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TMI Blog2019 (9) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the said provision. Contention that the money was actually received by the assessee on 14.05.2008 and the capital gain or loss, if any, arising to the assessee was required to be computed as per the provisions of sub-section (2) of section 46 in A.Y. 2009-10 and not in the year under consideration, i.e. A.Y. 2010-11 - In the present case, SSPL was liquidated vide order dated 06.11.2009 and the order for strike off (liquidation) of SSPL having been passed on 09.11.2009, we are of the view that the capital gain or loss arising from receipt of money by the assesese-company as a shareholder on the liquidation of a Company was chargeable to tax as per section 46(2) in the year under consideration, i.e. A.Y. 2010-11. We, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer to re compute the capital gain/loss chargeable to tax in the hands of the assessee-company as per the provisions of section 46(2). Ground No. 2 of the Revenue s appeal thus is treated as allowed for statistical purposes. - I.T.A. No. 29/KOL/2015, C.O. No. 119/KOL/2017 (arising out of I.T.A. No. 29/KOL/2015) - - - Dated:- 29-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- were claimed as business expenses. Since the assessee could not furnish the copies of relevant agreements or any other documents to establish the nature of services provided so as to establish it as a business activity and also failed to prove the genuineness of the expenses claimed, the Assessing Officer assessed the income of the assessee from the service charges under the head income from house property . As regards the expenses claimed by the assessee under the various heads as business expenses, the Assessing Officer made a disallowance of ₹ 1,11,71,200/- being 40% of the total expenses claimed by the assessee as the assessee failed to produce the relevant details and documents for verification before the Assessing Officer. 5. The action of the Assessing Officer in treating the service charges as income from house property and disallowing its claim for various expenses to the extent of 40% was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and after considering the submissions made by the assessee, the ld. CIT(Appeals) held that the service charges received by the assessee during the year under consideration were charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relief given by the ld. CIT(Appeals) on this issue, the Revenue has filed an appeal before the Tribunal while the assessee has also filed Cross Objection raising the following grounds:- Ground 1 in Revenue s appeal: That on the facts and in circumstances of the case, the ld. CIT(A) erred on facts as well as in law in holding that professional and legal charges and office expenses were business expenses, ignoring the facts that there was no agreement of documentary evidence furnished by the assessee in regards to service charges received from the tenants at Kolkata and Mumbai to prove this as business income against which expenses under the above heads were charged . Grounds 1 2 in assessee s Cross Objection (1) Because that the Id. Commissioner of Income (Appeals) ought to have adjudicated on the entire estimated disallowance under the read, 'Business Income'. as made by the Id. DCIT, Circle-6(1), in his order u/s 143(3) dated 22nd March 2013 of ₹ 1,11,71,200/-. (2) Because that the id. Commissioner of Income (Appeals) ought to have followed the principle as laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce amount received by the assessee on account of service and maintenance charges is not very clear from the details furnished by the assessee and if quantum of such amount is compared, vis-a-vis the substantial rental income received by the assessee, it does not appear that the service and maintenance charges were generated by the assessee from any business activity carried on independently. We, therefore, find merit in the contention of the ld. D.R. that the service and maintenance charges received by the assessee were only incidental to rental income and since the said activity was ancillary to the main activity of letting out the properties, the service and maintenance charges were chargeable to tax as income from house property as rightly held by the Assessing Officer. 12. As regards the alternative claim of the ld. Counsel for the assessee that the assessee-company was engaged in other business activities during the earlier years and there was only temporarily suspension of the said activities during the year under consideration due to lull in the business, we find that this aspect has not been specifically considered either by the Assessing Officer or even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for long-term capital loss of ₹ 7,25,08,426/-. 10. During the year under consideration, the subsidiary of the assessee company namely M/s. Shalimar Singapore PTE Limited (in short SSPL ) was liquidated vide an order dated 06.11.2009. On the liquidation, the assessee-company received a sum of ₹ 1,23,22,005/- only against an investment of ₹ 6,67,10,007/- made in the shares of SSPL. After reducing the indexed cost of SSPL shares computed at ₹ 8,48,30,431/- from the amount of ₹ 1,23,22,005/- received on liquidation, a loss of ₹ 7,25,08,426/- was claimed by the assessee under the head long-term capital gain . In the assessment completed under section 143(3), the claim of the assessee for the said loss was disallowed by the Assessing Officer for the following reasons:- (i) That after liquidation no money has been transferred to the 'A'. (ii) That the 'A' is unable to furnish the name and address of the person from whom the 'A' has received ₹ 1,23,22,005/-. (iii) That as per Balance Sheet as on 30.04.09 and Report of Public Accountant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which was treated by the appellant as advance. After final liquidation of the company, no further amount was received by the appellant and a sum of ₹ 1,23,22,005/- became the full and final settlement for the shares of SSPL. The assessing officer has expressed the doubt as to how the transaction can be called a transfer and it was also not clear as to who was the transferor/transferee. In this regard it has to be noted that as per section 2(47) of the Act,' transfer' includes extinguishment of any right in an asset as well as relinquishment of the assets. Since SSPL ceased to exist as a company and its name was stuck off, it is clear that the asset in form of share of SSPL held by the appellant was extinguished. This amounts to transfer of asset in terms of section 2(47). Hence, the amount received from SSPL in respect of refund of investment in shares is in nature of consideration for transfer of assets. 4.3. It is clear from the foregoing discussion, that the appellant was having capital assets in form of shares of SSPL, which were transferred by way of extinguishment and the appellant received consideration for the transfer. It is undisputed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation in the present case and the assessee having received a consideration for extinguishment of its interest in the shares of the Company, section 46 has no application. We are unable to accept this contention of the ld. Counsel for the assessee. In our opinion, the assessee-company having received money as shareholder on the liquidation of a Company, sub-section (2) of section 46 is clearly applicable and the capital gain or loss is required to be computed by applying the said provision. 14. The ld. Counsel for the assessee has also raised another contention that the money was actually received by the assessee on 14.05.2008 and the capital gain or loss, if any, arising to the assessee was required to be computed as per the provisions of sub-section (2) of section 46 in A.Y. 2009-10 and not in the year under consideration, i.e. A.Y. 2010-11. We do not find merit in this contention of the ld. Counsel for the assessee keeping in view the ratio laid down by the Hon ble Gujarat High Court in the case of CIT vs.- Jaykrishna Hariballav Das (supra) cited by the ld. D.R. In the said case, it was held by the Hon ble Gujarat High Court that the words on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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