Dabur Invest Corp, New Delhi V. PrCIT-16, New Delhi

ITA 1764/DEL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4076 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 13-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Revision of order; Transfer pricing; Business expenditure; Double taxation relief; Share purchase agreement; Opportunity of being heard; Principle of natural justice; International transaction; Earning of tax free income; Assessment record; Block assessment; Capital receipt; Revenue expenditure; Capital expenditure; TDS; Set aside; Liquidation; Capital Gains
• Section: 143(3); 142(1); 92E; 201; 64; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER ITA NO. 1 76 3 /DEL/2018 [A.Y 2013 - 14] & ITA NO. 1 76 4 /DEL/20 1 8 [A.Y 20 14 - 15 ] DABUR INVEST CORP VS. THE PR . C . I . T - 16 4 TH FLOOR, PUNJABI BHAWAN NEW DELHI 10, ROUSE AVENUE NEW DELHI PAN: AADFD 2529 G (APPLICANT) (RESPONDENT) ASSESSEE BY : SH RI M.P. RASTOGI , ADV SHRI CHANDAN AGGARWAL, CA DEPARTMENT BY : SHRI G.C. SRIVASTAVA, SR ADV [SPECIAL COUNSEL] SH RI KESHAV SAXENA, P CIT - DR SHRI S.R. SENAPATI, ADDL. CIT SHRI SUVINAY K. DASH, ADV. DATE OF HEARING : 2 9 . 0 1 .201 9 DATE OF PRONOUNCEMENT : 1 1 . 0 3 .201 9 2 ORDER PER N.K. BILLAIYA , ACCOUNTANT MEMBER, TH ESE TWO APPEAL S BY THE ASSESSEE ARE PREFERRED AGAINST T WO SEPARATE ORDER S OF THE PCIT - 16, NEW DELHI DATED 06.02.2018 FRAMED U/S 263 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] PERTAINING TO A.Y S 2013 - 14 AND 20 14 - 15 . SINCE THE UNDERLYING FACTS IN ISSUES ARE IDENTICAL IN BOTH THESE APPEALS AND PERTAIN TO SAME ASSESSEE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE REPRESENTATIVES OF BOTH THE SI DES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 18(6) OF ITAT RULES. JUDICIAL DECISIONS RELI ED UPON WERE CAREFULLY PERUSED. 3. BEFORE PROCEEDING FURTHER, IT WOULD BE PERTINENT TO UNDERSTAND THE FACTS OF THE CASE. 3 4. VIDE DEED OF PARTNERSHIP EFFECTIVE FROM 26.05.2001, SHRI A.C. BURMAN, SHRI V.C. BURMAN, SHRI G.C. BURMAN AND SHRI CHETAN BURMAN ENT ERED INTO A PARTNERSHIP WITH PROFIT SHARING RATIO 20:40:20:20 RESPECTIVELY. THESE PARTNERS DECIDED TO ENTER INTO A PARTNERSHIP FOR INVESTING IN EQUITY CAPITAL OF JOINT VENTURE COMPANY [JVC] PROPOSED TO BE ESTABLISHED IN INDIA FOR THE PURPOSE OF SETTING U P AND CARRYING ON THE BUSINESSES OF INSURANCE, PENSION AND LONG - TERM SAVINGS. SUBSEQUENTLY, SUPPLEMENTARY PARTNERSHIP DEEDS WERE EXECUTED ON 07.11.2001, 29.10.2003 AND 22.12.2011. 5. ON 07.08.2001, A JOINT VENTURE AGREEMENT WAS ENTERED INTO BETWEEN M/S COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD [CUIH] AND DABUR INVEST CORP, THE PARTNERSHIP FIRM REFERRED TO HEREINABOVE. CUIH IS A COMPANY INCORPORATED IN ENGLAND AND WALES. LATER ON, THE NAME WAS CHANGED TO AVIVA INTERNATIONAL HOLDINGS LTD. THIS JOINT VE NTURE AGREEMENT WAS TO CO - PROMOTE A JOINT VENTURE COMPANY FOR THE PURPOSE OF REGULATING THEIR RELATIONSHIP INTER SE IN RESPECT OF THE COMPANY PROPOSED TO BE FLOATED. AS PER THE AGREEMENT, THE APPELLANT COMPANY I.E. DABUR INVEST CORP HAD TO SUBSCRIBE 74% OF THE TOTAL PAID UP EQUITY CAPITAL OF THE COMPANY AND CUIH HAD TO SUBSCRIBE 26% OF THE TOTAL PAID UP CAPITAL OF THE COMPANY. 4 6. THIS WAS SO AGREED BECAUSE UPTO THE YEAR 2000, INSURANCE BUSINESS WAS NOT ALLOWED BY THE PRIVATE PARTIES AND WAS MEANT ONLY FOR GOVERNMENT COMPANIES. HOWEVER, IN THE YEAR 2001, THE GOVERNMENT HAD OPENED THE FIELD FOR PRIVATE PARTIES ALSO AND IN ORDER TO CONTROL HAD ESTABLISHED INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY [IRDA]. 7. AS PER THE JOINT VENTURE AGREEMENT, THE COMPANY WAS TO BE PROMOTED AS A PRIVATE LIMITED COMPANY WHICH SHALL CARRY ON THE BUSINESS OF INSURANCE SUBJECT TO APPROVAL BY THE IRDA PURSUANT TO REGULATION 3(1) OF THE IRDA [REGISTRATION OF INDIAN INSURANCE COMPANIES] REGULATIONS, 2000. 8. AS PER CLAUSE 6.9 OF THE AGREEMENT CUIH SHALL NOT BE UNDER ANY OBLIGATION TO SUBSCRIBE FOR ADDITIONAL SHARES TO THE EXTENT TH A T IS PREVENTED BY APPLICABLE LAWS WHCH WAS AT THAT TIME 26% FOR FOREIGN INVESTORS. 9. THE RELEVANT CLAUSES OF THE JOINT VENTURE AGREEMENT REA D AS UNDER: 5 6.1 IF AT ANY TIME : 6.1.1 THE COMPANY REQUIRES FURTHER FINANCING IN TERMS OF ITS FIVE YEAR BUSINESS PLAN AND ANNUAL BUSINESS PLAN PRESENTED TO AND APPROVED BY THE BOARD. 6.1.2 THE SOLVENCY RATIO OF THE COMPANY FALLS BELOW 120 % OF THE S TATUTORY MINIMUM SOLVENCY RATIO ( OR SUCH OTHER LEVEL OR RANGE AS THE BOARD MAY AGREE) (THE DESIRED SOLVENCY RATIO). 6.1.3 THE BOARD OF THE COMPANY RESOLVES THAT FURTHER FINANCING IS REQUIRED. 6.1.4 THE APPOINTED ACTUARY NOTIFIES THE BOARD THAT, IN HIS OPINION THE COMPANYS FINANCIAL RESOURCES ARE INSUFFICIENT TO SATISFY ITS WORKING CAPITAL REQUIREMENTS; OR 6.1.5 THE COMPANY IS REQUIRED BY APPLICABLE LAW TO INCREASE ITS ISSUES SHARE CAPITAL; THE COMPANY SHALL, PRIOR TO RAISING FINANCE THROUGH AN Y SOURCE TO MEET SUCH REQUIREMENT INCLUDING THAT BY WAY OF LOANS FROM SHAREHOLDERS, CALL ON EACH SHAREHOLDER TO PROVIDE FORTHWITH SUFFICIENT CAPITAL TO THE COMPANY BY WAY OF SUBSCRIPTION FOR FURTHER SHARES IN THE PROPORTION THAT THE TOTAL AMOUNT OF PAID UP SHARE CAPITAL HELD BY THAT SHAREHOLDER BEARS TO THE TOTAL AMOUNT OF PAID UP SHARE CAPITAL OF THE COMPANY (THE SPECIFIED PROPORTION) AND THE SHAREHOLDERS SHALL SUBSCRIBE FOR SUCH ADDITIONAL SHARES IN ACCORDANCE WITH CLAUSE 6.4 BELOW. HOWEVER, IF AN ANNU AL BUSINESS PLAN FOR A YEAR REQUIRES CAPITAL CONTRIBUTION BY DABUR IN EXCESS OF THE AMOUNT (PERMITTED AMOUNT) WHICH IS AGGREGATE OF : 6 ( A ) THE AMOUNT REQUIRED TO BE CONTRIBUTED BY DABUR IN THAT YEAR IN TERMS OF THE FIVE YEAR BUSINESS PLAN, AND ( B ) 30 PERCENT OF THE AMOUNT SET OUT IN (A) ABOVE. THE CALL BY THE COMPANY FOR FURTHER SUBSCRIPTION BY THE SHAREHOLDERS PURSUANT TO THIS CLAUSE 6.1 SHALL BE SUBJECT TO APPROVAL OF THE AFORESAID ANNUAL BUSINESS PLAN BY BOTH SHAREHOLDERS. 6.2 NOTWITHSTANDING ANYTHING STATED IN CLAUSE 6.1 ABOVE AND ELSEWHERE IN THIS AGREEMENT, THE TOTAL FINANCIAL COMMITMENT OF DABUR TOWARDS THE COMPANY SHALL NOT EXCEED RS.237 CRORES WHICH CONSTITUTES 74% OF RS.320 CRORES, THE PROPOSED TOTAL PAID UP EQUITY SHARE CAPITAL OF THE COMPANY. 6.2.1 [NOT USED] 6.2.2 [NOT USED] PROVIDED FURTHER, DABURS OBLIGATION TO DISCHARGE ITS COMMITMENT UNDER THIS CLAUSE 6.1 IS SUBJECT TO CUIH, PRIOR TO DABUR MAKING SUCH SUBSCRIPTION, REPLACING THE THEN EXITING CUIH OPTION. PRICE G UARANTEE, IF REQUIRED, WITH A FRESH IRREVOCABLE AND REVOLVING LETTER OF CREDIT FROM THE NEW DELHI BRANCH OF AN INTERNATIONAL BANK OF GOOD REPUTE, PROCURED AT ITS OWN EXPENSE, IN THE FORM AND SUBSTANCE SET OUT IN SCHEDULE 10A TO SECURE THE OPTION PRICE THAT WOULD BE PAYABLE BY CUIH FOR THE TOTAL NUMBER OF SHARES WHICH WILL BE HELD BY DABUR 7 PURSUANT TO DABUR SUBSCRIBING TO THE REQUISITE NUMBER OF SHARES SET OUT IN THE SUBSCRIPTION REQUEST INCLUDING THE SHARES ALREADY HELD BY DABUR PRIOR TO SUCH INVESTMENT. 6 .3 NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT, IF FUNDS ARE REQUIRED BY THE COMPANY AFTER DABUR HAS COMPLETELY DISCHARGED ITS COMMITMENT UNDER CLAUSE 6.2 ABOVE, DABUR SHALL HAVE THE OPTION TO CONTRIBUTE TOWARDS SUCH ADDITIONAL FUNDING IN PROPO RTION TO ITS THEN EXISTING SHAREHOLDING IN THE COMPANY. IF DABUR CHOOSES NOT TO EXERCISE ITS OPTION TO CONTRIBUTE FURTHER, THE COMPANY MAY ARRANGE SUCH ADDITIONAL FUNDING IN THE MANNER TO BE DETERMINED BY IT. IT IS HOWEVER EXPRESSLY AGREED THAT THE MANNER TO BE DETERMINED BY IT. IT IS HOWEVER EXPRESSLY AGREED THAT SUCH RAISING OF FUNDS SHALL NOT ISSUE ANY FRESH EQUITY SHARES ( OR ANY INSTRUMENT POTENTIALLY CONVERTIBLE INTO EQUITY) TO CUIH. DABUR AND TO ANY THIRD PARTY IN CONTRAVENTION OF THIS PROVISION. I T IS FURTHER AGREED THAT SUCH RAISING OF FUNDS BY THE COMPANY SHALL NOT REQUIRE EITHER OF THE SHAREHOLDERS TO ASSUME ANY FINANCIAL OBLIGATIONS IN RESPECT OF SUCH FUNDS. 6.4 WHENEVER THE COMPANY REQUESTS THE SHAREHOLDERS TO SUBSCRIBE FOR SHARES IN ACC ORDANCE WITH CLAUSE 6.1, THE FOLLOWING PROCEDURE SHALL BE APPLICABLE : - ( A ) THE COMPANY SHALL ISSUE A SUBSCRIPTION REQUEST (SUBSCRIPTION REQUEST) IN THE FORM AND SUBSTANCE SET OUT IN SCHEDULE 5 AND COPY IT TO EACH OF THE SHAREHOLDERS; 8 ( B ) THE SUBSCRIPTION REQU EST FOR ANY YEAR SHALL BE ISSUED BY THE COMPANY BETWEEN NOVEMBER 1 - 15; ( C ) THE SHAREHOLDERS SHALL BE OBLIGED TO SUBSCRIBE TO THE REQUISITE NUMBER OF SHARES SET OUT IN THE SUBSCRIPTION REQUEST IN ACCORDANCE WITH CLAUSE 6.5 BELOW, NO LATER THAN JANUARY 15 OF TH E SUBSEQUENT YEAR ( PAYMENT DATE). ( D ) THE COMPANY SHALL BE ENTITLED TO ISSUE THE SUBSCRIPTION REQUEST AT ANY TIME OTHER THAN THE PERIOD SET OUT IN PARAGRAPH (B) ABOVE, PROVIDED THE SAME HAS BEEN CONSENTED TO BY BOTH SHAREHOLDERS; ( E ) IF A SUBSCRIPTION REQUEST HAS BEEN ISSUED IN TERMS OF PARAGRAPH (D) ABOVE, THE SHAREHOLDER SHALL BE OBLIGED TO SUBSCRIBE TO THE REQUISITE NUMBER OF SHARES SET OUT IN THE SUBSCRIPTION REQUEST WITHIN SEVENTY FIVE (75) DAYS FROM THE DATE OF SUCH SUBSCRIPTION REQUEST. 6.5 SUBJECT TO CLAUSES 6.2, 6.4 AND OTHER TERMS OF THIS AGREEMENT, EACH SHAREHOLDER SHALL ON OR BEFORE THE PAYMENT DATE PAY IN FULL FOR THE SHARES TO BE ISSUED TO IT BY WAY OF CHEQUE/ BANK DRAFT/ PAY ORDER OR WIRE TRANSFER TO THE CREDIT OF THE COMPANY AT SUCH BANK IN INDIA AS THE COMPANY SHALL DESIGNATE IN THE SUBSCRIPTION REQUEST IS ISSUED IN TERMS OF CLAUSE 6.4 (E), THE COMPANY, ACTING THROUGH ITS CHIEF EXECUTIVE OFFICER, SHALL BE ENTITLED TO INVOKE THE DABUR GUARANTEE TO THE EXTENT OF THE AMOUNT PAYABLE PROV IDED CUIH HAS SUBSCRIBED TO THE SHARES AS PER THE SUBSCRIPTION REQUEST. IN THE EVENT THE COMPANY INVOKES THE DABUR GUARANTEE, IT SHALL WITHIN THIRTY (30) DAYS ISSUE TO DABUR THE APPROPRIATE NUMBER OF FULLY PAID UP SHARES AT PAR VALUE FOR WHICH SUCH PAYME NT HAS BEEN RECEIVED BY THE COMPANY FROM THE BANK. THE COMPANY SHALL DELIVER TO DABUR, SHARE CERTIFICATE (S) 9 EVIDENCING VALID TITLE TO THE SHARES SO ISSUED FREE FROM ANY LIENS OR THIRD PARTY PRE - EMPTIVE RIGHTS. THE COMPANY SHALL FURTHER FURNISH TO DABUR AND THE BANK EVIDENCE THAT ALL NECESSARY CORPORATE FORMALITIES (INCLUDING REGISTRATION IN THE REGISTER OF MEMBERS OF THE COMPANY) IN CONNECTION WITH THE ISSUE OF SUCH SHARES HAVE BEEN COMPLETED. 6.6 SHARES ISSUE UNDER THIS CLAUSE 6 SHALL RANK PARI PASSU IN ALL RESPECTS WITH THE EXISTING SHARES IN THE COMPANY. 6.7 UPON EACH SUBSCRIPTION AND PAYMENT BY A SHAREHOLDER FOR SHARES UNDER THIS CLAUSE 6, THE COMPANY SHALL; 6.7.1 I SSUE TO SUCH SHAREHOLDER THE APPROPRIATE NUMBER OF FULLY PAID UP SHARES AT PAR VALUE FOR WHICH SUCH PAYMENT IS MADE AND SHALL DELIVER TO SUCH SHAREHOLDER, A SHARE CERTIFICATE EVIDENCING VALID TITLE TO THE SHARES SO ISSUES FREE FROM ANY LIENS OR THIRD PARTY PRE - EMPTIVE RIGHTS; 6.7.2 FURNISH TO EACH SHAREHOLDER EVIDENCE THAT ALL NECE SSARY CORPORATE FORMALITIES (INCLUDING REGISTRATION IN THE REGISTER OF MEMBERS OF THE COMPANY) IN CONNECTION WITH THE ISSUE OF SUCH SHARES HAVE BEEN COMPLETED; AND 6.7.3 I SSUE A LETTER SIGNED BY ITS CHIEF EXECUTIVE OFFICER TO THE BANK THAT HAS FURNISHED THE DABUR GUARANTEE WITH A COPY TO DABUR CONFIRMING THAT ; ( A ) DABUR HAS DISCHARGED ITS PAYMENT OBLIGATION IN TERMS OF CLAUSE 6.5; AND ( B ) DABUR GUARANTEE CAN BE REPLACED WITH A FRESH IRRECOVERABLE AND REVOLVING LETTER OF CREDIT FOR AN AMOUNT WHICH IS THE DIFF ERENCE OF THE AMOUNT SECURED BY THE EXISTING DABUR GUARANTEE AND THE AMOUNT CONTRIBUTED BY THE DABUR TO THE 10 6.8 NOTWITHSTANDING THE TERMS OF CLAUSE 6.1 BUT SUBJECT TO CLAUSE 6.9, THE SHAREHOLDERS SHALL NOT BE REQUIRED TO SUBSCRIBE FOR SHARES UNLESS BOTH SHAREHOLDERS ARE OBLIGED TO SUBSCRIBE FOR AND ARE ISSUED WITH THE APPROPRIATE NUMBER OF SHARES AS SPECIFIED IN THE SUBSCRIPTION REQUEST AT THE SAME TIME. 6.9 CUIH SHALL NOT BE UNDER AN OBLIGATION TO SUBSCRIBE FOR ADDITIONAL SHARES TO THE EXTENT THAT IT IS PREVENTED BY THE APPLICABLE LAW FROM DOING SO. FOR THE AVOIDANCE OF DOUBT, CUIH SHALL ALWAYS HOLD A MINIMUM OF 26% OF THE TOTAL EQUITY SHARE CAPITAL OF THE COMPANY, SUBJECT TO APPLICABLE LAW. 6.10 IN THE EVENT THE APPLICABLE LAW PERCENTAGE IS CHANGED TO ALLOW CUIH TO HOLD MORE THAN 26% OF THE TOTAL EQUITY SHARE CAPITAL OF THE COMPANY, AND IN THE EVENT THAT THE C OMPANY AT THAT PARTICULAR POINT OF TIME REQUIRES FURTHER FINANCING, CUIH SHALL BE OBLIGED FIRST TO INCREASE ITS SHAREHOLDING IN THE PAID - UP CAPITAL OF THE COMPANY TO THE REVISED APPLICABLE LAW PERCENTAGE BY PURCHASING THE REQUIRED NUMBER OF SHARES FROM DAB UR IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. AFTER SUCH SUBSCRIBING BY CUIH, THE SHAREHOLDERS SHALL PROVIDE ANY FURTHER FINANCING SUBJECT TO CLAUSE 6.2, IN PROPORTION TO THEIR NEW SHAREHOLDING RATIO IN THE COMPANY. 10. IT C AN BE SEEN FROM CLAUSE 6.10 OF THE AGREEMENT [SUPRA] THAT IN THE EVENT THE APPLICABLE LAW % IS CHANGED TO ALLOW CUIH TO HOLD MORE THAN 26% OF THE TOTAL EQUITY SHARE OF THE COMPANY AND IN THE EVENT THE COMPANY AT THAT PARTICULAR POINT OF TIME REQUIRED FURTHER FINANCING, CUIH 11 SHA LL BE OBLIGED TO INCREASE ITS SHARES HOLDINGS IN THE PAID UP CAPITAL OF THE COMPANY TO THE REVISED APPLICABLE LAW PERCENTAGE BY PURCHASING THE REQUIRED NUMBER OF SHARES FROM DABUR INVEST CORP IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT. 11. COMPOSITION OF BOARD OF DIRECTORS IS GIVEN IN CLAUSE 11 AND THE SAME READ AS UNDER: 11. BOARD OF DIRECTORS 11.1 UNLESS OTHERWISE AGREED BY THE SHAREHOLDERS, THE NUMBER OF DIRECTORS OF THE COMPANY SHALL BE TEN (10). 11.2 DARBUR SHALL BE ENTITLED TO NOMINATE A MAXIMUM OF SIX (6) OF THE TEN (10) DIRECTORS AND CUIH SHALL NOMINATE A MAXIMUM OF FOUR (4) DIRECTORS. 11.3 THE CHAIRMAN SHALL BE NOMINATED BY ANNUAL ROTATION BETWEEN THE SHAREHOLDERS AND SHALL NOT HAVE A CASTING VOTE. DABUR WILL NOMINATE THE CHAIRMAN IN THE FIRST YEAR. 1 1.4 THE CHIEF EXECUTIVE OFFICER OF THE COMPANY SHALL BE NOMINATED BY CUIH (FROM ONE OF T HE FOUR (4) DIRECTORS NOMINATED BY IT) IN CONSULTATION WITH DABUR AND SHALL BE APPOINTED BY THE BOARD . 11.5 THE SHAREHOLDERS SHALL EXERCISE THEIR RESPECTIVE VOTES TO APPOINT AND RE APPOINT, AND PROCURE THE COMPANY TO APPOINT AND RE - APPOINT, THE 12 PERSONS NO MINATED BY THE RESPECTIVE SHAREHOLDERS AS DIRECTORS OF THE COMPANY FROM TIME TO TIME IN THE RATIO PROVIDED FOR IN CLAUSE 11.2 ABOVE. 11.6 EACH SHAREHOLDER SHALL BE ENTITLED FROM TIME TO TIME TO NOMINATE DIRECTORS OR THEIR ALTERNATE DIRECTORS ON THE BOARD NOMINATED BY IT AND EACH SHAREHOLDER SHALL SO ACT AS TO PROCURE THAT SUCH NOMINEE OF THE OTHER IS APPOINTED ON THE BOARD. IT IS AGREED THAT IN THE EVENT OF RESIGNATION BY A DIRECTOR FROM THE BOARD, THE SHAREHOLDER WHO HAS APPOINTED SUCH DIRECTOR SHALL NOMI NATE A NEW DIRECTOR WITHIN THIRTY (30) DAYS OF SUCH RESIGNATION 11.7 THE REMOVAL OF ANY DIRECTOR FROM THE BOARD SHALL BE IN ACCORDANCE WITH CLAUSE 13.24. 11.8 AS AND WHEN CULHS SHAREHOLDING IN THE COMPANY GOES UP PURSUANT TO A CHANGE IN THE APPLICABLE LAW PERCENTAGE. CUIH SHAFT BE ENTITLED TO NOMINATE SUCH ADDITIONAL NUMBER OF DIRECTORS ON THE BOARD AS IROA SHALL APPROVE. 12. TRANSFER OF SHARES IS GOVERNMENT BY CLAUSE 15 AND THE SAME READ AS UNDER: 15. TRANSFER OF AFFILIATED COMPANIES. 13 15.1 A SHAREHOLDER (THE TRANSFERRING PARTY 35 } MAY AT ANY LIME TRANSFER ANY OF ITS SHARES TO ONE OR MORE OF ITS AFFILIATES PROVIDED: 15 . 1 . 1 SUBJECT TO CLAUSE 15.1.5 BELOW, THE TRANSFERRING PARTY S HALL REMAIN JOINTLY AND SEVERALLY LIABLE WITH THE TRANSFEREE FOR THE OBLIGATIONS OF THE TRANSFERRING PARTY AND SHALL ALSO BE ABLE TO EXERCISE THE RIGHTS UNDER THIS AGREEMENT IN RESPECT OF EACH SHARE TRANSFERRED AND THE TRANSFERRING PARTY SHALL BE CONSTITUT ED AS THE SOLE POWER OF ATTORNEY HOLDER ON BEHALF OF THE TRANSFEREE PARTY TO DEAL WITH THE COMPANY WITHOUT INTERFERENCE FROM THE TRANSFEREE PARTY ; 15 . 1 . 2 THE AFFILIATE SHALL ACCEDE TO THIS AGREEMENT BY EXECUTION OF A DEED OF ADHERENCE IN THE FORM SET OUT IN SCH EDULE 7 AND SHALL ACCEDE OR EXECUTE SUCH OTHER DOCUMENTS TO WHICH THE TRANSFERRING PARTY IS A PARTY; 15 1.3 THE TRANSFER COMPLIES WITH THE ARTICLES AND THE APPLICABLE LAW'; 15 14 THE TRANSFERRING PARTY SHALL PROCURE THAT SUCH AFFILIATE TRANSFERS BACK TO THE TRANSFERRING PARTY ANY SHARES HELD BY SUCH AFFILIATE PRIOR TO IT CEASING TO BE AN AFFILIATE OF THE TRANSFERRING PARTY. 15. 1.5 NOTWITHSTANDING THE TRANSFER BY DABUR OF ITS SHARES TO ONE OR MORE AFFILIATES, CUIH AGREES THAT DABUR SHALL ALWAYS RETAIN TH E RIGHTS TO INVOKE THE CUIH OPTION PRICE GUARANTEE AND/ OR THE CUIH SUBSCRIPTION PRICE GUARANTEE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT ON BEHALF OF SUCH AFFILIATES. 14 HOWEVER, NO SUCH AFFILIATES SHALL HAVE THE RIGHT TO INVOKE EITHER THE CUIH OPTION PRICE GUARANTEE AND/ OR THE CUIH SUBSCRIPTION PRICE GUARANTEE . 15 . 