DEPUTY COMMISSIONER OF INCOME TAX-14(2)(1), MUMBAI V. INSTNAT HOLDINGS PRIVATE LTD, MUMBAI

ITA 5627/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0529 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWUNGSHI GIMSON LD
• Assessee Lawyers: RAKESH MOHAN LD
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Question of law; Scheme of amalgamation; Sham transactions; Set aside; Capital Gains
• Section: 143(3); 50C; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5627/MUM/2017 ( / ASSESSMENT YEAR:2010-11) D CIT - 14(2)(1) 432, AAYKAR BHAVAN 4 TH FLOOR, M.K. ROAD MUMBAI-400 020. / VS. M/S. INSTANT HOLDINGS PVT.LTD. 213, BEZZOLA COMPLEX B WING 71, SION TROMBAY ROAD, CHEMBUR, MUMBAI-400 071. ./ ./PAN/GIR NO. AACCK-5600-M ( ! /APPELLANT ) : ( '#! / RESPONDENT ) REVENUE BY : SHRI AWUNGSHI GIMSON- LD. CIT-DR ASSESSEE BY : SHRI RAKESH MOHAN - LD.AR / DATE OF HEARING : 28/06/2019 / DATE OF PRONOUNCEMENT : 13/09/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-12, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-12/DCIT-6(3)(1)/57/2013-14 DATED 01/06/2017 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.17,68,16,989/- WHICH IS CLAI MED LOSS ON TRANSFER OF BENEFICIAL INTEREST IN RIFL BENEFIT TRUST BY THE ASSESSEE, WIT HOUT NOTICING THE COLOURABLE NATURE OF THE TRANSACTION MERELY RELYING ON THE VARIOUS JU DICIAL PRECEDENTS. 2. THE CIT(A) ERRED IN PLACING RELIANCE ON JUDICIAL DECISIONS WHICH WERE NOT DISCUSSED WITH REFERENCE TO RELEVANCE APPLICABILITY. 2 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN INVESTMENT IN SHARES & SECURITIES WAS ASSESSED FOR IMPUGNED AY IN SCRUTINY ASSESSMENT U/S 143(3) ON 23/03/2013 WHEREIN THE LOSS OF THE ASSESSEE WAS DET ERMINED AT RS.16.04 CRORES AFTER CERTAIN DISALLOWANCE AS AGAIN ST RETURNED LOSS OF RS.33.72 CRORES FILED BY THE ASSESSEE ON 06/10/2010 . 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE CLAIMED SHORT-TERM CAPITAL LOSS OF RS.17.68 CRORES ON CERTAIN SHARE TRANSACTIONS. IT WAS NOTED THAT THE ASSESSEE ACQUIR ED BENEFICIAL INTEREST IN RIFL BENEFIT TRUST UPON AMALGAMATION OF SEVERAL TRANSFEROR COMPANIES VIZ. SUMMIT SECURITIES LTD., BRABOURNE EN TERPRISES LTD., OCTAVE INVESTMENTS LTD. & CHI INVESTMENTS LTD. WITH TRANSFEREE COMPANY NAMELY RPG ITOCHU FINANCE LTD. [RIFL] UNDER A SCHEME OF ARRANGEMENT FORMULATED U/S 391 TO 394 OF THE COMPAN IES ACT, 1956. THE SAID SCHEME WAS FINALLY APPROVED BY HONBLE BOM BAY HIGH COURT ON 18/12/2009 AND THE TERMS OF THE SCHEME BECAME EF FECTIVE FROM 23/12/2009. THE NAME OF TRANSFEREE COMPANY I.E. RIFL HAS SUBSEQUENTLY BEEN CHANGED TO SUMMIT SECURITIES LIMI TED [HEREINAFTER REFERRED TO AS SSL ]. 2.3 PROCEEDING FURTHER, CHI INVESTMENTS LTD. WAS HOLDING INVESTMENT IN EQUITY SHARE CAPITAL OF OTHER THREE TRANSFEROR COMP ANIES AND ACCORDINGLY, ENTITLED TO RECEIVE THE SHARES OF TRANSFEREE COMPAN IES I.E. SSL AGAINST SHAREHOLDING IN THE THREE TRANSFEROR COMPANIES. THE DETAILS OF SHAREHOLDING OF CHI INVESTMENTS LTD IN THE 3 ENTITIES COULD BE TABULATED IN THE FOLLOWING MANNER:- 3 NO. NAME OF THE ENTITY NO. OF SHARES C O ST (RS.) 1. BRABOURNE ENTERPRISES LTD 1064560 10,79,38,080/- 2. OCTAVE INVESTMENTS LTD. 250263 3. SUMMIT SECURITIES LTD. 3128298 36,33,46,220/- TOTAL 44,43,121 47,12,84,300/ - LESS : DIMINUTION IN VALUE OF INVESTMENTS 1,81,67,311/- TOTAL 45,31,16,989/ - UNDER THE SCHEME, THE SHARES HELD BY CHI INVESTMENTS LTD . IN OTHER 3 TRANSFEROR COMPANIES HAD TO BE TRANSFERRED TO A TRU ST CALLED RIFL BENEFIT TRUST [RIFLBT]. ACCORDINGLY, SSL ISSUED 2,45,455 SHARES TO RIFLBT AS PER THE SWAP RATIO UNDER THE SCHEME AND ALL THE FOU R TRANSFEROR COMPANIES INCLUDING CHI INVESTMENTS LTD. CEASED TO EXIST. THE ASSESSEE PURCHASED BENEFICIAL INTEREST IN RIFLBT FROM ITS 100% HOLDING COMPANY I.E. SSL AT RS.45.31 CRORES, BEING THE COST TO THE SELLER I .E. SSL . 2.4 SUBSEQUENTLY, THE SAID BENEFICIAL INTEREST WAS SOLD BY THE ASSESSEE FOR A CONSIDERATION OF RS.27.63 CRORES TO ANOTHER E NTITY NAMELY OFFSHORE INDIA LIMITED, AN UNRELATED PARTY RESULTING INTO CAPITAL LOSS OF R S.17.68 CRORES IN THE HANDS OF THE ASSESSEE. THE AVERAGE CO ST OF SHARES ACQUIRED BY THE ASSESSEE WORKED OUT TO RS.101/- PER SHARE AS AGAINST AVERAGE SALE VALUE PER SHARE OF RS.62/-. 2.5 IN THE ABOVE BACKGROUND, LD. AO OPINED THAT THE ASSESSEE BOUGHT THE SHARES FROM RELATED PERSONS AT BOOK VALUE BUT S OLD THE SAME TO AN UNRELATED PERSON AT REDUCED NEGOTIATED PRICE RESULT ING INTO CAPITAL LOSSES IN THE HANDS OF THE ASSESSEE. IT WAS NOTED THAT THE VALUE OF SSL SHARES WORKED OUT TO BE RS.362/- PER SHARE & RS.18/- PER S HARE BASED ON NET ASSET VALUE METHOD & PROFIT EARNING CAPACITY VALUE METHOD RESPECTIVELY, THE AVERAGE OF THE TWO BEING RS.190/- PER SHARE AS AGAINST THE SALE PRICE 4 PER SHARE OF RS.62/-. THEREFORE, THERE WAS NO LOGIC IN THE TRANSACTIONS AND THE SAME WAS WITHOUT ANY MERIT. THEREFORE, TREA TING THE TRANSACTION AS SHAM TRANSACTION, THE SAID CAPITAL LOSS WAS DENI ED TO THE ASSESSEE. 3.1 AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH SUCCESS BEFORE LD. FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 01/06/2017 WHEREIN THE ASSESSEE, INTER-ALIA, SUBMITTED THAT THE BENEFICIAL INTEREST WAS ACQUIRED AT COST FROM ITS HOLDING COMPANY IN TERMS OF SECTION 49(1)(III)(E) R.W.S. 47(IV). 3.2 REGARDING THE SALE PRICE PER SHARE, THE ATTENTI ON WAS DRAWN TO THE FACT THAT THE SALE TRANSACTION TOOK PLACE ON 05/02/ 2010. ON THAT DATE, THE VALUE OF SSL PER SHARE AS CALCULATED ON NET ASSET VALUE WORKED OUT TO BE RS.362/- PER SHARE AS AGAINST RS.1126/- PER SHAR E FETCHED BY THE ASSESSEE AND THEREFORE, THE QUESTION OF INADEQUATE CONSIDERATION COULD NOT ARISE. THE SUBMISSIONS WERE FURTHER FORTIFIED B Y THE FACT THAT THE SHARES OF SSL WERE LISTED ON BSE W.E.F. 28/01/2011. THE VALUE OF 2,45,455 SHARES OF SSL ON THE DATE OF LISTING WOULD BE RS.5.14 CRORES, IF THE HIGH PRICE OF RS.209.40 WAS TO BE CONSIDERED. A S AGAINST THIS, THE ASSESSEE FETCHED HIGHER AGGREGATE SUM OF RS.27.63 C RORES. THE SUBMISSIONS WERE MADE THAT THE SHARES WERE TRANSFER RED AT NEGOTIATED PRICE AND THE REVENUE COULD NOT STEP INTO THE SHOES OF THE BUSINESSMAN SO AS TO RE-WRITE THE TERMS OF THE AGREEMENT. IT WA S ALSO SUBMITTED THAT THE ASSESSEE DID NOT RECEIVE ANYTHING MORE THAN THE AGREED PRICE FROM THE BUYER FOR TRANSFER OF BENEFICIAL INTEREST. THE ACTION OF LD. AO IN TREATING THE SAME AS SHAM TRANSACTION WAS REBUTTED ON THE GROUND THAT ADDITIONS COULD NOT BE MADE MERELY ON THE BASIS OF CONJECTURES, SUSPICION OR DOUBTS AND THE ENTIRE BURDEN TO DISLOD GE THE STAND OF ASSESSEE WAS ON REVENUE. 5 3.3 THE LD. FIRST APPELLATE AUTHORITY, AFTER CONSID ERING ASSESSEES SUBMISSIONS AND MATERIAL ON RECORD AND CONCLUDED TH E MATTER IN ASSESSEES FAVOR WITH FOLLOWING OBSERVATIONS: - 11.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT CAREFULLY. I HAVE ALSO PERUSED THE ASSESSMENT ORDER AND THE MATERIAL AVAIL ABLE ON RECORD INCLUDING THE COPIES OF THE DOCUMENTS SUBMITTED BY THE APPELL ANT IN THE PAPER BOOK AS WELL AS DURING THE COURSE OF APPELLATE PROCEEDING. 11.4 IT IS NOTED THAT THE FACTS OF THE ISSUE REVEAL S THAT DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD ACQUIRED BENEFICIA L INTEREST IN RIFL BENEFIT TRUST. THE BENEFICIAL INTEREST WAS THE OUTCOME OF M ERGER OF SEVERAL TRANSFEROR COMPANIES WITH THE TRANSFEREE COMPANY. VIDE A SCHEM E OF ARRANGEMENT ('THE SCHEME') FORMULATED U/S. 391 TO 394 OF THE COMPANIE S ACT 1956 THE TRANSFEROR COMPANIES [I.E. ESRTWHILE SUMMIT SECURITIES LTD (ER STWHILE SUMMIT), BRABOURNE ENTERPRISES LTD (BRABOURNE), OCTAVE INVESTMENTS LTD (OCTAVE) AND CHI INVESTMENTS LTD (CHI)] WERE PROPOSED TO AMALGAMATE WITH THE TRANSFEREE COMPANY VIZ. RPG ITOCHU FINANCE LTD ('RIFL'), SUBSE QUENTLY NAME CHANGED TO SUMMIT SECURITIES LTD ('SSL'). THE HON'BLE MUMBAI H IGH COURT HAD APPROVED THE SCHEME IN ITS ABSOLUTE TERMS VIDE ITS ORDER DAT ED 18.12.2009. THE EFFECTIVE DATE OF THE SCHEME WAS 23.12.2009, AS THE SAID ORDE R OF THE HONBLE HIGH COURT, WAS FILED WITH THE ROC ON 23.12.2009 AND WIT H RBI ON 24.12.2009. AS CHI INVESTMENTS LTD., WAS ONE OF THE SHAREHOLDERS O F OTHER TRANSFEROR COMPANIES, IT WAS ENTITLED TO RECEIVE SHARES IN THE TRANSFEREE COMPANY AGAINST ITS SHAREHOLDING IN OTHER TRANSFEROR COMPANIES. UND ER THE SCHEME, THE SHARES HELD BY CHI INVESTMENTS LTD. IN OTHER TRANSFEROR CO MPANIES, AS REFERRED TO ABOVE, HAD TO BE TRANSFERRED TO A TRUST CALLED RIFL BENEFIT TRUST. ACCORDINGLY, AGAINST CHI INVESTMENT LTD'S HOLDING IN OTHER TRANS FEROR COMPANIES, SSL HAS ISSUED 2,45,455 SHARES TO RIFL BENEFIT TRUST AS PER THE SWAP RATIO PRESCRIBED IN THE SCHEME. AS ALL THE TRANSFEREE COMPANIES, INCLUD ING CHI CEASED TO EXIST WITHOUT WINDING UP, THE TRANSFEREE COMPANY VIZ. , SSL WAS THE BENEFICIAL OWNER OF SUCH SHARES AND INTEREST THEREIN. AS A RESULT, S UCH SHARES ARE HELD BY RIFL BENEFIT TRUST FOR THE BENEFICIARY OF SUCH SHARES VI Z. SSL BEING THE TRANSFEREE COMPANY. ON 02.01.2010, THE APPELLANT PURCHASED 'BE NEFICIAL INTEREST' IN RIFL BENEFIT TRUST FROM ITS 100% HOLDING COMPANY NAMELY SSL AT RS 45.31 CRORES, BEING THE COST TO THE SELLER I.E. SSL. THE APPELLAN T SOLD 'BENEFICIAL INTEREST' IN RIFL TRUST TO OFFSHORE INDIA LTD. AT RS 27.63 CRORE S ON 05.02.2010 THEREBY INCURRING A SHORT TERM CAPITAL LOSS ('STCL') OF RS. 17.68 CRORES. THE ASSESSING OFFICER DISALLOWED THE STCL OF RS.17.68 CRORES BY C ONSIDERING THE TRANSACTION AS BEING SHAM IN NATURE. 11.5 IT IS SEEN THAT THE APPELLANT HAD PURCHASED 'B ENEFICIAL INTEREST' IN RIFL BENEFIT TRUST FROM SSL AT RS. 45.31 CRORES, BEING T HE COST TO SELLER I.E. SSL. IT IS PERTINENT TO NOTE THAT THE BENEFICIAL INTEREST WAS PURCHASED BY THE APPELLANT FROM ITS 100% HOLDING COMPANY I.E. SSL. THE COST OF THIS BENEFICIAL INTEREST ACQUIRED FROM SSL HAS TO BE TAKEN AS COST OF PREVIOUS OWNER I.E. SSL AS PER SECTION 49(1)(III)(E) RWS 47(IV). THUS, THE TRANSACTION HAD TAKEN PLACE AT COST AS IN THE BOOKS OF TRANSFEROR (I.E., SSL). FURTHER, IT SEEN T HAT RS. 45.31 CRORES REPRESENT COST TO CHI BECAUSE AT THIS PRICE THE SHARES OF OTH ER TRANSFEROR COMPANIES WERE ACQUIRED BY CHI. 6 11.6 REGARDING THE TRANSFER OF BENEFICIAL INTEREST BY THE APPELLANT COMPANY TO 'OFFSHORE INDIA LTD.', IT IS SEEN THAT THE TRANSACT ION OF TRANSFER OF BENEFICIAL INTEREST TOOK PLACE AT A PRICE WHICH IS MORE THAN T HE NAV PRICE. FURTHER, IT WAS SUBMITTED THAT THE SHARES OF SSL WERE LISTED ON BSE W.E.F 28.01.2011. THE VALUE OF 2,45,455 SHARES OF SSL ON THE DATE OF LISTING WA S RS.5.14 CRORES, IF HIGH PRICE IS CONSIDERED. THE TRANSACTION OF TRANSFER TOOK PLA CE AT AN AGREED PRICE OF RS.27.63 CRORES BETWEEN THE APPELLANT AND THE OFFSH ORE INDIA LIMITED AND THE AGREED PRICE WAS MUCH HIGHER THAN THE NAV PRICE OR THE PRICE DETERMINED AT THE HIGHEST RATE OF EXCHANGE AS ON THE DATE OF LISTING WHICH WAS RS.5.14 CRORES. THE APPELLANT