9911796707
TMI Blog2002 (10) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... was delivered by R. JAYASIMHA BABU J. -The question referred at the instance of the assessee is, "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that a sum of Rs. 1,16,308 should be brought to tax as capital gains in the hands of the assessee, even though according to the assesses the transaction took place prior to the Taxation Laws (Amendment) Act which introduced section 45(2) of the Income-tax Act, 1961 ?" The assessment year is 1984-85. The assessees are two, the father and the minor son. The Assesses held shares in four companies, viz., Rajalakshmi Mills Ltd., Lakshmi Mills Co. Ltd., Premier Mills Ltd., and Premier Breweries Ltd., from the year 1969. On November 9, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shnaswamy Associates and Rajesh Associates. He concluded that this was only a device with the sole object of evading capital gains tax which should have been payable on the sale of the shares held by the assessees in these companies to their newly formed company, Krishnaswamy Investments Private Ltd. In the assessees' appeal the Commissioner accepted the case of the assessee by relying on the affidavit that had been filed to the effect that the newly formed company had subsequently carried on business in shares. On further appeal to the Tribunal, the Tribunal restored the order of the Assessing Officer and held that the only object of the declaration was to avoid the capital gains tax, that it was a step which the assessee had chosen to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gains on the shares held by them, and transferred to the private limited company which was completely owned and controlled by them and their relative, namely, the wife of Krishnaswamy and the mother of Rajesh. The declaration that these shares were being converted into stock-in-trade was not a normal necessary step but was a wholly artificial one introduced solely for the purpose of evading the liability for tax on capital gain, and for no other purpose. While the assessees no doubt had the freedom of managing their affairs in a manner which would minimise their liability for tax, that does not obligate the Revenue to refrain from examining the true character of the transactions and ignoring wholly artificial steps which are introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
