Shri Bharat V.Patel, Baroda V. The ACIT., Circle-2, Baroda

ITA 567/AHD/2005

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9790 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 22-02-2005

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M SHRI BHARAT V. PATEL, 13, SANDALWOOD SOCIETY, RACE COURSE CIRCLE, BARODA. VS. ASSTT. CIT, CIR-2, BARODA. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S. N. SOPARKAR, AR REVENUEBY:- SHRI BHUBNESH KULSHRESTHA, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF AO IN ERRONEOUSLY QUANTIFYING THE CAPITAL GAINS ON REDEMPTION OF STOCK APPRECIATION RIGHTS (SARS) GRAN TED TO THE APPELLANT. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF AO IN QUANTIFYING THE NET CONSIDERATION AT RS.7,46,44,405/- FOR THE PURPOSE OF CALCULATING EXE MPTION U/S 54EA OF THE ACT. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE NET CONSIDERATION OUGHT TO HAVE BEEN CALCULAT ED AT RS.4,85,98,022/-. (3) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN TAK ING THE DATE OF TRANSFER OF THE SAID SARS AS 15/10/1997 WHEREAS THE CORRECT DATE OF TRANSFER OUGHT TO HAVE BEEN 20/01/1997 WHEN THE APPELLANT ACTUALLY RECEIVED THE SALES CONSIDERATION . ITA NO.567/AHD/2005 ASST. YEAR :1998-99 ITA NO.567/AHD/2005 ASST. YEAR 1998-99 2 (4) ALTERNATIVELY AND WITHOUT PREJUDICE, FOR THE PURPOS E OF GRANTING AND QUANTIFYING EXEMPTION U/S54EA OF THE ACT, THE D ATE OF TRANSFER MAY BE TAKEN AS THE DATE ON WHICH THE APPE LLANT RECEIVED THE SALES CONSIDERATION ON THE SALE OF THE SAID SARS. (5) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF AO WHO HAS NOT GIVEN CORRECT AND PROPER E FFECT OF THE ITAT ORDER AND DIRECTIONS GIVEN THEREIN. BOTH THE L OWER AUTHORITIES HAVE ERRED IN NOT APPRECIATING THE DIRE CTIONS GIVEN IN THE ORDER OF THE HON. ITAT IN ITS CORRECT PERSPECTI VE. (6) BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN NOT PROPERLY APPRECIATING THE CONSIDERING VARIOUS SUBMI SSIONS, EVIDENCES AND SUPPORTING PLACED ON RECORD DURING TH E COURSE OF THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS AND NOT PROPERLY APPRECIATING VARIOUS FACTS AND LAW IN THEI R PROPER PERSPECTIVE. (7) LEVY OF INTEREST U/S 234A/B/C/D OF THE ACT IS NOT J USTIFIED. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND WAS EMPLOYED AT THE RELEVANT TIME IN M/S PROCTER AND GA MBLE INDIA LTD., USA. HE WAS CHAIRMAN AND MANAGING DIRECTOR OF THAT COMPANY IN INDIA. DURING HIS EMPLOYMENT, M/S PROCTER AND GAMBLE USA I SSUED FOLLOWING STOCK APPRECIATION RIGHTS (SARS) TO THE ASSESSEE:- DATE OF GRANT OF SARS NO. OF SHARES COVERED IN GRAN T FEB. 26, 1991 1,700 FEB. 24, 1992 1,800 FEB. 26, 1993 3,200 FEB.25, 1994 3,200 FEB.28, 1995 3,600 FEB.29, 1996 3,585 IT WAS EXPLAINED TO THE AO THAT