ACIT, Central Circle - XX, Kolkata, Kolkata V. M/s. Himadri Dyes & Intermediates Ltd, Kolkata

ITA 1252/KOL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70410 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 29-08-2012
• Court: TRIBUNAL
• Department Lawyers: K K DAS LD JCITSR
• Keywords: Share purchase agreement

Judgement Text

, B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B KOLKATA ( ) BEFORE . . , SHRI R.S. SYAL,, ACCOUNTANT MEMBER /AND ! ' 1 $% , SHRI GEORGE MATHAN, JUDICIAL MEMBER & / ITA NO. 1252/KOL/2012 ASSESSMENT YEAR : 200 7 - 08 A.C.I.T, CENT. CIR,XX, KOLKATA - % - -VERSUS -. M/S. HIMADRI DYES & INTERMEDIATES LTD PAN:AAACH7634Q ( $( / APPELLANT ) ( )*$( / RESPONDENT ) $( , /FOR THE APPELLANT / SHRI K.K. DAS, LD. JCIT/SR. DR )*$( , / FOR THE RESPONDENT: / SHRI SAJJAN KUMAR TULSIYAN, ADVOCATE,LD. AR -%. / 0 /DATE OF HEARING : 20-11-2013 12 / 0 /DATE OF PRONOUNCEMENT: 21/11/2013 3 / ORDER ! ' 1 $% , SHRI GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), CENTRAL-III IN APPEAL NO. 132 /CC-XX//CIT(A)C-III/2009-10/KOL DATED 22.06.2011 FOR THE ASSESSMENT YEAR 2007-08. . 2. SHRI K.K. DAS, LEARNED. JCIT/SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI SAJJAN KUMAR TULSIYAN, ADVOCATE, LEARNED AUTHORISED REPRESENTATIVE REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL IN ITA NO. 1252/KOL/201 2 A.Y 2007-08, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- THE FOLLOWING GROUNDS OF APPEAL ARE APPROVED FOR FI LING OF APPEAL TO ITAT, KOLKATA AGAINST THE ORDER DATED 22.06.20 12 OF THE COMMISSI ONER OF INCOME-TAX(APPEALS), CENTRAL, III, KOLKATA IN APPEAL NO. 132/CC-XX/CIT(A )C-IIL/2009-10/KOL. IN THE CASE OF M/S. HIIMADRI DYES & INTERMEDIATES LTD. FOR THE A. YR. 2007-08: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. C.1.T.(A) ERRED BOTH IN FACTS AS WELL AS IN LAW IN ALLOWING THE ASSESSEE S APPEAL BY DELETING THE ADDITION OF RS.26,13,600/- MADE BY THE A.O. ON ACCOUNT OF LO SS IN SHARE TRADING, WITHOUT APPRECIATING THE TOTALITY OF FACTS OF THE CASE AND MATERIALS BROUGHT ON RECORD ITA NO. 1252/KOL/2012-B-GM 2 DURING THE COURSE OF ASSESSMENT TO CONCLUDE THAT TH E SHARES WERE PURCHASED ON A LATER DATE THAN THAT OF THE DATE AS CLAIMED BY \ TH E ASSESSEE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. C.LT.(A) ERRED BOTH IN FACTS AS WELL AS IN LAW IN ALLOWING THE ASSESSEES APPEAL BY DELETING THE ADDITION OF RS.26,13,600/- MADE BY THE A.O. ON ACCOUNT OF LOSS IN SHARE TRADING WITHOUT APPRECIATING THE FINDINGS OF THE A.O. IN THE REMAND REPORT WHICH DOES NOT CONTRADICT THE FACTS THAT THE SHARES WERE PURCHASED ON A LATER DATE THAN THAT OF THE DATE AS CLAIMED BY THE ASSESSEE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. C.1.T.(A) ERRED BOTH IN FACTS AS WELL AS IN LAW IN DELETING THE ADDITION OF RS.36,68,570/- ON ACCOUNT OF LOSS IN DERIVATIVE J TRADING WITHOUT APPRECIATING THE FI NDINGS OF THE A.O. AND THE INFORMATION BROUGHT ON RECORD AT THE ASSESSMENT STA GE BUT RELYING ON THE REPORTS AT REMAND STAGE WHEN FURNISHING JJ OF FRESH CONTRACT N OTES BY THE SHARE BROKER IS NOTHING BUT AN AFTERTHOUGHT ACTION OF THE SHARE BRO KER AS WELL AS THE ASSESSEE. 4. THAT THE DEPARTMENT CRAVES LEAVE TO ALTER/AMEND /MODIF ANY OR ALL THE GROUNDS APPEAL. 4. IN REGARD TO GROUND NOS. 1 & 2, IT WAS SUBMITTED BY THE LEARNED SR.DR THAT THE ASSESSEE HAD ALLEGEDLY PURCHASED 80,000 SHARES OF M/S. PACE ELEC TRONICS & TEXTILES LTD FROM M/S. AGRAWAL BROKERAGE PRIVATE LIMITED ON 28-12-2006. THE SAID SHARES WERE SOLD BY THE ASSESSEE THROUGH BSE ON 30.03.2007, WHEREBY LOSS HAD BEEN INCURRED BY TH E ASSESSEE. IT WAS THE SUBMISSION THAT AS THE ASSESSING OFFICER HAD NOTICED THAT THE SHARES WHEN PURCHASED WERE NOT THROUGH STOCK EXCHANGE, HAD HELD THAT THE TRANSACTION WAS A COLOURABLE TRANSAC TION FOR REDUCING THE TAXABLE INCOME OF THE ASSESS EE AND CONSEQUENTLY, DISALLOWANCE OF LOSS OF RS. 26, 13,600/- INCURRED BY THE ASSESSEE. IT WAS THE SUBMISSION THAT THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) HAD ALLOWED THE ASSESSEES CLAIM OF LOSS. IT WAS THE SUBMISSION THAT THE ORDER OF T HE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) WAS LIABLE TO BE REVERSED. 5. IN REGARD TO GROUND NO.3, IT WAS SUBMITTED BY THE LEARNED SR.DR THAT THE LOSS CLAIMED BY THE ASSESSEE WAS ON ACCOUNT OF LOSS IN DERIVATIVE TRAD ING ON THE GROUND THAT THE UNIQUE CLIENT IDENTIFICATION NUMBER WAS NOT AVAILABLE IN THE CONT RACT NOTES. IT WAS THE SUBMISSION THAT THE LEARNE D COMMISSIONER OF INCOME-TAX(APPEALS) HAD ALLOWED TH E ASSESSEES CLAIM OF LOSS. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) WAS L IABLE TO BE REVERSED. THE LEARNED SR.DR HAS SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 6. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIV E DREW OUR ATTENTION TO PAGE NO.76 OF THE ASSESSEES PAPER BOOK, WHICH IS A COPY OF THE REMAN D REPORT FILED BY THE ASSESSING OFFICER BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS). THE S AME IS EXTRACTED HEREIN BELOW :- ITA NO. 1252/KOL/2012-B-GM 3 OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX, C ENTRAL CIRCLE - XX, KOLKATA PODDAR COURT, 18, RABINDRA SARAN!, KOLKATA NO.DCIT,CC-XX/AAACH7634Q/10-L 1735 DATE :04.03. 11 TO THE COMMISSIONER OF INCOME TAX(APPEAL), CENTRAL - III KOLKATA. (THROUGH PROPER CHANNEL) SIR, SUB : REMAND REPORT IN THE CASE OF M/S. HIMADRI DYE S AND INTERMEDIATES LTD - APPE AL NO. 132/CC-XX/KO1109- 10 FOR THE A/Y 2007-0 8 REGARDING . KINDLY REFER TO YOUR DIRECTION CONTAINED IN YOUR LE TTER DATED 17/02/2011 (ENCLOSED FOR YOUR READY REFERENCE). YOUR KIND SELF HAS DIREC TED TO FURNISH REPORT ON THREE SPECIFIC POINTS WHICH ARE AS FOLLOWS: 1. ON A PERUSAL OF THE BACK SIDE OF THE COPY OF TH E SHARE CERTIFICATE OF THE SCRIPT PACE E1ECTROT TEXTILES LTD IT IS SEEN THAT THE SH ARES WERE TRANSFERRED IN THE NAME OF THE AFORECITED ASSESSEE ON 31 .01 .2007. THE NAME OF THE COMPANY PACE ELECTRONICS & TEXTILES LTD HAS BEEN CHANGES TO PACE TEXTILES LI MITED W.E.F. 18.01.2008 AND THEN CHANGED TO SVC RESOURCES LIMITED W.E.F. 16.12.200 9. TO VERIFY THE DATE OF TRANSFER, A REFERENCE WAS MADE WITH SVC RESOURCES LIMITED, WHO VIDE LETTER DATED 01.03.2011 CONFIRMED THAT 80,000 SHARES OF M/S. HIMADRI DYES & INTERMEDIATES LTD HAD BEEN CONSIDERED FOR TRANSFER IN THE APPROVAL DATED 31.0 1.2007 (COPY OF THEIR LETTER ENCLOSED). 2. IN ORDER TO VERIFY THE DATE OF ISSUE OF CHEQUE S BY M/S. HIMADRI DYES & INTERMEDIATES LTD A REFERENCE WAS TO M/S. AGARWAL BROKERAGE PVT. LTD WHO VIDE THEIR LETTER DATED 26.02.2011 CONFIRMED THAT IT HAD S OLD 80,000 SHARES OF PACE ELECTRONICS TO M/S. HIMADRI DYES & INTERMEDIATES LTD AND THAT T HE SALE AMOUNT OF RS.15,00,000 AND RS.17,08,000 WERE RECEIVED BY THEM VIDE CHEQUE NO. 152029 DATED 29/12/2006 RESPECTIVELY. IT FURTHER CONFIRMED THAT THE SAID C HEQUES WERE RECEIVED BY IT ON RESPECTIVE DATES. (COPY OF THEIR LETTER ENCLOSED).. 3. TO VERIFY THE MATTER OF QUOTING OF UNIQUE CL IENT IDENTIFICATION NUMBER , REFERENCE WAS MADE WITH M/S MANU STOCK BROKING PVT. LTD WHO C ONFIRMED THE UNIQUE CLIENT IDENTIFICATION NUMBER OF M/S. HIMADRI DYES & INTER MEDIATES LTD IS H005 WHICH IS QUOTED IN THE CONTRACT NOTES ISSUED BY IT TO M/S. H IMADRI DYES & INTERMEDIATES LTD. JUST BELOW THE NAME OF THE PARTY IN THE CONTRACT NOTE. ( COPY OF THEIR LETTER ENCLOSED). SUBMITTED FOR CONSIDERATION. YOURS FAITHFULLY, SD/- (S.J. CHAKRABORTY) DCIT, CENTRAL CIRCLE-XX,KOL ITA NO. 1252/KOL/2012-B-GM 4 7. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE FOR THE ASSESSEE THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAD CALLED FOR THE REMAND REPORT. IN THE SAID R EMAND REPORT THE ASSESSING OFFICER HAD ACCEPTED THE GENUINENESS OF THE CLAIM OF LOSS ON THE PURCHASE AND SALE OF SHARES OF M/S. PACE ELECTRONICS & TEXTILES LTD. A S ALSO ON ACCOUNT OF DERIVATIVE TRANSACTION THE UNIQUE IDENTIFICATION CODE [H0005] WAS AVAILABLE IN THE CONTRACT NOTE. HE DREW OUR ATTENTION TO THE PAGE NOS. 16 & 17 OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). IT WAS THE SUBMISSION THAT THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) HAD ONLY ACCEPTED THE REMAND REPORTED OF THE ASSESSING OFFICER, CONSEQUENTLY, TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) WAS LIABLE TO BE UPHELD. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A P ERUSAL OF THE REMAND REPORT AS FURNISHED BY THE ASSESSING OFFICER BEFORE THE LEARNED COMMISSION ER OF INCOME-TAX (APPEALS) CLEARLY SHOWS THAT 80,000 SHARES OF M/S. PACE ELECTRONICS & TEXTILES L TD PURCHASED BY THE ASSESSEE HAVE BEEN TRANSFERRED TO THE NAME OF THE ASSESSEE ON 31.01.2 007 AND M/S. AGRAWAL BROKERAGE PRVIATE LIMITED HAS ALSO CONFIRMED THE RECEIPT OF THE AMOUNT OF SA LE CONSIDERATION BY CHEQUE. FURTHER, A PERUSAL OF THE SAID REMAND REPORT CLEARLY SHOWS THAT IN RESPE CT OF DERIVATIVE TRANSACTION, WHICH INCURRED A L OSS TO THE ASSESSEE, THE ASSESSING OFFICER HAS ACCEPTED THAT THE UNIQUE CLIENT IDENTIFICATION CODE NUMBER OF THE ASSESSEE IS ALSO QUOTED ON THE CONT RACT NOTE. IN THE CIRCUMSTANCES, AS IT IS NOTICED T HAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ONLY ACCEPTED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE REMAND REPORT PROVIDED BY THE ASS ESSING OFFICER AND AS THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDING IN THE REMAND REPORT A S SUBMITTED BY THE ASSESSING OFFICER BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), THE F INDINGS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON BOTH THE ISSUES STAND CON FIRMED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STAN DS DISMISSED. 4 3 - 5 -% 6 47 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 21/11/13 SD/- SD/- ( . . , ) ( R.S. SYAL, ACCOUNTANT MEMBER) ( ! ' 1 $ % , ) (GEORGE MATHAN, JUDICIAL MEMBER ) ( (( ( 0 0 0 0 ) )) ) DATE 21/11/13 ITA NO. 1252/KOL/2012-B-GM 5 3 / ),,8 982: / COPY OF THE ORDER FORWARDED TO: 1. . $( / THE APPELLANT : ACIT, CENTRAL CIRCLE 18 RABINDRA SARANI, PODDAR COURT, 5 TH FL., C.C XX, KOL 2 )*$( / THE RESPONDENT- M/S. HIMADRI DYES & INTERMEDIA TES LTD 23A, N.S RD, ROOM NO. 15, KOL-1 3 4. . ,3% / THE CIT ,3% ( )/ THE CIT(A) 5 . ;,6 ),% / DR, KOLKATA BENCH 6 . GUARD FILE . *8 ),/ TRUE COPY, 3%-/ BY ORDER, 4 /ASSTT REGISTRAR **PRADIP