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2013 (11) TMI 478 - AT - Income TaxConversion of sole proprietorship firm into company - succession - Applicability of section 47(xiv) of the Income Tax Act - certain transactions not to be regarded as transfer – Receipt of higher value of shares because of re-valuation of the assets - Held that:- all the assets and liabilities of the same proprietorship concern relating to business immediately before the succession has become the assets and liabilities of the company - Shareholding of the same proprietor was not less than 50% of the total voting power in the company - The Assessee has duly complied with the condition as stipulated under clause (c) to Section 47(xiv). This proviso only requires that same proprietor does not receive any consideration or benefit directly or indirectly in any form or manner other than by way of allotment of shares in the company. The words 'other than by way of allotment of shares in the company' qualifies the words 'does not receive any consideration or benefit' as well as 'directly or indirectly'. This clearly denotes that proviso (c) permits receiving of consideration or benefit directly or indirectly by way of allotment of shares in the company. It is not a case where the Assessee has received any other consideration or benefit other than the allotment of shares in the company - Clause (c) of Section 47(xiv) does not prohibit receipt of higher number of shares because the re-valuation. Receipt of higher value of shares because of re-valuation of the assets at the time of succession cannot be treated as consideration or benefit received other than by way of allotment of shares – Reliance has been placed upon the decision in the case of Asstt. CIT v. Nayan L. Mepani [2011 (12) TMI 347 - ITAT, Mumbai] – Decided against the Revenue. Applicability of section 14A read with Rule 8D - Assessing Officer disallowed a sum of Rs. 3,05,423/- applying the provisions of Sec. 14A r/w Rule 8D - There is no precise finding given by the Assessing Officer relating to the expense incurred by the assessee in respect of the income not forming part of the total income. The CIT(A) reduced the disallowance to Rs. 1 lac but also noted that the assessee did not file the full details of the expenditure - Held that:- Not filed any details of expenditure incurred by the assessee not relating to the dividend income - The onus lies on the assessee to prove that the assessee has not incurred any expenses relating to the income not forming part of the total income - Applicability of Sec. 14A has not been denied by the Learned AR – The order of the Assessing officer is restored vide applying Rule 8D read with section 14A – Decided in favor of assessee.
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