The Delhi High Court held that the allotment of shares in a scheme of amalgamation was not construed as transfer under Section 47(vii) of the Income Tax Act,1961.
Banyan Real Estate Fund Mauritius, the petitioner filed a writ petition against the issuance of notice under Section 148A(b) of the Income Tax Act for the remittance of two amounts mentioned i.e. Rs. 36,70,31,500/- & Rs. 8,98,87,560/-.
Indruj Singh Rai, Bharat Jain, and Aanchal Jain, the counsels for the petitioner contended that the petitioner had received monies upon the sale of shares, and not, as alleged, remitted monies through a non-resident/foreign company.
Further, the petitioner indicated that it had sold shares of two entities i.e., Landmark Hi-Tech Development Private Limited and Safari Retreats Private Limited, and received the amount as the sale of shares.
Puneet Rai, the counsel for the department contended that the issuance of notice under section 148(b) of the Income Tax Act was as per the law and liable to be sustained.
The Court observed that the allotment of shares in a scheme of amalgamation was not construed as transfer under the Act and the provisions of Section 47(vii) of the Income Tax Act were mentioned by the petitioner.
The two-member bench comprising Rajiv Shakdher and Girish Kathpalia stayed the order passed under Section 148A(d) of the Income Tax Act and the consequent notice issued under Section 148 of the Income Tax Act.
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