NINA P. MEHTA, MUMBAI V. DCIT CEN CIR 5, MUMBAI

ITA 3585/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7173 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 02-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P SINGH
• Assessee Lawyers: K SHIVARAM
• Keywords: Valuation report; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVAN , JM ITA NO.3585/MUM/2009 : ASST.YEAR 2007-2008 SMT.NINA P.MEHTA C/O.DIMEXON DIAMONDS LIMITED 804, RAHEJA CHAMBERS 213 NARIMAN POINT, MUMBAI 400 021. PA NO.AHMPM9023Q. VS. THE DY.COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 5 MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.3645/MUM/2009 : ASST.YEAR 2007-2008 THE DY.COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 5 MUMBAI. VS. SMT.NINA P.MEHTA C/O.DIMEXON DIAMONDS LIMITED 804, RAHEJA CHAMBERS 213 NARIMAN POINT, MUMBAI 400 021. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A.P.SINGH ASSESSEE BY : SHRI K.SHIVARAM O R D E R PER R.S.SYAL, AM : THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 30.3.2009 IN RELATION TO THE ASSESSMENT YEAR 2007- 2008. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH ACTION WAS TAKEN U/S.132(1) AT THE BUSINESS PREMISES OF M/S.DIMEXON DIAMONDS LIMITED AND ITS SISTER CONCERNS ALONG WITH RESIDENTIAL PREMISES OF THE DIRECTORS AND PARTNERS. THE ASSESSEE FILED HER RETURN DECLARING INCOME OF RS.5, 46,03,250 INTER ALIA INCLUDING LONG TERM CAPITAL GAIN OF RS.5,30,74,973 ON SALE OF UNQUOTED SHARES OF FOUR COMPANIES VIZ., M/S.DIMEXON DIAMONDS LIMITED, DIMEX ON EXPORTS PRIVATE LIMITED, KIRTI ORNAMENTS PRIVATE LIMITED AND COIMBA TORE POLISHING WORKS PRIVATE LIMITED. THE DISPUTED CAPITAL GAIN AROSE ON SALE OF 8,91,200 SHARES OF M/S.DIMEXON DIAMONDS LIMITED TO M/S.PANKAJ K.MEHTA INVESTMENT PRIVATE ITA NOS.3585 & 3645/MUM/2009 SMT.NINA P.MEHTA. 2 LIMITED. THE ASSESSEE SOLD THE SHARES AT RS.148 PER SHARE. THE ASSESSING OFFICER PERUSED THE BALANCE SHEET OF M/S.DIMEXON DIAMONDS L IMITED FOR THE FINANCIAL YEAR 2005-2006 AND FOUND THAT SHARES WERE UNDERVALU ED FOR SALE CONSIDERATION. IN SUPPORT OF THE SALE PRICE, THE ASSESSEE FURNISHED VALUATION REPORT OF M/S. DIMEXON DIAMONDS LIMITED BY THE AUDITORS CHAITANYA C.DALAL & CO. AND V.R.PANDYA & CO. BOTH THE VALUERS DETERMINED VALUATION OF RS.202 PER SHARE ON THE BASIS OF BALANCE SHEET AS ON 31.3.2005. THE ASSESSING OFFICE R HOWEVER WORKED OUT THE VALUE OF SHARES ON THE BASIS OF BALANCE SHEET AS ON 31.3.2006 AT THE AVERAGE OF ITS VALUE BASED ON NET ASSET VALUE METHOD AND VALUE BAS ED ON PROFIT EARNING CAPACITY VALUE METHOD. AFTER ALLOWING DEDUCTION OF 15%, HE V ALUED THE SHARES AT RS.414 AND ADDED THE DIFFERENCE OF VALUATION AND ACTUAL CONSID ERATION AS LONG TERM CAPITAL GAIN AMOUNTING TO RS.23,70,59,200. THE ASSESSEE PREFERR ED APPEAL BEFORE THE LEARNED CIT(A) WHO HELD THAT THE PROFIT EARNING CAPACITY VA LUATION METHOD BE ADOPTED AS PER BALANCE SHEET FOR ASSESSMENT YEAR 2005-2006. BO TH THE SIDES ARE IN APPEAL AGAINST THEIR RESPECTIVE STANDS. 3. AT THE VERY OUTSET THE LEARNED COUNSEL FOR THE A SSESSEE PLACED ON RECORD A COPY OF THE ORDER PASSED BY THE TRIBUNAL IN THE CAS E OF MR.VISHAL P.MEHTA VS. DCIT AND DCIT VS. MR.VISHAL P.MEHTA IN ITA NOS.3586 AND 3646/MUM/2009. IT WAS STATED THAT SHRI VISHAL P. MEHTA ALSO ENTERED INTO SIMILAR TRANSACTIONS IN RESPECT OF THE SHARES OF THE SAID COMPANY AT THE SA ME PRICE AND THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) FOLLOWED THE SAME APPROACH AS HAS BEEN DONE IN THE CASE OF INSTANT ASSESSEE. IT WAS SUBMITTED THAT THE TRIBUNAL VIDE ITS ORDER DATED 26.2.2010 HAS HELD THAT THE CAPITAL GAIN HAS TO BE COMPUTED ON THE BASIS OF AGREED PRICE OF RS.148 PER SHARE AS A RESULT OF WHI CH THE ASSESSEES APPEAL WAS ALLOWED AND THAT OF THE REVENUE WAS DISMISSED. HE I NVITED OUR ATTENTION TOWARDS ANOTHER ORDER PASSED BY THE TRIBUNAL IN THE CASE OF SOME OTHER SHAREHOLDERS UNDER IDENTICAL CIRCUMSTANCES IN WHICH THE EARLIER ORDER IN THE CASE OF MR.VISHAL P.MEHTA HAS BEEN FOLLOWED. COPY OF SUCH ORDER DATED 19.3.20 10 PASSED IN THE CASE OF ITA NOS.3585 & 3645/MUM/2009 SMT.NINA P.MEHTA. 3 M/S.PANKAJ K. MEHTA ETC. WAS PLACED ON RECORD. THE LEARNED DEPARTMENTAL REPRESENTATIVE, AFTER GOING THROUGH THE SAID ORDERS , FAIRLY CONCEDED THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT APPEAL WERE SIMILA R TO THOSE ALREADY DECIDED BY THE TRIBUNAL. IN VIEW OF THE RIVAL BUT COMMON SUBMI SSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENT, WE SET ASIDE THE IMPUGNED ORDER AND DIRECT THAT THE CAPITAL GAIN BE COMPUTED ON THE BASIS OF AGREED SALE PRICE OF RS.148 PER SHARE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF MARCH 2010. SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 30 TH MARCH, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A) CENTRAL - II, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.