Vaani Estates Private Limited Vs Additional / Joint / Deputy / ACIT / ITO (Madras High Court)
Madras High Court held that any order contrary / disregarding the direction of this Court cannot be sustained as it renders the order bad for want of jurisdiction. Thus, order set aside and writ petition disposed of.
Facts- The Company was initially formed by Mr. B.G. Raghupathy and his wife Sasikala Ragupathy, each holding 5000 shares. Upon the death of Mr. B. G. Raghupathy, his shares devolved on his daughter Mrs. Vaani Raghupathy. In order to purchase a property in Adyar, Chennai, Mrs. Sasikala Ragupathy brought in a sum of Rs.23.32 crores through Banking Channels against which, she was allotted 10100 shares at a premium of Rs.23,086/- per share. The total number of shares held as on the end of the relevant assessment year by Mrs. Sasikala Raghupathy and Mrs. Vaani Raghupathy stood at 15100 shares and 5000 shares respectively. The assessing authority imposed tax treating the said ‘Share Premium’ as “Income from Other Sources” u/s. 56(2)(viib) of the Act.
CIT(A) confirmed the order of assessment. Tribunal held that the provisions of Section 56(2)(viib) cannot be invoked in the case of assessee company when cash or asset is transferred by a mother to her daughter. Being aggrieved, the present appeal is filed.
