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TMI Blog2015 (4) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets too were valued and transferred. It was the aggregate of the book value and the net current value which constituted the sale price of ₹ 2,02,40,560/-towards which shares were in fact allotted. Given these facts, the AO appears to have assumed that the other liabilities and assets too had been transferred - which was an inaccurate assumption. The CIT (A) too appears to have ignored this important feature. Given these factors, no fault can be found with the ITAT’s conclusion that regardless of how the assessee treated the transaction, i.e., either reflecting in the P&L account or omitting to do so, in sum, no gain or income arises which can be brought to tax - Decided in favour of the assessee. Notional interest - ITAT deleted addition - Held that:- As the Revenue urges that no material was placed before the AO to support the contention that the advances were made from the assessee’s own funds and that in these circumstances, the CIT (A) fell into error in considering fresh materials. The submissions appear to be attractive considering that the CIT (A) has stated that the appellant placed before him copies of the relevant bank accounts. However, this Court sitting in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the assessee‟s bank, American Express Ltd., towards hundi discounting facilities. In the course of its business operation, the contractors used to submit bills which were discounted on the facilities afforded by the banker. The AO was of the opinion that this was used to finance its construction work in Qutub Enclave Complex and consequently could not have been treated as revenue expenditure but had to be necessarily capitalised, since it went towards augmenting stock in trade. The CIT (Appeals) confirmed this decision. The ITAT in its order (para 45 and 45.1) was of the opinion that the view taken by the lower authorities was erroneous. In doing so, the ITAT was persuaded by the fact that for all previous years and subsequent years the hundi discounting charges were treated as a period cost and charged to revenue account on a year to year basis. The department had enabled this and allowed the matters to become final. The ITAT also noticed that hundi discounting charges‟ was a different nomenclature of interest paid which is governed by Section 36(1)(iii) of the Act. The ITAT noted the definition of interest in Section 2(28A). The impugned order took note of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been done at cost i.e. book value. Income or profit accrues only if anything over and above the book value i.e. the cost is paid by the transferor to the transferee. Mere realisation of the assets or changing the asset from one form to another form do not give rise to income or profit, unless something over and above the cost of such assets is realized, e.g., if the bank Fix Deposits are converted in cash or cash on hand is converted to acquire any asset, do not give rise to income. However, in this case, as noted above there being no payment in excess of cost being paid either in form of cash or shares by the transferee, a wholly owned subsidiary company, to the transferor i.e. assessee in this case, the question of brining anything to tax does not arise. There is no evidence of anything more having passed between the parties than the consideration allotted as shares to the assessee. Accordingly, we delete the addition of ₹ 1,00,97,198/- made on this account. 4. This Court has considered the submissions of the parties. What appears to have escaped the attention of the AO is that at the stage of valuation of the assets transferred itself, the book value of the fixed asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances, the CIT (A) fell into error in considering fresh materials. The submissions appear to be attractive considering that the CIT (A) has stated that the appellant placed before him copies of the relevant bank accounts. However, this Court sitting in second appeal against the decision of the lower authorities has to be circumspect in such matters. This ground does not appear to have been urged before the ITAT articulating that the CIT (A) omitted to give any opportunity to it to re-examine such materials. Such ground also does not appear to have been urged during the hearing. Furthermore, this has not been raised as a ground of appeal before this Court. In the circumstances, we see no reason to depart from the rule of consistency which is also accepted in all the previous years. 7. The question of law is, therefore, answered in favour of the assessee and against the Revenue. Question No.4 8. The assessee had claimed ₹ 61,78,414/- as expenditure towards brokerage and commission. The amount was paid to its brokers for booking and sale of certain properties during the assessment year. The Assessing Officer disallowed this expenditure on the ground th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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