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TMI Blog1994 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... Sathar Singh, during the relevant previous year? 2. Whether, in the absence of any proof of actual receipt of consideration in excess of what is shown in the transaction between the parties the provision of section 52(2) of the Income-tax Act could be applied ? 3. Whether the value of Rs. 1,10,000 estimated by the Appellate Assistant Commissioner for routes transfer is proper and legal ? 4. Whether the Appellate Tribunal was right in holding that the motor vehicle tax paid by the assessee which did not relate to the year should be allowed as deduction in computing the total income of the assessee ?" The assessee is a private limited company carrying on the business of passenger transport. The assessee-company during the year of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yielded in income of Rs. 54,287 and Rs. 42,196, respectively, for the assessment years and 1968-69. In such circumstances, the Income-tax Officer felt that the assessee's claim that the route permits were not worth anything cannot be accepted and the Income-tax Officer was of the view that the route permits had considerable value. According to the Income-tax Officer, there is one piece of evidence on the basis of the amount which goes to show that the route permits had considerable value even in excess of the amount proposed to be added. The assessee-company was owing to the Indian Bank a sum of Rs. 3.5 lakhs, which was transferred to the managing director's account during this year. In the subsequent year, the amount lying to the credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale of 22 buses and 19 route permits. Therefore, he held that the capital gains could be levied and the provisions of section 52(2) are attracted. The Income-tax Officer took the value of each route roughly at Rs. 10,000 and the total value of the route permits was taken at Rs. 2,20,000. Accordingly, he completed the assessment. On appeal, the Appellate Assistant Commissioner has confirmed the assessee's liability to capital gains tax. The Appellate Assistant Commissioner agreed with the assessee that the motor vehicles tax paid by the assessee prior to the date of transfer of buses is admissible business expenditure from the total income of the assessee. On appeal, the Appellate Assistant Comml:ssioner reduced the route value to Rs. 1,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of capital gains was fixed at Rs, 2,16,703 which was confirmed by the Appellate Assistant Commissioner on appeal. This determination of value has become final. On going through the account books, the Income-tax Officer came to the conclusion that capital gains tax should be levied and the provision of section 52(2) of the Act are attracted. He estimated the value of the route permits. The reason for levying capital gains tax are contained in paragraph 7 of the order passed by the Income-tax Officer. The Tribunal agreed with the submission of the assessee that the company had not benefited from the transfer of the routes because its cost of acquisition of the routes was Rs. 2,16,703 whereas it is deemed to have transferred the rou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the managing director without recovering the proportionate prepaid amount from him, the Income-tax Officer added back a sum of Rs. 34,000 as amount spent but not relating to the company's business. rhe Appellate Assistant Commmissioner pointed cut that the assessee has paid the motor vehicles tax even long before the sale of the buses for the purpose of its own business and any sale of buses will not convert the tax that had been paid to the Government into non-business expenditure. In that view of the matter, the Appellate Assistant Commissioner did not sustain the addition. The Tribunal confirmed the order passed by the Appellate Assistant Commissioner on this point.The Tribunal pointed out that the later sale will not make the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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