2 ANY TRANSFER OF SHARES IN ACCORDANCE WITH THIS CLAUSE 15 SHALL BE EFFECTED BY THE TRANSFERRING PARTY TRANSFERRING SUCH SHARES AS BENEFICIAL OWNER FREE AND DEAR OF ALL SECURITY INTERESTS OTHER THAN THOSE IMPOSED BY THIS AGREEMENT OR THE ARTICLES TOGETHER WITH ALL RIGHTS A TTACHING THERETO ON OR AFTER THE DATE OF SUCH TRANSFER 15 . 3 THE SHAREHOLDERS SHALL PROCURE THAT THE COMPANY SHALL NOT REGISTER ANY TRANSFER OF SHARES MADE IN BREACH OF THIS CLAUSE 15. 15 . 4 DABUR UNDERTAKES THAT DURING THE TERM OF THIS AGREEMENT IT WILL NOT SELL OR TRANSFER THE DABUR SHARES TO ANY COMPANY WHICH IS NOT AN AFFILIATE OF DABUR AND THAT THERE WILL NOT BE ANY NEW SHAREHOLDING IN ANY AFFILIATE HOLDING SHARES PURSUANT TO A TRANSFER UNDER CLAUSE 15.1 OR IN DABUR BY ANY PERSON OTHER THAN AN INDIAN NATIONAL IF THE EFFECT OF SO DOING WOULD BE TO PREVENT CUIH FROM MAXIMISING ITS SHAREHOLDING IN THE COMPANY AND RENDER THE COMPANY IN BREACH OF APPLICABLE LAW PERCENTAGE . 13. CLAUSE 16 CONTAINS TRANSFER OF DABUR SHARES AND SHARE OPTION AND SAME READ AS UNDER: 16. T RANSFER OF DABUR SHARES AND SHARE OPTION 16.1 IN CONSIDERATION OF THE TERMS OF THIS AGREEMENT AND PAYMENT BY CUIH OF THE OPTION PRICE, DABUR HEREBY GRANTS TO CUIH. 15 (A) THE RIGHT DURING THE TEN YEAR PERIOD TO REQUIRE DABUR TO SELL ONLY TO CUIH SHAREHOLDING IN THE COMPANY TO THE MAXIMUM REVISED APPLICABLE LAW PERCENTAGE; AND (B) THE RIGHT AFTER THE TEN YEAR PERIOD TO REQUIRE DABUR TO SELL TO CUIH OR ITS NOMINEE SUCH NUMBER OF DABUR SHARES AS WOULD BE REQUIRED TO TAKE CUIH SHAREHOLDING IN THE COMPANY TO THE MAXIMUM REVISED APPLICABLE LAW PERCENTAGE. THE RIGHTS CONFERRED BY THIS CLAUSE TO CUIH SHALL BE EXERCISABLE ON EACH OCCASION (IF MORE THAN ONCE) WHEN CUIHS SHAREHOLDING IN THE COMPANY IS LOWER THAN THE REVISED APPLICABLE LAW PERCENTAGE. IN CONSIDERATION OF THE TERMS OF THIS AGREEMENT CUIH HEREBY GRANTS TO DABUR - ( A ) THE RIGHT DURING THE TEN YEAR PERIOD TO REQUIRE CUIH TO PURCHASE FROM DABUR SUCH NUMBER OF SHARES HELD BY DABUR AS MAYBE REQUIRED TO TAKE CU(H SHAREHOLDING IN THE COMPANY TO THE MAXIMUM REVISED APPLICABLE LAW PERCENTAGE; AND ( B ) THE RIGHT AFTER THE TEN YEAR PERIOD TO REQUIRE CUIH BY ITSELF FOR THROUGH ITS NOMINEE TO PURCHA SE FROM DABUR SUCH NUMBER OF DABUR SHARES AS WOULD BE REQUIRED TO TAKE CUIH SHAREHOLDING IN THE COMPANY TO THE MAXIMUM REVISED APPLICABLE LAW PERCENTAGE. THE RIGHTS CONFERRED BY THIS CLAUSE TO DABUR SHALL BE EXERCISABLE ON EACH OCCASION (IF MORE THAN ONCE) WHEN CUIHS SHAREHOLDING IN THE COMPANY IS LOWER THAN THE REVISED APPLICABLE LAW/ PERCENTAGE. 16 THE RIGHTS AVAILABLE TO CUIH AND DABUR UNDER THIS CLAUSE SHALL BE EXERCISED IN ACCORDANCE WITH THE PROCEDURES SET OUT IN SCHEDULE 6, 16.2 DURING THE TERM OF THIS AGREEMENT AND ON EACH OPTION PRICE PAYMENT DATE, CUIH WILL PAY TO DABUR THE OPTION PRICE ON THE TOTAL NUMBER OF SHARES HELD BY DABUR AT SUCH OPTION PRICE PAYMENT DATE, FAILING WHICH DABUR SHALL BE ENTITLED TO INVOKE THE CUIH OPTION PRICE GUARANTEE TO RECOVER SUCH AMOUNT. THE ABOVE OPTION PRICE SHALL BE PAID ON EACH OPTION PRICE PAYMENT DATE TO DABUR UNTIL: (A) ALL SHARES HELD BY DABUR OTHER THAN THE RETAINED SHARES ARE SOLD AND DABUR HAS RECEIVED SALE PROCEEDS FOR SUCH SHARES IN TERMS OF THIS AGREEMEN T: OR ( B ) DABUR ACCEPTS THE RETENTION OFFER MADE BY CUIH AS PER CLAUSE 16.9.2.4 ON ALL THE DABUR SHARES. 16 . 3 [NOT USED] 16 . 4 [NOT USED] 16 . 5 [NOT USED] 16 . 6 THE SALE CONSIDERATION RECEIVED BY DABUR PURSUANT TO THE EXERCISE OF THE CU I H OPTION OR THE DABUR OPTION, SHALL ALWAYS BE THE MARKET VALUE PER EACH SHARE SOLD BY DABUR PROVIDED THAT: - 16.6.1 IN THE EVENT THAT THE MARKET VA L UE IS LOWER THAN THE SUBSCRIPTION / PRICE, CU I H SHALL ALSO PAY THE DIFFERENCE BETWEEN THE SUBSCRIPTION PRICE AND THE MARKET VALUE TO DABUR SIMULTANEOUS WI TH THE SALE OF DABUR SHARES. DABUR SHALL BE ENTITLED TO RETAIN THE OPTION 17 PRICE RECEIVED ON SUCH DABUR SHARES. (SEE ILLUSTRATION A(1) IN SCHEDULE 9}; 16 . 6 . 2 IF THE MARKET VALUE IS HIGHER THAN THE SUBSCRIPTION PRICE, DABUR SHALL REPAY THE OPTION PRICE (TO BE CALCU LATED IN ACCORDANCE WITH SCHEDULE 3) PERTAINING TO SUCH DABUR SHARES WITHIN THIRTY (30) DAYS FROM THE RECEIPT OF THE MARKET VALUE. PROVIDED HOWEVER, IF AS A RESULT OF REPAYMENT OF THE OPTION PRICE, THE NET SATE PROCEEDS (I.E., THE DIFFERENCE BETWEEN THE GR OSS SATE RECEIPTS PER DABUR SHARE AND SUCH OPTION PRICE WHICH SHALL BE CALCULATED AS PER THE FORMULA SET OUT IN SCHEDULE 3) BECOME LESS THAN THE SUBSCRIPTION PRICE, ONLY SUCH PART OF THE OPTION PRICE SHALL BE REPAID SO AS TO ENSURE THAT THE NET SALE PRO CEEDS PER DABUR SHARE ARE NOT LESS THAN THE SUBSCRIPTION PRICE (SEE ILLUSTRATIONS A(2)(A), (B) & (C) IN SCHEDULE 9) 16 . 6 . 3 IN THE EVENT THAT THE MARKET VALUE IS EQUAL TO THE SUBSCRIPTION PRICE, DABUR SHALL RETAIN THE OPTION PRICE RECEIVED ON SUCH DABUR SHARES (SEE ILLUSTRATION A(3) IN SCHEDULE 9); 16 . 7 {NOT USED] 16 . 8 DIVESTMENT DURING THE TEN YEAR PERIOD 16 . 8 . 1 SUBJECT TO THE APPLICABLE LAW AND THE TERMS OF THIS AGREEMENT, NEITHER SHAREHOLDER SHALL SELL, TRANSFER, ALIENATE OR OTHERWISE DISPOSE OF ANY SHARE OR ANY INTEREST IN ANY SHARE TO ANY THIRD PARTY DURING THE TEN YEAR PERIOD. 16 . 8 . 2 (NOT USED] 16.8.3 IF AT ANY POINT DURING THE TEN YEAR PERIOD, THE APPLICABLE LAW REQUIRES EIT HER SHAREHOLDER TO ENGAGE IN A PROCESS WHICH. REQUIRES 18 DIVESTMENT OF ANY SHARES, THEN THE SHAREHOLDERS WILL COOPERATE IN SUCH PROCESS NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IF SUCH PROVISION OF THE APPLICABLE LAW REQUIRES SUCH A PROCESS TO BE UNDERTAKEN BY A SPECIFIED TIME THEN THE PROCESS SHALL BE COMMENCED WITHIN SIX MONTHS BEFORE THAT TIME BUT NOT EARLIER IN THE EVENT, DABUR HAS TO DIVEST ITS SHAREHOLDING IN THE COMPANY 16.8.3.1 IF THE MARKET VALUE REALISED BY DABUR IS HIGHER THAN SHE SUBSCRIPTION PRICE PLUS THE OPTION PRICE RECEIVED ON SUCH SHARES. DABUR SHALL WITHIN THIRTY (30) DAYS OF RECEIVING THE MARKET VALUE, REPAY TO CUSH THE TOTAL OPTION PRICE (TO BE CALCULATED IN ACCORDA NCE WITH SCHEDULE 3), PAID TILL DATE ON SUCH DABUR SHARES (SEE ILLUSTRATION 8(1) IN SCHEDULE 9) ; 16 . 8 . 3 . 2 IF THE MARKET VALUE IS HIGHER THAN THE SUBSCRIPTION PRICE BUT LOWER THAN THE SUBSCRIPTION PRICE PLUS THE OPTION PRICE (TO BE CALCULATED IN ACCORDANCE WITH S CHEDULE 3), PAID TILL DATE ON SUCH SHARES, DABUR SHALL REPAY CUIH, WITHIN THIRTY (30) DAYS OF RECEIVING THE MARKET VALUE, AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN THE MARKET VALUE AND THE SUBSCRIPTION PRICE (SEE ILLUSTRATION B{2) IN SCHEDULE 9); 16 . 8 . 3 . 3 IF THE M ARKET VALUE IS EQUAL TO THE SUBSCRIPTION PRICE PLUS (HE OPTION PRICE RECEIVED ON SUCH SHARES, THEN DABUR SHALL REPAY CUIH THE TOTAL OPTION PRICE (TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3), PAID TILL DALE ON SUCH DABUR SHARES WITHIN THIRTY {30) DAYS O F RECEIVING THE MARKET VALUE (SEE ILLUSTRATION 8(3) IN SCHEDULE 9); 16 . 8 . 3 . 4 I F THE MARKET VALUE IS LOWER THAN THE SUBSCRIPTION PRICE, CUIH SHALL PAY TO DABUR THE DIFFERENCE BETWEEN THE MARKET VALUE AND THE 19 SUBSCRIPTION PRICE SIMULTANEOUS WITH DABUR OFFERING ITS SHARES AS A PART OF THE DIVESTMENT PROCESS. DABUR SHALL RETAIN THE OPTION PRICE RECEIVED BY IT ON SUCH SHARES, (SEE ILLUSTRATION B{4) IN SCHEDULE 9). IN THE EVENT, CUIH FAILS TO PAY THE DIFFERENCE BETWEEN THE MARKET VALUE AND THE SUBSCRIPTION PRICE TO DABU R AS AFORESAID, DABUR SHALL BE ENTITLED TO INVOKE THE CUIH SUBSCRIPTION PRICE GUARANTEE TO THE EXTENT OF THE AMOUNT WHICH IS EQUAL TO SUCH DIFFERENCE. 16 . 9 DIVESTMENT AFTER THE TEN YEAR PERIOD AFTER THE EXPIRY OF THE TEN YEAR PERIOD, THE FOLLOWING PROVISIONS SH ALL APPLY IN RELATION TO THE DABUR SHARES: - 16.9.1 CUIH SHALL CONTINUE TO PAY THE OPTION PRICE ON THE DABUR SHARES. 16 . 9 . 2 THE CUIH OPTION SHALL CONTINUE IN LULL FORCE AND EFFECT AND CUIH SHALL HAVE THE FOLLOWING RIGHTS: - 16 . 9 . 2 . 1 CUIH MAY GIVE NOTICE (SALE NOTICE') AS PER SCHEDULE 6A THAT IT REQUIRES THE SALE OF SOME OR ALL DABUR SHARES TO CUIH (SUBJECT TO APPLICABLE LAW). IF CUIH REQUIRES DABUR TO SELL THE DABUR SHARES TO CUIH, DABUR SHALL SELL SUCH SHARES AT MARKET VALUE AND THE PROVISIONS OF CLAUSE 16.6 SHALL APPLY TO SUCH SALE/PURCHASE TRANSACTION. 16.9.2.2 CUIH MAY GIVE A SALE NOTICE THAT IT REQUIRES THE SAFE OF SOME OR A LL OF THE DABUR SHARES TO A THUD PARTY IDENTIFIED BY CUIH (SUBJECT TO 20 APPLICABLE LAW). DABUR SHALL BE OBLIGED TO SELL SUCH NUMBER OF DABUR SHARE S AS SPECIFIED IN THE SALE NOTICE AT MARKET VALUE PROVIDED THAT IF : ( A ) THE MARKET VALUE TO BE PAID BY THE THIRD PARTY IS TOWER THAN THE SUBSCRIPTION PRICE, CUIH SHALL PAY THE DIFFERENCE IN THE SUBSCRIPTION PRICE AND THE MARKET VALUE TO DABUR SIMULTANEOUS WITH THE SALE OF DABUR SHARES. DABUR SHALL BE ENTITLED TO RETAIN THE OPTION PRICE RECEIVED ON SUCH DABUR SHARES (SEE ILLUSTRATION D(1) IN SCHEDULE 9); ( B ) THE MARKET VALUE IS HIGHER THAN THE SUBSCRIPTION PRICE, DABUR SHALL REPAY TO CUIH THE OPTION PRICE (TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3). PERTAINING TO SUCH SHARES WITHIN THIRTY (30) DAYS OF RECEIVING THE MARKET VALUE . PROVIDED HOWEVER, IF AS A RE SULT OF REPAYMENT OF THE OPTION PRICE, THE NET SALE PROCEEDS PER SHARE RECEIVED BY DABUR BECOME LESS THAN THE SUBSCRIPTION PRICE, ONLY SUCH PART OF THE OPTION PRICE SHALL BE REPAID SO AS TO MAINTAIN THE NET SALE PROCEEDS PER DABUR SHARE AT SUBSCRIPTION PRI CE (SEE ILLUSTRATION D(2)(A)&(B) IN SCHEDULE9); ( C ) IF THE MARKET VALUE IS EQUAL TO THE SUBSCRIPTION PRICE, DABUR SHALL REPAY THE OPTION PRICE RECEIVED ON SUCH DABUR SHARES (SEE ILLUSTRATION D(3)IN SCHEDULE 9) THE SALE/ PURCHASE TRANSACTION ENVISAGED UNDER T HIS CLAUSE 16.9.2.2 SHALL BE EFFECT IN ACCORDANCE WITH THE PROCEDURES SET OUT IN SCHEDULE 6B1. 21 16.9.2.3. NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE 13.3, CUIH MAY GIVE A SALE NOTICE THAT IT REQUIRES DABUR TO DIVEST TO PUBLIC SOME OR ALL THE DABUR SHA RES. DABUR SHALL BE OBLIGED TO SELL THE NUMBER OF DABUR SHARES SPECIFIED IN THE SALE NOTICE. IN THE EVENT OF DIVESTMENT BY DABUR OF THE DABUR SHARES IF : - ( A ) THE MARKET VALUE REALIZED BY DABUR IS HIGHER THAN THE SUBSCRIPTION PRICE PLUS THE OPTION PRICE RE CEIVED ON SUCH SHARES, DABUR SHALL REPAY TO CUIH WITHIN THIRTY (30) DAYS OF RECEIVING THE MARKET VALUE, THE TOTAL OPTION PRICE ( TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3), PAID TILL DATE ON SUCH DABUR SHARES( SEE ILLUSTRATION C(1) IN SCHEDULE 9); ( B ) IF THE MARKET VALUE IS HIGHER THAN THE SUBSCRIPTION PRICE BUT LOWER THAN THE SUBSCRIPTION PRICE PLUS THE OPTION PRICE ( TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3), PAID TILL DATE ON SUCH SHARES, DABUR SHALL REPAY TO CUIH WITHIN THIRTY (30) DAYS OF RECEI VING THE MARKET VALUE, AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN THE MARKET VALUE AND THE SUBSCRIPTION PRICE ( SEE ILLUSTRATION C (2) IN SCHEDULE 9); ( C ) IF THE MARKET VALUE IS EQUAL TO THE SUBSCRIPTION PRICE PLUS THE OPTION RECEIVED ON SUCH SHARES, THEN DABUR SHALL REPAY TO CUIH WITHIN THIRTY (30) DAYS OF RECEIVING THE MARKET VALUE, THE TOTAL OPTION PRICE ( TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3), PAID TILL DATE ON SUCH DABUR SHARES ( SEE ILLUSTRATION C(3) IN SCHEDULE 9); ( D ) IF THE MARKET VALUE IS LOWER THAN THE SUBSCRIPTION PRICE, CUIH SHALL PAY TO DABUR THE DIFFERENCE BETWEEN THE MARKET VALUE AND THE SUBSCRIPTION PRICE SIMULTANEOUS WITH THE SALE OF DABUR SHARES OFFERED AS A PART OF THE DIVESTMENT PROCESS. DABUR SHALL BE ENT ITLED TO 22 RETAIN THE OPTION PRICE RECEIVED BY II ON SUCH SHARES (SEE ILLUSTRATION 0(4) IN SCHEDULE S). IN THE EVENT, CUIH FAILS TO DISCHARGE ITS PAYMENT OBLIGATION UNDER THIS CLAUSE 16.9.2.3, DABUR SHALL BE ENTITLED TO INVOKE THE CUIH SUBSCRIPTION PRICE GUA RANTEE FOR THE AMOUNT WHICH IS EQUAL TO THE DIFFERENCE BETWEEN THE SUBSCRIPTION PRICE PAID FOR DABUR SHARES AND THE MARKET VALUE RECEIVED THE DIVESTMENT BY DABUR ENVISAGED UNDER THIS CLAUSE 16.9.2.3 SHALL BE EFFECTED IN ACCORDANCE WITH THE PROCEDURES SET O UT IN SCHEDULE 6B2 16.9.2.4 CUIH MAY. AT ITS DISCRETION, OFFER (RETENTION OFFER) DABUR FOR DABUR TO RETURN THE OPTION PRICE RECEIVED BY IT ON SOME OR ALL OF THE DABUR SHARES SPECIFIED IN THE RETENTION OFFER. IF DABUR ACCEPTS THE RETENTION OFFER, DABUR SH ALL INDICATE SUCH ACCEPTANCE BY WAY OF A NOTICE TO CUIH WITHIN FIFTEEN (15) DAYS OF RECEIPT OF THE RETENTION OFFER. FURTHER, SUBJECT TO APPROVALS, DABUR SHALL, WITHIN THIRTY (30) DAYS OF ITS ACCEPTANCE, REPAY THE TOTAL OPTION PRICE RECEIVED BY DABUR TILL D ATE ON THE DABUR SHARES INDICATED IN THE RETENTION OFFER THE AMOUNT OF OPTION PRICE TO BE REPAID SHALL BE COMPUTED IN ACCORDANCE WITH THE FORMULA SET OUT IN SCHEDULE 3. THE SHARES ON WHICH THE OPTION PRICE IS REPAID BY DABUR TO CUIH SO TERMS OF THIS CLAUSE 16.9,2.4 SHALL 23 THEREAFTER BE TREATED AS RETAINED SHARES FOR PURPOSES OF THIS AGREEMENT. 16.9.3 FOR THE AVOIDANCE OF DOUBT, CUIH SHALL HAVE THE RIGHT TO EXERCISE ANY AND ALL OF THE RIGHTS ENUMERATED ABOVE IN CLAUSE INDIVIDUALLY OR CONCURRENTLY, FROM TIME TO TIME. 16.9.4 IF THE SALE NOTICE REQUIRES DABUR TO EFFECT A DIVESTMENT OF THE DABUR SHARES TO PUBLIC IN TERMS OF CLAUSE 16.9.2.3, THE COMPANY SHALL USE ITS BEST ENDEAVORS TO EFFECT SUCH AN OFFERING WITHIN SIX MONTHS OF ISSUE OF THE SALE NOTICE AND THE S HAREHOLDERS SHALL COOPERATE WITH THE COMPANY IN THIS REGARD. 16.9.5 [NOT USED] 16.9.6 PROVISIONS APPLICABLE TO RETAINED SHARES THE FOLLOWING PROVISIONS SHALL APPLY IN RELATION TO THE RETAINED SHARES AND SHARES WHICH ARE TREATED AS RETAINED SHARES PURSUANT TO CLAUSE 16.9.2.4: 16 . 9 . 6 . 1 DABUR SHALL REPAY THE OPTION PRICE IT HAS RECEIVED IT RESPECT OF THE RETAINED SHARES WITHIN THIRTY (30) DAYS OF EXPIRY OF THE TEN YEAR PERIOD. THE AMOUNT TO BE REPAID BY DABUR TO CUIH BY WAY OF OPTION PRICE SHALL B E CALCULATED IN ACCORDANCE WITH THE FORMULA SET OUT IN SCHEDULE 3 24 16 . 9 . 6 . 2 THE CUIH OPTION SHALL CEASE IN RESPECT OF THE RETAINED SHARES; 16 . 9 . 6 . 3 CUIH SHALL CEASE TO PAY THE OPTION PRICE ON THE RETAINED SHARES AFTER THE TEN YEAR PERIOD; 16.9.6.4 CUIH SHALL HAVE PRE - EMPTIVE RIGHTS OVER THE RETAINED SHARES IN TERMS OF CLAUSE 16.9.7; 16 . 9 . 6 . 5 CUIH SHALL NOT BE OBLIGED TO GUARANTEE DABUR A MINIMUM OF SUBSCRIPTION PRICE ON THE RETAINED SHARES AND THE CUIH SUBSCRIPTION PRICE GUARANTEE TO THAT EXTENT SNAIL CEASE FORTHWITH; AND 1 6.9.6.6 ANY THIRD PARTY WHO PURCHASES THE RETAINED SHARES SHALL NOT BE BOUND BY ANY OF THE OBLIGATIONS UNDERTAKEN BY DABUR UNDER THIS AGREEMENT. 16.9.7 IF DABUR INTENDS TO TRANSFER THE RETAINED SHARES TO ANY THIRD PARTY, IT SHA LL OFFER ALL SUET) SHARES, IN THE FIRST INSTANCE, TO CUIH IN THE MANNER SET OUT IN SCHEDULE 8. 16 . 9 . 8 FOR THE AVOIDANCE OF DOUBT, CUIH SHALL RETAIN PRE - EMPTIVE RIGHTS FOR ALL TIMES OVER THE RETAINED SHARES, REGARDLESS OF THE FACT THAT CUI H DOES NOT PAY OPTION PRICE IN RESPECT OF THE RETAINED SHARES. 16.9.9 IF REQUESTED BY DABUR, CUIH SHALL TAKE ALL STEPS SO AS TO ALLOW ANY PROSPECTIVE PURCHASER OF THE RETAINED SHARES TO UNDERTAKE A DUE DILIGENCE EXERCISE AS TO THE AFFAIRS OF THE COMPANY. 25 14. REPAYMENT OPTION PRICE BY DABUR TO CUIH I S GOVERNED BY CLAUSE 16A WHICH IS AS UNDER: 16. REPAYMENT OF OPTION PRICE BY DABUR TO CUIH DABUR SHALL REPAY TO CUIH THE OPTION PRICE UNDER THIS AGREEMENT ONLY UNDER THE FOLLOWING CIRCUMSTANCES: ( A ) IF THE MARKET VALUE RECEIVED BY DABUR FOR DABUR SHARES S OLD PURSUANT TO CLAUSES 16.6, 16.9.2.1 OR 16.9.2.2 IS HIGHER THAN THE SUBSCRIPTION PRICE, DABUR SHALL REPAY THE OPTION PRICE (TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3), PERTAINING TO SUCH DABUR SHARES WITHIN THIRTY (30) DAYS OF RECEIVING THE MARKET V ALUE PROVIDED HOWEVER, IF AS A RESULT OF REPAYMENT OF THE OPTION PRICE, THE NET SALE PROCEEDS PER SHARE RECEIVED BY DABUR PURSUANT TO THE AFORESAID CLAUSES BECOME LESS THAN THE SUBSCRIPTION PRICE, ONLY SUCH PART OF THE OPTION PRICE SHALL BE REPAID SO AS TO MAINTAIN THE NET SALE PROCEEDS PER SHARE AT SUBSCRIPTION PRICE ( B ) IF THE MARKET VALUE RECEIVED BY DABUR FOR DABUR SHARES OFFERED AS A PART OF ITS DIVESTMENT PURSUANT TO CLAUSES 16.8.3 OR 16.S.2.3 IS HIGHER THAN THE SUBSCRIPTION PRICE, DABUR SHALL REPAY THE OPTION PRICE PERTAINING TO SUCH SHARES WITHIN THIRTY (30) DAYS OF RECEIVING THE MARKET VALUE (TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3). PROVIDED HOWEVER, IF AS A RESULT OF REPAYMENT OF THE OPTION PRICE, THE NET SALE PROCEEDS PER SHARE RECEIVED BY DA BUR PURSUANT TO THE AFORESAID CLAUSE BECOME LESS THAN 26 THE SUBSCRIPTION PRICE, ONLY SUCH PART OF THE OPTION PRICE SHALL BE REPAID SO AS TO MAINTAIN THE NET SALE PROCEEDS PER SHARE AT SUBSCRIPTION PRICE. ( C ) IF THE S HAREHOLDING OF CUIH IS DIVESTED IN TERMS OF CLAUSE 17.2 AFTER THE TEN YEAR PERIOD AND DABUR, PURSUANT TO THE EXERCISE OF ITS TAG - ALONG RIGHT UNDER CLAUSE 17.2.5, SELLS ITS SHARES, DABUR SHALL REPAY CUIH THE OPTION PRICE RECEIVED BY IT (TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3). SUCH REPAYMENT SHALL BE IN ACCORDANCE WITH CLAUSE 17.2.5 (B) DABUR SHA L L REPAY THE OPTION PRICE (TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3) ON RETAINED SHARES IN TERMS OF CLAUSE 16.9.6. 