ACIT, CHENNAI V. Raajhendhran M, CHENNAI

ITA 2969/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86324 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: G G PRABHAKARAN
• Section: 143(3); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , ! . . ' , # $ BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.2969/MDS/2014 # % !&% / ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 20, CHENNAI - 600 034. V. SHRI RAAJHENDRAN. M, NO.32, POES ROAD 2 ND STREET, TEYNAMPET, CHENNAI - 600 018 PAN : AAFPR 1706 H (()/ APPELLANT) (+,()/ RESPONDENT) () - . / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT +,() - . / RESPONDENT BY : SHRI G.G. PRABHAKARAN / ! - 0 / DATE OF HEARING : 26.02.2015 1& - 0 / DATE OF PRONOUNCEMENT : 05.03.2015 / O R D E R PER S.S. GODARA, JUDICIAL MEMBER: THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2007-08 ARISES FROM ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- IV, CHENNAI DATED 29.09.2014 PASSED IN ITA NO.106/1 3-14 DELETING DISALLOWANCE OF EXPENSES ON ISSUE OF SHARE S AMOUNTING - - I.T.A. NO. 2969/MDS/2014 2 TO ` 49,31,112/-, IN PROCEEDINGS UNDER SECTION 143(3) O F THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. FACTS OF THE CASE ARE IN NARROW COMPASS. THE AS SESSEE, AN INDIVIDUAL, IS A DIRECTOR OF M/S RAJ TV NETWOR K LTD. AND ALSO A PARTNER IN M/S RAJ VIDEO VISION. HE HAD FILED HI S RETURN ON 31.10.2007 ADMITTING AN INCOME OF ` 3,33,42,819/-. THE SAME WAS SUMMARILY PROCESSED. THE A.O. TOOK UP SCRUTI NY POST ISSUANCE OF SECTION 148 NOTICE. HE INTER ALIA FOU ND THE ASSESSEE TO HAVE DECLARED CAPITAL GAINS FROM SALE O F SHARES AND PROPERTIES. THIS LITIGATION PERTAINS TO FORMER CAP ITAL ASSET ONLY. THE ASSESSEE HAD DEDUCTED A SUM OF ` 49,31,112/- AS EXPENSES U/S 48 INCURRED ON ISSUE OF SHARES JOINTLY BORN WIT H THE AFORESAID COMPANY AND PROMOTER SHAREHOLDERS IN CONNECTION WIT H A PUBLIC ISSUE OF 35,68,250 SHARES HAVING FACE VALUE ` 10/- AT A PRICE OF ` 257/-. THE PUBLIC ISSUE CONSISTED OF FRESH ISSUE O F 22,70,700 EQUITY SHARES BY THE COMPANY AND OFFLOADING OF 12,9 7,550 EQUITY SHARES HELD BY THE PROMOTERS/SHAREHOLDERS. THE ASS ESSEE HAD CLAIMED THE IMPUGNED EXPENDITURE INCURRED IN CONNEC TION WITH TRANSFER OF SHARES OF SHARES, DEDUCTIBLE UNDER SECT ION 48 OF THE ACT. HE WOULD PRODUCE RELEVANT PROSPECTUS, DETAILS OF - - I.T.A. NO. 2969/MDS/2014 3 APPORTIONMENT MADE ON THE BASIS OF THE NUMBER OF SH ARES OFFERED FOR SALE BY THE DIRECTORS, AGREEMENT EXECUT ED WITH THE COMPANY FOR PROPORTIONATE SHARING OF EXPENSES, RELE VANT MOU, ETC. ON RECORD. THE ASSESSING OFFICERS ORDER DATE D 19 TH MARCH, 2013 HELD THAT THE ENTIRE EXPENDITURE IN CONNECTION WITH SALE OF SHARES WAS ONLY THE COMPANYS LIABILITY. THE ASSES SEES ACTION OF SHARING THE EXPENSES IN QUESTION WAS HELD TO BE GRATUITOUS ONLY NOT COVERED BY SECTION 48 OF THE ACT. THIS RE SULTED IN DISALLOWANCE / ADDITION OF EXPENSES OF ` 49,31,112/-. 3. THE ASSESSEE PREFERRED AN APPEAL. HE STRONGLY R ELIED ON THE ORDER OF THE TRIBUNAL IN CASES PERTAINING TO OTHER DIRECTORS ON THE VERY ISSUE. THE CIT(APPEALS) HAS ACCEPTED HIS CONTENTIONS AS UNDER:- 4.1. I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRIT TEN SUBMISSIONS MADE DURING THE COURSE OF APPELLATE PROCEEDINGS AS WELL AS MATERIALS AVAILABLE ON RECOR D. 4.2. DURING APPELLATE PROCEEDINGS THE AR FILED VAR IOUS DOCUMENTS, INCLUDING TWO APPELLATE ORDERS (1) OF THE ITAT B BENCH (IN ITA NO.493, 494 AND 495/MDS/2012 DATE D 10.5.2012) IN THE CASES OF MRS. USHARANI RAGHUNATHA N, SHRI RAGHUNATHAN AND SMT. AMUDHA RAJENDERAN RESPECTIVELY AND (2) OF THE ITAT A BENCH (IN ITA NO.484, 485 A ND 486/MDS/2012 DATED 171.7.2012) IN THE CASES OF SHRI M. RAJARATHINAM, MRS. VIJAYALAKSHMI RAVINDRAN AND SHRI M. RAVINDRAN. ON GOING THROUGH THE ABOVE ORDERS OF TH E TRIBUNAL, IT IS SEEN THAT THESE APPEALS WERE FILED BY THE OTHER - - I.T.A. NO. 2969/MDS/2014 4 SIX DIRECTORS OF M/S RAJ TELEVISION NETWORK LIMITED . AS POINTED OUT EARLIER THE ASSESSEE IS ALSO ONE OF THE DIRECTORS OF THIS COMPANY. AS IN THE CASE OF THE APPELLANT, DISALLOWANCE OF SHARE ISSUE EXPENSES WAS MADE IN TH E CASES OF OTHER DIRECTORS ALSO. AGAINST THIS DISALL OWANCE THEY PREFERRED APPEALS BEFORE THE FIRST APPELLATE AUTHOR ITY BUT THEIR APPEALS WERE DISMISSED BY THE CIT(APPEALS). AGAINST THE ORDER OF THE CIT(APPEALS) THE DIRECTORS WENT ON APPEAL BEFORE THE ITAT. THE ITAT IN THE ORDERS CITED SUPR A ALLOWED THE APPEALS FILED BY ALL THE DIRECTORS BY OBSERVING AS UNDER: THERE IS NO CASE FOR THE REVENUE THAT ANY OF THE ASSESSEE CLAIMED MORE THAN THEIR SHARE OF EXPENSES BASED ON THE RATIO OF SHARES SOLD. WE ARE, THEREFORE, OF THE OPINION THAT THE DEDUCTION CLAIMED BY THE ASSESSEES FOR EXP ENSES INCURRED WAS UNJUSTLY DISALLOWED. THIS DISALLOWANC E IS DELETED. 4.3. AS THE FACTS OF THE APPELLANTS CASE AND THE CASES RELATING TO THE OTHER DIRECTORS ARE SIMILAR, RESPEC TFULLY FOLLOWING THE DECISION RENDERED BY THE HON'BLE ITAT IN THE CASES OF OTHER DIRECTOR, THE GROUND RAISED BY THE A PPELLANT IS ALLOWED. THIS LEAVES THE REVENUE AGGRIEVED. 5. WE HAVE HEARD BOTH THE COUNSEL AND GONE THROUGH THE RELEVANT CASE FILE. FACTS OF THE CASE ALREADY STAN D NARRATED IN THE PRECEDING PARAGRAPHS. THE PRESENT DISPUTE IS R EGARDING THE IMPUGNED EXPENDITURE OF ` 49,31,112/- INCURRED ON ISSUE OF SHARES JOINTLY WITH COMPANY AS STATED HEREINABOVE. THE REVENUE TREATS THE SAME AS LIABILITY OF THE COMPANY ONLY. THE ASSESSEE, IN THE COURSE OF HEARING, FILES ORDERS OF THE TRIBUNAL DECIDING THE VERY ISSUE IN THE CASE OF OTHER DIRECT ORS. THE - - I.T.A. NO. 2969/MDS/2014 5 REVENUE DOES NOT DRAW ANY EXCEPTION THERETO. THERE FORE, WE UPHOLD THE CIT(APPEALS)S ORDER DELETING THE IMPUGN ED DISALLOWANCE. THE REVENUES GROUND IS REJECTED. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 5 TH OF MARCH, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (S.S. GODARA) ( . ) ( . . ') / ACCOUNTANT MEMBER # /JUDICIAL MEMBER /CHENNAI, 3 /DATED, THE 5 TH MARCH, 2015. KRI. 4 - +#056 76&0 /COPY TO: 1. () /APPELLANT 2. +,() /RESPONDENT 3. / 80 () /CIT(A)-IV, CHENNAI 4. / 80 /CIT-IV, CHENNAI 5. 6!9' +#0# /DR 6. ':% ; /GF.