ITO, Ward - 6(2), Kolkata , Kolkata V. M/s. Gemini Overseas Ltd., Kolkata

ITA 1739/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0145 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 28-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: MANISH TIWARI
• Keywords: Cost of acquisition; TDS
• Section: 143(3); 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1739/KOL/2017 ( / ASSESSMENT YEAR:2011-12) ITO, WARD-6(2), KOLKATA VS. M/S GEMINI OVERSEAS LTD. 19, R.N. MUKHERJEE ROAD, KOLKATA- 700001 ./ ./PAN/GIR NO.: AABCG 0658 E (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI ROBIN CHOUDHURY, ADDL. CIT SR. DR RESPONDENT BY : SHRI MANISH TIWARI, AR / DATE OF HEARING : 23/01/2019 /DATE OF PRONOUNCEMENT : 29/03/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAIN ING TO ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST AN ORDER PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA (IN SHORT THE LD. CIT(A)], WHICH IN TURN ARISES OUT OF ASSESSMENT AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 05 .03.2014. 2. GROUND NO. 1 RAISED BY THE REVENUE READS AS UNDE R: I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING LOSS OF RS. 81,90,769/ - RESULTING FROM SALE OF SHARES OF TATIA SKYLINES & HEALTH FORMS LTD. AND J. P. MORGAN AND ALSO M/S GEMINI OVERSEAS LTD.. ITA NO.1739/KOL/2017 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 2 22 2 ERRED IN APPRECIATING THE FACTS RELYING ON EXTRANEO US AND IRRELEVANT CONSIDERATIONS. 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE HAS CLAIMED RS. 88,43,720/- AS LONG TERM CAPITAL LOSS. IT WAS FOUND THAT DURING TH E PREVIOUS YEAR THE ASSESSEE SOLD SHARES OF TATIA SKYLINES & HEALTH FARMS LTD. AND JP MORGAN FOR CONSIDERATION AS FOLLOWS: NAME OF THE SCRIPT PURCHASE PRICE CLAIMED DATE/YEAR OF PURCHASE SALE PRICE CLAIMED INDEXED PRICE OF ACQUISITION PRICE PER SHARE LOSS CLAIMED TATIA SKYLINES & HEALTH FARMS LTD. 41,25,000 1998-99 1,65,000 83,55,769 RS. 1/- 81,90, 769 JP MORGAN 21,00,000 2007-08 20,56,850 27,09,800 NO DETAIL COULD BE FILED 6,52,950 TOTAL 62,25,000 22,21,850 1,10,65,569 88,43,720 DURING THE ASSESSMENT PROCEEDINGS, AO ASKED THE ASS ESSEETO PRODUCE THE DETAILS OF PURCHASE FOR VERIFICATION OF PRICE OF THE SHARES AND THE RESPECTIVE YEAR OF ACQUISITION. IN RESPONSE, THE ASSESSEE-COMPANY FIL ED COPIES OF BILLS WHICH INDICATE THE SALE OF SHARES OF TATIA SKYLINES & HEALTH FARMS LTD. TO DIFFERENT PERSONS AT A VALUE OF RE.1/-. THE AO NOTICED FROM THE COMPUTATI ON OF THE LONG TERM CAPITAL LOSS, WHICH REVEALS THAT THE YEAR OF ACQUISITION OF SHARES OF TATIA SKYLINES & HEALTH FARMS LTD. AND JP MORGAN ARE 1998-99 AND 200 7-08 RESPECTIVELY. IN RESPECT OF JP MORGAN, THE ASSESSEE WAS UNABLE TO FI LE ANY DETAILS. AS THE ASSESSEE- COMPANY FAILED TO PRODUCE ANY EVIDENCE AS TO ITS SALE OF SHARES OF TATIA SKYLINES & HEALTH FARMS LTD, THROUGH STOCK EXCHANGE THEREFO RE AO CONCLUDED THAT THE CLAIM OF LOSS IN SHARE TRANSACTION IS NOT BEING SUB STANTIATED BY ASSESSEE. HENCE, THE LONG TERM CAPITAL LOSS AS HAVE BEEN CLAIMED BY THE ASSESSEE AGAINST BOTH THE M/S GEMINI OVERSEAS LTD.. ITA NO.1739/KOL/2017 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 3 33 3 SCRIPTS, AS DISCUSSED ABOVE, IS DENIED BY ASSESSING OFFICER AND NOT ALLOWED TO BE CARRIED FORWARD. 