TMI Blog2008 (9) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... hold the order - 119 of 2005 - - - Dated:- 8-9-2008 - PINAKI CHANDRA GHOSE and SANKAR PRASAD MITRA JJ. Bhowmick for the appellant. JUDGMENT 1. The only question which is tried to be pressed before us by Mr. Bhowmick in this matter is as per the provisions of section 47(iv) of Income-tax Act, 1961, whether the transfer of capital asset by a company to its wholly owned subsidiary company could be regarded as transfer and, therefore, capital gains tax could be levied on such transfer. 2. The facts of this case on that ground briefly are as follows: 3. The entire unit of packaging of coating units of the assessee has been transferred to M/s. Coates Coating India Pvt. Ltd. ("CCIPL") with effect from December 31, 1997. Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains on account of transfer of goodwill since CCIPL had in its accounts treated the same as goodwill. The Assessing Officer also did not accept the contention of the assessee that even if the transfer was treated as goodwill, tax is not leviable due to the fact that the transfer was to a wholly owned subsidiary company and, accordingly, the exemption is available to the assessee under section 47(iv) of the said Act. It appears that the Assessing Officer finally held that section 47(iv) was not applicable to the present case as the transfer of business undertaking included transfer of stock-in-trade and the proviso to section 47(iv) excludes the operation of section 47(iv) in case the capital asset is transferred to stock-in-trade. 6. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of the price could be attributed to stock-in-trade. The Assessing Officer had brought to capital gains tax the transfer of goodwill treating the goodwill as a capital asset rather than stock-in-trade. The Commissioner of Income-tax (Appeals), therefore, observed that the proviso to section 47(iv) has no application to the present case. The Commissioner of Income-tax (Appeals) granted relief to the assessee by holding as under: "(i). It was the entire packaging coating undertaking which was transferred in consideration of a slump price of Rs. 29,89,87,000 and no price was fixed item-by-item in respect of the different assets belonging to the undertaking. (ii.) In view of the decision of the Supreme Court in CIT v. B.C. Srinivas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the impugned assessment order, the Assessing Officer has mentioned that the provisions of section 47(iv) were not applicable in view of the proviso to section 47(v). On a careful scrutiny of the said proviso, however, we do not find any merit in the Assessing Officer's said contention. Under the approved scheme of arrangement, the respondent had transferred the entire packaging coating business. Such business undertaking itself constituted distinct 'capital asset' under section 2(14) of the Act. For transfer of the said capital asset consideration was not determined with reference to individual asset but the consideration was determined with reference to capitalised value of the said business. In our opinion, the proviso to section 47(v) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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