TMI Blog2020 (12) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on record to substantiate the allegation of intention to avoid tax in the guise of transfer of shares. Ld.CIT(A) on one hand holds that there was no transfer of Capital Asset, whereas on the other hand, refers to DVO report to allege tax avoidance by assessee. Ld.CIT(A) once rejected application of sec.50C cannot rely on DVO report to hold that assessee adopted a colourable device to avoid tax. Facts in present case are different as compared to facts considered in M/S CARLTON HOTEL PVT LTD [ 2017 (1) TMI 1471 - ALLAHABAD HIGH COURT] . In our view, assessee cannot blow hot and cold at the same time. There is no documentary evidence brought on record by authorities below to establish such allegation. We note that individual members cannot enjoy the units allotted in respect of shares and deposits held with the company beyond a period of 85 years starting from 11/07/2002. We also note that number of units held by a particular member is proportionate with 12 times the face value of shares as security deposit in order to get entitlement of enjoyment of the unit to be allotted. Further clause 11 of the scheme allows a member to sell or dispose of his/her shares along with deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The learned CIT (A) was not justified in alleging that the transfer of shares by the Appellant during the impugned assessment year as a colourable device to avoid tax on the facts and circumstances of the case. 8. Without prejudice the learned CIT (A) failed to appreciate that tax planning is permissible in the eyes of law as held by various Courts in the Country and also by the Hon'ble Apex Court in the case of IJOl Vs. Azadi Bachao Andolan, 263 ITR 706 (SC). 9. The lower authorities were not justified in not giving the benefit of indexation under the facts and circumstances of the case. 10. The appellant denies herself liable to be charged to interest under section 234B and 234C of the Act and further the calculation of interest under section 234B and 234C of the Act is not in accordance with law since the rate, method of calculation, quantum is not discernable from the order of assessment on the facts and circumstance of the case. 11. The Appellant craves leave to add, alter, substitute and delete any or all of the grounds of appeal urged above. 12. For the above and other grounds to be urged during the hearing of the appeal the Appellant prays th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50C of the Act clearly provides that it would apply only to a capital asset, being land or building or both . The moot question is as to whether such expression would cover the transfer of a capital asset being leasehold rights in land or building and the shares in a company. There cannot be a dispute to the proposition that the expression land by itself cannot include within its fold leasehold right in land also. So however, every kind of a 'capital asset' is not covered within the scope of section 50C of the Act for the purposes of ascertaining the full value of consideration. In fact, the heading of section itself provides that it is Special provision for full value of consideration in certain cases . Therefore, there is a significance to the expression a capital asset, being land or building or both contained in section 50C of the Act. The significance is that only capital asset being land or building or both are covered within the scope of section 50C of the Act, and not all kinds of capital assets. 7.3 The purpose of introducing section 5OC of the Act was to counter suppression of sale consideration of sale of immovable properties. Before insertion of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the outset, Ld.AR submitted that, provisions of section 50C is not applicable to present facts of the case, as, has been held by Ld.CIT(A). He submitted that, Ld.CIT(A), thereafter proceeded to direct Ld.AO to compute capital gains based on value adopted by DVO in the report, which was subsequently made available. It has been submitted that, identical situation arose before Hon ble Karnataka High Court, in case of Bhoruka Engineering Inds.Ltd vs DCIT reported in (2013) 36 Taxmann.com 82. He submitted that Hon ble jurisdictional High Court held that, If the shareholders chooses to transfer the lands and part with the land to purchase of shares, it would be a valid legal transaction in law and merely because they were able to avoid payment of tax, it cannot be said to be a colourable device or a sham transaction or an unreal transaction. On the contrary, Ld.Sr.DR placed reliance on decision of Hon ble Allahabad High Court in case of CIT Lucknow vs.Carlton Hotel(P) Ltd., reported in (2017) 88 Taxmann.com 257. She submitted that the ratio in this case is squarely applicable to the present facts of the case. 11. We have perused submissions advanced by both sides in light of rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and also specific amount of deposit with the company. 