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Showing contexts for: 47 xiii in Utsav Cold Storage P Ltd., Jodhpur vs Ito, Jaipur on 11 June, 2018Matching Fragments
9. Thereafter, the Coordinate Bench has recorded its finding at para 4.5 and 5 of its order which are reproduced as under:-
"4.5. We have heard rival contentions and perused the material available on record. Before we deal with the factual aspects of the matter, it is necessary to reproduce section 47(xiii) and 49 for the purpose of clarity and reference.
Section 47 : Transactions not regarded as transfer Nothing contained in section 45 shall apply to the following transfers :-
From the bare reading of both the provisions i.e. section 47 and section 49 of the Act, it is clear that section 47 deals with the transaction not regarded as transfer whereas section 49 deals with the cost with reference to certain mode of acquisition. Both the sections, in our understanding, operate and work in different forum and there is no over-lapping of the section. Under section 47(xiii), if a firm by way of succession became the company, then the transaction i.e. migration of the firm to the company would not be treated as transfer. However, this section do not provide the calculation of cost of acquisition by way of succession from firm to the company. Section 49, specifically provides the manner in which the cost of acquisition through various conditions is required to be calculated. If we look into section 49(1)(iii), it is specifically provide transfer by way of succession, inheritance/devaluation. The firm is succeeded by the company, therefore, the cost of acquisition of the company would be as that of acquisition of the firm. The valuation of land and assets of firm though valued by the valuer will not change or alter the cost of acquisition of the firm despite valuation of assets of the firm and would remain the same, and therefore the cost of acquisition of the company would be cost of acquisition of the firm. The firm is being succeeded by the company and the company is not buying or purchasing the assets of the firm. The element of sale and purchase of the assets of the firm were not involved in the case of succession of the firm to the company. In M/s Utsav Cold Storage Pvt. Ltd., Jaipur Vs. ITO, Jaipur view thereof, we decide the issue against the assessee and held that the cost of acquisition of the company (assessee) would be the cost of acquisition of the firm (M/s. Sarju Cold Storage). Therefore, the assessee would only be entitled to the indexation on the cost of acquisition of the firm on the amount of Rs. 2,50,000/-. The argument of the assessee that the AO has wrongly calculated the cost of acquisition of the assessee u/s 49(1)(iii)(a), in our view, is not correct as both the AO and ld. CIT (A) have applied the cost of acquisition on the basis of principles stated herein above i.e. cost of acquisition of the firm. The assessee, in our view, has wrongly got confused with the principles laid down under section 47 which talks about the transaction which are not regarded as transfer, with that of principles for determining of cost of acquisition under section 49. Section 49(1)(iii)(e) was introduced by the Finance Act, 2012 with effect from 1.4.1999. The said section, in our view, is only clarificatory in nature and has specifically provided the cost of acquisition in case of succession of firm to the company. However, the said cost of acquisition was already in existence under section 49(1)(iii)(a) of the IT Act. Therefore, in our view no fresh charge has been created on account of succession of a firm to the company. It has only clarified the existing basis of calculating the cost of acquisition in case of succession of the firm to the company. Therefore, the argument of ld. A/R for the assessee is devoid of any merit and is also dismissed.
5. Ground no. 3 relates to levy of interest under section 234B. Since we have dismissed the ground of the assessee relating to cost of acquisition on the basis of principles stated herein above i.e. cost of acquisition of the firm, therefore, levy of interest u/s 234B is rightly M/s Utsav Cold Storage Pvt. Ltd., Jaipur Vs. ITO, Jaipur confirmed by the ld. CIT (A). We find no infirmity in the order of ld. CIT (A). The same is hereby upheld."
10. The Coordinate Bench has referred to the provisions of section 47(xiii) and section 49 of the Act and has held that both the sections operate and work in different forum and there is no over-lapping of the section. It held that section 47(xiii) provides that the succession or migration of a firm to a company is not treated as transfer and the said section doesn't provide for cost of acquisition in the hands of the company where a firm is succeeded by a company. The said findings of the Coordinate Bench thus takes into account the general position of law regarding specific nature of transfer where a firm is succeeded by a company and not regarded as transfer for the purposes of chargeability of capital gains tax and also the general position of law governing the cost of acquisition in such situations as so defined in section 49 of the Act.
12. We find that the above findings of the Coordinate Bench have been rendered in the context of the provisions of section 49(1)(iii)(a) and not section 49(1)(iii)(e) as amended by the Finance Act, 2012 where clause (xiii) of section 47 was inserted w.r.e.f 1.4.1999. Further, the contentions of the assessee have also been understood in context of transfer as per clause (xiii) of section 47 as evident from the finding that "the assessee, in our view, has wrongly got confused with the principles laid down under section 47 which talks about the transaction which are not regarded as transfer, with that of principles for determining of cost of acquisition under section 49" instead of corresponding clause relating to cost of acquisition relating to transfer as contemplated under section 47(xiii) as introduced in section 49(1)(iii)(e) of the Act. However, if we look at the first two grounds of appeal, these grounds of appeal were raised by the assessee specifically in the context of section 49(1)(iii)(e) as amended by the Finance Act, 2012 which were brought on the statute subsequent to passing of the M/s Utsav Cold Storage Pvt. Ltd., Jaipur Vs. ITO, Jaipur assessment order u/s 143(3) of the Act and which were invoked by the ld CIT(A). In these grounds of appeal, the assessee has challenged the findings of the ld CIT(A) in holding that amendment to section 49(1)(iii)(e) inserting clause (xiii) of section 47 was clarificatory in nature. The said findings of the ld CIT(A), as we have noted above, were rendered in the context of amendment being retrospective and hence clarificatory in nature. However, the way the same has been apparently understood by the Coordinate Bench was that the provisions governing cost of acquisition in case of succession, inheritance are already in existence under section 49(1)(iii)(a), the subsequent amendment in section 49(1)(iii)(e), wherein corresponding provisions governing cost of acquisition in case of a transfer as defined in section 47(xiii) were provided by the Finance Act, 2012, was clarificatory in nature.