DCIT CEN CIR 5, MUMBAI V. SMITA P. MEHTA, TAMILNADU

ITA 3638/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2280 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2007-2008
• Appeal Filed On: 04-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K BALODIA
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Capital asset; Salary income; Rule of consistency; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KU MAR ,(AM) ITA NO.3668/MUM/2009 ASSESSMENT YEAR : 2007-08 SMITA P. MEHTA C/O., DIMEXON DIAMONDS LTD. 804, RAHEJA CHAMBERS, 213, NARIMAN POINT MUMBAI-400 021. ..( APPELLANT ) P.A. NO. (AHMPM 9145 R) VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-5, AAYAKAR BHAVAN MAHARSHI KARVE ROAD MUMBAI-400 020. ..( RESPONDENT ) ITA NO.3638/MUM/2009 ASSESSMENT YEAR : 2007-08 DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-5 MUMBAI-400 020. ..( APPELLANT ) VS. SMITA P. MEHTA MUMBAI-400 021. ..( RESPONDENT ) ASSESSEE BY : DR. K. SHIVRAM DEPARTMENT BY : SHRI N.K . BALODIA O R D E R PER D.K. AGARWAL (JM). THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) DATED 30.3 .2009 FOR ASSESSMENT YEAR 2007-08. BOTH THE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.3668 & 3638/M/09 A.Y:07-08 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. SHE IS DIRECTOR IN DIMEXON DIAMONDS LTD. A ND PRAKASH K. MEHTA INVESTMENT PVT. LTD. SHE IS ALSO PARTNER IN THE FIRM M/S. N.K. POLISHERS. DURING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAS SHOWN SALARY INCOME AND INCOME FROM OTHER SOURCES AND FILE D HER RETURN DECLARING TOTAL INCOME OF RS.9,20,760/-. DURIN G THE COURSE OF ASSESSMENT IT WAS INTERALIA OBSERVED BY THE AO THAT THE A SSESSEE HAS DECLARED LONG TERM CAPITAL LOSS OF RS.35,30,756/- WHICH I NCLUDED LOSS OF RS.32,62,806/- ON SALE OF 519,100 SHARES OF DIMEXON DIAMONDS (P) LTD. TO ONE PARESH K MEHTA INVESTMENT PVT. LTD. TH ESE SHARES HAVE BEEN SOLD AT THE RATE OF RS.148/- PER SHARE WHICH IS MEN TIONED AS AGREED PRICE WHICH AFTER INDEXATION WORKED OUT AT RS.8 ,00,89,606/-. ACCORDING TO THE ASSESSING OFFICER, THE COMPANY M/S. DIMEXON DIAMONDS (P) LTD. IS A CLOSELY HELD COMPANY AND SINCE THE SHARES ARE NOT LISTED ON ANY STOCK EXCHANGE, THE MARKET VALUE OF SHARES WAS NOT APPLICABLE FOR DETERMINING THE PRICE OF SHARE. HE THER EFORE ASKED THE ASSESSEE THE METHOD OF ARRIVING AT AGREED PRICE OF RS.148 /- PER SHARE. IN REPLY THERETO, THE ASSESSEE FURNISHED THE DETAILS OF S HARE VALUATION REPORT OF DIMEXON DIAMONDS (P) LTD. BY THE AUDITORS C HAITANYA C. DALAL & CO. AND V.R. PANDYA & CO. WHICH FORMS PART O F THE ASSESSMENT ORDER. THE VALUATION OF RS.202/- PER SHARE AS PER BO TH THE VALUERS IS WORKED OUT ON THE BASIS OF THE BALANCE SHEET AS AT 31 ST MARCH, 2005. ITA NO.3668 & 3638/M/09 A.Y:07-08 3 THE VALUERS HAVE VALUED THE SHARES AT THE AVERAGE OF I TS VALUE BASED ON NAV METHOD (RS.541/-) AND VALUE BASED ON YIELD BASI S VIZ. PROFIT EARNING CAPACITY VALUE (PECV) (RS.195/-) AT RS.368/- A ND AFTER GIVING DEDUCTION OF 45% FOR RESTRICTED MOBILITY (RS.165/-), VA LUED THE SAME AT RS.202/-. IT HAS BEEN MENTIONED THAT THE AUDITO RS HAVE VALUED THE SHARES ON THE BASIS OF THE FAIR VALUE AS PER THE GUIDE LINES ISSUED BY THE MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS VIZ. CONTROLLER OF CAPITAL ISSUES GUIDELINES (FOR SHORT, CCI GUIDELINES ). IT FURTHER MENTIONS THAT THE AGREED PRICE HAS BEEN ARRIVED AT RS. 148/- PER SHARE. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEES SUBMISSION , HOWEVER, WORKED OUT THE VALUE OF SHARES ON THE BASIS OF THE BALANCE SHEET AS AT 31 ST MARCH 2006 AT THE AVERAGE OF ITS VALUE BASED ON NAV METHOD (RS.653/-) AND VALUE BASED ON YIELD BASIS VIZ. PROFIT EARNING CAPACITY VALUE (PECV) (RS.321/-) AT RS.487/- AND AFTER GIVING DEDUCTION OF 15% FOR RESTRICTED MOBILITY (RS.73/-), VAL UED THE SAME AT RS.414/- AS AGAINST RS.148/- SHOWN BY THE ASSESSEE. IT MA Y BE MENTIONED THAT THE ASSESSING OFFICER HAS VALUED THE SHARES ON THE BASIS OF THE FAIR VALUE AS PER THE CCI GUIDELINES. ACCOR DINGLY THE ASSESSING OFFICER WORKED OUT THE LONG TERM CAPITAL GAIN RS.13,80,80,600/- AS UNDER: DIFFERENCE OF SELL PRICE = RS.414 RS.148 = RS.266/- LONG TERM CAPITAL GAINS = RS.266 X NO. OF SHARES SOLD 5,19,100 = RS.13,80,80,600/- ITA NO.3668 & 3638/M/09 A.Y:07-08 4 THE ASSESSEE HAS ALREADY SHOWN LONG TERM CAPITAL LOSS OF RS.32,62,806/- FROM THE SALE OF SHARES OF DIMEXON DIAMO NDS LTD. THEREFORE THE TOTAL ADDITION WORKS OUT TO RS.13,48,17 ,794/- (RS.13,80,80,600 LOSS RS.32,62,806) AND ACCORDINGLY COMP LETED THE ASSESSMENT AT AN INCOME OF RS.13,57,71,660/- VIDE ORDER D ATED 30.12.2008 PASSED U/S.143(3) OF THE I.T. ACT, 1961(THE ACT). 3. ON APPEAL, THE LD. CIT(A) AFTER CONSIDERING THE FA CTS AND CIRCUMSTANCES OF THE CASE HAS HELD VIDE PARA-2.3.10 OF HIS O RDER AS UNDER :- HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS HELD THAT THE APPELLANT WAS REQUIRED TO FOLLOW THE PROFIT EARNING CAPACITY METH OD OF VALUATION OF DDPL SHARES IN OBEDIENCE TO HONBLE APE X COURT DECISIONS REPORTED IN THE CASES OF CGT VS. SM T. KUSUMBEN D. MAHADEVIA (SUPRA), AND CWT VS. MAHADEO JALAN & OTHERS (SUPRA). THE APPELLANT HAS COMPLETEL Y DISREGARDED NEAREST COMPARABLES EG. SHARES SOLD ON 28.3.2005 BY SHRI KAMRUDDIN BHANJI AND THE VALUATIO N REPORT DATED 3.11.2005 WHICH IT HAD PRODUCED BEFORE THE LD. ASSESSING OFFICER. THE SALE RATE @ RS.148/- PER SHARE OF M/S. DDPL IS VITIATED BECAUSE OF THE SURROUNDING CIRCUMSTANCES AND IS NOT CONSIDERED AS FULL VALUE O F CONSIDERATION BECAUSE OF THE TRANSFEROR TRANSFEREE NEXUS AND THE ABSENCE OF ANY TRANSPARENT CONTRACT NOTE OR SALE AGREEMENT. UNDER THE CIRCUMSTANCES, THE LD. ASSESS ING OFFICER IS DIRECTED TO ADOPT THE FULL VALUE OF CONS IDERATION AT THE TOTAL VALUE OF SHARES AS PER PROFIT EARNING CAPACITY VALUATION METHODOLOGY AS UPHELD BY THE HONBLE SUPRE ME COURT IN THE SAID CASES OF CIT VS. SMT. KUSUMBEN D. MAHADEVIA (SUPRA) AND CWT VS. MAHADEO JALAN & OTHER S (SUPRA) AND AS PER BALANCE SHEET FOR ASSESSMENT YEA R 2005-06 FOR THE REASONS DISCUSSED IN THE BODY OF TH IS ORDER. ITA NO.3668 & 3638/M/09 A.Y:07-08 5 4. BEING AGGRIEVED, BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE AND THE REVENUE BOTH ARE IN APPEAL BEFORE US. THE ASSESSEE IN HIS APPEAL HAS CHALLENGED, IN ALL THE GROUNDS, THAT NOTHING MORE THAN RS.148/- PER SHARE CAN BE TAKEN FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS WHEREAS THE REVENUE HAS OBJECTED, IN ALL THE GROUNDS, T HAT THE AOS FIGURE OF 414/- PER SHARE WHICH WAS ARRIVED AT ON THE BASIS OF GUIDELINES ISSUED BY THE MINISTRY OF FINANCE, DEPARTMEN T OF ECONOMIC AFFAIRS FOR VALUATION OF SHARES SHOULD BE RESTORED. 5. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED T HAT THE ABOVE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE BY THE ORDER OF THE TRIBUNAL IN MR. VISHAL P . MEHTA VS. DY.CIT AND VICE VERSA IN ITA NOS.3586 & 3646/MUM/2009 FOR THE ASSESSMENT YEAR 2007-08 ORDER DATED 26 TH FEBRUARY 2010 WHICH HAS ALSO BEEN FOLLOWED IN THE GROUP CASES IN BATCH OF APPEALS IN PANK AJ K. MEHTA AND OTHERS VS. DCIT, CENTRAL CIRCLE -5 AND ANOTHER IN ITA NO.3587/MUM/2009 AND OTHERS FOR ASSESSMENT YEAR 2007-08 DATED 19.3.2010. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLA CED ON RECORD THE COPIES OF THE SAID ORDERS OF THE TRIBUNAL . 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL P ARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND TH AT THE FACTS ARE NOT IN DISPUTE IN AS MUCH AS IT IS ALSO NOT IN DISPUTE T HAT ON THE SIMILAR ITA NO.3668 & 3638/M/09 A.Y:07-08 6 FACTS AND CIRCUMSTANCES OF THE CASE THE TRIBUNAL IN THE GROU P CASES HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER IN TOTO. 7. IN VISHAL P. MEHTA SUPRA, IT HAS BEEN HELD VIDE PARA-5 TO 8 OF THE ORDER DATED 26.2.2010 AS UNDER : 5. THE QUESTION BEFORE US IS WHETHER THE CAPITAL G AINS ON THE SALE OF SHARES SHOULD BE COMPUTED ON THE BAS IS OF THE AGREED PRICE OF RS.148/- PER SHARE OR ON THE BA SIS OF RS.414/- PER SHARE BEING THE VALUE ARRIVED AT ON TH E BASIS OF THE GUIDELINES BY THE CONTROLLER OF CAPITAL ISSU ES. AS PER SECTION 48 OF THE INCOME TAX ACT, 1961, THE CAP ITAL GAINS CAN BE COMPUTED ONLY BY TAKING THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET AND NOTHING MORE. TH ERE IS NO MATERIAL OR EVIDENCE REFERRED TO IN THE ASSESSME NT ORDER TO SHOW THAT THERE WAS ANY SUPPRESSION OF THE SALE PRICE OF RS.148/- PER SHARE. IN SUCH CIRCUMSTANCES , WHATEVER BE THE SURROUNDING CIRCUMSTANCES, THE SALE PRICE DECLARED BY THE ASSESSEE CANNOT BE DISTURBED. FURTHER, IT HAS BEEN HELD IN A SERIES OF JUDGMENTS OF THE SUPREME COURT THAT WHILE COMPUTING CAPITAL GAINS, I N THE ABSENCE OF ANY EVIDENCE TO SHOW UNDERSTATEMENT OF CONSIDERATION, ONLY THE ACTUAL PRICE RECEIVED BY TH E ASSESSEE CAN BE TREATED AS FULL VALUE OF THE CONSID ERATION AND NOTHING MORE; PLEASE SEE CIT VS. GEORGE HENDERSO N & CO. LTD. (1967) 66 ITR 622 (SC), K P VARGHESE VS. ITO (1981) 131 ITR 597 (SC) AND CIT VS. SHIVAKAMI CO. ( P) LTD. (1986) 159 ITR 71 (SC). IN ALL THESE CASES IT HAS BEEN HELD THAT THE COMPUTATION OF CAPITAL GAINS HAS TO PROCEED ONLY ON THE BASIS OF THE CONSIDERATION DECL ARED BY THE ASSESSEE, UNLESS THERE IS EVIDENCE OR MATERIAL TO SHOW SUPPRESSION OR UNDERSTATEMENT OF CONSIDERATION. RESPECTFULLY FOLLOWING THESE RULINGS, WE HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ENHANCING TH E ACTUAL SALE PRICE OF RS.148/- PER SHARE AND IN COMPUTING T HE CAPITAL GAINS ON THAT BASIS. 6. THE SURROUNDING CIRCUMSTANCES MENTIONED IN THE ORDERS OF THE DEPARTMENTAL AUTHORITIES ARE, FIRSTLY , THAT SOME FAMILY MEMBERS HAD ACQUIRED THE SHARES OF THE SAME COMPANY FROM ONE KAMRUDDIN BHANJI AT THE RATE OF RS.300/- PER SHARE IN MARCH 2005. THIS MAY GIVE RI SE TO ITA NO.3668 & 3638/M/09 A.Y:07-08 7 SUSPICION AND PROVOKE FURTHER ENQUIRY, BUT MERELY F OR THIS REASON ALONE THE AGREED PRICE OF RS.148/- PER SHARE CANNOT BE DISCARDED. IT IS ALSO STATED BEFORE US T HAT KAMRUDDIN BHANJI IS NOT RELATED TO ANY OF THE FAMIL Y MEMBERS AND HE HELD 118000 SHARES OF M/S DIMEXON DIAMONDS LIMITED, WHICH THE FAMILY MEMBERS WANTED T O ACQUIRE AT ANY COST, SO THAT THEY GAIN FULL CONTROL OVER THE COMPANY. THIS CONSIDERATION PERHAPS WEIGHED IN THE IR MIND WHEN THEY PAID RS.300/- PER SHARE. IN ANY CAS E, THERE IS NO ALLEGATION THAT THE ASSESSEE HIMSELF AC QUIRED THE SHARES AT RS.300/- PER SHARE IN MARCH 2005. TH E SECOND CIRCUMSTANCE, ACCORDING TO THE INCOME TAX AUTHORITIES, IS THAT THE ASSESSEE AS WELL AS THE CO MPANY TO WHICH HE SOLD THE SHARES ARE PART OF THE SAME GR OUP AND, THEREFORE, IT IS MEANINGLESS TO SAY THAT THE P RICE OF RS.148/- PER SHARE WAS AN AGREED PRICE. A LITTLE BACKGROUND HAS TO BE GIVEN HERE AS TO WHY THE ASSES SEE PARTED WITH THE SHARES. IT WOULD APPEAR THAT THERE WAS AN ORAL FAMILY ARRANGEMENT BETWEEN THE VARIOUS PERS ONS CONSTITUTING THE FAMILY, THE TERMS OF WHICH WERE RE CORDED IN A MEMORANDUM OF FAMILY ARRANGEMENT. THE CIRCUMSTANCES WHICH RESULTED IN THE FAMILY ARRANGEM ENT ARE THAT ON 19.12.2003, SMT MANIBEN MEHTA PASSED AW AY LEAVING A WILL DATED 30.10.1981. SHE HAD 4 SONS, O F WHICH THE ASSESSEE WAS ONE, AND ONE DAUGHTER. THER E AROSE DISAGREEMENT AND DISPUTES BETWEEN THE SONS NAMELY, THE ASSESSEE, HIS BROTHERS KAUSHIK AND PANK AJ MEHTA, AFTER THE DEATH OF THEIR MOTHER ON ACCOUNT O F ALLEGED UNEQUAL DISTRIBUTION OF THE ASSETS AND INCO ME OF THE MEHTA FAMILY. THERE WERE ALSO DISPUTES REGARDI NG DIFFERENT BUSINESSES CARRIED ON BY THE FAMILY INCLU DING DISPUTES AS TO BUSINESS POLICY ETC. THE DISPUTES, ACCORDING TO THE MEMORANDUM, HAD REACHED A POINT WHERE THE FAMILY RELATIONS WERE GETTING STRAINED AN D THE BUSINESSES ALSO SUFFERED. IT HAD BECOME IMPERATIVE THAT MATTERS RELATING TO OWNERSHIP OF PROPERTY AND INVES TMENT OF SHARES IN COMPANIES NEEDED TO BE