Intent to reduce tax liability need to be established before invoking explanation 3 to section 43(1)

Brief of the Case ITAT Delhi held In the case of M/s. Continental Device India Ltd. vs. ACIT that Explanation 3 to section 43(1) is not an absolute rule. The Assessing Officer is empowered to substitute the value. However, such a valuation cannot be substituted where there is no intent to reduce the tax liability. In the instant case, as stated above, the assets as held by M/s. Deltron Ltd. and transferred to the appellant as part of transfer of electronic business on going concern basis cannot be said to be in any manner with intent to reduce the tax liability. Certainly, the effect of the tr...