Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2024 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (3) TMI 732 - BOMBAY HIGH COURTReopening of assessment - shares were transferred by way of a gift - Admittedly is respondents’ case that petitioner had transferred those shares without consideration - Whether transfer of shares by way of gift is an exempt transfer under Section 47(iii) and accordingly, not liable to capital gains as defined u/s 45 of the Act? - HELD THAT:- We are conscious that in this case return was accepted u/s 143(1) of the Act. Even in that case, the principle requirement that the AO has reason to believe that income chargeable to tax had escaped assessment would still survive. Though this formation of belief by the AO must be prima facie and at the stage when the Court is testing validity of such a notice, it would not be necessary for the Assessing Officer to conclusively establish that the income chargeable to tax had escaped assessment, for various reasons we are convinced that the reasons for reopening lack validity. In this case, Section 45 read with Section 47 read with Section 48 of the Act makes it clear that the AO could not have any tangible material to form a belief that income has escaped assessment. On scrutiny of the statutory provisions as the transaction in question does not invite any tax liability, we cannot accept revenue submission that there is some tangible material to form a belief that there is an escapement of income. Section 47 (1)(iii) of the Act, which deals with transactions not regarded as transfer, expressly provides nothing contained in Section 45 shall apply to any transfer of a capital asset under a gift or will or an irrevocable trust. The case in hand, therefore, would be governed by the main body of sub-clause (iii) of Section 47 of the Act. Therefore, even if there is a transfer of a capital asset under a gift, which admittedly in the case herein, it shall not amount to a transfer under Section 45 of the Act. If it does not amount to a transfer under Section 45 of the Act, no capital gains will be payable because Section 45 is the only taxing provision for capital gains. A gift is commonly known as voluntary transfer of property by one to another without any consideration. A gift does not require a consideration and if there is a consideration for the transaction, it is not a gift. Since in the reason to believe it is admitted that shares were transferred by assessee to NCPL without consideration, certainly it is a gift. Infact it is not even respondents’ case that is it not a gift. Mr. Sharma submitted, as an after thought, that assessee being a Trust it can be reasonably presumed that the transfer was for a consideration because anything a Trust does is for the benefit of its beneficiaries. It is not the case of the Revenue in the reasons to believe or in the order disposing objections or even in the affidavit in reply. Therefore, this submission cannot be even considered. We cannot proceed on hypothesis and deal with such presumptuous argument. Moreover, if the transfer is not valid, the property still remains with the Trust and in such a situation, there can be no capital gain. Decided in favour of assessee.
|