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2013 (2) TMI 350 - AT - Income TaxInvocation of the provisions of section 50C - assessee is a shareholder in company along with other shareholders and sold his shares for a consideration - Held that:- Section 50C provides for meaning of the "full value of the consideration" (FVC) and it is a deemed definition. Accordingly, when the assessee transfers a capital asset being land or building or both, for a consideration lesser than the value adopted, assessed by any authority of a State Government, the value so adopted or assessed shall be deemed to the 'full value consideration' for the purpose of computing capital gains u/s 48. The expression "assessable" has inserted into the statute for perspective application w.e.f 1.10.2009 whereas the assessment year under consideration is 2007-08 and 2008-09. The capital assets that are covered under the provisions are land or building or both. Expression "transfer" shall have to be a direct transfer as defined u/s 2(47)which does not include the tax planning adopted by the assessee. In the light of the above legal interpretation of section 50C in the instant case, what transferred by the assessee are the shares in the company and not the land or building or both. Assessee does not have full ownership on the flats which are owned by the company. The transfer of shares was never a part of the assessment of the Stamp duty Authorities of the State Government. The company was deriving income, taxable under the head 'income from property' for more than a decade. The expression "assessable" is inserted in section 50C(1) of the Act is not relevant for the impugned assessment years. In such circumstances, the AO's decision to invoke the provisions of section 50C to the tax planning adopted by the assessee is not proper and it does not have the sanction of the provisions of IT Act. The provisions of section 50C are deemed provisions which are required to be strictly interpreted, it is not covered by the expressions of the present case. Therefore, order of the CIT(A) is required to be reversed with a direction to the AO to allow the claim of the assessee - in favour of assessee. Addition on additional consideration of money paid by the transferees to the company who utilized the same for repayment of loans of the company to its Directors - Held that:- The entries in the books of accounts vividly suggests that the transferees infused the money in the accounts of the company and the company repaid the liabilities of the Directors and it is not the case of the transferees paying additional consideration directly to the transferors of the shares i.e. capital assets. Therefore, considering the book entries the allegations of the AO do not have sustainable strength. Therefore, Income tax Authorities have fallen into error zone in deeming the loan repayments as an additional sale consideration - in favour of assessee.
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