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2020 (12) TMI 731 - AT - Income TaxCapital gain on Transfer of share - whether the appellant company has transferred those shares as part of O P Jindal Group family settlement? - gift of share - HELD THAT:- As the assessee has gifted the share, there is no accrual of any revenue to the assessee. According to accounting standard (9) of Revenue Recognition, Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends. Revenue is measured by the charges made to customers or clients for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. As there is no sale of security by the assessee, there is not any inflow of cash, receivables or other consideration, there is no question of accrual of any consideration to the assessee. Even otherwise we hold that according to the Section 122 of The Transfer Of Property Act, 1882 there is an absence of consideration in case of a gift. It is an undisputed fact that the assessee being the absolute owner of the shares gifted , had full enjoyment rights including to alienate, discard and even demolish, unless prohibited by some statutory provisions, it is within the powers of the assessee to make gift at its free will. Further the shares were credited in the books of account of the donor. The gift is also authorised by articles of association, approved by Board of Directors and Shareholders. We have carefully considered the facts of that case and found that those facts are distinct with the case before us. In that particular case there was no addition in the hands of the appellant donee company but the appeal was merely against a direction by the learned assessing officer to tax the above sum in the hands of the beneficiary by applying the provisions of Section 2 (24) (iv) of the income tax act in the hands of one Ms Arti Jindal while assessing the case of the appellant company. The only grievance in that appeal was that despite no addition was made in the hands of that appellant company, the learned assessing officer’s jurisdiction was challenged wherein it has been held that benefit arose to the shareholder of the appellant company by invoking the above provisions of the income tax act. Here we do not have any issue about the taxability of sum in the hands of the donee companies. In fact those have been assessed and there is no addition in the hands of those companies, even otherwise we are not concerned with that /and issue before us is only about taxation of gift in the hands of the donor company. In the present case what have been transferred are stock in trade and not a capital asset. Further, in the present case there is a provision in the articles of association of making the gift thus, it meets the provisions of the companies act also. As asked the learned departmental representative to specifically show us any provision in the Income tax Act which provides for taxation of gift of stock in trade in the hand sof the Donor by imputing market value. No such specific references to section were made. No such provision was shown to us by the ld DR. The issue before us is prior to insertion of Chapter X- A in The Income Tax Act. Gift made by a corporate entity, appellant to 4 different corporate entities, in absence of any consideration, no business income can be charged to tax in the hands of Donor appellant. Accordingly ground number [3] and [4] of the appeal of the assessee is allowed.
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