ITO, Ward - 1(3), Kolkata, Kolkata V. M/s. ATN International Limited, Kolkata

ITA 1531/KOL/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4376 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 24-08-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 09-11-2011
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUREEL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Capital asset; Business income; Depreciation; Retrospective amendment; Speculation loss; Tax effect; Capital expenditure
• Section: 43B; 143(3); 131; 28

Judgement Text

1 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S.S.VISWANET HRA RAVI, JM] I.T.A NOS. 1531 & 1532/KOL/2011 ASSESSMENT YEAR: 2004-05 INCOME-TAX OFFICER, WD-1(3), KOLKATA. VS. M/S. AT N INTERNATIONAL LIMITED (PAN: AACCA5744Q) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 24.08.2016 DATE OF PRONOUNCEMENT: 05.10.2016 FOR THE APPELLANT: SHRI RAJAT KR. KUREEL, JCIT , SR. DR FOR THE RESPONDENT: SHRI MIRAJ D. SHAH, AR ORDER PER SHRI M. BALAGANESH, AM: THE APPEAL IN ITA NO. 1531/KOL/2011 IS AGAINST THE ORDER PASSED BY THE LD CITA IN APPEAL NO. R-1/CIT(A)-I/C-1/07-08 DATED 21.6.2010 A GAINST THE ORDER PASSED BY THE LD AO U/S 143(3) OF THE INCOME TAX ACT (HEREINAFTER REFER RED TO AS THE ACT) FOR THE ASST YEAR 2004-05. THE APPEAL IN ITA NO. 1532/KOL/2011 IS AGA INST THE ORDER PASSED BY THE LD CITA IN APPEAL NO. 613/CIT(A)-I/C-1/09-10 DATED 21.6.201 0 AGAINST THE ORDER PASSED BY THE LD AO U/S 147/143(3) OF THE ACT FOR THE ASST YEAR 2004 -05. BOTH THE APPEALS ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDE R FOR THE SAKE OF CONVENIENCE. ITA NO. 1531/KOL/2011 AGAINST 143(3) ORDER OF LD AO 2. AT THE OUTSET, WE FIND THAT THERE IS A DELAY OF 430 DAYS IN FILING THE APPEAL BEFORE US BY THE REVENUE WHICH IS SUPPORTED WITH CONDONATION PETITION ALONG WITH AN AFFIDAVIT. IN VIEW OF THE CONCESSION GIVEN BY THE LD AR FOR CONDO NATION OF DELAY, WE HEREBY CONDONE THE DELAY AND ADMIT THE APPEAL OF THE REVENUE FOR ADJUD ICATION. 3. THE FIRST ISSUE TO BE DECIDED IN THE APPEAL OF THE REVENUE IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN TREATING THE LOSS OF RS. 85,84,968/ - AS BUSINESS LOSS AS AGAINST THE SPECULATION LOSS TREATED BY THE LD AO IN THE FACTS AND CIRCUMST ANCES OF THE CASE. 2 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE IS A PUBLIC LIMITED COMPANY HAVING INCOME FROM SATELLITE TV CHANNEL AND INVESTMENT BAN KING. THE LD AO OBSERVED THAT ASSESSEE COMPANY HAD DECLARED GROSS LOSS FROM TRADI NG IN SHARES AMOUNTING TO RS. 85,84,968/- WHICH WAS SOUGHT TO BE TREATED AS DEEME D SPECULATION LOSS DUE TO THE FACT THAT THE INCOME OF THE ASSESSEE MAINLY CONSISTS OF THE F OLLOWING:- SHARE TRADING LOSS - RS. 85,84,968/- (BUSINESS LO SS) ADVERTISEMENT RECEIPT - RS. 26,73,408/- (BUSINESS INCOME) ALL TIME CHARGES - RS. 31,14,037/- (BUSINESS INCO ME) FTD RECEIPT - RS. 50,00,000/- (BUSINESS INCOME) LIABILITY WRITTEN BACK - RS. 22,42,700/- (BUSINESS INCOME) DIVIDEND - RS. 1,25,257/- (EXEMPTED INCOME FROM OTHER SOURCES) HENCE, BASED ON INCOME CRITERIA, THE LD AO CAME TO A CONCLUSION THAT THE MAIN INCOME OF THE ASSESSEE IS UNDER THE HEAD INCOME FROM BUSINES S AND ACCORDINGLY THE LOSS FROM TRADING IN SHARES WOULD FALL UNDER THE AMBIT OF EXPLANATION TO SECTION 73 OF THE ACT AND HENCE TREATED THE LOSS THEREON AS SPECULATION LOSS. THE LD AO ALSO OBSERVED THAT THE MAIN BUSINESS OF THE ASSESSEE IS NOT BUSINESS OF GIVING LOANS AND ADVANCES WHICH IS APPARENT FROM THE APPLICATION OF FUNDS AS UNDER:- OWN FUNDS (SHAREHOLDERS FUNDS) - RS. 39.87 CRORES LOAN FUNDS - RS. 12.17 CRORES APPLICATION OF FUNDS FIXED ASSETS - RS. 15.16 CRORES INVESTMENT IN SHARES AND SECURITIES - RS. 21.58 CRO RES LOANS & ADVANCES - RS. 13.58 CRORES OUT OF LOANS AND ADVANCES FOR RS. 13.58 CRORES, NO INTEREST IS ACCOUNTED FOR BY THE ASSESSEE. ACCORDINGLY, HE CONCLUDED THAT GIVING INTEREST FREE ADVANCE IS NOT PART OF BUSINESS OF GIVING LOANS AND ADVANCES AND HENCE NOT ELIGIBLE FOR EXCEP TION POINTED OUT IN THE EXPLANATION TO SECTION 73 OF THE ACT. WHEN ASSESSEE WAS SHOW CA USED IN THIS REGARD, THE ASSESSEE REPLIED 3 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 THAT IT HAD PURCHASED AND SOLD THE SHARES ON DELIVE RY BASIS AND HAD NOT ENTERED INTO ANY SPECULATIVE TRANSACTION. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MYSORE ROLLING MILLS (P) LTD VS CIT REPORTED IN 195 ITR 405 (KAR) WHEREIN IT WAS OBSERVED THAT UNLESS I T IS CONCLUSIVELY ESTABLISHED THAT THE ASSESSEE ENTERED THE TRANSACTIONS CLEARLY AS A SPE CULATIVE NATURE, THE COURTS CANNOT INFER THE TRANSACTIONS TO BE VENTURED ONLY BECAUSE THE ASSESS EE DERIVED SUBSEQUENTLY THE BENEFIT OF REDUCTION OF TAX. FURTHER ATTENTION WAS ALSO DRAWN TO THE CBDT CIRCULAR NO. 204 DATED 24.7.1976 WHICH CLEARLY STATED THAT THE OBJECT OF E XPLANATION TO SECTION 73 OF THE ACT WAS TO CURB THE DEVICES RESORTED BY THE CONTROLLING GROUP OF COMPANIES TO MANIPULATE AND REDUCE THE TAXABLE INCOME OF COMPANIES UNDER THEIR CONTROL . IN THE INSTANT CASE, THE ASSESSEE HAS NOT DEALT WITH THE SHARES OF GROUP COMPANIES AND AC CORDINGLY THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT CANNOT BE MADE APPLICABLE. THE LD AO NOT BEING CONVINCED WITH THIS ARGUMENT OF THE ASSESSEE, SOUGHT TO TREAT THE LOSS FROM TRADING OF SHARES OF RS. 85,84,968/- AS SPECULATION LOSS IN THE ASSESSMENT. 3.2. THE LD CITA DELETED THE DISALLOWANCE BY STAT ING THAT THE PROVISIONS OF EXPLANATION TO SECTION 73 OF THE ACT WERE BROUGHT IN THE STATUT E BOOK ONLY TO CURB THE DEVICES RESORTED BY THE ASSESSEES TO REDUCE THE TAXABLE INCOME BY M ANIPULATING WITH THE SHARES OF COMPANIES UNDER THEIR CONTROL. HE OBSERVED THAT THIS WAS FUL LY EXPLAINED IN THE CBDT CIRCULAR NO.204 DATED 24.7.1976 WHICH IS BINDING ON THE TAX AUTHORI TIES. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DIRECTING TO TREAT THE SPECULATION LOSS OF RS.85,84,968/- AS BUS INESS LOSS ON THE BASIS OF CBDTS CIRCULAR NO.204 DATED 24.07.1976 WHEN THE SAID CIRCULAR IS N OT SQUARELY APPLICABLE IN THE PRESENT CASE. 3.3. THE LD AR AT THE OUTSET ARGUED THAT THIS APPE AL OF THE REVENUE IS TO BE DISMISSED DUE TO LOW TAX EFFECT AS ACCORDING TO HIM, THE LD AO HA D MERELY SHIFTED THE LOSS FROM TRADING IN SHARES FROM BUSINESS LOSS TO SPECULATION LOSS WITHO UT DISTURBING THE FIGURES THEREON. HE ALLOWED THE SPECULATION LOSS ALSO TO BE CARRIED FOR WARD TO SUBSEQUENT YEARS. BARRING THIS ONE, THE OTHER TWO ADDITIONS MADE BY THE LD AO DOES NOT HAVE TAX EFFECT OF MORE THAN RS 10 LACS AND HENCE IN VIEW OF THE RECENT CIRCULAR NO. 2 1/2015 DATED 10.12.2015, THE APPEAL OF THE REVENUE IS TO BE DISMISSED AS NOT MAINTAINABLE. TH E LD DR ARGUED THAT THE CIRCULAR QUOTED BY THE LD AR CLEARLY STATES THAT THE TAX EFFECT IS TO BE CALCULATED ON THE DISPUTED ISSUES RAISED 4 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 BY THE REVENUE BEFORE THE TRIBUNAL AND IN SUCH A CA SE, THE TAX EFFECT IS MORE THAN RS 10 LACS AND THEREBY THE APPEAL IS MAINTAINABLE. 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE BARE READING OF THE CIRCULAR NO. 21/2015 DATED 10.12.2015 STATES THAT THE TAX EFFECT ON THE DISPUTED ISSUES ARE TO BE LOOKED INTO. HENCE WE ARE CONVINCED THAT THE TAX EFFECT I S MORE THAN RS 10 LACS TAKING INTO ACCOUNT THE DISPUTED ISSUES BEFORE US. HENCE WE DISMISS TH E ARGUMENTS OF THE LD AR AND HOLD THAT THE APPEAL OF THE REVENUE IS MAINTAINABLE. 3.5. ON MERITS OF THE ADDITION, THE DR ARGUED THAT THE CBDT CIRCULAR NO. 204 DATED 24.7.1976 RELIED UPON BY THE LD CIT(A) IS NOT WARRA NTED IN VIEW OF THE FACT THAT THE ASSESSEES CASE DOES NOT FALL UNDER THE EXCEPTION T O EXPLANATION TO SECTION 73 OF THE ACT BASED ON INCOME CRITERIA, AS THE ENTIRE INCOME IS O NLY FROM BUSINESS. MOREOVER, THE CASE LAW RELIED UPON BY THE ASSESSEE IN THE CASE OF MYSO RE ROLLING MILLS (P) LTD VS CIT REPORTED IN 195 ITR 405 (KAR) IS ALSO NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE, AS THE QUESTION BEFORE THE HONBLE KARNATAKA HIGH COURT WAS WHETHER THE ASSESSEE WAS A TRADER OR INVESTOR. HE PLACED RELIANCE ON THE DECISION OF THE HONBLE C ALCUTTA HIGH COURT IN THE CASE OF CIT VS ARVIND INVESTMENTS LTD REPORTED IN (1991) 58 TAXMAN 216 (CAL) WHEREIN IT WAS HELD THAT THE LANGUAGE OF EXPLANATION TO SECTION 73 OF THE ACT ME RELY INDICATES THAT THE BUSINESS ACTIVITY WHICH CONSISTS OF PURCHASE AND SALE OF SHARES WILL BE TREATED AS SPECULATION BUSINESS. IF THE ENTIRE BUSINESS ACTIVITY OF A COMPANY CONSISTS OF P URCHASE AND SALE OF SHARES OF OTHER COMPANIES, THEN THE ENTIRE BUSINESS WILL BE TREATED AS SPECULATION BUSINESS. ACCORDINGLY HE ARGUED THAT THE LD AO IS RIGHT IN TREATING THE LOSS FROM TRADING IN SHARES AS SPECULATION LOSS. 3.6. IN RESPONSE TO THIS, THE LD AR ARGUED THAT T HE ASSESSEE HAS GOT OWN FUNDS OF RS. 39.87 CRORES AND INVESTMENTS HELD AS STOCK IN TRADE WERE TO THE EXTENT OF RS. 21.58 CRORES. HENCE ON FUND DEPLOYMENT CRITERIA, IT COULD BE CONCLUDED THAT THE ASSESSEE IS ENGAGED IN THE PRINCIPAL BUSINESS OF TRADING IN SHARES AS MORE THA N 50% OF THE CAPITAL IS INVESTED IN SHARES. HE ARGUED THAT THE AMENDMENT BROUGHT TO TH IS EFFECT IN EXPLANATION TO SECTION 73 OF THE ACT W.E.F. 1.4.2015 HAS BEEN HELD TO BE RETROSP ECTIVE IN OPERATION BY THE FOLLOWING DECISIONS OF THE CO-ORDINATE BENCHES OF VARIOUS TRI BUNALS :- 5 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 (A) KOLKATA TRIBUNAL IN THE CASE OF DCIT VS RAIMA EQUIT IES PVT LTD IN ITA NO. 1994/KOL/2013 DATED 11.8.2016 (B) AHMEDABAD TRIBUNAL IN THE CASE OF ITO VS UNION INDI A LTD IN ITA NO. 1240/AHD/2012 DATED 22.6.2016 (C) MUMBAI TRIBUNAL IN THE CASE OF FIDUCIARY SHARES & S TOCK P LTD VS ACIT IN ITA NO. 321/MUM/2013 DATED 13.5.2016 BY PLACING RELIANCE ON THE AFORESAID DECISIONS, HE PLEADED THAT THE LOSS FROM TRADING IN SHARES WOULD FALL UNDER THE EXCEPTION PROVIDED IN E XPLANATION TO SECTION 73 OF THE ACT AND HENCE THE SAME NEED NOT BE TREATED AS SPECULATION L OSS. 3.7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HOL D THAT IT IS NOT IN DISPUTE THAT THE PRINCIPAL BUSINESS OF THE ASSESSEE IS TRADING IN SH ARES. WE FIND THAT THE AMENDMENT WAS BROUGHT BY FINANCE ACT 2014 W.E.F. 1.4.2015 BY INSERTION OF THE EXPRESSION PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF TRADING IN SHARES OR BANKING IN EXPLANATION TO SECTION 73 OF THE ACT. IT WOULD BE PERTINENT TO REFER TO THE RECOMMENDATIONS OF WANCHOO COMMITTEE REPORT OF DECEMBER 1971 PURSUANT TO WHICH THE EXPLANATION TO SECTION 73 OF THE ACT WAS INSERTED BY THE TAXATION LAWS (AMENDMENT) ACT, 1975 W.E.F. 01.04 . 1977, THE RELEVANT PORTION OF WHICH IS EXTRACTED HEREUNDER:- A TAX AVOIDANCE DEVICE OFTEN RESORTED TO BY BUSINE SS HOUSES CONTROLLING GROUPS OF COMPANIES IS MANIPULATION OF RESULTS FROM DEALINGS IN SHARES OF THE COMPANIES CONTROLLED BY THEM. IN OUR OPINION, SUCH MANIPULATION IN SHARE D EALINGS FOR THE PURPOSE OF TAX AVOIDANCE CAN BE CHECKED EFFECTIVELY IF THE RESULTS OF DEALIN GS IN SHARES BY SUCH COMPANIES ARE TREATED FOR TAX PURPOSES IN A MANNER ANALOGOUS TO SPECULATI ON. NO DOUBT, COMPANIES WHOSE MAIN BUSINESS ACTIVITIES CENTRE AROUND INVESTMENT IN SHA RES WILL HAVE TO BE LEFT OUT. ACCORDINGLY, WE RECOMMEND THAT THE RESULTS OF DEALINGS IN SHARES BY COMPANIES, OTHER THAN INVESTMENT, BANKING AND FINANCE COMPANIES, SHOULD BE TREATED IN A MANNER ANALOGOUS TO SPECULATION BUSINESS. 3.7.1. WE FIND THAT IN ORDER TO ACHIEVE THE REAL OB JECTIVE OF CURBING TAX AVOIDANCE METHODS RESORTED TO BY BUSINESS HOUSES CONTROLLING THEIR GR OUP COMPANIES, THE LEGISLATURE BY INSERTING AN AMENDMENT TO EXPLANATION TO SECTION 73 OF THE ACT BY FINANCE ACT 2014, HAS EXTENDED THE EXCEPTION CARVED OUT IN THE EXPLANATIO N BY PUTTING ALL THE COMPANIES, THE PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF TRAD ING IN SHARES INTO THE EXCEPTION. WE FIND THAT THE AMENDMENT BROUGHT IN BY THE FINANCE ACT 20 14 IN EXPLANATION TO SECTION 73 OF THE 6 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 ACT APPEARS TO BE MADE IN ORDER TO CLARIFY THE REAL INTENTION BEHIND THE INSERTION THEREOF, BY REMOVING THE OBVIOUS HARDSHIP CAUSED TO VARIOUS ASS ESSEES WHOSE MAIN BUSINESS IN TRADING IN SHARES. THE AMENDMENT HAS REMOVED THE ANOMALY A ND BROUGHT THE AMBIT OF THE EXPLANATION TO SECTION 73 OF THE ACT IN LINE WITH T HE INTENTION OF THE LEGISLATURE BY PLACING THE COMPANIES WHOSE PRINCIPAL BUSINESS IS TRADING I N SHARES AS PART OF THE EXCEPTION TO EXPLANATION TO SECTION 73 OF THE ACT, BECAUSE SUCH COMPANIES WERE NOT THE COMPANIES FOR WHOM THE EXPLANATION WAS INSERTED. 3.7.2. WE FIND THAT THOUGH THIS AMENDMENT IS MADE E FFECTIVE ONLY FROM ASST YEAR 2015-16 ONWARDS, THE REAL INTENTION BEHIND INTRODUCTION OF THIS AMENDMENT, IN OUR OPINION, IS CURATIVE IN NATURE. IN OUR CONSIDERED OPINION, THE AMENDMENT, IF NOT HELD RETROSPECTIVE, WOULD RESULT IN HARDSHIP TO THE ASSESSEE IN THE FOL LOWING MANNER:- (A) THE ASSESSEE ENGAGED IN TRADING OF SHARES WOULD BE TREATED AS SPECULATION BUSINESS UPTO ASST YEAR 2014-15. THAT ASSESSEE MIGHT BE HAVING L OSSES ELIGIBLE TO BE CARRIED FORWARD UNDER THE HEAD SPECULATION BUSINESS. (B) THE PROVISIONS OF SECTION 73 OF THE ACT PROVIDE S THAT THE BROUGHT FORWARD SPECULATION LOSS COULD BE SET OFF ONLY AGAINST SPECULATION PROF ITS. (C ) PURSUANT TO THE AMENDMENT BY FINANCE ACT 2014 SUPRA, THE LOSS DERIVED FROM THE PRINCIPAL BUSINESS OF TRADING IN SHARES WOULD NOT B E CONSTRUED AS SPECULATIVE IN NATURE. THE LOGICAL COROLLARY IS PROFIT DERIVED THEREON ALSO WO ULD BE TREATED ONLY AS NORMAL BUSINESS PROFITS AND NOT SPECULATIVE PROFITS. (D) IN THIS SITUATION, THE BROUGHT FORWARD SPECULAT ION LOSS COULD NEVER BE ELIGIBLE TO SET OFF AGAINST THE PROFITS WHEN THERE IS ABSOLUTELY NO CHA NGE IN THE BUSINESS ACTIVITIES OF THE ASSESSEE (I.E TRADING IN SHARES AS ITS PRINCIPAL BU SINESS) . THAT LOSS WOULD GET LAPSED FOR NO FAULT OF THE ASSESSEE THEREBY CREATING GENUINE HARD SHIP TO THE ASSESSEE. WE FEEL THAT THE INSERTION IN EXPLANATION TO SECTION 73 OF THE ACT B Y THE FINANCE ACT 2014 SHOULD BE LOOKED INTO FROM THIS PERSPECTIVE WHICH WOULD CREATE GENUI NE HARDSHIP TO THE ASSESSEE IF NOT HELD TO BE CURATIVE IN NATURE. HENCE WE HOLD THAT THE SAID AMENDMENT SHOULD BE GIVEN RETROSPECTIVE 7 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 EFFECT ONLY. IN OUR CONSIDERED OPINION, THE AMENDME NT WOULD NOT SERVE ITS OBJECT IN THE INSTANT CASE UNLESS IT IS CONSTRUED RETROSPECTIVE I N OPERATION. 3.7.3. WE ALSO DRAW SUPPORT FROM THE FOLLOWING DE CISIONS OF THE HONBLE APEX COURT IN THIS REGARD :- CIT VS ALOM EXTRUSIONS LTD REPORTED IN 319 ITR 306 (SC) ALLIED MOTORS PVT LTD VS CIT REPORTED IN 224 ITR 67 7 (SC) CIT VS J.H.GOTLA REPORTED IN (1985) 156 ITR 323 (SC ) AT PAGE 339 AND 340 3.7.4. WE ALSO FIND THAT SIMILAR VIEW HAS BEEN TA KEN BY THE CO-ORDINATE BENCHES OF AHMEDABAD , MUMBAI AND THIS TRIBUNAL SUPRA AS RIGHT LY POINTED OUT BY THE LD AR. RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELI ED UPON HEREINABOVE, WANCHOO COMMITTEE REPORT OF DECEMBER 1971 AND OUR FINDINGS GIVEN HEREINABOVE , WE HOLD THAT THE AMENDMENT BROUGHT IN BY THE FINANCE ACT 2014 SHOULD BE CONSTRUED AS CURATIVE IN NATURE AND HENCE TO BE GIVEN RETROSPECTIVE APPLICABILITY. IT IS NOT IN DISPUTE THAT THE PRINCIPAL BUSINESS OF THE ASSESSEE IN THE INSTANT CASE IS TRA DING IN SHARES. IF THE AMENDMENT SUPRA IS GIVEN RETROSPECTIVE EFFECT, THEN THE SAME WOULD AUT OMATICALLY FALL UNDER THE EXCEPTION PROVIDED IN THE EXPLANATION TO SECTION 73 OF THE AC T AND ACCORDINGLY THE LOSS INCURRED ON DELIVERY BASED SHARE TRANSACTIONS SHOULD NOT BE CON STRUED AS SPECULATION LOSS. IN VIEW OF THIS, WE ARE NOT INCLINED TO GET INTO THE OTHER ARG UMENTS ADVANCED BY THE LD AR AND LD DR ON THE MERITS OF THE CASE. HENCE, GROUND NO. 1 RAI SED BY THE REVENUE IN THIS REGARD IS DISMISSED. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 43B OF THE ACT IN THE SUM OF RS. 7,25,444/- IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE ASSESSEE HAD CLAIMED DEDUCTION TOWARDS INTEREST TO SYNDICATE BANK IN THE SUM OF RS. 7,25,444/- AGAINST SETTLEMENT OF DUES. THE ASSESSEE FURNISHED DOCUMENTARY EVIDE NCES SUCH AS COPIES OF PROPOSAL DATED 13.9.2003, LEDGER ACCOUNT OF THE BANK TOGETHER WITH THE BANK STATEMENT THEREON. THE LD AO HOWEVER WAS NOT SATISFIED WITH THE EXPLANATION GIVE N AND DISALLOWED THE SUM OF RS. 8 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 7,25,444/- U/S 43B OF THE ACT FOR WANT OF RELEVANT INTEREST CERTIFICATE FROM THE BANK TO JUSTIFY THE PAYMENT MADE BY THE ASSESSEE. BEFORE THE LD CIT A, THE ASSESSEE REITERATED THE SUBMISSIONS AND FURNISHED THE SAME EVIDENCES AND AR GUED THAT IF THE LD AO HAD ANY APPREHENSION OR DOUBT ABOUT THE DOCUMENTS SUBMITTED BEFORE HIM, HE OUGHT TO HAVE MADE NECESSARY ENQUIRIES DIRECTLY FROM THE BANK U/S 133( 6) OR 131 OF THE ACT AND ASSESSEE CANNOT BE DENIED THE BENEFIT OF DEDUCTION WHEN THE INTERES T COMPONENT HAS BEEN DULY PAID TO THE BANK. THE LD CITA CONVINCED WITH THE ARGUMENTS OF THE ASSESSEE DELETED THE DISALLOWANCE MADE THEREON U/S 43B OF THE ACT. AGGRIEVED, THE RE VENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,25,444/- U/S. 43B WHEN ASSESSEE FA ILED TO PROVE THAT THE AMOUNT WAS ACTUALLY PAID WITHIN THE TIME ALLOWED U/S. 139(1). 4.2. THE LD DR STATED THAT WHETHER THE ASSESSEE HA D INDEED MADE PAYMENT TO SYNDICATE BANK MAY KINDLY BE DIRECTED TO BE VERIFIED BY THE L D AO IN ORDER TO ARRIVE AT THE CORRECT PICTURE. THE LD AR FAIRLY AGREED FOR THE SAME. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE IS SUE INVOLVED ONLY REQUIRES FACTUAL VERIFICATION FROM THE BANK STATEMENT AND THE LOAN A CCOUNT OF THE ASSESSEE AS TO WHETHER OUT OF TOTAL SETTLEMENT OF DUES MADE BY THE ASSESSEE, W HETHER THE INTEREST COMPONENT HAD BEEN DULY PAID OR NOT. BASED ON THIS FACTUAL VERIFICATI ON, THE LD AO IS DIRECTED TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND NO. 2 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 5. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN DELETING THE DISALLOWANCE OF I NTEREST IN THE SUM OF RS. 14,05,745/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE INTEREST INCOME IS NOT SHOWN BY THE ASSESSEE ON ALL THE LOANS AND ADVANCES GIVEN BY IT AND WHEREAS THE ASSESSEE HAS BEEN PAYING INTEREST ON THE LOANS BORROWED BY I T. THE ASSESSEE WAS SHOW CAUSED TO THIS EFFECT. THE ASSESSEE REPLIED STATING THAT OUT OF T HE LOAN AMOUNT OF RS. 13.54 CRORES, EXCEPTING THE ADVANCES MADE TO THE THREE PARTIES NA MELY (I) M/S ATN FILMS LTD ; (II) M/S 9 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 GALAXY TELEVISION LTD AND (III) M/S GIRNAR FIBERS L TD, ALL THE ADVANCES HAD BEEN MADE AFTER THE FINANCIAL YEAR 1996-97, WHEREAS THE FIXED DEPOS ITS RECEIVED FROM PUBLIC AND THE LOAN RECEIVED FROM SYNDICATE BANK ARE PRIOR TO 31.03.199 7. IN RESPECT OF THE ADVANCES SHOWN IN THE NAMES OF THE SAID THREE COMPANIES, A SEPARATE S ELF-EXPLANATORY NOTE ALONG WITH COPIES OF SPECIAL RESOLUTION PASSED BY THE COMPANY AND THE OR DER OF THE HONBLE HIGH COURT OF CALCUTTA WERE FILED. IT WAS ACCORDINGLY SUBMITTED T HAT THE INTEREST BEARING FUNDS WERE NOT UTILIZED BY THE ASSESSEE COMPANY FOR GIVING INTERES T FREE LOANS OR ADVANCES, NO ADVERSE VIEW SHOULD BE TAKEN IN THAT REGARD. IN SUPPORT OF THIS , THE ASSESSEE ALSO PLACED PLETHORA OF JUDGEMENTS TO ITS SUPPORT. THE LD AO HOWEVER PROCEE DED TO DISALLOW THE INTEREST PROPORTIONATELY TREATING THE BORROWED FUNDS AS DIVE RTED FOR GIVING INTEREST FREE ADVANCES. THE LD CITA HOWEVER DELETED THE DISALLOWANCE OF INT EREST BY GIVING A FINDING THAT NO PART OF THE INTEREST BEARING FUND WAS UTILIZED FOR PROVIDIN G INTEREST FREE LOANS OR ADVANCES AND ACCORDINGLY THE INTEREST PAID ON BORROWED CAPITAL A MOUNTING TO RS. 14,05,745/- NEED NOT BE DISALLOWED. AGGRIEVED, THE REVENUE IS IN APPEAL BE FORE US ON THE FOLLOWING GROUND:- 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.14,05,745/- BEING INTEREST ON BORROW ED CAPITAL WHICH WAS UTILIZED FOR INTEREST FREE LOANS AND ADVANCES TO DIFFERENT PARTIES INCLUD ING RELATABLE PARTIES WHEN ASSESSEE DID NOT DISCHARGE ITS ONUS TO SHOW THAT INTEREST BEARING LO ANS WERE UTILIZED FOR PURPOSES OTHER THAN GIVING INTEREST FREE LOANS AND ADVANCES. 