The assessee, Manjula Finance Ltd. has made gifts of shares held as stock in trade of Jindal steel and Power Ltd, Jindal saw Ltd, Hexa Tradex Ltd, Nalwa Sons investments Ltd, JSW steel Ltd. The AO further found that the assessee has claimed gifting of the above shares whose market value is Rs.2,307,316,710 whereas the cost of purchase of these shares is Rs 11,17,87,701. The shares were gifted to 4 different companies.
The assessee contended that In support of the contention of the assessee, it is stated that there was a Memorandum of Understanding amongst the four sons of late O P Jindal specifically desiring to realign or rearrange the holding of listed equity shares of late O P Jindal group companies amongst various other group companies under the control of four brothers and their families.
The assessee being the absolute owner of the shares gifted , had full enjoyment rights including to alienate, discard and even demolish, unless prohibited by some statutory provisions, it is within the powers of the assessee to make a gift at its free will. Further the shares were credited in the books of account of the donor. The gift is also authorised by articles of association, approved by Board of Directors and Shareholders.
The issue raised was whether the assessee has produced said family settlement deed or a family memorandum of understanding or not does not make any difference and the transaction is required to be tested devoid of any consideration for a family arrangement. The coram consisting of H.S.Sidhu and Prashant Maharshi while reversing the orders of the lower authorities and hold that gift made by a corporate entity, appellant to 4 different corporate entities, in absence of any consideration, no business income can be charged to tax in the hands of Donor appellant.Subscribe Taxscan AdFree to view the Judgment