THE DCIT 1(2), MUMBAI V. M/S. PRIMO ENTERPRISES PVT. LTD, MUMBAI

ITA 4214/MUM/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8273 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 04-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Keywords: Business income; Additional evidence; Cost of acquisition; Wholly owned subsidiary

Judgement Text

ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.4214/MUM/2007 (ASSESSMENT YEAR: 2004-05) DY. COMMISSIONER OF INCOME TAX, 1(2), ROOM NO.535, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400020 VS. M/S PRIMO ENTERPRISES PVT. LTD., C/O HINDUSTAN DORR OLIVER LTD., INTERNATIONAL 5 TH FLOOR, NEW MARINE LINES X ROAD NO.1 CHURCHGATE, MUMBAI 400020 PAN: AACCP 5588 R (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI A.C. TEJPAL, CIT(DR) ASSESSEE BY: SHRI J.D.MISTRY/A.T.JAIN/ MAHESH O. RAJORA DATE OF HEARING: 03/10/2012 DATE OF PRONOUNCEMENT: 07/11/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDER OF THE CIT (A)-1 MUMBAI, DATED 29.03.2007. THE REVENUE HAS RAISED TH E FOLLOWING TWO GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING T HE ADDITION OF ` .298 CRORES RECEIVED BY TRANSFER OF ` .18,26,505/- SHARES TO M/S. MYSORE BREWERIES LTD AS INCOME FROM ADVENTURE IN THE NATURE OF TRADE OR BUSINESS AND HOLDNG THAT RECEIPT IS TAXABLE AS L ONG TERM CAPITAL GAIN. 2. THE LEARNED CIT (A) FURTHER ERRED IN ADMITTING F RESH EVIDENCE IN CONTRAVENTION OF RULE 46A WITHOUT GIVIN G AN OPPORTUNITY TO AO FOR CROSS EXAMINATION. ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 2 OF 10 2. THE ISSUE FOR CONSIDERATION IN THE APPEAL IS WHETHE R THE INCOME DECLARED BY ASSESSEE ON SALE OF SHARES IS TO BE ASSESSED AS LONG TERM CAPITAL GAIN AS DECLARED BY ASSESSEE OR A S BUSINESS INCOME (ADVENTURE IN THE NATURE OF TRADE) AS HELD B Y AO BUT NOT ACCEPTED BY THE CIT (A). 3. BRIEFLY STATED, ASSESSEE WAS INCORPORATED ON 15.05. 2002 AS A 100% SUBSIDIARY OF PRIMO DISTRIBUTORS PVT. LTD (PDP L). THE ASSESSEE COMPANY IS ONE OF THE GROUP CONCERNS OF M/S SHAW WA LLACE COMPANY LTD (SWCL). PURSUANT TO THE SCHEME OF REARR ANGEMENT IN NOVEMBER 2000, THERE WAS A SHAREHOLDERS AGREEMENT BETWEEN JUMBO WORLD HOLDINGS LTD (JWHL) AND SWCL ACCORDING TO WHICH JWHL, A MAJOR SHAREHOLDER OF SWCL SHALL THROUGH ITS NOMINEE ACQUIRE EQUITY IN SUBSIDIARIES OF SWCL. SWCL HAD TW O SUBSIDIARIES I.E. SHAW WALLACE DISTILLERIES LTD (SWDL) AND SHAW WALLACE BREWERIES LTD (SWBL). THE ARTICLES OF ASSOCIATION O F SWBL AND SWDL WERE AMENDED TO GIVE POWERS TO JWHL OR ITS NOM INEES TO HAVE OPTION TO SUBSCRIBE TO THE SHARES OF SWDL/SWBL UPTO 26% OF THE POST-ISSUE CAPITAL AT A FAIR PRICE THROUGH ISSU E OF EQUITY SHARES OR EQUIVALENT SHARE WARRANTS OR CONVERTIBLE PREFERE NCE AT A PRICE TO BE MUTUALLY AGREED. PURSUANT TO THE SHAREHOLDERS A GREEMENT JWHL THROUGH ONE OF ITS NOMINEE COMPANY M/S PRIMO D ISTRIBUTORS PVT. LTD (PDPL) EXERCISED ITS OPTION AND SUBSCRIBED TO 12,34,122 SHARES WARRANTS OF ` .1.00 EACH OF SWBL AND 29,81,568 SHARES WARRANTS OF ` .1.00 EACH OF SWDL. THE CONSIDERATION FOR ACQUIRING THESE WARRANTS OF SWBL AGGREGATING TO ` .12,34,122/- WAS ADJUSTED AGAINST THE DEPOSITS OF PDPL LYING WITH SWBL. THESE WARRANTS ENTITLED THE HOLDER I.E. PDPL TO SUBSCRIBE TO EQUIT Y SHARES ` .10.00 EACH OF THE RESPECTIVE COMPANIES I.E. SWBL AND SWDL WITHIN A PERIOD OF 18 MONTHS FROM THE DATE OF ISSUE OF WARRA NTS. PDPL THEREAFTER VIDE LETTER DATED 23.10.2001 OPTED TO SU BSCRIBE TO THE ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 3 OF 10 EQUITY SHARES OF SWBL AGAINST THE SAID SHARE WARRAN TS. PDPL ALSO REQUESTED IN THE SAID LETTER TO ADJUST THE BALANCE CONSIDERATION OF ` .1,11,07,098/- (1,23,41,220 12,34,122) AGAINST TH E ICD OF ` .1.25 CRORES PLACED BY PDPL WITH THEM. THEREAFTER SWBL AL SO ISSUED 592,383 SHARES OF ` .10.00 EACH AS RIGHT SHARES TO PDPL. HENCE PDPL AS A NOMINEE OF JWHL WAS HOLDING 26% EQUITY SH ARES OF SWBL. THE SHAREHOLDING POSITION OF JWHL, SWCL, SWDL , SWBL, PDPL AND ASSESSEE IS SHOWN BY WAY OF A DIAGRAMMATIC CHART AS UNDER: HOLDING STRUCTURE PRIOR TO DEMERGER OF BEER BUSINES S AND BEER INVESTMENTS OF PDPL: 100% 100% -54% 100% 100% 74% 26% 100% 74% 26% DIRECT HOLDING DIRECT+ INDIRECT HOLDING 4. THERE WAS A SCHEME OF ARRANGEMENT BETWEEN PDPL AND ASSESSEE WHEREIN IT WAS DECIDED TO DEMERGE THE BEER BUSINESS AND INVESTMENTS IN BEER COMPANIES OF PDPL I.E. SWBL AND TRANSFER IT TO JWHL BVI AML MAURITIUS M & P II MAURITIUS SHAW WALLACE (SWCL) INDIA PDPL INDIA SHAW WALLACE DISTILLERIES (SWDL) INDIA SHAW WALLACE BREWERIES (SWBL) INDIA PEPL INDIA ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 4 OF 10 ASSESSEE. THE SCHEME OF ARRANGEMENT WAS APPROVED BY THE HIGH COURT OF BOMBAY VIDE ITS ORDER DT. 01.08.2002 WHERE IN THE HIGH COURT APPROVED THE SAID SCHEME OF ARRANGEMENT W.E.F . 15.05.2002. PURSUANT TO SUCH ORDER THE BEER BUSINESS ALONG WITH ALL THE INVESTMENTS IN BEER COMPANIES WERE TRANSFERRED TO A SSESSEE BY PDPL. THE SHARES OF SWBL HELD BY PDPL WERE ALSO TRA NSFERRED TO ASSESSEE IN THE SAME SCHEME OF ARRANGEMENT. NECESSA RY ENTRIES WERE PASSED IN THE ACCOUNTS OF ASSESSEE TO GIVE EFF ECT TO DEMERGER OF BEER BUSINESS. 