TMI Blog2012 (6) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... e's appeal against the order of the Commissioner of Income-tax (Appeals), Gandhinagar dated 25-11- 2008 arising out of the order of the Assessing Officer passed under Section 143(3) of the Income Tax Act, 1961. 2. At the time of hearing before us, it is stated by the learned counsel that Ground No.1.1 of the assessee's appeal is general in nature needs no adjudication. Ground No.1.2 reads as under: "1.2 The ld.CIT(A) has grievously erred in upholding the addition of Rs.18,38,180/- made by AO u/s.47A(iii) of the Act without considering fully and properly the explanation offered and evidence produced by the appellant." 3. Other grounds i.e. Groun.2.1 to 4.1 are only arguments in support of Ground No.1.2 above. Thus, the only dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re transferred to Vishal Containers Pvt. Ltd. In the Balance sheet of Vishal Industries as on 31/03/2004 the capital balance of partner's was Rs.1.184 crores but in the Balance sheet of Vishal Containers on 1-04-2004 the Capital balance a Rs. 1.00 Crore only and Rs.18.4 lakhs transferred to Unsecured loans o partners. The partners and members of Vishal Containers as Joint Sock Company is the subscribers of Memorandum and Articles of Association of Vishal Containers Pvt. Ltd., in the same proportion of capital balance as share holders of the Company as per Chapter DC of Companies Act, 1956. Further, as per Clause 23(B) SCHEDULE-J of the Form 3 CD of Vishal Containers Pvt. Ltd. though the previous partners have been repaid by cheque or otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf. The only reason of creation of this firm on 01/04/2004 was to hide the fact that the firm "Vishal Industries" had not transferred all the assets and liabilities to the company "Vishal Containers Pvt. Ltd." (assessee) exactly in the same manner as prescribed in section 47(xiii) read with proviso (a) and (c) of that section. The Memorandum and Article of Association of Vishal Containers Pvt. Ltd. also mentioned in page 2 that the partners' of Vishal Industries decided to covert into Private Limited Company. The partners of the firm "Vishal Industries" have received net consideration of Rs.18.4 lakhs in contravention to the proviso (c) of Section 47(xiii) of the 1.T.Act. The Capital of the assessee-company at the time of conversion was Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was converted into company named as Vishal Containers Pvt. Ltd. with the share capital of Rs.1 crore dividend into10 lakhs equity shares of Rs.10/- each. All the assets of the partnership firm became the assets of the company. However, as per the AO, there is violation of proviso-(c) of clause (xiii) of Section 47, The clause-'c' of section 47 (xiii) reads as under: "(c) the partners of the firm do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company; and" 5. After considering the arguments of both the sides and the facts of the case, we do not agree with the findings of the AO that on the facts of the assessee's case there was violation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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