ITO v. Shreyans Investments (P.) Ltd.

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The Tax Publishers2013 TaxPub(DT) 1099 (Kol-Trib) : (2013) 141 ITD 0672 : (2013) 154 TTJ 0469 : (2013) 087 DTR 0001 INCOME TAX ACT, 1961 --Business income--Benefit or perquisite under section 28(iv) Capital reserve arising on account of amalgamation--The capital reserve came into existence in the books of the assessee, on account of amalgamation with VVPL. The assessing officer treated the amount of capital reserve as income of the assessee under section 28(iv). On appeal, Commissioner (Appeals) deleted the impugned addition on the ground that the amalgamation was not an adventure in the nature of trade and that transaction was clearly a capital account transaction. Assessing officer challenged the order of Commissioner (Appeals). The issue arose was : whether the transfer of capital reserve to the assessee company could indeed, be considered to be an income of the assessee under section 28(iv) as 'business income'. *Held:* As a result of amalgamation, the assessee, being the transferee-company , increased its assets and liabilities, and any benefit in the process could only be in the capital field because it was relatable to the non-trading assets and capital. Therefore, the benefit in form of capital reserve derived by the assessee on account of amalgamation by way of merger was not in revenue field, and not of an income nature. Accordingly, there was no occasion to invoke section 28(iv). Commissioner (Appeals) was justified in deleting the addition by observing that 'the amalgamation was not an adventure in the nature of trade' and 'that transaction was clearly a capital account transaction'. Income Tax Act, 1961 Section 28(iv) In The ITAT, Kolkata B Bench Pramod Kumar, A.m. & Mahavir Singh, J.M. ITO v. Shreyans Investments (P.) Ltd. IT Appeal No. 1485 (Kol.) of 2011 A.Y. 2008-09 6 March, 2013 Appellant by : L. K.S. Dahiya Respondent by : M. K. Patni ORDER *Pramod Kumar, A.M.* By way of this appeal, the appellant assessing officer has called into question correctness of learned Commissioner (Appeals)s order dated 8-8-2011, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for the assessment year 2008-09, on the following grounds : SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1099 (Kol-Trib) : (2013) 141 ITD 0672 : (2013) 154 TTJ 0469 : (2013) 087 DTR 0001

INCOME TAX ACT, 1961

--Business income--Benefit or perquisite under section 28(iv) Capital reserve arising on account of amalgamation--The capital reserve came into existence in the books of the assessee, on account of amalgamation with VVPL. The assessing officer treated the amount of capital reserve as income of the assessee under section 28(iv). On appeal, Commissioner (Appeals) deleted the impugned addition on the ground that the amalgamation was not an adventure in the nature of trade and that transaction was clearly a capital account transaction. Assessing officer challenged the order of Commissioner (Appeals). The issue arose was : whether the transfer of capital reserve to the assessee company could indeed, be considered to be an income of the assessee under section 28(iv) as 'business income'. Held: As a result of amalgamation, the assessee, being the transferee-company , increased its assets and liabilities, and any benefit in the process could only be in the capital field because it was relatable to the non-trading assets and capital. Therefore, the benefit in form of capital reserve derived by the assessee on account of amalgamation by way of merger was not in revenue field, and not of an income nature. Accordingly, there was no occasion to invoke section 28(iv). Commissioner (Appeals) was justified in deleting the addition by observing that 'the amalgamation was not an adventure in the nature of trade' and 'that transaction was clearly a capital account transaction'.

Income Tax Act, 1961 Section 28(iv)

In The ITAT, Kolkata B Bench

Pramod Kumar, A.m. & Mahavir Singh, J.M.

ITO v. Shreyans Investments (P.) Ltd.

IT Appeal No. 1485 (Kol.) of 2011

A.Y. 2008-09

6 March, 2013

Appellant by : L. K.S. Dahiya

Respondent by : M. K. Patni

ORDER

Pramod Kumar, A.M.

By way of this appeal, the appellant assessing officer has called into question correctness of learned Commissioner (Appeals)s order dated 8-8-2011, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for the assessment year 2008-09, on the following grounds :