DCIT Vs Jaspalsingh Prehaladsingh Chandok (ITAT Mumbai)
ITAT Mumbai held that gain arising on transfer of assets and liabilities of proprietary concern to succeeding company is covered by provisions of section 47(xiv) and accordingly cannot be considered as transfer of capital asset within meaning of section 45. Thus, appeal of revenue dismissed.
Facts- The Revenue has filed this appeal. The Revenue is aggrieved by the decision of CIT(A) in deleting the addition of LongTerm Capital Gains of Rs. 325 crores assessed by the AO.
Notably, the issue urged before us revolves around interpretation of section 47(xiv) of the Income Tax Act, 1961. The case of the assessee is that the gains arising on transfer of assets and liabilities of his proprietary concern to a succeeding company is covered by the provisions of 47(xiv) of the Act and accordingly, it should not to be considered as a case of “transfer of capital asset” within the meaning of sec. 45 of the Act. However, the case of the AO is that the assessee has violated the conditions prescribed in the above said section and hence it cannot avail exemption u/s 47(xiv) of the Act. Accordingly, the AO has held that the capital gains has to be computed treating the transfer of assets of proprietary concern as a case of slump sale.
