ACIT/DCIT, Circle - 6(2), Kolkata , Kolkata V. M/s. Usha Martin Ventures Limited , Kolkata

ITA 199/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4329 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-04-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 08-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TIBREWAL
• Keywords: Depreciation; Earning of tax free income; Proportionate interest; Question of law; Avoidance of tax; Rule 8D
• Section: 271(1)(c); 143(3); 14A; 115JB

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 199 / KOL / 20 18 ASSESSMENT YEAR :2010-11 ACIT/DCIT, CIRCLE-6(2) AAYAKAR BHAWAN, 6THFLOOR, ROOM NO.6/15, P-7, CHOWRINGHEE SQUARE, KOLKAT-700069 V/S . M/S USHA MARTIN VENTURES LTD., 24, R.N. MUKHERJEE ROAD, KOLKATA-700001 [ PAN NO.AAACU 3843 J ] /APPELLANT .. / RESPONDENT ITA NO.303/KOL/2018 & C.O NO.44/KOL/2018 (A/O ITA NO.303/KOL/2018) ASSESSMENT YEAR;2010-11 ACIT, CIRCLE-6(2) AAYAKAR BHAWAN, 6THFLOOR, ROOM NO.6/15, P-7, CHOWRINGHEE SQUARE, KOLKAT-700069 V/S . M/S UMIL SHARE & STOCK BROKING LTD., 24, R.N. MUKHERJEE ROAD, KOLKATA- 700001 [ PAN NO.AAACU 3331 K ] /APPELLANT .. / RESPONDENT /CO-OBJECTOR /BY ASSESSEE SHRI A.K. TIBREWAL, FCA & SHRI AMIT AGARWAL, ADVOCATE /BY REVENUE SHRI A.K. SINGH, CIT-DR /DATE OF HEARING 29-04-2019 /DATE OF PRONOUNCEMENT 10-05-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS INSTANT THREE CASES FOR ASSESSMENT YEAR 2010-1 1 TO TWO DIFFERENT ASSESSEES (SISTER CONCERN) M/S USHA MARTIN VENTURES LTD AND M/S UMIL SHARES & STOCK BROKING LTD. THE REVENUE HAS FIELD I TS APPEAL ITA ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 2 NO.199/KOL/2018 FORMER ASSESSEES CASE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-10 KOLKATAS DATED 17.11.2017 PASSED IN CASE NO.391/CIT(A)-10/CIR-6/2010-11. ITS SECOND APPEAL L ATTER ASSESSEES CASE ITA NO.303/KOL/2018 AND TAXPAYERS CROSS OBJECTION NO.4 4/KOL/2018 ARE DIRECTED AGAINST THE CIT(A)-10, KOLKATAS ORDER DATED 01.12. 2017 PASSED IN CASE NO.390/CIT(A)-10/CIR-6/10-11/2014-15/KOL. RELEVANT PROCEEDINGS ARE U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. BOTH THE LEARNED REPRESENTATIVES ARE FAIR ENOUGH DURING THE COURSE OF HEARING THAT ALL ISSUES RAISED IN THE INSTANT THREE CASES ARE IDENTICAL IN NATURE. WE HAVE HEARD THE INSTANT LIS TOGETHER. THE SAME ARE DISPOSED OF BY OUR DETAILED ADJUDICATION. 