Gujarat High Court
Principal Commissioner Of Income Tax - 4 vs M/S Torrent Private Limited on 9 October, 2018
Author: Akil Kureshi
Bench: Akil Kureshi, B.N. Karia
C/TAXAP/1230/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL No. 1230 of 2018
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PRINCIPAL COMMISSIONER OF INCOME TAX - 4
Versus
M/s. TORRENT PRIVATE LIMITED
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Appearance :
Mr MANISH R BHATT, Sr Advocate with Mrs MAUNA M BHATT, Advocate for the
PETITIONER
for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI
and
HONOURABLE Mr. JUSTICE B.N. KARIA
9th October 2018
ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
Tax Appeal is admitted for consideration of the following substantial question of law :
"Whether the Appellate Tribunal is correct in law on facts of the case in deleting the disallowance of Rs. 2,43,82,266/= made applying Section 14A for the purpose of computation of book profit under Section 15JB of the Act ?"
We notice that the Revenue has suggested one more Page 1 of 4 C/TAXAP/1230/2018 ORDER question which reads as under : "Whether the Appellate Tribunal is correct in law on facts of the case in deleting the disallowance of long term capital loss of Rs. 58,47,254/= ?"
This question arises in the following background :
In the return filed by the respondentassessee for AY 20092010, the assessee had claimed capital loss of Rs. 2.93 Crores [rounded off]. This included the assessee's computation of cost of acquisition of certain shares, taking the basis of the date of acquisition of these shares by its previous owner company which had amalgamated into the assesseecompany w.e.f 1st August 1999. The Assessing Officer was of the opinion that the indexation would be available only from 1st August 1999 and not for any period prior to it. The Assessing Officer was also of the opinion that such indexation can relate only to the date on which the assessee first held such shares.
CIT [A] allowed the assessee's appeal. The Tribunal ultimately by the impugned judgment, confirmed this view, Page 2 of 4 C/TAXAP/1230/2018 ORDER referring to the relevant statutory provisions contained in the Incometax Act, 1961.
We may notice that Section 47 of the Act pertains to "Transactions not regarded as transfer". As per clause [vi] of Section 47, nothing contained in Section 45 would apply to any transfer, in a scheme of amalgamation of a capital asset by the amalgamating company to the amalgamated company; if amalgamated company is an Indian company. In turn, Section 49 of the Act which pertains to "Cost with reference to certain modes of acquisition", inter alia, provides that where the capital asset became the property of the assessee under any such transfer as is referred, besides other clauses in Clause [vi] of Section 47, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee; as the case may be.
Page 3 of 4
C/TAXAP/1230/2018 ORDER Thus, this provision essentially provided that any transfer of asset upon amalgamation of two companies would not invite capital gain. In turn, the cost of such asset would be computed on a deeming basis and would be the cost for which previous owner of the property acquired it. CIT [A] and the Tribunal therefore were correct in law in applying indexation from the date of acquisition of the shares by the amalgamating company and not from the date on which amalgamation took place, as a result of which the assessee can be stated to have acquired such shares. This question is, therefore, not considered.
[Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 4 of 4