Case Law Details
Supermax Personal Care Private Limited Vs ACIT (ITAT Mumbai)
We are of the opinion that the endeavor of the departmental officers to tax the transaction in question as capital gains was not supported by the any legal base.First and foremost there was no transfer of capital asset,which is the basis for invoking the provisions of section 45 of the Act, in the case under consideration.The AO and FAA have tried to build a house without laying down foundation.Without the existence of capital assets they have tried to tax capital gain. They have nowhere mentioned as to which capital asset was transferred by the assessee, during the year under consideration.Secondly,it is also not known as to whom the assets were transferred.As per the balance sheet of the assessee it had sold some vehicles during the year and no other asset was sold.If no asset other than vehicles was sold,then how the capital gain would arise about shares,is beyond our comprehension.
We find that the FAA has mentioned in his order that the assessee had transferred the Interest/(stake)in itself outside India to SSPL.We find that the concept of ‘creating of interest in any assets in any manner’ and transferring‘interest/stake’was not part of the word ‘transfer’ for the year under consideration and nor it was applicable to that year.
Clearly,the FAA has applied the provision that was not part of the statute at the time when the transaction took place.
As far applicability of Explanation 5 of the section 9 is concerned,it is sufficient to state that the explanation covers the non residents and not a resident entity.There is no doubt that the assessee is a resident company.
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