| Case ID |
0fe2bd4a-e689-4ea6-aa9a-5d6aa6126589 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
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| Hearing Date |
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| Decision |
The Tribunal was not justified in holding that the transaction in question is in the nature of an 'exchange' only. The Supreme Court's ruling in CIT v. B.M. Kharwar established that there are two distinct transactions involved: a sale of motor vehicles and a contract under which shares were allotted in satisfaction of the price. The first transaction clearly attracts section 10(2)(vii), and the Tribunal's conclusion that it was merely an exchange was incorrect. Thus, the revenue's position was upheld, and the assessee was required to pay the costs. |
| Summary |
The case revolves around the interpretation of section 10(2)(vii) of the Indian Income-tax Act, 1922, specifically concerning the nature of a transaction involving the transfer of motor vehicles by a partnership firm to a private limited company in exchange for shares. The Supreme Court's established tests for determining whether a transaction constitutes a sale or an exchange were applied. The court concluded that the transfer was indeed a sale, triggering tax liabilities under the relevant section. This significant ruling emphasizes the importance of accurately classifying business transactions in tax law, impacting how firms manage asset transfers and tax obligations. |
| Court |
Madhya Pradesh High Court
|
| Entities Involved |
Combined Transport Service, Bilaspur,
Assessee-firm
|
| Judges |
J.S. Verma, C.J.,
B.M. Lal, J.
|
| Lawyers |
B.K. Rawat,
Y.S. Dharmadhikari,
B.L. Nema
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
AMar Court Transport Services
|
| Citations |
1986 SLD 2486,
(1986) 162 ITR 1
|
| Other Citations |
CIT v. Motors & General Stores (P.) Ltd. [1967] 66 ITR 692 (SC),
CIT v. R.R. Ramakrishna Pillai [1967] 66 ITR 725 (SC),
CIT v. B.M. Kharwar [1969] 72 ITR 603 (SC)
|
| Laws Involved |
Indian Income-tax Act, 1922
|
| Sections |
10(2)(vii)
|