Sh. Madhusudan Lal Nanda. Prop., Noida V. ITO, New Delhi

ITA 4799/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91017 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA
• Assessee Lawyers: M L NANDA
• Keywords: Capital asset; Opportunity of being heard
• Section: 56(2); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E, NEW DELHI) BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 4799/DEL/2011 ASSESSMENT YEAR : 2008-09 MADHUSUDANLAL NANDA PROP. VS. ITO, WARD 30(1), D-110, SECTOR 26, NEW DELHI GAUTAM BUDH NAGAR, NOIDA GIR / PAN:AABPN8378D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.L. NANDA, ASSESSEE RESPONDENT BY : SHRI P DAM KANUNJHA, SR. DR DATE OF HEARING : 18.03.2015 DATE OF PRONOUNCEMENT : 08.05.2015 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FIELD BY ASSESSEE AGAINST THE OR DER OF LD. CIT(A) DATED 16.09.2011. THE ASSESSEE HAS RAISED LEGAL GR OUND REGARDING NON SERVICE OF NOTICE U/S 143(2) WITHIN THE PRESCRIBED PERIOD AND HAS ALSO TAKEN A GROUND OF APPEAL REGARDING ACTION OF LD. CIT(A) BY WHICH HE HAD UPHELD THE ADDITION MADE BY A.O. AMOUNTING TO RS.44 LACS. AS PER THE RECORDS AVAILABLE, THE AMOUNT WAS RECEIVED FROM DELHI STOCK EXCHANGE ON ACCOUNT OF DEMUTUALIZATION OF STOCK EXCHANGE. THE ASSESSEE REPRESENTED HIMSELF FOR ARGUMENTS IN HIS CASE. BEFORE LD. CIT(A) ALSO, THE ASSESSEE APPEARED IN PERSON. THE ASSESSEE HAS BEEN ARGUING BEFORE LD. CI T(A) AND BEFORE US ALSO THAT THERE WAS NO SERVICE OF NOTICE U/S 143(2) AND ON MERITS, THE ASSESSEE ITA NO.4799/DEL/2011 2 ARGUED THAT THE AMOUNT WAS RECEIVED ON ACCOUNT OF D EMUTUALIZATION OF DELHI STOCK EXCHANGE WHICH WAS A CHARITABLE ASSOCIATION A ND THEREFORE, THE RECEIPT DID NOT CONSTITUTE LONG TERM CAPITAL GAIN. HOWEVER , LD. CIT(A) HAS REJECTED THE GROUND REGARDING SERVICE OF NOTICE BY HOLDING A S UNDER: 4.2. THE ASSESSEE IS IN APPEAL AGAINST THE ISSUE O F NOTICE U/S 143(2) AND IT IS SUBMITTED THAT THE AO IS NOT JUSTIFIED TO MAKE THE ASSESSMENT AS THE NOTICE WAS ISSUED BEYOND THE PERIOD OF 12 MO NTHS. 4.3. THE SUBMISSION OF THE ASSESSEE WAS FORWARDED T O THE AO AND A REMAND REPORT DATED 0110812011 HAS BEEN FORWARDED B Y THE ADDL. CIT RANGE-30, NEW DELHI VIDE THE LETTER DATED 01/08 /2011. IT IS SUBMITTED BY THE AO THAT THE ASSESSEE HAD FILED THE RETURN ON 25/07/2008 AND AS SUCH THE AO WAS JUSTIFIED TO ISSU E THE NOTICE BY THE END OF SEPTEMBER 2009 AS PROVIDED IN THE PROVISO U/ S 143(2). IT IS SUBMITTED THAT AS PER THE AMENDED PROVISIONS OF THE PROVISO U/S 143(2) W.E.F. 01/04/2008. THE AO IS ENTITLED TO ISSUE THE NOTICE WITHIN SIX MONTHS FROM THE END OF THE FY IN WHICH THE RETURN I S FILED. 4.4. I HAVE CONSIDERED THE ORDER OF THE AO, REMAND REPORT OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I DO NOT FI ND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE. THE PROVISIONS OF SECTI ON 143(2) HAS BEEN AMENDED W.E.F. 01/04/2008 AND IT HAS BEEN PROVIDED THAT THE NOTICE COULD BE ISSUED WITHIN SIX MONTHS FROM THE END OF T HE FY IN WHICH THE RETURN IS FILED. IN THE PRESENT CASE, THE ASSESSEE HAS FILED THE RETURN ON 25/07/2008 AND AS SUCH THE AO IS ENTITLED TO ISSUE THE NOTICE U/S 143(2) BY 30/09/2009 AND THE AO HAS ISSUED THE NOTI CE WITHIN TIME ON 24/09/2009. 4.5. THE HON'BLE DELHI TRIBUNAL ALSO WAS DEALING WI TH THE SIMILAR ISSUE OF NOTICE U/S 143(2) IN THE CASE OF AMIT JAIN VS ACIT CIRCLE- 30(L) ITA NO. 309/DE1L2010 (A- BENCH) FOR THE A Y 2 006-07 VIDE THE ORDER DATED 30/0612011 AND HAS GIVEN THE SIMILAR CO NTENTIONS RAISED BY THE ASSESSEE. HE HAS FILED THE RETURN ON 29TH JU LY 2007 DECLARING FINDING REFERRING TO THE BOARD'S CIRCULAR AND HAS H ELD IN PARA-2 OF THE ORDER AS UNDER :- ITA NO.4799/DEL/2011 3 'AS FAR AS THE FIRST FOLD OF GRIEVANCE IS CONCERNED , WE DO NOT FIND MUCH FORCE IN THE CONTENTION RAISED BY THE ASSESSEE. HE HAS FILED THE RETURN ON 29 TH JULY 2007 DECLARING AN INCOME OF RS 2,62,78,928/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND A NOTICE UNDER SEC. 143(2) OF THE ACT WAS ISSUED ON 16 TH SEPTEMBER 2008, WHICH WAS DULY SERVED UPON THE ASSESSEE ON 20 TH SEPTEMBER 208. THE PROVISO APPENDED THE SUB-SECTION (2) OF SECTION 143 OF THE ACT HAS BEEN AMENDED BY THE FINANCE ACT, 2008. PRIOR TO AME NDMENT IN THIS PROVISO, NO NOTICE UNDER SECTION 143(2) COULD BE SE RVED ON THE ASSESSEE AFTER THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FURNISHED. HOWEVER, AFTER THE AMENDMENT WHICH WAS GIVEN EFFECT FROM 1.4.1988, NO NOTICE UNDER SEC . 143(2) CAN BE SERVED AFTER THE EXPIRY OF THE SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. THE BOARD HA S ALSO EXPLAINED THAT AMENDED PROVISO OF SUB-SECTION (2) OF SECTION UPON THE ASSESSEE. THUS, THE TIME LIMIT FOR ISSUANCE OF A NOTICE IN TH E CASE OF ASSESSEE IS AVAILABLE UP TO 30 TH SEPTEMBER 2008 I.E. 6 MONTHS FROM 31/03/2008. THERE IS NO ILLEGALITY IN THE SERVICE OF NOTICE UND ER SECTION 143(2) UPON THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSE SSEE ALSO DID NOT ADVANCE ANY ELABORATE ARGUMENTS ON THIS ISSUE. THER EFORE, THE FIRST FOLD OF GRIEVANCE RAISED BY THE ASSESSEE IN GROUND NOS. 1 AND 1.1 HAS NO MERIT, IT IS REJECTED.' 4.6. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE, I AM OF THE VIEW THAT THERE IS NO MERIT IN THE SUBMISSIO N OF THE ASSESSEE AND THE AO HAS RIGHTLY ISSUED THE NOTICE IN TIME AND AC CORDINGLY, THE APPEAL OF THE ASSESSEE ON THIS GROUND IS DISMISSED AND THE ACTION OF THE AO IS CONFIRMED. 2. LD. CIT(A) HAS DECIDED THE ISSUE ON MERITS BY HO LDING AS UNDER: 5.2. THE ASSESSEE WAS HAVING THE MEMBERSHIP TICKET OF ERSTWHILE THE DELHI STOCK EXCHANGE LTD (D E) WHICH WAS LATER ON D ISSOLVED AND THE ASSESSEE RECEIVED THE AMOUNT OF RS.44,00,000/- FOR THE MEMBERSHIP CARD OF THE DSE WHICH WAS NOT DECLARED BY THE ASSES SEE AS INCOME IN THE INCOME TAX RETURN. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE AO HAD FOUND OUT THAT THE ASSESSEE HAS INCLUDED THE AMOUNT OF RS.44.00,000/- IN THE CAPITAL ACCOUNT OF THE ASSESS EE AND CLAIMED THE AMOUNT AS EXEMPT ON THE GROUND THAT THE DSE WAS A C HARITABLE ITA NO.4799/DEL/2011 4 ORGANIZATION AND THE AMOUNT WAS RECEIVED AS PART OF THE DEMUTUALIZATION. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE AMOUNT OF RS 44,00,0001- WAS TAXABLE AS A LONG TERM CAPITAL ON THE GROUND OF SALE OF ALLOTTED EQUITY SHARES AND TRADING RIGHTS. 5.3. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE AO AND IT IS SUBMITTED THAT THE AO IS NOT JUSTIFIED TO MAKE THE ADDITION AS THE DSE WAS CHARITABLE ORGANIZATION AND THE INCOME WAS EXEM PT U/S 11 OF THE IT ACT, 196 L . THE ASSESSEE ALSO FILED LARGE NUMBE RS OF PAPERS WHICH ARE OF 19 VOLUMES 0N 19 DIFFERENT OCCASIONS AND THE SAME ARE BASICALLY THE REPETITION OF THE ONE ANOTHER. THE SU BMISSIONS OF THE ASSESSEE ARE ALMOST ILLEGIBLE AS THE SAME ARE TYPED IN OLD TYPE-WRITER MACHINES AND ALSO HAND WRITTEN ALSO ALONG WITH VARI OUS SIMULTANEOUS OVER-WRITINGS. THE ASSESSEE ALSO RELIED ON THE CASE OF STOCK \ EXCHANGE OF AHMEDABAD VS ACIT, 248 ITR 209 (SC) [20 01] IN SUPPORT OF HIS CLAIM. 5.4. I HAVE CONSIDERED THE ORDER OF THE AO, REMAND REPORT OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I DO NOT FI ND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE. THE ASSESSEE HAS BEEN R EPRESENTING HIS OWN CASE AND ALSO HAD BEEN VERY ARROGANT IN HIS BEH AVIOUR WHILE WAS DEALING WITH THE STAFF OF THIS OFFICE AND AT THE SA ME TIME, LOSING HIS COOL DURING THE COURSE OF APPELLATE -PROCEEDINGS AL SO. WHILE THE HIGH AGE OF THE ASSESSEE IS RESPECTED BUT WITH AGE COMES MATURITY AND WISDOM BUT IT WAS FOUND DURING THE COURSE OF APPELL ATE PROCEEDINGS THAT THE ASSESSEE HAS BEEN ROUGH IN HIS BEHAVIOUR A ND USED TO USE ROUGH LANGUAGE WHILE ATTENDING THIS OFFICE AND WHIL E INTERACTING WITH THE OFFICERS AND THE STAFF AND SOMETIME USING FILTH Y LANGUAGE ALSO. HOWEVER, THE CASE OF THE ASSESSEE IS ADJUDICATED ON MERITS. 5.5. SO FAR AS THE ISSUE OF RECEIPT OF RS 44,00,000 /- IS CONCERNED, IT IS APPARENTLY A LONG TERM CAPITAL GAIN AS THE MONEY IS RECEIVED FOR THE MEMBERSHIP TICKET OF THE DSE. THE SAME VIEW HAS BEE N HELD IN THE ASSESSEE OWN CASE BY THE HON'BLE TRIBUNAL IN THE: Y 1997-98 VIDE ITA NO. 4645/DEL/2009 (BENCH 'E') (MADHUSUDAN LAL NANDA VS ITO WARD 30 I). NEW DELHI IN WHICH THE ISSUE HAS BEEN D EALT IN PARAS-II TO 15. THE HONBLE TRIBUNAL HAS ALSO RELIED ON THE SP ECIAL BENCH ITA NO.4799/DEL/2011 5 DECISION OF CHENNAI IN THE CASE OF R M VALLIAPPAN V S ACIT. 287 ITR .203 R20061 (ITAT CHENNAI SB) VIDE PARA-13 OF THE O RDER. 5.6. FURTHER, THE HONBLE SPECIAL BENCH DECISION OF CHENNAI IN THE CASE OF R M VALLIAPPAN VS ACIT, 287 ITR 203 [2006] (IT AT CHENNAI SB) HAS DISTINGUISHED THE CASE OF STOCK EXCHANGE AH MEDABAD VS ACTT. 2-1-8 ITR 209 (SC) [2001] AND HELD IN THE HEA D-NOTE AS UNDER 'THAT THE MEMBERSHIP CARD IS A VALUABLE PROPERTY WH ICH ENTITLES THE MEMBERS TO DEAL IN TRANSACTIONS ON THE FLOOR OF THE STOCK EXCHANGE AND WITHOUT WHICH ONE CANNOT TRANSACT SUCH BUSINESS . THIS RIGHT CAN BE DISPOSED OF BY A MEMBER BY NOMINATION, THOUGH SU BJECT TO THE RULES AND REGULATIONS OF THE STOCK EXCHANGE AND SETTLEMEN T OF DEBTS AND LIABILITIES OF THE MEMBERS OF THE STOCK EXCHANGE. T HE JUDGMENT OF THE SUPREME COURT IN STOCK EXCHANGE, AHMEDABAD V, ASST. CIT [200 I] 248 ITR 209 APPLIES ONLY TO CASES WHERE THE MEMBERS HIP HAS CEASED AND HAS VESTED WITH THE STOCK EXCHANGE AUTHORITIES. IT CANNOT APPLY TO CASES OF CONTINUING MEMBERSHIP. ACCORDINGLY, IN THE PRESENT CASE, THE TRANSFER OF MEMBERSHIP CARD BY THE ASSESSEE TO A LT D. WAS A TRANSFER OF A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2( 14) OF THE ACT AND CONSEQUENTLY THE CONSIDERATION FOR THE TRANSFER IS EXIGIBLE TO CAPITAL GAINS TAX (NOTE) - THE MEMBERSHIP CARD OF STOCK EX CHANGE WAS TREATED AS A CAPITAL ASSET, SO THAT ANY AMOUNT IN R EALIZATION ON TRANSFER OF THE MEMBERSHIP CARD WOULD BE LIABLE TO CAPITAL GAINS TAX AS HELD BY THE TRIBUNAL IN R. M. VALLIAPPAN V. ASST . CIT [2006] 287 ITR (AT) 203 (CHENNAI) [SB] FOLLOWING A NUMBER OF P RECEDENTS ON THE SUBJECT BOTH UNDER INCOME-TAX LAW AND IN COMPANY CA SES. THE ASSESSEE HAD RELIED UPON THE DECISION OF THE SUPREM E COURT IN AHMEDABAD STOCK EXCHANGE V. ASST. CIT [2001] 248 [T R 2U9. THIS WAS DISTINGUISHED ON THE GROUND THAT IT WAS RENDERE D IN THE CONTEXT OF SECTION 281 B OF THE INCOME-TAX ACT PROVIDING FOR P ROVISIONAL ATTACHMENT OF ALL ASSETS TO PROTECT REVENUE IN THE CASE OF MEMBERSHIP WHICH HAD CEASED. THIS DECISION CANNOT, THEREFORE, APPLY 10 CONTINUING MEMBERSHIP. THE DEFINITION OR CAPITAL AS SET UNDER SECTION 2( 14) IS WIDE. THE FACT THAT A MEMBER HAS GOT RIGH T OF NOMINATION CANNOT BE OVERLOOKED. IT IS ONLY WHERE A MEMBER HAS DEFAULTED IN PAYMENTS THAT SUCH MEMBERSHIP GETS FORFEITED. LIABI LITY CANNOT, THEREFORE, BE AVOIDED ON THE AMOUNT RECEIVED BY A M EMBER FOR SURRENDER OF HIS MEMBERSHIP IN FAVOUR OF ANOTHER.' ITA NO.4799/DEL/2011 6 5.7. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE, 1 AM OF THE VIEW THAT THERE IS NO MERIT IN THE SUBMIS SION OF THE ASSESSEE AND THE AO HAS RIGHTLY TAXED THE AMOUNT OF RS 44,00 ,000/- AS LONG TERM CAPITAL GAIN AND ACCORDINGLY, THE ADDITION MAD E BY THE AO IS CONFIRMED. 3. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE US. THE CASE OF THE ASSESSEE WAS EARLIER HEA RD ON 20.06.2013, HOWEVER, DUE TO CERTAIN CLARIFICATIONS REQUIRED BY THE MEMBERS, THE CASE WAS RELEASED FOR REHEARING AND ON 18.11.2014 THE BENCH HAD PASSED ORDER IN THE ORDER SHEET BY WHICH IT REQUIRED CERTAIN INFORMATIO N FROM A.O. IN THE FORM OF A REMAND REPORT. AT THE TIME OF HEARING BEFORE US, THE ASSESSEE APPEARED IN PERSON AND ARGUED THAT THE AMOUNT RECEIVED BY HIM W AS NOT TAXABLE AND ALSO ARGUED THAT NOTICE WAS NOT SERVED UPON HIM WITHIN T HE PRESCRIBED PERIOD OF TIME AND, THEREFORE, IT WAS NOT LIABLE TO PAY ANY T AX. 4. LD. D.R. ON THE OTHER HAND SUBMITTED THAT THE AM OUNT WAS RECEIVED FROM DELHI STOCK EXCHANGE AGAINST MEMBERSHIP CARD A ND, THEREFORE, WAS TAXABLE IN THE HANDS OF ASSESSEE. REGARDING SERVIC E OF NOTICE, LD. D.R. INVITED OUR ATTENTION TO THE FINDINGS OF LD. CIT(A) AND SUBMITTED THAT THE NOTICE WAS ISSUED WELL WITHIN TIME PERIOD OF SIX MO NTHS FROM THE END OF FINANCIAL YEAR IN WHICH THE RETURN WAS FILED. REGA RDING REMAND REPORT, LD. D.R. SUBMITTED THAT THE REMAND REPORT AS SOUGHT BY THE BENCH VIDE ORDER DATED 18.11.2014, IS LIKELY TO BE RECEIVED TODAY IT SELF AND HE REQUESTED THAT HE BE ALLOWED TO FILE THE SAME AS AND WHEN IT IS RE CEIVED. 5. WE HAVE HEAD RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. LD. D.R. FIELD A COPY OF REMAND REPORT DATED 19.03.2015 ON 23.03.2015. IN THE REMAND REPORT, THE A.O. HAS REP LIED TO THE QUESTIONS AS ITA NO.4799/DEL/2011 7 RAISED BY THE BENCH VIDE ORDER SHEET DATED 18.11.20 14. THE REMAND REPORT AS SENT BY A.O. IS REPRODUCED BELOW: OFFICE OF THE INCOME TAX OFFICER, WARD 48 (5), ROOM NO.217, DRUM SHAPE BUILDING, NEW DELHI. PH.NO.011~3370124 IF. NO.ITO/ WARD 48(5)/2014-15/ 39, DATED: 18/03/2015 TO THE SR. DEPARTMENTAL REPRESENTATIVE, E-BENCH, ITAT, LOK NAYAK BHAWAN, KHAN MARKET, NEW DELHI. (THROUGH JT. CIT, RANGE-48, NEW DELHI.) SIR, SUB.: REMAND REPORT IN THE CASE OF SH. MADHUSUDAN L AL NANDA, PROP. M/S WAZIR CHAND NANDA & CO. IN APPEAL NO. 479 9/0/2011 FOR A.Y. 2008-09 - REG. KINDLY REFER TO YOUR LETTER F.NO. SR. D.R./E-8ENCH/ ITAT/2014-15/89 DATED 05/02/2015 ON THE ABOVE SUBJECT. AS DESIRED BY YOUR GOODSELF, REMAND REPORT ON THE F OLLOWING POINTS IS AS UNDER: I) HOW CASH WAS GIVEN BY DSE TO ASSESSEE? IN THIS REGARD IT IS SUBMITTED THAT THE ABOVE AMOUN T WAS RECEIVED BY THE ASSESSEE BY TWO CHEQUES OF RS.20 LAC AND 24 LAC RES PECTIVELY. II) WHETHER CASH WAS GIVEN TO OTHER MEMBERS ALSO ON DEMUTUALIZATION OF DSE? ON PERUSAL OF THE RECORDS, NO SUCH INFORMATION AS TO WHETHER CASH WAS GIVEN TO OTHER MEMBERS ALSO ON DEMUTUALIZATION OF DSE IS AVAILABLE. III) A.O. TO EXAMINE THE APPLICABILITY OF SECTION 56(2)(VI)(G) AFTER BRINGING RELEVANT ASPECTS ON RECORD? IN THIS REGARD IT IS STATED THAT PROVISIONS OF SECT ION 56(2) (VI)(G) WAS NOT APPLICABLE IN THIS CASE BECAUSE AS PER PROVISION OF SECTION 56(2)(VI)(G) WHERE ANY SUM OF MONEY THE AGGREGATE VALUE OF WHICH EXCEED 50,0001- IS RECEIVED WITHOUT CONSIDERATION, BY AN INDIVIDUAL OR A HUF IN ANY PREVIOUS YEAR FROM A PERSON OR PERSONS ON OR AFTER 1 ST DAY OF APRIL, 2006, (BUT BEFORE ITA NO.4799/DEL/2011 8 THE 1ST DAY OF OCTOBER, 2009), THE WHOLE OF THE AG GREGATE VALUE OF SUCH SUM FROM ANY TRUST OR INSTITUTION REGISTERED U/S 12AA.S HALL BE EXEMPT. IN THIS CASE, THE ASSESSEE HAS CLAIMED DSE AS A CHARITABLE ORGANIZATION AND THE INCOME WAS TREATED AS EXEMPT U/S 11 OF THE I.T. ACT , 1961. THE SUBMISSION OF THE ASSESSEE THAT DSE IS A CHARITABLE ASSOCIATES IS INCORRECT BECAUSE AS PER DEFINITION IN CLAUSE 2 OF DSE ASSOCIATION LTD. DEMU TUALIZATION DSE SCHEME 2005. 'THE DELHI STOCK EXCHANGE ASSOCIATES LTD. MEANS THE COMPANY INCORPORATED ON JUNE 25 TH 1947 AS A CORPORATE BODY WITH LIMITED LIABILITY FOR THE PURPOSE OF PROMOTING, REGULATING OR CONTROL LING THE BUSINESS OF BUYING, SELLING OR DEALING IN SECURITIES AS A RECOG NIZED STOCK EXCHANGE.' HENCE THE CONSIDERATION RECEIVED FROM THE TRANSFER OF SHARES ALLOTTED TO MEMBERS IS LIABLE FOR CAPITAL GAIN TAX. THE CONTENT ION OF THE ASSESSEE THAT DSE IS A CHARITABLE ORGANIZATION U/S 11 (1A) OF THE I.T. ACT, 1961 IS NOT SUPPORTED BY ANY EVIDENCE, AS PER INFORMATION AVAIL ABLE ON RECORDS. IV) WHAT HAS HAPPENED IN THE CASE OF OTHER MEMBERS HIP TICKET HOLDERS/ IN THIS REGARD IT IS SUBMITTED THAT NO SUCH INFORMA TION IS AVAILABLE ON RECORD IN RESPECT OF OTHER MEMBERSHIP TICKET HOLDERS. V) IN CASE THE PROVISIONS OF SECTION 56(2)(VI)(G) A RE NOT APPLICABLE, WHETHER CONDITIONS OF SECTION 47(XIII A) HAVE BEEN FULFILLED OR NOT? CONDITIONS OF SECTION 47(XIII)(XIIIA) HAVE BEEN FUL FILLED. THE SALE OF THE ALLOTTED EQUITY SHARE AND TRADING RIGHT/CLEARING RI GHT IS TAXABLE UNDER THE HEAD CAPITAL GAINS. VI) THE A.O. TO EXAMINE THE APPLICABILITY OF SECTI ON 55(2)(AB) READ WITH SECTION 2(42)(A)(H) AND (HA). THE PROVISIONS OF SEC TION 5.5(2)(AB)READ WITH SECTION 2(42)(A)(H) AND (HA) ARE APPLICABLE TO THE ASSESSEE'S CASE. YOURS FAITHFULLY, SD./- (USHA RAWAT) INCOME TAX OFFICER WARD-48(5), NEW DELHI 6. AFTER GOING THROUGH THE REMAND REPORT REPRODUCED ABOVE AND GROUNDS OF APPEAL, AND OTHER RELEVANT MATERIAL FROM THE REC ORD. WHILE DICTATING THE ORDER, IT WAS FELT THAT A FURTHER REMAND REPORT REG ARDING FURTHER CLARIFICATIONS BE SOUGHT FROM A.O., THEREFORE, AN ORDER WAS PASSED VIDE ORDER SHEET ENTRY ITA NO.4799/DEL/2011 9 DATED 01.04.2015 AND A COPY OF WHICH WAS HANDED OVE R O LD. D.R. WITH A DIRECTION THAT REMAND REPORT BE SUBMITTED BY 20 TH APRIL, 2015 BUT TILL THE PASSING OF THIS ORDER, REMAND REPORT HAS NOT BEEN R ECEIVED. THEREFORE, THIS APPEAL HAS BEEN DISPOSED OFF ON THE BASIS OF MATERI AL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE BEFORE US IS AS TO WHETHER T HE NOTICE U/S 143(2) WAS SERVED UPON THE ASSESSEE WITHIN THE PRESCRIBED PERI OD OF TIME. LD. CIT(A) HAS DISMISSED THIS GROUND OF APPEAL HOLDING THAT TH E NOTICE WAS ISSUED WITHIN THE PRESCRIBED PERIOD OF TIME. HE HAS NOT MENTIONE D ABOUT SERVICE OF THE SAID NOTICE, THEREFORE, WE DEEM IT APPROPRIATE TO S ET ASIDE THIS GROUND OR APPEAL TO THE OFFICE OF A.O. WHO ON THE BASIS OF RE CORD WILL FIND OUT AS TO WHETHER THE SERVICE OF NOTICE U/S 143(2) WAS WITHIN THE PRESCRIBED PERIOD OF TIME AND ACCORDINGLY WILL DECIDE THIS LEGAL ISSUE A S PER LAW. 6.1 AS REGARDS THE ISSUE OF TAXABILITY OF RECEIPT O F RS.44 LACS FROM DELHI STOCK EXCHANGE, ON ACCOUNT OF DEMUTUALIZATION DSE S CHEME 2005, WE FIND THAT LD. CIT(A) HAS DISMISSED THIS GROUND OF APPEAL RELYING UPON THE EARLIER ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSEL F IN I.T.A. NO. 4645/DEL/2009 FOR ASSESSMENT YEAR 1997-98 WHICH WAS PRONOUNCED ON 14.05.2010. HOWEVER, WHILE GOING THROUGH FACTS OF THAT CASE IN ASSESSMENT YEAR 1997-98 WE FIND THAT DURING THAT YEAR, THE ASS ESSEE HAD RECEIVED AN AMOUNT OF RS.25 LACS ON ACCOUNT OF SALE OF MEMBERSH IP CARD AND, THEREFORE, THE TRIBUNAL HAD HELD THAT MEMBERSHIP CARD TO BE CA PITAL ASSET AND THEREFORE HAD DECIDED THE ISSUE HOLDING THAT THE ASSESSEE WAS LIABLE TO PAY CAPITAL GAIN TAX. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE HA D NOT SOLD THE MEMBERSHIP CARD BUT HAD RECEIVED THE AMOUNT ON ACCOUNT OF DEMU TUALIZATION OF STOCK EXCHANGE AND, THEREFORE THE FACTS OF THE PRESENT CA SE ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE IN I.T.A. NO. 4645/DEL/2009 F OR THE ASSESSMENT YEAR ITA NO.4799/DEL/2011 10 1997-98. BEFORE LD. CIT(A), THE ASSESSEE HAD RELIE D UPON THE CASE LAW OF STOCK EXCHANGE OF AHMEDABAD VS ACIT 248/2009 (S.C. ) WHICH THE LD. CIT(A) HAD REJECTED AND HAS FOLLOWED THE TRIBUNAL O RDER IN ASSESSMENT YEAR 1997-98 IN THE CASE OF ASSESSEE ITSELF. LD. CIT(A) HAS HELD THAT THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF S TOCK EXCHANGE AHMEDABAD VS ACIT APPLY IN THE CASES WHERE THE MEMB ERSHIP HAD SEIZED AND WAS SURRENDERED WITH THE STOCK EXCHANGE AUTHORI TIES. WE HAVE ALREADY HELD THAT FACTS OF THE PRESENT CASE ARE DISTINGUISH ABLE FROM THE FACTS OF THE CASE IN 1997-98. THEREFORE IN VIEW OF ABOVE, WE D EEM IT APPROPRIATE TO SET ASIDE THIS ISSUE ALSO TO THE OFFICE OF A.O. WHO ON THE BASIS OF LAW CONTAINED IN VARIOUS PROVISIONS OF THE ACT READ ALONG WITH RE LATED DECISION OF HON'BLE SUPREME COURT AS RELIED UPON BY ASSESSEE WILL ARRIV E AT THE APPROPRIATE DECISION. THE A.O. SHOULD ALSO ENQUIRE FROM DELHI STOCK EXCHANGE OR FROM OTHER MEMBERS OF STOCK EXCHANGE WHO ALSO MUST HAVE RECEIVED SIMILAR AMOUNTS REGARDING TAXABILITY OF SUCH AMOUNTS IN THE IR CASES. THE A.O. SHOULD ALSO EXAMINE THE CLAIM OF ASSESSEE THAT DELH I STOCK EXCHANGE WAS A CHARITABLE ORGANIZATION. NEEDLESS TO SAY THAT ASSE SSEE WILL BE PROVIDED SUFFICIENT OPPORTUNITY OF BEING HEARD. 7. IN VIEW OF ABOVE, APPEAL FILED BY ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MAY, 2015. SD./- SD./- ( G. C. GUPTA) (T.S. KAPOO R) VICE PRESIDENT ACCOUNTANT MEMBER DATE: 08.05. 2015 SP ITA NO.4799/DEL/2011 11 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 24/3 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 25,26/3,07/5, SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 8/5 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 8/5 SR. PS/PS 7 FILE SENT TO BENCH CLERK 8/5 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER