JUDGMENT P.R. Ramachandra Menon, J. 1. Can, a person borrow from himself and whether the 'sole proprietor' and his 'business concern' can be treated as two separate entities in the realm of the assessment of long term Capital Gain Tax ?. Is it not necessary to satisfy all the requirements under Section 47 (xiv) [proviso a, b and c] of the Income Tax Act [herein after referred to as 'Act'] separately, to have exemption from the transfer envisaged under Section 45 of the Act, involving taxability/exigency to tax?. Is the Tribunal justified in passing the order under challenge in this appeal, in favour of the assessee, treating the amount in the current account of the proprietorship concern, as a 'loan to the proprietor', which was stated as taken over by the Company, despite the absence of any such case before the Commissioner, whose order under Section 263 of the Act was subjected to challenge before the Tribunal at the instance of the assessee ? These are the substantial questions of law, on which the parties were heard in this appeal. 2. The respondent assessee was running a proprietorship concern under the name and style as KAP (India) Constructions, Thrissur. The said establishment, which was pursuing business in civil construction on contract basis, was having the head office at Bangalore and site offices at different places, including in Kerala. The proprietorship concern was run upto 30.09.2000 and thereafter, it was taken over by a limited Company by name KAP (India) Projects and Constructions (P) Limited, with all the assets and liabilities of the former, as per the terms agreed and settled. 3. The respondent assesee filed return for the year 2001 - 02, declaring a total income of Rs. 47,83,440/-; of course revealing the income received from the proprietorship concern up to 30.09.2000 and income from other sources as well. Pursuant to scrutiny under Section 143(3) of the Act, the assessment was finalized by the assessing officer as per Annexure A order dated 30.10.2003, treating the assessed income as Rs.50,49,130/- and fixing tax liability accordingly. 4. 47,83,440/-; of course revealing the income received from the proprietorship concern up to 30.09.2000 and income from other sources as well. Pursuant to scrutiny under Section 143(3) of the Act, the assessment was finalized by the assessing officer as per Annexure A order dated 30.10.2003, treating the assessed income as Rs.50,49,130/- and fixing tax liability accordingly. 4. On further scrutiny/perusal of the records, the appellant/Commissioner of Income Tax observed that, as per the terms and conditions of the agreement, all the assets of the proprietorship concern amounted to Rs.9,64,39,231.19 [including the goodwill valued at Rs.2,45,00,000], which was taken over by the Company, as per the values reflected in the Balance Sheet of the proprietary concern, as on 30.09.2000. It was also noted that the credit balance in the capital and current account of the assessee in the balance sheet of the proprietorship concern, as on 30.09.2000, amounted to Rs.5,17,03,897.63. An amount of Rs.1,52,94,900/- represented the value of 1,52,949 shares of face value of Rs.100/- each and the balance amount was payable at the end of the year, which was shown as 'amount due to the assessee' under "unsecured loans" due to the assessee. As per the relevant records, the assesee had transferred to the Company his individual business consisting of all the assets amounting to Rs.9,64,39,231.19 [which includes the goodwill value of Rs.2,45,00,000/-] and the liabilities amounting to Rs.4,47,35,333.56. As the transfer of goodwill would attract capital gain tax under the Income Tax Act and since the goodwill valued at Rs.2,45,00,0000/- remained untaxed under the Capital Gain Tax, Annexure A assessment finalized by the Assessing Officer was noted as erroneous and prejudicial to the interest of the revenue. It was accordingly, that a show-cause notice dated 14.10.2004 was issued to the assessee to explain why the amount of goodwill should not be brought to the tax net under the Capital Gain Tax. 5. On receipt of the said notice, a reply was submitted by the assessee, pointing out that he had satisfied the conditions prescribed under Section 47 (xiv) of the Act, to have exemption from the liability. It was pointed out, with reference to Section 47 (xiv) (a), that all the assets and liabilities of the sole proprietorship concern stood transferred as the assets and liabilities of the Company. It was pointed out, with reference to Section 47 (xiv) (a), that all the assets and liabilities of the sole proprietorship concern stood transferred as the assets and liabilities of the Company. In respect of Section 47 (xiv) (b), it was pointed out that the assessee was holding shares worth 51% of the paid up capital and that his share holding had never come down below 50% at any point of time. In respect of Section 47 (xiv) (c), it was stated that the assessee had not received