M/S.SHINANO RETAIL PRIVATE LIMITED, MUMBAI V. DCIT 4(3)(2), MUMBAI

CO 257/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6252 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 21-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Scheme of amalgamation; Revised return; Capital expenditure; Capital Gains
• Section: 143(3); 2(14); 133A; 143(1); 113; 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.1205/M/2019 ASSESSMENT YEAR: 2012-13 DCIT 4(3)(2), ROOM NO.649, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 VS. M/S. SHINANO RETAIL PVT. LTD., 4 TH FLOOR, COURT HOUSE, LOKMANYA TILAK MARG, DHOBI TALAO, MUMBAI 400 002 PAN: AALCS 4572R (APPELLANT) (R ESPONDENT) CO NO.257/M/2019 (ARISING OUT OF ITA NO.1205/M/2019 ASSESSMENT YEAR: 2012-13 M/S. SHINANO RETAIL PVT. LTD., 4 TH FLOOR, COURT HOUSE, LOKMANYA TILAK MARG, DHOBI TALAO, MUMBAI 400 002 PAN: AALCS 4572R VS. DCIT 4(3)(2), ROOM NO.649, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI SANDEEP RAJ, D.R. DATE OF HEARING : 03.12.2020 DATE OF PRONOUNCEMENT : 08.01.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL BY THE REVENUE AND THE CROSS OB JECTION BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORD ER DATED 24.12.2018 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 2 [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE REVENUE HAS FILED THE FOLLOWING GROUNDS OF A PPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, ID. CIT(A) IS RIGHT IN DIRECTING TO DELETE THE ADDITION MADE O N ACCOUNT OF LTCG OF RS. 190.47 CR. ARISING IN THE HANDS OF M/S ATPL TAXABLE IN THE HAN DS OF ASSESSEE CO. ON MERGER IGNORING THE FACT THAT M/SATPL FAILED TO FILED THE ROI FOR ANY OF THE ASSESSMENT YEARS DECLARING THE INVESTMENT IN THE SHARES SOLD W HICH REMAINED UNDISCLOSED TO THE DEPARTMENT AND HENCE UNVERIFIED. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID. CIT(A) IS RIGHT IN DIRECTING TO DELETE THE ADDITION MADE ON A CCOUNT OF LTCG OF RS. 190.47 CR. ARISING IN THE HANDS OF M/S ATPL TAXABLE IN THE HAN DS OF ASSESSEE CO. ON MERGER WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAI LED TO PROVE THE GENUINENESS OF TRANSACTIONS OF PURCHASE AND SALE OF SHARES BY M/S ATPL. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID. CIT(A) IS RIGHT IN DIRECTING TO DELETE THE ADDITION MADE ON A CCOUNT OF LTCG OF RS. 190.47 CR. ARISING IN THE HANDS OF M/S ATPL TAXABLE IN THE HAN DS OF ASSESSEE CO. ON MERGER IGNORING THE FACT THAT THE ASSESSEE FAILED TO PRODU CE ANY AUTHENTIC DOCUMENTARY EVIDENCES EITHER DURING THE COURSE THE ASSESSMENT P ROCEEDING OR BEFORE ID. CIT(A) TO SHOW THE INVESTMENT IN THE SHARES SOLD BY M/S AT PL GIVING RISE TO LTCG OF RS. 190.47 CRS. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID. CIT(A) IS RIGHT IN DIRECTING TO DELETE THE ADDITION MADE ON A CCOUNT OF LTCG OF RS. 190.47 CR. ARISING IN THE HANDS OF M/S ATPL TAXABLE IN THE HAN DS OF ASSESSEE CO. ON MERGER IGNORING THE FACT THAT THE ASSESSEE FAILED TO SHOW EITHER AT THE TIME OF ASSESSMENT PROCEEDINGS OR EVEN BEFORE THE ID. CIT(A) THE CORRE CTNESS OF SET OFF OF LTCG OF ATPL AGAINST THE LTC LOSS OF THE ASSESSEE CO. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID. CIT(A) IS RIGHT IN DIRECTING TO RESTRICT THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. 353,85,00,000/- TO RS. 260,89,28,374/- WITHOUT APPR ECIATING THE FACT THAT THE TRANSACTION OF PURCHASE AND SALE OF DEBENTURES OF M /S VPCL IS NOT A GENUINE TRANSACTION. 6 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID. CIT(A) IS RIGHT IN DIRECTING TO RESTRICT THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. 353,85,00,000/- TO RS. 260,89,28,374/- WITHOUT APPR ECIATING THE FACT THAT THE ASSESSEE FAILED TO GIVE COGENT REASONS AND ADDUCE A UTHENTIC DOCUMENTARY EVIDENCES FOR FALL IN PRICE OF DEBENTURES FROM RS. 403.85 CR. TO RS. 50 CR. 7. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID. CIT(A) IS RIGHT IN DIRECTING TO RESTRICT THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 3 353,85,00,000/- TO RS. 260,89,28,374/- WITHOUT APPR ECIATING THE FACT THAT THE FLUCTUATION IN THE PRICE OF SHARES OF M/S NDTV SHAL L NOT AFFECT THE VALUE OF DEBENTURES OF M/S VPCL SINCE THE LOAN ADVANCED BY T HE ASSESSEE COMPANY TO M/S VPCL HAVE NO CONNECTION WITH SHARE PRICE OF M/S NDT V AND HENCE WILL NOT IMPACT PRICE OF DEBENTURES HELD BY ASSESSEE COMPANY. 8. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID. CIT(A) IS RIGHT IN DIRECTING TO RESTRICT THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. 353,85,00,000/- TO RS. 260,89,28,374/- WITHOUT APPR ECIATING THE FACT THAT THE FLUCTUATION IN THE PRICE OF SHARES OF M/S NDTV SHAL L NOT AFFECT THE VALUE OF DEBENTURES OF M/S VPCL SINCE THE ASSESSEE IS CONCER NED ONLY WITH THE REPAYMENT OF LOAN ADVANCED BY IT TO M/S VPCL AND HAVE NO BUSI NESS WITH UTILISATION OF LOAN FUND BY M/S VPCL . 9. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITS CROSS OBJECTION: 1. ON THE FACTS AND CIRCUMSTANCE OF LAW, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEAL) ['CIT(A)-9'] ERRED IN CONFIRMING THE D ISALLOWANCE OF SHORT-TERM CAPITAL LOSS OF RS.92,95,71,626 (353,85,00,000-260,89,28,37 4) BY IGNORING THE PREMIUM ON PURCHASE PRICE AND DISCOUNT ON SALE PRICE TO CALCUL ATE THE PURCHASE PRICE AND SALE PRICE OF SECURITIES. 2. THE RESPONDENT CRAVES LEAVE TO ADD, TO AMEND , VARY OR ALTER INCLUDING BY SUBSTITUTION ANY OF THE GROUNDS OF APPEAL AS THEY O R THEIR REPRESENTATIVES MAY THINK FIT. 3. THE REVENUE HAS RAISED TWO EFFECTIVE ISSUES IN A LL THE GROUNDS OF APPEAL. IN GROUND NO.1 & 2 THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.190.47 CR ORES BY LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF LONG TERM CA PITAL GAIN ON SALE OF SHARES OF M/S. EENADU TELEVISION PVT. LT D. WHICH HAS BEEN MERGED WITH THE ASSESSEE. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 29.09.2012 CLAIMING LOSS OF RS.354,98,73, 866/-. THEREAFTER, 8 COMPANIES WERE MERGED AND AMALGAMATED WITH THE ASSESSEE COMPANY W.E.F. 01.04.2011 PURSUANT TO SCH EME OF ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 4 AMALGAMATION AS APPROVED BY THE THREE HONBLE HIG H COURTS OF BOMBAY , KARNATAKA AND MADHYA PRADESH AND CONSEQ UENTLY THE ASSESSEE REVISED ITS RETURN OF INCOME ON 29.08 .2013 DECLARING A LOSS OF RS.271,26,13,913/- AFTER INCOR PORATING THE ENTRIES OF THE MERGED COMPANIES AS NECESSITATED BY THE AMALGAMATION. THE SAID REVISED RETURN OF INCOME WA S PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND S TATUTORY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESS EE. THE DETAILS OF ENTITIES WHICH ARE MERGED WITH ASSESSEE ARE EXTRACTED BELOW FOR THE SAKE OF READY REFERENCE: SR. NO . NAME OF COMPANY DATE OF ORDER HIGH COURT 1 AARTHIK COMMERCIALS PVT LTD. 28.09.2012 MUMBAI. 2 ALTITUDE MERCANTILE PVT. LTD. 28.09.2012 MUMBAI. 3 DEVAKI COMMERCIALS PVT. LTD. 28.09.2012 MUMBAI. 4 KAVINDRA COMMERCIALS PVT. LTD. 28.09.2012 MUMBAI. 5 LONGITUDE MERCANTILE PVT. LTD. 28.09.2012 MUMBAI. 6 SHARANYA TRADING PVT. LTD. 28.09.2012 MUMBAI. 7 SHYAM EQUITIES PVT. LTD. 21.09.2012 KARNATAKA 8 ANU TRADING PVT. LTD. 27.02.2013 MADHYA PRADESH 5. A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDU CTED ON 30.08.2012 ON M/S. ANU TRADING PVT. LTD. WHICH HAS ALSO BEEN MERGED WITH ASSESSEE W.E.F. 01.04.2011. DURING THE COURSE OF SURVEY IT WAS FOUND THAT M/S. ANU TRADING PVT. LTD. HAS REALISED A PROFIT OF RS.190.00 CRORES FOR THE YEAR ENDED 31. 03.2012. A ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 5 MERGER PETITION WAS FILED BY M/S. ANU TRADING PVT. LTD. BEFORE THE HIGH COURT ON 18.06.2012 REQUESTING FOR ITS MER GER WITH THE ASSESSEE I.E. M/S. SHINANO RETAIL PVT. LTD., MUMBAI TO BE EFFECTIVE FROM 01.04.2011. THE REVENUE INTERVENED INTO THIS SCHEME OF MERGER BY FILING A PETITION AGAINST IT I N THE HIGH COURT. HOWEVER, THE SCHEME OF AMALGAMATION OF M/S. ANU TRADING PVT. LTD. WITH THE ASSESSEE WAS APPROVED BY THE HONBLE BOMBAY HIGH COURT SUBJECT TO THE APPROVAL OF HONBL E MADHYA PRADESH HIGH COURT AND ULTIMATELY THE AMALGAMATION WAS APPROVED AND BECAME EFFECTIVE FROM 10.04.2011. CON SEQUENTLY M/S. ANU TRADING PVT. LTD. WAS MERGED WITH THE ASSE SSEE. THE AO OF M/S. ANU TRADING PVT. LTD. INFORMED THE AO OF M/S. SHINANO RETAIL PVT. LTD., MUMBAI THAT THE JURISDICT ION NOW VESTED WITH THE AO OF THE ASSESSEE AFTER AMALGAMATI ON. THE AO DURING THE ASSESSMENT PROCEEDINGS FOUND FROM THE LE TTER OF THE AO OF M/S. ANU TRADING PVT. LTD . THAT THE SAID C OMPANY HAS REALISED A PROFIT OF RS.190.00 CRORES FOR THE YEAR ENDED 31.03.2012. ACCORDINGLY THE AO CALLED UPON THE ASSE SSEE VIDE LETTER DATED 16.03.2015 TO EXPLAIN THE SAID TRANSAC TIONS WITH DETAIL ALONG WITH THE MANNER OF ACCOUNTING THEREOF AFTER MERGER OF 8 COMPANIES WITH THE ASSESSEE WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 24.03.2015 WHICH IS EXTR ACTED BY THE AO IN PARA 6.3 AT PAGE NO.4, 5 & 6. THE AO NOTED T HAT M/S. ANU TRADING PVT. LTD. CAME INTO EXISTENCE FROM 10.1 2.2007 AND THEREAFTER FILED NO RETURN OF INCOME WITH THE DEPAR TMENT TILL DATE. IT IS ONLY UPON SURVEY UNDER SECTION 133A OF THE AC T ON THE BUSINESS PREMISES OF M/S ANU TRADING PVT LTD AT 58 2, LABHGANA, LG ROAD, INDORE BY THE DEPARTMENT ON 30.0 8.2012 RESULTING INTO SEIZURE OF SEVERAL DOCUMENTS. IT WAS ALSO FOUND ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 6 THAT MR. VIJAY CHHAJLANI WAS THE DIRECTOR OF M/S AN U TRADING PVT LTD . IT WAS ALSO FOUND THAT M/S. ANU TRADING PVT. LTD. BY MERGING WITH THE ASSESSEE COMPANY HAS NO INTENTION TO PAY THE TAXES ON RS.190.47 CRORES THE AMOUNT OF GAIN REALIZ ED DURING THE YEAR ENDED ON 31.3.2012. IN THE ASSESSMENT FRA MED BY THE AO, HE NOTED THAT THE ASSESSEE HAS NOT FILED ANY D OCUMENTARY EVIDENCES IN RESPECT OF PURCHASE AND SALE OF SHARES AND ALSO WITH RESPECT TO INDEXATION CLAIMED ON COST OF PURCH ASE OF SHARES. THE AO ALSO MENTIONED IN PARA 6.6 THAT ASSESSEE VID E LETTER DATED 24.03.2015 CALCULATED THE CAPITAL GAIN AT RS.55,24,14,213/- BY TAKING THE INITIAL DATE OF PUR CHASE AS 25.08.2008 AND THEREAFTER REVISED THE CAPITAL GAIN FIGURE TO RS.79,40,59,074/- BY TAKING THE ACTUAL DATE OF PURC HASE ON 30.03.2009. THE AO ADDED THE ENTIRE AMOUNT OF CAP ITAL GAIN OF RS.190,47,51,600/- TO THE INCOME OF THE ASSESSEE FO R THE WANT OF DOCUMENTARY EVIDENCES AND PROPER EXPLANATION BY THE ASSESSEE IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF TH E ACT VIDE ORDER DATED 31.03.2015. 6. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) ALLO WED THE APPEAL OF THE ASSESSEE ON THIS ISSUE AFTER TAKING I NTO CONSIDERATION THE CONTENTIONS AND SUBMISSIONS OF TH E ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 4.6 IN ORDER TO DECIDE THE ABOVE GROUND IN A PPEAL, I HAVE GONE THROUGH THE ASSESSMENT ORDER OF THE AO AS WELL AS DETAILED WRIT TEN SUBMISSION AND PAPER BOOK FILED BY THE APPELLANT. I HAVE ALSO CONSIDERED THE REMAND REPORT SUBMITTED BY THE AO. THE MOOT QUESTION WHICH IS REQUIRED TO BE DECID ED HERE IS THAT WHETHER TAXABLE INCOME HAS TO BE COMPUTED AS PER THE ENTRIE S PASSED IN THE BOOKS OF ACCOUNTS OR AS PER THE PROVISIONS OF THE INCOME TAX LAW! TO MY UNDERSTANDING, THE ABOVE QUESTION HAS ALREADY BEEN ANSWERED BY THE HON 'BLE SUPREME COURT AND JURISDICTIONAL HIGH COURT TIME AND AGAIN WHEREIN TH EY HAVE CATEGORICALLY HELD THAT THE ENTRIES PASSED IN THE BOOKS OF ACCOUNT ARE NOT DECI SIVE IN NATURE AND THE INCOME HAS TO BE COMPUTED AS PER THE PROVISIONS OF THE INCOME TAX LAW ONLY. THE RECENT JUDGMENT ON THIS ISSUE IS RENDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF TAPARIA TOOLS ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 7 LIMITED VS JCIT [372 ITR 605 SC] WHEREIN AT PARAGRAPH 19 OF THE JUDGMENT, AFTER REFERRING TO MANY OTHER DECISIONS OF HON'BLE SUPREM E COURT, THE APEX COURT HELD AS UNDER: '9. IN THE INSTANT CASE, AS NOTICED ABOVE, THE ASSE SSEE DID NOT WANT SPREAD OVER OF THIS EXPENDITURE OVER A PERIOD OF FI VE YEARS AS IN THE RETURN FILED BY IT, IT HAD CLAIMED THE ENTIRE INTER EST PAID UPFRONT AS DEDUCTIBLE EXPENDITURE IN THE SAME YEAR. IN SUCH A SITUATION, WHEN THIS COURSE OF ACTION WAS PERMISSIBLE IN LAW TO THE ASSE SSEE AS IT WAS IN CONSONANCE WITH THE PROVISIONS OF THE ACT WHICH PER MIT THE ASSESSEE TO CLAIM THE EXPENDITURE IN THE YEAR IN WHICH IT WAS I NCURRED, MERELY BECAUSE A DIFFERENT TREATMENT WAS GIVEN IN THE BOOK S OF ACCOUNTS CANNOT BE A FACTOR WHICH WOULD DEPRIVE THE ASSESSEE FROM C LAIMING THE ENTIRE EXPENDITURE : EXPENDITURE AS A DEDUCTION. IT HAS BEEN HELD REPEAT EDLY BY THIS COURT THAT ENTRIES IN THE BOOKS OF ACCOUNTS AR E NOT DETERMINATIVE OR CONCLUSIVE AND THE MATTER IS TO BE EXAMINED ON THE TOUCHSTONE OF PROVISIONS CONTAINED IN THE ACT [SEE KEDARNATH JUTE MANUFACTURING CO. LTD. VS. CIT (1972) 3 SCC 252; TUTICORIN ALKALI CHE MICALS & FERTILIZERS LTD. VS. CIT (1997) 141 CTR (SC) 387 : (1997) 6 SCC 117, SUTLEJ COTTON MILLS LTD. VS. CIT 1978 CTR (SC) 155 : (1978) 4 SCC 358 AND UNITED COMMERCIAL BANK VS. CIT (1999) 156 CTR (SC) 380 : ( 1999) 8 SCC338].' 4.7 THUS, THE SETTLED POSITION IS THAT THE IN COME HAS TO BE COMPUTED AS PER THE INCOME TAX LAW AND THE ENTRIES PASSED IN THE BOOKS OF ACCOUNT HAVE NO FINAL ROLE TO PLAY FOR COMPUTING THE TAXABLE INCOME. THEREFORE, T HE ENTRY PASSED FOR RS. 190 CRORE BEING PROFIT ON SALE OF SHARES IN THE CASE OF ATPL IN THE COMPUTER-GENERATED P&L ACCOUNT, HAS NOTHING TO DO WITH TAXABLE INCOME OF T HE APPELLANT ON THIS ACCOUNT. THE LONG TERM CAPITAL GAIN HAS TO BE COMPUTED AS PER SE CTION 48 OF THE ACT READ WITH PROVISO THERETO AND SECTION 49 OF THE ACT. AS PER THE PROVI SIONS OF SECTION 48 AND 49 OF THE ACT, THE LONG TERM CAPITA! GAIN ON SALE OF SHARE OF ETPL HAS BEEN WORKED TO RS. 79.40 CRORES AS UNDER: PARTICULARS PARTICULARS AMOUNT SALES CONSIDERATION 508,91,01,600 L ESS: INDEXED COST OF ACQUISITION COST RS. 318,43,50,000 X RS.785 % RS. 582 429,50,42,528 LONG TERM CAPITAL GAIN 79,40,59,074 4.8 NOW, I FIND THAT THE AO HAS NOT FOUND ANY DEFECT IN THE ABOVE WORKING. THE ONLY ISSUE WAS THE LEGAL ONE WHICH HAS ALREADY BEEN DISC USSED ABOVE. THEREFORE, I AM OF THE BELIEF THAT AS FAR AS THE WORKING OF CAPITAL GAIN I S CONCERNED, THE ATPL HAS CORRECTLY WORKED OUT THE ABOVE LONG TERM CAPITAL GAIN AND DEC LARED THE SAME IN THE RETURN FILED PRIOR TO MERGER. WHAT IS MORE THE ABOVE CAPITAL GAI N WORKING HAS ALSO BEEN ACCEPTED BY THE AO OF THE ATPL IN THE ASSESSMENT ORDER DATED 06 /03/2014 PASSED U/S 143(3) R.W.S. 147 OF THE ACT. THEREFORE, IT IS HELD HERE THAT THE LONG TERM CAPITAL GAIN OF RS. 79.40 CRORES HAS BEEN CORRECTLY OFFERED BY THE ATPL. ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 8 4.9 MOVING FURTHER, IT IS FOUND THAT, HOWEVER , SUBSEQUENT TO MERGER OF ATPL AS WELL AS OTHER COMPANIES WITH THE APPELLANT, THE LONG TER M CAPITAL LOSS HAS BEEN WORKED OUT TO RS. 229,33,27,559/- WHICH HAS BEEN CARRIED FORWARD TO THE SUBSEQUENT YEARS FOR SET OFF AGAINST THE INCOME. I AM OF THE VIEW THAT AS SPECIF ICALLY PRESCRIBED IN SECTION 2[1B] OF THE ACT, IN THE AMALGAMATION, ALL THE ASSETS AND LI ABILITY OF THE AMALGAMATING COMPANIES BECOME THE PROPERTY OF THE AMALGAMATED COMPANY. THE REFORE, IN ORDER TO GIVE EFFECT TO THE AMALGAMATION, THE APPELLANT IS DUTY BOUND TO CO MPUTE THE INCOME INCLUDING THE INCOME/LOSSES OF THE AMALGAMATING COMPANIES ALSO. H ENCE, THE APPELLANT WAS CORRECT WHEN HE COMPUTED THE LONG TERM CAPITAL LOSS CONSIDE RING THE LONG TERM CAPITAL INCOME EARNED BY THE ATPL AND LONG TERM CAPITAL LOSS INCUR RED BY THE OTHER AMALGAMATING COMPANIES. THUS, I AM OF THE VIEW THAT THE APPELLAN T HAS CORRECTLY DECLARED THE LONG TERM CAPITAL LOSS OF RS. 229.33 CRORES CONSIDERING THE INDEXED COST OF ACQUISITION AND THE LOSSES INCURRED BY OTHER AMALGAMATING COMPANIES . THE AO HAS TOTALLY IGNORED THE FACT THAT THE TAXABLE INCOME OF AN ASSESSEE HAS TO BE COMPUTED AS PER PROVISIONS OF THE PASSED IN THE BOOKS. THEREFORE, THE AO WAS GROSSLY UNJUSTIFIED IN MAKING THE ADDITION OF RS. 190 CRORES. HENCE, THE ADDITION OF RS. 190 CROR ES MADE BY THE AO IS HEREBY DELETED. 4.10 THE AO HAS ANOTHER OBSERVATION ALSO FOR MAK ING THE ADDITION WHEREIN HE HAS STATED THAT IT IS NOT UNDERSTOOD AS TO WHY THE PETI TIONER WANTS MERGER FROM 01.04.2011 WHEN THE PETITION OF MERGER WAS FILED IN JULY, 2012 . THE FACTS OF THE CASE ARE THAT THE MERGER PETITION HAS BEEN FILED ON 18/06/2012 WITH A REQUEST TO MAKE THE MERGER EFFECTIVE FROM 01/04/2011. I UNDERSTAND THAT THE INCOME TAX D EPARTMENT HAD INDEED INTERVENED INTO SCHEME AND FILED A PETITION BEFORE THE HON'BLE MADHYA PRADESH HIGH COURT AGAINST THE MERGER APPLICATION. HOWEVER, STILL, THE HON'BLE MADHYA PRADESH HIGH COURT VIDE ORDER DATED 27-02-13, HAS APPROVED THE AMALGAMATION W.E.F. 01/04/2011. AFTER THE PASSING OF AN ORDER BY NO LESS THAN A HIGH COURT ON A PARTICULAR MATTER, IT SHALL NOT BE PROPER AT THIS LEVEL OR FORUM TO GO INTO THIS ISSUE AGAIN OR EVEN CONSIDER DOING THAT. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF HON' BLE MP HIGH COURT, I REFRAIN FROM DOING SO AND CONSIDER THIS AS A CLOSED CHAPTER. THE REFORE, I AM OF THE VIEW THAT THE ONCE THE HIGH COURT HAS APPROVED THE SCHEME W.E.F. 01/04 /2011, THEN, THE AO AND THE DEPARTMENT HAVE TO ACCEPT THE SAME AS FATE-ACCOMPLI . 7. THE LD. D.R. VEHEMENTLY SUBMITTED BEFORE THE BEN CH THAT LD. CIT(A) HAS WRONGLY DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS.190.47 CROR ES BY OVERLOOKING THE FACT THAT THE ROUTE OF MERGER AMALG AMATION WAS RESORTED TO EVADE TAX ON THE LONG TERM CAPITAL GAI N OF RS. 190.47. THE LD. D.R. POINTED OUT THAT THE MERGER A ND AMALGAMATION OF M/S. ANU TRADING PVT. LTD. AND SEVE RAL OTHER ENTITIES WITH THE ASSESSEE W.E.F. 01.04.2011 IS NOT HING BUT A SCHEME PLANNED BY THE ASSESSEE TO AVOID THE TAX ON THE LONG TERM CAPITAL GAIN EARNED BY M/S. ANU TRADING PVT. LTD. THE LD DR SUBMITTED THAT MERE APPROVAL OF MERGER BY THE RE SPECTIVE ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 9 HIGH COURT WOULD NOT ABSOLVE THE ASSESSEE FROM ITS OBLIGATION TOWARDS THE TAXES TO BE PAID ON THE INCOME EARNED B Y THE ENTITY BEING MERGED WITH THE OTHER ENTITY PURSUANT TO THE MERGER. THE LD DR ARGUED THAT THE AT THE LEVEL OF HONBLE HIGH COURT, THE BROADER ISSUES IMPACTING THE VARIOUS STAKEHOLDERS A RE EXAMINED BY THE HIGH COURT AND THE ISSUE OF TAXABILITY OF TH E INCOME EARNED BY THE ASSESSEE THE MERGING ENTITY. THUS, L D. D.R. RELIED HEAVILY ON THE ORDER OF AO AND PRAYED BEFORE THE BE NCH THAT THE ORDER OF LD. CIT(A) MAY KINDLY BE REVERSED ON THIS ISSUE. 8. THE LD. A.R., ON THE OTHER HAND, STRONGLY CONTRO VERTED THE ARGUMENTS OF THE LD DR AND SUBMITTED BEFORE US TH AT THE CAPITAL GAIN HAS ARISEN DUE TO SALE OF SHARES OF M/ S. EENADU TELEVISION PVT. LTD. BY M/S. ANU TRADING PVT. LTD. THE LD. A.R. SUBMITTED THAT SINCE THE M/S. ANU TRADING PVT. LTD. WAS MERGED WITH ASSESSEE COMPANY ALONG WITH 7 OTHER COMPANIES W.E.F. 01.04.2011 AS PER THE SCHEME OF AMALGAMATION DULY A PPROVED BY THE HONBLE MADHYA PRADESH HIGH COURT AND HONBL E BOMBAY HIGH COURT. THE LD. A.R. SUBMITTED THAT CONSEQUENT TO THE APPROVAL OF SCHEME OF AMALGAMATION OF 8 COMPANIES W ITH THE ASSESSEE, THE ASSESSEE FILED REVISED RETURN OF INCO ME AFTER INCORPORATING THE NECESSARY ENTRIES IN ITS BOOKS OF ACCOUNTS AS NECESSITATED BY THE AMALGAMATION AND DULY OFFERED T HE LONG TERM CAPITAL GAIN EARNED BY M/S. ANU TRADING PVT. LTD. A S WELL AS LONG TERM CAPITAL LOSS SUFFERED BY OTHER MERGED ENTITIES . THE LD AR SUBMITTED THAT THE COMPUTATION OF LOSSES ARE NOT I N DISPUTE AND HAVE BEEN ACCEPTED BY THE AO IN THE ASSESSMENT FRAM ED. THE LD. A.R. ALSO POINTED OUT THAT THE SCHEME OF AMALGA MATION WAS APPROVED BY THE HONBLE MADHYA PRADESH HIGH COURT A FTER CONSIDERING THE OBJECTIONS FILED BY THE DEPARTMENT AND THE SLP ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 10 FILED BY THE DEPARTMENT AGAINST THE SAID ORDER OF T HE HONBLE MADHYA PRADESH HIGH COURT WAS DISMISSED BY THE HON BLE SUPREME COURT COPIES WHEREOF ARE FILED AT PAGE NO. 22 TO 35 AND PAGE NO.36 RESPECTIVELY. THE LD. A.R. ALSO SUBMITT ED THAT ONCE THE SCHEME OF AMALGAMATION IS APPROVED BY THE HIGH COURT THEN IT IS PRESUMED THAT THE SAME HAS BEEN APPROVED AFTER EXERCISING DUE DILIGENCE AND CONSIDERING THE REPRE SENTATIONS FROM VARIOUS STAKEHOLDERS AND THEREFORE THE AO CAN NOT ALLEGE THAT AMALGAMATION WAS DONE WITH A VIEW TO EVADE THE TAXES. THE LD. A.R. SUBMITTED THAT THE AMALGAMATION SCHEME WAS APPROVED BY THE HONBLE HIGH COURT AFTER CONSIDERING THE OBJ ECTIONS FILED BY THE DEPARTMENT AND CONSEQUENTLY AO CAN NOT ALLEG E THE AMALGAMATION OF M/S. ANU TRADING PVT. LTD. WITH THE ASSESSEE WAS A SCHEME TO AVOID THE TAX ON LONG TERM CAPITAL GAIN. THE LD. A.R. ALSO INVITED OUR ATTENTION TO THE PAGE NO. 4 TO 21 OF THE PAPER BOOK WHERE THE AUDITED FINANCIAL STATEMENTS O F M/S. ANU TRADING PVT. LTD. FROM 2007-08 TO 2011-12 WERE ATTA CHED WHICH HAVE ALSO BEEN FILED BEFORE THE AO. THE LD. A.R. P OINTED OUT THAT BALANCE SHEET OF F.Y. 2008-09 SHOWED THAT THE M/S. ANU TRADING PVT. LTD. HAD MADE AN INVESTMENT IN SHARES OF M/S. USHODAYA ENTERPRISES PVT. LTD. FOR RS.1150.00 CRORE S AND THE SAID INVESTMENT CONTINUED TO APPEAR IN BALANCE SHEE T TILL 31.03.2010. IN F.Y. 2010-11 DUE TO DEMERGER OF M/S . USHODAYA ENTERPRISES PVT. LTD., M/S. ANU TRADING PVT. LTD. R ECEIVED SHARES OF ANOTHER THREE COMPANIES INCLUDING M/S. EENADU TE LEVISION PVT. LTD. AND COST WAS APPORTIONED OVER 4 COMPANIES . THE LD. A.R. SUBMITTED THAT THE SAID COST WAS APPORTIONED O N THE BASIS OF COMMUNICATION RECEIVED FROM M/S. USHODAYA ENTERP RISES PVT. LTD. ON ITS DEMERGER. THEREAFTER, SHARES OF M/S. E ENADU ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 11 TELEVISION PVT. LTD. WERE SOLD BY M/S. ANU TRADING PVT. LTD. IN F.Y. 2011-12 AND ACCORDINGLY SAME WERE NOT BEING RE FLECTED IN THE INVESTMENT SCHEDULE IN THE FINANCIAL STATEMENT AS ON 31.03.2012. FURTHER A GAIN/PROFIT OF RS.190.47 CRO RES ON SALE OF SHARES WAS CREDITED TO P&L ACCOUNT. THE LD. A.R. S UBMITTED THAT THE FACT OF THESE INVESTMENTS HAVING BEEN HELD BY M/S. ANU TRADING PVT. LTD. ARE NOT IN DISPUTE AS CAN BE SEE N FROM THE ASSESSMENT ORDERS FRAMED UNDER SECTION 143(3) OF TH E ACT FOR AY 2009-10 & 2010-11 THE COPIES OF WHICH ARE FILED AT PAGE NO.37 TO 40 OF THE PAPER BOOK AND ALL THESE FACTS A RE RECORDED BY THE AO IN THE IMPUGNED ORDER IN A TABLE ON PAGE NO. 7 TO 8 IN PARA NO.6.5. THE LD. A.R. ALSO POINTED OUT THAT TH ERE WAS AN ERROR IN CALCULATION OF LONG TERM CAPITAL GAIN ON S ALE OF SHARES OF M/S. EENADU TELEVISION PVT. LTD. AT RS.55.24 CRORES AND HENCE IT RECALCULATED THE PROFIT ON SALE OF SHARES RS.79. 40 CRORES. THIS ERROR HAS OCCURRED DUE TO A PUNCHING ON ACCOUNT OF INCORRECT INDEXATION WHICH IS ALSO DULY NOTED BY THE AO IN PA RA 6.6 OF THE ASSESSMENT ORDER. FINALLY, THE LD. A.R. SUBMITTED THAT KEEPING IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND THE FA CT THAT ASSESSEE HAS DULY OFFERED THE LONG TERM CAPITAL GAI N ON SALE OF SHARES OF M/S. EENADU TELEVISION PVT. LTD. AFTER S ETTING IT OFF AGAINST THE OTHER CAPITAL LOSSES SUFFERED BY THE OT HER AMALGAMATING COMPANIES HAVE NOT BEEN DISPUTED BY T HE AO. THE LD. A.R. SUBMITTED THAT THESE LOSSES HAVE BEEN RETURNED BY THE ASSESSEE COMPANY CONSIDERING THE CAPITAL GAIN A ND CAPITAL LOSSES ONLY AFTER THE SCHEME OF AMALGAMATION WAS AP PROVED BY THE HIGH COURT BY FILING A REVISED RETURN OF INCOME . THEREFORE, THE AO HAS WRONGLY ERRED IN ADDING AN AMOUNT OF RS . 190.47 CR BY CITING THAT ASSESSEE HAS NOT FILED THE EVIDENCES IN SUPPORT OF ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 12 THE SAID SALE AND PURCHASE OF SHARES. THE LD AR SUB MITTED THAT ONCE THE MERGER IS APPROVED BY THE HIGH COURT, THE TAX AUTHORITIES HAVE NO JURISDICTION TO INTERFERE IN TH E MATTER. THE LD COUNSEL OF THE ASSESSEE RELIED ON THE FOLLOWING DEC ISIONS NAMELY ( I) RELIANCE MONEY INF LTD VS PCIT (2017) 88 TAXMA NN.COM 871 {MUMBAI TRIB) ,(II) ELECTROCAST SALES INDIA LTD VS DOT (2018) 170 ITD05 07 (KOLKATATRIB) AND III. DCITVS INDUS FILA LTD (2013}32TAXMANN.COM 382 (BANGALORE TRIB) FINALLY, THE LD. A.R. SUBMITTED THAT THE ORDER OF LD. CIT(A) MAY KINDLY B E AFFIRMED CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AS ALL THESE ASPECTS WERE DULY CONSIDERED BY THE LD CIT(A) WHILE PASSING THE APPELLATE ORDER. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED APPELLATE ORDER UNDER CHALLENGE BEFORE US. WE FIND THAT IN THIS CASE THE ASSESSEE HAS FILED A REVISED RETURN AFTER TAKING INTO ACCOUNT THE CAPITAL GAIN/LOSSES OF THE AMALGAMATIN G COMPANIES AFTER APPROVAL OF MERGER/AMALGAMATION OF 8 COMPANI ES WITH THE ASSESSEE COMPANY. WE NOTE THAT THE HONBLE MADHYA PRADESH HIGH COURT AND HONBLE BOMBAY HIGH COURT HAVE DULY APPROVED THE AMALGAMATION OF THESE 8 ENTITIES WITH THE ASSE SSEE COMPANY WHICH BECAME EFFECTIVE FROM 1.4.2011. CONSEQUENTLY , THE ASSESSEE FILED THE REVISED RETURN OF INCOME OFFERIN G TO TAX THE NET POSITION RESULTING FROM AMALGAMATION OF 8 ENTITIES WITH THE ASSESSEE AND IN THE PROCESS THE LONG TERM CAPITAL G AIN OF RS.190.47 CRORES EARNED BY M/S ANU TRADING PVT LTD. GOT SET OFF AGAINST THE LOSSES INCURRED BY OTHER MERGING ENTITI ES, THEREFORE WE DO NOT FIND ANY MERIT IN THE ARGUMENTS OF THE LD . D.R. THAT M/S. ANU TRADING PVT. LTD. HAS BEEN MERGED WITH THE ASSESSEE ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 13 IN ORDER TO AVOID THE TAX LIABILITY ON THE LONG TER M CAPITAL GAIN MADE BY IT ON SALE OF SHARES OF M/S. EENADU TELEVIS ION PVT. LTD. IN THIS CASE WE ALSO NOTE THAT THE REVENUE HAS FIL ED OBJECTIONS TO THE AMALGAMATION OF M/S ANU TRADING PVT LTD IN THE HONBLE HIGH COURT AND THE AMALGAMATION WAS APPROVED DISMIS SING THE SAID PETITION BY THE REVENUE. THE LD. A.R., THEREFO RE, SUBMITTED THAT THE FINDING OF THE LD. PCIT THAT THE AMALGAMAT IONS AND FORMATIONS OF THE VARIOUS COMPANIES IS FOR SECURING TAX ADVANTAGE IS INCORRECT. THE LD. A.R. ALSO SUBMITTED THAT EACH OF THE AMALGAMATIONS HAVE BEEN COURT APPROVED AND THER EFORE THE AO HAS NO JURISDICTION TO QUESTION THEM. THE ASSESS EES CASE IS SUPPORTED BY THE DECISIONS I) RELIANCE MONEY INF LTD VS PCIT (SUPRA),(II). ELECTROCAST SALES INDIA LTD VS DOT (SUPRA) AND (III ) DCITVS INDUS FILA LTD (SUPRA). WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF FIRST APPELL ATE AUTHORITY WHICH APPEARS TO BE CORRECT AND WELL - REASONED AND THEREFORE THE FINDINGS OF THE LD CIT(A) ON THIS ISSUE ARE UPH ELD. ACCORDINGLY, GROUND NO.1 TO 4 RAISED BY THE REVENUE ARE DISMISSED. 10. THE ISSUE RAISED IN GROUND NO.5 TO 8 BY THE REV ENUE IS AGAINST THE DELETION OF DISALLOWANCE OF LONG TERM C APITAL LOSS OF RS.260.89 CRORES ON SALE OF DEBENTURES BY LD. CIT(A ) AS AGAINST THE LOSS OF RS.353.85 CRORES DISALLOWED BY THE AO F OR THE WANT OF DOCUMENTARY EVIDENCES AND PROPER EXPLANATION BY THE ASSESSEE. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION CHALLEN GING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF LON G TERM CAPITAL LOSS TO THE TUNE OF RS.92.95 LAKH BY IGNORING THE PREMIUM ON PURCHASE PRICE AND DISCOUNT ON SALE PRICE TO CALCUL ATE THE PURCHASE PRICE AND SALE PRICE OF THE SECURITIES. T HEREFORE, THE GROUND NO.5 TO 8 IN THE REVENUES APPEAL AND ISSUE RAISED BY THE ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 14 ASSESSEE IN CROSS OBJECTION ARE ARISING FROM THE SA ME FINDINGS OF LD CIT(A) ON THE VERY SAME ISSUE OF LOSS ON SALE OF DEBENTURES AND THEREFORE IS BEING DECIDED TOGETHER. 11. THE FACTS IN BRIEF ARE THAT THE AO HAD RECEIVED A LETTER DATED 26.03.2015 FROM 8(1) DELHI MENTIONING TRANS ACTIONS BETWEEN M/S. EMINENT NETWORKS PVT. LTD. AND M/S. SH INONO RETAIL PVT. LTD., MUMBAI THE ASSESSEE RELATING TO S ALE OF ZERO COUPON UNSECURED OPTIONALLY FULLY CONVERTIBLE REDEE MABLE DEBENTURE (HEREINAFTER REFERRED TO AS OFCDS) OF M/S . VISHWAPRADHAN COMMERCIAL PVT. LTD. FOR A SUM OF RS.5 0 CRORE HAVING A FACE VALUE OF RS.403.85 CRORES. ACCORDINGL Y, THE AO VIDE ORDER SHEET NOTING DATED 26.03.2015 CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS OF THE SAID TRANSACTION WITH TH E REASONS FOR INCURRING HUGE LOSSES ALONG WITH DOCUMENTARY EVIDEN CES WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 30.03 .2015 ADMITTING THEREIN THAT OFCDS OF M/S. VISHWAPRADHAN COMMERCIAL PVT. LTD. WERE SOLD TO M/S. EMINENT NETW ORKS PVT. LTD. AT AN INTRINSIC VALUE OF RS.50 CRORES WHEREAS THE FACE VALUE OF THESE CONVERTIBLE DEBENTURES WAS RS.403.85 CRORE S. THE ASSESSEE ALSO FURNISHED BACKGROUND AND HISTORY OF THE TRANSACTIONS BEFORE THE AO WHICH HE EXTRACTED IN TH E ASSESSMENT ORDER AS UNDER : 3. A BRIEF HISTORY OF THE AFORESAID TRANSACTION IS AS FOLLOWS : (I) UPTO 31.03.2011, WE HAD PROVIDED CONVER TIBLE LOAN OF RS. 403.85 CRORES TO VCPL. ON 24.11.2011, VCPL CONVERTED ZERO COUPON OPT IONALLY CONVERTIBLE LOAN OF RS. 403.85 CRORES INTO 403,85,000 ZERO-COUPON OPTIO NALLY CONVERTIBLE DEBENTURES OFRS. 100 EACH. NOTE IN THE PRINTED ACCOUNTS IS AS FOLLOWS : 'CONVERSION AT THE OPTION OF THE HOLDER, INTO SUCH NUMBER OF EQUITY SHARES, BASED ON HIGHER OF FAIR VALUE TO BE DETERMINED BY INDEPEN DENT VALUER OR FACE VALUE OF EQUITY SHARES.' ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 15 (II) VCPL HAD UTILIZED THE LOAN GIVEN BY US FOR GRANTING LOAN TO RRPR HOLDINGS AS PER LOAN AGREEMENT DT. 21.07.2009 ENTERED INTO BETW EEN VCPL AND RRPR HOLDINGS. (III) RRPR HOLDINGS WAS HOLDING 29% STAKE IN N DTV AND ACCORDINGLY HAD UTILIZED THIS LOAN . FOR THE PURPOSE OF RETIRING ITS DEBTS AND OFFERING CONTROLLING INTEREST TO VCPL. THE PRICE O NDTV SHARES INCLUDING PREMIUM FO R CONTROLLING INTEREST AT THE TIME OF TRANSACTION WAS RS 214.65 PER SHARE. HOWEVE R, ON CLOSURE IN NOVEMBER, 2011, THERE WAS SUBSTANTIAL EROSION IN THE VALUE OF NDTV SHARES FROM RS. 214.65 TO RS. 26.58. ACCORDINGLY THE VALUE OF THE CONVERTIB LE DEBENTURES HAD ALSO FALLEN SUBSTANTIALLY AND RECOVERABILITY OF MONEY FROM SUCH DEBENTURES REDUCED SUBSTANTIALLY. ACCORDINGLY, THESE DEBENTURES WERE S OLD FOR COMMERCIAL REASONS TO A THIRD PARTY AT THEIR INTRINSIC VALUE OF RS. 50 CROR ES, RESULTING IN A LOSS OF RS.353.85 CRORES. 12. THE ASSESSEE FURNISHED BEFORE THE AO THE BASIS FOR SELLING THE THESE OFCDS AT RS. 50 CR. THE ASSESSEE SUBMITTE D BEFORE THE AO THAT THE PRICE OF THE SHARES OF NDTV INCLUDIN G PREMIUM AT THE TIME OF ENTERING INTO TRANSACTION WAS RS.214 .65 PER SHARE WHICH FELL SUBSTANTIALLY IN NOVEMBER 2007 CLOSE T O 226.58 PER SHARE. THE AO, HOWEVER, OBSERVED THAT PRICE OF NDT V SHARE IN NOVEMBER 2011 WAS 37.75 PER SHARE WHEREAS IN FEBRUA RY 2012 IT WAS RS.42.60 PER SHARE AND ACCORDINGLY CALLED UP ON THE ASSESSEE TO JUSTIFY THE CLAIM OF LOSS ON SALE OF TH ESE DEBENTURES TO M/S. EMINENT NETWORKS PVT. LTD. WHICH WAS REPLIE D BY THE ASSESSEE VIDE LETTER DATED 31.03.2015 WHICH IS REPR ODUCED AS UNDER: REGARDING THE LOSS ON SALE OF DEBENTURES OF VCPL, DETAILS OF WHICH HAVE BEEN VIDE LETTER NO. ASPRO/2012-13/11/FL DT. 30.03.2015, YOU HAVE RAISED A QUERY TO THE FACT THAT THERE IS NO SUBSTANTIAL DECREASE IN THE SHARES OF NDTV FROM THE DATE OF ALLOTMENT OF DEBENTURES OF VCPL IN NOVEMBER 2011 TO THE DATE OF SALE OF AFORESAID DEBENTURES IN FEBRUARY 2012. IN THIS CONNECTION, WE WOULD LIKE TO SUBMIT THAT: THIS TRANSACTION HAD TAKEN PLACE ON 21.07.2009 AND AT THAT POINT OF TIME, THE WEIGHTED AVERAGE PRICE IN LAST 60 DAYS OF NDTV SHAR ES WAS RS. 143.32 PER SHARE AND SINCE RRPR HOLDING WAS HOLDING 29% SHARES OF NDTV, CONTROLLING PREMIUM OF RS.71.33 WAS WORKED OUT AND ACCORDINGLY THE VALUATI ON PLACED ON NDTV SHARES AS HELD BY RRPR HOLDING WAS RS. 214.65 PER SHARE. IN FEBRUARY 2012, WHEN THE DECISION TO CLOSE THE TR ANSACTION WAS MADE, THE WEIGHTED AVERAGE PRICE OF NDTV SHARES IN LAST 60 DA YS WAS RS.35.55 PER SHARE AND ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 16 SINCE RRPR HOLDING WAS HOLDING 29% SHARES OF NDTV, MAKING PROVISION FOR BULK DISCOUNT, THE PRICE OF NDTV SHARES WAS WORKED OUT A T RS. 26.58 PER SHARE. 13. THE AO FINALLY NOTED THAT ASSESSEE HAS NOT SUBM ITTED DOCUMENTARY EVIDENCES IN RESPECT OF SALE AND PURCHA SE OF DEBENTURES DESPITE THE SAME BEING SPECIFICALLY ASKE D VIDE LETTER DATED 26.03.2015, 30.03.2015 AND ALSO NOT FURNISHED ANY JUSTIFICATION FOR SELLING OFCDS FOR RS.50 CRORE WHI CH HAS RESULTED INTO LOSS OF RS.353.85 CRORES. FINALLY, T HE AO DISALLOWED THE LOSS OF RS.353.85 CRORES IN RESPECT OF SALE OF DEBENTURES OF M/S. VISHWAPRADHAN COMMERCIAL PVT. LTD . FOR THE WANT OF DOCUMENTARY EVIDENCES AND PROPER EXPLANATIO N BY THE ASSESSEE. 14. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE, AFTER CALLING FOR A REP ORT FROM THE AO ON THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) IN RESPECT OF PURCHASE AND SALE OF THESE OFC DS EVIDENCING THE VARIOUS TRANSACTIONS, BY DIRECTING T HE AO TO RESTRICT THE LONG TERM CAPITAL LOSS TO RS.260.89 CR ORES THEREBY DISALLOWING THE LOSS TO THE EXTENT OF RS.92.95 CRO RES BY OBSERVING AND HOLDING AS UNDER: 5.4 I HAVE PERUSED THE ASSESSMENT ORDER WHEREIN T HE ABOVE DISALLOWANCE IS DISCUSSED AT PARAGRAPH 7.1 TO 7.7 ON PAGE 9 TO 17 O F THE ASSESSMENT ORDER. I HAVE ALSO PERUSED THE DETAILED WRITTEN SUBMISSIONS AND P APER BOOK FILED BY THE APPELLANT. THE FACTS OF THE CASE ARE THAT THE APPEL LANT HAS SOLD THE ZERO COUPON UNSECURED OPTIONALLY FULLY CONVERTIBLE REDEEMABLE D EBENTURES (OFCD) INVESTED IN M/S, VISHWAPRADHAN COMMERCIAL PRIVATE LIMITED (VCPL ) TO EMINENT NETWORK PRIVATE LIMITED (ENPL) FOR AN AMOUNT OF RS. 50 CROR ES WHOSE FACE VALUE WAS RS. 403.85 CRORES RESULTING INTO ASHORT TERM CAPITAL LO SS (STCL).THE SAID STCL HAS BEEN DISALLOWED BY THE AO ON THE GROUND THAT THE APP ELLANT HAS NOT FILED THE DOCUMENTARY EVIDENCES PERTAINING TO THE ABOVE TRANS ACTION AS WELL AS ON THE GROUND THAT THE TRANSACTION HAS BEEN DONE BETWEEN T HE PARTIES TO ACCOMMODATE EACH OTHER. DURING THE APPELLATE PROCEEDINGS, THE A PPELLANT HAS FILED ADDITIONAL EVIDENCES CONTAINING ALL THE DOCUMENTS PERTAINING T O THE TRANSACTIONS BETWEEN THE APPELLANT AND ENPL. THE SAID DOCUMENTS HAVE BEEN SE NT TO THE AO FOR SUBMITTING THE REMAND REPORT. THE AO HAS NOT COMMENTED ON THE DOCUMENTARY EVIDENCES ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 17 FILED BY THE APPELLANT PER SE. HOWEVER, I FIND THAT THE WHOLE THRUST OF THE AO WAS ON THE PRICES OF SHARES OF NDTV CLAIMED BY THE APPE LLANT ON THE DATE OF PURCHASE OF OFCD AS WELL AS ON THE DATE OF SALE OF OFCD. THE SAME ARE DEALT IN DETAIL IN SUBSEQUENT PARAGRAPHS. 5.5 THE FACTS EMERGING FROM THE ASSESSMENT OR DER, WRITTEN SUBMISSIONS AND PAPER BOOKS ARE THAT THE APPELLANT COMPANY HAS GIVE N LOAN OF RS. 403.85 CRORES TO VCPL DURING THE FINANCIAL YEAR 2009-10 ON 22.06.200 9 AS PER FACILITY AGREEMENT DATED 10.03.2010 WHEREIN IT WAS AGREED THAT THE APP ELLANT SHALL LEND AN AMOUNT NOT EXCEEDING RS. 500 CRORES TO VCPL AS ZERO COUPON OPTIONALLY CONVERTIBLE LOAN (ZCOCL). THE LOAN SHALL, AT THE OPTION OF THE LENDE R (I.E. APPELLANT), BE FULLY CONVERTIBLE INTO EQUITY SHARES OF THE COMPANY AT PA R. ON 24.11.2011, AS MUTUALLY AGREED BETWEEN THE APPELLANT AND VCPL, THE APPELLAN T WAS ALLOTTED 4,03,85,000 NUMBERS OF ZERO COUPON OPTIONALLY FULLY CONVERTIBLE REDEEMABLE DEBENTURES (OFCD) AT FACE VALUE OF RS. 100 EACH AGGREGATING TO RS. 403.85 CRORES. THE OFCD WAS ALLOTTED WITH AN UNDERSTANDING THAT THE APPELLA NT SHALL HAVE AN OPTION TO CONVERT EACH DEBENTURE INTO SUCH NUMBER OF EQUITY S HARES OF FACE VALUE OF RS. 10 EACH ARRIVED AT, BASED ON FAIR VALUE OF THE EQUITY SHARE TO BE DETERMINED BY AN INDEPENDENT VALUER AS ON THE DATE OF NOTICE OF CONV ERSION OR FACE VALUE OF EQUITY SHARES, WHICHEVER IS HIGHER. DURING THE YEAR UNDER CONSIDERATION, THE ABOVE DEBENTURES HAVE BEEN SOLD TO A COMPANY NAMELY ENPL, FOR AN AMOUNT OF RS. 50 CRORES RESULTING INTO STCL OF RS. 353.85 CRORES. 5.6 I HAVE PERUSED VARIOUS DOCUMENTS FILED BY THE APPELLANT BEFORE ME. THE SAID PAPERS HAVE BEEN SENT TO THE AO FOR HIS COMMENTS. T HE AO HAS NOT ADVERSELY COMMENTED ON VARIOUS DOCUMENTS FILED BY THE APPELLA NT PROVING THE GENUINENESS OF TRANSACTION. THEREFORE, 3 PRESUME THAT THE AO HA S NO COMMENTS ON THE DOCUMENTS SUBMITTED BY THE APPELLANT. THE APPELLANT HAS FILED AGREEMENT BETWEEN IT AND VCPL WHEREIN IT WAS AGREED THAT THE APPELLANT SHALL GIVE ZCOCL TO VCPL. SUCH ZCOCL HAS BEEN UTILIZED BY THE VCPL FOR REPAYING THE LOAN TAKEN BY IT FROM ICICI BANK WHICH LOAN HAS BEEN USED FOR THE PU RPOSES OF ACQUIRING THE SHARES OF RRPR AND RRPL ULTIMATELY HOLD THE SHARES OF NDTV . SIMILARLY, THE AGREEMENT ENTERED INTO BETWEEN THE VCPL AND RRPR HAS ALSO BEE N FILED WHERE IT WAS AGREED THAT THE RRPR SHALL BE HOLDING THE SHARES OF NDTV. IT IS NO BODY'S CASE THAT ALL THE MONEY HAS NOT BEEN ROUTED THROUGH BANKING CHANNEL. 5.7 THE IMPORTANT ASPECT TO BE CONSIDERED HERE IS THAT THE ENPL IS UN-RELATED PARTY OF THE APPELLANT THUS, LOOKING AT THE FACTS A ND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF DOCUMENTARY EVIDENCES, I AM OF THE VIE W THAT THE TRANSACTIONS ENTERED INTO BETWEEN THE APPELLANT AND ENPL ARE GENUINE TRA NSACTIONS. THE REASON STATED IN THE ASSESSMENT ORDER FOR MAKING THE ADDITION WAS THAT THE DOCUMENTARY EVIDENCE PERTAINING TO ABOVE TRANSACTIONS HAVE NOT BEEN FILED BEFORE HIM. HOWEVER, WHEN ALL THE DOCUMENTS PERTAINING TO THE T RANSACTION HAVE BEEN FILED BEFORE HIM DURING THE REMAND PROCEEDING, HE HAS NOT POINTED OUT ANY ADVERSE INFERENCE FROM THE DOCUMENTS FILED BEFORE HIM WHICH CAN EVEN REMOTELY SUGGEST THAT THE TRANSACTION WAS NOT A GENUINE ONE. THUS, AS FAR AS GENUINENESS OF THE TRANSACTION IS CONCERNED, IT IS PRESUMED THAT THE A O HAS NO COMMENT TO OFFER IN THE LIGHT OF DOCUMENTS FILED BY THE APPELLANT DURING TH E APPELLATE PROCEEDING. THUS, THE TRANSACTIONS ARE HELD AS GENUINE. ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 18 5.8 HOWEVER, I HASTILY ADD HERE THAT IN THE R EMAND REPORT, THE AO'S CONTENTION HAS BEEN THAT THE PRICES OF EQUITY SHARES OF NDTV ( WHICH IS UNDERLYING ASSET FOR VALUATION OF DEBENTURES) ON THE DATE OF PURCHASE AS WELL AS ON THE DATE OF SALE AS CLAIMED BY THE APPELLANT ARC NOT CORRECT AS PER HIS OWN RESEARCH. THE AO HAS SUBMITTED THAT THE PRICE OF SHARES OF NDTV ON PURCH ASE DATE WAS CLAIMED TO BE AT RS. 214.65 (I.E. SIXTY DAYS AVERAGE PRICE OF RS. 14 3.32 + PREMIUM FOR CONTROLLING STAKE OF RS. 71.33) AND THE PRICES ON THE DATE OF S ALE WAS CLAIMED AT RS. 26.58 (I.E. SIXTY DAYS AVERAGE PRICE OF RS. 35.55 - PREMIUM FOR CONTROLLING STAKE OF RS. 8.97); THESE PRICES ACCORDING TO THE AO WERE NOT CORRECT. ACCORDING TO AO'S RESEARCH, THE PRICES OF SHARES OF NDTV ON THE DATE ON PURCHASE WA S RS. 126.70 AND AS ON THE DATE OF SALE WAS RS. 44.8S/-. THUS, IN THE REMAND PROCEE DING, THE AO HAS EMPHASIZED THAT THE PRICE OF SHARES OF NDTV QUOTED BY THE APPE LLANT RESULTING INTO LOSSES ARE NOT CORRECT FOR QUOTING THE PRICES OF SHARES OF NDT V, THE SOURCE OF THE AO IS LISTED PRICE OF THE SHARES ON STOCK EXCHANGE AS ON 21/07/2 009 (I.E. PURCHASE DATE) AND 24.11.2011 (I.E. SALE DATE). 5.9 AS AGAINST THE ABOVE, THE APPELLANT HAS ST ATED THAT IT HAS TAKEN PRICES OF THE SHARES CONSIDERING THE AVERAGE PRICE OF LAST 60 DAY S. THE APPELLANT FURTHER SUBMITTED THAT AFTER CONSIDERING THE AVERAGE PRICE OF THE SHARES OF NDTV ON THE DATE OF PURCHASE AND SALE, THE SAME HAVE BEEN CHARG ED WITH PREMIUM (AT THE TIME OF PURCHASE) AND DISCOUNTED (AT THE TIME OF SALE). THE ABOVE CONTENTIONS OF THE APPELLANT HAVE BEEN CONSIDERED. HOWEVER, THE APPELL ANT COULD NOT JUSTIFY THE REASON BEHIND TAKING THE AVERAGE PRICE OF LAST 60 D AYS AS WELL AS JUSTIFICATION FOR CHARGING THE PREMIUM ON THE PURCHASE PRICE AND DISC OUNT THE PRICE AT THE TIME OF SALE. THEREFORE, THE CONTENTION OF THE APPELLANT FO R CHARGING THE PREMIUM OR DISCOUNTING SHARE PRICES WITHOUT THERE BEING ANY JU STIFICATION FOR THE SAME IS NOT ACCEPTED. AFTER HOLDING THAT THE PREMIUM CHARGED ON PURCHASE PRICE AND DISCOUNT ON SALE PRICE OF THE SHARES OF NDTV ARE NOT JUSTIFI ED BY THE APPELLANT, THE ONLY OPTION LEFT FOR DETERMINING THE SHARE PRICES ON THE DATE OF PURCHASE AND SALE SHALL BE AS PER THE PRICES INDICATED BY THE AO IN THE REM AND REPORT ACCORDINGLY, ON THE ISSUE OF PRICING OF SHARES OF NDTV ON THE DATE OF P URCHASE AND SALE, THE CONTENTION OF THE ASSESSING OFFICER AS MADE IN HIS REMAND REPO RT, IS ACCEPTED. CONSIDERING THE ABOVE PRICES, THE SHORT TERM CAPITAL LOSS WORKS OUT TO RS. 260,89,28,374/- AS AGAINST THE LOSS CLAIMED BY THE APPELLANT AT RS. 353,85,00,000/-WHICH ARE TABULATED AS UNDER: WORKING OF LOSS ON SALE OF DEBENTURES CONSIDERING T HE PRICE OF SHARES OF NDTV ON THE DATE OF PURCHASE AND SALES AS PER AO NO OF DEBENTURES ISSUED 40,385,000 NUMBER OF DEBENTURES CONVERTED [NO OF DEBENTURES 31,874,507 INTO ENQUIRY SHARES (AS AGREED] 403,85,00,000 /VALUE OF EQUITY SHARES RS. 126.70] ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 19 TOTAL COST 4,038,500,000 LESS: SALES CONSIDERATION 142,95,71,626 CONSIDERING THE PRICE OF SHARES OF NDTV ON THE DATE OF SALE [I.E. RS. 44.85 PER SHARE] W SHORT TERM CAPITA] LOSS ALLOWABLE TO 260,89,28,374 THE APPELLANT 5.10 THEREFORE, CONSIDERING THE PRICES QUOTED BY TH E AO, THE SHORT TERM CAPITAL LOSS WORKS OUT TO RS. 260,89,28,374/- AS AGAINST TH E LOSS CLAIMED BY THE APPELLANT AT RS.353,85,00,000/-. THUS, THE EXCESS LOSS CLAIME D BY THE APPELLANT OF RS. 92,95,71,626/- IS HEREBY DISALLOWED. THUS, THE SHOR T TERM CAPITAL LOSS CLAIMED BY THE APPELLANT IS RESTRICTED TO RS. 260,89,28,374/-. 5.11 WHILE ON THE SUBJECT, ON THE IDENTICAL FACT S AND CIRCUMSTANCES OF THE CASE, IN THE FOLLOWING CASES, THE HON'BLE MUMBAI ITAT HAS HE LD THAT LOSS ON TRANSFER OF LOAN IS A SHORT TERM CAPITAL LOSS. 1) SIEMENS NIXDORF INFORMATIONSSYSTEME GMBH VS DDIT (2016) 158 ITD 0480 (MUMBAI) FACTS OF THE CASE: THE ASSESSEE IS A NON-RESIDENT COMPANY GIVEN LOAN T O INDIAN COMPANY SIEMENS NIXDORF INFORMATION SYSTEMS LIMITED (SNISL, IN SHOR T). SNISL RAN INTO SERIOUS FINANCIAL TROUBLES THEREFORE, THE ASSESSEE ASSIGNED THIS DEBT TO SIEMENS AG FOR A CONSIDERATION LESSER THAN THE AMOUNT OF DEBT AND CL AIMED SHORT TERM CAPITAL LOSS. HOWEVER, THE ASSESSING OFFICER DECLINED THE DEDUCTI ON ON THE BASIS OF THE REASONING THAT (A) DEBTS NOT A CAPITAL ASSET UNDER SECTION 2(14); (B) THAT THE ASSIGNMENT OF THIS DEBT, OR THE RIGHT TO RECOVER TH E MONEY FROM SNISL, WAS NOT A TRANSFER UNDER SECTION 2(47). CIT (A) CONFIRMED THE ACTION OF THE AO WHICH HAS BEEN CHALLENGED BY THE ASSESSEE BEFORE THE ITAT. THE HON 'BLE ITAT HAS EXPLAINED IN DETAIL THE MEANING OF CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT AS WELL AS MEANING OF TRANSFER AS PER SECTION 2(47) OF THE ACT AND HELD AS UNDER AFTER CONSIDERING THE DECISION OF HON'BLE BOMBAY HIGH COU RT IN THE CASE OF CWT VS VIDUR V PATEL [215 ITR 30]: '9. THE NEXT THING THAT WE NEED TO DECIDE IS WHETHE R OR NOT THERE WAS A TRANSFER UNDER SECTION 2(47} OR NOT. SECTION 2(47) (I) PROVIDES THAT 'TRANSFER, IN RELATION TO A CAPITAL ASSET, INCLUDES (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET'. THERE IS NO DISPUTE T HAT THE RIGHTS TO RECOVER ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 20 THE MONEY FROM THE INDIAN ENTITY, WHICH IS WHAT THE CAPITAL ASSET IS IN THIS CASE, WAS SOLD TO SIEMENS FOR A CONSIDERATION OF EU RO 7,31,000. ALL THESE RIGHTS, UNDER THE ARRANGEMENTS WITH SIEMENS, BELONG ED THEREAFTER ONLY TO SIEMENS LIMITED. THE SALE OF TRADE DEBTS, OR EVEN L OANS, IS A PART OF DAY TO DAY TRADE AND COMMERCE. LEARNED CIT (A) HAS NOT EVE N RAISED ON ANY ISSUES ON THIS ASPECT OF THE MATTER; ALL THAT HE HAS TO SA Y IN THIS REGARD IS THAT SINCE AN ADVANCE GIVEN BY THE ASSESSEE DID NOT GIVE RISE TO ANY CAPITAL ASSET, THE TRANSFER OF THE ADVANCE, OR THE RIGHT TO RECOVER TH E ADVANCE SO GIVEN, DID NOT RESULT IN ANY TRANSFER OF CAPITAL ASSET AS WE HAVE HELD IT TO BE IN THE NATURE OF CAPITAL ASSET, THE OBJECTION RAISED BY THE CIT ( A) CEASES TO BE RELEVANT ANYWAY. 10. WE HAVE NOTED THAT THE RIGHT TO RECOVER THE MON EY FROM THE INDIAN ENTITY, IN THE LIGHT OF THE FINANCIAL DIFFICULTIES THAT THE INDIAN ENTITY WAS TRAVERSING THROUGH, WAS VALUED AT EURO 7,31,000. TH ERE IS NO DISPUTE ABOUT BONA FIDES OF THIS VALUATION. AS FOR THE VAGUE ALLE GATIONS ABOUT THE TAX EVASION MOTIVE, NOTHING COGENT HAS BEEN BROUGHT ON RECORD AT AFT. THE AUTHORITIES BELOW WERE IN ERROR IN FIGHTING SHY OF THE TAX COROLLARIES OF A LEGALLY VALID COMMERCIAL TRANSACTION, WITHOUT BRING ING H RECORD ANY MATERIAL TO DISPROVE ITS BONA FIDES OR TO SHOW THAT IT'S A SHAM TRANSACTION, JUST BECAUSE OF THEIR APPREHENSIONS ABOUT TAX MOTIV ES OF THE TRANSACTION. JUST BECAUSE A TRANSACTION RESULTS IN A TAX BENEFIT , UNLESS IT IS A SHAM TRANSACTION, IT CANNOT BE IGNORED. THE FACT REMAINS THAT THE RECOVERABLE FROM THE INDIAN ENTITY IS TRANSFERRED BY THE ASSESS EE AND THAT IT WAS TRANSFERRED FOR AN AMOUNT LESSER THAN THE COST AT W HICH IT IS ACQUIRED. THERE IS ALSO NO DISPUTE THAT IF THE CAPITAL LOSS I S TO BE ALLOWED, THE LOSS HAS TO BE SHORT TERM CAPITAL LOSS. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THERE IS NO JUSTIFICATION IN DECLINING THE SHORT TE RM CAPITAL LOSS CLAIMED BY THE ASSESSEE. 11. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARI NG IN MIND ENTIRETY OF THE CASE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE, AND DIRECT THE ASSESSING OFFICER TO ALLOW THE SHORT TERM CAPITAL LOSS, SUBJE CT TO NORMAL VERIFICATIONS, AS CLAIMED BY THE ASSESSEE. 12. IN THE RESULT, THE APPEAL IS ALLOWED. [BOLD IS EMPHASIS SUPPLIED US' 2) RELIANCE NATURAL RESOURCES LIMITED [ITA 8 47/MUM/2011]: '14.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. TH E ISSUE FOR CONSIDERATION BEFORE US, AS ARGUED BY BOTH THE PARTIES, IS WHETHE R OR NOT THE LEARNED CIT (A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF S TCL OF RS.17, 75, 67,418/- CLAIMED BY THE ASSESSEE. THE FACTS OF THE MATTER TH AT EMANATE FROM THE RECORD ARE THAT THE ASSESSEE HAD ADVANCED/LOANED AN AMOUNT OF RS.17,84,67,418/- TO M/S. RELIANCE PATALGANGA POWER LTD. ACCORDING TO THE ASSESSEE DUE TO DIFFICULTIES FACED, IT WAS DECIDED THAT THE SAID ADVANCE/LOAN BE ASSIGNED IN ORDER TO RECOVER WHATEVER WAS POSSIB LE AND ACCORDINGLY, THE SAME WAS ASSIGNED TO WESTERN POWER ALLIANCE LTD. FO R A CONSIDERATION OF ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 21 RS.9,00,000/~. THE ASSESSEE CLAIMED A STCL ON THIS TRANSACTION OF SALE OF A BOOK DEBT. 14.3.2 IN ASSESSMENT PROCEEDINGS, THE AO DISALLOWED THE ASSESSEE'S CLAIM ON THE GROUND THAT CAPITAL EXPENDITURE IS NOT ALLOW ABLE UNLESS SPECIFICALLY PROVIDED FOR IN THE ACT THOUGH HE ACCEPTED THE FACT THAT IT IS A CAPITAL LOSS. ON APPEAL, THE LEARNED CIT (A) DELETED THE DISALLOW ANCE MADE BY THE AO AND ALLOWED THE ASSESSEE'S CLAIM BY HOLDING AS UNDE R AT PARAS 4.3 AND 4.4 OF THE IMPUGNED ORDER: . 14.3.3 TAKING INTO CONSIDERATION THE FACTS AND CIRC UMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ISSUE FOR CONSIDERATION, I .E. WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEE'S CLAI M FOR STCL ON ASSIGNMENT OF LOAN TO M/S. WESTERN POWER ALLIANCE LTD. IS SQUAREL Y COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENC H OF THIS TRIBUNAL IN THE CASE OF NIXDORF LNFORMATIONSSYSTEME GMBH (SUPRA)............................................ 14.3.4 FOLLOWING THE DECISION OF THE COORDINATE BE NCH OF THIS TRIBUNAL IN THE CASE OF SIEMENS NIXDORF INFORMATIONSSYSTEME GMBH (2 016) 68 TAXMANN.COM 113 (MUMBAI-TRIB), WE UPHOLD THE ORDER OF THE LEARNED CIT(A) IN ALLOWING THE ASSESSEE'S CLAIM FOR STCL ON ASSIGN MENT OF LOAN TO M/S. WESTERN POWER ALLIANCE LTD. CONSEQUENTLY, GROUND NO . 4 OF REVENUE'S APPEAL IS DISMISSED' 5.11. RESPECTFULLY FOLLOWING THE DECISIONS OF HON'B LE JURISDICTIONAL ITAT, I AM OF THE VIEW THAT THE RIGHT TO RECEIVE THE LOAN GIVEN O R DEBT CONSTITUTES A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14] OF THE ACT AND THE ASSIGNMENT OF SUCH RIGHT TO ANOTHER PERSON CONSTITUTES TRANSFER WITHIN THE MEAN ING OF SECTION 2(47) OF THE ACT. THEREFORE, THE APPELLANT HAS RIGHTLY OFFERED THE LO SS ON ASSIGNMENT OF DEBT AS SHORT TERM CAPITAL LOSS. 5.12 I HAVE ALSO CONSIDERED THE CASE LAWS RELIED UPON BY THE AO IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. HOWEVER, THOSE CASES ARE DISTINGUISHABLE ON FACTS OF THE CASE AS ALREADY DONE BY THE APPELLANT IN THE WRITTEN SUBMISSIONS; HENCE, THEY ARE NOT APPLICABLE TO THE PRESENT CASE OF THE APPELLANT. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. THUS THE LD. CIT(A) RECOMPUTED THE LOSS FROM TR ANSACTION AT RS.260.89 CRORES THEREBY PARTLY UPHOLD THE DISAL LOWANCE AT RS.92.95 CRORES. THE LD. CIT(A) COMPUTED THE SAID LOSS OF RS.260.89 CRORES ON THE BASIS OF PRICES OF SHARES OF NDTV ON THE DATE OF PURCHASE AND SALE OF DEBENTURES. THE R EVENUE HAS CHALLENGED THE ORDER OF LD. CIT(A) ON THIS REDUCTIO N IN DISALLOWANCE BY THE AO WHILE ASSESSEE HAS ALSO FIL ED CROSS ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 22 OBJECTION AGAINST THE SUSTAINING OF DISALLOWANCE OF STCL OF RS.92.95 CRORES. 16. THE LD. D.R. WHILE RELYING HEAVILY ON THE ORDER OF AO ACCEPTED THAT IN THE REMAND REPORT CALLED FOR DURIN G THE APPELLATE PROCEEDINGS BY LD. CIT(A) ON THE ADDITION AL EVIDENCES FILED QUA SALE AND PURCHASE OF TRANSACTIONS, THE LD CIT(A) HAS DELETED THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS.260.89 CRORES, HOWEVER, RELIED HEAVILY ON THE GROUNDS OF A PPEAL AND ORDER OF AO. HOWEVER STRONGLY SUPPORTED AND RELIED ON THE ORDER OF LD CIT(A) IN RESPECT OF PARTLY SUSTAINING OF DIS ALLOWANCE ON ACCOUNT OF STCL AS RAISED BY THE ASSESSEE BY WAY OF CROSS OBJECTION CHALLENGING THE PART CONFIRMATION OF DISA LLOWANCE OF LOSS OF RS.92.95 CRORES BY LD. CIT(A). THE LD. D.R . SUBMITTED THAT LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT HAS SUSTAINED THE SAID LOSS WHILE THE LD. A.R., ON THE OTHER HAND, SUBMITTED THAT ASSESSEE HAS SOLD THE DEBENTURES TO M/S. EMINENT NETWORKS PVT. LTD. WHICH IS A THIRD PARTY A ND EVEN IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND ALSO IN THE REMAND PROCEEDINGS, THE AO HAS NOT DOUBTED THE GENUINENESS OF THE TRANSACTIONS WHEN THESE ADDITIONAL EVIDENCES WERE S ENT TO THE AO BY THE LD. CIT(A). THE LD. A.R. SUBMITTED THAT ONCE THE TRANSACTION WAS HELD TO BE GENUINE, THE SALE CONSID ERATION RECEIVED FROM THIRD PARTY THROUGH BANKING CHANNEL C OULD NOT BE INTERFERED WITH OR TINKERED PURSUANT TO THE PROVISI ONS OF SECTION 48 OF THE ACT UNLESS THE REVENUE IS ABLE TO BRING O N RECORD THE SUBSTANTIVE MATERIAL OR AUDUCE THE EVIDENCES TO PRO VE THAT DECLARED CONSIDERATION IS NOT REAL ONE AND THE ACTU AL CONSIDERATION IS DIFFERENT FROM WHAT HAS BEEN STATE D IN THE ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 23 DOCUMENTS. IN DEFENCE OF HIS ARGUMENTS THE LD. A.R . RELIED ON A SERIES OF DECISIONS WHICH ARE AS UNDER: 1. ARJUN MALHOTRA VS. CIT (2018) 92 TAXMAN.COM 338 (DELHI) 2. CIT VS. M/S. B. ARUN KUMAR & CO. ITA NO.2337 OF 2017 ORDER DATED 08.03.2016 3. CIT VS. SMT. NILOFER I. SINGH (2009) 176 TAXMANN 252 (DELHI) 4. CIT VS. SHIVAKAMI CO. (P.) LTD.(1986) 25 TAXMANN 80K (SC) 17. THE LD. A.R. SUBMITTED THAT IN THE PRESENT CASE THE PURCHASE CONSIDERATION IS AS PER THE AGREEMENT AND IS PAID THROUGH BANKING CHANNELS. BESIDES THE SALE OF DEBE NTURE IS BETWEEN THE TWO INDEPENDENT PARTIES AND CONSIDERATI ON IS DULY AGREED UPON AS PER THE AGREEMENT WHICH NEEDS TO BE ACCEPTED BY THE REVENUE AS THE REVENUE HAS FAILED TO BRING O N RECORD ANY SUBSTANTIVE EVIDENCE THAT CONSIDERATION ACCRUED TO THE ASSESSEE IS NOT THE REAL CONSIDERATION. THE LD. A.R. THEREF ORE HUMBLY PRAYED BEFORE THE BENCH THAT ORDER OF LD. CIT(A) TO THE EXTENT OF DELETING THE DISALLOWANCE OF STCL OF RS.260.89 CROR E MAY KINDLY BE UPHELD HOWEVER STRONGLY ARGUED THE SUSTAINING OF PART DISALLOWANCE TO THE TUNE OF RS. 92.95 CR AS THE SAM E CONTRARY TO THE FACTS ON RECORDS AND ALSO CONTRARY TO RATIO LAID DOWN BY THE JUDICIAL PRONOUNCEMENTS AS STATED ABOVE. THE LD AR ARGUED THAT ONCE THE TRANSACTION IS HELD TO BE GENUINE, T HE DEPARTMENT HAS NO POWER TO SUBSTITUTE THE VALUE OF TRANSACTION WITHOUT BRINGING ANY SUBSTANTIVE AND OBJECTIVE MATERIAL ON RECORD OR PROVE THE TRANSACTION TO BE NOT GENUINE. IN VIEW O F THESE FACTS AND CIRCUMSTANCES THE LD. A.R. PRAYED THAT THE PART DISALLOWANCE OF STCG OF RS.92.95 CR AS UPHELD BY TH E LD. CIT(A) MAY ALSO BE DELETED. ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 24 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THIS CASE THE AO HAS REJECTED THE STCL OF RS.353.85 CRORE RESULTING FROM SALE OF OFCDS OF M/S. VISHWAPRADHAN COMMERCIAL PRIVATE LTD TO EMINE NT NETWORK PVT LTD WHICH IS A THIRD PARTY FOR RS.50 CR ORES. THE FACE VALUE OF THESE DEBENTURES WAS RS.403.85 CRORES. WE NOTE THAT THIS TRANSACTION HAS TAKEN PLACE BETWEEN TWO PARTIE S WHO ARE NOT CONNECTED AT ALL. THE AO HAS MADE THE ADDITION ON THE GROUND THAT ASSESSEE HAS NOT FILED ANY EVIDENCES/EX PLANATIONS WITH REGARDS TO PURCHASE AND SALE OF THESE OFCDS AN D THEREFORE THE ENTIRE LOSS RESULTING FROM THIS TRANSACTION WAS DISALLOWED. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AFTER CAL LING FOR THE REMAND REPORT FROM THE AO ON THE ADDITIONAL EVIDEN CES FILED BY THE LD. COUNSEL OF THE ASSESSEE , RESTRICTED THE DI SALLOWANCE AT RS.92.95 CRORE THEREBY DELETING THE STCL TO THE E XTENT OF RS.260.89 CRORE . THE LD CIT(A) DELETED THE DISALLO WANCE TO THE TUNE OF RS. 260.89 CR ON THE BASIS OF AOS COMMENT S ON THE MARKET PRICE OF SHARES OF NDTV ON THE DATE OF PURCHA SE AND SALE RESPECTIVELY. THE LD CIT(A) WHILE SUSTAINING THE PA RT DISALLOWANCE ALSO REFERRED TO COMMENTS OF THE AO IN THE REMAND REPORT TO THE EFFECT THAT PURCHASE PRICE OF THE SHARES WERE INFLATED AND SALE PRICES WERE DEFLATED ARTIFICIALLY TO DECLARE HIGHER STCL. THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT ALLO WED THE LOSS TO THE EXTENT OF RS.260.89 CRORES WHICH WAS BASED U PON THE MARKET PRICE OF SHARES OF NDTV AND THUS REJECTED TH E LOSS TO THE EXTENT OF RS.92.95 CRORES. AFTER PERUSING THE ORDE RS OF AUTHORITIES INCLUDING REMAND REPORT, WE NOTE THAT G ENUINENESS OF THE TRANSACTION WAS NOT DOUBTED BY THE AUTHORITI ES BELOW. WE ALSO NOTE THAT THESE DEBENTURES WERE SOLD BY THE AS SESSEE TO ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 25 THIRD PARTY M/S. EMINENT NETWORK PVT. LTD. ON AGREE D TERMS AND THE CONSIDERATION WAS ALSO RECEIVED THROUGH BANKIN G CHANNELS. UNDER THESE CIRCUMSTANCES TO TINKER WITH THE CONSID ERATION OR TO SUBSTITUTE A HIGHER CONSIDERATION IN PLACE OF THE A GREED CONSIDERATION, THE REVENUE HAS TO BRING ON RECORD S OME SUBSTANTIVE AND CONCRETE EVIDENCES THAT ACTUAL CONS IDERATION IS NOT THE REAL CONSIDERATION AND ONLY IN THAT EVENT T HE AGREED CONSIDERATION CAN BE CHANGED TO REAL CONSIDERATION . IN THE PRESENT CASE THE CONSIDERATION ON WHICH THESE DEBEN TURES WERE SOLD WAS AGREED BETWEEN TWO PARTIES AND THERE IS NO EVIDENCE ON RECORD TO PROVE TO THE CONTRARY THAT ASSESSEE HAS R ECEIVED CONSIDERATION OVER AND ABOVE THE CONSIDERATION AS P ER THE SALE AGREEMENT. CONSIDERING THESE FACTS IN TOTALITY , W E ARE OF THE VIEW THAT THE CAPITAL GAIN UNDER SECTION 48 OF THE ACT CAN NOT BE ALTERED UNLESS THE EVIDENCES ARE THERE TO PROVE THA T ASSESSEE HAS RECEIVED MORE CONSIDERATION THAN THE DECLARED CONSI DERATION. THE CASE OF THE ASSESSEES CASE FIND SUPPORT FROM T HE FOLLOWING DECISIONS: IN THE CASE OF ARJUN MALHOTRA VS. CIT (SUPRA) THE H ONBLE DELHI HIGH COURT HAS HELD THAT FOR THE PURPOSE OF COMPUTING CAPITAL GAIN UNDER SECTION 48 THE ACTUAL CONSIDERATION SHALL BE CONSIDERED AND NOT THE MARKE T PRICE. SIMILARLY IN THE CASE OF CIT VS. B. ARUN KUMAR AND CO. (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT WHERE COMPUTATION OF MARKET GAIN IS GOVERNED BY SEC TION 48 OF THE ACT BUT ONLY FULL VALUE OF THE CONSIDERAT ION RECEIVED/ACCRUED TO THE ASSESSEE SHALL BE CONSIDERE D AND THERE IS NO QUESTION OF SUBSTITUTING THE SAME UNLES S ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 26 REVENUE PROVES THAT AMOUNT DISCLOSED BY THE ASSESSE E WAS LESS THAN BUT HAS BEEN RECEIVED BY IT OR WHAT H AD ACCRUED TO IT ON SALE OF SHARES. IN THE CASE OF CIT VS. SMT. NILOFER I. SINGH (SUPRA ) IT HAS BEEN HELD THAT FULL VALUE OF CONSIDERATION THAT HAS BEEN USED IN SECTION 48 DOES NOT HAVE ANY REFERENCE TO T HE MARKET VALUE BUT ONLY TO THE CONSIDERATION REFERRED TO ANY SALE DEED AS PER THE SALE PRICE OF THE ASSETS WHICH HAVE BEEN TRANSFERRED. IN THE CASE OF CIT VS. SHIVAKAMI CO. (P.) LTD. (SUP RA) THE HONBLE SUPREME COURT HAS HELD AS UNDER: THE FIRST PROVISO TO SECTION 12B(2) PROVIDES 'FULL VALUE OF THE CONSIDERATION FOR WHICH THE SALE, EXCHANGE, RELINQUISHMENT OR TRA NSFER IS MADE' TO BE TAKEN AS THE BASIS FOR THE COMPUTATION OF THE CAPIT AL GAINS. THEREFORE, UNLESS THERE IS EVIDENCE THAT MORE THAN WHAT WAS STATED WA S RECEIVED, NO HIGHER PRICE CAN BE TAKEN TO BE THE BASIS FOR COMPUTATION OF CAPITAL GAINS. THE ONUS IS ON THE REVENUE THE INFERENCE MIGHT BE DRAWN IN C ERTAIN CASES BUT TO COME TO A CONCLUSION THAT A PARTICULAR HIGHER AMOUNT WAS IN FACT RECEIVED MUST BE BASED ON SUCH MATERIAL FROM WHICH SUCH AN IRRESISTI BLE CONCLUSION FOLLOWS. THE PROVISO HELPS OR ENABLES THE DEPARTMENT BY PROV IDING A WAY TO DETERMINE THE MARKET VALUE. BUT THE PROVISO IS APPL ICABLE ONLY WHERE THE FULL VALUE FOR THE CONSIDERATION HAS NOT BEEN STATE D. IN K.P. VARGHESE V. ITO [1981] 131 ITR 597, THE SUPREME COURT HAS HELD THAT THE SECOND INGREDIENT THAT IS TO SAY THAT THE WORD 'DECLARED' IN SUB-SECT ION (2) OF SECTION 52 IS VERY ELOQUENT AND REVEALING. IT CLEARLY INDICATES THAT T HE FOCUS OF SUB-SECTION (2) IS ON THE CONSIDERATION DECLARED OR DISCLOSED BY TH E ASSESSEE AS DISTINGUISHED FROM THE CONSIDERATION ACTUALLY RECEI VED BY HIM AND IT CONTEMPLATES A CASE WHERE THE CONSIDERATION RECEIVE D BY THE ASSESSEE IN RESPECT OF TRANSACTION IS NOT TRULY DECLARED OR DIS CLOSED BY HIM BUT IS SHOWN AT A DIFFERENT FIGURE. CAPITAL GAINS IS INTENDED TO TAX THE GAINS OF AN ASSESSEE, NOT WHAT AN ASSESSEE MIGHT HAVE GAINED. 19. CONSIDERING THE FACTS OF THE ASSESSEES CASE IN THE LIGHT OF THE RATIO LAID DOWN IN THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING T HE DISALLOWANCE TO THE EXTENT OF RS.92.95 CRORES. WE ARE THEREFORE INCLINED TO MODIFY THE FINDINGS OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE FULL SHORT TERM CAPITAL LOSS OF RS.353 .95 CRORES. ITA NO.1205/M/2019 CO NO.257/M/2019 M/S. SHINANO RETAIL PVT. LTD. 27 CONSEQUENTLY THE GROUND NO. 5 TO 8 OF THE REVENUE A RE DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS AL LOWED. 20. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.01.2021. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 08.01.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.