Case Law Details
Dy. CIT Vs. M/s Amartara Pvt Ltd (ITAT Mumbai)
Provisions of section 45(3) deals with special cases of transfer of capital asset where the profits or gains arising from the transfer of capital asset by way of capital contribution or otherwise shall be chargeable to tax in the previous year in which such transfer takes place and for the purpose of section 48, the amount recorded in the books of account of the firm shall be deemed to be the full value of consideration received or accruing as a result of transfer.
A plain reading of provisions of section 45(3) makes it clear that it comes into operation only in special cases of transfer between partnership firm and partners and in such circumstances, a deemed full value of consideration shall be considered for the purpose of computation of capital gain as per which the amount recorded in the books of account of the firm shall be taken as full value of consideration.
Though the provisions of section 45(3) is not a specific provision overrides the other provisions of the Act, importing a deeming fiction provided in section 50C of the Act cannot be extended to another deeming fiction created by the statute by way of section 45(3) to deal with special cases of transfer. The purpose of insertion of section 45(3) is to deal with cases of transfer between partnership firm and partners and in such cases, the Act provides for computation mechanism of capital gain and also provides for consideration to be adopted for the purpose of determination of full value of consideration.
Since the Act itself is provided for deeming consideration to be adopted for the purpose of section 48 of the Act, another deeming fiction provided by way of section 50C cannot be extended to compute deemed full value of consideration as a result of transfer of capital asset.
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INSTANT
“….it is incorrect to extend one deeming fiction to another deeming fiction for the purpose of determination of consideration received as a result of transfer of capital asset.”
< 'to extend one deeming fiction to another deeming fiction' – may be better put, in one word, , 'telescopically' !
Now, the view the ITAT has taken, following the righteous principle laid down by the SC in a decided case, as imagined, with full merits and rightly so, might go a long way in putting an end to the legislature's /FM's escapade and fanciful resort to the 'deeming' concept, – impudently so, with no, or sky as the, limit /or to the end of vast horizon deceptively in virtual vision!