consideration/benefit directly or indirectly in any form or manner other than by way of 'allotment of shares' in the Company and that he had not received any interest on the balance to his credit under the loan account as well. After considering the explanation and also after perusing the records, the Commissioner observed that all the conditions laid down under Section 47 (xiv) of the Act had not been fullfilled by the assessee. It was observed that the assessee had received consideration in some form other than by way of allotment of shares i.e. out of net asset of Rs.5,17,03,897.63 [Rs.9,64,39,231.19 - Rs.4,47,35,333.56]; as allotment of shares was only to an extent of Rs.1,52,94,900/-, whereas a sum of Rs.2,73,07,905/- was treated as 'unsecured loan'. Based on the said finding, it was held as per Annexure B order dated 24.11.2004 that, 'goodwill' to an extent of Rs.2,45,00,000/- omitted to be taxed under the Capital Gain Tax and hence Annexure A order passed by the Assessing Officer was set aside, directing to recompute the assessee's total income, taking into account the said figure as well and to fix the liability accordingly. 6. Pursuant to Annexure B order, a fresh assessment was done by the Assessing Officer, as borne by Annexure C order dated 21.12.2005. But on being aggrieved of Annexure B order passed by the Commissioner, the assessee took up the matter in appeal before the Income Tax Appellate Tribunal. 6. Pursuant to Annexure B order, a fresh assessment was done by the Assessing Officer, as borne by Annexure C order dated 21.12.2005. But on being aggrieved of Annexure B order passed by the Commissioner, the assessee took up the matter in appeal before the Income Tax Appellate Tribunal. After hearing both the sides, the Tribunal, as per Annexure D order dated 12.06.2009, intercepted Annexure C order passed by the Commissioner; holding that invocation of the power by the Commissioner under Section 263 of the Act was wrong and further that there was no violation of Section 47 (xiv) at the hands of the assesee, as the deficit figure was to be treated as genuine liability of the sole proprietorship concern, to the proprietor. It was also observed that, no consideration was received by the assessee in respect of the transfer of assets and liabilities, except to the extent as mentioned by the assessee and further, even if the disputed amount shown in the 'current account' of the proprietorship concern as due to the proprietor [stated as taken over by the Company as a loan, to be repaid on demand], no such amount/consideration was received by the assessee in the particular year, to be reckoned for the purpose of computation. It was accordingly, that Annexure B order passed by the Commissioner was interdicted and the appeal was allowed, which forms the subject matter of challenge in this appeal preferred by the Commissioner/Department. 7. Heard Mr. Jose Joseph, the learned standing counsel appearing for the appellant and Mr. Gopinatha Menon, the learned counsel appearing for the respondent/assessee at length. 8. Any profits or gains arising from the transfer of capital assets effected in the previous year shall, save as otherwise provided in the particular situations referred to under Section 45 of the I.T. Act, are chargeable to income tax under the head "capital gains" and it shall be deemed to be the income of the previous year in which the transfer took place. Certain transactions have been taken outside the purview of Section 45, as dealt with under Section 47 of the Income Tax Act. Certain transactions have been taken outside the purview of Section 45, as dealt with under Section 47 of the Income Tax Act. Since we are concerned only with Section 47 (xiv), it is extracted below: "(xiv) where a sole proprietary concern is succeeded by a company in the business carried on by it as a result of which the sole proprietary concern sells or otherwise transfers any capital asset or intangible asset to the company : Provided that - (a) all the assets and liabilities of the sole proprietary concern relating to the business immediately before the succession become the assets and liabilities of the company ; (b) the shareholding of the sole proprietor in the company is not less than fifty per cent of the total voting power in the company and his shareholding continues remain as such for a period of five years from the date of the succession; and (c) the sole proprietor does not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company;" 9. According to the learned standing counsel for the appellant, the amount pumped in by the sole proprietor to his 'proprietorship concern' and shown in the current account, can be nothing other than investment, which, when taken over, will form the liability of the Company, to be discharged only by allotting shares and in no other manner; to be in conformity with Section 47 (xiv) (c) and to have the benefit of exemption accordingly. Same is the position in the case of a partnership as well, as it is always open for the partners to effect capital contributions, shown as a liability, and it can be sought to be compensated only by allotment of shares for availing the benefit of exemption in terms of Section 47 (xiv) of the Income Tax Act. In other words, it is only an accounting gimmick displayed by the assessee in the books of accounts, showing the disputed amount as part of the current account and the liability. The statutory provision makes it obligatory to have it reckoned and compensated only by 'allotment of shares' and no other manner, if exemption is claimed in respect of the Capital Gain Tax. 10. According to Mr. The statutory provision makes it obligatory to have it reckoned and compensated only by 'allotment of shares' and no other manner, if exemption is claimed in respect of the Capital Gain Tax. 10. According to Mr. Gopinatha Menon, the learned counsel appearing for the respondent, the disputed portion of the amount does not form part of the consideration at all and that, as pointed out by the Tribunal in paragraph 11 of Annexure D order, no such consideration was ever received by the assessee in the very same financial year 2001 - 02'. The learned counsel sought to defend the order passed by the Tribunal, also placing reliance on the decisions referred to and relied on by the Tribunal in the very same order, contending that invocation of power under Section 263 of the Act by the Commissioner was quite wrong. The learned counsel also pointed out that, even if two views are possible, it is not a ground for interference, when the view already expressed is also sustainable. 11. We have gone through the decisions cited across the Bar and as referred to in Annexure D order passed by the Tribunal. With regard to the observation made by the Tribunal, finding fault with the course pursued by the Commissioner for invoking the power under Section 263 of the Act, it is to be noted that, Section 263 confers adequate power upon the Commissioner to call for and examine any proceedings under the Act, if he considers that the order passed by the assessing officer is erroneous, in so far as it is 'prejudicial to the interest of the revenue'. Under such circumstances, appropriate orders can be passed, after affording an opportunity of hearing, as the circumstances of the case would justify, which includes an order enhancing or modifying assessment or cancelling or directing a fresh assessment. 12. There is no dispute as to the factual position that the worth of the assets of the proprietorship concern transferred to the Company by the assessee amounted to Rs.9,64,39,231.19 and the liabilities were to the tune of Rs.4,47,35,333.56. The value of the assets transferred includes the 'goodwill' as well, which was valued at Rs.2,45,00,000/-. 12. There is no dispute as to the factual position that the worth of the assets of the proprietorship concern transferred to the Company by the assessee amounted to Rs.9,64,39,231.19 and the liabilities were to the tune of Rs.4,47,35,333.56. The value of the assets transferred includes the 'goodwill' as well, which was valued at Rs.2,45,00,000/-. By virtue of the mandate under Section 55(1)(b) and 55(2)(a) of the Income Tax Act, it was noted that the cost of acquisition and cost of improvement of the 'goodwill' shall be taken as 'nil' and it was accordingly, that the differential portion was worked out and shown as the amount actually due to the assessee. Out of this amount, since the value of the total shares amounted to only Rs.1,52,94,9000/- [while showing Rs.2,73,07,905/- as unsecured loan], it was observed that Section 47 (xiv) (c) was not satisfied completely and the 'good will' portion to an extent of Rs.2,45,00,000/- was also liable to be taxed. This is not an attempt on the part of the Commissioner 'to generate some more revenue' by refixing the assessment, if two views were possible. It is not a question of two alternate views, but a case of only 'one view', which came to be wrongly decided by the Tribunal. As it stands so, it is the correct view that can be sustained and not the impaired one. Non-satisfaction of the ingredient under Section 47 (xiv)(c) in toto is a major defect and as such, value of the 'goodwill' i.e. Rs.2,45,00,000/- admittedly forming part of the assets transferred, required to be taxed under such circumstances. This being the position, the judicial precedents cited and sought to be relied on by the assesee [as relied on by the Tribunal] actually do not come to the rescue of the assesee. This Court is of the firm view that the power exercised by the Commissioner under Section 263 of the Act is correct and that the finding rendered by the Tribunal, to the contrary, is not sustainable. 13. Coming to the reasoning given by the Tribunal, that 'deficit' has to be treated as 'loan' given by the proprietorship concern, to the proprietor; [n turn taken over by the Company as 'loan' to be cleared on demand], it is to be noted that, under no circumstances can a person borrow from himself and transpose as 'creditor' and 'borrower' at the same time. To this extent, 'proprietor' and 'proprietorship concern' are not two different entities. Whatever is pumped in by the 'proprietor' to his proprietorship, is nothing other than investment and it forms part of the asset, which, when taken over by the Company, will have to be compensated [after deducting the liabilities]. If at all any exemption is to be claimed to come outside the purview of 'transfer' envisaged under Section 45 of the Act, various requirements mentioned under Section 47 (xiv) have to be satisfied. There may not be any dispute to the fact that all the assets and liabilities of the proprietorship concern have been taken over, but if there is wrong description of part of the assets concerned as a 'liability', such wrong procedure/accounting cannot be glibly swallowed, disregarding the mandate of the provisions of law in relation to the exigibility to tax. The proprietorship concern could have borrowed any amount to have categorized as a 'loan', only if it was procured from some other source, than himself/the proprietor. The finding and reasoning given by the Tribunal are not at all correct and it is liable to be intercepted. 14. With regard to the further observation made by the Tribunal in Annexure D order, that even if the amount in dispute is treated as part of consideration, no such consideration was ever received by the assesee in the year 2001- 02' and hence Section 47 (xiv)(c) was not attracted; it is to be noted that the 'transfer' was effected as on 01.10.2000, on which date, the disputed amount described as the liability of the 'proprietorship concern', to the proprietor, was stated as taken over by the Company as 'unsecured loan' to be discharged to the proprietor on demand. This by itself shows that the Company could not have borrowed any amount from the proprietor/assessee, unless the amount was credited to the latter's account. Though the amount actually did not come to the hands of the assessee/proprietor, the moment it is shown as 'loan' repayable to the proprietor, there results an indirect admission that the said amount had already come to the credit of the proprietor/assessee; from whom the Company had taken over the 'loan'. Though the amount actually did not come to the hands of the assessee/proprietor, the moment it is shown as 'loan' repayable to the proprietor, there results an indirect admission that the said amount had already come to the credit of the proprietor/assessee; from whom the Company had taken over the 'loan'. By virtue of the legal fiction in this regard, it can be easily said that, part of the consideration was paid by the Company to the 'proprietor' pursuant to taking over the proprietorship concern with all the assets and liabilities; which included the cost of the 'goodwill' as well, to an extent of Rs.2,45,00,000/-. In so far as there is no dispute that the total number of shares transferred was only 1,52,949 [having face value of Rs.100/- each], with a total worth of Rs.1,52,94,900/-, there was clear deficit, which was never paid or satisfied in the form of shares as envisaged under Section 47 (xiv) (c) of the Act. In other words, the terminology used under Section 47 (xiv) (c) is quite categoric, that the proprietor shall not receive any consideration or benefit directly or directly, in any form or manner, other than by way of allotment of shares in the Company. The very usage of expression, asserting the same to an appropriate extent, clearly reveals the intent of law makers that, it shall only be by way of 'shares' and in no other way at all. When the Statute says something to be done in a particular manner, it shall be done only in that manner and not in other manner. We find support from the ruling rendered by the Apex Court in Competent Authority v. Barangore Jute Factory and Ors., (2005) 13 SCC 477 and by this Court in Lakshmikutty Amma v. Vijayalakshmikutty, 1992 (2) KLT 341 : 1992 (2) KLJ 416 taking a cue from the celebrated English decision 1875 (1) Ch.D 426 [Taylor v. Taylor]. The value of 'goodwill' of the proprietorship firm passed on to the Company, having a value of Rs.2,45,00,000/-as part of consideration/benefit which has been indirectly/wrongly shown as 'loan' from the "proprietorship concern, to the proprietor", taken over by the Company, to be satisfied as and when demanded. The value of 'goodwill' of the proprietorship firm passed on to the Company, having a value of Rs.2,45,00,000/-as part of consideration/benefit which has been indirectly/wrongly shown as 'loan' from the "proprietorship concern, to the proprietor", taken over by the Company, to be satisfied as and when demanded. Viewed in the above circumstances, the said consideration had legally come to the credit of the proprietor/assessee on 01.10.2000 itself, to have transposed the latter as a creditor of the Company, who sought to show the said amount as a 'loan' procured from the proprietor. 15. In this context, it is also relevant to note the stand of the assesee as per the 'case/explanation' projected by him, in response to the show-cause notice issued by the Commissioner proposing to exercise the power under Section 263 of the Act. The said version is specifically taken note of by the Commissioner in Annexure B order and it has been extracted by the Tribunal in 'paragraph 4' of Annexure D as well, which is to the following effect: "In response to the said notice the assessee vide his letter dated 15-11-2004 has stated as under :- 1. All the conditions prescribed u/s 47(xiv) (c) have been complied with by assessee. The total issued and paid up capital of the Company as on 31.03.2002 was Rs.3 Crores of which, I subscribed Rs.153 lacs being 50% of the Paid-up capital. The conditions of provisions (b) have been satisfied. So far, the percentage of my share holding has not come down. All the assets and liabilities of the Company. Nowhere in the Section, it is mentioned that shares should be issued for the whole amount. As and when shares are issued, my shareholding should not be less than 50% of the total voting power. That condition is fully satisfied. 2. Regarding provision (c), I may inform you that I have not received any consideration or benefit directly or indirectly in any form or manner other than by way of allotment of shares in the Company. I have not received any interest on the balance to my credit under loan account also. 3. Provision 'b' also does not stipulate that shares should be issued for the value of entire assets taken over by the Company. 4. I have not received any interest on the balance to my credit under loan account also. 3. Provision 'b' also does not stipulate that shares should be issued for the value of entire assets taken over by the Company. 4. For the reasons mentioned above, I strongly object to your proposal to set aside the assessment to bring to tax the value of Good will of Rs.2,45,00,000/- under the head 'Capital Gains'." It was with reference to the said stand/case, that the matter was considered and decided by the Commissioner. But on challenging the said order before the Tribunal, the assessee/respondent sought to improve his case by contending something more, as referred to in paragraph 7 of Annexure D. 16. The Tribunal has said much in 'paragraph 10' of its order, stretching the proceedings/provisions even beyond the logical limits, when it says that parties [proprietor and the Company] at the time of taking over, had agreed that the 'current account balance' of the proprietor in the books of the whole proprietary concern was to be taken over as a liability under the loan account and was to be discharged as 'loan'. A reference is also made to definition of the term 'consideration' as given in Indian Contract Act [Section 23 mentioned therein appears to be a mistake, which might be Section 2(d)]. It is quite fundamental, that there cannot be any agreement contrary to the provisions of law. When the Tribunal propounds that there was an agreement between the 'proprietor' and the 'proprietorship concern' [treated as two different entities], the necessity to have two legal persons to arrive at a contract (lender and borrower), based on the consideration paid or agreed to be paid, was quite conveniently ignored. The role of two different persons/entities and their status unfortunately has been conferred upon the same person, i.e. the 'proprietor'; thus propounding a strange proposition that the 'proprietorship concern' had borrowed an amount from the 'proprietor', to be satisfied in the due course on demand; which liability in turn was stated as taken over by the Company. 17. The crux of the above discussion is that, the legal position applied correctly by the Commissioner to the given set of facts and circumstances, as per Annexure B order, came to be disturbed by the Tribunal, as per Annexure D order. 17. The crux of the above discussion is that, the legal position applied correctly by the Commissioner to the given set of facts and circumstances, as per Annexure B order, came to be disturbed by the Tribunal, as per Annexure D order. It is true that in tax parlance, 'partnership' is different from 'partners' and both can be taxed, though partnership firm is not a legal entity. But coming to proprietorship concern, there is no identity to 'proprietorship concern', leaving the 'proprietor' and the assessee is always the proprietor in such cases. In other words, there can not be any assessment separately for the 'proprietor' and 'proprietorship concern'. There is absolutely no rhyme or reason to have interfered with Annexure B order. The finding and reasoning given by the Tribunal is per se wrong and unsustainable in all respects. Annexure D order passed by the Tribunal stands set aside. Annexure B passed by the Commissioner is restored. Appeal stands allowed. No cost.