RAJAN LALL, MUMBAI V. ACIT (OSD) 1 CEN RG 7, MUMBAI

ITA 1015/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8312 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 04-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2013
• Court: TRIBUNAL
• Department Lawyers: LD CITA ERRED IN CONFIRMING
• Keywords: Capital asset; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.1015/MUM/2013 ASSESSMENT YEAR: -2009-10 RAJAN LALL 154-B, GURU GOVIND SINGH INDUSTRIAL ESTATE, GOREGAON, (E) MUMBAI 400 063. VS.` ACIT (OSD)-1, CENT RANGE- 7 PAN:- AAGPL1269G APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 7.11.2012 OF CIT(A) FOR A.Y. 2009-10. THE ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROUNDS IN THIS APPEAL:- 1 THE LD. CIT(A) ERRED IN CONFIRMING THE RECALCULA TION OF LONG TERM CAPITAL LOSS ON SALE OF 3,67,400 SHARES OF ITL INDUSTRIES LTD. B Y TAKING SELLING PRICE AT RS. 4.51 INSTEAD OF RS. 21 AS DECLARED BY THE APPELLANT . 2. THE LD. CIT(A) ERRED IN CONFIRMING THE TREATMENT OF DIFFERENCE BETWEEN SALE VALUE AND BOOK VALUE OF RS. 3,67,400/- ITL INDUSTRI ES LTD.S SHARES OF RS. 60,58,426/- AS INCOME FROM OTHER SOURCES. 2. GROUND NO. 1 IS REGARDING ADDITION ON ACCOUNT OF RECALCULATION OF LONG TERM CAPITAL LOSS BY TAKING THE SALE PRICE OF SHARE OF ITL INDUSTRIES LTD AS PER BOOK VALUE OF THE COMPANY. DURING THE YEAR, THE ASS ESSEE SOLD 3,67,400 SHARES OF ITL INDUSTRIES LTD AT THE RATE OF RS. 21 PER SHA RE. THE ASSESSEE COMPUTED THE ASSESSEE BY SHRI PARESH SAPARIA REVENUE BY SHRI LOVE KUMAR DATE OF HEARING 04.12.2014 DATE OF PRONOUNCEMENT 10.12.2014 ITA NO.1015/MUM/2013 ASSESSMENT YEAR: -2009-10 2 | P A G E CAPITAL LOSS AT RS. 5,40,461/- AFTER TAKING THE BEN EFIT OF INDEXED COST OF ACQUISITION. THE ASSESSING OFFICER TOOK THE SALE PR ICE OF PER SHARE AT RS. 4.51 INSTEAD OF RS. 21 AS DECLARED BY THE ASSESSEE. ACCO RDINGLY, THE ASSESSING OFFICER COMPUTED THE CAPITAL LOSS OF RS. 87,576/- A ND THE DIFFERENCE BETWEEN THE SALE PRICE DECLARED BY THE ASSESSEE AND SALE PR ICE ADOPTED BY THE ASSESSEE WAS TREATED AS INCOME FROM OTHER SOURCES AT RS. 60, 58,426/- ON APPEAL, THE CIT(A) HAS CONFIRMED THE ACTION OF A SSESSING OFFICER. 3. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AUTHORIZED REPRESENTATI VE OF THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE IS CONSIDERED AND DECIDED BY THE TRIBUNAL IN THE NUMBER OF DECISIONS. HE HAS RELIED UPON THE FOLLOWING DECI SIONS:- 1 INTER TRIM LINING FABRICS P. LTD. V. ACIT ITA NO. 8 61/MUM/2013 2 00ACIT VS. B. ARUNKUMAR & CO. ITA NO. 8272/M/2011 3 M/S MORARJEE TEXTILES LTD. VS. ACIT ITA NO. 2077/MU M/2009 4 SIL EMPLOYEES WELFARE TRUST VS. JCIT 27 TAXMANN.CO M 214 4. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS PERUSAL OF RELEVANT MATERIAL ON RECORD AND DECISIONS RELIED UPON BY THE LD. AUTH ORIZED REPRESENTATIVE, WE NOTE THAT THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW ON THE ISSUE IN SERIES OF DECISIONS. IN THE CASE OF SIL EMPLOYEES WELFARE TRU ST VS. JCIT (54 SOT 551), THE TRIBUNAL WHILE DEALING WITH AN IDENTICAL ISSUE HAS HELD IN PARA 7 TO 9 AS UNDER:- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREF ULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE IS AN EMPLOYEES' W ELFARE TRUST OF THE EMPLOYEES OF M/S STERLITE INDUSTRIES (I) LTD. THERE IS NO DIS PUTE THAT THE SHARES WERE ALLOTTED BY THE COMPANY TO THE ASSESSEE INITIALLY @ RS. 180 PER SHARE AND DUE TO BONUS ISSUE, THE COST PRICE OF THE SHARES WERE REDUCED TO RS. 90 PER SHARE. DURING THE YEAR UNDER CONSIDERATION, AS PER THE DIRECTIONS OF THE COMPANY, 3209 SHARES WERE ITA NO.1015/MUM/2013 ASSESSMENT YEAR: -2009-10 3 | P A G E TRANSFERRED TO 15 DIFFERENT PARTIES IN TWO LOTS. TH E ASSESSEE RECEIVED FROM THE COMPANY A SUM OF RS. 2,88,620/- @ RS. 90 PER SHARE. THERE IS NO ALLEGATION EITHER BY THE ASSESSING OFFICER IN THE REMAND REPORT OR BY THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE UNDERSTATED SALE CO NSIDERATION; BUT ADDITION HAS BEEN MADE BY TAKING INTO CONSIDERATION THE MARKET P RICE OF THE SHARES. 8. THERE IS NOTHING ON RECORD AND THERE IS NO INDICAT ION OF ANY MATERIAL TO DEMONSTRATE THAT THE ASSESSEE HAS RECEIVED MORE CON SIDERATION THAN WHAT HAS BEEN SHOWN FROM THE SALE OF SHARES IN QUESTION. WHEN THE RE IS NO INDICATION OF UNDERSTATEMENT OF SALE CONSIDERATION BY THE ASSESSE E, THEN THE MARKET VALUE OF THE SHARES ON THE DATE OF TRANSFER CAN NOT BE CONSTRUED AS FULL VALUE OF CONSIDERATION UNDER SECTION 48 OF THE I T ACT. THE EXPRESSION 'FU LL VALUE' AS PER SECTION 48 MEANS THE WHOLE PRICE RECEIVED OR ACCRUING, AS A RESULT O F TRANSFER OF CAPITAL ASSET WITHOUT ANY DEDUCTION WHATSOEVER AND THEREFORE, FOR COMPUTA TION OF CAPITAL GAINS, DEDUCTIONS ARE PERMITTED AS PER SECTION 48. HENCE, SECTION 48 DOES NOT HAVE ANY REFERENCE TO THE MARKET VALUE OF THE ASSET; BUT IT REFERS ONLY TO THE CONSIDERATION RECEIVED OR ACCRUING AS AGREED BETWEEN THE PARTIES TO THE TRANSACTION. WHEN THE BONA FIDE OF THE TRANSACTION AND THE ACTUAL SAL E CONSIDERATION RECEIVED BY THE ASSESSEE HAS NOT BEEN SUSPECTED, THEN FOR THE PURPO SE OF COMPUTATION OF CAPITAL GAINS, THE FULL VALUE OF CONSIDERATION CAN NOT BE S UBSTITUTED BY MARKET PRICE OR VALUE OF THE CAPITAL ASSET AS ON THE DATE OF TRANSF ER. IT IS NOT A CASE OF THE ASSESSING OFFICER IN THE REMAND REPORT OR THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE HAS UNDERSTATED THE SALE CONSIDERATION AND ACTUALLY RECEIVED MORE SALE CONSIDERATION THAN SHOWN BY THE ASSESSEE. THEREFORE , IN THE ABSENCE OF ANY INFERENCE BY THE COMMISSIONER OF INCOME TAX (APPEAL S) THAT THE ASSESSEE HAS CONCEALED THE ACTUAL SALE CONSIDERATION, THE CAPITA L GAIN CANNOT BE COMPUTED BY TAKING THE FULL VALUE CONSIDERATION AS MARKET VALUE AS ON THE DATE OF TRANSFER. ON THIS POINT, THERE ARE SERIES OF DECISIONS OF HONOUR ABLE SUPREME COURT AS WELL AS HONOURABLE HIGH COURT AS RELIED UPON BY THE LEARNED A.R. OF THE ASSESSEE. 9. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE MARKET PRICE OF THE SHARES CANNOT BE TAKEN AS FULL VALUE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN AS PER SEC. 48 WHEN THERE IS NO UNDER STATEMENT OF SALE CONSIDERATION. 6. SIMILAR VIEW HAS BEEN TAKEN IN ALL OTHER DECISIO NS RELIED UPON BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT FOR THE A.Y. UNDER CONSIDERATION THE AMENDED PROVISIONS OF THE COMPUTATION OF CAPITAL GA IN U/S 50D IS NOT APPLICABLE, THEREFORE, BY FOLLOWING THE DECISIONS O F THIS TRIBUNAL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST TH E REVENUE. 7. GROUND NO. 2 IS REGARDING TREATING THE DIFFERENCE OF SALE PRICE AND SALE CONSIDERATION ADOPTED BY THE ASSESSING OFFICER AS I NCOME FROM OTHER SOURCES ITA NO.1015/MUM/2013 ASSESSMENT YEAR: -2009-10 4 | P A G E IS A CONSEQUENTIAL TO THE GROUND NO. 1. IN VIEW OF OUR FINDING IN GROUND NO. 1 THIS GROUND OF ASSESSEES APPEAL BECOMES INFRUCTUOU S. 8. IN THE RESULT APPEALS OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF DECEMBER 2014. SD/- SD/- (N.K.BILLAIYA) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 10-12-2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI