Issue before the Tribunal  in the appeal of the revenue, was;

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that consideration received on transfer of asset took place is same as that of value of asset in the books of M/s Celerity Power Co. Pvt. Ltd.

2. On the facts and in the circumstances of the case and in law. the Ld. CIT(A) has erred in not confirming the value of consideration received as computed by the A.O for the purpose of Capital Gain u/s 47A(4) of the Income Tax Act, 1961.

3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing the assessee’s claim of deduction u/s 80- IA of the I.T. Act. 1961 without appreciating that the assessee has failed to furnish form 1OCCB during the course of assessment proceedings, despite being required to furnish the same by the A.O.

In the issue raised by the assessee in the Cross objection of the assessee was ;

1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the AO of charging capital gains under section 45 of the Act in the hands of the successor assessee LLP by invoking the provisions of section 47A of the Act.

2. The cross-objector prays that the AO be directed to delete the addition on account of capital gains computed under section 45 of the Act in the hands of the appellant.

3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in upholding the action of the AO that the conversion of the private limited company , Celerity Power Private Limited, into the LLP, would be a taxable transfer chargeable to tax under Sec. 45 of the Act on the alleged ground that the conditions laid down under section 47(xiiib) of the Act were not complied with.

4 The Cross-Objector prays that the AO be directed to delete the addition on account of capital gains computed under section 45 of the Act.

5. On the facts and in the circumstances of the case and in law, the learned CIT(A) failed to consider that no consideration was received by the private limited company and accordingly the charging provisions of section 45 would not apply due to the inapplicability of computation provisions under section 48 of the Act.

6. The Cross-objector prays that the AO be directed to delete the addition on account of capital gains computed under section 45 of the Act.

7. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in denying the carry forward of loss of the private limited company for set off against future profits of the Cross objector on the ground that the conditions laid down under section 47(xiiib) of the Act are not complied with and therefore the provisions of section 72A(6) of the Act are attracted.

8. The Cross-objector therefore prays that the AO be directed to allow the carry forward and set off of the losses of the erstwhile private limited company against the profits of the Cross objector.

Tribunal held that ,the conversion of a company into a LLP constitutes a “transfer”. If the conditions of S. 47(xiiib) are not satisfied, the transaction is chargeable to ‘capital gains‘-If the assets and liabilities of the company are vested in the LLP at ‘book values‘ (cost), there is in fact no capital gain. The argument that u/s 58(4) of the LLP Act, the LLP is entitled to carry forward the accumulated losses & unabsorbed depreciation of the company, notwithstanding non-compliance with S. 47(xiiib) is not acceptable. Tribunal also held that CIT(A) has rightly admitted the ‘audit report‘ filed by the assessee in ‘Form 10CCB‘ during the course of the appellate proceedings, and therein allowed the claim of deduction raised by the assessee under S. 80IA of the Act. ( ITA No. 3637/Mum/2015 & C.O No.2/Mum/2016, dt. 16.11.2018)(AY. 2011-12)