TMI Blog2017 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... on itself was sham. Thus, there appears no justification for the assumption that the assessee stood to benefit from the transfer. Suspicion, however strong, cannot take the place of evidence as has been held in a catena of judgments. We further find that the present case is also not hit by the provisions of section 2(22)(a) of the Act as it is not the case of revenue that profits have been distributed. Thus, the argument of the assessee that VAPL did not have accumulated profits, or that the AO was wrong in considering the assessed income as part of accumulated profits, is only academic and not relevant to the case. No basis for concluding that the transaction of transfer of commercial space between VAPL and SSPD was sham or colourable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2,98,62,280/-. The assessee has shown income from salary at ₹ 1,84,50,000/-, income from business at ₹ 1,03,60,022/-, income from other sources at ₹ 8,10,945/- and capital gain of ₹ 3,41,316/-. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the I.T. Act, 1961 dated 29.8.2011 was issued and served on the assessee. In this case, notice u/s. 142(1) of the Income Tax Act, 1961 dated 3.6.2011 was issued to the assessee, requiring him to file the details, which was remained un-complied with. Thereafter, notice u/s. 143(2) 142(1) of the Act alongwith questionnaire were issued to the assessee on 28.9.2012 fixing the case for 12.10.2012. In response thereto, Assessee s A.R. attended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest in both VAPL and SSPD, the sale of commercial space of VAPL to SSPD was actually payment in kind by VAPL to SSPD and thus indirectly was a benefit to the assessee chargeable to tax u/s. 2(22)(e). In view of the above, he requested that the impugned order may be cancelled and accordingly, the appeal of the Revenue may be allowed. 6. On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and reiterated the contentions made before the Ld. CIT(A) s order at page no. 3 to 9, which are not reproduced here for the sake of brevity. He further stated that since the Ld. CIT(A) has passed the well reasoned order which does not need any interference on our part. Hence, the appeal of the Revenue may be dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment or reward or benefit in cash in consideration for some goods or services or favours. In the present case, the transaction is of sale of commercial property for money between two companies. No doubt, the appellant holds interest in both companies, although technically he held less than 10% interest in the transferor company as on the date of transaction. The revenue's suspicion arose as the appellant was holding interest in both the transferor and transferee companies, and the amount remained unpaid during the year. However, there is no transfer of funds to the appellant and, therefore, it cannot be said that the appellant has received any payment . It is not a case of payment of cash but transfer of assets, and the transaction wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 2(22)(e) are not applicable. The case is also not hit by the provisions of section 2(22)(e). I hold accordingly. The addition made is deleted and the grounds of appeal are allowed. 8. After perusing the aforesaid finding, we find that it is not disputed that the subject of transaction was transfer of commercial space by VAPL to SSPD. It is also not disputed that the assessee holds interest in both the transacting companies. It is undisputed that the assessee held 50% shares in SSPD. While the revenue has opined that the assessee held 18.33% shares in VAPL. We note that before the Ld. CIT(A), the assessee submitted that his interest was diluted to 5.5.% due to additional allotment of 14,00,000 shares to M/s Discovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, there is no evidence to suggest that the assessee was the real beneficiary and the transaction itself was sham. Thus, there appears no justification for the assumption that the assessee stood to benefit from the transfer. Suspicion, however strong, cannot take the place of evidence as has been held in a catena of judgments. We further find that the present case is also not hit by the provisions of section 2(22)(a) of the Act as it is not the case of revenue that profits have been distributed. Thus, the argument of the assessee that VAPL did not have accumulated profits, or that the AO was wrong in considering the assessed income as part of accumulated profits, is only academic and not relevant to the case. In view of the above facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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