RELIED ON VARIOUS HON'BLE JUDGMENTS S UBSTANTIATE THAT 'FULL VALUE OF CONSIDERATION' CANNOT BE CONSTRUED AS THE MARKET VALUE BUT AS THE PRICE BARGAINED FOR BY THE PARTIES TO THE SALE. 11.7 LOOKING AT THE FACTS OF THE CASE AS WELL AS TH E HON'BLE JUDICIAL DECISIONS AVAILABLE ON THIS ISSUE, I FIND NO FORCE IN THE ARG UMENTS OF THE ASSESSING OFFICER. THE APPELLANT HAD PURCHASED BENEFICIAL INT EREST FROM ITS 100% HOLDING COMPANY (SSL) AT COST OF PREVIOUS OWNER I.E . SSL AS PER SECTION 49(L)(III)(E) RWS 47(IV) OF THE ACT. ACCORDINGLY, T HE COST IN THE HANDS OF THE APPELLANT CANNOT BE DISTURBED. ALSO, THE TRANSACTIO N OF TRANSFER OF BENEFICIAL INTEREST FROM THE APPELLANT TO 'OFFSHORE INDIA LTD. HAD TAKEN PLACE AT A PRICE WHICH IS MORE THAN THE NAV PRICE. HENCE, THE DISALL OWANCE OF STCL MADE BY THE A.O. IS NOT SUSTAINABLE AT ALL. ACCORDINGLY, TH E DISALLOWANCE OF RS.17,68,16,989/- IS DELETED. THEREFORE, GROUND NO. 1 IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AR REITERATED THE SUBMISSIONS AS MADE BE FORE LOWER AUTHORITIES WHEREAS LD. CIT-DR SUBMITTED THAT THE A SSESSEE SUFFERED LOSS WITHIN A VERY SHORT SPAN OF TIME WITHOUT ANY P LAUSIBLE EXPLANATION. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL IN RECORD. THE BASIC FACTS ARE NO T IN DISPUTE. UPON PERUSAL OF THE ORDER OF LD. AO, IT TRANSPIRES THAT THE WHOLE PREMISE TO REJECT THE IMPUGNED LOSSES WAS THE FACT THAT THE SH ARES WERE SOLD AT RS.62/- PER SHARE AS AGAINST COST PRICE OF RS.101/- PER SHARES AND THEREFORE, THE TRANSACTIONS WERE TREATED AS SHAM TRANSACTION. HOWEVER, NOTHING MORE HAS BEEN BROUGHT ON RECORD TO FORTIFY THE SAME. NO INQUIRY WHATSOEVER, HAS BEEN MADE FROM THE PURCHASER, IN TH IS REGARD. THE SHARES WERE SOLD BY THE ASSESSEE AT NEGOTIATED PRIC ES UNDER AN AGREEMENT. NOTHING ON RECORD WOULD REVEAL THAT THE ASSESSEE RECEIVED 7 ANY EXTRA CONSIDERATION OVER AND ABOVE TO WHAT WAS STATED IN THE AGREEMENT. IT IS TRITE LAW THAT NO ADDITIONS COULD BE MADE MERELY ON THE BASIS OF PRESUMPTION, SUSPICION, CONJECTURES OR SUR MISES. THE ASSESSEE HAD PLACED ON RECORD ALL THE MATERIAL TO SUPPORT TH E SUBMISSIONS AND THEREFORE, THE BURDEN TO DISLODGE THE ASSESSEES CL AIM WAS ON LD. AO BY BRINGING ON RECORD ANY COGENT MATERIAL IN SUPPORT O F THE FACT THAT THE TRANSACTIONS WERE SHAM TRANSACTIONS . IT IS ALSO NOTED THAT THE SHARES WERE ACQUIRED BY THE ASSESSEE UNDER APPROVED SCHEME OF AMALGAMATION WITH COMPLIANCE TO ALL THE STATUTORY R EQUIREMENTS. THE ALLEGATION OF LD. AO THAT THE SHARES WERE SOLD AT L ESS THAN NET ASSET VALUE ALSO STOOD REBUTTED BY THE FACT THAT THE SHARES OF SSL WERE SOLD AT RS.1126/- PER SHARE WHICH WAS MUCH HIGHER THAN NET ASSET VALUE OF RS.362/- PER SHARE AND ALSO MORE THAN THE LISTED PR ICED OF THE SHARES. 5.2 WE FIND SUPPORT FROM THE DECISION OF THIS TRIBU NAL RENDERED IN RUPEE FINANCE AND MANAGEMENT PVT. LTD. VS. ACIT [12 0 ITD 539] WHEREIN IT HAS BEEN OBSERVED AS UNDER: - 13.1 .THERE IS NO ALLEGATION MUCH LESS, ANY EVIDE NCE TO SHOW THAT THESE ASSESSEES BEFORE US HAVE RECEIVED MONIES IN EXCESS OF AMOUNTS OF SALE CONSIDERATION RECORDED AND DISCLOSED IN THE TRANSAC TION FOR THE SALE OF SHARES. THE FIRST APPELLATE AUTHORITY HAS RIGHTLY NOTED THAT UN DER SECTION 48 THE STARTING POINT FOR COMPUTATION OF CAPITAL GAINS IS THE AMOUNT OF FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF A TRANSFER OF THE CAPITAL A SSET. THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE ( SUPRA ) HELD THAT SUB-SECTION (2) OF SECTION 52 CAN BE INVOKED ONLY WHEN THE FULL VALUE OF THE CONSIDERATI ON IS RECEIVED IN RESPECT OF A TRANSFER IS SHOWN AT A LESSER FIGURE THAN THAT WHIC H IS ACTUALLY RECEIVED BY THE ASSESSEE. IT FURTHER LAID DOWN THAT THE BURDEN OF P ROVING SUCH UNDERSTATEMENT OF CONSIDERATION IS ON THE REVENUE AND THAT THE SUB-SE CTION HAS NO APPLICATION IN THE CASE OF A BONA FIDE TRANSACTION, WHERE THE TRUE CONSIDERATION RECEIVED BY THE ASSESSEE HAS BEEN DECLARED OR DISCLOSED BY HIM. SEC TION 50C, HAS COME INTO THE STATUTE ONLY WITH EFFECT FROM 1-4-2003 BY FINANCE A CT, 2002 AND IS NOT APPLICABLE TO THE IMPUGNED ASSESSMENT YEARS. HENCE, FOR THE PERIO D PRIOR TO THE INSERTION OF SECTION 50C NO ADDITION CAN BE MADE BY INVOKING THE RATIO OF THIS SECTION. THE FIRST APPELLATE AUTHORITY AT PAGE 21 OF HIS ORDER HAS RIG HTLY OBSERVED THAT, WHAT IN FACT NEVER ACCRUED OR WAS NEVER RECEIVED CANNOT BE COMPU TED AS CAPITAL GAIN. HE RELIED ON THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CIT V. SMT. NANDINI NOPANI [1998] 230 ITR 679 . HE RIGHTLY HELD THAT IT IS MAN IFEST THAT THE CONSIDERATION FOR THE 8 TRANSFER OF CAPITAL ASSET IS WHAT THE TRANSFEROR RE CEIVES, IN LIEU OF ASSETS HE PARTS WITH, I.E., MONEY OR MONIES WORTH AND THAT THE EXPRESSION 'FUL L CONSIDERATION' CANNOT BE CONSTRUED AS HAVING REFERENCE TO THE MARKET VALU E OF THE ASSETS TRANSFERRED BUT REFERS TO THE PRICE BARGAINED FOR BY THE PARTIES AN D IT CANNOT REFER TO THE ADEQUACY OF THE CONSIDERATION. HE ALSO RIGHTLY OBSERVED THAT TH E LEGISLATURE HAS USED THE WORDS 'FULL VALUE OF THE CONSIDERATION' AND NOT 'FAIR MAR KET VALUE OF THE ASSETS TRANSFERRED'. HE RECORDED THAT THE ASSESSING OFFICER HAS NOT BROU GHT ON RECORD ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS RECEIVED MORE THAN WHAT HAS BEEN DISCLOSED IN THE BOOKS AND UNDER THESE CIRCUMSTANCES THE DIFFERENCE CANNOT BE BROUGHT TO TAX UNDER THE HEAD 'CAPITAL GAINS'. WE FULLY