Law: Income Tax Act, 1961

Section: 2(47),45,256

Income-tax----Reference---Capital gains---Transfer---Amalgamation of companies-¬Assessee receiving shares and bonds of amalgamated company in lieu of his shareholding in amalgamating company--- Department accepting that there is no transfer of capital asset within the meaning of S.2(47)---Whether gains resulting from transfer liable to tax---Reference not answered---Indian Income Tax Act, 1961, Ss.2(47), 45 & 256. Where on an amalgamation of companies, the assessee received bonds and shares of the amalgamated company in lieu of her shareholding in the amalgamating company, on a reference of the question whether the gains resulting from the transfer were liable to tax as capital gains: Held, that the Department, in similar cases belonging to the same group or the same set of assessees, had accepted that there was no transfer of a capital asset within the meaning of section 2(47) of the Income Tax Act, 1961. The reference, therefore, did not need to be answered. CIT v. Gautam Sarabhai Trust (1988) 173 ITR 216 (Guj.); CIT v. Master Raghuveer Trust (1985) 151 ITR 368 (Kar.); CIT v. Rasiklal Maneklal (HUF) (1974) 95 ITR 656 (Bom.) and CIT v. Rasiklal Maneklal (HUF) (1989) 177 ITR 198 (SC) ref. JUDGMENT M. B. SHAH, J. ---The assessee was a holder of shares in the amalgamating company. By a scheme of amalgamation, the assets, inter alia, of the amalgamating company as also its liabilities were transferred to the amalgamated company, namely, Alkapuri Investments (Private) Limited ("A.I.P.L.", for short). Under the scheme, A.I.P.L. was obliged to issue and allot to the shareholders of the amalgamating company one equity share of the face value of Rs.100 and two fractional certificates each representing entitlement of 1/10th of one equity share and one 11 per cent. redeemable bound of the face value of Rs.100 in respect of one equity share of the amalgamating company. The Income-tax Officer levied capital gain tax by holding that, as the assessee received shares, it was a transfer and that the amount received by the assessee was subject to tax as capital gains. That part of the order passed by the Income-tax Officer was confirmed by the Commissioner of Income-tax…

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