15. TRANSFER OF CUIH SHARES IS GO VERN ED BY CLAUSE 17 AND THE SAME READS AS U NDER: 17. TRANSFER OF CUIH SHARES 17 . 1 TRANSFER OF CUIH SHARES - DURING THE TEN YEAR PERIOD SUBJECT TO APPLICABLE LAW, IF AT ANY TIME DURING THE FEN YEAR PERIOD CUIH DECIDES TO SELL, TRANSFER, ALIENATE OR OTHERWISE DISPOSE OFF, ALL AND NOT LESS THAN ALL, OF THE CUIH SHARES TO A THIRD PARTY, CUIH SHALL DO SO IN ACCORDANCE WITH THE PROCEDURE SET OUT BELOW: 17 . 1 . 1 CUIH SHALL GIVE A NOTICE IN WRITING (CUIH OFFER NOTICE') TO DABUR STATING THE PRICE PER SHARE AT WHICH CUIH IS WILLING TO SELL ITS SHAREHOLDING. THIS PRI CE SHALL BE ONE WHICH HAS BEEN GIVEN BY AN INVESTMENT BANKER TO CUIH AS THE INDICATIVE VALUE 27 WHICH CUIH MAY RECEIVE IN RESPECT OF ITS ENTIRE SHAREHOLDING IN THE COMPANY FROM ONE OR MORE THIRD PARTIES. 17 . 1 . 2 WITHIN THIRTY (30) DAYS OF RECEIPT OF THE CUIH OFFER NOTICE, DABUR SHALL ISSUE A WRITTEN NOTICE TO CUIH INDICATING ITS INTENTION TO EITHER: ( A ) ACQUIRE THE CUIH SHARES; OR ( B ) REQUIRE THAT CUIH ENSURES THAT ANY PROSPECTIVE PURCHASERS) OF CUIH SHARES ALSO PURCHASES THE SHARES HELD BY DABUR IN FULL EITHER DIRECTLY O R THROUGH A NOMINEE SIMULTANEOUS WITH THE PURCHASE OF CUIH SHARES ON IDENTICAL TERMS AND CONDITIONS. ( C ) CONTINUE TO BE A SHAREHOLDER IN THE COMPANY WHILE ALLOWING CU I H TO SELL THE CUIH SHARES TO ONE OR MORE THIRD PARTIES 17 . 1 . 3 IN THE EVENT DABUR INTENDS TO ACQUIR E CUIH SHARES UNDER CLAUSE 17.1.2(A) ABOVE, DABUR SHALL, ITSELF OR THROUGH ANY NOMINATED PARTY, PAY CUIH THE PRICE SET OUT IN CLAUSE 17.1.1 AGAINST DELIVERY BY CUIH OF THE RELEVANT SHARE CERTIFICATES/TITLE DOCUMENTS AND DULY EXECUTED TRANSFER DOCUMENTS. TH E SHAREHOLDERS SHALL COMPLETE THE SALE/PURCHASE TRANSACTION WITHIN THIRTY (30) DAYS OF NOTICE BY DABUR IN TERMS OF CLAUSE 17.1.2. THE TIME LIMITS SET OUT IN THIS CLAUSE SHALL BE EXTENDED BY A PERIOD EQUAL TO THE TIME TAKEN BY THE REGULATORY AUTHORITIES FO R GRANTING ANY APPROVALS. 17 . 1 . 4 IN THE EVENT DABUR EXERCISES ITS OPTION IN ACCORDANCE WITH CLAUSE 17.1.2(B), AND THE PRICE PER SHARE OFFERED BY THE PROSPECTIVE PURCHASERS) TO DABUR FOR ITS SHARES IS IOWEI THAN THE SUBSCRIPTION PRICE, CUIH SHALL PAY TO DABUR THE DIFFERENCE BETWEEN THE SUBSCRIPTION PRICE AND THE PRICE OFFERED BY SUCH PURCHASER(S) SIMULTANEOUS WITH THE TRANSFER OF ITS SHARES TO SUCH 28 PURCNASER(S). THE SALE OF THE CUIH SHARES AND THE SALE OF THE SHARES HELD BY DABUR SHAL L TAKE PLACE SIMULTANEOUSLY AN D BOTH DABUR AND CUIH UNDERTAKE TO EACH OTHER THAT IN THE EVENT THAT THE SALE OF THE OTHER SHAREHOLDER'S (I.E., CUIH/DABUR, AS THE CASE MAYBE) SHARES DOES NOT PROCEED TO COMPLETION FOR WHATEVER REASON, NEITHER OF THEM SHALL SELL, TRANSFER, ALIENATE OR OTHE RWISE DISPOSE OF ANY OF THEIR RESPECTIVE SHARES. 17 . 1 , 5 IN THE EVENT DABUR FAILS TO ISSUE A NOTICE IN TERMS OF CLAUSE 17.1.2 WITHIN 30 DAYS OF RECEIPT OF CUI H OFFER NOTICE, IT SHALL BE DEEMED THAT DABUR HAS EXPRESSED ITS INTENTION IN TERMS OF CLAUSE 17.1 2(C), AND CUIH SHALL BE FREE TO SELL ITS SHAREHOLDING TO ANY THIRD PARTY 17 . 1 . 6 LF: - ( A ) DABUR HAS EXPRESSED ITS INTENTION IN TERMS OF CLAUSE 17.1.2(C), BUT CUIH IS UNABLE TO DIVEST ITS ENTIRE SHAREHOLDING IN THE COMPANY WITHIN ONE (1) YEAR OF THE CUIH OFFER NOTICE; OR ( B ) DABUR HAS EXPRESSED ITS INTENTION IN TERMS OF CLAUSE 17.1.2(B), BUT CUIH IS UNABLE TO COMPLETE THE SA L E OF THE SHARES HELD BY DABUR WITHIN ONE (1) YEAR OF THE CUIH OFFER NOTICE. THEN, WITHIN ONE (1) YEAR OF THE DATE OF THE NOTICE ISSUED BY DABUR UNDER CLA USE 17.1.2, OR SUCH EXTENDED PERIOD OF TIME AS AGREED BY THE SHAREHOLDERS MUTUALLY, THE SHAREHOLDERS SHALI COOPERATE WITH EACH OTHER TO WIND UP IHE COMPANY SUBJECT TO APPLICABLE LAW. THE PROVISIONS OF CLAUSE 20.1 SHALL APPLY IN RELATION TO SUCH WINDING UP. 17 . 1 . 7 {NOT USED] 29 17 . 1 . 8 IF AT ANY TIME DURING THE TEN YEAR PERIOD CUIH SELLS, ALIENATES, AND/OR TRANSFERS ANY OF THE CUIH SHARES WITHOUT COMPLYING WITH THE PROCEDURE SET OUT IN THIS CLAUSE 17.1, DABUR SHALL BE ENTITLED TO INVOKE THE CUIH SUBSCRIPTION PRICE GUARANTEE. 17 . 1 . 9 IF DABUR EXERCISES ITS OPTION IN ACCORDANCE WITH CLAUSE 17.1.2(B) ABOVE, IT SHALL WITHIN FIFTEEN (15) DAYS OF EXERCISING SUCH OPTION, PROVIDE CUIH WITH A POWER OF ATTORNEY WHICH SHALL BE SUBSTANTIALLY IN THE FORM SET OUT IN SCHEDULE 12. SUBJECT TO APPLICA BLE LAW THE POWER OF ATTORNEY GIVER, BY DABUR SHALL ALLOW THE ATTORNEY, TO EXECUTE THE REQUIRED SHARE TRANSFER FORMS AND SALE & PURCHASE AGREEMENT ON BEHALF OF DABUR. SHOULD DABU R FALL TO PROVIDE THE SAID POWER O F ATTORNEY, THE OPTION EXERCISED BY DABUR PU RSUANT TO CLAUSE 17.1.2(B) SHALL STAND CANCELLED AND IT SHALL BE DEEMED THAT DABUR HAS EXPRESSED ITS INTENTION IN TERMS OF CLAUSE 17.1.2(C) AND CUIH SHALL BE FREE TO SE LL ITS SHAREHOLDING TO ANY THIRD PARTY . 17 . 1 , 10 FOR THE AVOIDANCE OF DOUBT IT IS UNDERSTOOD BY B OTH THE SHAREHOLDERS THAT (A) THERE SHALL BE NO OBLIGATION ON DABUR TO ASSUME ANY RESPONSIBILITY AND/OR LIABILITY IN TERMS OF GIVING ANY REPRESENTATIONS/ WARRANTIES REGARDING ANY MATTER CONCERNING THE COMPANY AND THE ATTORNEY SHALL NOT DO ANY ACT WHICH IS TO THE CONTRARY; (B) THE ATTORNEY ON BEHALF OT DABUR SHALL HOWEVER GIVE REPRESENTATIONS/ WARRANTIES REGARDING DABUR'S TITLE AND OWNERSHIP OF THE DABUR SHARES 30 17 . 1 . 11 FOR THE AVOIDANCE OF DOUBT, IT IS UNDERSTOOD BY THE SHAREHOLDERS THAT IN CASE OF CUIH TRANSFERRING ITS SHAREHOLDING UNDER CLAUSE 17 . 1 ABOVE, THE OPTION PRICE RECEIVED BY DABUR IN RESPECT OF ITS SHARES SHALL BE RETAINED BY DABUR. TRANSFER OF CUIH SHARES - AFTER THE TEN YEAR PERIOD IF AT ANY TIME AFTER THE TEN YEAR PERIOD, CUIH DECIDES TO SE LL , TRANSFER, ALIENATE OR OTHERWISE DISPOSE OFF, ALL AND NOT LESS THAN ALT, OF CUIH SHARES TO ANY THIRD PARTY, IT SHALL OFFER AIL SUCH SHARES, TO THE FIRST INSTANCE, TO DABUR .OR TO ANY THIRD PARTY NOM INATED BY DABUR AND THE PROCEDURE IN CLAUSES 17.2.1 TO CLAUSE 17.2.5 SHALL APPLY. 17 . 2 . 1 CUIH SHALL GIVE A NOTICE (OFFER NOTICE) TO DABUR STATING: 17 . 2 . 1 . 1 THE NUMBER OF CUIH SHARES TO BE TRANSFERRED; 17 . 2 . 1 . 2 THE PRICE OF EACH CUIH SHARE; 17 . 2 . 1 . 3 THE OTHER TERMS AND CONDITIONS ON WHICH CUIH PROPOSES TO SELL THE CUIH SHARES; AND 17 . 2 . 1 . 4 THE IDENTITY OF THE PROPOSED PURCHASER. IF NO PURCHASER IS IDENTIFIED, THE OFFER NOTICE SHALL CLEARLY INDICATE THE SAID FACT. 17 . 2 , 2 DABUR SHALL HAVE THE RIGHT TO ACCEPT AN OFFER MADE PURSUANT TO CLAUSE 17.2.1 BY GIVING A WRITTEN ACCEPTANCE TO THE OFFER NOTICE WHICH SHALL BE GIVEN WITHIN THIRTY (30) DAYS OF RECEIPT OF THE OFFER NOTICE BY DABUR. IF DABUR ACCEPTS THE OFFER, IT SHALL COMPLETE THE TRANSFER BY PAYING FOR SUCH SHARES, WITHIN THIRTY (30) DAYS OF THE DATE OF ITS ACCEPTANCE, AGAINST DELIVERY BY CUIH OF THE RELEVANT SHARE CERTIFICATES/TITLE DOCUMENTS AND DULY EXECUTED TRANSFER DOCUMENTS THE 17.2 31 TIME LIMITS SET OUT IN THIS CLAUSE SHALL BE EXTENDED BY A PERIOD EQUAL TO THE TIME TAKEN FOR OBTAINING ANY APPROVALS PURSUANT TO CLAUSE 17.2.3 17 . 2 . 3 SHOULD THE APPROVAL OF ANY GOVERNMENT OR REGULATORY AUTHORITY BE REQUIRED BY DABUR OR THE THIRD PARTY NOMINATED BY IT FOR ACQUIRING THE CUIH SHARES, DABUR SHAL L MAKE OR PROCURE AN APPLICATION TO BE MADE THEREFOR E WITHIN THIRTY (30) DAYS O F THE DATE OF NOTIFICATION OF ACCEPTANCE AND PAY OR PROCURE THE PAYMENT OF THE PRICE FOR THE SHARES WITHIN THIRTY (30) DAYS OF THE RECEIPT OR SUCH APPROVALS. IF FOR ANY REASON WHATSOEVER SUCH APPROVAL IS NOT RECEIVED WITHIN NINETY (90) DAYS OF MAKING THE A PPLICATION, CUIH SHALL BE AT LIBERTY TO WITHDRAW THE OFFER. FOR THE AVOIDANCE OF DOUBT, IF CUIH DESIRES TO TRANSFER THE CUIH SHARES AT ANY LIME AFTER WITHDRAWING THE OFFER, AS AFORESAID, THE PROVISIONS OF CLAUSE 17 2 SHALL APPLY TO SUCH TRANSFER. 17 . 2 . 4 IF DABUR - ( A) DECLINES CUIH'S OFFER AS SET OUT IN THE OFFER NOTICE AND ALLOWS CUIH TO SELL ITS SHARES TO ANY THIRD PARTY (WHERE THE OFFER NOTICE DOES NOT HAVE THE NAME OF THE PROPOSED PURCHASER); OR ( B) FAILS TO RESPOND TO THE OFFER NOTICE WI THIN THE TIME EMIT SPECIFIED IN CLAUSE 17.2 2; OR ( A ) HAVING ACCEPTED CUIH'S OFFER IN TERMS OF THE OFFER NOTICE FAILS TO PAY THE PURCHASE PRICE WITHIN THE TIME L IMIT STATED IN CLAUSE 17.2.2; OR ( B ) DOES NOT EXERCISE ITS RIGHTS UNDER CLAUSE 17.2.5 WITHIN THE TIME LIMIT STATED IN CLAUSE 17.2.5. CUIH MAY THEN SELL THE CUIH SHARES IN RESPECT OF WHICH THE OFFER IS MADE TO ANY THIRD PARTY BUT AT THE PRICE WHICH IS NOT LOWER THAN 32 THE PRICE SET OUT IN THE O FFER NOTICE AND UPON THE SAME TERMS OFFERED TO DABUR. 17 . 2 . 5 IN ADDITION TO THE RIGHT OF DABUR TO ACCEPT OR REFUSE CUIH'S OFFER IN TERMS OF THE OFFER NOTICE, DABUR SHALL ALSO HAVE THE OPTION TO REQUIRE THAT CUIH ENSURES THAT THE THIRD PARTY WHOSE NAME IS SET OUT IN THE OFFER NOTICE (OR A PARTY NOMINATED BY SUCH PARTY) PURCHASES THE DABUR SHARES AT THE PRICE AND OTHER TERMS AND CONDITIONS AS SPECIFIED IN THE OFFER NOTICE SIMULTANEOUSLY WITH THE PURCHASE OF THE CU I H SHARES. IF DABUR INTENDS TO EXERCISE THIS OPTION, IT SHALL GIVE A WRITTEN ACCEPTANCE TO CU I H IN THIS REGARD WITHIN THIRTY (30) DAYS OF RECEIPT OF THE OFFER NOTICE BY DABUR. CUIH SHALL THEN ENSURE THAT THE SAID THIRD PARTY COMPLETES THE PURCHASE OF DABUR SHARES SIMULTANEOUSLY WITH THE PURCHASE OF ITS OWN SHARES IF THE SALE PROCEEDS AGREED T O BE PAID BY THE PROPOSED PURCHASER TO DABUR IS: ( A ) LOWER THAN THE SUBSCRIPTION PRICE, CUIH SHAT! PAY THE DIFFERENCE IN THE SUBSCRIPTION PRICE AND SUCH SALE PROCEEDS TO DABUR SIMULTANEOUS WITH THE SALE OF DABUR SHARES DAB UR SHALL BE ENTITLED TO RETAIN THE OPTION PRICE RECEIVED ON SUCH DABUR SHARES (SEE ILLUSTRATION E (1) IN SCHEDULE 9); ( B ) HIGHER THAN THE SUBSCRIPTION PRICE, DABUR SHALL REPAY TO CUIH THE OPTION PRICE (TO BE CALCULATED IN ACCORDANCE WITH SCHEDULE 3), WITHIN TH IRTY (30} DAYS OF THE RECEIPT OF THE SALE PROCEEDS. PROVIDED HOWEVER, IF AS A RESULT 33 OF REPAYMENT OF THE OPTION PRICE, THE NET SALE PROCEEDS PER SHARE RECEIVED BY DABUR BECOME LESS THAN THE SUBSCRIPTION PRICE, ONLY SUCH PART OF THE OPTION PRICE SHALL BE RE PAID SO AS TO MAINTAIN THE NET SALE PROCEEDS PER DABUR SHARE AT SUBSCRIPTION PRICE; (SEE ILLUSTRATION E{2)(A)& (B) IN SCHEDULE 9) ( C ) EQUAL TO THE SUBSCRIPTION PRICE, DABUR STRATI RETAIN THE OPTION PRICE RECEIVED ON SUCH GABUR SHARES (SEE ILLUSTRATION E{3) IN SCHEDULES). THE SALE OF THE CUIH SHARES AND THE SALE OF THE DABUR SHARES SHALL TAKE PLACE SIMULTANEOUSLY AND BOTH DABUR AND CUIH UNDERTAKE TO EACH OTHER THAT IN THE EVENT THAT THE SALE OF THE OTHER SHAREHOLDERS (I.E., CUIH/DABUR, AS THE CASE MAYBE) SHA RES DOES NOT PROCEED TO COMPLETION FOR WHATEVER REASON, NEITHER OF THEM SHALL SELL, TRANSFER, ALIENATE OR OTHERWISE DISPOSE OF ANY OF THEIR RESPECTIVE SHARES. IF DABUR EXERCISES ITS OPTION IN ACCORDANCE WITH CLAUSE 17.2.5 ABOVE, IT SHALL WITHIN FIFTEEN (15 ) DAYS OF EXERCISING SUCH OPTION, PROVIDE CUIH WITH A POWER OF ATTORNEY WHICH SHALL BE SUBSTANTIALLY IN THE FORM - SET OUT IN SCHEDULE 12. SUBJECT TO APPLICABLE LAW THE POWER OF ATTORNEY GIVEN BY DABUR SHALL ALLOW THE ATTORNEY THE ABILITY TO EXECUTE THE REQU IRED 34 SHARE TRANSFER FORMS AND SALE & PURCHASE AGREEMENT ON BEHALF OF DABUR 16. SIMILARLY, TRAN SFER OF SHARES BY DABUR IS GOVERNED BY CLAUSE 17A WHICH READS AS UNDER : 17. TRANSFER OF SHARES BY DABUR 17.A1 TRANSFER OF SHARES BY DABUR DURING THE TEN YEAR PERIOD. SUBJECT TO APPLICABLE LAW, DABUR SHALL NOT TRANSFER ITS SHARES TO ANY THIRD PARTY DURING THE TEN YEAR PERIOD EXCEPT IN ACCORDANCE WITH CLAUSE 16 OF THIS AGREEMENT. 17.A.2 TRANSFER OF DABUR SHARES AFTER THE TEN YEAR PERIOD. DABUR SHALL NOT TRANSFER THE DABUR SHARES TO ANY THIRD PARTY DURING THE TEN YEAR EXCEPT IN ACCORDANCE WITH CLAUSE 16 OF THIS AGREEMENT. 17.A.3 IN THE EVENT DABUR SELLS, ALIENATES AND / OR TRANSFER S ITS SHARES TO ANY THIRD PARTY DURING THE TEN YEAR PERIOD OR THE DABUR SHARES AFTER THE TEN YEAR PERIOD IN BREACH OF PROVISIONS OF CLAUSES 17.A.1. OR 17. A. 2 ABOVE, AS THE CASE MAY BE, THE FOLLOWING PROVISIONS SHALL APPLY : - (A) THE COMPANY SHALL NOT R EGISTER ANY SUCH TRANSFER, (B) THE CUIH OPTION PRICE GUARANTEE AND THE CUIH SUBSCRIPTION PRICE GUARANTEE SHALL CEASE WITH IMMEDIATE EFFECT. (C) ANY TRANSFER SO EFFECTED BY DABUR IN FAVOUR OF A THIRD 35 PARTY OTHER THAN CUIH SHALL NOT AFFECT THE CUIH OPTIO N QUA THE SHARES AND FURTHER CUIH SHALL BE AT LIBERTY TO TAKE ALL SUCH STEPS TO HAVE THE TRANSFER EFFECTED IN ITS NAME OR IN THE NAME OF ITS NOMINEE (S) IN TERMS OF CLAUSE 17A.1 AND 17A.2. 17. CLAUSE 28 OF THE AGREEMENT STATES THAT NEITHER OF THE SHARE H OLDERS MAY ASSIGN TRANSFER CHARGE OR OTHERWISE DISPOSE OF THEIR RIGHTS OR OBLIGATIONS UNDER THE AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER SHARE HOLDERS. 18. CLAUSE 33 PROVIDES THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO CONSTITUTE A P ARTNERSHIP BETWEEN THE SHARE HOLDERS AND NONE OF THEM SHALL HAVE ANY AUTHORITY, EXPRESS OR IMPLIED, TO BIND OR COMMIT THE OTHER OR OTHERS IN ANY WAY WHATSOEVER. 19. IN PURSUANCE TO THE JOINT VENTURE AGREEMENT, DABUR APPLIED FOR APPROVAL OF THE JOINT VENTURE AGREEMENT ABOUT THE RECEIPT OF REFUNDABLE OPTION MONEY WITH RESERVE BANK OF INDIA ON 19.10.2001 AND WHICH WAS PERMITTED BY RBI VIDE LETTER DATED 15.04.2002. THE LETTER OF THE RBI READ AS UNDER: 36 RESERVE BANK OF INDIA EXCHANGE CONTROL DEPARTMENT CENTRAL OFFICE BUILDING MUMBAI - 400001. M/S. DABUR INVEST CORPORATION OFF PUNJABI BHAWAN, 10, ROUSE AVENUE NEW DELHI - 110002 DEAR SIRS, ACCEPTANCE OF OPTION PRICE FROM M/S. COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. (CUIH) PLEASE REFER TO THE CORRESPONDENCE RESTING WITH YOUR LETTER DATED 2ND APRIL 2002 ON THE CAPTIONED SUBJECT. WE HEREBY PERMIT DABUR - GGU TO RECEIVE REFUNDABLE OPTION PRICE AND TO REFUND THE AMOUNTS SO RECEIVED IN TERMS OF THE JV AGREEMENT DATED 7TH AUGUST 20UF. YOURS FAITHFULLY, (M.R.RANGACHARI) DEPUTY GENERAL MANAGER 20. ON 07.04.2002, THE RBI AMENDED THE ABOVE MENTIONED LETTER AS BELOW: RESERVE BANK OF INDIA EXCHANGE CONTROL DEPARTMENT CENTRAL OFFICE BUILDING MUMBAI - 400001. REF. NO. EC . 6030/1001 - 02.01.01/2001 - 02 17 TH APRIL 2002 M/S. DABUR INVEST CORPORATION, OFF PUNJABI BHAWAN, 10, ROUSE AVENUE, 37 NEW DEIHI 110 002. DEAR SIRS, ACCEPTANCE OF OPTION PRICE FROM M/S. COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. ( CUIH) PLEASE REFER TO THE CORRESPONDENCE RESTING WITH OUR LETTER DATED 15TH APRIL 2002 ON THE CAPTIONED SUBJECT. WE HEREBY AMEND PARA 2 OF OUR ABOVE LETTER DATED 15TH APRIL 2002 TO READ AS UNDER: 'WE HEREBY PERMIT DABUR INVEST CORPORATION TO RECEIVE REFUNDABLE OPTION PRICE FROM CUIH AND TO REFUND THE AMOUNTS SO R ECEIVED IN TERMS OF THE JV AGREEMENT DATED 7TH AUGUST 2001.' YOURS FAITHFULLY, (M. R. RANGACHARI) DEPUTY GENERAL MANAGER 21. AS MENTIONED ELSEWHERE, UPTO THE YEAR 2000, THE INSURANCE BUSINESS WAS NOT ALLOWED BY THE PARTIES, BUS SUBSEQUENTLY, ON ACCOUN T OF CHANGE IN THE GOVERNMENT POLICY WITH REGARD TO INVESTMENT MADE BY FOREIGN ENTERPRISE, CUIH WAS ALLOWED BY THE FIPB VIDE LETTER DATED 18.03.2016 TO INCREASE ITS SHARE HOLDING IN M/S AVIVA LIFE INSURANCE COMPANY, INDIA LIMITED FROM 26% TO 49% BY WAY OF TRANSFER OF 23% SHARE HOLDING CURRENTLY HELD BY DA BUR INVEST. CORP FOR A CONSIDERATION OF RS. 940 CRORE SUBJECT TO THE CONDITION THAT INVESTMENT WILL BE MADE OUT OF REMITTANCE OF FOREIGN EXCHANGE RECEIVED THROUGH NORMAL BANKING CHANNEL AS PER RBI NOTIFICATION NO. FEMA 20/2000. THE LETTER 38 DATED 18.03.2016 BY THE UNDER SECRETARY TO THE GOVERNMENT OF INDIA READ AS UNDER: GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS FIPB ------- NORTH BLOCK, NEW DELHI DATED 18.03.2016 TO, AVIVA LIFE INSURANCE COMPANY INDIA LIMITED (C/O KHAITAN LEGAL ASSOCIATES) 1 ST FLOOR CENTURY BHAVAN 771 DR. ANNIE BESANT ROAD WORLI MUMBAI 400030 SUBJECT : APPLICATION FOR FOREIGN COLLABORATION (REGISTRATION NO.3796 AND PROPOSAL NO.170/FC/2015 DATED 23.10.2015) SIR, I AM DIRECTED TO REFER TO THE ABOVE MENTIONED APPLICATION AND TO CONVEY APPROVAL OF GOVERNMENT TO THE ABOVE CAPTURED PROPOSAL. 1. NAME AND ADDRESS OF FOREIGN COLLABORATOR/ INVESTOR M/S. AVIVA INTERNATIONAL HOLDINGS LIMITED UK ST. HELENS, 1, UNDERSHAFT, LONDON, EC3PC3DO UNITED KINGDOM NAME AND ADDRESS OF THE INDIA JOINT VENTURE PARTNER DABUR INVESTMENT CORP PUNJABI BHAWAN 10 ROUSE AVENUE, NEW DELHI - 110002 NAME AND ADDRESS OF THE INVESTEE COMPANY M/S. AVIVA LIFE INSURANCE COMPANY INDIA LIMITED AVIVA TOWERS SECTOR ROAD OPP DLF GOLD 39 CLUB SECTOR 43 GURGAON 122003 2 ITEM(S) OF MANUFACTURE/ ACTIVITY COVERED BY THE FOREIGN COLLABORATION THE COMPANY IS ENGAGED IN INSURANCE SERVICES 3. LOCATION/ PROPOSED LOCATION MUMBAI MAHARASHTRA. 4. FOREIGN EQUITY PARTICIPATION 49% BY M/S AVIVA INTERNATIONAL HOLDINGS LIMITED, UK THE PROPOSED TRANSACTION INVOLVES FDI/FII INFLOW OF RS.94 CRORE 5. THE APPROVAL IS TO INCREASE THE FOREIGN SHAREHOLDING IN M/S. AVIVA LIFE INSURANCE COMPANY INDIA LIMITED FROM 26% TO 49% BY AVIVA INTERNATIONAL HOLDINGS LIMITED, UK BY WAY OF TRANSFER OF 23 % SHAREHOLDING CURRENTLY HELD BY DABUR INVESTMENT CORP. 6. ALL REMITTANCES BY THE FOREIGN COLLABORATION SHALL BE MADE AS PER THE EXCHANGE RATES PREVAILING ON THE DAY OF REMITTANCE. 7. THE TRANSFER / ISSUE /PRICING OF THE SHARES BE AS PER RBI / SEBI GUI DELINES AS APPLICABLE. 8. THE APPROVAL IS SUBJECT TO THE FOLLOWING CONDITIONS : - A. COMPLIANCE WITH THE PROVISIONS OF THE INSURANCE ACT, 1938 AND THE CONDITION THAT COMPANIES BRINGING IN FDI SHALL OBTAIN NECESSARY LICENSE UNDERTAKING INSURANCE ACTIVITIE S. B. COMPLIANCE WITH PARA 6.2.18.7.2 OF THE FDI POLICY 2015 C. COMPLIANCE WITH THE INDIAN INSURANCE COMPANIES (FOREIGN INVESTMENT) D. THE TAXATION OF DIVIDEND, FUTURE CAPITAL GAINS ON ALIENATION OF SHARES BY THE FOREIGN INVESTOR, INTEREST INCOME AND INCOME OF ANY OTHER NATURE SHALL BE EXAMINED BY THE FIELD FORMATION IN 40 ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT, 1961 AND DTAA APPLICABLE TO THE FACTS OF THE CASE. E. CLAIM OF ANY TAX RELIEF UNDER THE INCOME TAX ACT OR THE RELEVANT DTAA WILL BE EXAMINED INDEPENDENTLY BY THE TAX AUTHORITIES TO DETERMINE THE ELIGIBILITY AND EXTENT OF SUCH RELIED AND THE APPROVAL OF FIPB BY ITSELF WILL NOT AMOUNT TO ANY RECOGNITION OF ELIGIBILITY OF GI VING SUCH RELIEF. F. FIPB APPROVAL BY ITSELF DOES NOT PROVIDE ANY IMMUNITY FROM TAX INVESTIGATIONS TO DETERMINE WHETHER SPECIFIC OR GENERAL ANTI AVOIDANCE RULES APPLY. G. THE FAR MARKET VALUE OF VARIOUS PAYMENTS SERVICES, ASSETS SHARES ETC., DETERMINED I N ACCORDANCE WITH FIPB GUIDELINES SHALL BE EXAMINED BY THE TAX AUTHORITIES UNDER THE TAX LAWS AND RULES IN FORCE AND MAY BE VARIED ACCORDINGLY FOR TAX PURPOSES. 9. THE AGREEMENT SHALL BE SUBJECT TO COMPLIANCE WITH INDIAN LAWS. THE APPROVAL WILL ALSO BE SU BJECT TO COMPLIANCE WITH THE RELEVANT PROVISIONS OF THE SECTORAL CONDITIONS/ GUIDELINES, AND THE FDI POLICY AS AMENDED FROM TIME TO TIME. 10. YOU SHALL SUBMIT QUARTERLY COMPLIANCE REPORT OF THE CONDITIONALITIES CONTAINED IN THE APPROVAL LETTER, DULY CERTI FIED BY YOUR AUDITORS. THIS REPORT SHOULD BE SUBMITTED TO FIPB SECRETARIAT, MINISTRY OF CORPORATE AFFAIRS ( MCA) AND THE DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION (DIPP). MCA AND DIPP WILL SCRUTINISE THE CERTIFICATE AND BRING TO THE NOTICE OF FIPB ANY VIOLATION OF THE CONDITIONALITIES ALSO ON A QUARTERLY BASIS, WHICH IS AVAILABLE AT FIPB.GOV.IN. 11. THE COMPANY SHALL NOTIFY FIPB UNIT WITHIN 30 DAYS OF RECEIPT OF FUNDS AND / OR ALLOTMENT OF SHARES TO NON - RESIDENT SHAREHOLDERS IN THE FOLLOWING CIRCUMSTA NCES : - A . WHERE THERE IS AN INCREASE IN THE AMOUNT OF FOREIGN EQUITY WITHOUT A CHANGE IN THE FOREIGN EQUITY PERCENTAGE APPROVED, AS PER CLAUSE 4 SUPRA. B . WHERE THERE IS AN INCREASE IN THE FOREIGN EQUITY PERCENTAGE BEYOND WHAT IS APPROVED AS PER CLAUSE 4 SUPR A AND THE ACTIVITY IS PERMISSIBLE ON THE AUTOMATIC ROUTE UNDER THE EXTANT FDI POLICY. 41 12. INC C ASE OF PROPOSED ACTIVITY IS NOT EXEMPTED FROM THE PROVISIONS OF INDUSTRIAL (DEVELOPMENT & REGULATION ) ACT 1951 AND THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 AS AMENDED FROM TIME TO TIME, IT WILL BE YOUR RESPONSIBILITY TO OBTAIN SUCH CLEARANCE AS MAY BE REQUIRED UNDER THE SAID ACTS. 13. THE LOCATION OF THE INDUSTRIAL PROJECT, IN ANY, WILL BE SUBJECT TO CENTRAL OR STATE ENVIRONMENTAL LAWS OR REGULATIONS INCLUDIN G LOCAL ZONING AND LAND USE LAWS AND REGULATIONS. 14. THE INVESTEE COMPANY/ PROJECT SHALL COMPLY WITH ALL APPLICABLE ENVIRONMENTAL LAWS AND REGULATIONS (INCLUDING EFFLUENT AND EMISSION STANDARDS AS MAY BE PRESCRIBED BY THE STATE GOVERNMENT IN WHICH THE I NVESTEE COMPANY/ PROJECT IS LOCATED. 15. YOU SHALL ENSURE THAT YOUR PROPOSED INVESTMENT APPROVED VIDE THIS LETTER IS IN COMPLIANCE WITH PREVENTION OF MONEY LAUNDERING ACT, 2002 AS AMENDED FROM TIME TO TIME. 16. YOU MAY NOW PROCEED, IF NEEDED TO FINALIS E THE FOREIGN COLLABORATION AGREEMENT. THIS APPROVAL LETTER BE MADE PART OF THE SAID AGREEMENT TO BE EXECUTED BETWEEN THE INVESTEE COMPANY AND THE FOREIGN COLLABORATOR AND ONLY THOSE PROVISIONS OF THE AGREEMENT WHICH ARE COVERED BY THIS LETTER OR WHICH AR E NOT IN VARIANCE WITH THE PROVISIONS OF THIS LETTER SHALL BE BINDING ON THE GOVERNMENT OF INDIA OR RESERVE BANK OF INDIA. 17. THE ADMINISTRATIVE MINISTRIES/ DEPARTMENTS IS DEPARTMENT OF FINANCIAL SERVICES. 18. YOU SHALL FILE REQUIRED DOCUMENTS OF INWARD REMITTANCE WITH THE REGIONAL OFFICE OF THE RESERVE BANK OF INDIA WITHIN 30 DAYS AFTER ISSUE OF SHARES IN TERMS OF FEMA REGULATIONS NOTIFIED BY RBI> 19. A COPY OF THE FOREIGN COLLABORATION AGREEMENT, SIGNED BY B OTH PARTIES SHALL BE FURNISHED TO THE FOLLOWING AUTHORITIES: I. RESERVE BANK OF INDIA/ AUTHORIZED DEALER II. ADMINISTRATIVE MINISTRY / DEPARTMENT AS MENTIONED ABOVE. III. FIPB UNIT, NEW DELHI 42 IV. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (IR DA) 20. YOU ARE REQUESTED TO : A ) ACKNOWLEDGE AND CONFIRM THE ACCEPTANCE OF THE TERMS AND CONDITIONS MENTIONED IN THIS LETTER IMMEDIATELY ON RECEIPT OF THIS APPROVAL. B ) FURNISH THE INFORMATION AS PER THE QUESTIONNAIRE ON 1 ST JANUARY & 1 ST JULY EVERY YEAR TI LL THE RECEIPT OF TOTAL APPROVED FOREIGN EQUITY AND COMMENCEMENT OF COMMERCIAL PRODUCTION TO THE ADMINISTRATIVE MINISTRY / IES CONCERNED AND ALSO TO THE FIPB UNIT. 21. IN CASE OF ANY PROBLEM ENCOUNTERED DURING IMPLEMENTATION OF THIS FOREIGN COLLABORATIO N APPROVAL, YOU ARE ADVISED TO CONTACT FOREIGN INVESTMENT IMPLEMENTATION AUTHORITY (FIIA) AT EMAIL ADDRESS OR WRITE TO FOREIGN INVESTMENT IMPLEMENTATION AUTHORITY, DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION, MINISTRY OF COMMENCE AND INDUSTRIAL, UDYOG BHA WAN, NEW DELHI - 110011. 22. ANY NON - COMPLIANCE WITH THE APPROVAL LETTER SHALL BE VIEWED STRICTLY BY THE REVOKE THIS APPROVAL OF MODIFY ITS TERMS AND CONDITIONS AND / OR INITIATE ACTION ON ACCOUNT OF SUCH NON - COMPLIANCE. 23. ALL FUTURE CORRESPONDENCE/ IN TIMATION / DOWNSTREAM INVESTMENT NOTIFICATIONS/ NOTIFICATIONS FOR AMENDMENTS / CHANGES IN TERMS AND CONDITIONS OF THE APPROVAL LETTER ETC. IF REQUIRED SHALL BE ADDRESSED TO THE FIPB SECRETARIAT, SECTION OFFICER, FIPB, NORTH BLOCK, NEW DELHI 11001 AND AT EMAIL ADDRESS FIPB - [e-mail] . KINDLY, QUOTE THE APPROVAL NUMBER IN ALL CORRESPONDENCE. YOURS FAITHFULLY (ASHISH SHARMA) UNDER SECRETARY TO THE GOVT. OF INDIA 43 22. AFTER APPROVAL FROM THE FIPB, FOR INCREASE IN SHARE HOLDING BY AVIVA, THE COMPANY ALSO GOT APPROVAL FROM IRDA AUTHORITIES WITH REGARD TO INCREASE IN SHARE HOLDING FROM 26% TO 4 9 % BY WAY OF TRANSFER OF SHARES FROM DABUR. THE SAID LETTER READS AS UNDER: REF. N O. 112.1/1/F&A - LIFE/ALIC - RESTR/213/2016 MR. T REVOR BULL CHIEF EXECUTIVE OFFICER AVIVA LIFE INSURANCE CO. LTD. AVIVA TOWER, SECTOR ROAD, OPP. GOLF COURSE, OLE PHASE V, SECTOR - 43, GURGAON - 122003 DEAR SIR, RE: APPLICATION FOR APPROVAL FOR TRANSFER OF SHARES TO INCREASE THE FOREIGN INVESTMENT FROM 26% TO 49% IN AVIVA LIFE INSURANCE CO. LTD. PLEASE REFER TO YOUR APPLICATION DATED 23 RD NOVEMBER, 2015 AND THE CORRESPONDENCE RESTING WITH THE AUTHORITY ON THE CAPTIONED SUBJECT. 1 . WE ARE PLEASED TO INFORM YOU THAT THE AUTHORITY HEREBY GRANTS APPROVAL UNDER SEC TION 6A OF THE INSURANCE ACT, 1938 FOR THE FOLLOWING: - I) INCREASE IN FOREIGN EQUITY PARTICIPATION BY AVIVA INTERNATIONAL HOLDING LTD. (AIHL) IN AVIVA LIFE INSURANCE CO. LTD FROM THE EXISTING 26% TO 49% THROUGH TRANSFER OF 461127000 SHARES FROM DABUR INVES T CORP. TO AIHL FOR A TOTAL CONSIDERATION OF RS. 940 CRORES. 2 . THE APPROVAL IS SUBJECT TO THE CONDITIONS AS INDICATED BELOW: - I) YOUR COMPANY SHALL FILE THE AMENDED ARTICLES OF ASSOCIATION TO BRING THEM IN LINE WITH THE AMENDED JV AGREEMENT BETWEEN PROMOTERS/ SHAREHOLDERS WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF APPROVAL OF THE AUTHORITY. 44 II ) YOUR COMPANY SHALL COMPLY WITH THE PRICING GUIDELINES ISSUED BY THE RBI AS APPLICABLE TO THE TRANSACTION OF TRANSFER OF SHARES; III ) YOUR COMPANY SHALL ENSURE COMPLIANCE WITH THE CONDITIONS STATED IN THE LETTER F.NO.018(2016)/170(2015) DATED 18 TH MARCH, 2016 OF FIPB, DEPARTMENT OF ECONOMIC AFFAIRS. IV ) YOUR COMPANY SHALL COMPLY WITH THE INSURANCE ACT/RULES/REGULATIONS, ORDERS, CIRCULARS ET C. AND ANY OTHER RULES/REGULATIONS AS APPLICABLE FROM - TIME - TO - TIME. V ) YOUR COMPANY AND ITS SHAREHOLDERS SHALL ENSURE THAT THE SOLVENCY MARGIN AS STIPULATED BY THE AUTHORITY FROM TIME TO TIME IS MAINTAINED. VI ) VI) THE COMPANY SHALL ENSURE THAT THE JOINT VENTU RE PARTNER COMPLIES WITH ALL REQUIREMENTS AS REGARDS TAXATION LAWS FOR THE INDIAN JURISDICTION AS MAY BE APPLICABLE. THE BOARD OF THE COMPANY SHALL ENSURE COMPLIANCE WITH THE REQUIREMENTS OF 'INDIAN OWNED & CONTROLLED' AT ALL TIMES. 23. WITH THE AFOREMENTIONED FACTUAL MATRIX STARTING FROM CONSTITUTION OF PARTNERSHIP FIRM DABUR INVEST CORP. ENTERING INTO JOINT VENTURE AGREEMENT WITH CUIH AND PROMOTION OF THE COMPANY AVIVA INTERNATIONAL HOLDING LTD IN AVIVA LIFE INSURANCE CO. LTD, THE ASSES SEE WAS FILING ITS RETURN OF INCOME. 45 24. NOW LET US SEE THE PAST ASSESSMENT HISTORY OF THE ASSESSEE. A.Y. 2005 - 06 25. ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 31.05.2007. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, A QUERY WAS RAISED ABOUT THE JOINT VENTURE AGREEMENT AND RECEIPT OF OPTION MONEY CREDITED TO THE ACCOUNT AND IN RESPECT OF THE SAID QUERY, THE APPELLANT FILED COPY OF JOINT VENTURE AGREEMENT. THE REPLY IS DATED 19.02.2007 AND THE SAME IS EXHIBITED AT PAGE 213 OF THE PAPER BOOK. THE OPTION MONEY RECEIVED FROM CUIH WAS DULY SHOWN IN SCHEDULE 6 OF THE ANNUAL ACCOUNTS. IN THE NOTES OF ACCOUNT, THE APPELLANT HAD DULY DISCLOSED ABOUT THE JOINT VENTURE AGREEMENT. IN THE NOTES OF ACCOUNT NO. 1, THE APPELLANT HAD CLEARL Y STATED THAT INTEREST OF RS. 9.17 CRORES PAID ON BORROWED FUNDS FOR ACQUISITION OF SHARES HAS BEEN CAPITALISED AND INCLUDED IN THE COST OF INVESTMENT. IN THE NOTES OF ACCOUNT NO. 2, DISCLOSURE ABOUT THE RECEIPT OF OPTION MONEY FROM CUIH IS MADE AND IS FUR THER MENTIONED THAT SUCH OPTION MONEY IS TO BE ADJUSTED AGAINST THE REDUCTION OF SHARE HOLDING IN AVIVA LIFE INSURANCE COMPANY BY DABUR IN FAVOUR OF CUIH AND THE REVENUE WILL BE ACCOUNTED FOR IN THE YEAR OF TRANSFER OF SHARES. 46 A.Y 2006 - 07 26. ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 23.10.2008 AND ONCE AGAIN IN RELATION TO THE OPTION MONEY, A QUERY WAS RAISED AND IN COMPLIANCE THEREOF, ONCE AGAIN JOINT VENTURE AGREEMENT WAS FILED. SIMILAR DISCLOSURES WERE MADE IN THE NOTES OF ACCOUNTS IN THE ANNUAL REPORT AS MENTIONED IN A.Y 2005 - 06. A.Y 2008 - 09 27. ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 2 3. 12 .20 1 0. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, ONCE AGAIN A QUERY WAS RAISED ABOUT THE JOINT VEN TURE AGREEMENT AND RECEIPT OF OPTION MONEY AND THE SAID QUERY WAS DULY COMPLIED WITH ONCE AGAIN BY FILING COPY OF JOINT VENTURE AGREEMENT AND THE TREATMENT OF OPTION MONEY IN THE ANNUAL ACCOUNT WAS EXPLAINED BY WAY OF NOTES TO ACCOUNT AS IN A.Y 2005 - 06 ADN 2006 - 07. ASSESSMENT WAS ACCORDINGLY COMPLETED. 47 A.Y 2011 - 12. 28. ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 06.09.2013. VIDE QUESTIONNAIRE DATED 10.07.2013, THE ASSESSING OFFICER SOUGHT CERTAIN DETAILS WHICH WERE DULY COMPLIED WITH. V IDE SUBMISSIONS DATED 03.09.2013 ALONGWITH RELEVANT DOCUMENTS WHICH ARE EXHIBITED AT PAGES 221 TO 243 OF THE PAPER BOOK. ACCOUNTING POLICIES AND NOTES TO TH E FINANCIAL ACCOUNTS ARE EXHIBITED AT PAGES 343 AND 344 OF THE PAPER BOOK AND RELEVANT NOTES TO THE ACCOUNT READ AS UNDER: II NOTES TO THE ACCOUNTS 1 . THE FIRM HAS ENTERED IN TO JOINT VENTURE (M/S AVIVA LIFE INSURANCE CO. PVT. LTD.) WITH COMMERCIAL UNION INTERNATIONAL HOLDING LIMITED ENGLAND & WALES. 2 . THE INTEREST OF RS. 225.06 CRORES PAID ON BORROWED FUNDS , FOR ACQUISITION OF SHARES IN M/S AVIVA LIFE INSURANCE CO. PVT. LTD. ON A LONG TERM BASIS , HAS BEEN CAPITALIZED AND INCLUDED IN THE COST OF THE INVESTMENT BEING LONG TERM INVESTMENT, BASED ON THE LEGAL OPINION OBTAINED AND AS PER ACCOUNTING POLIC I ES ADOPTED BY THE FIRM. 3 . THE FIRM HAS RECEIVED RS. 1082.65 CRORES (INCLUDING RS. 249.71 CRORES RECEIVED DURING THE YEAR) FROM COMMERCIAL UNION INTERNATIONAL HOLDINGS LIMITED AS OPTION MONEY . THE OPTION 48 MONEY TO BE ADJUSTED AGAINST FURTHER REDUCTION OF SHAREHOLDING IN M/S AVIVA LIFE INSURANCE CO. PVT. LTD. BY DABUR INVEST CORP. IN FAVOUR OF COMMERCIAL UNION INTERNATIONAL HOLDINGS LIMITED , U.K. AT A PRICE TO BE DETERMINED AT THE TIME OF TRANSFER OF SHARES . THE REVENUE IF ANY WILL BE ACCOUNTED FOR IN THE YEARS OF TRANSFER OF SHARES. 4 . THE FIRM HAS PAID RS. 23.75 LACS DURING THE YEAR AS PROFESSIONAL CHARGES FOR INSURANCE VENTURE HAS BEEN CAPITALIZED AND INCLUDED IN THE COST OF THE INVESTMENT BEING LONG TERM I NVESTMENT IN EQUITY SHARES OF M/S AVIVA LIFE INSURANCE CO. PVT LTD. AS PER ACCOUNTING POLICES ADOPTED BY THE FIRM. 5 . THE PROFESSIONAL CHARGES OF RS. 48.18 LACS HAS BEEN ACCOUNTED FOR AS REVENUE EXPENSES AS IN THE OPINION OF MANAGEMENT THE SAME IS REVENUE NAT URE AND NOT RELATED TO INVESTMENT VENTURE. A.Y 2013 - 14 [YEAR UNDER CONSIDERATION] 29. VIDE NOTICE DATED 20.1.2015, ISSUED U/S 142(1) OF THE ACT, THE ASSESSING OFFICER RAISED THE FOLLOWING QUERIES: OFFICE OF THE INCOME TAX OFFICER WARD 46 (5) ROOM NO.205, DRUM SHAPE BUILDING I.P. ESTATE NEW DELHI - 110002 NOTICE UNDER SECTION 142 (1) OF THE INCOME TAX ACT, 1961 NO. ITO/WARD 46 (5) / SCRUTINY / 2015 - 16 DATED 20.11.2015 49 PAN AADFD2529G M/S. DABUR INVEST CORP. 4 TH FLOOR, PUNJABI BHAWAN 10 - ROUSE AVENUE NEW DELHI - 110002 SIR, YOU ARE REQUESTED TO FURNISH THE FOLLOWING DETAILS FOR THE A. Y. 2013 - 14 1 . FURNISH POWER OF ATTORNEY. 2 . FURNISH DETAILS OF DIVIDEND RECEIVED. 3 . FURNISH DETAILS OF LEGAL & PROFESSIONAL CHARGES AND LOSS FROM MUTUAL FUND. 4 . TDS DETAILS IN THE FOLLOWING FROM NAME OF THE PERSONS, ADDRESSES, NATURE OF PAYMENT, DATE OF DEPOSIT ALONG WITH COPY OF CHALLAN EXPLAIN WHY TDS HAS NOT BEEN DEDUCTED ON INTEREST PAID TO SOME PERSONS AS IS EVIDENT FROM CONFIRMATION. 5 . JUSTIFY INCREASE/ DECR EASE IN UNSECURED LOANS. FURNISH LIST OF UNSECURED LOAN IN THE YEAR, SQUARED UP DURING THE YEAR, AMOUNT AND % OF INTEREST, TDS AND CLOSING BALANCE. 6 . FURNISH OF DEDUCTION INADMISSIBLE IN TERMS OF SECTION 14 A R.W.S. 8D AS THE ASSESSEE HAS EXEMPT INCOME. 7 . STATEMENT OF BARCLAYS BANK AND J. M. FINANCIAL PRODUCTS LTD. 8 . DETAILS OF OPTION PRICE AND TDS DEDUCTED. YOU ARE HEREBY REQUIRED TO ATTEND MY OFFICE EITHER IN PERSON OR BY A AUTHORIZED REPRESENTATIVE IN WRITING ON 03.12.2015. (VINOD KUMAR) INCOME TAX OFF ICER WARD 46 (5), NEW DELHI 5 0 30. AFTER BEING SATISFIED WITH THE REPLY OF THE ASSESSEE, ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 09.02.2016. A.Y 2014 - 15 [YEAR UNDER CONSIDERATION ] 31. ASSESSMENT WAS FRAMED U/S 143 ( 3) OF THE ACT VIDE ORDER DATED 28.07.2016. THE RELEVANT NOTES TO THE ACCOUNTS READ AS UNDER: II NOTES TO THE ACCOUNTS 1 . THE FIRM HAS ENTERED IN TO JOIN VENTURE (M/S. AVIVA INSURANCE CO. PVT. LTD.) WITH COMMERCIAL UNION INTERNATIONAL HOLDING LIMITED ENGLAND & WALES. 2 . T HE INTEREST OF RS.57.26 CRORES PAID DURING THE CURRENT YEAR ON BORROWED FUNDS FOR ACQUISITION OF SHARES IN M/S. AVIVA LIFE INSURANCE CO. PVT. LTD. ON A LONG TERM BASIS AND RS.22.20 CRORE AS PROFESSIONAL CHARGES PAID TO INDUS BANK LIMITED, HAS BEEN CAPITALI ZED AND INCLUDED IN THE COST OF THE INVESTMENT BEING LONG TERM INVESTMENT, BASED ON THE LEGAL OPINION OBTAINED AND AS PER ACCOUNTING POLICIES ADOPTED BY THE FIRM. 3 . THE FIRM HAS RECEIVED RS.1823.19 CRORES (INCLUDING RS.246.84 CRORES RECEIVED DURING THE YEA R ) FROM COMMERCIAL UNION INTERNATIONAL HOLDINGS LIMITED AS OPTION MONEY. THE OPTION MONEY 51 TO BE ADJUSTED AGAINST FURTHER REDUCTION OF SHAREHOLDING IN M/S. AVIVA LIFE INSURANCE CO. PVT. LTD. BY DABUR INVEST CORP. IN FAVOUR OF COMMERCIAL UNION INTERNATIONAL HOLDING LIMITED, U. K. AT A PRICE TO BE DETERMINED AT THE TIME OF TRANSFER OF SHARES. THE REVENUE IF ANY WILL BE ACCOUNTED FOR IN THE YEARS OF TRANSFER OF SHARES. 4 . THE PROFESSIONAL CHARGES OF RS.2.19 LACS HAS BEEN ACCOUNTED FOR AS REVENUE EXPENSES AS IN THE OPINION OF MANAGEMENT THE SAME IS REVENUE NATURE AND NOT RELATED TO INVESTMENT VENTURE . 