Resorts Consortium India Ltd., New Delhi V. ITO, New Delhi

ITA 1725/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7211 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 20-06-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 12-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAMAKANT DIRECTOR
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.1725/DEL/2012 ASSESSMENT YEAR : 2001-02 ITA NO.5068/DEL/2013 ASSESSMENT YEAR : 2001-02 RESORTS CONSORTIUM INDIA LTD., AC-1/181 B, SHALIMAR BAGH, NEW DELHI. PAN: AAACR1203P VS. ITO, WARD-15(3), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAMAKANT, DIRECTOR DEPARTMENT BY : SHRI DEEPAK GARG, SR. DR DATE OF HEARING : 20.06.2016 DATE OF PRONOUNCEMENT : 21.06.2016 ORDER THESE TWO APPEALS ONE AGAINST THE QUANTUM ORDER A ND THE OTHER AGAINST THE PENALTY ORDER RELATE TO ASSESSMENT YE AR 2001-02. ITA NO.1725/DEL/2012 IS A RECALLED MATTER INASMUCH AS T HE EARLIER EX PARTE ORDER PASSED BY THE TRIBUNAL WAS SUBSEQUENTLY RECAL LED VIDE ITS LATER ITA NO.1725/DEL/2012 ITA NO.5068/DEL/2013 2 ORDER DATED 8.6.2016. SINCE BOTH THE APPEALS ARE B ASED ON SIMILAR FACTS, I AM PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDA TED ORDER FOR THE SAKE OF CONVENIENCE. 2. FACTS LEADING TO THE QUANTUM APPEAL ARE THAT THE ASSESSEE PURCHASED 1,80,000 UNQUOTED SHARES OF M/S SHIV SHAKTI EXTRUSI ONS LTD. WITH FACE VALUE OF RS.10 EACH AT PAR AGGREGATING TO RS.18 LAC . AT THE END OF THE YEAR, THESE SHARES WERE VALUED AT RS.16,20,000/- AN D THE REMAINING AMOUNT OF RS.1,80,000/- WAS CLAIMED AS DEDUCTION TO WARDS DEPRECIATION IN THE VALUE OF SHARES. IN THE ORIGINAL ROUND OF P ROCEEDINGS, THE MATTER CAME UP BEFORE THE TRIBUNAL WHICH RESTORED THE MATT ER TO THE FILE OF AO FOR GRANTING FULL OPPORTUNITY TO THE ASSESSEE TO FI LE DETAILS IN RESPECT OF THE CLAIM. IN THE FRESH PROCEEDINGS, THE ASSESSEE WAS AGAIN REQUIRED TO FILE NECESSARY DETAILS. THE ASSESSEE SUBMITTED BEF ORE THE AO THAT THE COMPANY HAD SURPLUS FUNDS WHICH WERE USED FOR PURCH ASING 1,80,000 SHARES AT PAR. IT WAS EXPLAINED THAT THE SAID COMP ANY WAS ABOUT TO COME OUT WITH PUBLIC ISSUE, BUT, EVENTUALLY, DID NOT DUE TO MARKET CONDITIONS. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION OF HAVING HELD THE ITA NO.1725/DEL/2012 ITA NO.5068/DEL/2013 3 SHARES AS STOCK-IN-TRADE BECAUSE THE ASSESSEE COMPA NY HAD NEVER DEALT WITH THE SHARES SINCE ITS INCORPORATION. SINCE THE ASSESSEE INVESTED ALL SURPLUS FUNDS AS PER THE ASSESSEES OWN VERSION, TH E AO TREATED THE PURCHASE OF SHARES AS `INVESTMENT AND, RESULTANTLY , DISALLOWED THE AMOUNT OF LOSS ON THEIR VALUATION TO THE TUNE OF RS .1,80,000/-. THE LD. CIT(A) UPHELD THE ASSESSMENT ORDER ON THIS ISSUE. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS EVIDENT FROM T HE ASSESSEES REPLY TENDERED BEFORE THE AO THAT THE COMPANY INVESTED IT S SURPLUS FUNDS IN PURCHASE OF UNQUOTED SHARES. IT CAN BE SEEN THAT T HE ASSESSEE HAD NEVER DEALT WITH OR TRADED IN SHARES EITHER IN THE PAST O R IN THE FUTURE. UNDER THESE CIRCUMSTANCES, IT IS DIFFICULT TO ACCEPT THE ASSESSEES CONTENTION OF HAVING HELD THESE SHARES AS `STOCK-IN-TRADE. ONCE IT IS HELD THAT THE SHARES WERE PURCHASED AS INVESTMENT, THERE CANNOT B E ANY DEDUCTION ON ACCOUNT OF DECLINE IN THE VALUE OF `INVESTMENT AS AT THE YEAR END. I, THEREFORE, APPROVE THE VIEW TAKEN BY THE AUTHORITIE S BELOW. ITA NO.1725/DEL/2012 ITA NO.5068/DEL/2013 4 4. IN THE RESULT, THE QUANTUM APPEAL IS DISMISSED. 5. AS REGARDS THE PENALTY APPEAL, IT IS FOUND THAT THE AO IMPOSED PENALTY U/S 271(1)(C) IN RESPECT OF DISALLOWANCE OF RS.1,80,000/-. THE FACTS NARRATED ABOVE EVIDENTLY PROVE THAT THE ASSES SEE CLAIMED DEDUCTION FOR DECLINE IN THE VALUE OF SHARES WHICH IT PERCEIV ED TO BE STOCK-IN-TRADE RATHER THAN INVESTMENT. BUT, FOR THAT, ALL THE NEC ESSARY DETAILS WERE DULY FILED. SIMPLY BECAUSE THE ASSESSEES CONTENTION OF THE SHARES HAVING BEEN PURCHASED AND HELD AS STOCK-IN-TRADE HAS NOT B EEN ACCEPTED, IT CANNOT BE EQUATED WITH CONCEALMENT OF INCOME OR FUR NISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT T HE PENALTY. IT IS A CASE IN WHICH THE ASSESSEES BONA FIDE BELIEF OF THESE SHARES HAVING BEEN HELD AS INVESTMENT HAS NOT BEEN ACCEPTED, WHICH CAN BE A GOOD GROUND FOR MAKING OF DISALLOWANCE, BUT, CANNOT LEAD TO IMPOSIT ION OF PENALTY. I, THEREFORE, ORDER FOR THE DELETION OF THE PENALTY. ITA NO.1725/DEL/2012 ITA NO.5068/DEL/2013 5 6. IN THE RESULT, THE PENALTY APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.20 16. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 21 ST JUNE, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.