Veil not lifted!!
Sec. 170 of Income Tax Act provides that where there is a “succession of business”, the predecessor has to be assessed in respect of the income up to the date of succession and the successor has to be assessed thereafter.
In a recent case, it was held that Sec 170 is not attracted even if there is 100% transfer of shares of a company. It was stated that even if it is accepted that by a transfer of shares under sec. 2(47) of ITA, there is a transfer in the right to use the capital assets of the company, still Sec. 170 is not attracted because there is no “transfer of business”. A company is a juristic person and owns the business. The share holders are not the owners of the assets of the company. Therefore, by a transfer of shares, there is no transfer in so far as the company is concerned.
Yet another reiteration of the unique feature of a ‘company’ as a juristic entity in its own right.
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