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TMI Blog2007 (10) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... are transferred to others for consideration, we are of the opinion that the respondent-assessee being a legal entity is liable to pay the capital gains tax - Tribunal did not consider a question that was raised by the assessee, namely, that it was not liable to pay the capital gains tax since no consideration was passed on such transfer and that there was no proper determination by the Assessing Officer on the cost of acquisition of the shares – matter remanded. - 89 of 2002 - - - Dated:- 26-10-2007 - K. L. MANJUNATH and ARALI NAGARAJ JJ. Aravind for M.V. Seshachala for the appellants. G. Sarangan for S. Parthasarathi and Y.V. Raviraj for the respondent. JUDGMENT The judgment of the court was delivered by K. L. MANJUN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted on November 3, 1993. Still there was a dispute between the two groups, namely, the Mohandas Pai group and the Ramesh Pai group. Later on, the same was referred to Shri C. Subramaniam for settlement. Accordingly, Shri C. Subramaniam passed an award resolving the dispute among the members of the Manipal Pai group. According to the assessee-company, in terms of the arbitration award these shares were transferred by the assessee-company. Therefore, it is only a family arrangement and does not attract the tax. The Assessing Officer having accepted the facts of the case held that since the assessee-company is a private limited company, as the assessee-company has transferred the shares held by it of M/s. ICDS Limited and sold at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raising the following substantial questions of law: "(1) Whether the transfer of shares held by the assessee of M/s. ICDS Ltd. and M/s. Manipal Finance Corporation Limited to various persons for a sum of Rs. 3,37,49,633 in excess of the cost of shares received would be liable to capital gains tax ? (2) If the assessee has sold the shares to other persons for consideration under the guise of a family arrangement the assessee-company is not liable to pay the capital gains tax ?" 2. We have heard the learned counsel appearing for the parties. 3. The facts of this case are not in dispute. Even the Revenue has accepted the facts narrated by the assessee. It is also not in dispute that the respondent-assessee is a company consisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account maintained by the assessee, the Tribunal should not have allowed the appeal of the assessee relying upon the judgments of the Madras High Court reported in AL. Ramanathan [2000] 245 ITR 494 and R. Ponnammal [1987] 164 ITR 706. 4. According to the learned counsel for the appellant, the decisions relied upon by the Tribunal was only in regard to the members of the Hindu undivided joint family and not in regard to transfer of shares held by one company to others. Therefore, he contends that the aforesaid two decisions of the Madras High Court are distinguishable on the facts and requests the court to allow the appeal. 5. Per Contra Mr. Sarangan contends even though the facts involved in the judgment relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a serious dispute among the members of Pai. It is also not disputed by the Revenue that a settlement was effected and an award was passed by Shri C. Subramaniam. The respondent-assessee is a private limited company even though its shareholders are members of the joint family, as shareholders have no right over the assets of the company and they would get a right over the assets of the company only in the event the company is liquidated under the provisions of the Companies Act and assets are to be distributed to the members of the company. There cannot be any quarrel over this legal proposition. If it is so, by virtue of the arbitration award if shares of the private limited company are transferred to others for consideration, we are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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