AGREE WITH THESE FINDINGS AND THE APPEALS FILED BY THE REVENUE FAIL. THE AFORESAID DECISION HAS NOT ONLY BEEN CONFIRMED BY HONBLE BOMBAY HIGH COURT BY WAY OF DISMISSAL OF REVENUES APPEAL BUT ALSO FOLLOWED IN ANOTHER DECISION TITLED AS CIT VS DEVESH AGARWAL [81 TAXMANN.COM 257] WHEREIN HONBLE BOMBAY HIGH COURT HAS OBSERVED AS U NDER: - 6. BEING AGGRIEVED THE REVENUE FILED TWO APPEALS TO T HE TRIBUNAL. BY THE IMPUGNED ORDER DATED 10TH APRIL, 2014 THE REVENUE'S APPEAL F OR BOTH THE ASSESSMENT YEARS WAS DISMISSED. THE IMUGNED ORDER UPHELD THE ORDER D ATED 25TH MARCH, 2011 OF THE CIT (A). WE NOTE THAT THE CIT (A) HAD, WHILE REVERS ING THE VIEW OF THE ASSESSING OFFICER HAD INTER ALIA, PLACED RELIANCE UPON THE DE CISION OF THE TRIBUNAL IN RUPEE FINANCE & MANAGEMENT (P.) LTD. V. ASSTT. CIT [2008] 120 ITD 539 (MUM.). MR. MOHANTY THE LEARNED COUNSEL FOR REVENUE VERY FAIRLY POINTS OUT THAT THE REVENUE HAD FILED AN APPEAL AGAINST THE ORDER OF THE TRIBUN AL IN RUPEE FINANCE AND MANAGEMENT (P.) LTD. ( SUPRA ) TO THIS COURT BEING INCOME TAX APPEAL NO. 1208 OF 2008. ( CIT V. RUPEE FINANCE & MANAGEMENT (P.) LTD. ). THIS COURT BY AN ORDER DATED 20TH OCTOBER, 2008 HAD DISMISSED THE REVENUE'S ABOV E APPEAL, INTER ALIA, ON THE ISSUE OF ADDITION ON ACCOUNT OF UNDISCLOSED INVESTM ENTS UNDER SECTION 69 OF THE ACT FOR PURCHASE OF SHARES AT A PRICE LESSER THAN ITS M ARKET VALUE. NO DISTINGUISHING FEATURES IN THE PRESENT CASE HAS BEEN SHOWN TO US W HICH WOULD WARRANT TAKING A DIFFERENT VIEW. MOREOVER, IN THE ABSENCE OF ANY COR ROBORATIVE EVIDENCE ESTABLISHING RECEIPTS AND PAYMENTS OUTSIDE THE REGULAR BOOKS OF ACCOUNT, IT CANNOT BE ALLEGED THAT INVESTMENTS HAVE BEEN MADE WHICH ARE NOT RECOR DED. FURTHER THE REVENUE HAS IN THIS CASE PROCEEDED TO HOLD THAT THERE IS INVEST MENT IN SHARES IN EXCESS OF WHAT IS SHOWN ON THE BASIS OF PURE SUSPICION I.E. THE SHARE S PURCHASED AT A PRICE LESS THAN ITS ACTUAL VALUATION. THEREFORE UNLESS IT IS FIRST ESTABLISHED BEYOND DOUBT THAT THERE IS AN INVESTMENT WHICH IS NOT RECORDED BY THE ASSESSEE IN ITS BOOKS, NO OCCASION TO EXPLAIN ABOUT THE NATURE AND SOURCE OF THE INVESTME NT CAN ARISE. THE INVOCATION OF SECTION 69 OF THE ACT BEFORE ESTABLISHING INVESTMEN T NOT RECORDED IN ITS BOOKS OF ACCOUNT, IS NOT JUSTIFIED. 7. IN THE ABOVE VIEW, THE PROPOSED QUESTION DO NOT GI VE RISE TO ANY SUBSTANTIAL QUESTION OF LAW FOR BOTH THE ASSESSMENT YEARS. THUS NOT ENTERTAINED. 9 IN THE AFORESAID BACKGROUND, WE CONCUR WITH THE STA ND OF LD. CIT(A) IN THE IMPUGNED ORDER AND ACCORDINGLY, DISMISS THE APP EAL. 6. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13/09/2019 SR.PS. JAISY VARGHESE !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.