Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: VAT RATES :: form 3cd :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment
 
 
From the Courts »
  Vatsala Shenoy vs. JCIT (Supreme Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 M.K.Overseas Pvt. Ltd. Vs. Pr.Commissioner Of Income Tax-06
 Arshia Ahmed Qureshi Vs. Pr. Commissioner Of Income Tax-21
 CHAUDHARY SKIN TRADING COMPANY Vs. PR. COMMISSIONER OF INCOME TAX-21
  Sushila Devi vs. CIT (Delhi High Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 Deputy Director Of Income Tax Vs. Virage Logic International
 Commissioner Of Income Tax-3 International Taxation Vs. Virage Logic International India
 Pr. Commissioner Of Income Tax-06 Vs. Moderate Leasing And Capital Services Pvt. Ltd.
 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

Smt. Divya Jain, C-215, Vivek Vihar, Delhi (PAN: AECPJ4086M) Vs. ACIT, Central Circle-03, Room No. 355, 3rd floor, Jhnadewalan Extension, New Delhi 110 055
October, 12th 2015
                                                   ITA NO. 4315/Del/2011 &
                                                        CO No. 355/Del/2011

              IN THE INCOME TAX APPELLATE TRIBUNAL
                     DELHI BENCH "B", NEW DELHI
            BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
                                 AND
               SHRI L.P. SAHU, ACCOUNTANT MEMBER
                       I.T.A. No. 4315/Del/2011
                             A.Y. : 2007-08
ACIT, Central Circle-03,            VS. Smt. Divya Jain,
Room No. 355, 3rd floor,                C-215, Vivek Vihar, Delhi
Jhnadewalan Extension,                  (PAN: AECPJ4086M)
New Delhi ­ 110 055


(APPELLANT)                            (RESPONDENT)
                                 AND
                        C.O. No. 355/Del/2011
                     (In ITA No. 4315/Del/2011)
                            A.Y. : 2007-08
Smt. Divya Jain,                   Vs. ACIT, Central Circle-03,
C-215, Vivek Vihar, Delhi              Room No. 355, 3rd            floor,
(PAN: AECPJ4086M)                      Jhnadewalan Extension,
                                       New Delhi ­ 110 055
(CROSS OBJECTOR)                       (RESPONDENT)

        Department by              :   Md. Mohsin Alam, CIT(DR)
         Assessee by               :   Dr. Rakesh Gupta, Advocate


                            Date of Hearing : 07-9-2015
                            Date of Order :  09-10-2015

                                 ORDER
PER H.S. SIDHU, JM
     The appeal filed by the Revenue and Cross Objections filed by

the Assessee emanate out of the Order dated 07.7.2011 passed by

the Ld. CIT(A-II), New Delhi pertaining to assessment year 2007-08.


2.   The grounds raised in the Revenue's appeal being ITA No.

4315/Del/2011 (AY 2007-08) read as under:-
                                  1
                                                    ITA NO. 4315/Del/2011 &
                                                         CO No. 355/Del/2011

     1.    That the Ld. CIT(A) erred in law and on facts of the case
           in deleting the addition of Rs. 3,34,47,563/- made on
           account of long term capital gain.

     2(a) The order of the CIT(A) is erroneous and not enable in law

           and on facts.

     (b)   The appellant craves leave to add, alter or demand any /

           all of the grounds of appeal before or during the course of

           hearing of appeal.

3.   The grounds raised in the Assessee's Cross Objection           being

CO No. 355/Del/2011 (A.Y. 2007-08) read as under:-


     "1.   That having regard to the facts and circumstances of the

           case Ld. CIT(A) has rightly deleted the addition of Rs.

           2,34,47,563/-, which was made by AO on the ground of

           alleged sale proceeds of shares received by the appellant

           as against Rs. 3,00,000/- declared by her.


     2.    The Ld. CIT(A) is erred under the law while holding that
           AO has a valid jurisdiction u/s. 153A of the Act.
     3.    That the Cross Objectors craves         the leave to add,
           amend, modify, delete       any of the ground(s) of cross
           objection before or at the time of hearing."

4.   Briefly stated the facts are that the Original return declaring

net taxable income of Rs.6,69,800/- was filed on 30.7.2007 with

ACIT, Circle-35(1), New Delhi. The return was duly processed u/s

                                   2
                                                   ITA NO. 4315/Del/2011 &
                                                        CO No. 355/Del/2011

143(1) of the l.T. Act. She is one of the directors of M/s Mahagun

(India) Pvt. Ltd. The search was conducted on 26.8.2008 at the

business premises i.e. Plot No.A-19, Sector-63, Noida. Consequent

upon search, the case was centralized with Central Circle-5, New

Delhi vide order dt.06.11.2009. At the time of search, certain

documents pertaining to the assessee were found and seized.

Accordingly, after recording of the satisfaction within the meaning of

section 153C of the l.T. Act, the case was taken up and notice u/s

153C of the l.T. Act was issued on 08.11.2010. In response to this

notice, the assessee furnished a reply on 15.11.2010 stating that the

return filed on 18.02.2010 in response to notice u/s 153A of the I.T.

Act may be treated as having been filed in response to this notice.

Return declaring net taxable income of Rs.6,69,800/- was filed on

18.02.20I0. Subsequently, notice u/s 143(2), 142(I) along with

questionnaire was issued on 22.11.2010 fixing the case for

26.11.2010. In response to this notice, the proceedings were

attended by the Authorised Representatives of the assessee from

time to time as per order sheet and the information filed has been

examined and placed on record.


4.1   As per the return filed; the assessee derives salary income in

her capacity as director of Mahagun Group of companies, income

from capital gain and income from other sources which includes

bank interest and interest on loan advanced to Mahagun (India)
                                  3
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

Pvt.Ltd. and Mahagun Developers Ltd. During the year, the assessee

has sold 3000 shares of Mahagun Realtors Pvt.Ltd. @ Rs.100/- per

share. On 01.12.2006, these shares have been sold outside the

normal market channels amongst the members of the group only.

The shares had a paid up value of Rs.I00/- each and had been

acquired on 29.9.2004 for acquisition cost of Rs.30,000/-. The only

question that can arise is whether in a group transaction, the

assessee has received fair market value for these shares or not.





4.2    As per the facts on record, Mahagun Realtors Pvt. Ltd. had

merged with Mahagun (India) Pvt. Ltd. w.e.f. 01.4.2006 though the

orders of the court sanctifying this merger was passed only on

10.9.2007 and was supposed to take effect from 01.4.2006. The

High Court      had approved the merger scheme without any

modification. Both the companies i.e. Mahagun Realtors Pvt. Ltd.

and Mahagun (India) Pvt.Ltd. are family owned concerns. As per the

Merger Scheme approved by the court, the shareholders of Mahagun

Realtors Pvt. Ltd. were to receive 45 equity shares of Mahagun

(India) Pvt.Ltd. of face value Rs.10/- each fully paid up of Mahagun

Realtors Pvt.Ltd. This benchmarking of the relative value of shares

of    the two companies had the full support and approval of the

members of the Mahagun Group.




                                  4
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

4.3   Fortunately, there is concrete proof about the value of shares

of Mahagun (India) Pvt. Ltd. as on 31.3.2006 (the case is also

assessed in this Circle only). On 31.3.2006, Mahagun (India) Pvt.Ltd.

had issued and allotted the. following shares at the rate and

premium mentioned below.-


Name of the   No.       of Face Value Share             Total amount
Share         shares       (per share) Premium          received
Applicant                              (per share)
Mahagun       280000       10/-        240/-            7,00,00,000/-
Developers
Ltd.
Mahagun       236000        10/-         240/-          5,90,00,000/-
Realtors
Pvt. Ltd.
ADR Home      11600         10/-         240/-          29,00,000/-
Décor Pvt.
Ltd.



4.4   Thus, there is independent evidence that the value of shares of

Mahagun (lndia) Pvt.Ltd. was Rs.250/- per share after including

premium of Rs.240/- per equity share. The assessee, Smt. Divya

Jain, possessed 3000 shares of Mahagun Realtors Pvt. Ltd. which

were equivalent to 3000 x 45 = 1,35,000 shares of Mahagun (India)

Pvt. Ltd. The value of each share of Mahagun (India) Pvt. Ltd. on

31.3.2006 was Rs.250/- and on that basis the fair market value of

3000 shares of Mahagun Realtors Pvt. Ltd. comes to 1,35,000 x 250

= Rs.3,37,50,000/-. Therefore, in view of the close nit family

connections and intersee transactions, it is held that the assessee


                                   5
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

received sale proceeds of Rs.3,37,50,000/- and not Rs.3,OO,OOO/-

as declared by her. Accordingly, the total income was assessed at

Rs. 3,41,17,363/- vide order      dated 29.12.2010 passed u/s. 153C

read with Section 143(3) of the I.T. Act, 1961.


5.   Aggrieved with the aforesaid assessment order, assessee

appealed before the Ld. CIT(A), who vide      impugned order dated

07.7.2011 has partly allowed the appeal of the assessee.


6.   Now the Revenue is in Appeal and Assessee has filed Cross

Objections before the Tribunal.


REVENUE'S APPEAL


7.   First we deal with the Revenue's appeal i.e. ITA 4315/Del/2011

(AY 2007-08) wherein the only effective issue was relating to

deletion of addition of Rs. 3,34,47,563/- made on account of long

term capital gain has been raised by the Revenue.     We have heard

both the parties and      perused the records available with us,

especially the orders of the authorities below and Brief Synopsis

filed by the Ld. Counsel of the Assessee.


8.   As regards the issue involved in the Revenue appeal is

concerned, the Ld. CIT(DR) relied upon the order passed by the AO

and the contention raised in the Grounds of Appeal filed by the

Revenue. On the contrary, the Ld. Counsel for the assessee relied


                                   6
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

upon the order passed by the Ld. CIT(A).        Ld. Counsel of the

assessee in support of    his contention has also filed the Brief

Synopsis in Revenue's Appeal as well as Assessee's Cross Objection

which is reproduced as under:-


          "The only issue in the departmental appeal IS against the

          relief of Rs.3,34,47,563/- allowed by Ld. CIT(A) in respect

          of addition made by the AO on the ground that sale

          consideration of the shares should have been equal to

          Fair Market Value.

          Facts are like this that assessee sold 3000 shares of

          Mahagun Realtors Pvt Ltd at contracted price of @ Rs.I00

          per   share    on    01.12.2006.   Accordingly,     assessee

          calculated Capital Gain by taking the sale consideration

          based on actual sale price i.e. Rs.100 per share.

          According to        A.O., there was merger of Mahagun

          Realtors (P) Ltd with Mahagun India (P) Ltd subsequently

          and as per the court's order dated 10.09.2007, the

          shareholders of Mahagun Realtors (P) Ltd were to receive

          45 shares of Mahagun India (P) Ltd. for each share and

          that too of the worth @ Rs.250 per shares. Therefore,

          according to Ld. A.O., assessee ought to have received

          sale proceeds equal to Rs.3,37,50,000/- (3000x45x250)

                                  7
                                           ITA NO. 4315/Del/2011 &
                                                CO No. 355/Del/2011

and not Rs.3,OO,OOO/- as claimed by the assessee and

computed the capital gain based on this fictional amount.

Ld. CIT(A) deleted the addition and held that so far

assessee   is   concerned,    she   sold     her    shares     on

01.12.2006 much before the date of the order of High

Court and she received Rs.3,00,000/- only and when High

Court approved the scheme on 10.09.2007, the share

were not held by the assessee because she had already

sold her shares on 01.12.2006.

In fact, there is no infirmity in the order of Ld. CIT (A) as

u/s 45 read with section 48, actual sale consideration in

the hands of the assessee is the sole determining factor

'for computing the capital gain. Assessee sold her shares

on 01.12.2006 on "as is where is" basis @ Rs.100/shares.

If by subsequent order of High Court dated 10.09.2007,

some more consideration in the form of shares were to

be received, it was to be received and in fact was

received by the holder of shares on the date of the order

of High Court which in any case was not the assessee.

Therefore, there was no question to say in the present

case that assessee received enhanced consideration.

Fact of the matter is that assessee did not receive


                        8
                                        ITA NO. 4315/Del/2011 &
                                             CO No. 355/Del/2011

anything except an aggregate actual sale consideration

of Rs.3,00,000/- in consideration of transfer of her 3000

shares.

PB 22-24 is the Computation of Income of the assessee

showing sale consideration at Rs.3,OO,OOO/-.

PB 41 is letter to Ld. A. O. submitting that sale of share

by the assessee was an independent transaction and

share of Private Limited Company are not freely

transferable and therefore, such sale has got nothing to

do with the merger scheme.

PB 12-21 are the submission before Ld. CIT (A) submitting

that sale of these shares already took place on

01.12.2006 and even the petition was filed in Delhi High

Court for merger only on 26.02.2007 i.e. after the date of

sale and the capital gain is taxable u/s 48 on the basis of

full value of the consideration received by the assessee

and not on the basis of fair market value and relying

upon several judicial decisions as under:-

CIT vs. Infosys Technologies Ltd. reported in [2008] 297

ITR 167 (SC)




                       9
                                         ITA NO. 4315/Del/2011 &
                                              CO No. 355/Del/2011

Hilder vs. Dexter (1902) AC 474 (HL). Head & Co. Ltd. vs.

Ropner Holding Ltd. (1951) 2 AIi ER 994 (Ch. D) followed

in Shearer (Inspector of Taxes vs. Bercain Ltd. (1980) 3

All ER 295

K.P. Varghese's Case [1981] 131 ITR 597 (SC)

CIT vs. Nilofar I Singh (2009) 309 ITR 0233 dated August

27, 2008

Dev Kumar Jain vs. ITO (2009) 309 ITR 0240

Commissioner of Income George Henderson and Co. Ltd.

(1967) 066 ITR 0622 (SC)

Commissioner of Income Tax vs. Gillianders Arbuthnot

and Co. GilIanders Arbuthnot and Co. vs. Commissioner of

Income Tax (1973) 087 ITR 0407 (SC)

CIT vs. Shivakami Co. P. Ltd. (1986) 159 ITR 0071

CIT vs. I.P. Chaudhari (2010) 328 ITR 0007, jurisdiction

Delhi-High Court Moral Trading & Investment Ltd. vs.

DCIT (2011) 0007 ITR (Trib) 0548 (Delhi)

Rupee Finance vs. ACIT (Mumbai ITAT) (2009) 120

ITD0539

CIT vs. Vania Silk Mills P. Ltd. (1977) 107 ITR 300 (Guj.)

                       10
                                              ITA NO. 4315/Del/2011 &
                                                   CO No. 355/Del/2011

CIT vs. Lake Palace Hotels and Motels Ltd. (2010) 321 ITR

165 (Raj.)

CIT vs. Gulshan Kumar (Decd.) [2002] 257 ITR 0703

PB 44-45 is the remand report in which Ld. A.O. has said

that assessee should have received the fair market value.

PB 47-48 is our submission to remand report submitting

that capita gain is taxed on the actual sale consideration

and is not calculated based upon fair market value and

any addition based upon fair market value was brought

on the statute w.e.f. 01.10.2009 u/s 56(2)(vii). Therefore,

there is no infirmity in the order of Ld. CIT(A).




Assessee's Cross Objections

The only issue in Cross Objection is regarding assumption

of jurisdiction u/s 153C (wrongly mentioned as 153A in

the grounds of appeal).

Submission of the assessee is that for assuming

jurisdiction u/s 153C, not only the documents of the

assessee     should   be        found   and   seized   but    those





                           11
                                           ITA NO. 4315/Del/2011 &
                                                CO No. 355/Del/2011

documents found and seized must be of incriminating

nature. To treat a person as searched u/s 153C is very

harsh and mere discovery of disclosed documents should

not confer this harsh jurisdiction, as held in the judicial

decisions given herein after.

PB 25 is the copy of notice u/s 153C.

PB 26-29 is the copy of document, which is copy of the

sale deed of property, B-66, Vivek Vihar, purchased by

the assessee for Rs.22,00,OOO/- on the basis of which the

jurisdiction has been assumed u/s 153C.

PB 30-33 in the copy of return of the assessee wherein at

PB-33, the property B-66, Vivek Vihar has been shown for

Rs.11,72,959/-   (being     half   share   of   the   assessee,

inclusive of expenses).

PB 34-40 are the submission before Ld. A.O. submitting

that the document was not incriminating and was

disclosed in the return and relying upon the following

decision:-

Saraya Industries vs. UOI 306 ITR 189 (Delhi)

Jurisdiction is bad on this reason also that the assessment

of the assessee was not pending and therefore, could not

                       12
                                        ITA NO. 4315/Del/2011 &
                                             CO No. 355/Del/2011

be reopened up 153C in view of the following decisions

reported at PB 37:-

Anil P. Khimani v/s. DCIT 2010 - TIOL -177 ITAT - Mumbai

"B" Bench

Anil    Kumar      Bhatia     vis.    ACIT      (ITA       No.

2660to2665/Del/2009 ITAT 'B' Bench

LMJ International Ltd. vls. DCIT (2008) 119 TTJ 214 (Kol)

Ms. Shyam Lata Kaushik vls. ACIT (2008) 114 TTJ 940

(Del)

Shivnath Rai Harnarain (India) Ltd. (2008) 304 ITR (AT)

271 (Del)

PB 3-12 are the submission before Ld. CIT(A).

PB 43-44 is the copy of remand report of this issue giving

the satisfaction note u/s 153C and it may please be seen,

based on that, that the only basis was the document

relating to B-66, Vivek      Vihar,   which was        already

disclosed.

PB 46-47 are the reply to remand report giving few more

judicial decisions which are reproduced as under:-

LMJ International Ltd. vls. DCIT (2008) 119 TTJ 214 (Kol)

                       13
                                                    ITA NO. 4315/Del/2011 &
                                                         CO No. 355/Del/2011

          Sinhgad Technical Education Society vls. ACIT 140 TTJ

          233 (Pune)

          Bharati Vidya Peeth vts. ACIT 119 TTJ 0261 (Pune)

          ACIT vts. Srj Peety Steels P Ltd. 137 TTJ 0627 (Pune)

          Ld. CIT(A) has also wrongly interpreted section 153C

          which is not in

          accordance with the law as laid down in above

          decisions."

9.    For the sake of convenience, we are also reproducing

hereunder the relevant findings on the issue in dispute of the Ld.

CIT(A) vide para 9 to 11 from pages 21 to 23.


                "9. I have considered the assessment order, written

                submissions filed by the AR, AO's subsequent

                reports and the AR's rejoinder as well as the facts of

                the case and position of law. It is observed that the

                contention of the AR that the law does not permit

                the A.O. to substitute "Fair Market Value" in place of

                "Actual     Sale   Consideration"   received     for   the

                purpose of calculation of capital gain is fairly valid.

                Moreover, the A.O. has not, adduced any evidence

                found either during search proceeding on the group

                                   14
                                       ITA NO. 4315/Del/2011 &
                                            CO No. 355/Del/2011

    company's business premises u/s 132 or post

    search proceedings of the appellant which may

    establish that the appellant has received the

    consideration more than what she has declared in

    her I.T. Return for the year under review. A

    combined reading of section 45(1)(a) and section 48

    of the Act shows that when a sale of capital assets

    take place the capital gain arising out of such

    transfer has to be computed by looking at full value

    of consideration received or accruing as a result of

    such   transfer.   The   expression   "full   value     of

    consideration" is not the same as "fair market

    value" as appearing in section 55A of the Act. Thus

    for the purpose of computing capital gain there is

    no necessity to determine the fair market value

    unless it is specifically provided in the Act. Reliance

    is placed on the following authorities:-

·    Moral Trading & Investment Ltd. vis. DCIT (2011)

     007 ITR (Trib) 0548 (Delhi)

·   CIT vis. I.P. Chaudhari (2010) 328 ITR0007 (Del)

·   CIT v. Lake Palace Hotels and Motels Ltd. [2010]321

    ITR 165 (Raj)

                       15
                                        ITA NO. 4315/Del/2011 &
                                             CO No. 355/Del/2011

·     CIT vis. Ni/ofar I Singh (2009) 309 ITR 0233 (Del)

·     Rupee Finance Vs ACIT( Mumbai ITAT) (2009) 310

      ITR 403

·     Dev Kumar Jain vis. ITO (2009) 309 ITR 0240(Del)

·     Commissioner of Income Taxrge Henderson and Co.

      Ltd. (1967) 066 ITR 0622 (SC)

·     Commissioner      of   Income   Tax   vis.   Gillianders

      Arbuthnot and Co. Gillanders Arbuthnot and Co. v/s.

      Commissioner of Income Tax (1973) 087 ITR 0407

      (SC)

·     CIT v/s Shivakami Co. P Ltd. [1986]159 ITR 0071.

·     CIT v. Vania Silk Mills P. Ltd. [1977]107 ITR 300

      (Guj)

10.   Further, the AR submitted before me that the

      appellant was allotted 3000 shares of M/s MRPL on

      29.09.2004 at its face value of Rs. 10/- each. The

      same has been sold on 01.12.2006 to its group

      company.    The    merger   scheme     in    which   the

      exchange ratio of shares Of MIPL & MRPL was

      formulated was on 26.02.2007. The exchange ratio

      so determined was further subject to approval of
                        16
                                   ITA NO. 4315/Del/2011 &
                                        CO No. 355/Del/2011

Delhi High Court, which came on 10.09.2007 i.e.

after a gap of 9 months (approx) from the date of

sale of shares. Had ,the appellant kept the shares,

he would have got 1,35,000 equity shares of MIPL

only on 08.04.2008 i.e. the date of allotment of

shares after merger as stated above or in other

words after 18 months from the date of sale. In

other words, it was only prospective benefit

attached with the shareholding of the appellant in

the MRPL as on date of sale. The AR relied upon

Hon'ble Apex Court decision in the case of CIT vis.

Infosys Technologies Ltd. (2008) ITR 167. Where it

was held that if prospective benefit is in the nature

of income or specifically included, by the legislature

as part of income, the same is not taxable.

11.   Therefore, keeping in view the above facts &

circumstances and legal authorities cited by the AR,

the adoption of Fair Market Value of share in lieu of I

value of sale consideration as declared by the

appellant is not valid particularly when there is no

provision under the law to include prospective

benefit in the ambit of the word "income". The

appellant succeed on this ground appeal."
                 17
                                                   ITA NO. 4315/Del/2011 &
                                                        CO No. 355/Del/2011

9.1   After going through the aforesaid relevant findings of the

impugned order on the issue involved in Ground No. 1 raised by the

Revenue, we are of the     considered view that the Ld. CIT(A) has

deleted the addition in dispute by observing that the law does not

permit the A.O. to substitute "Fair Market Value" in place of "Actual

Sale Consideration" received for the purpose of calculation of capital

gain is fairly valid. We note that in the present case the A.O. has not

adduced any evidence found either during search proceeding on the

group company's business premises u/s 132 or post search

proceedings of the assessee which may establish that the assessee

has received the consideration more than what she has declared in

her I.T. Return for the year under review. A combined reading of

section 45(1)(a) and section 48 of the Act shows that when a sale of

capital assets take place the capital gain arising out of such transfer

has to be computed by looking at full value of consideration

received or accruing as a result of such transfer. The expression "full

value of consideration" is not the same as "fair market value" as

appearing in section 55A of the Act. Thus for the purpose of

computing capital gain there is no necessity to determine the fair

market value unless it is specifically provided in the Act. We have

perused the following case laws as relied cited by the Ld. CIT(A),

which supports the case of the Assessee:-




                                  18
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

           ·     Moral Trading & Investment Ltd. vis. DCIT (2011)

                 007 ITR (Trib) 0548 (Delhi)


           ·    CIT vis. I.P. Chaudhari (2010) 328 ITR0007 (Del)


           ·    CIT v. Lake Palace Hotels and Motels Ltd. [2010]321

                ITR 165 (Raj)


           ·    CIT vis. Nilofar I Singh (2009) 309 ITR 0233 (Del)


           ·    Rupee Finance Vs ACIT( Mumbai ITAT) (2009) 310

                ITR 403


           ·    Dev Kumar Jain vis. ITO (2009) 309 ITR 0240(Del)


           ·    Commissioner of Income Taxrge Henderson and Co.

                Ltd. (1967) 066 ITR 0622 (SC)


           ·    Commissioner    of    Income    Tax   vis.   Gillianders

                Arbuthnot and Co. Gillanders Arbuthnot and Co. v/s.

                Commissioner of Income Tax (1973) 087 ITR 0407

                (SC)


           ·    CIT v/s Shivakami Co. P Ltd. [1986]159 ITR 0071.


           ·    CIT v. Vania Silk Mills P. Ltd. [1977]107 ITR 300

                (Guj)


9.2   In this case the assessee was allotted 3000 shares of M/s MRPL

on 29.09.2004 at its face value of Rs. 10/- each. The same has been
                                 19
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

sold on 01.12.2006 to its group company. The merger scheme in

which the exchange ratio of shares Of MIPL & MRPL was formulated

was on 26.02.2007 and the exchange ratio so determined was

further subject to approval of Delhi High Court, which came on

10.09.2007 i.e. after a gap of 9 months (approx) from the date of

sale of shares. The assessee kept the shares and he would have got

1,35,000 equity shares of MIPL only on 08.04.2008 i.e. the date of

allotment of shares after merger as stated above or in other words

after 18 months from the date of sale. In other words, it was only

prospective benefit attached with the shareholding of the assessee

in the MRPL as on date of sale. We find that the case law      referred

by the Ld. CITA(A) in his impugned order of the Hon'ble Apex Court

decision in the case of CIT v/s. Infosys Technologies Ltd. (2008) ITR

167 supports the case of the assessee wherein it was held that if

prospective benefit is in the nature of income or specifically

included, by the legislature as part of income, the same is not

taxable.


9.3   In the background of the aforesaid discussions and the

precedent relied upon by the Ld. CIT(A) in his impugned order, we

are of the considered opinion that the adoption of Fair Market Value

of share in lieu of value of sale consideration as declared by the

assessee is not valid particularly when there is no provision under

the law to include prospective benefit in the ambit of the word
                                 20
                                                   ITA NO. 4315/Del/2011 &
                                                        CO No. 355/Del/2011

"income". Therefore, the Ld. CIT(A) has rightly allowed this ground

and deleted the addition in dispute, which does not need any

interference on our part, hence, we uphold the      action of the Ld.

CIT(A) on this ground and dismissed the ground no. 1 raised by the

Revenue in its Appeal. In the result, the Appeal filed by the Revenue

stands dismissed.





ASSESSEE'S CROSS OBJECTION


10.   With regard to ground no. 1 relating to rightly deletion of

addition of Rs. 3,34,47,563/- which was made by the AO on the

ground of alleged sale proceeds of shares received by the assessee

as against Rs. 3,00,000/- declared by her. Since we have already

dismissed this ground of appeal raised in the Revenue's Appeal by

upholding the action of the Ld. CIT(A) of deletion of the addition, as

aforesaid, hence, this issue has become infructuous as such.


