Held that the receipt of shares of the amalgamated company in substitution of stock-in-trade could give rise to taxable business profits under section 28. However, the actual application of this principle to the facts of the case, including whether the shares received were freely realisable or otherwise subject to restrictions, or whether the shares were held only as investment, was a matter requiring factual determination. In these circumstances, the proper course was to remit the matter to the Tribunal for fresh adjudication in accordance with law.<\/p>\n
By the court<\/strong>: Business, by its very nature, admits of profits arising in diverse forms, whether in money or in kind, yet the common denominator is that the benefit must be concrete, capable of commercial realisation, and not a mere paper rearrangement. Amalgamation, as a statutory substitution, ensures continuity of enterprise but also extinguishes one form of holding and replaces it with another. Where such substitution confers on the assessee realisable assets of definite market value, a commercial realisation takes place, and section 28 is attracted. At the same time, courts must remain alive to the distinction between genuine commercial gain and hypothetical accretion. The touchstone is, therefore, the doctrine of real income, applied with due regard to the facts of each case, ensuring that the tax charge operates neither oppressively nor evasively, but in harmony with the legislative design, to tax true profits of business, however manifested, while eschewing illusory gains.(AY. 1997-98)<\/p>\n","protected":false},"excerpt":{"rendered":" S. 28(i) : Business income-Capital gains-Two provisions operate in distinct and independent fields-Mere receipt not sufficient to attract charge Commercial realisability required-Shares received on amalgamation-Shares held as stock-in-trade Nature of stock-in-trade wholly different from investment-No exception contemplated in case of business assets-Shares received on amalgamation-Shares held as stock-in-trade-Profit taxable as business profits-Burden on department to establish and Tribunal to apply the principles to evidence on record-Charge attracted only upon allotment of new shares-Not on appointed date or date of court sanction. [S. 2(1B), 2(14), 2(47), 28, 45(1), 47(vii) Art. 136] <\/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_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":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-60448","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-fIY","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/60448","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=60448"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/60448\/revisions"}],"predecessor-version":[{"id":60449,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/60448\/revisions\/60449"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=60448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=60448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=60448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}