3. THE REVENUES IDENTICAL FIRST SUBSTANTIVE GRIEVA NCE CHALLENGES CORRECTNESS OF CIT(A)S ORDER REVERSING ASSESSING O FFICERS ACTION DISALLOWING ASSESSEES LONG TERM CAPITAL LOSS (LTCL) OF SHARES SALE AMOUNTING TO 6,07,02,817/- AND 20,95,69,036/-; RESPECTIVELY. ITS CASE IS THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN TAKING INTO CONSID ERATION ASSESSEES SUBMISSIONS WITHOUT COGNIZANCE OF BREAK-UP VALUE OF THE SHARES SOLD. OUR ATTENTION IS INVITED TO IDENTICAL FINDINGS THE CIT( A)S DETAILED DISCUSSION AS UNDER:- THE IMPUGNED MATTER HAS BEEN DEALT BY THE LD. AO A S UNDER: ON INVESTIGATION, DURING THE CURSE OF THE SCRUTINY ASSESSMENT, IT IS FOUND FROM THE RETURN, COMPUTATION AND AUDITED ACCOUNTS FILED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAS CLAIME D SHORT TERM CAPITAL GAIN ON SALE/REDEMPTION OF UNITS OF VARIOUS MUTUAL FUNDS WITHOUT STT OF RS22,70,049/-, LONG TERM CAPITAL GAIN OF RS.85,02,9 25/- ON SALE OF IMMOVABLE PROPERTIES (AFTER INDEXATION) LONG TERM C APITAL LOSS OF RS.6,07,02,817/- ON SALE OF UNQUOTED EQUITY SHARE ( AFTER INDEXATION) LONG TERM CAPITAL GAIN OF RS.9,97,07,084/- ON SALE OF QU OTED EQUITY SHARES (WITH STT). AS PER DETAILS SUBMITTED BY THE ASSESSEE IT WAS FO UND THAT THE SALE PRICE OF EQUITY SHARES OF UNQUOTED SHARES OF M/S UMIL SHARE & STOCK BROKING SERVICES LTD (BREAK UP VALUE RS24/- PER SHARE) UT O R CONSTRUCTION STEEL LTD (BREAKUP VALUE RS.113.55 PER SHARE) & USHA BRECO LT D (BREAKUP VALUE RS.27.19 PER SHARE) WERE BELOW THE BREAKUP VALUE OF THOSE SHARES. THEREFORE THE SALE VALUE OF THOSE SHARES ARE NOT ACCEPTED. IN THE CASE OF SALE OF SHARES OF USHA COMMUNICATION & TECH LTD AND LANCOINFRATECH LTD IT IS FOUND THAT THE ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 3 RECORDED SALE PRICE IS HIGHER THAN THE BREAKUP VALU E/MARKET VALUE OF THOSE SHARES. THEREFORE THE SAME IS ACCEPTED. IN VIEW OF ABOVE, THE LONG TERM CAPITAL LOSS OF RS. 6,07,02,817/- ON SALE OF EQUITY SHARE WITHOUT STT (AFTER INDEXATION) IS NOT ACCEPTABLE AND THE SAME HAS BEEN RECOMPUTED AT RS.37,42,487//- TAKING THE B REAKUP VALUE OF SHARERS OF THESE COMPANIES AS STATED IN AFORESAID PARAGRAPH . SL NAME OF COMPANIES NO OF SHARE COST PRICE (RS) INDEX COST (RS) SALE PRICE (RS) PROFIT/LOSS (RS) 1 UIL SHARE & STOCK BROKING SERVICES LTD. 1,40,000 13,67,336 24,96,836 3,60,000 8,63,364 2 U-TOR CONSTRUCTION STEEL LTD 1,51,671 96,40,050 1,40,80,920 1,72,22,242 31,41,322 3 USHA BRECO LTD 1,15,866 11,58,660 32,83,736 31,50,397 (-) 1,33,339 4 LANCOINFRATECH LTD 596 3,17,905 3,45,216 2,16,556 (-) 1,28,660 TOTAL 1,24,83,951 2,02,06,708 2,39,49,195 37,42,487 REGARDING SALE OF SHARE USHA COMMUNICATION TECH. LT D. IT IS OBSERVED THAT: THE ENTIRE SALE PROCEED WAS MADE TO ITS RELATED/ASS OCIATED/GROUP COMPANY VIZ UMIL SHARE & STOCK BROKERS LTD. VALUE PER SHARE, AS PER ACCOUNTS OF USHA COMMUNICAT ION TECH LTD FURNISHED BY THE AR OF THE ASSESSEE, IS NEGATIVE. THE ABOVE MENTIONED COMPANY AS REPORTED WAS A FOREI GN COMPANY AND WAS NOT LISTED IN INDIA. A HUGE LOSS OF RS.4,47,88,034 [INDEX COST RS.11,21, 35,134 (COST PRICE7,55,758) SALE PRICE