32. SUBSEQUENTLY, THE PCIT ISSUED NOTICE U/S 263 OF THE ACT FOR A.Y 2013 - 14 AND THE SAME READ AS UNDER: OFFICE OF THE PR COMMISSIONER OF INCOME TAX, DELHI 16 ROOM NO. 101, DRUM SHAPED BUILDING,I P ESTATE, NEW DELHI - 11 0002 F. NO. PC IT - 16/RE VISION/2017 - 18/ 329 DATED: 1 2.06.2017 PAN: AAD F 1)26 2 9 G TO M/S DABUR INVEST CORP. 4 TH FLOOR, PUNJABI BHAWAN, 10, ROUSE AVENUE, NEW DELHI - 110002 DEAR SIR, SUB: - NOTICE U/S 263 OF THE I.T. ACT.1961 FOR THE A.Y . 2013 - 14 - REG - THE ASSESSMENT RECORDS IN YOUR CASE FOR THE A.Y. 2013 - 14 WERE CALLED FOR BY THE UNDERSIGNED AND EXAMINED. ON EXAMINATION OF THE ASSESSMENT RECORDS IT IS FOUND THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING 52 OFFICER FOR THE A.Y. 2013 - 14 IN YOUR CASE DATED 09.02.2016 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE AO FAILED TO MAKE ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE WITH REGARD TO OPTION MONEY AMOUNTING TO RS. 246.84 CRORES RECEIVED BY YOU DURING THE YEAR WHICH IS SHOWN UNDER THE HEAD CURRENT LIABILITIES AS PER SCHEDULE 4 OF THE BALANCE SHEET. AS PER POINT NO. 3 TO THE NOTES ON ACCOUNTS IN SCHEDULE 8 OF THE BALANCE SHEET YOU HAVE RECEIVED RS. 1581.81 CRORES WHICH INCLUDES RS. 246.84 CRORES DURING THE YEAR FROM C OMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. AS OPTION MONEY. THE OPTION MONEY HAS TO BE ADJUSTED AGAINST FURTHER REDUCTION OF SHARE HOLDING IN M/S AVIVA LIFE INSURANCE CO. PVT. LTD. BY YOUR FIRM IN. FAVOUR OF COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. U. K. AT A PRICE TO BE DETERMINED AT THE TIME OF TRANSFER OF SHARES. AS PER POINT NO. 1 TO THE NOTES ON ACCOUNTS YOU HAVE ENTERED INTO A JOINT VENTURE WITH COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. IN THE NAME OF IS M/S AVIVA LIFE INSURANCE CO. PVT. LTD. T HE AO EXAMINED THE TAXABILITY OF THE OPTION MONEY RECEIVED BY YOU. IN THIS REGARD, YOU ARE REQUESTED TO FURNISH THE FOLLOWING INFORMATION: - 1 . A COPY OF THE JOINT VENTURE AGREEMENT WITH COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. FOR CARRYING OUT THE BUSINE SS OF M/S AVIVA LIFE INSURANCE CO. PVT. LTD. 2 . A COPY OF THE BALANCE SHEET AND THE ANNUAL ACCOUNTS OF M/S AVIVA LIFE INSURANCE CO. PVT. LTD. FOR A.Y. 2013 - 14, REFLECTING THE SHARE HOLDING PATTERN. 3 . A COPY OF THE AGREEMENT VIDE WHICH OPTION MONEY HAS BEEN RECEIVED 53 YOU FROM COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. U.K. 4 . PLEASE STATE WHY THE RECEIPT OF RS. 246.84 AS OPTION MONEY HAS NOT BEEN DECLARED AS INCOME, SINCE IT IS CONSIDERATION RECEIVED FOR SALE OF SHARES 5 . IT IS SEEN THAT YOU HAVE RECEIVED OPTION MONEY FROM YOUR JOINT VENTURE PARTNER ITT VIEW OF BUSINESS RESTRUCTURING. THIS TRANSACTION IS COVERED WITHIN THE MEANING OL INTERNATIONAL TRANSACTION AS PER PROVISION OF SECTION 92 B(2J, EXPLANATION (T) (EJ OF THE I T ACT, 1961. PLEASE STATE WHY YOU HAVE NOT FILED ANY REPORT U/S 92E OF THE IT ACT. 6 . PLEASE STATE ON WHAT BASIS YOU HAVE CAPITALISED THE INTEREST EXPENDITURE OF RS. 78.54 CRORES WHICH HAS BEEN PAID ON BORROWED FUNDS AND RS. 13.61 LAKHS AS PROFESSIONAL CHARG ES PAID TO INDUS BANK LTD. HAS AND INCLUDED IN THE COST OF INVESTMENT. 7 . FROM THE COPY OF THE JOINT VENTURE AGREEMENT FURNISHED BY YOU DURING HEARING OF PROCEEDING U/S 263 FOR A.Y. 2014 - 15 AND SCHEDULE 1 TO THE JOINT VENTURE 1 AGREEMENT YOU ARE RECEIVING OP TION PRICE ANNUALLY IN ADVANCE FROM COMMERCIAL UNION INTERNATIONAL HOLDINGS LTD. AT THE RATE OF 20 PER CENT OF THE SUBSCRIPTION PRICE IN EACH SHARE HELD BY YOU. THIS OPTION MONEY IS NOTHING BUT A RECEIVING RECEIPT WHICH HAS BEEN GIVEN THE COLOUR OF LIABILI TY AS PER THE JOINT VENTURE AGREEMENT, PLEASE STATE WHY THE OPTION MONEY OF RS. 246.84 CRORES RECEIVED BY YOU SHOULD NOT BE TAKEN AS TAXABLE RECEIPT IN STEAD OF LIABILITY TOWARDS PURCHASE OF SHARES. IT IS BROUGHT TO YOUR NOTICE THAT THIS WELL SETTLED LAW TH AT IT IS THE SUBSTANCE OF THE AGREEMENT AND NOT THE FORM OF 54 AGREEMENT WHICH WILL HOLD THE FIELD. 8 . SO IN SUBSTANCE THE OPTION MONEY RECEIVED BY YOU IS A TAXABLE RECEIPT PLEASE FURNISH YOUR REPLY BY 14.06.2017 SINCE NO ENQUIRY OR VERIFICATION WHICH SHOULD HAVE BEEN MADE HAS BEEN MADE BY THE AO, THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. PLEASE STATE WHY THE ASSESSMENT ORDER PASSED BY THE AO SHOUL D NOT BE CANCELLED/MODIFIED U/S 263 OF THE IT ACT 1961. YOU ARC HEREBY REQUIRED TO FILE THE REPLY TO THE ABOVE QUERIES ON 27 TH LUNC. 2017 AT 11:00 A.M. (SURESH KUMAR MITTAL) PR. COMMISSIONER OF INCOME TAX DELHI - 16, NEW DELHI ( SURESH KUMAR MITTAL) PR. COMMISSIONER OF INCOME TAX DELHI - 16 , NEW DELHI 3 3 . WITH THE AFOREMENTIONED NOTICE, THE LD. PCIT STARTED PROCEEDINGS U/S 263 OF THE ACT. DURING THE COURSE OF PROCEEDINGS, THE LD. PCIT ASKED THE ASSESSEE TO CLARIFY AND FURNISH DETAILS ON VARIOUS ASPECTS OF THE TRANSACTION. ALL THE CLARIFICATIONS AND DETAILS SOUGHT BY THE LD. PCIT WERE DULY REPLIED BY THE ASSESSEE BY FILING RELATED DOCUMENTS / EVIDENCES. 55 3 4 . AFTER CONSIDERING THE DETAILED SUBMISSIONS, THE LD. PCIT WAS OF THE OPINION THAT THE ASSESSMENT ORDER S FOR ASSESSMENT YEAR S 2013 - 14 AND 2014 - 15 ARE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE ASSESSING OFFICER WAS DIRECTED TO COMPLETE SUCH ASSESSMENTS AFRESH AND EXAMINE THE ISSUES FOR ASSESSMENT YEARS 2013 - 14 AND 2014 - 15 BY GATHERING SUCH DETAILS AS MAY BE NECESSARY AND CONDUCTING SUCH ENQUIRIES AS MAY BE NEEDED. 3 5 . THE OBSERVATIONS OF THE PCIT CAN BE SUMMARISED AS UNDER: (I) THE PCIT HELD THE ASSESSEE AS A FINANCER AND A DUMMY STAKE HOLDER , VYING TO GET MAXIMUM GUARANTEED RETURN ON MONEY APPLIED. ACCORDING TO HIM, THE OPTION MONEY ON GRANTING OF FIRST RIGHTS OF STAKE PURCHASE TO CUIH AND ACCRETION IN SHARES AS COMPOSITE INCOME ARISING OUT OF JV AGREEMENT , CLEARLY FALL UNDER THE HEAD BUSINESS INCOME. (II) TH E LD. PCIT WAS OF THE OPINION THAT HE ASSESSING OFFICER HAS NOT RAISED ANY QUERY RELATED TO THE NATURE OF BUSINESS CAPITALISED BY THE ASSESSEE AND WHETHER THE ASSESSEE WAS JUSTIFIED IN CAPITALISING SUCH EXPENSES. THE PCIT FURTHER OBSERVED THAT THE ASSESSIN G OFFICER DID NOT GATHER ANY DETAILS OF OPTION 56 MONEY RECEIVED AND DID NOT EXAMINE ITS NATURE WHETHER IT WAS AN ADVANCE OR A TAXABLE RECEIPT. (III) NEITHER COPY OF JV AGREEMENT , NOR WORKING OF SUCH AMOUNT OF OPTION MONEY WAS FURNISHED. (IV) SURPRISINGLY, T HEREAFTER, THE PCIT REFERRED TO THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2015 - 16 AND EXTRACTED THE ENTIRE ASSESSMENT ORDER IN THE BODY OF HIS ORDER. THE LD. PCIT CONTINUED HARPING O N THE OPTION MONEY RECEIVED BY THE ASSESSEE AND WAS OF THE FIRM BELIEF THA T OPTION MONEY RECEIVED BY THE ASSESSEE YEAR AFTER YEAR AT A FIXED RATE OF 20% IS THE INCOME OF THE ASSESSEE FOR EACH YEAR AND THERE IS NO EXPLANATION FURNISHED BY THE ASSESSEE FOR RETAINING THE OPTION MONEY. ACCORDING TO THE PCIT, RECURRING ANNUAL PAYMEN T @ 20% OF INVESTMENT BY CUIH IS NOT RESTRICTED BY ANY OTHER CONDITION OF JV AGREEMENT AND NO PART OF OPTION MONEY RECEIVED WAS REFUNDED OR REFUNDABLE , THER E BY THE ASSESSEE DELIBERATE LY AVOIDED PAYMENT OF TAXES ON OPTION PRICE , WHICH WAS DUE EVERY YEAR IN THE PAST 15 YEARS WITH THE SOLE INTENTION TO MISLEAD THE DEPARTMENT BY WAY OF WRONG NOTES TO ACCOUNTS AND BY WRONGLY 57 SHOWING SUCH INCOME FIRSTLY AS LIABILITY , AND THEN AS CAPITAL RECEIPT , WHICH WAS, IN FACT, REVENUE RECEIPT. (V ) I N THE ASSESSMENT ORDER, THERE IS NO DISCUSSION REGARDING THE QUESTION AS TO WHETHER THE AMOUNT OF INCOME SHOWN BY THE ASSESSEE WAS BEING CLAIMED TO BE EXEMPT OR WHETHER THE ENTIRE AMOUNT WAS EXEMPT. THE PCIT CONCLUDED BY HOLDING THAT THE ASSESSMENT ORDER HAS BEEN FRAMED WITHOUT APPLICATION OF MIND. 36. THE LD. DR SHRI G.C. SRIVASTAVA REPRESENTING THE REVENUE EMPHASIZED ON THE FOLLOWING ISSUES: OPTION PRICE CALCULATION AS PER FORMULA GIVEN IN SCHEDULE 3 AND ILLUSTRATIONS GIVEN IN SCHEDULE 9 OF JV AGREEMENT: - AS PER FORMULA GIVEN IN SCHEDULE 3 AND ILLUSTRATIONS GIVEN IN SCHEDULE 9 THE OPTION PRICE TO BE REPAID (OPR) WORKS OUT AS UNDER FOR MARKET VALUE ADOPTED FOR ASSESSEE AT RS.20.38/ - PER SHARE AND FOR OTHER HYPOTHETICAL MARKET VALUES OF RS.0/ - , RS.10/ - AND RS.100/ - PER SHAR E OF SHARES OF 'AVIVA LIFE INSURANCE CO. PVT. LTD.': - 58 6. WHAT WILL BE REFUND FROM DIC TO CUIH OR PAYMENT FROM CUIH TO DABUR RS.16.71 PER SHARE ON 23% STAKE WILL BE W&MDED - RB (MV > SP + OP) RS.10.38 PER SHARE ON 23% STAKE WILL BE ICFCITREFEAF FED RE (RS.478.64 CR.) MV < SP + OP THEREFORE, MV - SP OR 20.38 - 10 OR 10.38 WILL BE REFUNDED OP IS RETAINED DABUR WILL RETAIN OP TARIN, DABUR WILL RETAIN ENTIRE OP. + DABUR WILL ALSO RECEIVE FROM CUIH RS.10 PER SHARE I.E. SP S.NO. PARTICULARS AND CONTINGENCIES IN EXIT OPTION SITUATION A (HYPOTHETICAL) SITUATION B (ASSESSEE'S CASE) SITUATION C (HYPOTHETICAL) SITUATION D (HYPOTHETICAL) 1. SUBSCRIPTION PRICE (SP) (TOTAL 1483626000 SHARES) 10 10 10 10 2. OPTION PRICE (OP) RECEIVED PER SHARE BY ASSESSEE FROM AY 2003 - 04 TO AY 17 - 18 (2480.48 CRORE 1,48,36,26,000) 16.71 16.71 16.71 16.71 3. MARKET VALUE (MV) OF 23% STAKE SALE (46,11,27,000 SHARES) 100 20.38 10 0 4. SITUATION MV > SP + OP MV < SP + OP MV = SP MV < SP 5. HOW MUCH ASSESSEE (DIC) HAS RECEIVED FROM CUIH RS.16.71 PER SHARE ON 74% STAKE + RS. 100 PER SHARE ON 23% STAKE RS.16.71 PER SHARE ON 74% STAKE (I.E. RS.2480.48 CR.) + RS.20.38 PER SHARE ON 23% STAKE (I.E. RS. 940 CR.) RS.16.71 PER SHARE ON 74% STAKE + RS.10 PER SHARE ON 23% STAKE RS.16.71 PER SHARE ON 74% STAKE + RS.0 PER SHARE ON 23% STAKE 59 AFTER GOING THROUGH AFORESTATED TABLE WE CAN OBSERVE THAT: - (1) ASSESSEE DABUR INVEST CORP. (DIC) HAS APPLIED RS. 1483,62,60,000/ - IN 1,48,36,26,000 SHARES OF AVIVA LIFE INSURANCE CO. P. LTD., WHICH IS 74% STAKE IN THAT COMPANY AND 26% ALLOWED TO FDI IS HELD BY CUIH. 2) AS PER SCHEDULE 1 AND CLAUSE 16.6.1 AND 16.6.2 OF JV AGREEMENT ASSESSEE IS GETTING RETURN OF 20% ANNUALLY ON SUCH MONEY APPLIED IN SHARES, IN NAME OF OPTION PRICE MONEY. ( 3 ) TOTAL AMOUNT RECEIVED TILL AY 2017 - 18 AS OPTION PRICE IS RS.2480.48 CRORE. ( 4 ) WHATEVER MAY BE 'MARKET PRICE' OF 'AVIVA' SHARES, AS PER THE T ABLE, MONEY RETAINED BY PIC IS ALWAYS MORE THAN 'OPTION PRICE' RECEIVED I .E. OPTION PRICE RECEIVED IS RS.2480.48 CRORE AND MONEY 7. WHAT IS RETAINED BY DABUR 74% STAKE = 1,48,36,26,000 SHARE 23% STAKE SOLD = 46,11,27,000 1/ OP OF 74% STAKE + (MV - OP) OF 23% STAKE = 2480.48 CR. + (100 - 16.71) X 46,11,27,000 = 6321.20 CR. (> 2480.48 CR.) DABUR WILL RETAIN OPTION PRICE & MARKET VALUE IN EXCESS OF OPTION PRICE ON 23% WHICH IS ALREADY RECEIVED. OP OF 74% STAKE + [MV (MV - SP)] 23% STAKE = OP OF 74% STAKE + SP OF 23% STAKE =2480.48 CR. + [940 CR. = - (940 - 461.12 CR.)] = 2941.60 CR. [OP ON 74% RETAINED + REED. SP ON 23%] OP ON 74% RETAINED + REED. MV ON 23% = 2941.60 CR. OP ON 74% RETAINED + REED. SP ON 23% = 2941.60 CR. 60 RETAINED IN THESE 4 DIFFERENT MARKET VALUES IS RS.6321.20 CRORE (WHEN RS.100/ - MV PER SHARE) AND RS.2941.60 CRORE IN REST OF TH REE CASES IS SAME WHETHER MARKET VALUE OF SHARES IS 0 OR 10 OR 20.38 PER SHARE. THIS MEANS OPTION PRICE IS NEVER REFUNDED . ( 5 ) THIS MEANS THERE IS GUARANTEED MINIMUM RETURN OF RS.2914.60 CRORE TO PIC FROM CUIH ON SUCH MONEY APPLIED, IRRESPECTIVE OF MARKET VAL UE OF SHARES, EVEN WHEN MARKET VALUE IS ZERO . THIS FIX RETURN ON SHARE INVESTMENT IS NOT PER SAY RETURN ON SHARES BUT MORE LIKE FIX INTEREST RETURN ON MONEY APPLIED, THUS MAKING ITS NATURE AKIN TO FINANCIAL TRANSACTION. ( 6 ) SINCE IT IS A FINANCIAL TRANSACTION , INCOME ARISING THEREFROM IS BUSINESS INCOME FOR WHICH A DETAILED NOTE IS SEPARATELY ENCLOSED. BOTH 'OPTION PRICE' RECEIVED EVERY YEAR AT 20% RATE AND AMOUNT RECEIVED ON DIVESTMENT ARE BUSINESS RECEIPTS AND REFUND GIVEN FROM SHARE CONSIDERATION RECEIVED OR INTEREST EXPENSES TOWARDS BORROWED CAPITAL WHICH ARE USED FOR PURCHASE OF SUCH SHARES ARE BUSINESS EXPENSES, BUT ASSESSEE HAS WRONGLY CAPITALIZED THEM AND WRONGLY CLAIMED INDEXATION ON THEM. ( 7 ) ASSESSEE HAS ALSO CLAIMED SOME UNRELATED EXPENSES PAID AS NON - COMPETE FEES TO INDUSIND BANK FOR NOT COMPETING WITH 'AVIVA' IN INSURANCE BUSINESS . THIS DOES NOT FALL IN BUSINESS PURPOSES OF ASSESSEE AND NOT ALLOWABLE U/S 37. ( 8 ) ASSESSEE HAS THUS NOT PAID TAXES ON 'OPTION PRICE MONEY' RECEIVED OF RS.2480.48 CRORE NOR IT PAID ANY TAXES ON SHARE SALE RECEIPT OF RS.940 CRORE IN EITHER AY JLQQ3 - 04 TO AY 2016 - 17 OR I N YEAR OF DIVESTMENT 61 IN AY 2017 - 18 BY CLAIMING THEM AS CAPITAL RECE IPTS ;AND CLAIMING VARIOUS UN RELATED EXPEN SES AND CLAIMING HUGE INDEXATION ON THEM. ( 9 ) NOT O NLY THAT THE OPTION PRICE RECEIVED ON 51% STAKE I.E. RS.1470 CRORE IN NOT OFFERED TO TAX IN ANY YEAR AND AS PER ASSESSEE IT IS NOT TAXABLE TILL CHANGE OF FDI POLICY AND DIVESTMENT OF 51% EVEN IF IT MEANS NON - TAXING THE SAME TILL PERPETUITY. 37. THE LD. DR FURTHER HIGHLIGHTED ON THE FOLLOWING POINTS 1 . OPTION PRICE IS A RECURRING ANNUAL RECEIPT WHICH IS TAXABLE IN THE YEAR OF RECEIPT. AS PER SCHEDULE 1 OF J.V. AGREEMENT, ASSESSEE IS RECEIVING ANNUALLY 20% AS A FIXED RETURN ON INVESTMENT FROM FDI PARTNER (CUIH) AS PER CLAUSE 16.6.2 OF J.V. AGREEMENT. AS PER TABLE GIVEN SEPARATELY, MINIMUM FIXED ANNUAL RETURN IS RECEIVED BY THE ASSESSEE EVEN IF MARKET VALUE OF AVIVA SHARE IS ZERO. 2 . SINCE, THERE IS A FIXED MINIMUM ANNUAL RETURN OF 20% ON INVESTMENT PRICE, THEREFORE, THIS TRANSACTION IS IN THE NATURE OF IN TEREST INCOME AND RELIANCE IS PLACED ON RAMA BAI AND ORS. VS. CIT DATED 08.11.1989. ISC). 1990 181 ITR 400 ( SC) . 3 . RECURRING RETURN OF 20% ANNUALLY AND THE RETURN AT THE TIME OF DIVESTMENT OF SHARES ARE ONLY TWO LIMBS OF SAME RECEIPT ARISING OUT OF SAME J.V . AGREEMENT AND THEREFORE THEY ARE IN NATURE OF BUSINESS INCOME AS HELD IN THE CASE OF CIT VS. GOVIND CHAUDHARY & SONS DATED 22.04.1992 1993 203 ITR 881 SC WHICH SAYS THAT INTEREST INCOME DRAWS ITS NATURE FROM UNDER LYING TRANSACTION . 62 4 . SINCE THE RETURN IN THIS CASE IS FIXED RETURN OF 20% ON INVESTMENT WHICH IS NEVER ASSOCIATED WITH SHARE INVESTMENT PER SE, BECAUSE RETURN ON SHARES IN A PRIVATE LIMITED COMPANY IS HIGHLY ILLIQUID AND SUFFERS FROM VOLATILITY IN LIFE INSURANCE MARKET THEREF ORE, THE RETURN ON SUCH INVESTMENT IS NOT AT ALL AKIN TO SHARE INVESTMENT BUT IN NATURE OF INTEREST INCOME OR INCOME FROM FINANCIAL TRANSACTION AS HELD IN THE CASE OF MAHINDRA TELECOMMUNICATIONS VS. ITO DATED 24.05.2016, ITAT MUMBAI BENCH IN ITA NO. 2832/M UM/2012, RELEVANT PART IS REPRODUCED BELOW: - THE ASSESSEE FOLLOWING THE ACCRUAL METHOD OF ACCOUNTING FOR FINALIZING ITS ACCOUNTS AS WELL AS REPORTING INCOME - BEING IN FACT LEGALLY OBLIGED TO DO SO, THE SAID CONCEPT, I.E., ACCRUAL, A FUNDAMENTAL ACCOUNTIN G ASSUMPTION - SO THAT THE ACCOUNTS CANNOT BE CONSIDERED AS REFLECTING A TRUE AND FAIR STATE OF AFFAIRS UNTIL THE SAME IS ADOPTED, WAS EXAMINED IN LIGHT OF THE JUDICIAL PRECEDENTS AND ACCOUNTING STANDARDS, SINCE LEGALLY MANDATED. ONLY TO FIND A COMPLETE HA RMONY BETWEEN THE TWO, I.E., AS JUDICIALLY EXPLAINED AND AS DEFINED IN ACCOUNTANCY, THE COMMERCIAL PRINCIPLES OF WHICH WOULD EVEN OTHERWISE HOLD IN THE ABSENCE OF ANYTHING TO THE CONTRARY UNDER THE STATUTE. THE QUESTION TO EXAMINE IS IF THE RIGHT TO RECEIV E THE RETURN (OR INCOME) ON THE SHARES HAD ACCRUED TO THE ASSESSEE DURING THE RELEVANT YEAR. THE SAME FLOWING FROM THE SHAREHOLDER'S AGREEMENT ENTERED INTO BY IT WITH A PARENT (FOREIGN) COMPANY OF THE INVESTEE - COMPANY, A RESIDENT, THE SAID AGREEMENT STANDS EXAMINED IN DETAIL, EVEN AS NO DISPUTE OR DOUBT WITH REGARD TO 63 THE SCOPE OR MEANING OF ITS PROVISIONS IS AVAILABLE ON RECORD, I.E., ONLY WITH A VIEW TO ASCERTAIN THE NATURE OF THE RIGHTS ACCRUING TO OR VESTING IN THE ASSESSEE PER THE SAME. THE AGREEMENT W AS FOUND TO UNEQUIVOCALLY AND UNAMBIGUOUSLY CONVEY THE RIGHT TO RECEIVE THE RETURN ON ITS INVESTMENT (IN SHARES) TO ITA NO28 3 2/ MU M/2 012 (A.Y . 2 008 - 09 ) MAHINDRA TELECOMMUNICATIONS INVESTMENT PRIVATE LIMITED VS. ITO THE ASSESSEE - COMPANY AND, FURTHER, THAT INCOME THEREFORE ACCRUED TO IT IN THE SAME MANNER AND TO THE SAME EXTENT AS THE INCREASE IN THE VALUE OF ITS' SHARE HOLDING IN THE INVESTEE - COMPANY, AT A DEFINED RATE PER UNIT OF TIME OVER THE HOLDING PERIOD, WHICH WAS FURTHER FIXED AT A MINIMUM OF T HREE YEARS OR SUCH LOWER TIME) AS OCCASIONED BY THE ELIMINATION OF THE INDIAN GOVERNMENT REGULATION ON FOREIGN EQUITY HOLDING LEVELS. THIS IS AS THE ASSESSEE HAD AN IRREVOCABLE RIGHT TO TRANSFER, AND THE PARENT COMPANY (AT&T) AN IRREVOCABLE RIGHT TO ACQUIR E THE ASSESSEE'S SHAREHOLDING IN ITS INDIAN SUBSIDIARY (AT&T INDIA) EITHER TO ITSELF OR THROUGH ITS AFFILIATES (WHICH HAVE RIGHT TO FIRST REFUSAL), AT A PREDETERMINED PRICE, CALLED OPTION PRICE, WHICH SHALL CONTINUE TO INCREASE WITH TIME, I.E., AT THE DEFI NED RATE (11% P.A.), TO BE COMPOUNDED ANNUALLY, SO THAT THE AGREED RETURN SHALL CONTINUE TO OBTAIN, RESULTING IN A CONTINUOUS GROWTH IN OPTION PRICE OVER TIME. THE TRANSFER OF SHARES IN THE MANNER AFORE - SAID, INCLUDING THE PRICE DETERMINED THERE - UNDER, IS MADE THE ESSENCE OF THE AGREEMENT, SO THAT ANY CONTRAVENTION THEREOF CONSTITUTES A BREACH THEREOF, WHICH MAY RESULT IN ITS TERMINATION. THE ASSESSEE - COMPANY, WHICH HAS NO RIGHT TO MANAGEMENT, CANNOT SELL, ASSIGN, TRANSFER OR OTHERWISE DISPOSE OF ITS' SHARE S (OR INTEREST THEREIN) IN ANY MANNER, OR 64 OTHERWISE ENCUMBER THE SAME IN ANY MANNER. THE ASSESSEE'S INVESTMENT IN SHARES, HAS TO BE CONSIDERED IN CONJUNCTION WITH THE SAID AGREEMENT, BEING IN FACT ITSELF ONLY PURSUANT THERETO, I.E., HAVING REGARD TO THE RE ALITY AND THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME, AS EVIDENT, IS QUALITATIVELY VERY DIFFERENT FROM THE SHAREHOLDING OF, OR THE RIGHTS AS A SHAREHOLDER OF, AT&T. THE PROVISION OF 'CALL OPTION FEE' AND 'COMPOUNDING' IN THE AGREEMEN T ARE CONSIDERED CONSISTENT WITH INVESTMENT IN SHARES PROPER. IT IS THE SUBSTANCE THAT IS TO PREVAIL OVER FORM. THE ARRANGEMENT IS ACCORDINGLY FOUND TO BE THE ONLY A MANNER OF INVESTMENT, AKIN TO A FINANCING ARRANGEMENT, YIELDING RETURN INCOME) AS A FUNCTI ON OF TIME. NO DOUBT OR UNCERTAINTY WITH REGARD TO THE REALIZATION OR THE ULTIMATE COLLECTION OF THE INCOME - BY WAY OF OPTION PRICE ON TRANSFER OF SHARES, OBTAINING (I.E., RECKONED IN A REALISTIC MANNER), THE INCOME (BY WAY OF RETURN ON INVESTMENTS IN SHA RES) IS FOUND TO HAVE ACCRUED BY WAY OF INFLOW OF OR GIVING RISE TO A RECEIVABLE. THE ARRANGEMENT I S IN FACT ITA NO28 3 2/ MUM/ 2 012 ( A. Y. 2008 - 09 ) MAHINDRA TELECOMMUNICATIONS INVESTMENT PRIVATE LIMITED VS. ITO. AT & T NOT REQUIRING ANY FINANCER, BUT EN TERING THE ARRANGEMENT ALL THE SAME ONLY TO COMPLY WITH THE GOI POLICY AS TO A CAP ON THE FOREIGN EQUITY PARTICIPATION IN THE TELECOM SECTOR FOR THE TIME BEING, NOT EVEN A FINANCING ARRANGEMENT. THE AGREEMENT AND THE RIGHTS ACCRUING THEREBY WAS FURTHER EXA MINED FROM THE STAND POINT OF AND IN THE LIGHT OF A PROVISION OF THE COMPOUND RATE OF RETURN (ON ANNUALIZED BASIS - SO THAT THE SAME INCREASES 65 IN GEOMETRIC PROGRESSION WITH TIME); DISCOUNTING FOR NET PRESENT VALUE, ONLY TO FIND FURTHER ENDORSEMENT OF THE S AID VIEW AND, FURTHER, OF NOT IMPACTING THE VALUATION (OF THE RIGHT TO RECEIVE) OR THE ACCRUAL OF THE INCOME IN ANY MANNER. EVEN DE HORS THE CHARACTER OF THE ARRANGEMENT AS A FINANCING ARRANGEMENT OR ANY OTHER, THE NATURE OF THE INVESTMENT WOULD NOT BE OF MUCH CONSEQUENCE AS LONG AS THERE IS ACCRUAL OF INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I.E., BY WAY OF RIGHT TO RECEIVE - A RECEIVABLE, RESULTING IN A DEBT, REALIZABLE EVEN IF IN FUTURE. THE RIGHT TO RECEIVE, IF CONSTRUED AS A RIGHT TO RECEIVE IN PRAESENTI, IT MAY BE APPRECIATED, WOULD OBLITERATE THE DIFFERENCE BETWEEN THE 'RIGHT TO RECEIVE' AND 'DUE FOR PAYMENT'. OR, IN FACT, BETWEEN 'ACCRUAL' AND 'RECEIPT', USED IN CONTRADISTINCTION, EVEN AS EXPLAINED IN ASHOKBHAI CHIMANBHAI (SUPRA). IT IS ON LY THE REALIZABILITY OF THE RIGHT ACCRUED THAT IS POSTPONED TO A LATER, DEFINED DATE, SIGNIFIED AS THE DUE DATE, WHICH IS AT CONVENIENT OR AGREED DATES OF TIME. IT IS ONLY BECAUSE THE DEBT HAS ARISEN AND ACCRUED THAT IT BECOMES LIABLE TO BE REALIZED, EVEN IF AT A LATER DATE. THAT, IN FACT, FORMS THE FUNDAMENTAL OR THE QUINTESSENTIAL DIFFERENCE BETWEEN CASH AND ACCRUAL SYSTEMS OF ACCOUNTING, LEGALLY RECOGNIZED AND JUDICIALLY WELL EXPLAINED. IT WOULD, AS SUCH, BE INCORRECT TO SAY THAT THE RIGHT (TO RECEIVE) T HAT VESTS IN THE ASSESSEE WITH A PASSAGE OF TIME IS NOT A LEGALLY ENFORCEABLE RIGHT. IT IS, FURTHER, ONLY WHEN THE SAID RIGHT TO RECEIVE CULMINATES UNDER THE TERMS OF THE AGREEMENT INTO A REALIZABLE RIGHT, I.E., WHICH IS BY A DEFINED DATE AND FOR A DEFINIT E SUM, THAT IT CAN BE SAID TO MATURE FOR 66 PAYMENT IN FAVOUR OF THE RECIPIENT OF INCOME. IT IS ONLY UPON THIS THAT, WHERE NOT (BEING) RECEIVED, DESPITE THE COMPLIANCES WITH THE STIPULATIONS MADE IN ITS RESPECT BY THE ASSESSEE, THAT THE RIGHT CAN BE LEGALLY E NFORCED BY IT. OF - COURSE, WHETHER THE INCOME AT A DEFINITIVE RATE HAS BEEN EARNED AND, ACCORDINGLY, ACCRUED, IS ITSELF A SUBJECT MATTER OF DISPUTE, I.E., UNDER IT A NO2832/ MUM/ 2012 (A.Y. 2008 - 09 ) MAHINDRA TELECOMMUNICATIONS INVESTMENT PRIVATE LIMITED VS . ITO THE TERMS O F THE ARRANGEMENT/CONTRACT, THE SAME CAN BE SUBJECT TO JUDICIAL DETERMINATION. HOW, THEN, IT IS WONDERED, HAS THE INCOME NOT ACCRUED OR ARISEN TO OR, CORRESPONDINGLY, THE RIGHT TO RECEIVE NOT VESTED IN, THE ASSESSEE - A QUESTION WHICH, BEIN G A MIXED QUESTION OF FACT AND LAW, HAS TO CONSIDERED ON A REALISTIC ASSESSMENT AND CONSIDERATION OF THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WITH WE OBSERVING NO DISPUTE AS REGARDS FACTS. THE FACT THAT THE INCOME IS REALIZABLE AS A PART OF THE SALE PRICE OF SHARES, I.E., AN INVESTMENT BY THE ASSESSEE, A INVESTMENT COMPANY, AS A PART OF AND IN REGULAR COURSE OF ITS BUSINESS, TO FETCH RETURN, I.E., ALONG WITH REDEMPTION OR LIQUIDATION OF THE INVESTMENT, AS ONLY REPRESENTING THE FORM IN WHICH THE INCOME, IMBEDDED IN THE INCREASED SHARE VALUE, IS REALIZED. THE SAME IS ONLY A MANNER OF REALIZATION OF THE INCOME, SINCE ACCRUED, AS IS THE CASE (IN OTHER COMMON DAY EXAMPLES OF WITH INTEREST ON (CUM) DEBENTURES OR BANK FDR, ET. AL. AND, THUS, BY ITSE LF OF LITTLE MOMENT. COULD IT BE MATERIAL, ONE MAY ASK, IF THE INTEREST OF DEBENTURE OR FDR STANDS TO BE RECEIVED, OVER FNE TENURE OF THE INVESTMENT, SEPARATELY, OR ALONG WITH REDEMPTION OF THE INVESTMENT? THE INCREASE IN THE SHARE PRICE 67 TO THE DEFINED EXT ENT WOULD ARISE IRRESPECTIV E OF THE PERFORMANCE OF THE COMP A NY DURIN G THE HOLDING PERIOD OR ITS' INTRINSIC VALUE (NET WORTH) AT THE TIME OF TRANSFER OF SHARES. WOULD IT THEREFORE MATTER EVEN IF (SAY) SOME MANAGEMENT RIGHTS WERE ALSO ATTACHED TO THE SHAREHO LDING - WHICH WE OBSERVE AS NOT. IN OUR VIEW - NOT. THE INVESTMENT IS IN A PRIVATE COMPANY , SHARES IN WHICH ARE SEVERELY RESTRICTED FOR TRANSFER, MAKING IT HIGHLY ILLIQUID, I.E., BUT FOR THE ARRANGEMENT , IN PURSUANCE TO WHICH ONLY IN FACT THE INVESTMENT IN SHARES STANDS MADE. THAT IS. CONSIDERABLE UNCERTAINTY WOULD OTHERWISE EXIST AS TO THE REALIZABILITY OF THE INCOME. THE INCOME BEIN G ALSO IN AGREEMENT WITH THE MATCHIN G PRINCIPLE OF ACCOUNTANCY, ALSO JUDICIALLY APPROVED, IS THUS FOUND TO ACCRUE FROM YEAR TO YEAR, I.E., ON TIME BASIS AND, THUS, FOR THE RELEVANT YEAR. THE SAME, FURTHER, IS ONLY BY WAV OF BUSINESS INCOME, I.E., AS ASSESSED, ON WHICH WE AGAIN OBSERVE NO DISPUTE; RATHER, THE TWO RETURNS ENSUING ON INVESTMENT, I.E.. BY WAV OF CALL OPTION FEE (R ETURNED AND ASSESSED AS BUSINESS INCOME) AND THE ANNUALIZED RETURN (OVER THE HOLDIN G PERIOD), FOUND TO BE P ARA MATERIA, FORMING PART OF AN INTE G RATED REVENUE ITA NO28 3 2/ MU M/ 2 0 12 (A.Y . 200 8 - 09 ) MAHINDRA TELECOMMUNICATIONS INVESTMENT PRIVATE LIMITED VS. ITO MODEL AND, FURTHER, ONLY IN THE NATURE OF INTEREST INCOME AS DEFINED BOTH IN THE ACCOUNTANCY AS WELL AS BY STATUTE. THERE IS NO LAW THAT INTEREST COULD BE ASSESSED ONLY AS 'INCOME FROM OTHER SOURCES', PARTAKE AS IT DOES ITS' CHARACTER FROM THE UNDERLYING TRANSACTION FROM WHICH IT ARISES IT VS. 68 GOVINDA CHOUDHURY [19931 203 ITR 881 (SC)). THE CASE LAW CITED STANDS ALSO CONSIDERED, ONLY TO FIND THE SAME TO BE IN AGREEMENT WITH THE VIEW EXPRESSED HEREIN, CONFIRMING THE STAND OF THE REVENUE, BEI NG ESSENTIALLY A QUESTION OF FACT, TO BE DETERMINED ON AN APPRECIATION OF THE FACTS OF THE CASE, WITH THE LAW BEING WELL SETTLED. 5 . ANNUA L RECURRING INCOME CAN BE EITHER INCOME COMPRISING INTE REST PART OR IT CAN BE INTEREST PLUS CAPITAL. IN THE PRESENT CASE, THERE IS NO RETURN OF CAPITAL (SUBSCRIPTION PRICE FROM A.Y. 2003 - 04 TO 2016 - 17). THEREFORE, AMOUNT OF OPTION PRICE RECEIPT IS ONLY INTEREST INCOME AND SO, TAXABLE AS REVENUE RECEIPT. RELIANCE IS PLACED ON THE DECISION IN CASE OF ADDL. CIT VS. SYNDICATE BANK DATED 08 - 02 - 1979 1986 159 ITR 474 KAR. 6 . BUSINE SS OF ASSESSEE: - AS PER PARTNERSHIP DE ED OF THIS ASSESSEE, INVESTMENT IN SHARES & MUTUAL FUNDS IS BUSINESS OF ASSESSEE. HENCE SALE OF INVESTMENT AND MAKING OF FRESH I NVESTMENTS WAS DIRECTLY CONNECTED IN THE CARRYING ON OF THE SAID FIRM'S BUSINESS & PROFITS MADE BY THE SAID FIRM ON SALE OF SHARES WAS ASSESSABLE TO INCOME TAX AS HELD BY HONBLE APEX COURT IN THE CASE OF SARDAR INDER SINGH & SONS LTD VS. CIT (SCI 1953 AIR 453. 7 . PURC HASE OF SHARES FROM BORROWED FUNDS: - ASSESSEE HAS PURCHASED OF AVIVA SHARES FROM FUNDS BORROWED FROM NBFCS & SISTER CONCERNS AND SUCH FUNDS ARE BORROWED ON INTEREST. HENCE, RETURN ON SALE OF SUCH INVESTMENT WILL BE AN ADVENTURE IN NATURE OF TRADE AS 69 HEL D BY HONBLE APEX COURT IN THE CASE OF DALHOUSIE INVESTMENT TRUST VS. CIT (SC) 1968 AIR 791. 8 . LONG HOLDING OF SHARES IS NOT ASSESEES CHOICE: - AS PER ASSESEES JV AGREEMENT CLAUSE 16.6.1, SHARES OF AVIVA HELD BY ASSESSEE, WILL BE SOLD TO CUIH AS & WHEN GOV T POLICY ON FDI CHANGES. HAD IT CHANGED IN A.Y. 2003 - 04 ITSELF, ASSESSEE WAS DUTY BOUND TO SALE THE SAME IN THAT YEAR. SO LONG HOLDING OF SHARES WAS NOT ASSESEES CHOICE BUT DUE TO DEPENDENCE ON CHANGE IN GOVT POLICY OF FDI. CASE WHERE ISSUE INVOLVED WAS EITHER NOT EXAMINED OR NOT PROPERLY EXAMINED A TABLE IS GIVEN BELOW WHICH SHOWS THAT THE ISSUE OF OPTION PRICE MONEY RECEIVED EVERY YEAR WAS ~C~. AT ALL EXAMINED OR NOT PROPERLY EXAMINED. IT MAY BE MENTIONED THAT IN MOST OF T HE YEARS FROM AY 1003 - 04 TO AY 2017 - 18, ISSUE WAS NOT SCRUTINIZED, BUT WHERE EVER IT WAS SCRUTINIZED, EITHER NO QUERIES ERE RAISED OR NO RELEVANT QUERIES OR INSUFFICIENT QUERIES WERE RAISED. 'ABLE IS GIVEN BELOW: - 70 NAME OF CASE - M/S DABUR INVEST CORP. S. N 0. YEAR OF SCRUTIN Y ASSESS M ENT U/S 143(3) (AY) QUERY RAISED ON THE ISSUE OF OPTION PRICE REPLY OF ASSESSEE WHETHER CASE OF NO QUERY OR INSUFFICIENT QUERY APPLICABLE CASE LAWS 1 2014 - 15 NO QUERY ASKED NO REPLY GIVEN NO QUERY 1 . MALA BAR INDUSTRIAL CO. LTD V. CIT [2000] 109 TAXMAN 66/243 ITR 83 (SUPREME COURT) 2 . RAJMANDIR ESTATES PVT LTD VS PCIT (2017) 245 TAXMAN 127 (SC), 3 . SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS VS CIT (1998) 231 ITR 53 (SC) 4 . CIT T/S HARSH J PUNJABI [2012] 27 TAXMANN.COM 175 (DELHI)/[2012] 345 ITR 451 (DELHI) 5 . SHANKAR TRADEX PVT LTD VS PCIT (ITA NO. 2999/DEL/2017) 2 2013 - 14 VIDE NOTICE U/S 142(1) DATED 20/11/2 0 15, A SINGLE POINT LEDGER ACCOUNT OF OPTION PRICE RECEIVED GIVEN INSUFFICIENT QUERY EQUIVALENT TO NON - ENQUIRY AS PER JUDGMENT OF BOMBAY HIGH COURT IN CASE OF JEEVAN INVESTMENT AND 1 . MALABAR INDUSTRIAL CO. LTD V. CIT [2000] 109 TAXMAN 66/243 ITR 83 (SUPREME COURT) 2 . ADI. CIT V. GEE VEE ENTERPRISES [1975] 99 ITR 375 (DEL) 3 . JEEVAN INVESTMENT AND FINANCE PVT LTD L/S CIT CITY 1 MUMBAI [2017] 88 71 QUERY 'DETAILS OF OPTION PRICE AND TDS DEDUCTE D ' RAISED. NO FOLLOW UP QUERIES FINANCE PVT LTD AND DELHI HIGH COURT IN CASE OF CIT VS HARSH J PUNJABI [2012] 345 ITR 451 (DELHI) TAXMANN.COM 552 (BOMBAY) 4 . CIT VS HARSH J PUNJABI [2012] 27 TAXMANN.COM 175 (DELHI) /[2012] 345 ITR 451 (DELHI) 5 . DIT VS JYOTI FOUNDATION [2013] 38 TAXMAN.COM 180 (DELHI) 6 . ITO VS DG HOUSING PROJECTS LTD [2012] 343 ITR 329/20 TAXMANN.COM 587/[2013] 212 TAXMAN 132 (DEL) 7 . CIT VS. MAITHAN INTERNATIONAL (HIGH COURT OF CALCUTTA) 8 . SHANKAR TRADEX PVT LTD VS PCIT (ITA NO. 2999/DEL/2017) 3 2011 - 12 NO QUERIES ASKED LEDGER OF OPTION PRICE RECEIVED IS ATTACHED NO QUERY 1 . MALA BAR INDUSTRIAL CO. LTD V. CIT [2000] 109 TAXMAN 66/243 ITR 83 (SUPREME COURT) 2 . RAJMANDIR ESTATES PVT LTD VS PCIT (2017) 245 TAXMAN 127 (SC), 3 . SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS VS CIT (1998) 231 ITR 53 (SC) 4 . CIT VS HARSH J PUNJABI [2012] 27 TAXMANN.COM 175 (DELHI) /[2012] 345 ITR 451 (DELHI) 5 . CIT V. SHESHASAYEE PAPER AND BOARDS LTD [2000] 108 TAXMAN 464/242 ITR 490 (MAD.) 6 . SHANKAR TRADEX PVT LTD VS PCIT (ITA NO. 2999/DEL/2017) 4 2008 - 09 REGARDING OPTION MONEY, IT IS TO MENTION THAT OPTION MONEY IS THE ANNUAL PREMIUM RECEIVED IN LIEU OF GIVING THEM, I.E. AVIVA INSUFFICIENT QUERY - NATURE OF RECEIPT NOT EXAMINED WHETHER CAPITAL OR REVENUE, 1 . MALABAR INDUSTRIAL CO. LTD V. CIT [2000] 109 TAXMAN 66/243 ITR 83 (SUPREME COURT) 2 . ADI. CIT V. GEE VEE ENTERPRISES [1975] 99 ITR 375 (DEL) 72 CORPORATION, THE OPTION OF BUYING AS AND WHEN LAW PERMITS, OUR STAKE IN THAT COMPANY AT THE THEN PREVAILING MARKET PRICE AND THEN THIS OPTION MONEY AMOUNT RECEIVED BY US WILL BE REFUNDED BACK TO THEM. COPY OF AGREEMENT FOR OPTION MONEY AND COPY OF BANK STA TEMENTS OF THE ASSESSEE COMPANY WHEREIN THE OPTION MONEY HAS BEEN DEPOSITED AND ITS UTILIZATION FOR PAYMENT OF LOANS FOR THE PERIOD UNDER CONSIDERATION ARE ENCLOSED. NOTE TO ACCOUNTS NOT EXAMINED FOR CORRECTNESS. 3 . JEEVAN INVESTMENT AND FINANCE PVT LTD VS CI T CITY 1 MUMBAI [2017] 88 TAXMANN.COM 552 (BOMBAY) 4 . DIT VS JYOTI FOUNDATION [2013] 38 TAXMAN.COM 180 (DELHI) 5 . ITO VS DG HOUSING PROJECTS LTD [2012] 343 ITR 329/20 TAXMANN.COM 587/[2013] 212 TAXMAN 132 (DEL) 6 . CIT \ /S. MAITHAN INTERNATIONAL (HIGH COURT OF CALCUTTA) 7 . SHANKAR TRADEX PVT LTD VS PCIT (ITA NO. 2999/DEL/2017) 5 2005 - 06 AS PER THE JV AGREEMENT DATED 7 TH AUG 2001, A COPY OF WHICH IS ENCLOSED HEREWITH, THE MONEY RECEIVED IS SUBJECT TO VARIOUS CONDITIONS AND THE SUM IS LIABLE FOR REPAYMENT INSUFFICIENT QUERY 1 . MALABAR INDUSTRIAL CO. LTD V. CIT [2000] 109 TAXMAN 66/243 ITR 83 (SUPREME COURT) 2 . ADI. CIT V. GEE VEE ENTERPRISES [1975] 99 ITR 375 (DEL) 3 . JEEVAN INVESTMENT AND FINANCE PVT LTD VS CIT CITY 1 MUMBAI [2017] 88 TAXMANN.COM 552 (BOMBAY) 4 . DIT VS JYOTI FOUNDATION [2013] 38 TAXMAN.COM 180 (DELHI) 5 . ITO VS DG HOUSING PROJECTS LTD [2012] 343 ITR 329/20 TAXMANN.COM 587/[2013] 212 TAXMAN 132 (DEL) 6 . CIT VS. MAITHAN INTERNATIONAL (HIGH COURT OF CALCUTTA) 7 . SHANKAR TRADEX PVT LTD VS PCIT (ITA NO. 2999/D EL/2017) 73 CASE LAWS REGARDING SECTION 263 OF THE ACT WHEN ASSESSMENT IS ORIGINALLY MADE WITHOUT OR INSUFFICIENT ENQUIRY: 1. 'WHERE THE ASSESSING OFFICER HAD ACCEPTED ENTRY...WITHOUT MAKING ANY ENQUIRY, THE EXERCISE OF JURISDICTION BY THE COMMISSIONER U/S 263(1) WOULD BE JUSTIFIED.' MALABAR INDUSTRIAL CO. LTD V. CIT [2000] 109 TAXMAN 66/243 ITR 83 (SUPREME COURT). SIMILAR JUDGMENTS IN CASES OF: A . RAJMANDIR ESTATES PVT LTD VS PCIT (2017) 245 TAXMAN 127 (SC) B . SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS VS CIT (1998) 231 ITR 53 (SC) C . DETAILED DISCUSSION OF MALABAR INDUSTRIAL CO. LTD V. CIT [2000] 109 TAXMAN 66/243 ITR 83 (SUPREME COURT): THE HON'BLE APEX COURT THEREIN LAID DOWN A FOUR - WAY TEST FOR INVOCATION OF A PROVISION. SUCCINCTLY PUT, THESE ARE: (A) INCORRECT ASSUMPTION OF FACTS; (B) INCORRECT APPLICATION OF LAW; (C) WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE; AND (D) WITHOUT APPLICATION OF MIND. ITAT MUMBAI IN CASE OF HORIZON INVESTMENT CO. LTD BEAUTIFULLY SUMMARIZED THE APPLICABILITY OF THIS JUDGMENT IN CASE OF NON - APPLICATION OF MIND (LEADING TO INSUFFICIENT OR NO ENQUIRIES): 'WE SHALL, FOR T HE REASON THAT THE PRESENT CASE INVOLVES THE APPLICATION OF SECTION 263 ON GROUND (D) ABOVE, DWELL ON THIS ASPECT IN SOME DETAIL. AN ORDER, AS EXPLAINED IN MALABAR INDUSTRIAL COMPANY LTD. (SUPRA), IS IN SUCH A CASE SUBJECT TO REVISION UNDER SECTION 263 NOT FOR THE REASON THAT SOME ERROR MAY BE FOUND UPON ENQUIRY, BUT BECAUSE OF NON - APPLICATION OF MIND PER SE. DECADES EARLIER, THE 74 HONBLE DELHI HIGH COURT , PER ITS LANDMARK DECISION IN ADDL . CIT V. GEE VEE ENTERPRISES [1975] 99 ITR 375 (DEL) , RELYING ON TWO CELEBRATED DECISIONS BY THE APEX COURT [REPORTED AT 67 ITR 84 AND 88 ITR 323], EXPLAINED THAT AN ASSESSING AUTHORITY IS BOTH AN ADJUDICATOR AND INVESTIGATOR. THAT IS, HE IS, BESIDES ADJUDICATION, ALSO CHARGED WITH THE RESPONSIBILITY OF PROBI NG THE MATTER AND UNEARTHING FACTS. AS SUCH, WHERE HE FAILS TO MAKE PROPER ENQUIRY, I.E., AS WARRANTED BY THE FACTS AND CIRCUMSTANCES OF THE CASE, HIS ORDER IS RENDERED ERRONEOUS IN - SO - FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . WHAT, THEN, IS REQUIRED IS AN EXAMINATION OF THE FACTS OF THE CASE TO ARRIVE AT A FINDING OF FACT AS TO AN APPLICATION OR OTHERWISE OF MIND BY THE ASSESSING AUTHORITY IN THE MATTER, MAKING INQUIRY AS WARRANTED, WHILE FRAMING THE ASSESSMENT. 'MERELY ASKING A QUESTION WHICH GOES TO THE ROOT OF THE MATTER AND NOT CARRYING IT FURTHER IS A CASE OF NON - ENQUIRY, IF THE QUERY IS NOT OTHERWISE SATISFIED WHILE RESPONDING TO ANOTHER QUERY...ASSESSING OFFICER AFTER HAVING ASKED A PERTINENT QUESTION OF THE METHOD OF VALUING UNLIST ED SHARES DIDN'T PURSUE THAT LINE OF ENQUIRY. THIS WAS A CASE OF NON - ENQUIRY AND NOT INADEQUATE ENQUIRY. THEREFORE THE ORDER OF THE ASSESSING OFFICER WAS CERTAINLY ERRONEOUS AND PREJUDICIAL TO THE REVENUE.' JEEVAN INVESTMENT AND FINANCE PVT LTD VS CIT CITY 1 MUMBAI [2017] 88 TAXMANN.COM 552 (BOMBAY) IN THE PRESENT CASE, THEREFORE, THERE WAS FAILURE ON THE PART OF THE ASSESSING OFFICER TO CONDUCT NECESSARY AND REQUIRED ENQUIRIES. FAILURE TO CONDUCT THE SAID ENQUIRIES MAKES THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER RIGHTLY EXERCISED HIS REVISIONARY POWER U/S 263 OF THE ACT' CIT VS HARSH J PUNJABI [2012] 27 TAXMANN.COM 175 (DELHI) /[2012] 345 ITR 451 (DELHI) 'THE COMMISSIONER CAN REGARD THE ORDER AS ERRONE OUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE 75 STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN.' ADI. CIT V. GEE VEE ENTERPRISES [1975] 99 ITR 375 (DEL) 'THE ASSESSING OFFICER THOUGH REOPENED THE ASSESSMENT PROCEEDINGS DID NOT MAKE ANY ENQUIRY AND THERE IS NO MENTION OF THE SAME IN THE ASSESSMENT ORDER ITSELF WHICH PROVED THAT THE ORDER IS PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATIONS WHICH SHOULD HAVE BEEN MADE BY THE ASSESSING OFFICER. THUS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND THERE IS LOSS OF REVENUE': SHANKAR TRADEX PVT LTD VS PCIT (ITA NO. 2999/DEL/2017) 'ORDERS WHICH ARE PASSED WITHOUT INQUIRY OR INVESTIGATION ARE TREATED AS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF REVENUE. IN CASE OF INSUFFICIENT INQUIRIES, INQUIRY SHOULD BE CONDUCTED BY COMMISSIONER OR DIRECTOR HIMSELF TO RECORD THE FINDING THAT THE ASSESSMENT ORDER WAS ERRONEOUS' PIT VS JY OTI FOUNDATION [20131 38 TAXMAN.COM 180 (D ELHI). SIMILAR RATIO IN CASE OF ITO VS DG HOUSING PROJECTS LTD [2012] 343 ITR 329/20 TAXMANN.COM 587/[2013] 212 TAXMAN 7 . INSUFFICIENT ENQUIRIES UPHELD REVISION U/S 263 : CIT VS. MAITHAN INTERNATIONAL (HIGH COURT OF CALCUTTA) 8 . 'FAILURE OF ASSESSING OFFICER TO MAKE AN INQUIRY BEFORE GRANTING DEDUCTION WOULD RENDER THE ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE': CIT V. SHESHASAYEE PAPER AND BOARDS LTD [2000] 108 TAXMAN 464/242 ITR 490 (MAD.) CONSISTENCY PRINCIPLE WITHOUT PREJUDICE TO THE ABOVE, IF A CLEARLY INCORRECT VIEW WAS TAKEN IN EARLIER YEARS, IT CAN'T BE ARGUED IN THE 76 SUBSEQUENT YEAR THAT THE SAME INCORRECT APPROACH SHOULD BE REPEATED, AS HELD IN THE CASE OF CIT VS V.MR.P. FIRM (1965) 56 ITR 67 (SC) AND ALSO IN CWT VS MEATTLES (P) L TD (1984) 156 ITR 569 (DEL). 38. THE LD. DR CONCLUDED BY STATING AS UNDER: APPARENT IS NOT REAL : - AS PER CLAUSE 11.4 OF JV AGREEMENT, CEO OF THE COMPANY 'AVIVA' WILL ALWAYS BE FROM CUIH AND NEVER FROM DABUR. ASSESSEE WAS ASKED TO EXPLAIN WHY THEY HAVE UP THEIR RIGHT FOR EVER AND WHY DAY - TO - DAY CONTROL OF 'AVIVA' WAS GIVEN IN HANDS OF CUIH, DESPITE HOLDING MAJORITY STAKE OF 74%. ASSESSEE COULD NOT GIVE A PLAUSIBLE REPLY TO THIS QUERY. THEY SIMPLY SAID THAT THEY ARE DULY REPRESENTED IN MANAGEMENT BY THEI R DIRECTORS. THAN THEY WERE ASKED WHETHER MANAGEMENT EVER REVERSED DECISION OF CEO AND TO SUBMIT COPY OF BOARD MEETING. THEY FAILED TO SUBMIT ANY SUCH ' MINUTES OF BOARD MEETING '. CUIH IS RUNNING AND CONTROLLING THE COMPANY 'AVIVA' DESPITE HOLDING MINORITY STAKE, WHICH IS AGAINST GOVERNMENT POLICY ON FDI AND AGAINST LARGER PUBLIC INTEREST. GOVT, DID NOT ALLOW 100% FDI IN INSURANCE SECTOR BECAUSE HUGE PREMIUMS ARE COLLECTED IN INSURA NCE POLICIES AND THEIR CONTROL IN FDI MAY LEAD TO MISUSE/DIVERSION OF FUNDS OUTSIDE INDIA. THEREFORE, APPARENT IS NOT REAL. RELIANCE IS PLACED ON DECISIONS IN CASE OF DURGA PRASAD MORE, SUMATI DAYAL AND MCDOWELLS. 77 39. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE PCIT AND THE ISSUES RAISED BY HIM FOR SETTING ASIDE THE ASSESSMENT ORDERS. AS MENTIONED ELSEWHERE, THE INITIAL YEAR OF TRANSACTION WAS 2001 WHEN THE GOVERNMENT OPENED THE FIELD FOR PRIVATE PART IES ALSO IN THE INSURANCE BUSINESS. THIS IS NOT THE FIRST YEAR OF TRANSACTION. THE ASSESSEE HAS BEEN RECEIVING OPTION MONEY AFTER THE YEAR IN WHICH IT ENTERED INTO A JV AGREEMENT WITH CUIH TO CO - PROMOTE A JV COMPANY. THE FIRST YEAR OF SCRUTINY ASSESSMENT WAS 2005 - 06 AND THE ASSESSING OFFICER RAISED SPECIFIC QUERY IN RELATION TO THE OPTION MONEY RECEIVED FROM CUIH. THE ASSESSING OFFICER EXAMINED THE BALANCE SHEET AND NOTES OF ACCOUNT S AND WAS CONVINCED THAT THE OPTION MONEY RECEIVED IS NOT TAXABLE DURING THE YEAR. 40 . ONCE AGAIN, ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006 - 07 WAS ALSO COMPLETED U/S 143(3) OF THE ACT AND ONCE AGAIN A QUERY WAS RAISED IN RELATION TO THE OPTION MONEY , WHICH WAS DULY REPLIED BY THE ASSESSEE AND EXPLAINED THE NATURE OF TRANSAC TION WITH NOTES OF ACCO U NT , WHICH ALSO CONTAIN S CAPITALISATION ON INTEREST PAID ON BORROWED FUNDS. 78 41 . THEREAFTER, ASSESSMENT YEAR 2008 - 09 WAS ALSO TAKEN UP FOR SCRUTINY ASSESSMENT. ONCE AGAIN QUERIES WERE RAISED BY THE ASSESSING OFFICER IN RELATION TO T HE JV AGREEMENT AND OPTION MONEY. ONCE AGAIN, THE ASSESSEE EXPLAINED THE TRANSACTION IN THE LIGHT OF DETAILS GIVEN IN THE BALANCE SHEET AND NOTES TO ACCOUNTS. THE ORDER WAS F R AMED U/S 143(3) OF THE ACT. 42 . IN ASSESSMENT YEAR 2011 - 12 ALSO, THE RETURN OF INCOME WAS TAKEN UP FOR SCRUTINY ASSESSMENT. THE BALANCE SHEET AND NOTES OF ACCOUNT WERE EXAMINED WHEREIN ALL THE DETAILS ABOUT THE CAPITALIZATION OF INTEREST WAS PROPERLY DISCLOSED AND RECEIPT OF OPTION MONEY WAS EXPLAINED TO BE ADJUSTED AGAINST REDUCTI ON IN THE SHARE HOLDING IN THE YEAR OF TRANSFER OF SHARES. 4 3 . IT IS INCORRECT TO SAY THAT THE JV AGREEMENT WAS NEVER EXAMINED BY THE ASSESSING OFFICER. RIGHT FROM THE FIRST YEAR OF SCRUTINY ASSESSMENT, AFTER THE IMPUGNED TRANSACTION OF OPTION MONEY, JV AGREEMENT HAS BEEN SCRUTINISED BY THE ASSESSING OFFICER ALONGWITH THE BALANCE SHEET AND NOTES TO ACCOUNTS. IT CANNOT BE SAID THAT RIGHT FROM ASSESSMENT YEAR S 2005 - 06 TO 2011 - 12, THE ASSESSING OFFICERS CONTINUOUSLY IGNORED THE TAXABILITY OF OPTION MONEY. A READING OF THE 79 ORDER OF THE PCIT FRAMED U/S 263 OF THE ACT CLEARLY SHOWS THAT T HE PCIT ASSUMED JURISDICTION ON THE STRENGTH OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2015 - 16 , WHEN THE ASSESSING OFFICER TOOK A DIFFERENT VIEW ON THE SAME SET OF TRANSACTI ON S WHICH THE ASSESSEE CONTINUED TO FOLLOW SINCE THE YEAR 2001. 4 4 . AS MENTIONED ELSEWHERE, THE JV AGREEMENT WAS FILED WITH OTHER GOVERNMENT AUTHORITIES LIKE IRDA AND DEPARTMENT OF ECONOMIC AFFAIRS IN 2001 - 2002 AND AFTER RECEIVING APPROVAL FROM RBI/IRDA/F IPB, THE TRANSACTION TOOK PLACE. IN FACT, AFTER APPROVAL FROM FIPB FOR INCREASE IN SHARE HOLDING BY AVIVA LIFE INSURANCE PVT. LTD . , T HE ASSESSEE ALSO GOT APPROVAL FROM IRDA AUTHORITIES WITH REGARD TO INCREASE IN SHARE HOLDING FROM 26% TO 49% BY WAY OF TRA NSFER OF SHARES FROM DABUR , T HOUGH THE TRANSACTION FOR SALE OF SHARES TOOK PLACE IN SUBSEQUENT ASSESSMENT YEAR. 4 5 . THE CONSTITUTION OF THE ASSESSEE, JV AGREEMENT, JV COMPANY WAS EXAMINED BY VARIOUS GOVERNMENT AUTHORITIES AS MENTIONED ELSEWHERE, THEREFORE , BY NO STRETCH OF IMAGINATION THE ASSESSEE CAN BE TERMED AS A DUMMY STAKE HOLDER. ACCORDING TO THE PCIT , WHEN THE COMPOSITION OF BOARD OF DIRECTORS IS DOMINATED BY THE ASSESSEE, THEN , WHY THE CEO 80 IS FROM CUIH. IN OUR CONSIDERED OPINION, THE PCIT CANNOT , AND SHOULD NOT DECIDE HOW AN ASSESSEE SHOULD DO ITS BUSINESS. IT IS THE PREROGATIVE OF THE BOARD OF DIRECTORS T O APPOINT ITS MD/CEO TO RUN DAY - TO - DAY FUNCTIONING OF THE BUSINESS. ANY ADVERSE VIEW DRAWN BY THE PCIT IN RESPECT OF COMPOSITION OF BOA RD OF DIRECTORS IS BASELESS AND NOT AT ALL RELEVANT. 4 6 . IT APPEARS THAT THE PCIT HAS NOT UNDERSTOOD THE JV AGREEMENT AND HAS BEEN CARRIED AWAY BY DRAWING ADVERSE INFERENCE FROM CERTAIN CLAUSES OF THE JV AGREEMENT. IT IS INCORRECT TO HOLD THAT THE ASSESSE E HAS PURCHASED SHARES AS THE SAME IS BUSINESS OF THE ASSESSEE. INVESTMENT IN AVIVA LIFE INSURANCE WAS A CAPITAL CONTRIBUTION IN THE FORM OF SHARES FOR THE PURPOSE OF ACQUIRING CONTROLLING INTEREST TO THE EXTENT OF 74% IN THE COMPANY AND IS DEFINITELY A C APITAL ASSET IN THE HANDS OF THE ASSESSEE. THERE IS A SPECIFIC RESTRICTION IN THE JV AGREEMENT THAT NEITHER OF THE PARTIES I.E. THE ASSESSEE AND CUIH , WILL SELL ITS SHARES TO OUTSIDERS AND RIGHT TO PURCHASE SHARES OF THE ASSESSEE WAS GRANTED TO CUIH AT A LATER DATE AS AND WHEN FIPB INCREASE S THE PERMISSIBLE LIMIT OF INVESTMENT FOR FOREIGN PARTNERS IN JV AGREEMENT. 81 4 7 . THE PCIT COMPLETELY MISSED THE POINT THAT IN THE CASE OF SHARE S OF A COMPANY, WHICH IS A MOVABLE PROPERTY, THE TRANS FER COMPLETES WHEN THE DULY COMPLETED TRANSFER DEEDS , ALONG WITH SHARE CERTIFICATES , ARE DELIVERED TO THE TRANSFEREE. THUS, THE TRANSFER OF SHARES GIVING RISE TO CAPITAL GAIN, IF ANY, IS COMPLETED IN THE YEAR IN WHICH THE SHARES ARE DELIVERED TO THE TRANSFEREE. THIS ASPECT WAS CONSIDERED AND ACCEPTED BY THE ASSESSING OFFICERS IN THE PAST ASSESSMENT YEARS AND, THEREFORE, NO ADVERSE VIEW WAS TAKEN AS THERE WAS NO SALE OF SHARES IN THOSE YEARS. 4 8 . AS FAR AS CAPITALIZATION OF INTEREST IS CONCERNED, IT IS A SETTLED PROPOSITION OF L AW THAT ANY EXPENDITURE INCURRED IN ACQUIRING A CAPITAL ASSET HAS TO BE CAPITALISED. 4 9 . THE BONE OF CONTENTION IS AS TO WHETHER THE OPTION PRICE RECEIVED BY THE ASSESSEE IS INCOME OR IT IS CAPITAL RECEIPT. AS PER THE FACTS EXPLAINED ELSEWHERE, THE ASSES SEE ENTERED INTO A JV AGREEMENT WITH CUIH TO CO - PROMOTE A COMPANY IN THE FIELD OF INSURANCE SECTOR . S INCE CUIH IS A PROMINENT PLAYER IN THE EURO PEAN MARKET IT WAS INTERESTED IN HOLDING MAJOR STAKE IN THE JV COMPANY BUT ON ACCOUNT OF RESTRICTIONS IMPOSED BY FIPB MEANT FOR INSURANCE SECTOR CUIH WAS CONTENDED WITH A STAKE OF 26% AND REST OF 74% WAS TAKEN BY THE ASSESSEE. 82 50 . BOTH THE PARTIES AGREED THAT AS AND WHEN THE GOVERNMENT EASES THE NORMS , THE FIRST RIGHT OF REFUSAL SHALL BE WITH CUIH AND IF IT REFUSE S TO PURCHASE SHARES OF THE ASSESSEE, THE SAME CAN BE SOLD TO THIRD PARTIES. SAME RESTRICTION APPLIED TO THE ASSESSEE ALSO. THIS RESULTED INTO STERILISATION OF THE ASSESSEES HOLDING AND CUIH AGREED TO PAY OPTION PRICE AS DESCRIBED IN THE JV AGREEMENT AN D IT WAS FURTHER AGREED THAT THE SAID OPTION PRICE SHALL BE REFUNDABLE AT THE TIME OF TRANSFER OF SHARES BY THE ASSESSEE TO CUIH AND THE MANNER AND MODE AS WELL AS QUANTUM OF REFUNDABLE OPTION PRICE HAS BEEN DESCRIBED IN ARTICLE 16A R.W.S SCHEDULE IX OF JV AGREEMENT. 51 . IT IS IMPERATIVE TO MENTION HERE THAT THIS JV AGREEMENT CONTAINING TERMS OF REFUNDABLE OPTION PRICE HAS BEEN APPROVED NOT ONLY BY IRDA , BUT ALSO BY RBI WHO IS THE AUTHORISED SUPERVI SORY AUTHORITY TO CONTROL INCOMING AND OUTGOING OF FOREIGN EXCHANGE. NEEDLESS TO MENTION THAT APPROVAL HAS BEEN GRANTED BY THE RBI AS MENTIONED ELSEWHERE. 52 . IT IS PERTINENT TO MENTION HERE THAT THE SALE/TRANSFER OF 2 3 % STAKE BY THE ASSESSEE TO CUIH TOOK PLACE IN F.Y. 2016 - 17 RELEVANT TO ASSESSMENT YEAR 2017 - 1 8. ALL THE ALLEGATIONS MADE BY THE PCIT MAY BE 83 RELEVANT FOR ASSESSMENT YEAR 2017 - 18 WHEN THE ACTUAL TRANSFER TOOK PLACE. WE DO NOT FIND ANY MERIT IN APPLYING THOSE ALLEGATIONS IN ASSESSMENT YEAR 201 3 - 14 AND 2014 - 15 TO MAKE THE ASSESSMENT ORDERS FRAMED U/ S 143(3) OF THE ACT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. RELIANCE PLACED ON THE JUDGMENT OF THE TRIBUNAL IN THE CASE OF MAHENDRA TELECOMMUNICATION INVESTMENT PVT. LTD VS. ITO 180 TTJ 434 IS PREMATURE AS THE SAME IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. 5 3 . SINCE THE TRANSFER OF SHARES TOOK PLACE IN F.Y. 2016 - 17 RELEVANT TO ASSESSMENT YEAR 2017 - 18, THE ASSESSING OFFICERS IN THE EARLIER ASSESSMENT YEARS RIGHTLY TOOK A VIEW THAT CAPITAL GAINS, IF ANY, WOULD ARISE IN F.Y. 2 016 - 17 AND, THEREFORE, DID NOT TAKE ANY ADVERSE VIEW ON THE TRANSACTIONS DONE BY THE ASSESSEE SINCE THE OPTION PRICE RECEIVED IS TOTALLY LINKED WITH INVESTMENT MADE BY THE ASSESSEE AS A CAPITAL CONTRIBUTION IN THE COMPANY PROMOTED BY IT AND HAS DIRECT NEXU S/LINK WITH DIVESTMENT OF SUCH HOLDING IN FAVOUR OF CUIH BUT THIS HAPPENED IN F.Y. 2016 - 17. 5 4 . THE ALLEGATION OF THE PCIT THAT THE INVESTMENT IN SHARES OF AVIVA LIFE INSURANCE INDIA LTD IS BUSINESS OF THE ASSESSEE IS ILL FOUNDED AS THIS 84 IS ONLY A PRESUMPTION AND SURMISE OF THE PCIT CONTRARY TO THE FACTS OF THE CASE IN HAND. 5 5 . IN THE CASE OF PARIMISETTI SEETHARAMAMMA VS. CIT 57 ITR 532, THE HON'BLE SUPREME COURT OBSERVED THAT ALL RECEIPTS ARE NOT INCOME, BUT IT IS ONLY THOSE VERY RECEIPTS WHICH H AVE THE CHARACTERISTIC OF INCOME IS ONLY CHARGEABLE TO TAX AND THE ONUS IS ON THE REVENUE TO PROVE THAT THE RECEIPTS ARE INCOME. 5 6 . IN THE CASE OF CIT VS. MAHESHWARI DEVI JUTE MILLS LTD. IN 57 ITR 35, THE HONBLE SUPREME COURT HAD OCCASIONED TO EXPLAIN THE DISTINCTION BETWEEN REVENUE AND CAPITAL. THE HONBLE SUPREME COURT OBSERVED AS UNDER: THERE IS NO DOUBT THAT WHEN A BUSINESSMAN DISPOSES OF HIS CAPITAL FOR WHATEVER REASON UNLESS IT IS A PART OF HIS CIRCULATING CAPITAL, THE RECEIPT IS CAPITAL AND NOT INCOME WHICH IS TAXABLE. DISTINCTION BETWEEN REVENUE AND CAPITAL IN THE LAW OF INCOME - TAX IS FUNDAMENTAL. TAX IS ORDINARILY NOT LEVIED ON CAPITAL PROFITS. IT IS LEVIED ON INCOME. IT IS WELL SETTLED THAT SALE OF STAKE IN TRADE OR CIRCULATING CAPITAL OR REN DERING SERVICES IN THE COURSE OF TRADING RESULTS IN A TRADING RECEIPT, SALE OF ASSETS USES 85 AS FIXED CAPITAL ENABLE HIM TO CARRY ON HIS BUSINESS RESULTS IN CAPITAL RECEIPT. 5 7 . FURTH ER, IN THE CASE OF P.H. DIVECHA VS. CIT IN 48 ITR 222, WHILE CONSIDERING THE NATURE OF RECEIPTS, WHETHER IT IS INCOME OR CAPITAL, THE HONBLE SUPREME COURT HELD THAT TO CONSTITUTE INCOME, PROFIT OR GAINS, THERE MUST BE A SOURCE FROM WHICH THE PARTICULAR RECEIPT HAS ARISEN AND A CONNECTION MUST EXIST BETWEEN THE QUALITY AND THE RECEIPT OF THE SOURCE. IT IS NOT THE MOTIVE OF THE PERSON WHO PAID THAT IS RELEVANT. MORE RELEVANCE ATTACHES TO THE NATURE OF THE RECEIPTS IN THE HANDS OF THE PERSON THOUGH IN TRYING T O FIND OUT THE QUALITY OF THE RECEIPT, ONE MAY HAVE TO EXAMINE THE MOTIVE OUT OF WHICH PAYMENT WAS MADE. THE FACT THAT THE AMOUNT INVOLVED IS LARGE OR THAT IT IS PERIODIC IN NATURE, HAS NO DECISION BEARING UPON THE MATTER WHETHER IT IS A CAPITAL OR INCOME. 5 8 . THE HON'BLE SUPREME COURT AT PAGE 231 OF THE REPORT OBSERVED AS UNDER: IN DETERMINING WHETHER THIS PAYMENT AMOUNTS TO A RETURN FOR LOSS OF A CAPITAL ASSET OR IS INCOME, PROFITS OR GAINS LIABLE TO INCOME - TAX, ONE MUST HAVE REGARD TO THE NATURE AND Q UALITY OF THE PAYMENT. IF THE PAYMENT WAS NOT 86 RECEIVED TO COMPENSATE FOR A LOSS OF PROFITS OF BUSINESS THE RECEIPT IN THE HANDS OF THE APPELLANT CANNOT PROPERLY BE DESCRIBED AS INCOME, PROFITS OR GAINS AS COMMONLY UNDERSTOOD. TO CONSTITUTE INCOME, PROFITS OR GAINS, THERE MUST BE A SOURCE FROM WHICH THE PARTICULAR RECEIPT HAS ARISEN, AND A CONNECTION MUST EXIST BETWEEN THE QUALITY OF THE RECEIPT AND THE SOURCE. IF THE PAYMENT IS BY ANOTHER PERSON IT MUST BE FOUND OUT WHY THAT PAYMENT HAS BEEN MADE. IT IS NOT THE MOTIVE OF THE PERSON WHO PAYS THAT IS RELEVANT. MORE RELEVANCE ATTACHES TO THE NATURE OF THE RECEIPT IN THE HANDS OF THE PERSON WHO RECEIVES IT THOUGH IN TRYING TO FIND' OUT THE QUALITY OF THE RECEIPT ONE MAY HAVE TO EXAMINE THE MOTIVE OUT OF WHICH TH E PAYMENT WAS MADE. IT MAY ALSO BE STATED AS A GENERAL RULE THAT THE FACT THAT THE AMOUNT INVOLVED WAS LARGE OR THAT IT WAS PERIODIC IN CHARACTER HAVE NO DECISIVE BEARING UPON THE MATTER. A PAYMENT MAY EVEN BE DESCRIBED AS 'PAY', 'REMUNERATION' ETC. BUT TH AT DOES NOT DETERMINE ITS QUALITY, THOUGH THE NAME BY WHICH IT HAS BEEN CALLED MAY BE RELEVANT IN DETERMINING ITS TRUE NATURE, BECAUSE THIS GIVES AN INDICATION OF HOW THE PERSON WHO PAID THE MONEY AND THE PERSON WHO RECEIVED IT VIEWED IT IN THE FIRST INSTA NCE. THE PERIODICITY OF THE PAYMENT DOES NOT MAKE THE PAYMENT A RECURRING INCOME BECAUSE PERIODICITY MAY BE THE RESULT OF CONVENIENCE AND NOT NECESSARILY THE RESULT OF THE ESTABLISHMENT OF A SOURCE EXPECTED TO BE PRODUCTIVE OVER A CERTAIN PERIOD. THESE GEN ERAL PRINCIPLES HAVE BEEN SETTLED FIRMLY BY THIS COURT IN A LARGE NUMBER OF CASES. SEE FOR 87 EXAMPLE : THE COMMISSIONER OF INCOME - TAX V. VAZIR SULTAN, 8& SONS, GODREJ 8S CO. V. COMMISSIONER OF INCOME - TAX, COMMISSIONER OF INCOME - TAX V. JAIRAM VALJI, SENAIRAM DOONGARMALL VS CIT. 5 9 . IN THE LIGHT OF THE AFORESAID DISCUSSION, FOR THE SAKE OF REPETITION, WE HAVE TO POINT OUT THAT THE JV AGREEMENT WAS MADE NOT TO CARRY ON ANY BUSINESS TRANSACTION BETWEEN THE ASSESSEE AND CUIH BUT WAS MADE TO CO - PROMOTE A COMPANY WHO WOULD CARRY ON THE INSURANCE BUSINESS. THE JV AGREEMENT WAS DRAFTED TO LAY DOWN THE TERMS AND CONDITIONS FOR PURCHASE OF SHARES BY EACH PARTY. THEREFORE , THE INVESTMENT SO MADE BY THE ASSESSEE IN THE CO - PROMOTED COMPANY WAS NOT THE BUSINESS OF THE ASSESSEE BUT THE INVESTMENT AS CAPITAL CONTRIBUTION. THE OPTION MONEY RECEIVED BY THE ASSESSEE ON ACCOUNT OF THIS INVESTMENT WHICH HAS TO BE TAKEN INTO ACCOUNT FOR WORKING OUT THE SELLING PRICE OF STAKE AT A LATER DATE I.E. F.Y. 2016 - 17. 60 . AS MENTIONED ELSEWHERE, THE PCIT WAS HEAVILY INFLUENCED BY THE FINDINGS OF THE ASSESSING OFFICER MADE IN A.Y 2015 - 16. IN OUR CONSIDERED OPINION, AS FAR AS INVOKING OF PROVISIONS OF SECTION 263 OF THE ACT FOR A.Y 2013 - 14 AND 2014 - 15 IS CONCERNED, THE S AME CANNOT BE HELD A S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE 88 MERELY ON THE BASIS OF FINDING THAT THE SUCCEEDING OFFICER IN SUBSEQUENT YEAR , I.E. 2015 - 16 , HAS TAKEN A DIFFERENT VIEW FROM THE EARLIER OFFICERS. IN OUR CONSIDERED OPINION, FO R THE PURPOSE OF SECTION 263 OF THE ACT, THE PCIT HAS TO INDEPENDENTLY EXAMINE AND PROVE THAT THE ORDERS PASSED BY THE ASSESSING OFFICER FOR A.Y S 2013 - 14 AND 2014 - 15 ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 61 . IN THE CASE OF CIT VS. ESCORTS LTD . IN 338 ITR 435, THE HONBLE JURISDICTIONAL DELHI HIGH COURT HAD THE OCCASION TO DEAL WITH THE VALIDITY OF ORDER PASSED BY CIT U/S 263 OF THE ACT, WHEREIN THE CIT HAD PROMPTED TO TAKE ACTION ON ACCOUNT OF DIFFERENT VIEW TAKEN BY THE AO IN SUBSE QUENT YEAR. THE HONBLE HIGH COURT NOTICED THAT SIMILAR TRANSACTION MADE IN EARLIER YEAR WAS TREATED GENUINE. 62 . THE QUESTION AROSE BEFORE THE DELHI HIGH COURT WHETHER THE DEPARTMENT COULD REOPEN THE ASSESSMENT BASED ON A FRESH INFERENCE OF TRANSACTION W HICH HAS BEEN CARRIED ON BY THE ASSESSEE AND ACCEPTED IN TERMS BY REVENUE FOR SEVERAL PRECEDING YEARS BY NOT CHALLENGING THE ORDER ON THE PRETEXT OF DUBBING THEM AS ERRONEOUS? 89 6 3 . THE HONBLE DELHI HIGH COURT NEGATIVED THE STAND OF DEPARTMENT AND CANCELL ED THE ORDER U/S 263 OF THE ACT. THE HONBLE DELHI HIGH COURT A T P ARA 12 OF THE JUDGMENT HELD SO IN FOLLOWING WORDS: 12. I N OUR OPINION, AT THE HEART OF THE MATTER, IS THE ISSUE: WHETHER THE DEPARTMENT COULD RE - OPEN AN ASSESSMENT BASED ON A FRESH INFERENCE OF TRANSACTIONS WHICH HAVE BEEN CARRIED ON BY THE ASSESSEE AND ACCEPTED IN - TURN BY THE REVENUE FOR SEVERAL PRECEDING YEARS ON THE PRETEXT OF DUBBING THEM AS ERRONEOUS. IN OUR VIEW THE A NSWER HAS TO BE IN THE NEGATIVE OTHERWISE. 12.1 IN THE CASE OF CIT V. ASS OCIATED FOOD PRODUCTS (P.) LTD. POPULAR BREAD FACTORY [20061 280 ITR 377 THE DIVISION BENCH OF THE MADHYA PRADESH HIGH COURT WHILE CONSIDERING THE ISSUE AS TO WHETHER THE CIT HAD CORR ECTLY EXERCISED ITS POWER UNDER SECTION 263 OF THE ACT BY RE - OPENING A BLOCK ASSESSMENT, HAD CITED WITH APPROVAL THE FOLLOWING PASSAGE FROM THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF SIRPUR PAPER MILLS LTD. V. ITO [19781 114 ITR 404 WHICH SOMEWHAT SUMMED UP THE SCOPE OF THE POWER UNDER SECTION 263 OF THE INCOME - TAX ACT. 'AS OBSERVED IN SIRPUR PAPER MILLS LTD. V. ITO [19781 114 ITR 404 (AP) BY RAGHUVEER, J. (AS HIS LORDSHIP THEN WAS), THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FRESH LITIGA TION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EITHER OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCES. IF THIS IS PERMITTED, LITIGATION WOULD HAVE NO END , 'EXCEPT WHEN LEGAL 90 INGENUITY IS EXHAUSTED'. TO DO SO, IS '. . .TO DIVIDE ONE ARGUMENT INTO TWO AND TO MULTIPLY THE LITIGATION'. 12.2 WE RESPECTFULLY CONCUR WITH THE PRINCIPLE ADOPTED BY THE DIVISION BENCH OF MADHYA PRADESH HIGH C OURT RESPECT OF THE PROVISIONS OF SECTION 263 OF THE ACT. 6 4 . ANOTHER ALLEGATION MADE BY THE PCIT IS THAT THE ASSESSMENT ORDERS FRAMED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT FOR A.Y 2013 - 14 AND 2014 - 15 ARE COMPLETELY SILENT ON THE ISSUES RAISED BY TH E PCIT IN HIS ORDER FRAMED U/S 263 OF THE ACT. 6 5 . THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE HONDA SIEL POWER PRODUCTS LTD. IN 333 ITR 547 HAS OBSERVED THAT WHILE CONSIDERING THE PROV ISION OF SECTION 263 OF THE ACT , THAT GENERALLY THE ISSUES WHICH ARE ACCEPTED BY AO, DO NOT FIND MENTION IN THE ASSESSMENT ORDER BUT IT CANNOT BE SAID THAT THE AO HAS NOT APPLIED HIS MIND. IT CANNOT ALSO BE SAID THAT THE AO HAD FAILED TO MAKE ANY ENQUIRY BECAUSE NO FURTHER ENQUIRY WAS NE CESSARY, MORE PARTICULARLY WHEN ALL THE FACTS WERE BEFORE ASSESSING OFFICER . 91 6 6 . IN THE CASE OF CIT VS. NIRAV MODI IN 390 ITR 292, THE HONBLE BOMBAY HIGH COURT HELD THAT IF A QUERY IS RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IF THE ASSESSEE RESPONDS TO THE SAID QUERY MERELY BECAUSE THE SAID ASPECT HAS NOT BEEN DEALT IN THE ASSESSMENT ORDER, WOULD NOT LEAD TO A CONCLUSION THAT THE AO HAD NOT APPLIED HIS MIND. 6 7 . THE FACTS OF THE PRESENT CASE CLEARLY REVEAL THAT THE ASSESSING OFFICER S , RIGHT FROM A.Y S 2005 - 06 TO 2011 - 12, AFTER GOING THROUGH THE JV AGREEMENT AND BALA NCE SHEET AND NOTES OF ACCOUNTS , FILED BY THE ASSESSEE HAS TAKEN A POSSIBLE VIEW . IT HAS BEEN HELD IN VARIOUS DECISIONS THAT WHERE THE A.O HAS TAKEN A POSSIBLE VIEW, THE A SSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 6 8 . WE FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS SUNBEAM AUTO REPORTED IN 332 ITR 167 HAS HELD AS HELD AS UNDER: 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE CIT UNDER S. 263 OF THE IT ACT. AS NOTED ABOVE, 92 THE SUBMIS SION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE AO DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE AO HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN T HE PRINCIPLE THAT THE AO IN THE ASSESSING ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITU RE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY'. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDERS UNDER S. 263 OF THE ACT, MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT SUCH A COURSE OF ACTION WOULD BE OPEN. IN GABRI E L INDIA LTD. (SUPRA), LAW ON THIS A SPECT WAS DI SCUSSED IN THE FOLLOWING MANNER : '........FROM A READING OF SUB - S. (1) OF SECTION, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE CIT ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSID ERS THAT ANY ORDER PASSED THEREIN BY THE ITO IS 'ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER. IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LAID DOWN IN SUB - S. (1). THE C ONSIDERATION OF THE CIT AS TO WHETHER 93 AN ORDER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHI CH IT CAN BE SAID THAT THE CIT ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE CIT CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND R OVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR S TAGE AND THAT LAPSE OF TIME MUST INDUCES REPOSE IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. [SEE PARASHURAM POTTERY WORKS CO. LTD. VS. ITO 1977 CTR (SC) 32 : (1977) 106 ITR 1 (SC) AT P. 10]. . .............. FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY T HE CIT SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE CIT FOR THAT OF THE ITO, WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRON EOUS. CASES MAY BE VISUALISED WHERE THE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE CIT, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE 94 ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE CIT HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE ITO. THAT WOU LD NOT VEST THE CIT WITH POWER TO REEXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. ............... THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLIC ATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. ............... WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE POWERS OF THE CIT SET OUT ABOVE. THE ITO IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLO WED BY THE ITO ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF THE ITO CANNOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD..........' 13. WHEN WE EXAMINE THE MATTER IN THE LIGHT OF THE AFORESAID PRINCIPLE, WE FIND THAT THE AO HAD CALLED FOR EXPLANATION ON THIS VERY ITEM, FROM THE ASSESSEE AND THE ASSESSEE HAD 95 FURNISHED HIS EXPLANATION VIDE LETTER DT. 26TH SEPT., 2002. THIS FACT IS EVEN TAKEN NOTE OF BY THE CIT HIMSEL F IN PARA 3 OF HIS ORDER DT. 3RD NOV., 2004. THIS ORDER ALSO REPRODUCES THE REPLY OF THE RESPONDENT IN PARA 3 OF THE ORDER IN THE FOLLOWING MANNER: ' THE TOOLS AND DYES HAVE A VERY SHORT LIFE AND CAN PRODUCE UPTO MAXIMUM 1 LAKH PERMISSIBLE SHORTS AND HAVE TO BE REPLACED THEREAFTER TO RETAIN THE ACCURACY. MOST OF THE PARTS MANUFACTURED ARE FOR THE AUTOMOBILE INDUSTRIES WHICH HAVE TO WORK ON COMPLETE ACCURACY AT HIGH SPEED FOR A LONGER PERIOD. SINCE IT IS AN ONGOING PROCEDURE, A C OMPANY HAD PRODUCED 10,75,000 SETS WHOSE SELLING RATES IS INCLUSIVE OF THE REIMBURSEMENT OF THE DYES COST. THE PURCHASE ORDERS INDICATING THE COSTING INCLUDE THE REIMBURSEMENT OF DYES COST ARE BEING PRODUCED BEFORE YOUR HONOUR. SINCE THE SALE RATE INCLUDES THE REIMBURSEMENT OF DYE COST AND TO HAVE THE MATCHING EFFECT, THE COST OF THE DYES HAS BEEN CLAIMED AS A REVENUE EXPENDITURE.' 14. THIS CLEARLY SHOWS THAT THE AO HAD UNDERTAKEN THE EXERCISE OF EXAMINING AS TO WHETHER THE EXPENDITURE INCURRED BY THE ASS ESSEE IN THE REPLACEMENT OF DYES AND TOOLS IS TO BE TREATED AS REVENUE EXPENDITURE OR NOT. IT APPEARS THAT SINCE THE AO WAS SATISFIED WITH THE AFORESAID EXPLANATION, HE ACCEPTED THE SAME. THE CIT IN HIS IMPUGNED ORDER EVEN ACCEPTS THIS IN THE FOLLOWING WOR DS : 'AO ACCEPTED THE EXPLANATION WITHOUT RAISING ANY FURTHER QUESTIONS, AND AS STATED EARLIER, COMPLETED THE ASSESSMENT AT THE RETURNED INCOME.' 96 15. THUS, EVEN THE CIT CONCEDED THE POSITION THAT THE AO MADE THE INQUIRIES, ELICITED REPLIES AND THEREAFTER PASSED THE ASSESSMENT ORDER. THE GRIEVANCE OF THE CIT WAS THAT THE AO SHOULD HAVE MADE FURTHER INQUIRIES RATHER THAN ACCEPTING THE EXPLANATION. THEREFORE, IT CANNOT BE SAID THAT IT IS A CASE OF 'LACK OF INQUIRY'. 16. HAVING PUT THE RECORDS STRAIGHT ON T HIS ASPECT, LET US PROCEED FURTHER. IS IT A CASE WHERE THE CIT HAS CONCLUDED THAT THE OPINION OF THE AO WAS CLEARLY ERRONEOUS AND NOT WARRANTED ON THE FACTS BEFORE HIM AND, VIZ., THE EXPENDITURE INCURRED WAS NOT THE REVENUE EXPENDITURE BUT SHOULD HAVE BEEN TREATED AS CAPITAL EXPENDITURE OBVIOUSLY NOT. EVEN THE CIT IN HIS ORDER, PASSED UNDER S EC . 263 OF THE ACT, IS NOT CLEAR AS TO WHETHER THE EXPENDITURE CAN BE TREATED AS CAPITAL EXPENDITURE OR IT IS REVENUE IN NATURE. NO DOUBT, IN CERTAIN CASES, IT MAY NOT BE POSSIBLE TO COME TO A DEFINITE FINDING AND THEREFORE, IT IS NOT NECESSARY THAT IN ALL CASES THE CIT IS BOUND TO EXPRESS FINAL VIEW, AS HELD BY THIS COURT IN GEE VEE ENTERPRISES (SUPRA). BUT, THE LEAST THAT WAS EXPECTED WAS TO RECORD A FINDING THAT ORDER SOUGHT TO BE REVISED WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. [SEE SESHASAYEE PAPER (SUPRA)]. NO BASIS FOR THIS IS DISCLOSED. IN SUM AND SUBSTANCE, ACCOUNTING PRACTICE OF THE ASSESSEE IS QUESTIONED. HOWEVER, THAT BASIS OF THE ORDER VA NISHES IN THIN AIR WHEN WE FIND THAT THIS VERY ACCOUNTING PRACTICE, FOLLOWED FOR NUMBER OF YEARS, HAD THE APPROVAL OF THE IT AUTHORITIES. INTERESTINGLY, EVEN FOR FUTURE ASSESSMENT YEARS, THE SAME VERY ACCOUNTING PRACTICE IS ACCEPTED. 97 6 9 . WE FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR REPORTED IN 335 ITR 83 HAS HELD THAT WHERE IT WAS DISCERNIBLE FROM RECORD THAT THE A.O HAS APPLIED HIS MIND TO THE ISSUE IN QUESTION, THE LD. CIT CANNOT INVOKE SECTION 263 OF THE ACT ME RELY BECAUSE HE HAS DIFFERENT OPINION. 7 0 . RELEVANT OBSERVATION OF THE HIGH COURT READS AS UNDER: 63. WE FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF VIKAS POLYMER REPORTED IN 341 ITR 537 HAS HELD AS UNDER: WE ARE THUS OF THE OPINION THAT THE PR OVISIONS OF S. 263 OF THE ACT, WHEN READ AS A COMPOSITE WHOLE MAKE IT INCUMBENT UPON THE CIT BEFORE EXERCISING REVISIONAL POWERS TO : (I) CALL FOR AND EXAMINE THE RECORD, AND (II) GIVE THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND THEREAFTER TO MAKE OR CA USE TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY. IT IS ONLY ON FULFILMENT OF THESE TWIN CONDITIONS THAT THE CIT MAY PASS AN ORDER EXERCISING HIS POWER OF REVISION. MINUTELY EXAMINED, THE PROVISIONS OF THE SECTION ENVISAGE THAT THE CIT MAY CALL FOR THE RE CORDS AND IF HE PRIMA FACIE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SU CH ENQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. THE TWIN REQUIREMENTS OF THE SECTION ARE MANIFESTLY FOR A PURPOSE. 98 MERELY BECAUSE THE CIT CONSIDERS ON EXAMINATION OF THE RECORD THAT THE ORDER HAS BEEN ERR ONEOUSLY PASSED SO AS TO PREJUDICE THE INTEREST OF THE REVENUE WILL NOT SUFFICE. THE ASSESSEE MUST BE CALLED, HIS EXPLANATION SOUGHT FOR AND EXAMINED BY THE CIT AND THEREAFTER IF THE CIT STILL FEELS THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE, THE CIT MAY PASS REVISIONAL ORDERS. IF, ON THE OTHER HAND, THE CIT IS SATISFIED, AFTER HEARING THE ASSESSEE, THAT THE ORDERS ARE NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY CHOOSE NOT TO EXERCISE HIS POWER OF REV ISION. THIS IS FOR THE REASON THAT IF A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE AO, WHICH WAS ANSWERED TO THE SATISFACTION OF THE AO, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE AO CALLED FOR INTERFERENCE AND REVISION. IN THE INSTANT CASE, FOR EXAMPLE, THE CIT HAS OBSERVED IN THE ORDER PASSED BY HIM THAT THE ASSESSEE HAS NOT FILED CERTAIN DOCUMENTS ON THE RECORD AT THE TIME OF ASSESSMENT. ASSU MING IT TO BE SO, IN OUR OPINION, THIS DOES NOT JUSTIFY THE CONCLUSION ARRIVED AT BY THE CIT THAT THE AO HAD SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INVESTIGATING THE CASE. MORE SO, IN VIEW OF THE FACT THAT THE ASSESSEE EXPLAINED THAT THE CAPITAL INVES TMENT MADE BY THE PARTNERS, WHICH HAD BEEN CALLED INTO QUESTION BY THE CIT WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PARTNERS WHO WERE I.T. ASSESSEES AND THE UNSECURED LOAN TAKEN FROM M/S STUTEE CHIT & FINANCE (P) LTD. WAS DULY REFLECTED IN T HE ASSESSMENT ORDER OF THE SAID CHIT FUND WHICH WAS ALSO AN ASSESSEE. 99 64. SINCE IN THE INSTANT CASE THE A.O AFTER CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE FROM TIME TO TIME AND HAS TAKEN A POSSIBLE VIEW, THEREFORE, MERELY BECAUSE THE DI T DOES NOT AGREE WITH THE OPINION OF THE A.O, HE CANNOT INVOKE THE PROVISIONS OF SECTION 263 TO SUBSTITUTE HIS OWN OPINION. IT HAS FURTHER BEEN HELD IN SEVERAL DECISIONS THAT WHEN THE A.O HAS MADE ENQUIRY TO HIS SATISFACTION AND IT IS NOT A CASE OF NO ENQ UIRY AND THE DIT/CIT WANTS THAT THE CASE COULD HAVE BEEN INVESTIGATED/ PROBED IN A PARTICULAR MANNER, HE CANNOT ASSUME JURISDICTION U/S 263 OF THE ACT. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE ASSUMPTION OF JURISDICTION BY THE DIT U/S 263 OF THE ACT IS NOT IN ACCORDANCE WITH LAW. WE, THEREFORE, QUASH THE SAME AND GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 71 . IN THE CASE OF SBI VS. ACIT IN WRIT PETITION NO. 271 OF 2018 VIDE ORDER DATED 15 TH JUNE 2018, THE HON'BLE BOMBAY HIGH COURT HELD THAT THE COMPUTATION OF INCOME AND THE NOTES ATTACHED THEREWITH ARE THE BASIC DOCUMENTS WHICH IS SUPPOSED TO BE SEEN BY THE AO AND IF NOTES ARE VERY CLEAR AND EXPLAIN THE BASIS OF CLAIM OF ASSESSEE E TO TH E SATISFACTION OF AO AND NO ADDITION HAS BEEN MADE, THEN IT MUST NECESSARILY BE INFERRED THAT THE AO HAS APPLIED HIS MIND AT THE TIME OF PASSING THE ORDER. 100 72 . IN THE LIGHT OF THE AFORESAID JUDICIAL DISCUSSION, IT CANNOT BE SAID THAT THE JV AGREEMENT WAS A COLORABLE DEVICE TO ENTE R INTO A SHAM TRANSACTION FOR EVADING TAX. THE JV AGREEMENT HAS BEEN ACCEPTED BY VARIOUS GOVERNMENT AUTHORITIES AS DISCUSSED ELSEWHERE. IT IS NOT THE CASE OF THE PCIT THAT MONEY INVESTED BY DABUR, I.E., THE APPELLANT, IN AVIVA HAS COME FROM CUIH. THEREF ORE, THE SAME CANNOT BE HELD AS SHAM TRANSACTION. MOREOVER, THE OPTION MONEY PAID BY CUIH HAS COME THROUGH BANKING CHANNEL WITH THE APPROVAL OF RBI AS EXPLAINED ELSEWHERE. 7 3 . FOR THE SAKE OF REPETITION, WE WOULD LIKE TO MENTION ONCE AGAIN THAT 23% STAKE SOLD BY DABUR WAS IN F.Y. 2016 - 17 RELEVANT TO ASSESSMENT YEAR 2017 - 18 WHEN THE ACTUAL TRANSFER OF SHARES TOOK PLACE . THEREFORE, IN OUR CONSIDERED OPINION, LIABILITY TOWARDS I.T., IF ANY, WOULD ARISE IN F.Y. 2016 - 17 RELEVANT TO A.Y 2017 - 18. 7 4 . CONSIDERING THE FACTS OF THE CASE IN HAND IN TOTALITY , FROM ALL POSSIBLE ANGLES, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT ORDERS FRAMED U/S 143(3) ARE NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ORDERS OF THE PCIT ARE, AC CORDINGLY, SET ASIDE AND THAT OF THE ASSESSING OFFICER ARE RESTORED. 101 7 5 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE IN ITA NO S . 1763 AND 1764 /DEL/201 8 ARE ALLOWED. THE ORDER IS PRON OUNCED IN THE OPEN COURT ON 1 1 . 0 3 .201 9 . S D / - S D / - [ SUCHITRA KAMBLE ] [ N.K. BILLAIYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 1 T H M A R C H , 201 9 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 102 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER