ITO, New Delhi V. M/s. Prerna Auto Pvt. Ltd., New Delhi

ITA 3583/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74099 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 13-01-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADHIR JHA
• Assessee Lawyers: FUZAIL AHMAD AYYABI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI R.S. SYAL ITA NO. 3583/DEL/2012 ASSTT. YR: 2003-04 INCOME-TAX OFFICER, VS. M/S PRERNA AUTO PVT. LTD ., WARD 14(3), NEW DELHI. N-39, GREATER KAILASH-I, NEW DELHI-110048. PAN : AACCP 3968 M ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI ADHIR JHA CIT (DR). RESPONDENT BY : SH. FUZAIL AHMAD AYYABI ADV. O R D E R PER R.P. TOLANI, J.M: : THIS IS REVENUES APPEAL AGAINST THE ORDER OF CIT (A)-XVII, NEW DELHI DATED 26-4-2012 RELATING TO A.Y. 2003-04. FOL LOWING GROUNDS ARE RAISED: 1. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PROTECTIVE ADDITION OF RS. 17,39,43,000/- MADE U/S 28(IV) R.W.S. 2(24)(VD) OF THE ACT UNDER THE BENEFIT ACCRUED ON THE SHARES OF M/S REL IANCE INFOCOMM. LTD. ON THE BASIS OF DECISION OF ITAT MU MBAI ITA NO. 442/MUM/2007 DT. 25-10-2011 IN THE CASE OF SH. ASHISH P. DEORA IN THE HANDS OF WHOM SUBSTANTIVE ADDITION WAS MADE. 2. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FA CT THAT THE AID ITAT DECISION IN THE CASE OF SH. ASHISH P. DEORA H AS BEEN CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE BOM BAY HIGH COURT. 2. LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER. ITA NO. 3583/DEL/2012 ITO VS. M/S PRERNA AUTO PVT. LTD. 2 3. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND C ONTENDS THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE AS SESSEE BY THE ITAT ORDER IN THE CASE OF ANOTHER ASSOCIATE CONCERN I.E. ACIT VS. SOFTNET TRADERS & CONSULTANTS P. LTD. (ITA NO. 3030 & 3071/DEL/2008 F OR A.Y. 2003-04 & 2005-06 DATED 25-10-2011). BESIDES, IT IS CONTENDED THAT BY THE IMPUGNED ORDER CIT(A) DELETED THE PROTECTIVE ADDITION RELYIN G ON THE ITAT ORDER IN THE CASE OF VARIOUS OTHER GROUP CONCERNS BY FOLLOWI NG OBSERVATIONS: 5.3. THE RELEVANT PORTION OF THE HON'BLE ITAT, MU MBAI DECISION IN THE CASE OF SHRI ASHISH P. DEORA IN ITA NO. 442/MUM/2007 DATED 25.10.2011 IS AS UNDER: WE HAVE CONSIDERED THE RIVAL CONTENTION AND RELEVA NT MATERIAL ON RECORD. IT IS PERTINENT TO NOTE THAT 1 CRORE SHARES OF RIC WERE GIVEN TO THREE COMPANIES NAMELY (I) M/S FAIREVER TRADERS & CONSULTANTS (P) LTD., (II) M/S SO-NET TRADERS & CONSULTANTS (P) LTD. (III) M/S PR ERNA AUTO (P) LTD., ON FACE VALUE OF RS. 1/- AT PART SUBJECT TO THE CONDITION THAT THE ASSESSEE HAS TO EXECUTE THE JOB OF LAYING OF OPTIC FIBRE CABLE BY ACHIEVING THE TARGET OF AT LEAST 50,000 BUILDING WITHIN THE STIPULATED PERIOD. IT .MAY BE NOTED THAT FINALLY THE ASSESSEE FAILED TO FULF ILL THE SAID CONDITION AND 1 CRORE SHARES WERE RETURNED BACK. TH ERE IS NO DISPUTE ABOUT THE FACT THAT THE SHARES WERE G IVEN BY ONE M/S GANESH INFRASTRUCTURE CAPITAL FUND AND ALSO RETURNED BY THE ASSESSEE TO GANESH TRUST. THUS, THE RE WAS NO FINAL TRANSFER OF THESE SHARES EITHER IN THE NAME OF THE ASSESSEE OR IN THE NAME OF THE COMPANIES IN WHI CH THE ASSESSEE IS DIRECTOR. UNDISPUTEDLY THE TRANSFER OF SHARES WAS ON CONDITIONAL AND CONSEQUENTLY THE SHARES COUL D NOT BE TRANSFERRED. WHEN THE TRANSACTION OF TRANSFE R COULD NOT MATERIALIZE AND ULTIMATELY THE SHARES WE RE RETUNED BACK WITHOUT CHARGING ANY PRICE THEN, NO BE NEFIT WHATSOEVER EITHER ACCRUED OR RECEIVED BY THE ASSESS EE OR THE COMPANIES IN WHICH THE ASSESSEE IS A DIRECTOR. THEREFORE, ON THESE FACTS ITSELF IT CAN SAFELY BE SAID THAT THE ENTIRE EXERCISE OF RECEIVING AND RETURN OF THE SHARE ITA NO. 3583/DEL/2012 ITO VS. M/S PRERNA AUTO PVT. LTD. 3 DID NOT FRUCTIFY AND THE CONDITIONS AS POSTULATE U/ S 28(IV) ARE NOT FULFILLED. HENCE THE PROVISIONS OF SEE 28(IV) CANNOT BE INVOKED IN THE HANDS OF THE ASSESSEE.' 5.4. THE APPELLANT'S AR'S SUBMISSION IS THAT SINCE THE PROVISIONS OF SECTION 28(IV) ARE NOT APPLICABLE IN THE CASE OF SHRI ASNISH P. DEORA WHERE SUBSTANTIVE ADDITION WAS MADE, THE SAME CANNOT BE APPLICABLE IN THE CASE OF THE APPELLANT COMPANY WHERE ONLY THE PROTECTIVE ASSESSMENT IS MADE AS THE COMPANY RE CEIVED 33,00,000 SHARES OF RELIANCE INFOCOMM LTD. ON BEHAL F OF SHRI ASHISH P. DEORA ONLY. FURTHER, THE APPELLANT'S AR P OINTED OUT THAT THE ITAT SPECIFICALLY HELD IN THE ABOVE CASE THAT NO BENEFIT ACCRUED OR RECEIVED EVEN BY THE APPELLANT COMPANY I N WHICH SHRI ASHISH P. DEORA IS A DIRECTOR. THERE IS NOTHIN G IN THE ASSESSMENT ORDER OF THE APPELLANT COMPANY TO INDICA TE THAT ANY BENEFIT U/S 28(IV) ACCRUED TO IT FROM THE TRANSACTI ON OF 33,00,000 SHARES OF RELIANCE INFOCOMM LTD. AT BEST IT CAN BE SAID THAT THE APPELLANT COMPANY AND ITS DIRECTOR SH RI ASHISH P. . DEORA INTENDED TO GET SOME BENEFIT IN THE RELEVANT ASSESSMENT YEAR THROUGH THE ABOVE TRANSACTION HOWEVER SINCE SH RI ASHISH P. DEORA COULD NOT ACHIEVE THE TARGET SET BY RELIAN CE, HE HAD TO RETURN THE 33,00,000 SHARES OBTAINED BY THE APPELLA NT COMPANY BACK TO THE ORIGINAL OWNER AT THE SAME PURCHASE PRI CE. THUS, NO REAL BENEFIT U/S 28(IV) OF THE I.T. ACT, 1961 ACCRU ED TO THE APPELLANT COMPANY. IN ADDITION THERE IS THE ABOVE S PECIFIC FINDING BY THE MUMBAI ITAT THAT NO BENEFIT ACCRUED OR RECEIVED BY THE APPELLANT COMPANY. IN VIEW OF THE A BOVE, THE PROTECTIVE ADDITION MADE BY THE AO IN CASE OF THE A PPELLANT COMPANY IS HEREBY DELETED AS THE ADDITION MADE BY T HE AO IS NOT SUSTAINABLE AND AS A RESULT, THE APPELLANT SUCC EEDS IN GROUND NO. 4 TO 7. 3.1. IT IS THUS PLEADED THAT THE CIT(A)S ORDER IN DELETING THE PROTECTIVE ADDITION IS BASED ON ITAT ORDER AND A FURTHER RELEV ANT FACT THAT EVEN THE SHARES SO PROMISED TO BE TRANSFERRED HAVE BEEN TAKE N BACK BY THE ORIGINAL OWNERS AT THE SAME PRICE. THUS, EVEN IF IT IS ASSUM ED THAT THERE WAS ANY TRANSFER OF SHARES, THEY HAVE BEEN RETURNED ON THE SAME VALUE, THUS NO BENEFIT ITA NO. 3583/DEL/2012 ITO VS. M/S PRERNA AUTO PVT. LTD. 4 ACCRUED IN TERMS OF SEC. 28(IV). COPY OF THE ORDER IN THE CASE OF SOFTNET TRADERS & CONSULTANTS P. LTD. (SUPRA) IS ALSO PLACE D ON THE RECORD. 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THE ISSUE IN QUESTIO N STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE INASMUCH AS THE SUBSTANTI VE ADDITION HAS BEEN RETAINED IN THE CASE OF SHRI ASHISH P. DEORA. BESI DES, NO BENEFIT IN TERMS OF SEC. 28((IV) R.W.S. 2(24)(VD) OF THE I.T. ACT HAS A CCRUED. IN VIEW THEREOF, WE SEE NO REASON TO INTERFERE IN THE ORDER OF CIT(A). ORDER OF CIT(A) IS ACCORDINGLY UPHELD. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 07-02-2014. SD/- SD/- ( R.S. SYAL ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07-02-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR