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2014 (12) TMI 97 - AT - Income TaxComputation of capital gain – Cost of acquisition on land sold adopted – Held that:- The land admeasuring two acres was allotted to partnership firm M/s Bimco Products in the year 1973 at the cost of ₹ 10,000 per acre - assessee joined as a partner in M/s Bimco Products on 01/04/1991 and ultimately on dissolution of firm on 01/10/1991 took over the assets and liabilities of partnership firm which was converted into a private limited company - the land was revalued in the year 1987 in the books of the partnership firm at ₹ 13,40,000 and it was apportioned to the capital account of the partners - when the assets and liabilities of partnership firm was taken over by assessee in the year 1991-92, which also included the land, the value of the land in the books was ₹ 13,40,000. Under no circumstances rate of ₹ 10,000 per acre which is the cost to the original owner i.e. partnership firm in the year 1973 can be considered as cost of acquisition at the hands of assessee - the transfer of asset to the assessee company has taken place on dissolution of partnership firm in FY 1991-92, the provisions of section 49(1)(iii)(b) will not apply - as the transfer has taken place in terms of section 45(4) of the Act, on dissolution of partnership firm in the FY 1991-92, the value of the asset as per the books on the date of transfer has to be taken as cost of acquisition – relying upon Suvardhan Vs. CIT [2006 (8) TMI 142 - KARNATAKA High Court] - AO and CIT(A) were not justified in adopting the cost of acquisition of land at ₹ 10,000 per acre as against ₹ 13,40,000 as shown in the books at the time of transfer on dissolution of the partnership firm – the AO is directed to compute capital gains by adopting the cost of acquisition at ₹ 13,40,000 for two acres of land. Deemed dividend u/s 2(22)(e) – Advances received from sister concern - Held that:- Following the decision in Assistant Commissioner Of Income-Tax. Versus Bhaumik Colour (P) Limited [2008 (11) TMI 273 - ITAT BOMBAY-E] - assessee is not a registered shareholder of M/s Bimco Isolators Ltd. - only because both the companies are having common shareholders will not be a ground to treat advances received as deemed dividend at the hands of assessee u/s 2(22(e) of the Act - as conditions of section 2(22)(e) are not satisfied, addition of ₹ 18,82,901/- cannot be sustained – the AO is directed to delete the same – Decided in favour of assessee.
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