RS.6,73,47,100] OCCURRE D IN THE TRANSACTION OF ABOVE SHARE. THE AR OF ASSESSEE HAS STATED, IN COMPLIANCE TO OUR QUERY THAT THE ABOVE TRANSACTION WAS MADE THROUGH OFF MARKET BUT THE TRA NSFER OF SHARE WAS DULY REFLECTED IN THE BOOKS OF BOTH THE COMPANYS THE ABOVE SUBMISSION HAS BEEN CONSIDERED BUT THE SA ME IS NOT TREATED AS CONVINCING AND TENABLE. SINCE THE ASSESSEE FAILS TO ESTABLISH HOW THE SALE VALUE OF SHARE WAS DETERMINED SINCE THE BOOK VALUE BECAME NEGATIVE AS SUBMITTED BY THE AR OF THE ASSESSEE. IN VIEW OF THE NATURE OF TRANSACTION, THE MANNER IN WHICH IT IS UNDERTAKEN AND THE SURROUNDING CIRCUMSTANCES CLEARLY SHOW THAT THE TRANSACTIONS OF USHA COMMUNICATIONS. IN VIEW OF ABOVE DISCUSSION IT IS H ELD TECH LTD IS NOTHING BUT INTERNAL ARRANGEMENT AMONG OWN GROUP COMPANIES TO C REATE ARTIFICIAL LOSS. IN VIEW OF ABOVE DISCUSSION IT IS HELD LONG TERM CA PITAL LOSS TO THE TUNE OF RS.4,47,88,034/- IS NOT GENUINE AND THEREFORE THE S AID LOSS IS DISALLOWED AND THE CARRIED FORWARD LOSS IS RECALCULATED ACCORDINGL Y. ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 4 AS SUCH ON ACCOUNT OF ABOVE DISALLOWANCE OF LONG TE RM CAPITAL LOSS (WITHOUT STT) NET GAIN ARISES UNDER THIS (LTCG NON STT) HEAD WORKS OUT RS.37,42,487/-. FOR FURNISHING OF INACCURATE PARTICULARS IN THE ABO VE MATTER PENALTY PROCEEDING U/S. 271(1)(C) IS INITIATE. 4. THE CIT(A) HAS REVERSED THE IMPUGNED DISALLOWANC E BY FOLLOWING THIS TRIBUNALS ORDER IN FORMER ASSESSEES CASE IN PRECE DING ASSESSMENT YEAR 2009-10 INVOLVING ITA NO.847/KOL/2013 DECIDED ON 29.01.2016 AS FOLLOWS:- 3. THE RELEVANT OBSERVATION OF THE HON'BLE IN ITA NO.847/KOL/2013 DATED 29 TH `JANUARA,2016 ON THE IDENTICAL ISSUE IS AS UNDER: 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THEE MATERIALS AVAILABLE ON RECORD. LD. AR SUBMITTED PAPER BOOK WH ICH IS RUNNING AT PAGES 1 TO 71 AND INDEX OF CASE LAWS WHICH IS RUNNI NG AT PAGES 1 TO 43. ON ANALYZING THE CASE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF MCDOWELL & CO LTD. (SUPRA) IT WOULD BE FOUN D THAT TAX PLANNING MAY BE LEGITIMATE PROVIDED IT IS WITHIN TH E FRAMEWORK OF LAW . IN THE CASE ON HAND, THE GENUINENESS OF THE TRAN SACTIONS IS NOT DOUBTED. THERE IS NO ALLEGATION THAT THE LOSSES INC URRED ON SALE OF SHARES ARE NOT AUTHORIZED OR ILLEGAL. LD. AR SUBMIT TED THAT WHEN THE TRANSACTIONS ARE GENUINE AND WITHIN THE AMBIT OF LE GAL PROVISIONS, THE SAME COULD NOT BE TERMED AS COLOURABLE DEVISE ON TH E GROUND THAT THE SAID TRANSACTION RESULTED IN REDUCTION OF TAXES. TH E ASSESSEE SUBMITS THAT IF THE DECISION OF HON'BLE SUPREME COURT IN TH E CASE OF MCDOWELL AND CO. LTD. (SUPRA) IS UNDERSTOOD IN THAT SENSE TH EN EVERY TRANSACTION RESULTING IN LOSSES OR WHERE THERE EXISTS PROVISION S RELATION TO EXEMPTION OF INCOME FROM TAX WOULD BE CONSIDERED AS COLOURABLE DEVISE. IN SUCH CASES, EVEN THE TAN OF LTCG ON SALE OF STT PAID SHARES & SECURITIES RESULTING IN EXEMPT CAPITAL GAI NS WOULD BE TREATED AS COLOURABLE DEVISE SINCE THE LTCG WOULD RESULT IN REDUCTION / AVOIDANCE OF TAXES. THE ASSESSEE SUBMITS THAT THE A O WAS NOT JUSTIFIED IN ALLEGING THAT THE SALE OF SHARES RESULTING IN LO SSES WAS COLOURABLE DEVISE T DISALLOW THE SAME FOLLOWING THE TWO DECISION RE LIED BY LD. CIT(A). LD. AR FURTHER SUBMITTED THAT THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MCDOWELL AND CO LTD. (SUPRA) W AS NOT CORRECTLY UNDERSTOOD BY ASSESSING OFFICER/ THERE IT WAS FOUND THAT THE ASSESSEE RESORTED TO DUBIOUS METHODS WHICH ARE NOT AUTHORIZE D BY LAW TO AVOID EXCISE DUTY CHARGEABLE ON MANUFACTURER OF LIQUOR BY THE DEPARTMENT AND TRANSACTIONS, ITSELF WERE FOUND TO BE ILLEGAL. IN THESE FACTS OF THE CASE, HON'BLE SUPREME COURT HELD THAT AVOIDING TAXE S BY MEANS OF ILLEGAL TRANSACTIONS ADOPTING DUBIOUS METHOD GIVING THEM THE SHAPE OF LEGALITY WOULD BE COLOURABLE DEVICE. FURTHER, LD. A R SUB MITTED THAT IT IS FOR THE ASSESSEE TO ARRANGE ITS AFFAIRS IN A MANNER WHICH REDUCES ITS TAX LIABILITY./ SO FAR THE ASSESSEE DOES NOT VIOLATE TH E PROVISIONS OF ANY STATUTE, THE TRANSACTIONS RESULTING IN REDUCTION OF TAXES COULD NOT BE TERMED AS COLOURABLE DEVISE AS ENVISAGED IN THE CASE OF MCDOWELL AND CO LTD. (SUPRA). ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 5 6. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON T HE ORDERS OF AUTHORITIES BELOW. 7. FROM THE AFORESAID DISCUSSION, WE FIND THAT ASSE SSEE HAS SOLD SHARES TO ITS GROUP COMPANY AND BOOKED A LOSS OF 56,76,211/- UNDER THE HEAD CAPITAL GAINS . THE ASSESSING OFFICER FOUND THAT THE PURPOSE OF SELLING SHARE AT A PRICE LESS THAN MARKET VALUE / BOOK VALUE WAS TO ES CAPE FROM THE TAX LIABILITY THEREFORE, IT WAS DISALLOWED BY AO. HOWEVER, FROM, THE ABOVE FACTS, WE UNDERSTAND THAT GENUINENESS OF THE TRANSACTION OF S ALE AND PURCHASE OF SHARE WITH ASSESSEE AND BUYER-COMPANY HAS NOT BEEN DOUBTE D BY AO. THE LD. DR COULD NOT BRING ANYTHING ON RECORD THAT THE TRANSAC TION WAS A COLOURABLE DEVICE TO REDUCE THE TAX LIABILITY. THERE HAS TO BE COGENT REASONS FOR HOLDING A TRANSACTION AS COLOURABLE DEVICE TO REDUCE THE TAX LIABILITY. IN THE INSTANT CASE THE TRANSACTION WAS WITH THE GROUP COMPANY AND AT T HE PRICE LESS THAN THE BOOK VALUE. IN OUR VIEW THIS OBSERVATION OF THE AO DOES NOT MAKE THE TRANSACTION AS COLOURABLE DEVICE TO REDUCE THE TAX BURDEN. WE ARE ALSO RELYING IN THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SMT. NANDINI NOPANY (1998) 230 ITR 679 (CAL), WHEREIN THE HON'BLE JURIS DICTIONAL HIGH COURT HAS HELD:- UPON CONSIDERATION OF ALL THE ABOVE FACTS AND ALSO THE QUESTION THAT THE MARKET VALUE OF THE SHARES TRANSFERRED BY THE A SSESSEE WAS RS.20,67,876, THE ASSESSING OFFICER REJECTED THE CO NTENTION OF THE ASSESSEE REGARDING THE TRANSFER OF SHARES AND ADDED THE DIFFERENCE BETWEEN THE AMOUNT OF RS.13,34,392 AND RS.20,67,876 AND THUS HELD THAT THE ASSESSEE HAD EARNED AN INCOME OF RS.7,57,3 82. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E THE COMMISSIONER OF INCOME-TAX (APPEALS) WHO AFTER CONSIDERING THE FACT S AND CIRCUMSTANCES OF THE CASE REVERSED THE ORDER OF THE ASSESSING OFFICE R BEING OF THE OPINION THAT THERE WAS NO CASE FOR SUBSTITUTING THE DISCLOSED VA LUE OF CONSIDERATION ON TRANSFER BY THE SHARES AND HE ACCORDINGLY DELETED T HE ADDITION MADE ON THAT ACCOUNT IN THE INCOME OF THEE ASSESSEE BY THE ASSES SING OFFICER. BEING AGGRIEVED, THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL UPHELD THE FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) BY AGREEING WITH THE CONTENTIONS. THUS, UNDER THOSE CI RCUMSTANCES, THE AFORESAID QUESTION OF LAW HAS BEEN REFERRED TO US F OR OUR OPINION. THE GENUINENESS OF THE TRANSACTION OF THE SALE AND PURCHASE OF THE SHARES BETWEEN THE ASSESSEE AND VISHWA MANGAL TRADING CO. PVT. LTD., HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. THIS HAS NOT EVEN BEEN QUESTIONED BY THE DEPARTMENT. IT IS NOT DISPUTED THAT THE ASSE SSEE HAD TRANSFERRED THOSE SHARES AT THE BOOK VALUE COST MAINTAINED BY HER. IT IS ALSO NOT DISPUTED THAT THE BOOK VALUE COST WAS LOWER THAN THE MARKET VALUE OF THE SHARES. IN FACT IT IS ADMITTED THAT THE MARKET VALUE OF THOSE SHARES WAS TO THE TUNE OF RS.20,67,876. UNDER THOSE CIRCUMSTANCES, HOLDING TH AT THE ASSESSEE HAD DERIVED ANY INCOME, BEING THE DIFFERENCE BETWEEN TH E MARKET VALUE AND THE PRICE ON WHICH THE SHARES WERE SOLD BY THE ASSESSEE , IN OUR OPINION, WAS NOT CORRECT. WE ARE OF THE VIEW THAT THE TRIBUNAL RIGHT LY UPHELD THE FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS). IT IS NOT A C ASE WHERE ANY ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 6 UNDERSTATEMENT OF VALUE OR MISSTATEMENT OF VALUE OF THE SHARES SOLD WAS MADE BY THE ASSESSEE. THIS IS A CASE WHERE THE ASSE SSEE HAD SOLD THE SHARES AT A VALUE ADMITTEDLY LOWER ITA NO.847/KOL/2013 A.Y 2009-10 USHA MARTIN VENTURES LTD. V. DCIT CIR-6 KOL PAGE 7 THAN THE MARKET PRICE. YET THE SHARES COULD NOT BE ASSESSED ON THE DIFFERENCE AMOU NT BEING HER INCOME BECAUSE NO INFERENCE CAN BE DRAWN IN THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE DESIGN OF THE ASSESSEE WAS SUCH THAT SHE CONCEALED CERTAIN FACTS AND SHE RECEIVED THE DIFFERENCE OF THE VALUE BY FRAUDULENT MEANS.. THERE WAS NO EVIDENCE DIRECT OR INFERENTIAL, NOR WAS THER E ANY