13. Subsequently, assessee sold her shares to 4 different buyers. Copies of the agreements have been placed at page 109 -130 of paper book. The details of sale of shares and deposit are as under: Name of the Buyer Unit Allotted SaIe Value for Shares Receipt for Deposits Total Receipt Surplus M.Bhavana S-4 3,45,000 16,56,000 20,01,000 2,07,000 Bhatia Et Others G- 10 4,72,050 12,58,800 17,30,850 3,67,150 Bhatia Et Others G 11 2,02,5C0 5,40,000 7,42,500 1,57,500 Ratanchand G - 4 5,56,650 14,84,400 20,41,050 4,32,950 Total 15,76,200 49,39,200 65,15,400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en exploited within four corners of the law, it is open to the Parliament to amend the law plugging the loophole. However, by any judicial interpretation we cannot read into the Section, which was not intended to, by the Parliament at the time of enacting this provision. The language employed in Section 10(38) of the Act is simple and unambiguous and it makes no distinction between the transfer of share of company with an immovable asset and movable asset, instead of executing a sale deed in respect of the immovable property by the company, which is owning the land. If the shareholder chooses to transfer the lands and part with the land to the purchaser of the shares, it would be a valid legal transaction in law and merely because they were able to avoid payment of tax, it cannot be said to be a colourable device or a sham transaction or an unreal transaction. 18. In the present facts, of the case we note that Company had no rights to sell superstructure. Company is permitted only to sublet or sublease or assign or nominate any portions thereof falling to its share to one or more parties in one or more than one deeds for the period of lease. We have also perused Scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit to be held by the member for each unit is found in the annexure enclosed herewith. d. The Board shall have discretion in varying the above deposit amount. The above deposit amount shall be paid in such instalments as may be specified by the Board. The Board shall have full discretion in the above matter and may specify different instalments for different members. e. The deposit shall be adjusted against the assets of the Company at the expiry of lease period of 85 years. The Company can modify the scheme of adjustment of deposits only if so resolved by the members in the general meting by 2/3rd majority to take advantage of fiscal laws of the country from time to time. f. In the event of any member ceasing to be a member of the company other than by way of death, insolvency, transfer or operation of law then and in that event the Company shall refund the proportionate deposit to the extent of the unexpired period of lease. 5. Each member shall be entitled to the possession and enjoyment of unit / Commercial space allotted to him pursuant to the above scheme together with full right to possess, enjoy, let-out and realize the rent there from. The Member s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable fixtures and partitions, Air conditioner etc., within his unit. 19. Each Member shall join the execution of deed and documents required by the company and shall bear stamp duty and other expenditure involved in granting allotment of the unit. 20. A unit/commercial space allotted shall absolutely belong to the Member for his/her enjoyment and such right is heritable, provided the legal heirs continue to hold the shares and deposit. 21. The shares and relevant deposit shall always go with a specific unit/commercial space and the transfer thereof shall be done simultaneously to the same person in whom the right of enjoyment of that unit is vested. No transfer of Deposit without the shares being transferred in favour of any person is possible under article No.7 of Articles of Association of the Company. 22. The Municipal taxes payable shall be paid by the Company after collection from shareholders based on the assessment done by the Corporation in respect of each of the units. The individual unit owners shall pay the additional taxes, if any determined by the concerned authorities in respect of their units. 23. Building shall revert back to the origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in the guise of transfer of shares. Ld.CIT(A) on one hand holds that there was no transfer of Capital Asset, whereas on the other hand, refers to DVO report to allege tax avoidance by assessee. Ld.CIT(A) once rejected application of sec.50C cannot rely on DVO report to hold that assessee adopted a colourable device to avoid tax. Facts in present case are different as compared to facts considered by Hon ble Allahabad High Court. In our view, assesee cannot blow hot and cold at the same time. There is no documentary evidence brought on record by authorities below to establish such allegation. 22. We note that individual members cannot enjoy the units allotted in respect of shares and deposits held with the company beyond a period of 85 years starting from 11/07/2002. We also note that number of units held by a particular member is proportionate with 12 times the face value of shares as security deposit in order to get entitlement of enjoyment of the unit to be allotted. Further clause 11 of the scheme allows a member to sell or dispose of his/her shares along with deposits subject to payment of full amount due to the company towards shares/or deposit in accordance with the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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