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TMI Blog2018 (9) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 47A of the Income Tax Act (For short 'The Act'). 2. The relevant extract of the said Judgment dated 23.07.2018 in ITA No.884/2007 c/w ITA No.60/2015 is quoted below for ready reference:- "16. We have heard the learned counsel for both sides and given our earnest consideration to the rival submissions. 17. We are of the opinion that the provisions of Section 47(xiii)(b) of the Act, does not envisage the immediate allotment of shares in exchange of capital accounts balances of the partners of the partnership firm on or before the date of succession of business of partnership firm by the limited company. It is true that Clause (b) requires all the partners of the firm immediately before the succession to be allotted the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the erstwhile partners of the partnership firm. The condition of all the assets and liabilities of the firm upon succession becoming the assets and liabilities of the company was also satisfied. 19. Therefore, the only point raised before us is about the purported non- compliance with the condition stipulated in clause (b) of Clause (xiii) of Section 47 and effect thereof on the capital gains tax liability of the erstwhile firm or the successor- company. 20. We are of the opinion that the reasonable period of such process of allotment of shares by way of consideration to the partners in proportion to their capital account balance in the partnership firm has to be completed during the relevant previous year itself viz., on or before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had they been allotted these shares at the time of succession of the business or immediately thereafter, before the end of previous year on 31.03.2000 as against the succession of business on 01.05.1999, they would have become entitled to receive the Dividends for the financial year ending on 31.03.2000, but since in the present case last allotment of shares to larger extent was made by the Company only on 11.03.2003, they were deprived of such an opportunity for 3 years in a row. 23. Had it been a case of other shareholders or outside shareholders also joining the said company and the allotment process of shares could have been legally delayed for 3 years for such other persons also, in a hypothetical case, even such other shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, which in our view, the petitioner with the aforesaid interpretation, were not so complied with during the previous year 1999-2000 relevant to Assessment Year 2000-2001. 26. Therefore, we answer the aforesaid substantial question of law in favour of the Revenue and against the Assessee, by holding that the allotment of shares of the company which succeeds to the business of the partnership firm has to be complied before the end of relevant previous year in which such succession of business takes place. Both the appeals are accordingly disposed of with no order as to costs." 3. In the present Writ Petition, the reassessment proceedings were initiated against the petitioner- company for Assessment Year 2000-01 under Sections 147/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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