FINDING BY ANY INCOME-TAX AUTHORITY THAT THE AS INDULGED IN SUCH A PRACTICE. WE ARE FORTIFIED IN OUR VIEW BY A JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT V. SHIVAKAMI CO. PVT. LTD. [1986] 159 ITR 71 (SC) WE ALSO FIND S UPPORT IN OUR VIEW FROM A DIVISION BENCH JUDGEMENT OF THE BOMBAY HIGH COURT I N THE CASE OF INDIA FINANCE AND CONSTRUCTION CO. PVT. LTD. V. B.N.PANDA , DY. CIT [1993] 200 ITR 710. TAKING A CONSISTENT VIEW OF HON'BLE SUPREME COURT I N THE CASE OF MCDOWELL AND CO LTD. (SUPRA) AND IN TERMS OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. NANDINI NOPANY (SUPRA), W E REVERSE THE ORDERS OF AUTHORITIES BELOW AND HOLD ACCORDINGLY. THESE COMMO N GROUNDS OF ASSESSEE ARE ALLOWED. [UNQUOTE] 4. THUS, IN THE LIGHT OF THE SAID OBSERVATIONS OF T HE HON'BLE JURISDICTIONAL ITAT IN SIMILAR AND IDENTICAL FACTS IN THE OWN CASE OF T HE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10, IN TERMS OF THE BINDING DE CISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. NAND INI NOPANY, IT IS HELD THAT THE ACTION OF THE LD. AO IN MAKING THE IMPUGNED DIS ALLOWANCE OF LOSSES OF RS.6,07,02,817 CLAIMED ON SALE OF SHARES OF GROUP C OMPANIES AND THE RE- COMPUTATION OF THE PROFIT FROM THE SAID TRANSACTIO NS IN THE SUM OF RS.37,42,487 TO BE UNSUSTAINABLE IN LAW. THE GROUND S OF APPEAL ARE THEREFORE ALLOWED. 5. LEARNED CIT-DR FAILS TO DISPUTE THE CLINCHING F ACT THAT REVENUES PLEADINGS HAVE NOWHERE PIN-POINTED ANY EXCEPTION ON FACTS OR LAW IN IMPUGNED ASSESSMENT YEAR 2010-11 IN ASSESSEES CASE S VIS--VIS THOSE INVOLVED IN SAID PRECEDING ASSESSMENT YEAR. WE MAKE IT CLEAR THAT THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THE ASSESSEES SHA RE TRANSACTIONS PER SE. COUPLED WITH THIS, LEARNED CO-ORDINATE BENCH HAS AD MITTEDLY FOLLOWED HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) SETTLING THE LAW ON THE VERY ISSUE. WE THEREFORE FIND NO FORCE IN REVENUES INSTANT FIRST SUBSTANTIV E GRIEVANCE RAISED IN BOTH APPEAL(S). 6. NEXT COMES REVENUES IDENTICAL SECOND SUBSTANTIV E GROUND THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CALCULATING ASSESSEES GAINS ON SALE OF ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 7 LAND AMOUNTING TO 86,26,729/- AND 44,39,870/- (ASSESSMENT YEAR-WISE) AS LTCG THAN STCG TREATED BY THE ASSESSING OFFICER. SU FFICE TO SAY, IT TRANSPIRES AT THE OUTSET THAT THESE TWO ASSESSEES HAD SOLD THE IR RANCHI LAND IN THE RELEVANT PREVIOUS YEAR GIVING RISE TO CAPITAL GAINS IN ISSUE. THE ASSESSING OFFICER ADMITTEDLY APPLIED SEC.50 OF THE ACT STIPUL ATING CAPITAL GAINS COMPUTATION ON TRANSFER OF DEPRECIABLE ASSETS TO AS SESS THE SAID GAINS AS STCG. THE CIT(A)S ORDER IN BOTH CASES HAS PARTLY A CCEPTED THE ASSESSEES ARGUMENTS THAT THEY