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2016 (6) TMI 328 - AT - Income TaxCapital gain - Transactions not regarded as transfer - succession of company - cost of acquisition of the company - indexation on the cost of acquisition - converting the Short Term Capital Loss into Long Term Capital Gain and taxing the same - Held that:- The firm is succeeded by the company, therefore, the cost of acquisition of the company would be as that of acquisition of the firm. The valuation of land and assets of firm though valued by the valuer will not change or alter the cost of acquisition of the firm despite valuation of assets of the firm and would remain the same, and therefore the cost of acquisition of the company would be cost of acquisition of the firm. The firm is being succeeded by the company and the company is not buying or purchasing the assets of the firm. The element of sale and purchase of the assets of the firm were not involved in the case of succession of the firm to the company. In view thereof, we decide the issue against the assessee and held that the cost of acquisition of the company (assessee) would be the cost of acquisition of the firm (M/s. Sarju Cold Storage). Therefore, the assessee would only be entitled to the indexation on the cost of acquisition of the firm on the amount of ₹ 2,50,000/-. The argument of the assessee that the AO has wrongly calculated the cost of acquisition of the assessee u/s 49(1)(iii)(a), in our view, is not correct as both the AO and ld. CIT (A) have applied the cost of acquisition on the basis of principles stated herein above i.e. cost of acquisition of the firm. The assessee, in our view, has wrongly got confused with the principles laid down under section 47 which talks about the transaction which are not regarded as transfer, with that of principles for determining of cost of acquisition under section 49. Section 49(1)(iii)(e) was introduced by the Finance Act, 2012 with effect from 1.4.1999. The said section, in our view, is only clarificatory in nature and has specifically provided the cost of acquisition in case of succession of firm to the company. However, the said cost of acquisition was already in existence under section 49(1)(iii)(a) of the IT Act. Therefore, in our view no fresh charge has been created on account of succession of a firm to the company. It has only clarified the existing basis of calculating the cost of acquisition in case of succession of the firm to the company. - Decided against assesssee Levy of interest under section 234B - Held that:- Since we have dismissed the ground of the assessee relating to cost of acquisition on the basis of principles stated herein above i.e. cost of acquisition of the firm, therefore, levy of interest u/s 234B is rightly confirmed by the ld. CIT (A). - Decided against assesssee
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