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TMI Blog2015 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no revaluation of asset and it was mistake on the part of the auditor to classify it as Capital Revaluation Reserve and, therefore, there is no transfer or taxability of capital gain. Since there is no clarity of facts, therefore, in the interest of justice, we are of the opinion that this matter should be restored back to the file of the Assessing Officer to correctly appreciate the facts after taking into consideration the contentions of the assessee and the observations made by the CIT(A) in the light of the material on record. - Decided in favour of revenue for statistical purpose. - ITA No. 4392/Mum/2010 - - - Dated:- 27-5-2015 - B R Baskaran, AM And Amit Shukla, JM,JJ. For the Appellant : Shri Sacchidanand Dubey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that, in wake of consent of settlement with the erstwhile share holders, an amount of ₹ 3,87,01,260/- was credited to Capital Revaluation Reserve, which included the revaluation of the land and certain expenditure incurred for the said land. The book value of the land was ₹ 1,12,98,740/- and after allocation of expenditure and certain liabilities, the difference in income was taken in the balance sheet to Capital Revaluation Reserve and was not recorded as income. The Assessing Officer observed that such a transaction between the assessee company and the erstwhile share holder is clearly a case of transfer of asset u/s. 2(47). In response to show cause notice, the assessee explained that the two shareholders i.e. Malhotra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed opening balance of land as on 01.04.2005 at ₹ 2,18,76,090/-. Out of this the amount of ₹ 1,12,98,740/- was declared as transfer and the balance amount of ₹ 1,05,77,350 was shown as closing balance of land as on 31.03.2006. The land was sold to Malhotra Group for ₹ 5 crore and the difference between the cost price and sale price of ₹ 3,87,01,260/- was profit on sale of land, which was nothing but capital gain which has been transferred to Capital Revaluation Reserve Fund in the balance sheet. He also referred to various clauses of the agreement and also the terms of confirmation of settlement and came to the conclusion that various expenses claimed by the assessee has already been considered/paid by Malhotra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears also. Therefore, actually there was no revaluation of the assets but by mistake the auditor has written as capital revaluation reserve but it should have been written as capital reserve of ₹ 3,87,01,260/- This is a value of transfer of assets as per court settlement and not the revaluation of assets as mentioned in the balance sheet. The AO has also raised no dispute that it was a capital assets and the capital assets has been transferred as per agreement and court settlement and no cash transaction has been taken place which means there is no sale and purchase of any assets. Secondly, it is a capital receipts because the entries are not rooted through the P L A/c. On this fact, neither the AO nor the appellant has any di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is not sustainable, hence deleted. The ground of appeal is allowed. 4. After hearing both the parties at length and on perusal of the impugned order, we find that the Assessing Officer and the CIT(A) have given two diverse reasons for deciding the issue. Earlier the two group, i.e. Malhotra Group and the Pandit Group were running the club with the name and style of Clublink India Pvt. Limited . Due to certain dispute and difference of opinion, both the parties approached the court for amicable settlement for distribution of assets and liabilities. As per the court settlement, Pandit Group took over the assessee club along with the members' liability and Malhotra Group took over the Link House and vacant land along with the lia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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