other. An attempt is made to apply the concept underlying Clause (xiii) of Section 47 of the Act. Firstly, the provision was not in vogue in the relevant assessment year. Secondly, assuming that the concept was in the offing and in a given ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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