Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 406 - AT - Income TaxSale consideration from transfer of property of the Company - whether taxable in the hands of the appellant? - Held that:- It is settled law that company is an artificial juridical person which has its own identity and it is taxable as such. Hence, for its property sold it is the company which is taxable and not the assessee who received the money on behalf of the company. Now the Ld. Counsel for the assessee’s plea is also cogent that the receipt of sum of money from the company could be taxable in the hands of the assessee who is shareholder and director only under u/s 2(22)(e) of the Act. In this regard, Ld. Counsel for the assessee has stated at bar that assessee is not holding more 9% share in the said company. Hence, provisions of section 2(22)(e) of the Act is not also applicable. In any case, it is not at all the case of Revenue that sum involved is taxable in the hands of the assessee as deemed dividend. Accordingly, we find that just because out of ignorance the assessee has invested sale proceed in regard on behalf of company capital gain bond to save its perceived capital gain liability, the sum involved cannot become taxable income of the assessee. The Central Board of Direct Tax in its Circular has also reiterated that Officers of the Revenue should not try to later advantage of the ignorance of the Assessee. It is also settled law that an income should be taxed in the hands of the appropriate assessee to whom the income belongs. Since the income by way of sale proceed of the property did not belong to the assessee, the assessee is not taxable for the said amount. As held in the case of Income Tax Officer v. Ch. Atchaiah (1995 (12) TMI 1 - SUPREME Court) it is the duty of the Assessing Officer to assess the right person only. Furthermore, as held in the case of Commissioner of Income-Tax, West Bengal I v. India Discount Co. Ltd. (1969 (8) TMI 2 - SUPREME Court) a receipt which in law cannot be regarded as income cannot become so merely because of assessee’s book entry. - Decided in favour of assessee.
|