ACIT, New Delhi V. M/s. Ashoka Mercantile Ltd., New Delhi

ITA 4901/DEL/2012

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0954 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 13-09-2012
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Capital asset; Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘A’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.4901/Del./2012 (ASSESSMENT YEAR : 2008-09) DCIT, Circle 2 (1), vs. M/s. Ashoka Mercantile Ltd., New Delhi. 601, COPIA Corporate Suites, 9, Jasola Commercial Complex, New Delhi – 110 025. (PAN : AAACA4221A) (APPELLANT) (RESPONDENT) ASSESSEE BY : None REVENUE BY : Shri Jitendra Chand, Senior DR Date of Hearing : 04.10.2022 Date of Order : 13.10.2022 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the Revenue is directed against the order of the ld. CIT (Appeals)-V, New Delhi dated 18.07.2012 for the Assessment Year 2008-09. 2. The grounds of appeal raised by the assessee read as under :- “1. The Ld. CIT (A) erred on facts and in law in deleting the addition made on account of short term capital gain amounting to Rs.2,72,07,520/-. 2. The Ld. CIT (A) erred on fact and in law in holding that the transaction of the assessee company of exchange of shares ITA No.4901/Del./2012 2 is not liable for capital gain within the meaning of section 45 of the I.T. Act.” 3. Brief facts of the case are that AO noted from schedule VI of the B/Sheet that the assessee company had received 4,11,487 equity shares of Rs.10/- each of Modi Pon Ltd. in lieu of 3,24,375 equity shares of M/s Indo Fil Organic Ltd. on a/c of agreement between Shri K.K.Modi and Shri M. K. Modi which had also been clarified in note no.11 of schedule XIX of the B/Sheet. The said shares had been received pursuant to the agreement dated 28.10.2006. The AO further noticed that the shares of Indo Fil Organic Indus. Ltd. are not listed in any stock exchange and he further observed that the sale consideration of these 324375 equity shares of M/s Indo Fil Organic Ltd. is equally to the value of 4,11,487 shares of M/s Modi Pon Ltd. The shares of M/s Modi Pon were quoted and the quoted price of Rs.66.12 paisa was multiplied with 4,11,487 shares to arrive at the consideration of Rs.2,72,07,520/-. Further, it is noted that the AO had required the assessee vide order sheet entry dt.25.10.10 as to why the short term capital gain on the transfer of 3,24,375 shares of M/s Indo Fil Organic Indus. Ltd., against which the cost of acquisition was determined at 'nil' value, should not be taxed. In response to this query by the AO, the assessee had claimed that the said transfer of shares of M/s Indo Fil Organic Indus. Ltd. to Mr. K.K.Modi and his family members was in lieu of which assessee got shares of Modi Pon Ltd. from the ITA No.4901/Del./2012 3 family of K.K.Modi in swap of shares. It was further claimed by the assessee that the said transfer of shares from one group to another took place in view of swap of share holding pursuant to family settlement made between the families of cousin brothers. The assessee also filed a copy of family settlement deed which is claimed to be certifying such arrangements. It was further claimed by the assessee that a bonafide family arrangements does not spring any taxable event. The assessee relied upon few case laws as he has been noted by the AO in para 6.3 of his order. Thereafter, the AO rejecting the contention of the assessee on the following main grounds :- (i) That the assessee i.e. M/s. Ashoka Mercantile Ltd. Is not a party to the family settlement deed. (ii) The definition of transfer u/s 2(47) r.w.s. 45 of the I.T. Act includes ‘exchange’ as transfer. (iii) The I.T. Act i.e. Sec.45 to 55 does not specifically exclude the exchange of this nature from the definition of transfer. Therefore the AO concluded that the market value of 4,11,487 shares admittedly received by the assessee in lieu of 3,24,375 shares of M/s. Indo Fil Organic Indus. Ltd., working out at Rs.2,72,07,520/- represents to short term capital gain taxable in the hands of the assessee. 4. Against the above, assessee appealed before the ld. CIT (A). Assessee also filed additional evidences. Ld. CIT (A)asked for remand report from Assessing Officer. But the AO objected to the admission of ITA No.4901/Del./2012 4 additional evidences. Ld. CIT (A) overruled the AO’s objection and admitted the additional evidences. Considering the additional evidences and referred to assessee’s submissions, ld. CIT (A) deleted the addition holding it to be unwarranted as there was family settlement. 5. Against this order, Revenue is in appeal before us. Despite notice, nobody appeared on behalf of the assessee. The notice has also been served by ld. DR for the Revenue. But none has responded. Hence, we dispose off the appeal by hearing the ld. DR for the Revenue and perusing the record. 6. In our considered opinion on the facts and circumstances of the case, the additional evidences and the submissions before the ld. CIT (A) were not before the AO. Hence, in the interest of justice, we remit the issue to the file of AO. The AO shall consider the issue afresh considering these additional evidences and submissions. Needless to add assessee should be given adequate opportunity of being heard. 7. In the result, Revenue’s appeal is allowed for statistical purposes. Order pronounced in the open court on this 13 th day of October, 2022. Sd/- sd/- (NARENDER KUMAR CHOUDHRY) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 13 th day of October, 2022 TS ITA No.4901/Del./2012 5 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-V, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.