5. DURING THE YEAR UNDER CONSIDERATION ASSESSEE SOLD S HARES OF SHAW WALLACE BREWERIES LIMITED (SWBL) TO MYSORE BRA VERIES LTD, AN INDIAN SUBSIDIARY OF SAB MILLER, SOUTH AFRICA AND D ECLARED LONG TERM CAPITAL GAIN OF ` .187,06,52,136/- AFTER CLAIMING EXEMPTION UNDER SECTION 54EC OF THE ACT BY PURCHASING BONDS AMOUNTI NG TO ` .108,00,00,000/-. THE COMPUTATION OF LONG TERM CAP ITAL GAIN IS GIVEN AS UNDER: S.NO PARTICULARS AMOUNT( ` `` ` .) 1 SALE OF 1,23,41,222 EQUITY SHARES OF SWBL DATE OF SALE: MAY 21, 2003 200,66,30,000 LESS: INDEXED COST OF ACQUISITION (12341220 X 463/447) DATE OF ACQUISITION: MAY 15, 2002 (1,27,82,964) LESS: EXPENSES IN CONNECTION WITH SALE OF SHARES (STAMP DUTY ` .100362 + STAMP PAPER 400 + NOTARIZATION CHARGES ` .2110/-) (1,02,872) ----------------- 199,37,44,164 LESS: DEDUCTION U/S 54EC (108,00,00,000) LONG TERM CAPITAL GAINS- (A) 91,37,44 ,164 2 SALE OF 5,92,383 EQUITY SHARES OF SWBL 96,31,90,0 00 DATE OF SALE: JUNE 25, 2003 LESS: INDEXED COST OF ACQUISITION (61,35,869) ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 5 OF 10 (5923830 X 463/447) DATE OF ACQUISITION: JUNE 16, 2002 LESS: EXPENSES IN CONNECTION WITH SALE OF SHARES (STAMP DUTY ` .48659+SAFE CUSTODY CHARGES 67,500 + CONSULTANTS FEES ` .30,000/-) (1,46,159) LONG TERM CAPITAL GAINS - (B) 95,69 ,07,972 TOTAL LONG TERM CAPITAL GAINS (A+B) 187,06,52,136 6. AO TREATED THE TRANSACTION OF SALE OF SHARES GIVING RISE TO LONG TERM CAPITAL GAINS AS AN ADVENTURE IN THE NATURE OF TRADE AND TAXED THE ENTIRE SALE CONSIDERATION ON SALE OF SHAR ES OF ` .295,06,52,136/- (199,37,44,164 + 95,69,07,972) AS BUSINESS INCOME. AO HAS TREATED THE SAID TRANSACTION AS ADVE NTURE IN NATURE OF TRADE MAINLY ON THE FOLLOWING GROUNDS:- A) ASSESSEE IS A DEALER IN SHARES AS PER MEMORANDUM OF ASSOCIATION. B) ASSESSEE HAS NOT PAID ANY CONSIDERATION FOR ACQUIRI NG THE SHARES OF SWBL. THE ENTIRE CONSIDERATION WAS PAID B Y PDPL BY WAY OF INTERNAL TRANSFER. C) ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THA T SHARES ARE TRANSFERRED FROM PDPL TO PEPL. D) THE AGREEMENT DT. 21.05.2003 AND THE ANNEXURE TO TH E SAID AGREEMENT EXECUTED BETWEEN ASSESSEE AND THE BU YER COMPANY I.E. MYSORE BREWERIES LTD STATES ABOUT PERFORMANCE BASED INCREASE IN SALE CONSIDERATION WH ICH IS TOTALLY UNCOMMON AND UNUSUAL IN CASE OF AN INVESTOR . THIS SORT OF ARRANGEMENT GIVE RISE TO EXTRA ELEMENT OF P ROFIT WHICH ONLY TAKES PLACE IN CASE OF DEALER IN SHARES AND NOT IN CASE OF AN INVESTOR. ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 6 OF 10 E) BOOK ENTRIES ARE NOT DECISIVE AND HENCE THE FACT TH AT ASSESSEE HAS SHOWN THE SHARES AS INVESTMENT IS NOT MATERIAL TO DECIDE WHETHER ASSESSEE IS A DEALER IN SHARES. F) THE SCHEME OF ARRANGEMENT AS APPROVED BY HIGH COURT IS ONLY ON PAPER AND NOT IN REALITY AND HENCE THE PROC ESS OF EXECUTION OF DEMERGER IS NOT FREE FROM SUSPICION AS THERE WAS NO TRANSFER OF BEER BUSINESS TO ASSESSEE. IN VIEW OF THE ABOVE FINDINGS RECORDED BY AO, IN HI S ELABORATELY DISCUSSED ORDER HE REACHED TO THE CONCLUSION THAT T HE GAIN REALIZED ON SALE OF SHARES OF SWBL REPRESENTS PROFIT FROM AD VENTURE IN THE NATURE OF TRADE AND NOT FROM INVESTMENT AS CLAIMED BY ASSESSEE. 7. BEFORE THE CIT (A), ASSESSEE SUBMITTED THAT AO HAS MADE SEVERAL INCORRECT/IRRELEVANT/SELF CONTRADICTORY STA TEMENTS/ OBSERVATIONS IN THE ASSESSMENT ORDER TO DRAW CONCLU SION THAT ARE PRE-MEDIATED. ASSESSEE SUBMITTED THE DETAILS WHICH WERE EXTRACTED BY THE CIT (A) IN PAGE 6 ONWARDS. 8. AFTER CONSIDERING ASSESSEES DETAILED SUBMISSIONS A ND EXAMINING THE FACTS ON RECORD AND LAW ON THE ISSUE, THE CIT (A) VIDE HIS DETAILED ORDER RUNNING TO 42 PAGES CONSIDERED T HAT ASSESSEES INCOME ON SALE OF SHARES HAS TO BE TAXED AS LONG TE RM CAPITAL GAIN AND NOT AS BUSINESS INCOME. HE HAS REBUTTED EACH OF THE CONTENTIONS RAISED BY AO IN THE ORDER PARA-WISE VID E HIS DETAILED REASONING IN PARA 8.3. ULTIMATELY HE HAS CONCLUDED AS UNDER: 8.4 I HAVE CAREFULLY CONSIDERED THE JUDGMENTS RELI ED UPON BY AO AND THE APPELLANT. THE JUDGMENT RELIED U PON BY AO/APPELLANT ARE MAINLY ON THE PROFIT MOTIVE O N THE OCCASION OF ACQUISITION OF SHARES AS ADVENTURE IN THE NATURE OF TRADE. THIS MOTIVE IS NOT BORN OUT FROM T HE FACTS OF THE CASE AS THE APPELLANT GOT 18,26,505 EQUITY S HARES AS A RESULT OF DEMERGER OF THE ENTIRE BEER DISTRIBU TION BUSINESS OF PDPL TO ITS 100% SUBSIDIARY (THE APPELL ANT) UNDER THE SCHEME AS SANCTIONED BY THE HON'BLE BOMBA Y ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 7 OF 10 HIGH COURT. THUS, THE SHARES WERE NOT ACQUIRED BY T HE APPELLANT WITH PROFIT MOTIVE. THE APPELLANT ACQUIRE D THE ENTIRE BEER BUSINESS UNDER THE SCHEME SANCTIONED BY THE HON'BLE HIGH COURT. THE APPELLANT DID NOT PURCHASE 18,26,505 EQUITY SHARES OF SWBL WITH THE MOTIVE TO EARN PROFIT. NO MOTIVE OF PROFIT CAN BE ATTRIBUTED FROM THE ABOVE FACTS OF THE CASE AND HENCE THE TRANSACTION C ANNOT BE SAID AS ADVENTURE IN THE NATURE OF TRADE. (A) THE APPELLANT DID NOT PURCHASE 18,26,505 EQUITY SHARES OF SWBL AND HENCE THE APPELLANT DID NOT PAY ANY CONSIDERATION FOR THE ABOVE SHARES SEPARATELY T O PDPL AS THE SAME WERE ALLOTTED TO THE APPELLANT (PEPL) IN ACCORDANCE WITH THE SANCTIONED SCHEME TO TRANSFER THE ENTIRE ASSETS/LIABILITIES INCLUDING TH OSE OF EMPLOYEES OF THEIR PRESENT AND PAST SERVICES OF BEE R BUSINESS AS A GOING CONCERN TO THE APPELLANT BY THE PDPL (TRANSFEROR). (B) AFTER A FEW MONTHS OF THE ACQUISITION OF THE ABOVE GOING BEER BUSINESS, THE APPELLANT WAS NOT SUCCESSFUL TO OBTAIN REQUISITE LICENSES FROM THE GO VT. AUTHORITIES TO CONTINUE THE NEWLY ACQUIRED BEER BUSINESS. CONSEQUENTLY IT WAS COMPELLED TO REVERT BACK THE SAID BUSINESS TO PDPL. THIS REVERSION DID NOT INFRINGE ANY LAW OF THE COUNTRY AS IT IS PERMISSIBLE UNDER THE COMPANIES ACT. (C) THE APPELLANT MAINTAINED ITS REGULAR BOOKS OF ACCOU NT OF ITS BEER BUSINESS AND DULY DECLARED THE PROFIT F ROM ITS BEER BUSINESS AT ` .6,54,78,073/- AS PER THE AUDITED ACCOUNTS CONFIRMING THE ACQUISITION OF THE BEER BUSINESS. THERE DOES NOT APPEAR ANY COLOURFUL DEVICE HAVING BEEN USED BY THE APPELLANT AS THIS SALE WOULD HAVE GENERATED THE SAME AMOUNT OF LONG TERM CAPITAL GAIN S IF THESE SHARES WOULD HAVE BEEN SOLD BY PDPL, INSTEAD OF THE APPELLANT (PEPL) WHICH CANNOT TAKE AWAY ITS WEALTH OUTSIDE THE COUNTRY WITHOUT THE COMPLIANCE OF RBI REGULATIONS. HENCE THERE WOULD HAVE BEEN NO NEED TO FILE THE PETITION BEFORE THE HON'BLE HIGH COURT FOR THE SANCTION OF THE DEMERGER SCHEME AS PROPOSED BY THE BOARD OF DIRECTORS OF BOT H THE TRANSFEROR AND TRANSFEREE COMPANIES. THEREFORE, EVEN UNVEILING OF THE CORPORATE VEIL TO TREAT THE P EPL AS PAPER TIGER DOES NOT ALTER THE APPARENT FACTS OF THE CASE. THUS, THE ASSESSMENT OF ENTIRE SALE PROCEEDS AS ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 8 OF 10 PROFIT FROM ADVENTURE IN THE NATURE OF TRADE IS TOT ALLY AGAINST THE FACTS OF THE CASE AND LAW. (D) THE APPELLANT DISCLOSED ITS FULL FACTS WHICH HAVE N OT BEEN CORRECTLY APPRECIATED BY AO TO ACCEPT THE APPELLANTS CLAIM OF THE LONG TERM CAPITAL GAIN AS AVAILABLE TO THE APPELLANT AS PER THE PROVISIONS OF INCOME TAX ACT, 1961 MERELY DUE TO ABNORMALLY HIGH PROFIT ON SALE OF ABOVE SHARE. SUCH ABNORMAL PROFIT S ARE ALWAYS POSSIBLE WHEN CORPORATE SECTOR WAS AGGRESSIVELY ENGAGED IN AMALGAMATION AND DEMERGER OF COMPANIES IN A FREE ECONOMY PARTICULARLY IN THE BEER BUSINESS. THEREFORE, THIS SOLE CRITERION OF ABNORMAL PROFITS CANNOT LEAD TO CONCLUDE THAT THE SALE OF ASSET WAS AN ADVENTURE IN THE NATURE OF TRADE. IN FACT THE APPELLANT WAS HUGELY BENEFITED BY THE INTENSE COMPETITION BETWEEN SAB, SOUTH AFRICA GROUP AND JUMBO WORLD HOLDINGS LTD, DUBAI GROUP TO CONTROL THE BEER BUSINESS OF THIS COUNTRY. THEREFORE, NO ADVERSE MOTIVE TO EARN PROFIT FROM SA LE OF ABOVE SHARES CAN BE ATTRIBUTED FROM THE GIVEN FA CTS OF THE CASE. HENCE THE TRANSACTION CANNOT BE SAID A S ADVENTURE IN THE NATURE OF TRADE. ACCORDINGLY THE GROUND OF APPEAL IS ALLOWED. FOR STATISTICAL PURPOSE, THE APPEAL IS ALLOWED. 9. REVENUE IS AGGRIEVED AND RAISED THE GROUNDS. 