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2021 (3) TMI 599 - HC - Income TaxTax evasion in the guise of tax planning - Colourable Devise - arrangement to avoid payment of taxes on account of correct quantum of capital gain that would result on transfer of shares of NCCPL to GBFL was permitted and within the framework of law - Allegation of Transfer of shares to Godrej Group as part of sale of business of the Nutrine Group to Godgrej Group, routed through a series of transactions including the reconstitution of the defunt firm M/s. B.V. Reddy enterprises to accommodate the shareholders of M/s. Nutrine confectionery Co. P. Ltd HELD THAT:- The Supreme Court in AZADI BACHAO ANDOLAN supra held that an act which is otherwise valid in law cannot be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interest. The aforesaid view has quoted with approval in WALFORT SHARE AND STOCK BROKERS P. LTD supra. - As long as arrangement of the assessee to avoid payment of tax do not contravene any statutory provision and the same is within four corners of law it cannot be found fault with. There were two ways in which the shares of NCCPL held by 13 partners of BVRE to be transferred to Godrej Beverages and Foods Ltd., firstly, that 13 partners in their individual capacity could transfer the shares to NCCPL held by them to Godrej Beverages and Foods Ltd. at a price the shares were ultimately sold to Godrej Beverages and Foods Ltd. through NCSPL and secondly, the manner in which the assesses have transferred the shares through medium of the firm BVRE. The later course would definitely result in lesser tax burden to the assessee but the aforesaid course is permissible in law. It is pertinent to note that there was a lacuna in law which has been addressed by Finance Act, 2012 by introducing clause (xiii) to sub clause(e) of Section 49(1) with effect from 01.04.1999. Before the aforesaid amendment, the assessment was complete. It is also pertinent to mention that during the previous year relevant to Assessment Year 2007-08, there is no transfer of shares by the assessee (individual /HUF) in favour of Godrej Beverages and Foods Ltd. The tribunal on the basis of meticulous appreciation of evidence on record has recorded a conclusion in favour of the assessee. The substantial questions of law answered against the revenue and in favour of the assessee.
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