It is to be noted that in the instant case what has been transferred by the assessee is the tenancy right which is very much part of the capital asset as envisaged in sub-section (2)(a) of section 55. Sub-section (2)(a) of section 55 stipulates that cost of acquisition in relation to asset, inter alia, tenancy rights not falling under sub-clause (1)(iv) of sub-section (1) of section 49 shall be taken to be nil.
Issue is whether such a notification given on 22nd May 2009, thorugh which MCX Stock Exchange has been recognized, can be held to be applicable for the transaction undertaken in the assessment year 2007-08 i.e., after 1st April 2006. From the combined reading of clause (d) of proviso to section 43(5), Rule 6DDA, 6DDB and Explanation (ii) to section 43(5), it would be seen that the rules which has been prescribed are only procedural in nature,
On going through the remaining object of the trust, read with the provisions of sections 2(15), 12A, 12AA of the Income Tax Act, and the case laws cited by the AR, we find that there has been compliance to section 12A as required under the provisions, so far as provisions of section 2(15) are concerned, we find that the amendment talks about preservation of environment.
The claim of the assessee of having converted the capital asset of land into stock in trade for the purpose of his business as envisaged in section 45(2) was not accepted by the Assessing Officer as well as by the Commissioner (Appeals) mainly for the reason that there was no business of real estate development actually commenced or carried on by the assessee and it was a case of transfer of land as capital asset simpliciter as per the Development Agreement.
On perusal of the material on record, it is found that the assessee first of all seeks to get the benefit under the provisions of Indo UAE DTAA Treaty on the ground that payees were residents of UAE as per article 4(1). The other limb of its case is that the payment of fees for registration of trademark to Advocates in Emirates were not in the nature of fees for technical services in view of the section 9(1)(vii) but was purely for professional services.
The contention of the assessee that Audit Reports and minutes of meeting of Board of Directors were enough to prove the genuineness of the transactions in the case under consideration was unacceptable. There is no doubt that Tax Audit Report is an important document, but it cannot take place of the evidence required for claiming a deduction.
It is evident from the record that the assessee has earned dividend mainly from shares of a and ‘C’ Ltd. which was acquired through amalgamation of two companies. Further, it is also noticed that most of the expenses are directly attributable to assessee’s business.
The assessee has contended that the amount debited by the assessee is as per an independent enquiry carried out by M/s Institute of Oil and Gas Production Technology and therefore, it cannot be held as unascertained liability. The Assessing Officer did not accept the explanation of the assessee and added this amount for the purpose of computing the book profit.
So far as the first difference of age and formation is concerned, there is no merit in the contention of the assessee, as the age and formation of the company cannot be the criteria for rejecting the company for comparability analysis. If that is the criteria, then most of the companies which have been included by the assessee are also substantially old companies. The age and formation of the company cannot be the criteria or a relevant factor for excluding or rejecting the company for comparability analysis. This reason based on age and formation is not accepted.
In the instant case, no where the assessee-firm is considered as the tenant. In the partnership deed dated 4-4-1990 also, it is stated that all rights over trade name, goodwill license and permits shall belong to the partners. It is the legal heirs of ‘A’ and ‘V’, who have continued to hold the tenancy rights and have used the name of the business only for the sake of convenience, which had been continuance from the pre-partition days.
