Rp/1548/2011 Of Joint Commissioner Of Income Tax v. M/S. Ferro Concrete Company Of India

IN THE HIGH COURT OF KARNATAKACIRCUIT BENCH AT DHARWAD DATED THIS THE 24 DAY OF AUGUST, 2012 PRESENT THR HON’BLE MR. JUSTICE N. KUMAR ANI THR HON’BLEK MR. JUSTICE H.S. KEMPANNA R.P. No. 1548/2011 in I.T.A. No. 4/2007 BETWEEN: 1.Joint Commissioner ofIncome Tax (Assessment), special Range, Hubli. a2Commissioner of Income Tax, Central Revenue Building, Hubli, (by Sri Y.V. Raviraj, Advocate) Petitioners ANI' M/s Ferro Concrete Company of India,Industrial Estate, Gokul Road, Hubli. (by Sri A. Shankar, Advocate) -Respondent This review petition is filed under Order XLVIIRule 1 R/w Sec. 151 of CPC praying to review thejudgment passed by this Court in I.T.A. No. 4/2007dated 17.03.2011, etc. This petition coming on for hearing oninterlocutory application this day,N.Kumar J.,made the following: ORDER 1.This review petition is filed seeking review oT|theorders.passedbythisCourt %17.03.2011 dismissing the appeal following thejudgment of this Court in I.T.A. No. 3170/05disposed of on 09.07.2010 holding both thesubstantial questions.ot|lawagainst(>+Revenue. 2.The grievance is Clause 13 to Sec. 47 of theAct has been inserted with the statute witheffect from O1.04.1990.Thereforefor(>+assessment year 1993-94 in the present casebefore this Court the respondent is outside theambit of Clause 13 of Sec. 47 oft the Act as thsame was not in existence in the relevantassessment.YCal1993-94..Therefore(>+ provisions of Sec. 49(4) and 47 of the Act areattracted in the present case and to that extentthere appears to be an error, 3.We do not see any merit in the said ground,This Court in I.T.A. no. 3170/09 has held Sec.45 of the Act deals with capital gains withreference to transfer of capital asset and the taxpayable on such capital gain. Sec. 4/7 of the Actexpresslydealswith.transfer/transactions,which are not to be regarded as transfer underthe Act. Clause 13 is the one such transfer,which, in effect, is not a transfer under the Act.It provides, any transfer of a capital asset orintangible asset by a firm to a company as aresult of succession of the firm by a company inthe business carried on by the firm or anytransfer of a capital asset to a company in thecourse of demutualisation or corporatisation ofa recognised stock exchange in India as a result ofwhich an association of persons or body ofindividuals is succeeded by such company is nota transfer. Therefore under the Act, even ifthere is a transfer, under $.4/7 it is not transfer of a capital asset so as to attract tax oncapital gains. Of course, for attracting theaforesaid clauses, certain conditions have to befulfilled. Firstly, all the assets and liabilities ofthe firm relating to the business immediatelybefore the succession become the assets andliabilities of the Company. Secondly, all thepartners in the firm immediately before thesuccession, become the shareholders of thecompany in the same proportion in which theircapital accounts stood in the books of the firmon the date of succession. Thirdly, the partnersof the firm do not receive any consideration or benefit, directly or indirectly, in any form ormanner, other than by way of allotment ofShares in the company. Once these threeconditions are fulfilled, the liability to pay taxon transfer of capital gains would not arise. Inthat context, the date on which this amendmentcame into force is of no relevance. We do not seeany|eroundsfor|reviewingtheorder.Accordingly this review petition is dismissed. »D/-JUDGE Bvv »D/-JUDGE