TMI Blog2011 (12) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... -company was changed due to scheme of arrangements approved by the Hon ble High Court and as a result of such arrangements, the assessee-company has got a benefit of ₹ 1,13,20,637/- and the same has been shown under the head general reserve in the balance sheet as at 31/3/2005. Since the assessee-company has got the benefit, the same was required to be assessed as taxable income u/s. 28(iv) of the Act, but in the assessment order dated 11/12/2007, the A.O. has not taken into consideration the said benefit and also has not been added to the total income of the assessee. Therefore, the ld. Commissioner found that the regular assessment order dated 11/12/2007 is erroneous and prejudicial to the interest of the revenue. 3. The ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT, reported in (2004) 85 TTJ (Chennai) 1049. The learned counsel, therefore, submitted that the aforesaid decision of the Tribunal is directly applicable to the case of the assessee and the ld. Commissioner cannot travel beyond the reasons mentioned in the notice. He further submitted that as this is a discretionary power, the same has to be exercised with great caution and in support the learned counsel relied on the following decisions :- G.K. Kabara (AP) 211 ITR 336 at pages 339-341 General Trade Agencies (Cal) [(1973) Tax L.R. 1383] Shyam Biri Works (P) Ltd. [84 ITD 124 (All)] 5. On the other hand, the ld. Departmental Representative justified the action of the ld. Commissioner and contended that once the assessment order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights issue of the company, as it is beyond his jurisdiction and which is not mentioned in the notice issued u/s. 263 of the Act. 7. Coming to the taxability of the sum of ₹ 1,13,20,637/- u/s. 28(iv) of the Act, this is the only reason given in the notice of revision u/s. 263 of the Act. On this issue, we have heard the learned counsel for the assessee and the ld.Departmental Representative. The learned counsel submitted that the assessment order should be both erroneous and prejudicial to the interest of the revenue and then only the ld. Commissioner can exercise his jurisdiction u/s. 263 of the Act, as laid down by the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CITD [243 ITR 83 (SC)]. Therefore, for as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s operation of the assessee-company. Amalgamation of another company with the assessee-company is not a part of a regular business affair of the assessee-company. The credit entry has arisen by way of inclusion of all the assets and liabilities of the amalgamating company in the accounts of the assessee-company on amalgamation. Hence there is a distinction between business of the assessee and the benefit which the assessee has derived as there is no nexus at all and by no stretch of imagination the amount of ₹ 1,13,20,637/- cannot be considered as benefit or perquisite arising out of business of the assessee, as argued by the learned counsel. Coming to the transfer issue, the learned counsel submitted that actually no income or even c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by sec. 47(vi) of the Act. He, therefore, submitted that the order of the A.O. is not erroneous and may be prejudicial to the interest of the revenue. However, if twin conditions are not satisfied, sec. 263 of the Act cannot be invoked. 8. For invoking sec. 28(iv) of the Act, it has to be proved that it is the benefit derived out of profession or business. Such value of any benefit or perquisite arising from business or the exercise of the profession, whether convertible into money or not, alone would be chargeable to tax u/s. 28(iv) of the Act. Here in this case, there is no nexus to establish that this amount, which the assessee-company got as a benefit, has any nexus with the business income which is taxable as business income. The sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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