Assessee LLP had failed to satisfy clause (e) of the proviso of Sec. 47(xiiib), therefore, the ‘transfer‘of the capital assets on the conversion of the private limited company into a LLP was to be regarded as a ‘transfer‘within the meaning of Sec. 45 and also, there was no occasion for invoking the provisions of Sec. 47A(4).
Addition made by AO on the reason that assessee had introduced his own unaccounted money by way of bogus long term capital gain was not correct as AO had not brought any material on record to show that assessee had paid over and above purchase consideration of shares as claimed and evident from the bank account and assessee had produced the relevant record to show the allotment of shares by the company on payment of consideration by cheque.
Difference between alleged fair market value of share and the subscribed value of shares cannot be assessed as income u/s 56(2)(vii)(c) as the transaction of issue of shares was carried out to comply with a covenant in the loan agreement with the bank to fund the acquisition of the business by the subsidiary in USA, therefore, such a bonafide business transaction could not be taxed under section 56(2)(vii) especially when there was not even a whisper about money laundering by the AO in the assessment order.
Income earned corresponding to the expenditure alleged to be bogus is not question and hence the entire expenditure incurred which is duly supported by the income cannot be disallowed. Genuineness of the transaction has been proved by the documentary evidence. Addition restricted to the difference in the gross profit declared as compared to the average gross profit rate of earlier five years.
Transaction is duly recorded in the books of accounts, statutory returns are duly filed with regard to allotment of shares. Documentary evidence proving identity, creditworthiness and genuineness of the transaction is provided. Addition under section 68 not possible.
Ms Inderpuri Express Couriers Pvt Ltd Vs DCIT (ITAT Mumbai) The AO has made protective addition in the hands of the assessee towards estimated commission income derived from hawala transactions on the ground that certain incriminating materials were found in the premises of the assessee and further, one of the employees has stated that the […]
Tribunal had passed order u/s 254 (1) beyond one day beyond 90 days prescribed under the Rule 34(5)(c) from the date of conclusions of its hearing and the delay had resulted in prejudice to assessee hence, the order being not sustainable and restored for fresh consideration.
M/s. CLSA India Private Limited Vs DCIT (ITAT Mumbai) Facts of the case: The assessee company, i.e. CLSA India Private Limited is a subsidiary of Credit Lyonnais Securities Asia (CLSA) incorporated in Netherlands. The assessee is primarily engaged in the business of equity broking. The assessee’s customers comprise of foreign institutional investors (FIIs) and domestic […]
AO was incorrect in making addition towards deposits found in foreign bank account of assessee maintained with HSBC Bank, Geneva without establishing the fact that the said deposit was sourced out of income derived in India, when the assessee had filed necessary evidences to prove that he was a non resident since 25 years and his foreign bank account and assets did not have any connection with India and that the same have been acquired / sourced out of foreign income which had not accrued / arisen in India.
Conversion of cumulative and compulsory convertible preference shares(CCPS) into equity shares cannot be treated as ‘transfer’ under section 2(47) and no capital gain is to be computed upon such conversion.
