Assessee, engaged in construction activities, had filed its return of income after being converted from a private company to LLP.\u00a0 Assessing Officer\u00a0 made additions under section 45 on account of asset being goodwill brought into books of account after conversion holding that assessee was in violation of clauses (c) and (f) of section 47(xiiib).\u00a0 Clause (c) refers that no direct or indirect benefit should be passed on to shareholders in any form or manner, other than by way of share of profit and capital contribution in LLP and said clause operates only till date of conversion. Tribunal held that\u00a0 on perusal of pre-conversion and post-conversion balance sheets of assessee, it was clear that shareholders had not received any such consideration or benefit thus, assessee was not in violation of clause (c).\u00a0 Clause (f) refers to amount paid to partner of LLP, out of balance of accumulated profits standing in accounts of company on date of conversion. Since commercial expediency explained by assessee had not been controverted by Assessing Officer and accumulated profits did not include amount of goodwill in books of predecessor company, there could not be any violation of clause (f) either.\u00a0 Additions made by Assessing Officer on mere presumption could not be sustained and deleted. (AY. 2016-17)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 47(xiiib) : capital gains-Transaction not regarded as transfer-Capital gains-Conversion of firm in to LLP-Good will-Books of account of predecessor company did not include goodwill in accumulated profits, there was no violation of clauses (c) and (f) of section 47(xiiib) and additions made under section 45 treating assessee to be in violation of clauses (c) and (f) of section 47 could not be sustained.[S. 45] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-43250","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-bfA","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43250","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=43250"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43250\/revisions"}],"predecessor-version":[{"id":43251,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/43250\/revisions\/43251"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=43250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=43250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=43250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}