Assessee transferred assets to its 100 percent subsidiary and surplus generated from the same was offered to tax in the return of income with a note providing details of transactions offered to tax. On appeal to the CIT(A), it was held that surplus generated by the assessee on transfer would be chargeable to tax as the asset was employed in the business. However, the Tribunal held that surplus generated on account of transfer of asset could not be treated as income in view of the provisions of section 47(iv) of the Act. The Hon’ble High Court dismissed the revenue appeal and held that the surplus generated on transfer could not be treated as income under section 47(iv). Further, merely because the assessee inadvertently offers a receipt for levy of tax, tax cannot be levied by the revenue if it is not otherwise constituting income of the assessee. (AY. 2012-13)
PCIT v. Ansal Properties and Infrastructure Ltd (2023) 152 taxmann.com 49 / (2024) 460 ITR 341 (Delhi) (HC)
S. 47(iv) :Capital gains-Transaction not regarded as transfer-Capital gains Subsidiary-Prerequisites provided to Indian subsidiary company-Assessee inadvertently offered receipt for levy of tax-Tax could not be levied as receipt did not constitute income-Income-tax leviable only in accordance with provisions of Income-tax Act-Admission by assessee is not conclusive. [S.4, 45]