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2016 (9) TMI 1493 - AT - Income TaxDeemed Dividend and taxability u/s 2(22)(a) - transfer of shares is the case of “disguised distribution of accumulated profits - HELD THAT:- Ultimate beneficiaries of the impugned transaactions are again the same individual of the shroff family. We don't find any benefit accrued to them in any manner. Therefore, the analysis of the provisions of clause (a) of section 2(22) reveals that the same are inapplicable to the share transaction under consideration. In our opinion, the CIT (A) has randomly applied these provisions invalidly and without having any strength of explicit legal provisions. There are no provisions for taxing the so called indirect benefit accrued to the shareholders of the company and provisions of section 2(22)(e) and the that of the section 64 helps the assessee. We direct the AO to delete the addition on this account. Taxability of donor companies u/s 115-O - HELD THAT:- CIT (A) exceeded his jurisdiction in directing the AO to tax the donor companies u/s 115-O of the Act, which may be consequent one, but they are not the subject matter of appeals before him. Therefore, we order for deletion of such direction. Therefore, further, we direct the AO to delete the addition on this account. Gift and its taxability u/s 56(2)(vii) - transaction of gift of UPL and UEL shares to NCPL as a colourable device - HELD THAT:- The assessee is the donor and not the receiver as per the transfer agreement honoured by the revenue authorities. Therefore, in our view the said provisions are not applicable to the facts on record. CIT's conclusions relating to the indirect transfer of benefit suffers from the lack legislative support in any form. Therefore, we direct the AO to delete the addition on this account. The donor and donee of the benefit are the same. On this factual matrix, we do not find any indirect benefit unfairly accrued to the assessee-individual. Even if the transfer is not bonafide, we find it is case of donating share with right hand and receiving the benefit from the left hand of the same individual. In our view, the conclusion of the CIT(A) is far stretched and unsustainable. Therefore, the allegation of colourable device and applying the judgment of the Apex Court in the case of McDowells [1985 (4) TMI 64 - SUPREME COURT] is randomly and erroneously done. Thus, we dismiss the conclusions of the CIT (A). The transfer agreement dated 26.2.2010 needs to be considered as the “gift agreement” as title is not determinative and for this, we rely on the Honble Bombay HC judgment in the case of NCPL [2014 (4) TMI 480 - BOMBAY HIGH COURT] and Gujarath High Court's judgment in the case of Prakriya Pharmachem [2016 (1) TMI 946 - GUJARAT HIGH COURT]. So far as the assessee is concerned, the impugned transactions are covered by the provision of section 47(iii) of the Act as prima facie held by the said judgments. There is no case of invoking the provisions of section 2(22)(a) on the assessee-individual. Similarly there is no case for direction to AO for invoking th provisions of section 115- 0 of the Act on the donor companies where the Shroff family members are the share holders. Finally we disapprove the CIT(A)‟s claim of colourable device in these cases of individuals. Considering the same, we are of the opinion that the grounds raised by the assessee are required to be allowed in favour of the assessee.
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