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Kantilal G. Kotecha Versus ITO - 8 (2) (4) , Mumbai

2016 (7) TMI 975 - BOMBAY HIGH COURT

Goodwill arising on succession - capital balance accounted as goodwill - capital gain computation - transfer - interpretation of Section 47 (xiv) - AO found that the goodwill was never created in the books of the proprietary concern and therefore it never became an asset of the sole proprietary concern which was taken over on such succession also confirmed by CIT-A and ITAT - Held that:- after considering that the assessee's capital account in the OPM had the credit balance of ₹ 1,16,05,93 .....

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elied by the Ld.AR, a proper valuation of good will has been done prior to the transfer of assets. In view of that matter, we do not find any justifiable reason to interfere with the order of the Ld.CIT(A) confirming the addition/disallowance made by the AO on this count. - We do not think that the Tribunal's view and in the backdrop of the peculiar facts can be termed as perverse or vitiated by any error of law apparent on the face of the record. We do not think any question, much less of .....

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ions of law and these questions of law are formulated at page 7 of the paper-book. 3. He submits that these questions squarely arise out of the order passed by the Tribunal, dated 6-6-2014. 4. Mr. Tolat has invited our attention to Section 47 (xiv) of the Income Tax Act, 1961. Mr. Tolat submits that computation of income from capital gains and in relation to transactions not regarded as transfer is contemplated by Section 47. In the present case, all preconditions for applicability of the above .....

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te Limited Company. Therefore, the view taken by the Tribunal requires consideration. 5. We are unable to agree with Mr. Tolat for more than one reason. The questions arise from ground No.1 in the Tribunal's order. The Tribunal had before it an appeal of the assessee directed against the order of the Commissioner of Income Tax (Appeals), dated 4-10-2012. The Assessment Year in question is 2009-10. The assessee individual was proprietor of M/s. Overseas Plastic Moulders. During the year this .....

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allotted to the assessee 33,59,064/of equity shares of ₹ 10/each. Since the credit balance of ₹ 1,16,05,939/was there in the Capital Account of the assessee, in order to comply with the accounting entries, a goodwill of ₹ 2,29,89,701/was created in the books of the Private Limited Company and an equal amount was credited to the Capital Account of the assessee in his personal balancesheet. According to the assessee, the excess credit balance, namely, the difference between the a .....

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ital Gain Tax on the shortterm capital gain. That is how Section 45 was attracted. This finding of the Assessing Officer was confirmed in appeal by the First Appellate Authority. The Tribunal confirmed the view of the First Appellate Authority on facts and by assigning cogent and satisfactory reasons. In para 31 of the order under challenge, the Tribunal, at pages 19 and 20, has held thus: 3.1 Having heard both the sides and perused the material on record it is not disputed that the assessee was .....

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etween the assignor and assignees for the assignment of the assignor's right title interest, claim and demand in the said business including its business assets and liabilities written and business rights quota allotments rights registration and intangibles including good will technical know how drawing designs etc. by the assignee and peruse terms and conditions in the said assignment were mutually agreed upon. However, the perusal of the first & second schedules at pages 14-15 of the s .....

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