11.   As regards the issue involved in ground no. 2 of the Cross

Objection regarding the assumption of jurisdiction u/s. 153(C)

(wrongly mentioned as 153A in the ground of appeal) is concerned.

Ld. Counsel of the assessee has stated that certain         documents

belonging to the assessee were seized by the Search Party of the

Department, which the assessee has already disclosed while filing

the return of income for the assessment year in dispute. Therefore,




                                  21
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

no incriminating material belonging to the assessee were found

during search period.    Therefore, he stated that the assessment

made in the case of the assessee is without jurisdiction, in view of

the Hon'ble Jurisdictional High Court decision dated 28.8.2015 in the

case of CIT vs. Kabul Chawla      passed in ITA No. 707, 709 and

713/2014.    He further stated that when no incriminating material

are found relating to assessee in the course of search, then the

proceedings initiated u/s. 153C is null and void and this issue has

already been adjudicated and decided in favor of the assessee by

the Hon'ble Jurisdictional High Court in the case of    CIT vs. Kabul

Chawla (Supra), which shall be followed in the present case of the

assessee. In this behalf, he     draw our attention      towards the

relevant para no. 38 of the order, which is reproduced hereunder:-


            "38. The present appeals concern AYs 2002-03, 2005-06

                 and 2006-07. On the date of the search the said

                 assessments already stood completed.         Since no

                 incriminating material was unearthed during the

                 search, no additions could have been made ot the

                 income already assessed."

12.   On the other hand, Ld. CIT(DR) opposed the request of the

assessee's counsel.




                                 22
                                                     ITA NO. 4315/Del/2011 &
                                                          CO No. 355/Del/2011

13.    We have heard both the counsel and perused the records, we

find considerable cogency in the assessee's counsel submission that

if no incriminating material belonging to the assessee were found

during search period, the assessment made is without jurisdiction

and proceedings initiated u/s. 153C is null and void. To support this

contention, we follow the Hon'ble Jurisdictional High Court decision

dated 28.8.2015 in the case of CIT vs. Kabul Chawla          passed in ITA

No. 707, 709 and 713/2014 wherein vide para no. 38 it has been

held as under:-


                   "38. The present appeals concern AYs 2002-03,

                   2005-06 and 2006-07. On the date of the search the

                   said assessments already stood completed. Since

                   no incriminating material was unearthed during the

                   search, no additions could have been made ot the

                   income already assessed."

13.1 In the background of the aforesaid discussions and precedent,

we are of the considered      view that the present issue involved in

ground no. 2 in the cross objection is squarely covered by the

decision of the     Hon'ble Jurisdictional High Court decision dated

28.8.2015 in the case of CIT vs. Kabul Chawla        passed in ITA No.

707,   709   and     713/2014.   Respectfully,   following    the    above

precedent, we      quash the assessment made u/s. 153C and decide


                                   23
                                                  ITA NO. 4315/Del/2011 &
                                                       CO No. 355/Del/2011

the issue raised in ground no. 2 in favour of the assessee and

accordingly, this ground is allowed.       In the Result, the Cross

Objection is partly allowed.


14.   In the result, the Appeal of the Revenue Dismissed and Cross

Objection filed by the Assessee stands partly allowed.


      Order pronounced in the Open Court     09-10-2015.


      Sd/-                                             Sd/-
[L.P. SAHU]                                      [H.S. SIDHU]
ACCOUNTANT MEMBER                             JUDICIAL MEMBER

Date 09/10/2015

"SRBHATNAGAR"
Copy forwarded to: -
1.    Appellant -
2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT                 TRUE COPY
                                                 By Order,



                                                 Assistant Registrar,
                                                 ITAT, Delhi Benches




                                   24

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System developers CMS developers Content Management Solutions CMS Solutions CMS India Content Management System India CMS development India Website CMS Website Content Management India Portal CMS India CMS Outsourcing CMS Vendor Complete CMS Custom CMS Services

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions