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2012 (12) TMI 133 - HC - Income TaxDeemed income u/s 41(1) - transfer of Rs. 1,32,88,530/- from the share application account to the capital reserve account - Assessee is an investment company mainly into the business of purchase and sale of shares. It is also engaged into taking business loans and further financing done to the parties. - held that:- The share application amount was treated as a capital receipt; and likewise the amount of Rs. 45,41,542/- was shown as liability towards purchase of capital assets. Having regard to the law declared in HHEC, consequently it never changed its character when it was eventually transferred to the capital reserve in 2006-07 when the conversion took place 6-7 years later. The period of time when the amounts were held by the assessee in its books also factually eliminated the suspicion that the amounts were given as grants or aid. Whether the assessee claimed any depreciation in respect of the second amount i.e. Rs. 45,41,542/-. There is no observation or finding on the part of the assessing officer. If such is actually the position those amounts allowed as depreciation are liable to be added back. For these reasons the matter is remanded, restricted to the second question, for determination as to whether any amount was allowed as depreciation by the assessee towards goods it imported from its holding company - appeal is partly allowed in the above terms in terms.
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