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ITAT quashes ex-cricketer Srikanth’s tax planning; sale of shares by minor sons clubbed in his income

May 23, 2020[2020] 116 721 (Chennai - Trib.)

INCOME TAX : Where in a company assessee's minor sons held 99% shares and assessee held only 125 shares, when entire shareholding was sold, sale proceeds would belong to minor sons of assessee and same was required to be brought to tax by invoking provisions for clubbing income of minors

• Where loan was availed by a company of which assessee was director and he stood as guarantor of said loan, his minor sons could not be made to pay for default in payment of loan as they were not guarantors of said loan; assessee, being natural guardian of minor sons, had no right to use sale proceeds belonging to minor sons to discharge bank loan without permission of Court.

• Where assessee being ex-cricket captain of India, enjoyed reputation and brand value and was running a company providing cricket coaching through electronic media, sold entire shareholding of company and simultaneously entered into agreements with buyer-company not to compete with it for six years, amount received was not chargeable to tax as it was a capital receipt.

• Where assessee was claiming huge exemption of income by making incomplete, untrue and wrong claim before Assessing Officer and no scrutiny assessment was made earlier by Revenue and reopening was sought to be done within four years from end of assessment year, reopening of concluded assessment was justified.
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