SETTLED EITHER THROUGH A MEDIATOR OR AFTER INTERSE NEGOTIATIONS. IT WAS FELT THAT IF THE DISPUTES ARE TAKEN TO THE COURTS, A SUBSTANTIAL PART OF THE FAMILY ASSETS WILL BE SPENT IN WASTEFUL EXPENDITURE AND THERE WOULD ALSO BE ENORMO US DELAY WHICH WOULD BE DETRIMENTAL TO THE INTEREST OF THE FAMILY. THE FAMILY MEMBERS, THEREFORE, SAT AND CONDUCTED LONG NEGOTIATIONS AND DELIBERATIONS BETWE EN THEMSELVES AND ARRIVED AT AN ORAL FAMILY ARRANGEMEN T ON 15.03.2005 IN RESPECT OF SEVERAL IMMOVABLE PROPERTI ES, BUSINESS CONCERNS, SHARES OF LIMITED COMPANIES ALL OF WHICH WERE MENTIONED IN THE SCHEDULE TO THE ITA NO.3668 & 3638/M/09 A.Y:07-08 8 MEMORANDUM, A COPY OF WHICH IS PLACED AT PAGES 10 T O 43 OF THE PAPER BOOK. IT HAS BEEN CERTIFIED IN THE PA PER BOOK THAT THE MEMORANDUM RECORDING THE ORAL FAMILY ARRANGEMENT WAS FILED BEFORE THE ASSESSING OFFICER. THE VARIOUS TERMS AND CONDITIONS AND THE ACTUAL DISTRIB UTION OF THE FAMILY ASSETS AND BUSINESSES AMONGST THE 8 O R 9 FAMILY MEMBERS UNDER THE FAMILY ARRANGEMENT NEED NO T DETAIN US, BUT SUFFICE TO SAY THAT THE ASSESSEE HAD TO SELL THE SHARES HELD BY HIM IN M/S DIMEXON DIAMONDS LIMI TED TO THE COMPANY CALLED M/S PANKAJ K MEHTA INVESTMENT PRIVATE LIMITED, WHICH WAS ALSO A FAMILY CONCERN. THE GENUINENESS OR THE BONA FIDE OF THE FAMILY ARRANGEM ENT HAS NOT BEEN CALLED IN QUESTION BY THE DEPARTMENTAL AUTHORITIES. COURTS GIVE EFFECT TO A FAMILY SETTLE MENT UPON THE BROAD AND GENERAL GROUND THAT THE OBJECT I S TO SETTLE EXISTING AND FUTURE DISPUTES REGARDING PROPE RTY AMONGST THE MEMBERS OF THE FAMILY. THE CONSIDERATI ON FOR THE SETTLEMENT IS THE EXPECTATION THAT IT WILL RESULT IN ESTABLISHING AMITY AND GOODWILL AMONGST PERSONS BEA RING RELATIONSHIP WITH ONE ANOTHER. IT IS FOR THIS REAS ON THAT THE ASSESSEE SOLD THE SHARES AT RS.148/- PER SHARE AND SINCE THE SALE HAD TO BE MADE IN THE BACKGROUND OF THE FAMILY ARRANGEMENT, THE GENUINENESS OF THE SALE OR THE AUTHENTICITY OF THE SALE PRICE CANNOT BE CALLED IN QUESTION. THE FAMILY ARRANGEMENT IS A STRONG CIRCUMSTANCE IN FAVOUR OF THE VIEW THAT NOTHING MORE THAN RS.148/- PER SHARE WAS ACTUALLY RECEIVED BY THE ASSESSEE. THIS ASPECT HAS NOT RECEIVED THE TREATMENT WHICH IT DESERVED IN THE ORDERS OF THE DEPARTMENTAL AUTHORITIES. THIS IS WI THOUT PREJUDICE AND IN ADDITION TO THE LEGAL POSITION THA T IN THE ABSENCE OF ANY EVIDENCE OF UNDERSTATEMENT OR SUPPRESSION OF SALE CONSIDERATION, THE SALE PRICE D ECLARED BY THE ASSESSEE HAS TO BE ACCEPTED FOR THE PURPOSE OF SECTION 48. THIS ASPECT ALSO TAKES CARE OF THE STA TEMENT MADE IN THE ORDER OF THE CIT(A) THAT IT WAS THE DUT Y OF THE ASSESSEE TO PLACE MATERIAL OR EVIDENCE TO PROVE THAT THE VALUATION OF RS.148/- PER SHARE WAS HONESTLY DO NE IN GOOD FAITH AND IN A BONA FIDE MANNER. 7. IT IS ALSO SEEN THAT THE COMPANY M/S. PANKAJ K. MEHTA INVESTMENT PVT. LTD. TO WHOM THE ASSESSEE SOL D THE SHARES AT RS.148/- PER SHARE, IN TURN SOLD THE SHARES ON 30.10.2006 AT THE RATE OF RS.150/- PER SHARE. TH E CAPITAL GAINS WAS COMPUTED ACCORDINGLY IN THE RETUR N OF THE COMPANY FOR THE ASSESSMENT YEAR 2007-08 AS IS S EEN FROM THE COMPUTATION OF ITS TAXABLE INCOME PLACED A T PAGES 179 TO 182 OF THE PAPER BOOK, FILED AT OUR IN STANCE. THE CAPITAL GAINS AS DECLARED IN THE RETURN OF THE COMPANY ITA NO.3668 & 3638/M/09 A.Y:07-08 9 WAS ACCEPTED IN THE ASSESSMENT ORDER PASSED IN THE COMPANYS CASE UNDER SECTION 143(3) ON 17.11.2009. A COPY OF THE ASSESSMENT ORDER IS PLACED AT PAGES 167 TO 169 OF THE PAPER BOOK WHICH SHOWS THAT THE TOTAL IN COME DECLARED BY THE COMPANY IN THE RETURN INCLUDING THE CAPITAL GAINS, HAS BEEN ACCEPTED, THE ONLY ADJUSTME NT MADE BEING A DISALLOWANCE OF RS.4,47,496/- UNDER SE CTION 14A. THE SAME POSITION HOLDS GOOD IN THE CASE OF AN OTHER COMPANY BY NAME M/S.PARESH K.MEHTA INVESTMENT PVT. LTD. TO WHOM ALSO SHARE OF M/S.DIMEXON DIAMONDS LTD . WERE SOLD AT THE RATE OF RS.148/- PER SHARE. THIS C OMPANY IN TURN SOLD THE SHARES ON 30.10.2006 FOR RS.150/- PER SHARE AND DECLARED THE CAPITAL GAINS ACCORDINGLY IN ITS RETURN OF INCOME, COPY OF WHICH HAS BEEN PLACED AT PAGES 170 TO 174 OF THE PAPER BOOK. THE CAPITAL GAINS DE CLARED IN THE RETURN WAS ACCEPTED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) ON 17.11.2009. THESE FA CTS ALSO SHOW THAT THE CAPITAL GAINS IN THE ASSESSEES CASE HAVE TO BE COMPUTED ONLY ON THE BASIS OF THE AGREED PRICE OF RS.148/- PER SHARE, SINCE THE DEPARTMENT H AS ACCEPTED THE SALE PRICE OF RS.150/- PER SHARE IN TH E CASE OF THE ABOVE TWO COMPANIES. 8. FOR THE ABOVE REASONS WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE CAPITAL GAINS ON THE SALE OF THE SHARES OF M/S DIMEXON DIAMONDS LIMITED ON THE BASIS OF THE AGREED SALE PRICE OF RS.148/- PER SHARE. 8. THE ABOVE ORDER HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE GROUP CASES IN PANKAJ K. MEHTA AND OTHERS SUPRA. 9. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL SUPRA, AND KEEPING IN VIEW THE RULE OF CONSISTENCY HOLD THAT THE AO WAS NOT JUSTIFIED IN ENHANCING THE ACTUAL SALE PRICE OF RS.148/- PER SHARE AND IN COMPUTING THE CAPITAL GAINS ON THAT BASIS. ACCORDINGLY WE DIRECT THE AO TO COMPUTE THE CAPITAL GAINS ON SALE OF SH ARES OF M/S. ITA NO.3668 & 3638/M/09 A.Y:07-08 10 DIMEXON DIAMONDS LTD. ON THE BASIS OF THE AGREED SALE PRICE OF RS.148/- PER SHARE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE, ALLOWED AND THE GROUNDS TAKEN BY THE REVENUE ARE REJ ECTED 10. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLOWED AN D THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8.4.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 8.4.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 1.4.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 1.4.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 8.4.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 12.4.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER