Shree Wasudeo Finance Pvt. Ltd., Pune V. Addl. CIT, Pune

ITA 1095/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9775 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAURATH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1095/PN/2010 (ASSESSMENT YEAR: 2006-07) SHREE WASUDEO FINANCE PVT. LTD., KOHINOOR ESTATE OPP. BAJAJ GARDEN WAKDEWADI, PUNE-411 003 PAN AACCS 5975 P .. APPELLANT VS. ADDL. CIT RANGE 6, PUNE RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI J.S. NAURATH DATE OF HEARING: 22-11-2012 DATE OF PRONOUNCEMENT: 26-11-2012 ORDER PER G.S. PANNU, A.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III PUNE D ATED 24-5-2010 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 11-12-2 008 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSM ENT YEAR 2006-07. 2. IN THIS APPEAL, ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT ESSENTIALLY THE GRIEVANCE IS CONFINED TO DENIAL OF CAPITAL LOSS OF RS. 6,46,16,492/- CLAIMED IT ON ACCOUNT OF DIMINUTION IN THE VALUE OF INVESTMENTS. 3. IN BRIEF, THE FACTS ARE THAT THE ASSESSEE IS A C OMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956 AND IS, INTER ALIA, ENGAGED IN THE BUSINESS OF FINANCING, L ENDING MONIES TO COMPANIES, FIRMS, INVESTMENTS IN SHARES, ETC. FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION, IT WAS NOTICED THAT THE A SSESSEE HAD CLAIMED A LONG TERM CAPITAL LOSS OF RS. 1,51,05,000 /- AND SHORT TERM 2 ITA NO. 1095/PN/2010 WASUDEO FINANCE PVT.LTD. A.Y. 2006-07 CAPITAL LOSS OF RS. 4,95,11,462/- TOTALLING TO RS. 6,46,16,492/- WITH RESPECT TO 68,01,736 EQUITY SHARES HELD BY IT IN AN OTHER CONCERN VIZ. SANJEEVANI REMEDIES PVT. LTD. THE ASSESSEE-COMPANY HAD PURCHASED IN EARLIER YEARS 68,01,736 EQUITY SHARES WITH FACE VALUE OF RS. 10/- PER SHARE OF M/S. SANJEEVANI REMEDIES P VT. LTD. DURING THE YEAR UNDER CONSIDERATION, THE INVESTEE COMPANY REDUCED THE FACE VALUE OF ITS SHARES FROM RS. 10/- EACH TO RS. 0.50 EACH ON ACCOUNT OF CONTINUING LOSSES. AS A RESULT, THE ASS ESSEE ALSO RE- STATED ITS INVESTMENT OF 68,01,736 EQUITY SHARES IN M/S. SANJEEVANI REMEDIES PVT. LTD., AT RS. 0.50 PER SHARE INSTEAD O F RS. 10/- PER SHARE AND ACCORDINGLY IT CLAIMED A LOSS OF RS. 6,46 ,16,492/, (PARTLY LONG TERM CAPITAL LOSS OF RS. 1,51,05,000/- AND PAR TLY SHORT TERM CAPITAL LOSS OF RS. 4,95,11,462/-) ON ACCOUNT OF DI MINUTION IN VALUE OF ITS INVESTMENTS. THE AFORESAID LOSS WAS DECLARED U NDER THE HEAD CAPITAL GAINS AND PARTLY SET OFF AGAINST OTHER I NCOMES AND THE BALANCE WAS CARRIED FORWARD TO THE SUBSEQUENT YEARS . THE ASSESSING OFFICER HOWEVER, DENIED THE LOSS CLAIMED ON DIMINUTION IN VALUE OF SHARES HELD IN THE INVESTEE COMPANY AS ACC ORDING TO HIM, THERE WAS NO TRANSFER ENVISAGED IN THE IMPUGNED T RANSACTION WITHIN THE MEANING OF SEC. 2(47) OF THE ACT. THE CIT(A) H AS ALSO UPHELD THE STAND OF THE ASSESSEE AGAINST WHICH, ASSESSEE I S IN FURTHER APPEAL BEFORE US. 4. BEFORE US, IT WAS A COMMON GROUND BETWEEN THE PA RTIES THAT AN IDENTICAL ISSUE HAS BEEN THE SUBJECT MATTER OF C ONSIDERATION BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BE NNETT COLEMAN AND CO. LTD. VS. ADDL. CIT 141 TTJ 777 (SB) (MUM), WHEREIN BY A MAJORITY OPINION, IT HAS BEEN HELD THAT THE LOSS AR ISING TO A SHAREHOLDER ON ACCOUNT OF REDUCTION IN SHARE CAPITA L OF THE INVESTEE COMPANY CANNOT BE SUBJECTED TO THE PROVISIONS OF SE C. 45 R.W.S. 48 OF THE ACT AND ACCORDINGLY SUCH LOSS IS NOT ALLOWA BLE AS A CAPITAL 3 ITA NO. 1095/PN/2010 WASUDEO FINANCE PVT.LTD. A.Y. 2006-07 LOSS. IN TERMS OF THE AFORESAID DECISION, THE STAN D OF THE REVENUE IS LIABLE TO BE UPHELD. IN THE ABSENCE OF ANY DECISIO N TO THE CONTRARY BROUGHT TO OUR NOTICE, FOLLOWING THE RATIO OF THE D ECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BENNET T COLEMAN & CO. LTD. (SUPRA) WE HEREBY AFFIRM THE ORDER OF THE CIT( A) AND ACCORDINGLY, ASSESSEE HAS TO FAIL IN THIS APPEAL. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER 2012. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED:26 TH NOVEMBER 2012 ANKAM COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT (A)-III PUNE 4. THE CIT- III PUNE 5. THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T. A.T., PUNE. BY ORDER //TRUE COPY// SR. P.S. I.T.A.T., PUNE