DCIT, New Delhi V. M/s. Sabita HealthCare Pvt. Ltd., New Delhi

ITA 4179/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2966 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Section: 143(3)

Judgement Text

1 ITA NO. 4179/ DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 4179/DEL/201 4 ( A.Y 2010-11) DCIT CIRCLE-7(1) NEW DELHI (APPELLANT) VS SABITA HEALTH CARE PVT. LTD. 10-B, K. G. MARG, CONNAUGHT PLACE NEW DELHI AAICS4602D (RESPONDENT) APPELLANT BY SH. KAUSHLENDRA TIWARI, SR. DR RESPONDENT BY SH. PRADEEP DINODIA, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER DATED 09/05/2014 PASSED BY CIT(A)-X, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.53,40,681/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXPENS ES INCURRED ON TRANSFER OF SHARES. 3. THE ASSESSEE FILED RETURN OF INCOME DECLARING IN COME OF RS.3,53,64,791/- DATE OF HEARING 07.03.2018 DATE OF PRONOUNCEMENT 14.03.2018 2 ITA NO. 4179/ DEL/2014 ON 28.02.2013. THE ASSESSMENT U/S 143(3) WAS COMPL ETED BY THE ASSESSING OFFICER AT AN INCOME OF RS.4,08,82,560/- BY MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES: (I) DISALLOWANCE OF EXPENSES ON TRANSFER RS.53,40, 681/- (II) DISALLOWANCE OF LONG TERM CAPITAL LOSS BROUGHT FORWARD IN ABSENCE OF EVIDEN CE. RS. 1,77,083/- 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE A SSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT(A) WAS NOT COR RECT IN DELETING THE ADDITION OF RS.53,40,681/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF EXPENSES INCURRED ON TRANSFER OF SHARES. 6. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER:- ON CONSIDERING THE FACTS OF THE CASE AND PERUSAL O F THE DOCUMENTS FILED BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS, IT IS OBSERVED THAT 7 SHAREHOLDERS OF M/S DIWAN CHAND MEDICAL SERVICES PV T. LTD. HAD ENGAGED THE PROFESSIONAL FIRMS M/S BMR ADVISORS AND M/S LUT HRA & LUTHRA FOR SEARCHING THE SUITABLE BUYERS OF SHARES AND EXECUTE THE NECESSARY FORMALITIES IN THIS RESPECT. CONSEQUENT TO IT THE APPELLANT COM PANY GOT ENTERED INTO AN AGREEMENT WITH M/S AVB FINANCE PVT. LTD. FOR THE SA LE OF SHARES DURING THE YEAR. IN CONNECTION WITH SUCH TRANSACTION ONLY THE SERVICES OF M/S BMR ADVISORS AND M/S LUTHRA &. LUTHRA LAW OFFICE WERE U NDERTAKEN BY THE SHAREHOLDERS AND EXPENSES RELATING TO THEM WERE PRO PORTIONATELY CLAIMED BY THE SHAREHOLDERS WHILE GAINS ON SUCH TRANSFER. IT I S OBSERVED THAT THE APPELLANT BEING ONE OF THE SHAREHOLDERS HAD SOLD 91 ,128 SHARES OUT OF 3 ITA NO. 4179/ DEL/2014 TOTAL POSSESSION OF 1,19,905 SHARES BY M/S DIWAN CH AND MEDICAL SERVICES PVT. LTD. AND THE CONSEQUENTIAL CAPITAL GA IN HAS BEEN SHOWN DURING THE YEAR. THE APPELLANT IS ENTITLED FOR DEDUCTION O F EXPENSES WHOLLY AND EXCLUSIVELY INCURRED IN CONNECTION WITH SUCH TRANSF ER. THE OBJECTIONS / OBSERVATIONS MADE BY THE A.O. ON THE INVOICES RAISE D BY M/S BMR ADVISORS AND M/S LUTHRA & LUTHRA LAW OFFICE ARE NOT BASED ON THE PROPER APPRECIATION OF THE FACTS. THERE IS NO LEGAL REQUIREMENT THAT WH ILE THE AGREEMENT OF TRANSFER BETWEEN SELLER AND PURCHASER SHOULD CONTAIN THE NAM ES OF THE ADVISORS / SERVICE PROVIDERS ENGAGED BY EACH ONE OF THEM IN CO NNECTION WITH SUCH TRANSFER. SIMILARLY, IT IS NOT NECESSARY THAT THE I NVOICES RAISED BY THE SERVICE PROVIDER SHOULD ALSO MENTION THE DETAILS OF AGREEME NT TO TRANSFER OF SHARES. SIMILARLY, IF THE APPELLANT HAS NOT MADE PAYMENT TO THE AUDITORS WHO HAD DONE THE VALUATION AND FOR WHICH IT HAS EXPLAINED T HE REASONS OF OLD FRIENDSHIP WITH THE DIRECTOR OF THE COMPANY, THIS C ANNOT BE MADE A GROUND THAT CLAIM OF THE APPELLANT WAS WRONG. IT APPEARS T HAT THE A.O. WAS SWAYED BY THE FACT THAT THE INVOICES RAISED BY THESE PROFE SSIONALS WERE AFTER THE END OF THE FINANCIAL YEAR AND, THEREFORE, THE SERVICES RENDERED BY THEM WAS NOT GENUINE. HOWEVER, SUCH PRESUMPTION ON THE PART OF T HE A.O. IS NOT JUSTIFIED IN VIEW OF THE SERIES OF EVIDENCES PRODUCED BY THE APP ELLANT BEFORE HIM. THE APPELLANT IS ENTITLED TO CLAIM THE EXPENSES WHOLLY AND EXCLUSIVELY INCURRED BY IT IN CONNECTION WITH THE TRANSFER OF SHARES U/S 48 (1) OF THE ACT AND SUCH CLAIM OF THE APPELLANT IS IRRESPECTIVE OF THE PERIOD RELA TABLE TO THE YEAR AS HELD BY THE HON'BLE COURT IN THE CASE OF CIT VS. ROHTAK TEX TILE MILLS LTD. (SUPRA). IN VIEW OF THE ABOVE, THE CLAIM OF EXPENDITURE OF RS.5 3,40,681/- MADE BY THE APPELLANT WHILE COMPUTING THE CAPITAL GAINS ON TRAN SFER OF SHARES IS JUSTIFIED. THE AO'S ACTION IN DISALLOWING SUCH A CLAIM IS NOT JUSTIFIED AND ADDITION MADE BY HIM ON THIS ACCOUNT IS DIRECTED TO BE DELETED. G ROUNDS NO. L & 2 OF APPEAL ARE ALLOWED. THUS, THE CIT(A) HAS GIVEN A DETAILED FINDING AFTER DISCUSSING EACH AND EVERY DOCUMENTS/EVIDENCE. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE ORDER OF 4 ITA NO. 4179/ DEL/2014 THE CIT(A). THE APPEAL OF REVENUE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH MARCH, 2018 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 14/03/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 4179/ DEL/2014 DATE 1. DRAFT DICTATED ON 08/03/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 09/03/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14.03.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 4 .03.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.