Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 1369 - AT - Income TaxAddition of transfer of accumulated profit - charitable institution - accumulation of income u/s 11(2)/(3) - HELD THAT:- Hon’ble High Court, while quashing the notice u/s 148 for assessment years 1998-99 to 2000-01, held that any accumulated profit u/s 11(3) in the hands of the assessee of the past years is liable to be taxed in assessment year 2001-02. Thus, the limited question which we are required to adjudicate in this appeal is whether there were any accumulated profits in the hands of the assessee within the meaning of Section 11(3) which can be taxed on account of merger of the assessee with EHIRC, Chandigarh. We further find that learned CIT(A) has given the finding that there was no accumulated profit u/s 11(2). Learned CIT(A), after considering the facts of the case in detail including the application of income in each assessment year beginning from assessment year 1986-87, has arrived at the conclusion that there was no accumulation of income in any of the years. On the other hand, the application of income was more than the prescribed limit of 85%. The above finding of fact recorded by the CIT(A) has not been controverted by the Revenue. The assessee has stated before the learned CIT(A) as well as before us that the assessee has not accumulated any income in any of the past assessment year by filing application as prescribed in that Section. The Revenue neither in the assessment order nor during appellate proceedings before the CIT(A) including the remand report before learned CIT(A) has been able to establish that there was any accumulation of income as provided in Section 11(2). Before us also, no evidence is brought on record by the Revenue to establish any accumulation of profit u/s 11(2) by the assessee society. In view of the above, we do not find any justification to interfere with the order of the learned CIT(A) in this regard. The same is sustained and all the grounds raised by the Revenue in this appeal are dismissed. Addition on account of capital gain - EHIRC, Delhi merged with the assessee and all the assets and liabilities vested with the assessee society was converted into a company limited by shares - AO concluded that there is transfer of the assets owned by the assessee AOP to another legal entity within the meaning of Section 2(47) which would attract capital gain u/s 45(1) HELD THAT:- We find the issue to be squarely covered in favour of the assessee by the decision of Hon’ble Bombay High Court in the case of Texspin Engineering and Manufacturing Works [2003 (3) TMI 56 - BOMBAY HIGH COURT]. The ratio of their Lordships would be squarely applicable to the case of the assessee because in this case also, the assessee AOP was converted into a company under Part IX of the Companies Act. Thus, till the time of conversion, the AOP remained in existence and the moment conversion took place, the company came into existence. However, the AOP and company never remained in existence simultaneously. Section 45(1) would be applicable on transfer of a capital asset. The transfer of a capital asset is possible only when there is a transferor and the transferee. In the absence of existence of the two entities, the transferor and the transferee, there cannot be any transfer. Similarly, in the absence of two entities, the consideration cannot pass from transferor to the transferee. In view of the above, we hold that the above decision of Hon’ble Bombay High Court would be squarely applicable to the case of the assessee and has rightly been followed by the learned CIT(A). No contrary decision is brought to our knowledge. In view of the above, we, respectfully following the above decision of Hon’ble Bombay High Court in the case of Texspin Engineering and Manufacturing Works (supra), uphold the order of learned CIT(A) and dismiss the appeal filed by the Revenue.
|