Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 411 - AT - Income TaxLong term capital gain - transfer u/s 2(47) - Year of assessment - AO on perusal of agreement was of the view that under the agreement,assessee as well as other co-owners of Unisol were to receive in aggregate a sum of ₹ 20 crores and proceeded to tax entire amount of ₹ 20 crores in the subject assessment year in the hands of all co-owners of shares - HELD THAT:- Commissioner (Appeals) deleted the addition of ₹ 4.48 crores made by the Assessing Officer on the ground that it is notional. On further appeal, the Tribunal upheld the findings of the Commissioner (Appeals) inter alia holding that as there is no certainty of receiving any amount as deferred consideration, the bringing to tax the maximum amount of ₹ 20 crores provided as a cap on the consideration in the agreement dated 25-1- 2006 is not tenable. What amount has to be brought to tax is the amount which has been received and/or accrued to the respondent-assessee and not any notional or hypothetical income as the revenue is seeking to tax the respondent-assessee in the subject assessment year 2006-07. What has to be taxed is the amount received or accrued and not any notional or hypothetical income. As observed by the Apex Court in CIT v. Shoorji Vallabhdas & Co [1962 (3) TMI 6 - SUPREME COURT] ‘Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which liability to tax is attracted, viz., the accrual of its income or its receipt; but the substance of the matter is income, if income does not result, there cannot be a tax, even though in book-keeping an entry is made about a hypothetical income, which does not materialize.’ In this case ₹ 20 crores cap in the agreement is not income in the subject assessment year. In this case the amount of ₹ 20 crores is neither received nor it has accrued to the respondent-assessee during the subject assessment year. We are informed that for the subsequent assessment year (save Assessment Year 2007-08 for which there is no deferred consideration on application of formula), the Assessee has offered to tax the amounts which have been received on the application of formula provided in the agreement dated 25th January, 2006 pertaining to the transfer of shares - Appeal filed by the Revenue is dismissed.
|