CHETAN H DAIYA,MUMBAI vs. ITO 16(1)(2), MUMBAI

ORDER PER : OM PRAKASH KANT These appeals by the assessee are directed against the separate orders passed by the Ld.Commissioner of Income-tax (Appeals)-27, 2 /Mum/2014 ITA No.4556/Mum/2010 ITA No.4557/Mum/2010 ITA 4376/Mum/2014 Shri Chetan H Daiya Mumbai [in short, the Ld.CIT(A)] for Assessment Years1993-94 & 1998- 99, respectively.

3 /Mum/2014 ITA No.4556/Mum/2010 ITA No.4557/Mum/2010 ITA 4376/Mum/2014 Shri Chetan H Daiya 5. The assessee is legal heir of Shri Hariram Daiya and Late Smt. Velabai Daiya who were shareholders in the private limited company, i.e. M/s Mulji V Narsi Pvt Ltd and M/s Hercules Engg.Works Pvt Ltd. Due to liquidation of the concerned companies, the money was distributed in the previous year relevant to A.Ys.1993-94 & 1998-99. Though the assessee offered the money distributed on liquidation in the return of income filed and computed capital gain under section 46(2) of the Act; however, he contested the taxability to the assessment proceedings and matter was carried to the ITAT. The ITAT set aside the matter to the Assessing Officer. The assessment order passed by the Assessing Officer under section 143(3) read with section 254 was subjected to revision proceedings by the CIT-16, Mumbai, who set aside the assessment order with the direction to treat the money received on liquidation of the companies as taxable under section 46(2) of the Act as the word “registered shareholder” was not used in the section and, therefore, capital gain shall be charged in the hands of the assessee. The Assessing Officer accordingly assessed the relevant income in the hands of the assessee. On further appeal, Ld.CIT(A) in a detailed finding after discussing decisions of the various Hon’ble High Courts and Hon’ble Supreme Court in paras 2.4.10 to 2.4.33, dismissed the appeal of the assessee by observing as under:- “2.4.34 Keeping in view the above factual and legal analysis and in view of the decision of Patna High Court in the case of D.M. Murarilqal Budhia 139 ITR 410 (Pat), the issue has to be decided against the appellant. A similar view was taken by the Hon’ble Supreme Court in the case of CIT vs. R.M. Amin 106 ITR 68 (SC) where it was held that but for 4 ITA No.4375 /Mum/2014 ITA No.4556/Mum/2010 ITA No.4557/Mum/2010 ITA 4376/Mum/2014 Shri Chetan H Daiya section 46(2), it would not have been possible to charge tax under the head ‘capital gains’ on the money or other assets of the company received by its shareholder on its liquidation. Accordingly, grounds raised are dismissed.”