SUN MEDIA PVT. LTD., NEW DELHI V. ITO, WARD- 24(3), NEW DELHI

ITA 5443/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3008 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 25-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: C S AGGARWAL SH R P MALL
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH.AMIT SHUKLA, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO.5443/DEL/2017 ASSESSMENT YEAR: 2014-15 SUN MEDIA PVT. LTD. 5-E, LOCAL SHOPPING CENTRE, MASJID MOTH, GREATER KAILASH-II, NEW DELHI PAN NO. AAGC9301K VS ITO WARD-24 (3) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. C. S. AGGARWAL, ADVOCATE SH. R. P. MALL, ADVOCATE RESPONDENT BY SH. PRAKASH DUBEY, SR. DR. DATE OF HEARING: 14/06/2021 DATE OF PRONOUNCEMENT: 17/06/2021 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE CIT(A)-30, NEW DELHI DATED 19.06.2017 PERTAININ G TO A.Y. 2014-15. 2 2. THE GRIEVANCE OF THE ASSESSEE READ AS UNDER :- 1. THAT THE LEARNED CIT (A) HAS ERRED BOTH ON FACT S AND IN LAW IN UPHOLDING THE ORDER OF ASSESSMENT. HE HAS FURTHE R ERRED IN HOLDING THE LOSS SUFFERED BY THE ASSESSEE OF RS.2,2 0,43,350/- CANNOT BE HELD EITHER AS LONG TERM CAPITAL LOSS OR EVEN BUSINESS LOSS. 2. THAT THE LEARNED CIT (A) HAVING NOT DISPUTED TH AT THE ASSESSEE HAD BEEN ALLOTTED SHARES BY M/S GURGOAN RE CREATION PARK LIMITED AND HELD 32,68,620 SHARES SINCE 31.03.2008, OUT OF WHICH ONLY 1288438 SHARES HAD BEEN TRANSFERRED BY I T, THERE REMAINED NO JUSTIFICATION FOR HIM NOT TO HAVE HELD THAT THE LOSS SUFFERED ON THE TRANSFER OF SHARES MADE DID NOT REP RESENT LONG TERM CAPITAL LOSS. 3. THAT THE LEARNED CIT (A) IN ANY CASE AND WITHOU T PREJUDICE OUGHT TO HAVE HELD THAT SUCH A LOSS AS SUFFERED REP RESENTS A LOSS WHICH IS AN ALLOWABLE BUSINESS LOSS. 4. THAT THE LEARNED CIT (A) HAS MISCONCEIVED THE F ACTS AND HAS FAILED TO APPRECIATE THAT THERE BEING ADMITTEDLY A TRANSFER OF SHARES MADE BY THE ASSESSEE COMPANY TO HSIIDC, THE TRANSFE R SO MADE WAS MADE AT MARKET PRICE. THE FINDING OF THE LEARNE D CIT (A) THAT THE TRANSFER WAS NOT MADE AT MARKET PRICE IS MISCONCEIV ED AND IS BASED ON NO MATERIAL. NONETHELESS THERE WAS NO JUSTIFICAT ION NOT TO HAVE ALLOWED THE CLAIM OF LONG TERM CAPITAL LOSS SUFFERE D BY THE ASSESSEE. IT IS THEREFORE PRAYED THAT IT BE HELD THAT THE LOS S SUFFERED OUGHT TO HAVE BEEN HELD AS ALLOWABLE AND THERE WAS NO JUSTIF ICATION TO COMPUTE THE LOSS AT NIL. 3 3. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. CASE RECORD CAREFULLY PERUSED AND WITH THE ASSISTAN CE OF THE COUNSEL WE HAVE CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE LIGHT OF RULE 18 (6) OF TH E ITAT RULES. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED ITS RETURN OF INCOME ON 23.09.2014 DECLARING NIL IN COME. THE ASSESSEE HAD SHOWN CARRIED FORWARD OF CURRENT YEARS LOSS OF RS.34924140/-. THE RETURN WAS SELECTED FOR SCRUTIN Y ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND S ERVED UPON THE ASSESSEE. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS DEBITED RS.128 71496/- TO ITS P & L ACCOUNT AS LOSS ON SALE OF INVESTMENT AND CARRIED FORWARD OF THE SAME. 6. THE FACTS RELATING TO THE LOSS ON THE SALE OF IN VESTMENT ARE THAT THE ASSESSEE HAD GIVEN SHARE APPLICATION MONEY OF RS.73916400/-TO M/S. GURGAON RECREATION PARK LIMITE D. THIS AMOUNT HAS BEEN UTILIZED TO ISSUE 3268650 EQUITY SH ARES IN EARLIER YEARS AND 4123000 SHARES ON 27.05.2013. 7. THE SHARE APPLICATION MONEY AND THE ALLOTMENT OF SHARES CAN BE UNDERSTOOD FROM THE FOLLOWING CHART : 4 SHARE APPLICATION S. NO. DATE AMOUNT 1. 01.04.2002 1,00,00,000/- 2. 14.01.2005 . 1,50,00,000/- 3. 19.01.2007 2,20,00,000/- 4. 05.11.2007 70,00,000/- 5. 24.12.2007 1,00,00,000/- 6. 20.04.2012 35,00,000/- 7. 01.04.2013 100/- 8. TOTAL 7,75,00,1007/- SHARE ALLOTMENT DATE NO. OF SHARES SHARE PRICE 01.04.2002 10 100.00 08.12.2002 24,960 2,49,600.00 01.04.2007 4,75,000 47,50,000.00 12.06.2007 27,68,650 2,76,86,500.00 27.02.2008 3,58,390 25,83,900.00 27.05.2013 41,23,000 4,12,30,000.00 77,50,010 7,75,00,100.00 8. AS PER THE SHARE HOLDERS AGREEMENT BY AND BETWEE N M/S. UNITECH HOLDINGS LTD. AND M/S. SUN MEDIA PRIVA TE LIMITED DATED 30.09.2006 IT WAS AGREED THAT M/S. UNITECH AN D SUN MEDIA WOULD JOINTLY PARTICIPATE IN THE PROPOSED PROJECT O F ENTERTAINMENT AND AMUSEMENT PARK IN GURGAON AND FOR THIS HAVE EN TERED INTO A SHAREHOLDERS AGREEMENT ON 25.10.2000 SO AS TO RECOR D THEIR MUTUAL UNDERSTANDING AND THE TERMS AND CONDITIONS O F THEIR INTER-SE RELATIONSHIP WITH RESPECT TO THEIR RESPECT IVE SHARE HOLDINGS AND OTHER RELATED RIGHTS AND LIABILITIES I N RELATION TO M/S. 5 GRPL THE MOST RELEVANT ARTICLE OF THE PRESENT AGREE MENT IS AT PARA 6.4 AND 6.5 THE SAME READS AS UNDER :- 9. ON THE BASIS OF THE AFORESTATED FACTS IT CAN BE SEEN THAT THE PRIMARY RESPONSIBILITIES OF ALLOTMENT OF EQUITY SHA RES TO HSIDC WAS THAT OF COMPANY M/S. GRPL. IT IS TRUE THAT THE SHARES 6 ALLOTTED BY M/S. GRPL MISMATCHED WITH THE AGREED PE RCENTAGE OF SHAREHOLDING. 10. BEFORE US THE COUNSEL VEHEMENTLY STATED THAT AL LOTMENT OF SHARES BY THE COMPANY M/S. GRPL WOULD HAVE TAKEN MU CH MORE TIME SINCE THE COMPANY HAD TO APPLY FOR INCREASE IN SHARE CAPITAL WITH THE REGISTRAR OF COMPANIES AND AFTER OBTAINING APPROVAL IN THE GENERAL BODY MEETING OF THE COMPANY. 11. IT WAS STRONGLY CONTENDED THAT ANY DELAY IN ISS UE OF SHARES WOULD HAVE RESULTED INTO CANCELLATION OF THE LAND A LLOTTED AND POSTPONEMENT OF LOAN GRANTED. THE COUNSEL CONTINUE D STATING THAT IN SUCH CASE ENTIRE AMOUNT INCURRED BY THE COM PANY ON THE PROJECT WOULD HAVE BECOME ZERO AND IN TURN THE SAID COMPANY M/S. GRPL WOULD HAVE TO PAY HSIDC AMOUNT OF LOAN AV AILED FROM THEM WITH INTEREST AND PENALTY THEREON. 12. ON SUCH A SITUATION AS MENTIONED ABOVE, IN ORDE R TO AVOID DELAY RESULTING IN SUCH HUGE LOSS TO THE ASSESSEE C OMPANY AND OTHER SHARE HOLDERS, IT WAS CONSIDERED PROPER TO BE AR THIS LOSS ON TRANSFER OF SHARES TO HSIDC AND ACCORDINGLY THE ASS ESSEE TRANSFERRED 1288438 SHARES TO HSIDC AND SIMULTANEOU SLY M/S. UNITECH HOLDINGS LIMITED ALSO TRANSFERRED 149026 TO HSIDC. 13. BOTH THE LOWER AUTHORITIES HAVE BRUSHED ASIDE T HE LOSS HOLDING THAT THE ALLOTMENT OF SHARES BY M/S. GRPL T O THE 7 ASSESSEE ITSELF WAS WRONG AND AGAINST THE AGREEMENT AND, THEREFORE, THE ASSESSEE WAS NOT A BENEFICIAL OWNER OF THE SHARES ALLOTTED TO IT. BOTH THE LOWER AUTHORITIES HELD TH AT TRANSFER CAN ONLY TAKE PLACE WHEN THE PERSON TRANSFERRING THE PR OPERTY HAS A LEGAL RIGHT IN THAT PROPERTY. ACCORDING TO THE AUT HORITIES BELOW THE ALLOTMENT OF SUCH SHARES TO THE ASSESSEE AND M/ S. UNITECH HOLDINGS LIMITED WAS VOID AB INITIO. 14. THE OBSERVATION OF THE AO THAT M/S. GRPL COULD HAVE ISSUE EXTRA SHARES TO CORRECT THE ERROR IN ALLOTMENT AND MAKE THE HOLDING OF HSIDC 15% THEN THE QUESTION OF ANY LOSS TO THE ASSESSEE WOULD NOT HAVE ARISEN DOES NOT HAVE ANY LE GS TO STAND. 15. WE ARE OF THE CONSIDERED VIEW THAT ASSESSMENT C OULD NOT BE MADE ON SURMISES AND CONJECTURES AND HAVE TO BE BAS ED ON THE FACTS OF THE CASE UNDER CONSIDERATION. 16. THERE IS NOT DISPUTE THAT THE ASSESSEE WAS OWNE R OF THE SHARES ON THE DATE OF TRANSFER BY IT. IT IS ALSO N OT IN DISPUTE THAT THE ASSESSEE HAD HELD THE INVESTMENT FOR MORE THAN 12 MONTHS. IT IS NOT THE CASE OF THE REVENUE THAT THE ENTIRE P URCHASE AND SALE OF SHARES TRANSACTION IS A SHAM TRANSACTION. 17. THE ACT ITSELF U/S. 47 HAS SPECIFICALLY PROVIDE D THE TRANSACTIONS WHICH ARE NOT REGARDED AS TRANSFER. TH E PROVISIONS READ AS UNDER :- 8 9 10 11 12 13 14 15 16 18. IN OUR CONSIDERED VIEW WHEN THE STATUTE HAS PRO VIDED SPECIFIC PROVISIONS THEN THE SAME HAVE TO BE CONSTR UED STRICTLY AND MUST NOT EXTEND BEYOND REQUIREMENTS OF THE LANG UAGE USED. FOR THIS PROPOSITION WE DRAW SUPPORT FROM THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF GILLANDERS ARBUTHNOT C OMPANY LTD. VS. CIT 76 ITR 160. 19. WE FURTHER FIND THAT NO ADVERSE INFERENCE HAVE BEEN DRAWN BY EITHER OF THE LOWER AUTHORITIES IN SO FAR AS THE VALUE OF SHARE OF THE COMPANY M/S. GRPL AS ON THE DATE OF TRANSFER IS CONCERNED. THE VALUATION AS GIVEN TO THE AUTHORITIES IS AS UND ER :- 17 20. CONSIDERING THE FACTS IN TOTALITY THAT THE ASSE SSEE DID PURCHASE THE SHARES FROM M/S. GRPL AND HAVE ACTUALL Y SOLD THE SHARES AND THE SHARES HAVE BEEN SUBSEQUENTLY TRANSF ERRED IN THE NAME HSIDC, WE DO NOT FIND ANY MERIT IN THE FINDING S OF THE AO/ CIT(A). THE LOSS INCURRED BY THE ASSESSEE ON THE S AID TRANSACTION IS A BONAFIDE LOSS AND DESERVES TO BE ALLOWED AS SU CH CLAIMED BY THE ASSESSEE. 18 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.06.2021 . SD/- SD/- (AMIT SHUKLA) (N. K. BILL AIYA) JUDICIAL MEMBER A CCOUNTANT MEMBER *NEHA* DATE:- 17.06.2021 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI DATE OF DICTATION 14.06.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14.06.2021 DATE ON WHICH T HE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 14.06.2021 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 14.06.2021 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 14.06.2021 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 14.06.2021 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 17.06.2021 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF D ISPATCH OF THE ORDER