10. WE HAVE HEARD THE LEARNED DR AND THE LEARNED COUNSE L IN DETAIL, THE FACTS WERE EXPLAINED AND THE ORDER OF A O AND THE CIT(A) WERE RELIED UPON TO SUPPORT RESPECTIVE CONTENTIONS. WITH REFERENCE TO THE GROUND NO.2 WE DO NOT SEE ANY ADDITIONAL EVI DENCE BEING ADMITTED BY THE CIT (A), NOR THE DR WAS ABLE TO POI NT OUT ANY ADDITIONAL EVIDENCE BEING ENTERTAINED BY THE CIT (A ) WITHOUT GIVING OPPORTUNITY TO AO. THEREFORE, GROUND NO.2 AS RAISED BY THE REVENUE DOES NOT ARISE OUT OF THE ORDER OF THE CIT (A). ACCORDINGLY, GROUND NO.2 IS DISMISSED. 11. WITH REFERENCE TO THE GROUND NO.1 TREATMENT OF GAIN EARNED ON SALE OF SHARES IS THE MAIN CONTENTIOUS ISSUE. AF TER GOING THROUGH THE DETAILED ORDERS OF BOTH THE AUTHORITIES, WE ARE IN AGREEMENT WITH ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 9 OF 10 THE ORDER PASSED BY THE CIT (A). AS RIGHTLY POINTED OUT BY THE CIT (A), ASSESSEE IS NOT A DEALER IN SHARES AND HAS ACQ UIRED SHARES CONSEQUENT TO THE RE-ORGANIZATION OF THE BUSINESS A S PER THE TERMS APPROVED BY THE HON'BLE BOMBAY HIGH COURT AND AS TH E ENTIRE GROUP WAS GETTING REORGANIZED AND FOREIGN INVESTOR WAS ACQUIRING THE CONTROLLING INTEREST IN THE PART OF GROUP BUSIN ESS, THE SHARES WERE SOLD TO M/S MYSORE BREWERIES LTD. SINCE THE AB NORMAL PROFIT AS CONSIDERED BY AO AROSE IN THE PECULIAR CIRCUMSTA NCES OF THE CASE, IT CANNOT BE CONSIDERED THAT THE REALIZATION OF PROFIT CAN BE CONSIDERED AS ADVENTURE IN NATURE OF TRADE. ASSESSE E CONTINUED TO HAVE ITS BEER BUSINESS AND INCOME FROM BEER BUSINES S OF ` .6.54 CRORES WAS ALSO OFFERED. AS RIGHTLY POINTED OUT BY THE CIT (A), IF ASSESSEES ACQUISITION OF SHARES IS NOT TO BE ACCEP TED THEN THE SHARES ARE TO BE CONSIDERED AS HELD BY THE HOLDING COMPANY M/S PDPL AND IN ITS HANDS THE INCOME WOULD HAVE BEEN CA PITAL GAIN AGAIN. IN VIEW OF THIS, WE UPHOLD THE FINDINGS OF T HE CIT (A) ON THIS ISSUE. 12. DURING THE PROCEEDINGS THE QUESTION WAS SPECIFICALL Y RAISED ABOUT THE ACTION TAKEN IN THE PRINCIPLE COMPANY I.E . SHAW WALLACE COMPANY LTD, AS AO NOTED THAT THE ENTIRE INCOME HAS TO BE CONSIDERED AS INCOME OF SWCL SUBSTANTIALLY AND IN C ASE IT WAS UPHELD, THE ORDER IN ASSESSEES CASE WILL BE MODIFI ED ACCORDINGLY. NOTHING WAS KEPT ON RECORD TO INFORM THE CONSEQUENC ES OF THE ABOVE OBSERVATION. THEREFORE, ON THE FACTS OF THE CASE WE UPHOLD THE ORDER OF THE CIT (A). 13. BOTH THE PARTIES RELIED ON VARIOUS CASE LAW TO JUST IFY THE STAND TAKEN BY THEM RESPECTIVELY. THERE IS NO NEED TO DIS CUSS THE CASE LAW AGAIN AS THESE WERE CONSIDERED BY THE LEARNED CIT ( A) IN DETAIL IN THE ORDER WITH WHICH WE AGREE. GROUND NO.1 IS ACCOR DINGLY REJECTED. ITA NO.4214 OF 2007 PRIMO ENTERPRISES PVT LTD MUMBA I PAGE 10 OF 10 14. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2012. SD/- SD/- ( D.K.AGARWAL ) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 7 TH NOVEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI