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. 2
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. 3
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 : 4
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. 5
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 6
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 7
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 :- 8 9 10 11 12 13 14 15 16
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 :- 17
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. 18
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
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