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news details
DB dismisses appeal filed under IT Act
Alleged evasion of Tax
9/13/2017 10:28:08 PM
Early Times Report
JAMMU, Sept 13: A Division Bench of High Court of Jammu and Kashmir comprising of Justice Alok Aradhee and Justice B S Walia dismissed the appeal under section 260-A of Income Tax Act, 1961. Counsel for the appellant contended that the appeal was admitted by a Bench of the same Court vide order dated 05.04.2011.
The facts giving rise to the filing of the appeal briefly stated are that there was a change in the Management and Share-holdings of the Company. M/s Janki Motor Pvt. Ltd. was having dealership rights for sale of vehicles etc. of Maruti Udyog Ltd. In the aforesaid company, one Krishan Kumar and Ushal Amla were the shareholders and Directors having Rs 4 lakh equity shares of Rs. 10 per share and by an agreement dated 26.07.2001, the Directors agreed to transfer dealership rights of Maruti Udyog ltd. and the entire shareholdings to one Davender Singh Rana for consideration of Rs. 40 lakh. In the balance sheet the assessee had shown goodwill of Rs. 40 lacs as the transferee had purchased the dealership rights from the then Directors and assets and liabilities of the company as on the date of takeover were transferred to the outgoing Directors. The Assessing Officer observed that there was no change in the company which continued to carry out the business. Despite several opportunities being granted, the assessee did not produce the books of accounts. Accordingly, the Assessing Officer came to the conclusion that it was merely a device to evade tax. He applied gross profit @ 9.6 per cent and estimated profit to transfer tradable assets worth Rs 70,11,090/- and made an addition of Rs. 6,35,204/-.
Counsel for the appellant submitted that principle which is to be applied while dissolving the firm cannot be applied to continue the Company. On the other hand, learned counsel for Revenue has submitted that the plea that principle which is to be applied while dissolving the firm cannot be applied to continue the company, has been taken for the first time in this appeal, which is not permissible.
DB opined that the Tribunal has rightly applied the ratio laid down in the case of A.L.A Firm (supra) to the fact situation of the case. Even otherwise, the fact that the Assessing Officer has made the addition in the hands of the Directors would not make any difference in the present case for the reason that such income actually belongs to the assessee and therefore, taxable as such in its hand.
DB dismissed the appeal being without merits.
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