IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘G’, NEW DELHI

BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER
AND

SH.AMIT SHUKLA, JUDICIAL MEMBER
(THROUGH VIDEO CONFERENCING)

ITA No.5443/Del/2017
Assessment Year: 2014-15

Sun Media Pvt. Ltd. ITO
5-E, Local Shopping Centre, Vs Ward-24 (3)
Masjid Moth, Greater New Delhi
Kailash-II, New Delhi
PAN No. AAGC9301K (RESPONDENT)

(APPELLANT)

Appellant by Sh. C. S. Aggarwal, Advocate
Respondent by Sh. R. P. Mall, Advocate
Sh. Prakash Dubey, Sr. DR.

Date of hearing: 14/06/2021
Date of Pronouncement: 17/06/2021

ORDER

PER N. K. BILLAIYA, AM:

This appeal by the assessee is preferred against the order of
the CIT(A)-30, New Delhi dated 19.06.2017 pertaining to A.Y.
2014-15.
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2. The grievance of the assessee read as under :-

1. That the learned CIT (A) has erred both on facts and in law
in upholding the order of assessment. He has further erred in
holding the loss suffered by the assessee of Rs.2,20,43,350/-
cannot be held either as long term capital loss or even business loss.

2. That the learned CIT (A) having not disputed that the
assessee had been allotted shares by M/s Gurgoan Recreation Park
Limited and held 32,68,620 shares since 31.03.2008, out of
which only 1288438 shares had been transferred by it, there
remained no justification for him not to have held that the loss
suffered on the transfer of shares made did not represent long term
capital loss.

3. That the learned CIT (A) in any case and without prejudice
ought to have held that such a loss as suffered represents a loss
which is an allowable business loss.

4. That the learned CIT (A) has misconceived the facts and has
failed to appreciate that there being admittedly a transfer of shares
made by the assessee company to HSIIDC, the transfer so made
was made at market price. The finding of the learned CIT (A) that the
transfer was not made at market price is misconceived and is based
on no material. Nonetheless there was no justification not to have
allowed the claim of long term capital loss suffered by the assessee.

It is therefore prayed that it be held that the loss suffered ought to
have been held as allowable and there was no justification to
compute the loss at Nil.
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3. Representatives of both the sides were heard at length.
Case record carefully perused and with the assistance of the
counsel we have considered the relevant documentary evidences
brought on record in the light of rule 18 (6) of the ITAT Rules.

4. Briefly stated the facts of the case are that the assessee filed
its return of income on 23.09.2014 declaring nil income. The
assessee had shown carried forward of current years loss of
Rs.34924140/-. The return was selected for scrutiny assessment
and accordingly statutory notices were issued and served upon
the assessee.

5. During the course of the scrutiny assessment proceedings
the AO noticed that the assessee has debited Rs.12871496/- to
its P & L Account as loss on sale of investment and carried
forward of the same.

6. The facts relating to the loss on the sale of investment are
that the assessee had given share application money of
Rs.73916400/-to M/s. Gurgaon Recreation Park Limited. This
amount has been utilized to issue 3268650 equity shares in
earlier years and 4123000 shares on 27.05.2013.

7. The share application money and the allotment of shares
can be understood from the following chart :
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Share application

S. No. Date Amount
1. 01.04.2002 1,00,00,000/-
2. 14.01.2005 . 1,50,00,000/-
3. 19.01.2007 2,20,00,000/-
4. 05.11.2007 70,00,000/-
5. 24.12.2007 1,00,00,000/-
6. 20.04.2012 35,00,000/-
7. 01.04.2013 100/-
8. Total 7,75,00,1007/-

Share allotment

Date No. of Shares Share Price
01.04.2002 10 100.00
08.12.2002 24,960 2,49,600.00
01.04.2007 4,75,000 47,50,000.00
12.06.2007 27,68,650 2,76,86,500.00
27.02.2008 3,58,390 25,83,900.00
27.05.2013 41,23,000 4,12,30,000.00
77,50,010 7,75,00,100.00

8. As per the share holders agreement by and between
M/s. Unitech Holdings Ltd. and M/s. Sun Media Private Limited
dated 30.09.2006 it was agreed that M/s. Unitech and Sun Media
would jointly participate in the proposed project of entertainment
and amusement park in Gurgaon and for this have entered into a
shareholders agreement on 25.10.2000 so as to record their
mutual understanding and the terms and conditions of their
inter-se relationship with respect to their respective share
holdings and other related rights and liabilities in relation to M/s.
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GRPL the most relevant article of the present agreement is at para
6.4 and 6.5 the same reads as under :-

9. On the basis of the aforestated facts it can be seen that the
primary responsibilities of allotment of equity shares to HSIDC
was that of company M/s. GRPL. It is true that the shares
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allotted by M/s. GRPL mismatched with the agreed percentage of
shareholding.

10. Before us the counsel vehemently stated that allotment of
shares by the company M/s. GRPL would have taken much more
time since the company had to apply for increase in share capital
with the Registrar of Companies and after obtaining approval in
the general body meeting of the company.

11. It was strongly contended that any delay in issue of shares
would have resulted into cancellation of the land allotted and
postponement of loan granted. The counsel continued stating
that in such case entire amount incurred by the company on the
project would have become zero and in turn the said company
M/s. GRPL would have to pay HSIDC amount of loan availed from
them with interest and penalty thereon.

12. On such a situation as mentioned above, in order to avoid
delay resulting in such huge loss to the assessee company and
other share holders, it was considered proper to bear this loss on
transfer of shares to HSIDC and accordingly the assessee
transferred 1288438 shares to HSIDC and simultaneously M/s.
Unitech Holdings Limited also transferred 149026 to HSIDC.

13. Both the lower authorities have brushed aside the loss
holding that the allotment of shares by M/s. GRPL to the
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assessee itself was wrong and against the agreement and,
therefore, the assessee was not a beneficial owner of the shares
allotted to it. Both the lower authorities held that transfer can
only take place when the person transferring the property has a
legal right in that property. According to the authorities below
the allotment of such shares to the assessee and M/s. Unitech
Holdings Limited was void ab initio.

14. The observation of the AO that M/s. GRPL could have issue
extra shares to correct the error in allotment and make the
holding of HSIDC 15% then the question of any loss to the
assessee would not have arisen does not have any legs to stand.

15. We are of the considered view that assessment could not be
made on surmises and conjectures and have to be based on the
facts of the case under consideration.

16. There is not dispute that the assessee was owner of the
shares on the date of transfer by it. It is also not in dispute that
the assessee had held the investment for more than 12 months.
It is not the case of the revenue that the entire purchase and sale
of shares transaction is a sham transaction.

17. The act itself u/s. 47 has specifically provided the
transactions which are not regarded as transfer. The provisions
read as under :-
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14
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18. In our considered view when the statute has provided
specific provisions then the same have to be construed strictly
and must not extend beyond requirements of the language used.
For this proposition we draw support from the decision of Hon’ble
Supreme Court in the case of Gillanders Arbuthnot Company Ltd.
Vs. CIT 76 ITR 160.

19. We further find that no adverse inference have been drawn
by either of the lower authorities in so far as the value of share of
the company M/s. GRPL as on the date of transfer is concerned.
The valuation as given to the authorities is as under :-
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20. Considering the facts in totality that the assessee did
purchase the shares from M/s. GRPL and have actually sold the
shares and the shares have been subsequently transferred in the
name HSIDC, we do not find any merit in the findings of the AO/
CIT(A). The loss incurred by the assessee on the said transaction
is a bonafide loss and deserves to be allowed as such claimed by
the assessee.
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21. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 17.06.2021.

Sd/- Sd/-
(N. K. BILLAIYA)
(AMIT SHUKLA) ACCOUNTANT MEMBER

JUDICIAL MEMBER ASSISTANT REGISTRAR
ITAT NEW DELHI
*NEHA*

Date:- 17.06.2021

Copy forwarded to:

1. Appellant

2. Respondent

3. CIT

4. CIT(Appeals)

5. DR: ITAT

Date of dictation 14.06.2021
Date on which the typed draft is placed 14.06.2021
before the dictating Member 14.06.2021
Date on which the typed draft is placed 14.06.2021
before the Other member 14.06.2021
Date on which the approved draft comes to 14.06.2021
the Sr.PS/PS 17.06.2021
Date on which the fair order is placed before
the Dictating Member for Pronouncement
Date on which the fair order comes back to
the Sr. PS/ PS
Date on which the final order is uploaded
on the website of ITAT
Date on which the file goes to the Bench
Clerk
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant
Registrar for signature on the order
Date of dispatch of the Order