WHETHER A COMPANY CAN GIVE ITS PROPERTY TO ANOTHER COMPANY AS GIFT & WHETHER SECTION 50C WILL APPLY

Описание: Link of full case : https://taxlawsonline.com/agtlol.html...

[2024] 111 ITR (Trib) (S.N.) 47 (ITAT[Ahm])
[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — AHMEDABAD "C" BENCH]

GUJARAT INFRAPIPES P. LTD.
v.
DEPUTY COMMISSIONER OF INCOME-TAX

(and vice versa)
______
WASEEM AHMED (Accountant Member) and T. R. SENTHIL KUMAR (Judicial Member)

April 3, 2024

Playlist: 47(iii), 50C

A.Y: 2013-14/Assessee/Department

QUESTION: WHETHER A COMPANY CAN GIVE ITS PROPERTY TO ANOTHER COMPANY AS A GIFT AND WHETHER SECTION 50C WILL APPLY?

1. In 2009, the assessee company acquired from the collectors nine plots of land for industrial purposes.

2. Due to various financial, administrative and infrastructure problems, the assessee was not able to start its proposed industrial project on these plots.

3. After obtaining necessary approvals from the competent authority, the plots were gifted to R Ltd, free from all encumbrances and without any consideration, either in cash or kind by executing gift deed dated 29.10.2012.

4. A.O. applying section 50C, brought to tax as capital gains a sum equal to the market value minus indirect cost of the plots.

5. CIT(A) deleted the additions, on appeal to ITAT, Tribunal held that:

6. The transfer of property Act, 1882 considers a company not only as a person but literally speaking as a living person, a person with life.

7. The same expression “person” in section 5 is transplanted in section 122 of the 1882 Act, which defines a “gift”.

8. A cogent reading of section 5 and 122 of the 1882 Act makes it clear that a company being a “living person” can transfer property by way of gift to another company.

9. Further section 122 of the Act does not prescribe any attributes like love and affection.

10. There are no restrictions in law against a company making a gift of its property to another company.

11. A transfer without consideration when claimed as a gift is always a gift.

12. Further section 47(iii) of the Act, specifically provides that any transfer of a capital asset under a gift is not regarded as a transfer, consequently the question of invoking the provisions of section 50C does not arise.

13. Grounds of disallowance of Rs 91,956 for prior period expenses, Rs 54,000 for failure to deduct TDS, Rs 60,517 u/s 40A(3) are dismissed without going into merit since the amounts involved were small.

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Link for some important videos:

1) WHETHER TRIBUNAL CAN REMAND MATTER IN ENTIRETY WHERE DEPARTMENT DID NOT FILE CROSS APPEALS?- https://www.youtube.com/watch?v=gkqMk...

2) WHETHER ASSESSEE HAS ALSO TO CHALLENGE THE FINDINGS OF THE A.O THAT NOTICE HAS BEEN SERVED?- https://www.youtube.com/watch?v=XbZWh...

3) WHETHER EXTENDED TIME LIMIT U/S 149(1)(b) CAN BE USED ON THE BASIS OF SALES CONSIDERATION U/S 48?- https://www.youtube.com/watch?v=WuRt9...

4) WHETHER NOTICE SENT TO SECONDARY EMAIL IS VALID IF NOT SENT TO PRIMARY E-MAIL U/S 148?- https://www.youtube.com/watch?v=aAzHE...

5) WHETHER ENTRIES IN BOOKS OF ACCOUNTS CONCLUSIVE TO DETERMINE TAXABLE INCOME OF ASSESSEE?- https://www.youtube.com/watch?v=Rx8JQ...