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2020 (5) TMI 339 - AT - Income TaxShares received by the appellant as gift - transaction of receipt of shares as taxable in the hands of the beneficiary under section 2(24)(iv) - sham and void transaction - HELD THAT:- The words benefit and perquisite are used in this clause of sub-section (24) to Section 2. Whether gifting shares amounts any benefit or perquisite has to be looked into. In the present case at one point the AO has stated that there is benefit to assessee company but at the same time states that the transaction of gift of shares held by Mrs. Arti Jindal in the assessee company to M/s PRJ Holding Private Trust was not valid and was a sham and void transaction which was undertaken to avoid tax. But from the MOU submitted by the assessee company it can be clearly seen that it a family arrangement and internal family realignment amongst the members of the family of Late Shri O.P. Jindal and cannot be taken as gift. The chart reproduced in para 3 hereinabove from the Assessment Order clearly shows that it is not a gift but a family arrangement and these kind of family arrangement cannot be termed as gift/benefit or perquisite. AO by lifting the corporate veil, without providing any cogent reasons, and without appreciating that the beneficiary never obtained any benefit from this transaction at any time cannot comment on the said transaction as sham and bogus. Observations made by the AO in the present assessment order are without any jurisdiction. In fact, the AO overstepped the provisions of the Income Tax Act wherein the Assessment is nil in the case of present Assessee company and commented on the third party assessee which is not permissible under the Act. Ground No. 1 of the assessee’s appeal is allowed.
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