P.V. Leela Amma, Mumbai vs Department Of Income Tax on 21 November, 2014
In fact,
4
ITA No. 1277/Mum/2010 (A.Y. 2006-07)
ITO vs. P. V. Leela Amma
as it appears to us, the consideration clause in the Agreements has been stated in the
manner it has been, i.e., rather than simply stating it to be the book value of the final net
assets, in view of the same being in the negative for two of the three concerns being
transferred. Be that as it may, the A.O.'s confusion, as it would appear to us, is as to how
the consideration could be in the negative? The ld. Authorized Representative (AR), the
assessee's counsel, on being so queried during the course of hearing, would object
thereto, stating it as not so, but only that the assessee had not been able to show that the
net worth of the said two firms had been lost. We are surprised. In our view, the A.O.'s
confusion stems principally on account of the negative net worth of two of the three
undertakings transferred. How could the consideration, which is pegged at the net worth,
whether positive or negative, be in the negative? How for instance, one may ask, would it
be conveyed? As such, even assuming the ld. AR to be correct in stating that to be not the
(or a) source of the AO's confusion, how we wonder it would not be an issue arising in
the matter and, thus, not relevant for being questioned and examined in deciding the
same. We would rather consider this to be the issue arising in the instant case. The ld.
AR, in our view, ought to have addressed the query, being germane to the issue.