Commnr. of Income-tax, Madurai v. M/s. Annamalaiar Mills
[Citation -2017-LL-0328-15]
| Citation | 2017-LL-0328-15 |
|---|---|
| Appellant Name | Commnr. of Income-tax, Madurai |
| Respondent Name | M/s. Annamalaiar Mills |
| Court | SUPREME COURT |
| Relevant Act | Income-tax |
| Date of Order | 28/03/2017 |
| Judgment | View Judgment |
| Keyword Tags | subsidiary company • holding company • capital gain |
| Bot Summary: | Briefly stated, the facts of this case are as follows: M/s Annamalaiar Mills Ltd., respondent herein is a holding company of M/s Annamalaiar Textiles Ltd. Hundred per cent shares of M/s Annamalaiar Textiles Ltd. were held by the respondent company. In the respondent company, there were two groups of shareholders; the majority shareholder called Group A was having 61.26 per cent shares whereas the minority shareholders called Group B were holding 38.74 per cent shares. An agreement was entered into between the two groups on 24.06.1985 by which Group A came to hold all the shares in the holding company i.e. the respondent herein and Group Signature Not Verified Digitally signed by ASHA SUNDRIYAL Date: 2017.04.01 B was given 100 per cent shares in the subsidiary company 12:45:04 IST Reason: i.e. M/s Annamalaiar Textiles Ltd. However, M/s Annamalaiar Textiles Ltd also paid a sum of Rs.42.45 2 lakhs to the respondent company. Proceedings under the Gift Tax Act were initiated in respect of payment of Rs.42.45 lakhs received by the respondent company. The assessing officer treated the amount of Rs.42.45 lakhs paid by the M/s Annamalaiar Textiles Ltd. to the respondent company as capital gain on the footing that since both the companies are now 100 per cent owned by Group A or Group B, as the case may be, payment of Rs.42.45 lakhs was to off set valuation of the shares of M/s Annamalaiar Textiles Ltd. The Assessing Officer opined that the respondent herein-assessee was liable to pay tax for capital gains which was upheld in the appeal before the Commissioner of Income Tax. The Income Tax Appellate Tribunal, Madras, in appeal preferred by the respondent herein accepted the pleas put forth by the respondent herein, set aside the assessment and restored the matter to the Income Tax Officer so that the assessee may approach the Central Board of Direct Taxes. 3 The sole question which arises for our consideration is as to whether the sum of Rs.42.45 lakhs paid by M/s Annamalaiar Textiles Ltd. to the respondent company is liable to any capital gains or not. |