4. AGGRIEVED BY THE STAND SO TAKEN BY THE AO, THE A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE AD DITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATER IAL AVAILABLE ON RECORD, WE NOTE THAT THIS GROUND OF REVENUE RELATES TO DISALLO WANCE OF LOSS INCURRED UNDER THE HEAD LONG TERM CAPITAL GAINS OF RS. 88,43,720/- A RISING FROM SALE OF UNQUOTED SHARES OF TATIA SKYLINES & HEALTH FARMS LTD. OF RS. 81,90,769/- AND JP MORGAN RS.6,52,950/- BOTH TOTALRS.88,43,719/-.THE PARTICUL ARS REGARDING THE YEAR OF ACQUISITION, COST PRICE, INDEXED COST AND SALE CONS IDERATION WERE FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS. ADMITTEDLY, THE S HARES HELD IN TATIA SKYLINES & HEALTH FARMS LTD. ARE NOT QUOTED IN ANY RECOGNIZED STOCK EXCHANGE. IT IS COMMON KNOWLEDGE AND IT IS A WELL KNOWN FACT THAT U NQUOTED SHARES ARE NOT TRANSACTED THROUGH STOCK EXCHANGE. BUT THAT DOES N OT NECESSARILY MEAN THAT THE SALE OF SUCH UNQUOTED SHARES ISBOGUS OR LOSS RESULT ING FROM SUCH UNQUOTED SHARES IS REQUIRED TO BE REJECTED. BILLS IN SUPPORT OF SA LE OF SHARES OF SUCH UNQUOTED SHARES IN FAVOUR OF DIFFERENT PERSONS WERE FURNISHE D BY ASSESSEE BEFORE AO. THEREFORE,DENIAL OF LONG TERM CAPITAL LOSS TO THE EXTENT OF RS. 81,90,769/- CANNOT BE IGNORED MERELY ON THE PLEA THAT SALES WERE NOT E FFECTED THROUGH RECOGNIZED STOCK EXCHANGE. THE CONTENTION OF A.O. THAT SHARES WERE NOT SOLD IN ACUTE FINANCIAL EXIGENCY MAY ALSO BE SAID EXTRANEOUS AND IRRELEVANT . THE COST OF ACQUISITION OF SHARES IN TATIA SKYLINES & HEALTH FARMS LTD. I.E. R S. 41,25,000/- IS APPARENT FROM SCHEDULE 5 OF AUDITED ACCOUNTS OF THE ASSESSEE. IN VIEW OF THE TOTALITY OF FACTS EXPLAINED ABOVE THE DISALLOWANCE OF ASSESSEES CLAI M FOR LONG TERM CAPITAL LOSS OF RS. 81,90,769/- IS BEYOND ANY CONTROVERSY AND REQUI RES TO BE ALLOWED AND THEREFORE WE CONFIRM THE FINDINGS OF LD CIT(A). WE NOTE THAT SO FAR OF LONG TERM CAPITAL LOSS OF R S.6,52,950/- ARISING FROM SALE OF 20,56,850 SHARES OF JP MORGAN, IT IS AN ADMITTED FA CT THAT THE COMPANY FAILED TO M/S GEMINI OVERSEAS LTD.. ITA NO.1739/KOL/2017 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 4 44 4 FURNISH ANY DETAILS. THE FAILURE TO FURNISH SUCH DE TAILS MAY RESULT IN DISALLOWANCE OF LONG TERM CAPITAL LOSS OF RS.6,52,950/- RELATING TO ACQUISITION AND SALE OF SHARES OF JP MORGAN SHARES ONLY. KEEPING IN VIEW OF ABOVE, THE LOSS ARISES FROM THE SALE OF 20,56,850 SHARES OF JP MORGAN WHEREIN THE ASSESS EEFAILED TO FURNISH ANY DETAILS ARE NOT ALLOWED AND BALANCE LOSS IS ALLOWED. HENCE, A.O. IS DIRECTED TO DELETE THE ADDITION ACCORDINGLY AND BALANCELOSS OF RS.6,52,950 /- IS CONFIRMED.THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. C.I T .(A) IN DELETING THE AFORESAID ADDITION. HIS ORDER ON THIS ADDITION IS, THEREFORE, UPHELD AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 6. GROUND NO.2 RAISED BY THE REVENUE READS AS FOLLO WS: II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) HAS ERRED IN PROCEEDING ON EXTRANEOUS BELIEF AND MI SCONCEPTION OF LAW IN ALLOWING RS. 2,79,962/- OUT OF DYES & CHEMICALS U/S 40(A)(IA) OF THE ACT. 7. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE YE AR, THE ASSESSEE DEBITED AN AMOUNT OF RS.18,27,397/-UNDER THE HEAD CONVERSION, MACHI NING & OTHER DIRECT EXPENSES. THE ASSESSEE WAS ASKED TO FILE THE DETA ILS OF THE ABOVE SAID EXPENSE AND EVIDENCE IN SUPPORT OF THE SAME. IT WASNOTED B Y AO FROM THE SUBMISSION OF THE ASSESSEE THAT A TOTAL NUMBER OF 8 (EIGHT) EXPE NSES UNDER DIFFERENT NAMES ARE INCLUDED IN THE ABOVE MENTIONED EXPENSE. THEY ARE EMBROIDERY, WEAVING CHARGES, STORES AND SPARES, DYES & CHEMICALS, POWER & FUEL, WASHING CHARGES AND THREAD CUTTING. UNDER THE HEAD DYES AND CHEM ICALS AN EXPENDITURE TO THE TUNE OF RS. 2,79,962/- HAS BEEN MADE. THE ASSESSEE WAS ASKED TO PRODUCE THE NECESSARY LEDGERS AND BILLS, VOUCHERS AS EVIDENCE IN SUPPORT OF ITS CLAIM. FROM THE SUBMISSION FILED BY THE ASSESSEE IT WAS NOTED THAT THE DYES AND CHEMICALS HAVE BEEN PURCHASED IN THE NAME OF ONE TASSAR DYEING & FINISHING WORKS, BHAGALPUR FROM DIFFERENT PARTIES SUCH AS RAMAN SCIE NTIFIC AGENCIES, SANDEEP KUMAR AND MANISH DYES AND CHEMICALS ETC. IT WAS ASS UMED THAT THE ASSESSEE HAD GIVEN CONTRACT FOR DYEING ITS PRODUCTS TO TASSAR DYEING & FINISHING WORKS, BHAGALPUR. THE FACT WAS EVIDENCED FROM THE VOUCHERS OF RAMAN SCIENTIFIC AGENCIES, SANDEEP KUMAR AND MANISH DYES AND CHEM ICALS. HAVING GIVEN M/S GEMINI OVERSEAS LTD.. ITA NO.1739/KOL/2017 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 5 55 5 CONTRACT TO TASSAR DYEING & FINISHING WORKS, BHA GALPUR, FOR THE NECESSARY DYEING, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SO URCE U/S 194C OF THE ACT. BUT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE, HENCE THE ENTIRE AMOUNT OF RS. 2,79,962/-WAS DISALLOWED AND ADDED TO THE TOTAL INC OME OF THE ASSESSEE. 8. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A), WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATER IAL AVAILABLE ON RECORD, WE NOTE THAT THE ASSESSEE SUBMITTED BEFORE THE AO ALL THE BILLS OF DYES & CHEMICALS AND COPY OF TDS RETURN FOR THE RELEVANT ASSESSMENT YEA R. IT IS AN ADMITTED FACT THAT EXPENSES CLAIMED UNDER THE SUB-HEAD 'DYES & CHEMICAL' AMOUNT ING TO RS. 2,79,962/- IS IN RELATION TO PURCHASES OF MATERIALS. THIS FACT IS AL SO ADMITTED AT PARA 5 OF THE ASSESSMENT ORDER. THEREFORE, THE QUESTION OF DEDUCTION OF TDS U/S 194C IS NOT APPLICABLE. THAT IS, THE PROVISIONS OF CHAPTER XVIIB OF THE ACT RELATING TO TDS DO NOT ATTRACT ON PURCHASE OF GOODS AND MATERIALS. THEREFORE, THE DISALLOWANCE MA DE BY AO IS CONTRARY TO THE PROVISIONS OF SECTION 194C OF THE ACT. THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. C.I T.(A) IN DELETING THE AFORESAID AD DITION. HIS ORDER ON THIS ADDITION IS, THEREFORE, UPHELD AND THE GROUND OF APPEAL OF T HE REVENUE IS DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 29.03.2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE:29/03/2019 ( SB, SR.PS ) M/S GEMINI OVERSEAS LTD.. ITA NO.1739/KOL/2017 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 6 66 6 COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-6(2), KOLKATA 2. M/S GEMINI OVERSEAS LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES