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2023 (4) TMI 1003 - DELHI HIGH COURTTransactions not regarded as transfer - exemption of income arising on account of transfer of “Trunk Infrastructure Asset” to its 100% subsidiary - CIT(A) concluded that the surplus generated by the respondent/assessee on transfer of what was, essentially, capital work-in-progress would be chargeable to tax, as it was an asset employed in the business - HELD THAT:- “Trunk Infrastructure”, which includes roads etc., were, admittedly, transferred by the respondent/assessee to its 100% subsidiary. Transfer of “Trunk Infrastructure”, concededly, led to generation of surplus. The record shows that the respondent/assessee had included this surplus in its return of income albeit, with a note which explained as to how the surplus arose. Tribunal, in reversing the view of the CIT(A), has, in our view, rightly, concluded that an assessee employees both capital assets and trading assets in his business; the fact that a capital asset (i.e., Trunk Infrastructure), which was, as noted above, a capital work-in-progress, on transfer, generated surplus, could not be treated as income, in view of the provisions of Section 47(iv) of the Act. There is no dispute raised before us that the prerequisites provided in Section 47(iv) of the Act stand fulfilled i.e., the transfer of the Trunk Infrastructure/capital work-in-progress was made by the respondent/assessee to its 100% subsidiary and the subsidiary was an Indian company. Whether Tribunal could not have gone beyond the assessment order, given the fact that the respondent/assessee itself had included the surplus as income chargeable to tax in its return of income? - This argument misses the point (something which the Tribunal has noted) which is that the assessee had entered a caveat in the return of income. It is not disputed that a note was incorporated in the return wherein it was explained as to how the surplus arose in the instant case on transfer of Trunk Infrastructure/capital work-in-progress. In our view, it is more than well-established that merely because the assessee inadvertently offers a receipt for levy of tax, tax cannot be levied by the revenue if it is not otherwise constitute income of the assessee. Every receipt is not an income chargeable to tax under the provisions of the Act. Decided against revenue.
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