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2019 (10) TMI 1453 - ITAT MUMBAICapital gain computation - LTCG - addition invoking section 50C - as per AO assessee had transferred certain ancestral plot of land by way of his capital contribution as a partner in two partnership firms - HELD THAT:- As can be gathered from a perusal of Sec. 45(3), the “charging” of the transaction therein envisaged to levy of capital gain tax and quantification of such tax, both go hand in hand for facilitating quantification of the capital gains tax. Now, in case the quantification of the capital gain tax as envisaged in Sec. 45(3) is substituted by Sec. 50C, then, in our considered view, the charging to tax of the transaction under consideration would in itself stand jeopardised and the section would be rendered as inoperative. In sum and substance, the provisions of Sec. 45(3) cannot be substituted. - the deeming of the amount recorded in the “books of accounts” of the firm or other association of persons or body of individuals, as the “full value of consideration” received or accruing as a result of the transfer of the capital asset in Sec. 45(3), cannot be dissected and the charging provision therein provided be allowed to subsist in isolation. As such, we are of a strong conviction, that the deeming of the amount recorded in the “books of accounts” of the firm or other association of persons or body of individuals, as the “full value of consideration” received or accruing as a result of the transfer of the capital asset in Sec. 45(3), cannot be substituted by the deemed sale consideration contemplated in Sec. 50C of the Act. Apart there from, we find that as per the Latin maxim generallia speciali bus non derogant, which is a rule of construction, the special provisions prevail over the general provisions. In the backdrop of our aforesaid observations, we are of a strong conviction that in case the legislature in all its wisdom would had intended to apply the deeming provisions of Sec. 50C to the transactions contemplated in Sec. 45(3) of the Act, then it would have removed Sec. 45(3) from the Act. Having not so done, we are of the considered view, that the deeming provisions of Sec. 50C cannot be transposed and therein be read into Sec. 45(3) of the Act, as the same would frustrate the very chargeability to tax of the transactions therein provided. CIT(A) had rightly vacated the addition of ₹ 4,21,02,957 that was made by the A.O by substituting the market value of the property as per the ready reckoner rates u/s 50C, as against the amount recorded in the “books of accounts” of the respective firms, which was adopted by the assessee as the “full value of consideration” received or accruing as a result of the transfer. Accordingly, finding no infirmity in the order of the CIT(A) to the said extent, we uphold the same. Grounds of appeal Nos. 1 & 2 are dismissed. Deemed dividend addition u/s 2(22)(e) - HELD THAT:- We find no infirmity in the order of the CIT(A), who rightly observing that as none of the shareholders of M/s Gayatri Films & Music Pvt. Ltd. was having not less than 20% of equity capital and was simultaneously having not less than 10% shareholding in the lending company i.e M/s Sagar Entertainment Ltd., therefore, the addition made by the A.O u/s 2(22)(e) was principally not sustainable. At this stage, we may herein observe, that the revenue had not been able to point out before us that as to how the aforesaid observations of the CIT(A) suffered from any perversity. In the backdrop of our aforesaid deliberations, we are persuaded to subscribe to the view taken by the CIT(A) that in the absence of the shareholding pattern required for applying deeming provisions of Sec. 2(22)(e), the addition made by the A.O was not sustainable. Order of the CIT(A) in context of the aforesaid issue is upheld. Grounds of appeal Nos. 2 to 5 are dismissed.
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