HAD NOT CLAIMED ANY DEPRECIATIO N REGARDING LAND IN QUESTION BY INCLUDING IN THEIR RESPECTIVE BLOCK OF ASSETS FOR THE PURPOSE OF COMPUTING DEPRECIATION. HE HAS DIRECTED THE ASSESSI NG OFFICER TO VERIFY THE RELEVANT FACT IN THIS REGARD. WE CONCLUDE THESE PEC ULIAR FACTS THAT THE REVENUE CANNOT BE HELD TO BE AN AGGRIEVED PARTY AGAINST THE CIT(A)S FINDINGS AT THIS STAGE SINCE THE ISSUE IS VERY MUCH OPEN BEFORE THE ASSESSING OFFICER AS TO WHETHER ASSESSEE HAD INCLUDED THE RELEVANT LAND IN THEIR BLOCK OF ASSETS OR NO SO AS TO ATTRACT SEC. 50 OF THE ACT. THE REVENUES IDENTICAL SUBSTANTIVE GROUND RAISED IN BOTH THE APPEALS FAILS THEREFORE. 7. LASTLY COMES THE THIRD IDENTICAL ISSUE OF CORREC TNESS OF SEC. 14A R.E.S. 8D DISALLOWANCE AMOUNTING TO 3,10,94,241/- AND 44,45,663/- (ASSESSEE- WISE); RESPECTIVELY. IT TRANSPIRES THAT THE CO-ORDI NATE BENCH (SUPRA) ALSO FINDS THAT ASSESSING OFFICER HAD NOWHERE RECORDED ANY SAT ISFACTION STIPULATED U/S14A(2) OF THE ACT. THERE IS NO DISPUTE ABOUT THE SE TWO ASSESSEES TO HAVE DERIVED EXEMPT INCOME IN PRINCIPLE IN THE RELEVANT PREVIOUS YEAR. THE SOLE QUESTION HEREIN IS THAT OF COMPUTATION OF CORRESPON DING DISALLOWANCE. THE ASSESSING OFFICER ARRIVED AT A FIGURE OF 3,10,94,241/- COMPRISING OF DIRECT EXPENDITURE, PROPORTIONATE INTEREST AT ADMINISTRATI VE EXPENDITURE INVOLVING FIGURES OF 552/- 280,70,693 AND 13,22,996/- COMING TO 3,10,94,241/- IN ISSUE. HIS COMPUTATION IN LATTER ASSESSEES CASE RE LATES TO ONLY THE FIRST AND LAST HEAD(S) INVOLVING SUMS OF 252 AND 44,45,411/- TOTALING TO 44,45,663/- (SUPRA). THE CIT(A)S ORDER IN FORMER ASSESSEES CA SE HOLDS THAT THE ASSESSEES INTEREST FREE FUNDS ARE MUCH MORE THAN I TS CORRESPONDING INVESTMENTS IN TAX FREE INCOME INVESTMENT AS ON 31. 03.2009 AND 31.03.2010 ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 8 READING FIGURES OF 6,94,646/- AND 154,552.116; RESPECTIVELY. THE ASSESSEES SHARE CAPITAL, RESERVES AND SURPLUS FUND S HAVE FIGURES OF 564,23,750/- AND 457,976,819.64; RESPECTIVELY I.E. MORE THAN ITS TAX FREE INVESTMENTS. THIS TRIBUNALS DECISION IN REI AGRO L TD. VS. DCIT [20113] 35 TAXMANN.COM 404 (KOLKATA-TRIB.) AS UPHELD IN HON'BL E JURISDICTIONAL HIGH COURTS AS WELL AS HON'BLE BOMBAY HIGH COURTS DECI SION IN CIT VS. RELIANCE UTILITIES AND POWER LTD. (2009) 313 ITR 340 (BOM) H OLDS THAT NECESSARY PRESUMPTION THAT ARISES IN SUCH A CASE IS OF DEPLOY MENT OF INTEREST FREE INVESTMENTS FUNDS ONLY IN EXEMPT INCOME YIELDING IN VESTMENTS. WE DO NOT FIND ANY MERIT IN REVENUES FORMER ARGUMENT REGARDING RU LE 8D(2)(II) OF THE INCOME TAX RULES, 1962 PROPORTIONATE INTEREST ISSUE THEREFORE 8. COMING TO LAST HEAD IN FORMER ASSESSEES CASE AN D SOLE HEAD IN LATTER ASSESSEES CASE OF ADMINISTRATIVE EXPENDITURE DISAL LOWED UNDER THIRD LIMB OF RULE 8D, BOTH PARTIES FAIL TO DISPUTE THAT THE CIT( A) HAS DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE IMPUGNED DISALLOWANCE QUA THE EXEMPT INCOME YIELDING INVESTMENT ONLY AS PER THIS TRIBUNALS CO- ORDINATE BENCHS DECISION IN REI AGRO LTD. VS. DCIT (2013) 144 ITD 141 (KOL) UPH ELD IN HON'BLE JURISDICTIONAL HIGH COURT. THE REVENUES THIRD SUBS TANTIVE GROUND IN BOTH THESE TWO APPEALS IS DECLINED THEREFORE. 9. WE NOW ADVERT TO ASSESSEES CROSS-OBJECTION THAT THE ASSESSING OFFICER HAD NOWHERE RECORDED MANDATORY SATISFACTION US/1 4A R.W.S. 8D DISALLOWANCE BEFORE COMPUTING THE IMPUGNED DISALLOWANCE. WE FIND THAT THE ASSESSEE HAD SUO MOTU DISALLOWED ADMINISTRATIVE EXPENDITURE WHOSE CORREC TNESS FAILED BEFORE THE ASSESSING OFFICER AS PER THE PRESCRIBED FORMULA UNDER RULE 8D. HE DECLINED THE SAID COMPUTATION THEREFORE TO ARRIVE A T THE IMPUGNED ADMINISTRATIVE HEAD EXPENDITURE OF 44,45,411/-. WE OBSERVE IN THESE FACTS THAT THE ASSESSING OFFICER HAD DULY TAKEN NOTE OF A SSESSEES COMPUTATION AS WELL AS ITS RELEVANT BOOKS OF ACCOUNT BEFORE ARRIVI NG AT THE IMPUGNED ADMINISTRATIVE DISALLOWANCE. THE ASSESSEES CROSS-O BJECTION IS REJECTED ITA NO.199,303/KOL/2018 & CO 44/KOL/2018 A.Y. 2010-11 ACIT CRI-6(2) KOL. VS. M/S USHA MARTIN VENTURES UMIL SHARE & STOCK BROKING LTD. PAGE 9 THEREFORE. WE MAKE IT CLEAR BEFORE PARTING THAT WE HAVE NOT TOUCHED UPON THE FIRST HEAD OF DIRECT EXPENSE (SUPRA). THE REVENUE A S WELL AS LATTER ASSESSEE IN THEIR RESPECTIVE PLEADINGS THEREFORE. THE ASSESS EES CROSS-OBJECTION 44/KOL/2018 RAISING THE INSTANT SOLE SUBSTANTIVE GR OUND FAILS THEREFORE. 10. WE NOW ADVERT THE REVENUES FOURTH AND LAST SUB STANTIVE GROUNDS SEEKING TO REVIVE SEC. 115JB MAT ADJUSTMENT ON THE 14A R.W.S. 8D DISALLOWANCE. SUFFICE TO SAY, THIS TRIBUNALS SPECI AL BENCH DECISION IN ACIT VS. VIVEET INVESTMENT PVT. LTD. 165 ITD 27 (DEL) HOLDS THAT SAID STATUTORY PROVISI ON DOES NOT COVER ANY DISALLOWANCE MADE U/S 14A READ W ITH RULE 8D. WE ACCORDING AFFIRM THE CIT(A)S FINDINGS QUA INSTANT LAST ISSUE AS WELL. 11. THESE TWO REVENUES APPEALS AND ASSESSEES CROS S-OBJECTION IN LATTER APPEAL (ITA 303/KOL/2018) ARE DISMISSED. WE ORDER A CCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT 10/ 05/2019 SD/- SD/- ( ) () ) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S *- 10 / 05 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S USHA MARTIN VENTURES LTD./M/S UMIL SHARE & STOCK BROKING LTD. 24, R.N. MUKHERJEE ROAD, KOLKAT-700001 2. /REVENUE-ACIT/DCIT, CIR-6(2), AAYAKAR BHAWAN, 6 TH FL, R NO.6/15, P-7 CHOWRINGHEE SQUARE, KOL-69 3. 5 6 / CONCERNED CIT KOLKATA 4. 6- / CIT (A) KOLKATA 5. 9 ))5, 5, / DR, ITAT, KOLKATA 6. > / GUARD FILE. BY ORDER/ , /TRUE COPY/ 5,