5.2. THE LD DR ARGUED THAT THE ASSESSEE DID NOT P ROVE THE BUSINESS EXPEDIENCY OF ADVANCING INTEREST FREE FUNDS TO THREE COMPANIES AN D HENCE VEHEMENTLY RELIED ON THE ORDER OF THE LD AO. IN RESPONSE TO THIS, THE LD AR ARGUE D THAT THE ADVANCES MADE TO THREE COMPANIES WERE PURELY RELATED TO THE BUSINESS OF TH E ASSESSEE AS THEY WERE ALSO INVOLVED IN THE SAME LINE OF BUSINESS IN WHICH ASSESSEE WAS ENG AGED AND HENCE THE BUSINESS NEXUS / EXPEDIENCY HAS BEEN PROVED BEYOND DOUBT. FROM THE PERUSAL OF THE BALANCE SHEET, IT COULD BE SEEN THAT THE ASSESSEE HAD GOT SUFFICIENT OWN FU NDS AT ITS KITTY WHICH IS MUCH LESS THAN THE BORROWED FUNDS AND HENCE THERE IS NO QUESTION OF DI SALLOWING THE INTEREST. HE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS BRITANNIA INDUSTRIES LTD REPORTED IN (2006) 280 ITR 525 (CAL) IN SUPPORT OF HIS CONTENTIONS. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE ENTIRE DETAILS OF AMOUNT OF INTEREST FREE FUNDS PAID TO THREE COMPANI ES WERE DULY FILED BEFORE THE LD AO BY THE ASSESSEE. THE LD CITA HAD GIVEN A CATEGORICAL FINDING THAT NO PART OF THE BORROWED 10 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 FUNDS WERE UTILIZED FOR ADVANCING INTEREST FREE FUN DS BY THE ASSESSEE. THIS FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. HENCE THE P RIMARY TEST FOR DISALLOWANCE OF INTEREST THAT BORROWED FUNDS HAVE BEEN DIVERTED FOR NON BUSI NESS PURPOSES FAILS. WE FIND FROM THE ANNUAL REPORT OF THE ASSESSEE COMPANY THAT THE ASSE SSEE IS HAVING SUFFICIENT OWN FUNDS WHICH IS SEVERAL TIMES MORE THAN THE BORROWED FUNDS AND THE AMOUNTS ADVANCED TO THREE COMPANIES. IT IS WELL SETTLED THAT WHEN THERE ARE MIXED FUNDS (I.E BOTH BORROWED AS WELL AS OWN FUNDS) AND WHEN THE OWN FUNDS ARE SEVERAL TIMES MORE THAN THE BORROWED FUNDS AND INTEREST FREE ADVANCES, THEN IT SHOULD BE PRESUMED THAT THE INTEREST FREE FUNDS WERE ADVANCED BY THE ASSESSEE FROM ITS OWN FUNDS. RELIANCE IN TH IS REGARD PLACED BY THE LD AR ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS B RITANNIA INDUSTRIES LTD REPORTED IN (2006) 280 ITR 525 (CAL) IS VERY WELL FOUNDED AND IS DIRECTLY ON THE POINT. WE ALSO FIND THAT SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES AND POWER LTD REP ORTED IN 313 ITR 340 (BOM) . RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECE DENTS , WE HOLD THAT THERE IS NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE LD CITA I N THIS REGARD. ACCORDINGLY, GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 1531/KOL/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1532/KOL/2011 AGAINST 147 ORDER OF LD AO 7. AT THE OUTSET, WE FIND THAT THERE IS A DELAY O F 430 DAYS IN FILING THE APPEAL BEFORE US BY THE REVENUE WHICH IS SUPPORTED WITH CONDONATION PETITION. IN VIEW OF THE CONCESSION GIVEN BY THE LD AR FOR CONDONATION OF DELAY, WE HER EBY CONDONE THE DELAY AND ADMIT THE APPEAL OF THE REVENUE FOR ADJUDICATION. 8. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN DELETING THE DISALLOWANCE OF D EPRECIATION OF RS. 15,05,244/- RELATED TO TRANSFERRED ASSETS AND ADDITION OF RS. 1,28,23,581/ - ON ACCOUNT OF BUSINESS PROFIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2004-05 THE ASSESSEE HA D TRANSFERRED THE TANGIBLE AND INTANGIBLE 11 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 ASSETS AND LIABILITIES OF THE BUSINESS IN THE NAME OF AHIMSAA CHANNEL TO ITS SUBSIDIARY COMPANY IN THE NAME OF M/S. AHIMSAA GLOBAL MEDIA LT D. IN TERMS OF THE AGREEMENT DATED 20.03.2004 AT A CONSIDERATION OF RS.195 LAKH AND TH E CONSIDERATION WAS RECEIVED BY THE ASSESSEE IN THE FORM OF 39,00,000/- FULLY PAID SHAR ES OF THE SAID SUBSIDIARY COMPANY @ RS.5/- PER SHARE. THE AHIMSAA CHANNEL HAD BEEN LAU NCHED BY THE ASSESSEE IN THE FY. 2003- 04 AND THE SAME WAS DISPOSED OFF BY THE ASSESSEE IN THE FINANCIAL YEAR 2003-04 TO THE SAID SUBSIDIARY COMPANY. THE FOLLOWING ASSETS BELONGING TO AHIMSAA CHANNEL RUN BY THE ASSESSEE WERE TRANSFERRED TO ITS SUBSIDIARY COMPANY M/S AHIMSAA GLOBAL MEDIA LTD :- COMPUTERS 74,450 MEDIA EQUIPMENTS 52,18,510 OFFICE EQUIPMENTS 65,080 VEHICLES 6,98,379 PREOPERATIVE EXPENSES CAPITALISED 1,28,23,581 PRELIMINARY EXPENSES 6,20,000 ------------------ 1,95,00,000 THE ASSESSEE BEING A HOLDING COMPANY STATED THAT I T ACQUIRED ALL THESE ASSETS AND INCURRED CAPITAL EXPENDITURE WHICH WERE CAPITALIZED DURING T HE YEAR UNDER APPEAL AND THE SAME WERE TRANSFERRED AT BOOK VALUES TO ITS SUBSIDIARY COMPAN Y DURING THE YEAR UNDER APPEAL. ACCORDINGLY, BOTH THE ASSETS ADDED AND TRANSFERRED/ SOLD WERE NOT REFLECTED IN THE DEPRECIATION SCHEDULE OF THE ASSESSEE AS IT HAD NO IMPACT ON THE CALCULATION OF DEPRECIATION. THE ASSESSEE STATED THAT THIS TRANSFER WAS WITHOUT ANY PROFIT. IN ANY CASE, IT WAS CLAIMED THAT THE TRANSFER OF ASSETS BY HOLDING COMPANY TO ITS SU BSIDIARY COMPANY SHALL NOT BE REGARDED AS TRANSFER IN TERMS OF SECTION 47(IV) OF THE ACT. B UT THE LD AO NOT CONVINCED WITH THIS CONTENTION STATED THAT SINCE THE VALUE OF TRANSFERR ED ASSETS TO THE TUNE OF RS. 60,56,419/- WERE NOT DEDUCTED BY THE ASSESSEE IN THE DEPRECIATI ON SCHEDULE, IT HAD CLAIMED EXCESS DEPRECIATION OF RS. 15,05,244/- AND ACCORDINGLY THE SAME WAS DISALLOWED. HE ALSO OBSERVED THAT THE SUM OF RS. 1,28,23,581/- FOR TRANSFER OF P REOPERATIVE EXPENSES WOULD BECOME INCOME DERIVED FROM TRANSFER OF THE SAME BEING EXCE SS OF ASSETS OVER LIABILITIES AND THEREFORE TAXABLE AS INCOME U/S 28 OF THE ACT. HE HELD THAT ASSESSEE BECAME THE HOLDING COMPANY OF THE SUBSIDIARY ON 28.1.2004 AND DURING T HE NEXT ASST YEAR 2005-06, THE ASSESSEE CEASED TO BE THE HOLDING COMPANY OF THE SU BSIDIARY ON DISPOSAL OF THE SHARES OF THE 12 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 SUBSIDIARY. THEREFORE HE OBSERVED THAT THE INCOME OF RS. 1,28,23,581/- DERIVED FROM THE TRANSFER OF THE SAID ASSETS AND ACCORDINGLY ADDED T HE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 8.2. BEFORE THE LD CITA, THE ASSESSEE STATED THAT THE ASSESSEE LAUNCHED ITS SATELLITE TV CHANNEL, AHIMSAA ON 2.10.2003 AND SUBSEQUENTLY THE CHANNEL WAS TRANSFERRED TO ITS SUBSIDIARY AHIMSAA GLOBAL MEDIA LIMITED ON 20.3.200 4 FOR CONSIDERATION OF RS. 1,95,00,000/- BY WAY OF ALLOTMENT OF 39 LACS FULLY PAID EQUITY SHARES OF RS 5 EACH OF AHIMSAA GLOBAL MEDIA LIMITED. IT WAS REITERATED TH AT THE CONSIDERATION BY WAY OF TRANSFER OF CHANNEL RECEIVED BY WAY OF ALLOTMENT OF EQUITY S HARES WAS EXACTLY THE COST OF FIXED ASSETS PURCHASED BY ASSESSEE ON OR AFTER 1.4.2003 AND ALSO THE EXPENSES INCURRED AS PER PREOPERATIVE EXPENSES FOR LAUNCHING THE CHANNEL. A LL THESE FACTS WERE DIRECTLY VERIFIABLE FROM THE ANNUAL REPORT OF THE ASSESSEE WHICH WAS FI LED BEFORE THE LD CITA AS WELL AS BEFORE THE LD AO. IT WAS ARGUED THAT THE TOTAL MOVABLE FIX ED ASSETS WORTH RS 60,56,419/- WERE NOT DEBITED TO PROFIT AND LOSS ACCOUNT BY THE ASSESSEE BUT WERE CAPITALIZED IN THE BOOKS OF ACCOUNTS. SIMILARLY THE PREOPERATIVE EXPENSES OF R S. 1,28,23,581/- INCURRED BY THE ASSESSEE FOR VARIOUS EXPENSES IN RESPECT OF LAUNCHING AHIMSA A CHANNEL TILL THE DATE OF LAUNCH AND PRELIMINARY EXPENSES OF RS. 6,20,000/- WERE CAPITAL IN NATURE AND WERE ADDED TO THE COST OF CHANNEL ALONG WITH OTHER FIXED ASSETS. IT WAS REI TERATED THAT SINCE THE FIXED ASSETS WERE PURCHASED DURING THE FINANCIAL YEAR AND ALSO TRANSF ERRED DURING THE SAME YEAR, IT DID NOT APPEAR IN THE BLOCK OF ASSETS AND NO DEPRECIATION W AS CLAIMED ON SAID FIXED ASSETS BY THE ASSESSEE. THE DEPRECIATION OF RS. 37,46,228/- CLA IMED WERE ONLY IN RESPECT OF ASSETS AND OTHER EQUIPMENTS ACQUIRED FOR ITS OTHER CHANNEL ATN WORD WHICH IS CLEARLY REFLECTED IN THE DEPRECIATION SCHEDULE ITSELF. IT WAS FURTHER STATED THAT THE ASSESSEE DID NOT RECEIVE ANY INCOME AS THE COST OF EQUIPMENTS ON WHICH NO DEPREC IATION WAS CHARGED AND EXPENSES INCURRED WITH CHANNEL WERE RECEIVED BY WAY OF ALLOT MENT OF EQUITY SHARES AND NO SURPLUS WHATSOEVER WAS EARNED BY THE ASSESSEE. THE LD CIT A DELETED THE ADDITIONS BY MAKING THE FOLLOWING OBSERVATIONS:- TAKING INTO THE ACCOUNT THE CIRCUMSTANCE AND FACTS AS NARRATED, IT IS APPARENT THAT NO PROFIT COULD HAVE ARISEN TO THE COMPANY IN THE WAY OF TRA NSFER OF ASSETS OR EXCESS DEPRECIATION. THE ADDITION DESERVE TO BE DELETED AND ON MERITS TH ESE GROUNDS ARE ALLOWED. 8.3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 13 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.15,05,244/- ON ACCOUNT OF DISALLOWAN CE OF DEPRECIATION RELATED TO TRANSFERRED ASSETS AND ADDITION OF RS.1,28,23,581/- ON ACCOUNT OF BUSINESS PROFIT BY SIMPLY ACCEPTING ASSESSEES ARGUMENTS WHEN ASSESSEE SUBMITTED NOTHIN G IN THESE REGARDS. LD. CIT(A) HAS ALSO ERRED IN LAW FOR FAILURE TO REMAND THE MATTER FOR VERIFICATION. 8.4. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF T HE LD AO AND PRAYED FOR VERIFICATION OF THESE FACTS BY THE LD AO AS PROPER EXAMINATION OF T HE SAME WERE NOT CARRIED OUT BY THE LD AO IN THE INSTANT CASE. IN RESPONSE TO THIS, THE LD AR REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND RELIED ON THE ORDER OF TH E LD CITA. 8.5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FA CTS STATED HEREINABOVE ARE NOT NARRATED FOR THE SAKE OF BREVITY. WE FIND THAT THE ASSESSEE HAD CLEARLY MENTIONED THE FOLLOWING IN ITS SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUN TS ATTACHED ALONG WITH THE PRINTED ANNUAL REPORT VIDE PAGE 65 AS BELOW:- 4. FIXED ASSETS : (A) ALL FIXED ASSETS ARE ACCOUNTED FOR AT COST INCL USIVE OF LEGAL AND / OR INSTALLATION AND INCIDENTAL EXPENSES LESS DEPRECIATION. (B) DEPRECIATION ON ALL ASSETS HAS BEEN PROVIDED ON STRAIGHT LINE BASIS AS PER RATES PRESCRIBED UNDER SCHEDULE XIV OF THE COMPANIES ACT, 1956 EXCEP T ON OFFICE PREMISES, WIND POWER PROJECT, ASSETS OF AHIMSAA GLOBAL MEDIA LIMITED IN AHIMSAA CHANNEL WHERE DEPRECIATION HAS NOT BEEN CHARGED. WE ARE THOROUGHLY CONVINCED FROM THE FACTS NARRATED ABOVE THAT THERE WAS NO SURPLUS THAT WAS DERIVED IN ANY MANNER WHATSOEVER BY THE ASSESSE E WARRANTING CHARGEABILITY TO TAX. IN ANY CASE, WE ARE IN COMPLETE AGREEMENT WITH THE ARG UMENTS OF THE LD AR THAT THE TRANSFER OF ASSETS BY HOLDING TO SUBSIDIARY COMPANY WOULD FALL UNDER THE EXEMPTION CLAUSE PROVIDED IN SECTION 47(IV) OF THE ACT AND HENCE THE SAME, IN AN Y EVENT, WOULD NOT BE REGARDED AS TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF T HE ACT. WE FIND FROM THE FACTS NARRATED ABOVE, THE ASSESSEE HAD ONLY ADDED THE FIXED ASSETS PERTAINING TO AHIMSAA CHANNEL DURING THE YEAR UNDER APPEAL INCLUDING THE CAPITALIZATION OF PREOPERATIVE AND PRELIMINARY EXPENSE RELATING TO THE CHANNEL AND TRANSFERRED THE SAME AT BOOK VALUES / COST TO ITS SUBSIDIARY COMPANY. THERE IS NO PROFIT ELEMENT DERIVED FROM I T. HENCE WE HOLD THAT THERE IS NO CASE FOR MAKING ANY ADDITION TOWARDS EXCESS DEPRECIATION OR PROFIT DERIVED FROM EXCESS OF ASSETS OVER LIABILITIES. WE FIND THAT THE LD CITA HAD RI GHTLY GRANTED RELIEF BY DULY APPRECIATING THE 14 ITA NOS. 1531 & 1532/KOL/2011 ATN INTERNATIONAL LTD, AY 2004-05 FACTS OF THE CASE. HENCE WE FIND NO INFIRMITY IN TH E ORDER OF THE LD CITA. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IN THIS REGARD IS DISM ISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 1532/KOL/2011 IS DISMISSED. 10. TO SUM UP, THE APPEAL OF THE REVENUE IN ITA NO . 1531/KOL/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF THE REVENUE IN I TA NO. 1532/KOL/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.10.2016 SD/- SD/- (S.S.VISWAMETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 5 TH OCTOBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ITO, WARD-1(3), KOLKATA. 2 RESPONDENT M/S. ATN INTERNATIONAL LTD., 10, PRINCE P STREET, 2 ND FLOOR, KOLKATA-700 072. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .