DCIT Vs Samagra Wealthmax private Limited (ITAT Mumbai)
ITAT Mumbai held that reserve arising out of amalgamation is capital in nature and cannot be treated as revenue under the ambit of section 28(iv) of the Income Tax Act.
Facts- Assessee is a Company engaged in the business of Real Estate. The assessee is a Company incorporated under the Companies Act and during the year, with an intent to simplify the group structure, rationalize the administrative overhead and to achieve greater administrative efficiency, M/s Celina Buildcon and Infra Private Ltd. was amalgamated with the assessee company as per the scheme of amalgamation approved by the Regional Director, Western Region, Mumbai. In accordance with the scheme Rs.1,49,29,00,000/- was credited to the capital reserve.
The assessee company held the entire share capital of M/s Orval Corporate Solution Private Limited (Orval) which in turn held the entire share capital of Celina Buildcon and Infra Pvt. Ltd. Thus, Celina Buildcon and Infra Pvt. was indirectly owned subsidiary company of the assessee. Therefore, because of restriction u/s.19 of the Companies Act, 2013 no shares were issued by the assessee to the shareholders of Celina Infra Buildcon and Infra Pvt. Ltd. on amalgamation of Celina with the assessee.
