ITO 16(2)(1), MUMBAI V. AJIT SINGH CHAWLA (HUF), MUMBAI

ITA 2752/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3125 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDE
• Assessee Lawyers: JAIDEV
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI G.S.PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 2752/MUM/2013 ASSESSMENT YEAR: 2009-10 THE ITO - 16(2)( 1 ). MATRU MANDIR, TARDEO ROAD, MUMBAI- 400007. VS. SHRI. AJIT SINGH CHAWLA (HUF), C/O QUALITY MACHINERS TOOLS, 25, AMBALAL DOSHI MARG, FORT, MUMBAI- 400023. PAN: AAAHA4878G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. SAURABH DESHPANDE RESPONDENT BY : SHRI. JAIDEV DATE OF HEARING: 2 9/04/2016 DATE OF PRONOUNCEMENT: 13/06/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST ORDER DATED 04/01/2013 PASSED BY THE LD. CIT(A)-27, MUMBAI FOR THE ASST. YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT/A SSESSEE BEING A HINDU UNDIVIDED FAMILY (HUF) HAVING INCOME FROM BUSINESS, CAPITAL GAINS AND OTHER SOURCES, FILED RETURN OF INCOME FOR THE ASST. YEAR 2009-10 DECLARING THE TOTAL INCOME OF RS. 2,80,445/-. AFTER SCRUTINY, THE AO PA SSED ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) ASSESSING THE TOTAL INCOME AT RS.64,37,979/- MAKING ADDITION OF RS. 63, 94,880/-, TREATING A PART OF THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE ON SALE OF SHARES OF M/S SOMA TEXTILES & INDUSTRIES LTD., AS INTEREST INCOME , TO BE ASSESSED UNDER THE 2 ITA NO. 2752/MUM/2013 ASSESSMENT YEAR: 2009-10 HEAD OTHER SOURCES OWING TO THE FACT THAT IN THE BU Y-BACK OFFER THE PRICE OFFERED TO PUBLIC WAS SHOWN TO HAVE INCLUDED AN INT EREST COMPONENT OF RS. 5.69 PER EACH FULLY PAID UP EQUITY SHARE. 3. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), INTER ALIA ON THE GROUND THAT THE AO HAS ERRED IN NOT ACCEPTI NG THE WORKING OF LONG TERM CAPITAL GAIN ARISING ON THE SA LE OF SHARE IN A BUY-BACK TRANSACTION AS SHOWN BY THE APPELLANT IN IS RETURN OF HIS INCOME. THE LD. CIT(A) AFTER HEARING THE ASSESSEE, ALLOWED THIS GRO UND OF APPEAL. 4. DISSATISFIED WITH THE IMPUGNED ORDER PASSED BY THE LD. CIT(A), THE REVENUE HAS CHALLENGED THE SAME ON THE FOLLOWING EF FECTIVE GROUNDS:- 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THE RECEIPT OF INT EREST INCOME OF RS. 63,94,880/-AS SALE CONSIDERATION OF THE SHARES WITH OUT APPRECIATING THE FACT THAT THE INTEREST PAID TO THE ASSESSEE WAS OVER AND ABOVE THE SALE PRICE OF THE SHARES AS FIXED BY SEBI TO SA FEGUARD THE INTEREST OF THE RETAIL INVESTORS. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE A N IN LAW, THE LD. CIT(A) HAS ERRED IN CONSIDERING THE OFFER PRICE OF SHARES AT RS. 40.14/- IGNORING THE FACT THAT THE SALE PRICE OF TH E SHARES TRANSACTED THROUGH THE OFFER PRICE WAS FIXED BY SEBI AT RS. 34 .15/- WHICH WAS HIGHER THAN THE PREVALENT MARKET PRICE OF THE SHARE ON THE DATE OF OFFER I.E. 23.01.2009 (AT RS. 21.80/- PER SHARE). 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN TREATING THE RECEIPT OF INT EREST INCOME OF RS. 63,94,880/- AS SALE CONSIDERATION OF THE SHARES WIT HOUT APPRECIATING THE FACT THAT THE INTEREST PAID TO THE ASSESSEE WAS OVER AND ABOVE THE SALE PRICE OF THE SHARES AS FIXED BY SEBI TO SAFEGUARD THE INTEREST O F THE RETAIL INVESTORS. HOWEVER, THE LD. CIT(A) HAS WRONGLY CONSIDERED THE OFFER PRICE OF SHARES AT RS. 3 ITA NO. 2752/MUM/2013 ASSESSMENT YEAR: 2009-10 40.14/- IGNORING THE FACT THAT THE SALE PRICE OF TH E SHARES TRANSACTED THROUGH THE OFFER PRICE WAS FIXED BY SEBI AT RS. 34.15/- WH ICH WAS HIGHER THAN THE PREVALENT MARKET PRICE OF THE SHARE ON THE DATE OF OFFER. 6. ON THE OTHER HAND THE LD. AUTHORISED REPRESENTA TIVE (AR) SUBMITTED THAT THE MUMBAI BENCH OF ITAT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF SMT. RAMINDER KAUR CHAWLA I TA NO. 845/MUM/2014 FOR THE A.Y. 2009-10 AND ASSESSEES OWN CASE IN ITA 846/MUM/2014 FOR THE A.Y. 2009-10, THEREFORE THE PRESENT CASE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE ITAT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE TH ROUGH THE MATERIAL PLACED ON RECORD INCLUDING THE DECISION RELIED UPON BY THE ASSESSEE. IN SMT. RAMINDER KAUR CHAWLA VS ITO, THE CO-ORDINATE BENCH OF MUMBAI TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESS EE HOLDING AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS AND RECO RDS WITH US. M/S. MAVI INVESTMENTS FUND LTD MADE AN OPEN OFFER O N 01/06/2007 AT RS 34.45 PER SHARES BUT THE PROCESS O F ACQUISITION WAS DELAYED AND ACTUAL TRANSFER TOOK PLACE ON 24/01 /2009. AS PER SEBI RULES AND REGULATIONS, THE ASSESSEE WAS COMPEN SATED AND WAS PAID INTEREST @ RS. 5.69 PER SHARE FOR THE PERI OD COMMENCING FROM 01/06/2007 TO 27/01/2009. THUS THE ASSESSEE RE CEIVED RS. 40.14 PER SHARE INCLUDING INTEREST OF RS. 5.69 PER SHARE. THE DR ARGUED THAT INTEREST PRIOR TO THE DATE OF TRANSFER WAS PAID DUE TO DELAY IN PAYMENT OF SALES CONSIDERATION. THE COUNSE L OF THE ASSESSEE ARGUED THAT RIGHT TO RECEIVE THE SALES CON SIDERATION ACCRUED TO THE ASSESSEE ON 24/01/2009 WHEN THE ACTU AL TRANSFER TOOK PLACE AND NOT ON THE DATE OF OPEN OFFER BY M/S . MAVI INVESTMENTS FUND LTD. ASSESSEE FURTHER ARGUED THAT TRIBUNAL L BENCH IN THE CASE OF GENESIS INDIAN INVESTMENT COM PANY LTD. IN ITA NO. 2878/MUM/2006 DATED 14TH AUGUST, 2013, ON T HE IDENTICAL FACTS HAS HELD THAT THE INTEREST WHICH RELATES TO T HE PERIOD PRIOR TO THE DATE OF TRANSFER IS PART OF THE SALES CONSIDERA TION AND NOT INCOME 4 ITA NO. 2752/MUM/2013 ASSESSMENT YEAR: 2009-10 FROM OTHER SOURCES. WE FIND THAT THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY THE ABOVE JUDGMENT OF THE TRIBUNAL, HENC E FOLLOWING THE SAME, WE ALLOW THE APPEAL OF THE ASSESSEE . 8. FOLLOWING THE DECISION RENDERED IN SMT. RAMINDE R KAUR CHAWLA VS ITO (SUPRA), THE COORDINATE BENCH HAS DECIDED THE IDENT ICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE SHRI. AJIT SINGH CH AWLA VS ITO (SUPRA) 9. IN OUR CONSIDERED VIEW, IN THE PRESENT CASE THE ISSUES INVOLVED ARE IDENTICAL TO THE ISSUES INVOLVED IN RAMINDER KAUR C HAWLA VS ITO AND SHRI. AJIT SINGH CHAWLA VS ITO (SUPRA). THE COORDINATE BENCH H AS DECIDED THE IDENTICAL ISSUES IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, RE SPECTFULLY FOLLOWING THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE A FORESAID CASES, DISMISS BOTH THE GROUNDS OF APPEAL OF THE REVENUE AND UPHOLD THE ORDER PASSED BY THE LD. CIT(A). 10. IN THE RESULT APPEAL OF THE REVENUE FOR A.Y. 2 009-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COUR T 13TH JUNE, 2016. SD/- SD/- ( G.S.PANNU ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 13/06/2016 5 ITA NO. 2752/MUM/2013 ASSESSMENT YEAR: 2009-10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA