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2016 (5) TMI 880 - HC - Income TaxComputation of capital gains arising from transfer of an undertaking by the Assessee to a new company in terms of a scheme of arrangement - Assessee had received only ₹ 32.48 crores in terms of the Scheme and the balance amount of ₹ 17.64 crores was discharged by MTAIC by directly issuing fully paid shares to the shareholders of the Assessee Held that:- If we look at the Scheme in the context in which it belongs, it would be plainly evident that it is an instrument for effecting sale of the Assessee’s assets (the Panasonic Division) where the owner selling its assets (the Assessee) has called upon the buyer to pay a part of the consideration to a third party (its shareholders). Indisputably, the seller would be entitled to the entire consideration for the sale and the fact that at its instance a part of the consideration is diverted to a third party would not absolve the seller from recognizing the entire consideration. We are unable to accept Mr Kapoor's contention that merely because part of the consideration for the transfer of the Panasonic Division had been paid to the shareholders of the Assessee by issue of fully paid-up shares, the same could not be stated to have been “received or accruing” in favour of the Assessee. The expression “accruing” as used in Section 48 of the Act is synonymous to entitlement. If the Assessee is entitled to the consideration, then the same must be taken into account for the purposes of computation of capital gains in terms of Section 48 of the Act. The consideration for the transfer of Panasonic Division is real and not hypothetical. The fact that the Assessee had agreed for part of the same being directly received by its shareholders would not make the consideration unreal in its hands; the income sought to be taxed cannot be stated to be hypothetical. - Decided in favour of the Revenue and against the Assessee.
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