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TMI Blog2013 (6) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... y did not arise from business or due to exercise of profession but on amalgamation, therefore, held to be not income, whereas it may be concluded that amalgamation is also an exercise carried out for the purpose of various requirements of business. 2. Ld. representatives fairly agree that the issue in appeal is squarely covered by a decision dated 06.03.2013 of the coordinate bench of this Tribunal in the case of ITO, Ward-7(3), Kolkata vs.- Shreyans Investments (P) Ltd. in ITA No. 1485/Kol./2011 reported in [2013] 31 Taxman.com 11 (Kolkata-Trib.),wherein on materially identical facts similar action of ld. CIT(Appeals) was upheld. While doing so, the coordinate Bench through speaking order has observed as under :- 6. We find that there is no dispute about the fundamental factual position that it is a case of amalgamation of companies, and it is as a result of this scheme of amalgamation, duly approved by Hon ble jurisdictional High Court a copy of which is placed on our records as well, that the capital reserve of the amalgamating company, i.e. VVPL, was shown in the books of accounts of the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that (ii) that such benefits or perquisites should arise from the business or exercise of the profession. The expression arising from the business essentially implies that the benefit or perquisite must be in the nature of a business receipt or revenue receipt. No matter how wide be the scope of Section 28(iv), the difference between a capital receipt and revenue receipt cannot be overlooked. In the case of Mahindra Mahindra Limited Vs CIT ( 261 ITR 501), Hon ble Bombay High Court has, in the context of this significant distinction between revenue and capital receipts, held that waiver of principal amount in respect of imports of plant and machinery could, by no stretch of logic, be treated as business income , and, therefore, as an income taxable under section 28(iv). One must bear in mind the fact that section 28 only refers to the income which can be charged to income tax under the head profits and gains from business or profession , and, therefore, when a particular advantage, perquisite or receipt is not in the nature of income, there cannot be any occasion to bring the same to tax under section 28(iv). Hon ble Supreme Court, in the case of Padmaraje R Kadambande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is in nature of income, it cannot be considered for taxation under section 28(iv). The reference to benefits which can be brought to tax under section 28 (iv) for benefits arising from the business also indicates that such benefit must be a business receipt, or revenue receipt, in nature. 8. To find out whether or not the benefit, even if that be so, is on capital account or revenue account, it is necessary to understand the nature of transaction which has resulted in, what the Assessing Officer, perceives as benefit to the assessee . This was a case of amalgamation in the nature of merger, and an amalgamation in the nature of merger, in corporate parlance, is the process of blending of two or more companies into one of these blending companies, the shareholders of each blending company becoming substantially the shareholder of the company which holds the blended undertaking. The expression amalgamating company is used for the blending company which loses its existence into the other company and the expression amalgamated company is used for blended undertaking, which holds existence of those two or more companies. In essence thus, the whole exercise of amalgamati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The onus is on the Assessing Officer to demonstrate that the receipt is of the revenue nature. 9. We have noted that the Assessing Officer s observations to the effect that business under section 28 has a very broad meaning and may be used in different connotations and that it includes adventure in the nature of trade, as also his reliance on Hon ble Supreme Court s judgment in the case of Rajputana Texitiles (Agencies) Ltd. Vs CIT 42 ITR 743 (SC), wherein it was held that where from the very beginning, purchase of shares is made with the intention of selling them, at a profit, it is an adventure in the nature of trade. However, we are unable to see any merits in these arguments either. Whatever be the scope of expression business , an advantage has to be of income nature first, and when it is not of income nature, it cannot be brought to tax under the head profits and gains from business or profession As regards the transactions in the nature of adventure in the nature of trade in a situation in which shares are purchased with an intention of selling the same, right now we are dealing with a case of amalgamation by way of merger and not by way of purchase of shares, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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