DIRECT MEDIA DISTRIBUTION VENTURES PVT. LTD.,MUMBAI V. ITO , RG-6(2)(3)(PRESENT IN CHARGE ACIR-RG-6(2)(2), MUMBAI

MA 287/MUM/2023

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The case involves Direct Media Distribution Ventures Pvt. Ltd., which filed a Miscellaneous Application under section 254(2) of the Income-tax Act, 1961, seeking rectification of an order passed by the Income Tax Appellate Tribunal. The original dispute arose from the taxability of shares received as a gift, which were valued at 3578,49,12,600. The Tribunal had previously upheld the deletion of this addition, agreeing that the receipt of shares as a gift was not taxable under section 56(1) of the Income-tax Act. However, the assessee contested the language used in the Tribunal's order, which seemed to affirm observations made by the Commissioner of Income-tax (Appeals) regarding the tax implications for the transferor companies, a matter not directly addressed in the Tribunal's original decision. The Departmental Representative argued that the Tribunal's observations were directory and did not constitute a review of the order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837822 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 03-04-2023
• Other Referred Cases: ITO vs. 25FPS Media Pvt. Ltd. (ITA No. 2798/Mum/2018)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: JAY BHANUSALI
• Keywords: Capital receipt; Gift; Rectification of order

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER MA No.287/Mum/2023 (Arising out of ITA No.3084/Mum/2018 (Assessment Year :2012-13) Direct Media Distribution Ventures Pvt. Ltd. C-606, Gaurav Woods Phase-II, C Wing Near Kankia, Close to Mayor Bunglow Mira Road East Thane Vs. ACIT, Range-6(2)(2) Mumbai PAN/GIR No.AADCD1940Q (Appellant) .. (Respondent) Assessee by Shri Jay Bhanusali Revenue by Shri Surendra Mohan, Sr. DR Date of Hearing 30/01/2026 Date of Pronouncement 16/02/2026 आदेश / O R D E R PER AMIT SHUKLA (J.M): By way of the present Miscellaneous Application filed under section 254(2) of the Income-tax Act, 1961, the applicant–assessee seeks rectification of the order passed by this Tribunal dated 31.01.2023, arising out of ITA No. Printed from counselvise.com MA No. 287/Mum/2023 Direct Media Distribution Ventures Pvt. Ltd., 2 3084/Mum/2018 for Assessment Year 2012–13, specifically in relation to the findings and concluding expression recorded in paragraph 32 of the said order. The grievance of the assessee is confined to the manner of articulation employed by the Tribunal while disposing of the grounds raised by the assessee and seeks limited rectification so as to bring the concluding expression in consonance with the true import and tenor of the Tribunal’s adjudication. 2. In the Miscellaneous Application, the assessee has, inter alia, submitted that the learned Commissioner of Income-tax (Appeals), while adjudicating the appeal, had made certain observations to the effect that the restructuring involving transfer of shares of Dish TV constituted a colourable device and had directed the Assessing Officer to examine the taxability of such transactions in the hands of the transferor companies. The assessee had challenged such observations before the Tribunal on the ground that these observations were beyond the jurisdictional scope of section 251, inasmuch as the appeal before the learned CIT(A) pertained only to the taxability of receipt of shares in the hands of the assessee and did not extend to adjudication of tax implications in the hands of transferor companies. 3. The assessee had further submitted that this precise issue stood covered by the decision of the co-ordinate Bench Printed from counselvise.com MA No. 287/Mum/2023 Direct Media Distribution Ventures Pvt. Ltd., 3 of the Tribunal in the case of ITO vs. 25FPS Media Pvt. Ltd. (ITA No. 2798/Mum/2018), a group concern, wherein under similar restructuring, shares were received without consideration, and the learned CIT(A) had made analogous observations regarding alleged colourable device. The Tribunal, in that case, had held that such extraneous observations were not justified. It was thus contended that the Tribunal, while adjudicating the appeal of the assessee, ought not to have affirmed or sustained such observations in a manner capable of being construed as confirmation of any adverse inference against transferor companies, especially when the Tribunal had already upheld the position that receipt of shares by the assessee was in accordance with law. 4. Per contra, the learned Departmental Representative submitted that there was no mistake apparent from record warranting rectification within the limited scope of section 254(2). He submitted that the Tribunal, after due consideration of the material on record and submissions of both parties, had consciously examined the observations of the learned CIT(A) and had upheld the same only to the limited extent of holding that such observations were directory in nature and within the permissible scope of section 251. He submitted that any modification of the language or conclusion would amount to a review of the order, which is beyond the scope of rectification. Printed from counselvise.com MA No. 287/Mum/2023 Direct Media Distribution Ventures Pvt. Ltd., 4 5. We have carefully heard the rival submissions, perused the Miscellaneous Application, and examined the order of the Tribunal sought to be rectified. The jurisdiction conferred under section 254(2) is limited to rectification of mistakes apparent from record, which are manifest, patent, and self- evident. The Tribunal does not possess power of review under this provision and cannot revisit its conclusions on merits under the guise of rectification. 6. In the present case, it is an undisputed position that the appeal before the Tribunal arose from deletion of addition of ₹3578,49,12,600/-, representing the market value of shares received by the assessee as gift. This Tribunal, after elaborate consideration, had categorically upheld the order of the learned CIT(A) deleting the addition, holding that receipt of shares as gift constituted a capital receipt and was not taxable under section 56(1). The Tribunal had further observed that since the shares pertained to a listed company, the provisions of section 56(2)(viia) were not applicable, and further, the provisions of section 28(iv) were also not attracted as the receipt did not arise from business or profession. 7. While adjudicating the grounds raised by the assessee, the Tribunal had also examined the observations made by the learned CIT(A) regarding possible tax implications in the Printed from counselvise.com MA No. 287/Mum/2023 Direct Media Distribution Ventures Pvt. Ltd., 5 hands of transferor companies. Upon careful analysis, the Tribunal had observed that such observations were merely enabling or directory in nature and were confined to directing the Assessing Officer to examine taxability in accordance with law and did not amount to any conclusive determination of tax liability. The Tribunal had thus held that there was no reason to interfere with such observations, as they did not prejudice the rights of the assessee nor constituted any adjudication beyond the factual findings placed on record. 8. However, it has been pointed out that the concluding expression employed in paragraph 32 of the Tribunal’s order states that “grounds taken by the assessee are dismissed.” Upon careful perusal of paragraph 32 in the context of the reasoning recorded therein and the adjudication as a whole, it is evident that the Tribunal had primarily clarified the nature and scope of the observations of the learned CIT(A) and had not rendered any adverse adjudication against the assessee on the substantive issue of taxability, which stood decided in favour of the assessee. 9. The learned counsel for the assessee had, in the course of hearing of the Miscellaneous Application, alternatively submitted that the concluding expression in paragraph 32 may be suitably modified so as to reflect that the grounds raised by the assessee were disposed of in terms of the Printed from counselvise.com MA No. 287/Mum/2023 Direct Media Distribution Ventures Pvt. Ltd., 6 observations made therein, rather than dismissed simpliciter, so as to avoid any unintended ambiguity or misinterpretation of the Tribunal’s findings. 10. Having carefully examined paragraph 32 of the Tribunal’s order in the light of the entire reasoning and adjudicatory intent reflected therein, we find that the observations of the Tribunal were clarificatory in nature and were intended to explain that the observations of the learned CIT(A) did not constitute any conclusive adjudication against the assessee. In order to bring the concluding expression in paragraph 32 in complete harmony with the reasoning and intent of the Tribunal as discernible from the order as a whole, and to avoid any unintended ambiguity, it is considered appropriate, in exercise of rectificatory jurisdiction under section 254(2), to clarify that the concluding portion of paragraph 32 shall be read as “grounds raised by the assessee are disposed of in the manner indicated above, in view of the observations made herein”, instead of the expression “grounds taken by the assessee are dismissed.” 11. Subject to the aforesaid limited rectification, the order of the Tribunal dated 31.01.2023 remains unaltered in substance and effect. Printed from counselvise.com MA No. 287/Mum/2023 Direct Media Distribution Ventures Pvt. Ltd., 7 12. In the result, the Miscellaneous Application filed by the assessee is allowed in the limited manner indicated above. Order pronounced on 16th February, 2026. Sd/- (VIKRAM SINGH YADAV) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 16/02/2026 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Printed from counselvise.com "