Admitted To Be Decided In This Appeal Is Squarely Covered In Favour Of Theassessee In The Light Of The Decision Of The Hon’ble Supreme Court In Thecase Of Commi v. Mahindra And Mahindra Ltd. [2018] 404 Itr 1(Sc). This Decision Was Referred In The Case Of Commissioner Of Income-Tax (Ltu) V. Areva T & D India Ltd.[2021] 434

IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITA/67/2012IN THE MATTER OF :COMMISSIONER OF INCOME TAX, CENTRAL-I, KOLKATAVS VIPER ESTATES & INVESTMENTS (P) LTD. BEFORE : THE HON’BLE JUSTICE T.S.SIVAGNANAM A N D THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADATED : JANUARY 18, 2022. [Via Video Conference] Appearance :Mr. P.K. Bhowmick, Advocate …for appellantMr. Abhratosh Majumder, AdvocateMr. Avra Mazumder, Advocate …for respondent The Court :- This appeal by the revenue under Section 260A of theIncome Tax Act, 1961 (the Act) is directed against the order dated 29[th]December, 2010 passed by the Income Tax Appellate Tribunal “B” Bench,Kolkata in ITA No. 890/Kol/2010 for the assessment year 2005-06. Theappeal was admitted on 15[th] June, 2012 to decide the followingsubstantial question of law:- 1.Whereon the facts and in the circumstances of the case theIncome Tax Appellate Tribunal erred in law in quashing theorder passed under section 263 of the Income Tax Act, 1961without considering the judgement of the Hon’ble Apex court inthe case of Vazir Sultan tobacco Co. Ltd. reported in 132 ITR559 where the Hon’ble Apex Court had held that amounttransferred to General Reserve should be treated as profitchargeable to Income-tax in the assessee’s hands ?Income Tax Appellate Tribunal erred in law in quashing theorder passed under section 263 of the Income Tax Act, 1961without considering the judgement of the Hon’ble Apex court inthe case of Vazir Sultan tobacco Co. Ltd. reported in 132 ITR559 where the Hon’ble Apex Court had held that amounttransferred to General Reserve should be treated as profitchargeable to Income-tax in the assessee’s hands ? We have heard Mr. P.K. Bhowmick, learned Counsel appearingfor the appellant/revenue and Mr. Abhratosh Majumder, learnedCounsel assisted by Mr. Avra Mazumder, learned Counsel appearing forthe respondent. The substantial question of law, which has been raised and admitted to be decided in this appeal is squarely covered in favour of theassessee in the light of the decision of the Hon’ble Supreme Court in thecase of Commissioner v. Mahindra and Mahindra Ltd. [2018] 404 ITR 1(SC). This decision was referred in the case of Commissioner of Income-Tax (LTU) v. Areva T & D India Ltd.[2021] 434 ITR 604 (Mad). Theoperative portion of the judgement read as follows:- “18. Substantial question of law Nos.3 and 4 are connected as the question is as to whether the net book value of the entity taken over by theassessee over and above the consideration paid for acquiring three companies would not fall within the ambit of the provisions of section 28(iv)of the Act. 19. The Tribunal found that the amalgamation of the threecompanies with the assessee-company was not the business of theassessee and consequently, it could not be stated that the provisions ofsection 28(iv) of the Act would apply to the excess of the net book value ofthe entities over the consideration paid in any way nor was it income liableto tax under the head “Profit and gains of business” in the hands of theassessee-company. On the above terms, relief was granted to theassessee. 20. This issue is no longer res integra and has been decided by thehon’ble Supreme Court in the case of Commissioner v. Mahindra andMahindra Ltd. reported in [2018] 404 ITR 1 (SC) wherein it was held thatfor applicability of section 28(iv) of the Act, the income must arise from thebusiness or profession and the benefit, which is received has to be in someother form other than in the shape of money. 20. This issue is no longer res integra and has been decided by thehon’ble Supreme Court in the case of Commissioner v. Mahindra andMahindra Ltd. reported in [2018] 404 ITR 1 (SC) wherein it was held thatfor applicability of section 28(iv) of the Act, the income must arise from thebusiness or profession and the benefit, which is received has to be in someother form other than in the shape of money. 21. An identical issue was considered by the hon’ble Division Bench ofthis court in the case of CIT v. Stads Ltd. reported in [2015] 373 ITR 313(Mad) wherein it was held that the provisions of section 28(iv) of the Actmake it clear that the amount reflected in the balance-sheet of the assesseeunder the head “Reserves and surplus” could not be treated as a benefit orperquisite arising from business or exercise of profession, that the difference amount post amalgamation was the amalgamation reserve and itcould not be said that it was out of normal transaction of the business andthat the present transaction, being capital in nature, which arose onaccount of amalgamation of four companies, could not be treated as fallingunder section 28(iv) of the Income-tax Act. 22. Thus, the Tribunal rightly granted relief to the assessee. We alsofind that the Commissioner of Income-tax (Appeals) appreciated the facts ina proper perspective and granted relief to the assessee and in doing so,followed the decision of the High court of Gujarat in the case of CIT v.Spunpipe and Construction Co. Ltd. reported in [1965] 55 ITR 68 (Guj).” In the instant case, the Tribunal noted the facts and found that nonexus has been established that the amount which the assessee got as abenefit had anything to do with the business income. Further, theTribunal noted that the scheme of arrangement in the nature ofamalgamation was approved by the jurisdictional High Court on 15[th]January, 2005, and was effective from 1[st] April, 2004, which will showthat it is a case of scheme of amalgamation. Therefore, the Tribunalrightly observed when it is a case of amalgamation provisions of Section47(6) of the Act will take care of the situation. Thus the Tribunalconcluded that the order of assessment dated 11[th] December, 2007cannot be said to be erroneous or prejudicial to the interest of revenuewarranting invoking of power under Section 263 of the Act. Thus we findthat there is no error in the decision of the Tribunal. In the result, appeal filed by the revenue is dismissed and thesubstantial question of law is answered against the revenue. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) GH/nm.