{"id":1066,"date":"2009-10-22T17:45:56","date_gmt":"2009-10-22T17:45:56","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=1066"},"modified":"2009-10-22T17:45:56","modified_gmt":"2009-10-22T17:45:56","slug":"cit-vs-panchratan-hotels-hp-high-court","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-panchratan-hotels-hp-high-court\/","title":{"rendered":"CIT vs. Panchratan Hotels (HP High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (panchratan_hotels_succession_transfer_s_170.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nNo \u201csuccession of business\u201d u\/s 170 even on 100% sale of shares
\n<\/strong><\/p>\n

S. 170 provides that where there is a \u201csuccession of business\u201d, the predecessor has to be assessed in respect of the income upto the date of succession and the successor has to be assessed thereafter. 100% of the assessee\u2019s shares were sold by the existing shareholders to another person. The CIT in revision took the view that the result of the said transfer of shares was that there was a \u201csuccession\u201d and that the loss incurred prior to the date of succession could not be allowed to the \u201csuccessor\u201d assessee. The assessee\u2019s appeal was allowed by the Tribunal. On appeal by the Revenue, HELD dismissing the appeal:<\/p>\n

(1) The term \u201csuccession\u201d in s. 170 has a somewhat artificial meaning. The tests of change of ownership, integrity, identity and continuity of a business have to be satisfied before it can be said that a person \u201csucceeded\u201d to the business of another;<\/p>\n

(2) Even if it is accepted that by a transfer of shares u\/s 2(47), there is a transfer in the right to use the capital assets of the company, still s. 170 is not attracted because there is no \u201ctransfer of business\u201d<\/strong>. A company is a juristic person and owns the business. The share holders are not the owners of the company. By a transfer of the shares, there is no transfer so far as the company is concerned<\/strong>. <\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

S. 170 provides that where there is a \u201csuccession of business\u201d, the predecessor has to be assessed in respect of the income upto the date of succession and the successor has to be assessed thereafter. 100% of the assessee\u2019s shares were sold by the existing shareholders to another person. The CIT in revision took the view that the result of the said transfer of shares was that there was a \u201csuccession\u201d and that the loss incurred prior to the date of succession could not be allowed to the \u201csuccessor\u201d assessee. The assessee\u2019s appeal was allowed by the Tribunal. On appeal by the Revenue, HELD dismissing the appeal even if it is accepted that by a transfer of shares u\/s 2(47), there is a transfer in the right to use the capital assets of the company, still s. 170 is not attracted because there is no \u201ctransfer of business\u201d. A company is a juristic person and owns the business. The share holders are not the owners of the company. By a transfer of the shares, there is no transfer so far as the company is concerned. <\/p>\n

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