OBJECT OF SARS WAS TO ENABLE THE EMPLOYEE OF THE GROUP TO BENEFIT FROM FUTURE APPREC IATION IN MARKET PRICE WITHOUT REQUIRING HIM TO MAKE ANY INVESTMENT. THE S TOCK APPRECIATION ITA NO.567/AHD/2005 ASST. YEAR 1998-99 3 RIGHTS SO ISSUED TO THE ASSESSEE WERE EXTINGUISHED ON 15.10.1997 AND WERE ACCORDINGLY REDEEMED. ON REDEMPTION OF SHARES SO GRANTED TO THE ASSESSEE, ASSESSEE RECEIVED A CONSIDERATION OF RS.6 ,80,40,727/- FROM PROCTER AND GAMBLE OF USA. THE ASSESSEE SOUGHT TO E XPLAIN THAT THIS AMOUNT WILL NOT BE TAXABLE UNDER SECTION 17(2) OF T HE ACT AS PERQUISITE AS THERE WAS IN FACT NO EMPLOYEE AND EMPLOYER RELATION SHIP OF PROCTER AND GAMBLE ( P & G) USA. IN FACT HE WAS EMPLOYEE OF PRO CTER AND GAMBLE INDIA LTD. ACCORDING TO THE ASSESSEE THESE SARS HA VE BEEN TRANSFERRED AS CAPITAL ASSET AND CAPITAL GAINS WOULD ARISE ON THE DATE OF REDEMPTION. THE ASSESSEE ACCORDINGLY SUBMITTED COMPUTATION OF CAPIT AL GAINS AS UNDER :- MY TOTAL CAPITAL GAIN ON SARS IS OF RS.6,80,40,724 /- OUT OF WHICH RS.1,94,42,627/- IS TOWARDS SHORT TERM CAPITAL GAIN AND RS.4,85,98,097/- IS TOWARDS LONG TERM CAPITAL GAIN. AGAINST ABOVE LO NG TERM CAPITAL GAIN, INVESTMENT WITHIN THE PRESCRIBED TIME OF SIX MONTHS IS MADE OF RS.3,99,99,900/- IN THE SCHEME U/S 54EA WHICH MAY B E ALLOWED. WE AGREE FOR TAXATION AND PAYMENT OF TAX ON ABOVE STATED SHO RT TERM CAPITAL GAIN AS WELL AS BALANCE LONG TERM CAPITAL GAIN AS WELL A S BALANCE LONG TERM CAPITAL GAIN IF ANY AGAINST WHICH NO APPEAL SHALL B E PREFERRED. THE AO, HOWEVER, DID NOT AGREE. HE INVOKED CIRCULAR NO.710 DATED 24.07.95 HOLDING THE RECEIPT ON REDEMPTION OF SHARE S AS PERQUISITES AND TAXED IT ACCORDINGLY. THE MATTER TRAVELED TO THE TR IBUNAL WHICH HELD THAT RECEIPT OF REDEMPTION OF SHARES SHOULD BE TAXED UND ER THE HEAD CAPITAL GAINS. IN THIS REGARD WE REFER TO PARA 4.1 OF TRIBU NALS ORDER IN ITA NO.2241/AHD/2002 ASST. YEAR 1998-99 DATED 27/6/2003 AS UNDER :- 4.1 REGARDING THE ALTERNATIVE STAND OF ASSESSEE TH AT SARS ACQUIRED BY ASSESSEE FROM PROCTER & GAMBLE, USA CONSTITUTES CAP ITAL ASSETS AND NO CAPITAL GAIN AROSE ON REDEMPTION TO SARS SINCE THEY WERE ACQUIRED ITA NO.567/AHD/2005 ASST. YEAR 1998-99 4 WITHOUT COST. WE ARE OF THE VIEW THAT ACCEPTANCE OF SARS AMOUNT TO ACCEPT THE LIABILITY TO PAY THE AMOUNT ON DATE OF A LLOTMENT OF SARS WHICH ALSO IS EVIDENT FROM THE FACT THAT ASSESSEE GOT NET AMOUNT I.E. DIFFERENCE BETWEEN THE MARKET PRICE AND LIABILITY TO PAY THE A MOUNT ON THE DATE OF ALLOTMENT. THE ACQUISITION OF SARS WERE NOT WITHOUT ANY COST. THOUGH NOTHING WAS ACTUALLY PAID AT THE TIME OF ACCEPTANCE OF SARS BUT ELEMENT OF CONSIDERATION NOT ONLY INCLUDE THE ACTUAL PAYMEN T BUT ALSO THE PROMISE TO PAY THE SAME AND SINCE BY ALLOTMENT OF SARS THE EMPLOYEE IMPLIEDLY PROMISED TO PAY FOR THE COST WHICH IS ALSO EVIDENT FROM THE ULTIMATE TRANSACTIONS UNDER WHICH ASSESSEE GOT ONLY NET AMOU NT OF REDEMPTION AS ADMITTED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. THUS IT WOULD BE A CASE OF ACQUISITION OF SARS WITH CONSIDERATION. THI S POSITION IS FURTHER CLEAR BY THE CONDUCT OF THE ASSESSEE WHO HAS AGREED FOR CAPITAL GAIN ON THE SAME. NOT ONLY THIS, ASSESSEE AGREED NOT TO FIL E APPEAL AGAINST SUCH LEVY OF CAPITAL GAIN. THE CLAIM FOR EXEMPTION UNDER SECTION 54EA OF THE IT ACT BY INVESTING THE SAID GAIN IN SPECIFIED CHAN NEL NOTIFIED UNDER SECTION 54EA OF THE ACT CANNOT BE GONE INTO AT THIS STAGE AS THE SAID INVESTMENT DETAILS ARE NOT ON RECORD. SO THE AO IS DIRECTED TO VERIFY THE SAME, OF COURSE, AFTER PROVIDING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE AND ALLOW NECESSARY RELIEF TO THE ASSESSEE UNDER THIS SECTION. AFTER THE ORDER OF TRIBUNAL THE AO PASSED AN ORDER UNDER SECTION 250 GIVING EFFECT TO THAT ORDER AND WORKED OUT SHORT TE RM AND LONG TERM CAPITAL GAINS AND ALSO ALLOWED EXEMPTION UNDER SECT ION 54EA ACCORDINGLY. THE AO, HOWEVER, ADOPTED THE NOTIONAL VALUE OF ACQUISITION OF SHARES AS COST OF ACQUISITION AND NOTIONAL VALUE OF REDEMPTION AS SALE CONSIDERATION, THE DIFFERENCE BEING SUM OF RS.6,80, 40,649/- PAID TO THE ASSESSEE BY P & G, USA WAS TREATED AS GAINS ON TRAN SFER/REDEMPTION OF SHARES ON WHICH THE AO WORKED OUT THE CAPITAL GAINS AS UNDER :- ITA NO.567/AHD/2005 ASST. YEAR 1998-99 5 WORKING OF EXEMPTION U/S 54EA: = CAPITAL GAIN X AMOUNT OF ELIGIBLE INVESTMENT U/S 54EA WITHIN 6 MONTHS NET CONSIDERATION. = 4,85,98,021 X 3,99,99,000 = 2,60,41,76,749/- 7,46,44,405 TAXABLE CAPITAL GAIN IS WORKED OUT AS UNDER : LONG TERM CAPITAL GAIN RS.4,85,98,021/- EXEMPTED U/S 54EA RS.2,60,41,767/- TAXABLE L.T.C.G. RS.2,25,56,254/- 3. THE ASSESSEE BEING AGGRIEVED WENT IN APPEAL BEFO RE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE AO IN CALCULATING TH E CAPITAL GAINS ON THE BASIS OF NOTIONAL SALE CONSIDERATION ON REDEMPTION OF THE SHARES AND NOT TREATING THE NET CONSIDERATION AS TOTAL SALE CONSID ERATION. ACCORDING TO THE LD. CIT(A) AT THE TIME OF ALLOTMENT OF SARS THERE W AS A LIABILITY TO PAY THE AMOUNT EQUAL TO THE PRICE OF THE STOCK AS ON TH E DATE OF ALLOTMENT OF SARS BUT THE LIABILITY WAS DEFERRED TILL DATE OF RE DEMPTION OF THESE SARS AND WAS ADJUSTED/DEDUCTED OUT OF THE MARKET PRICE O F THE STOCK AS ON THE DATE OF REDEMPTION. THUS ONLY THE NET AMOUNT BEING APPRECIATION OR GAIN WAS PAID TO THE APPELLANT. THE NET AMOUNT ACCORDING LY WAS CAPITAL GAIN AND CANNOT BE CONSIDERED TO BE NET CONSIDERATION. T HE LD. CIT(A) ALSO UPHELD THE CALCULATION OF EXEMPTION UNDER SECTION 5 4EA ON THE BASIS OF NO. SARS RATE IN DOLLAR EXCHANGE PRICE IN RS. OF ONE DOLLAR 6800 71.97 38.70 7200 71.97 38.70 6400 71.97 38.70 6400 71.97 38.700 26800 (TOTAL) 71.97 38.70 NET CONSIDERATION =26800 X 71.97 X 38.70 = 7,48,44, 405 ITA NO.567/AHD/2005 ASST. YEAR 1998-99 6 GROSS CONSIDERATION BEING MARKET VALUE OF THE SARS AT WHICH THEY WERE REDEEMED. WE FOR THE SAKE OF CONVENIENCE REPRODUCE THE ORDER OF LD. CIT(A) TO HIGHLIGHT THE VIEW HE HAS TAKEN:- 4.3 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND ALSO PERUSED THE ORDER GIVING EFFECT TO THE ITATS ORDER AS WELL AS COMMENTS OF THE AO. THE MAIN ISSUE UNDER CONSIDERATION IS THAT WHAT IS THE DATE OF TRANSFER OF SAR. THE AO HAS TAKEN THE DATE OF TRANSFER AS 15.10 .97, WHEREAS THE APPELLANT CONTENDS THAT HE HAS RECEIVED THE REDEMPT ION PROCEEDS ON 20.01.98 AND ACCORDINGLY, SAME SHOULD BE TAKEN AS T HE DATE OF TRANSFER. THE APPELLANT HAS CONTENDED THAT THERE COULD NOT BE ANY TRANSFER OF SAR AND SAME COULD BE AND WERE IN FACT, EXTINGUISHED BY REDEMPTION AND THE REDEMPTION OF SAR TOOK PLACE ON 20.01.98 UPON APPEL LANT RECEIVING THE REDEMPTION PROCEEDS. IT WAS FURTHER CONTENDED THAT THE EARLIER DATE, IF AT ALL, ONLY REPRESENTED A REFERENCE DATE FOR THE PURP OSE OF ACTUAL QUANTIFICATION OF REDEMPTION RIGHT. ON GOING THROUGH THE VARIOUS DOCUMENTS AND DETAILS , THE CLAIM OF THE APPELLANT WAS FOUND TO BE INCORRECT. IN FACT, A T PAGE 2 OF THE ASSESSMENT ORDER, IT HAS BEEN CLEARLY MENTIONED THA T THE SARS WERE EXTINGUISHED ON 15.10.97 BY PROCTER & GAMBLE CO., U SA AND REDEMPTION WAS CARRIED OUT ON 15.10.97. SIMILAR FACT WAS MENTI ONED IN THE ORDER OF THE CIT(A) WHILE DECIDING THE QUANTUM APPEAL. APART FROM THIS, IT IS NOTICED THAT THE APPELLANT IN ITS WRITTEN SUBMISSIO N BEFORE THE AO HAS FURNISHED THE DETAILS IN WHICH THE DATE OF REDEMPTI ON WAS MENTIONED AS 15.10.97 (BY TYPOGRAPHICAL ERROR, SAME WAS MENTIONE D AS 15.10.98 INSTEAD OF INTENTION OF THE APPELLANT TO MENTION TH E DATE AS 15.10.97). IN FACT, ON REDEMPTION, TWO CHEQUES WERE ISSUED BY THE P & G, USA IN FAVOUR OF THE APPELLANT AMOUNTING TO $12,55,762.84 AND $ 5,02,393.13 TOTALING TO $ 17,58,156.33. BOTH THE CHEQUES WERE D ATED 24.10.97. INCIDENTALLY, THE MONEY RELATED TO THESE CHEQUES WE RE CREDITED IN THE BANK ACCOUNT OF THE APPELLANT ON 20.01.98. HOWEVER, THE DATE OF RECEIPT OF MONEY I.E. 20.01.98 CANNOT BE CONSIDERED TO BE THE DATE OF TRANSFER. AS PER THE DEFINITION OF TRANSFER PROVIDED IN SECTION 2(47) RELINQUISHMENT OF ASSET OR EXTINGUISHMENT OF ANY RIGHT THEREIN IS INC LUDED WITHIN THE DEFINITION OF TRANSFER IN RELATION TO CAPITAL ASS ET. IN THE PRESENT CASE, SUCH DATE OF EXTINGUISHMENT OF RIGHT BY WAY OF REDE MPTION IS UNDISPUTEDLY 15.10.97. IT IS THE APPELLANT HIMSELF WHO HAS GIVEN THIS DATE AS THE DATE OF REDEMPTION WHILE FURNISHING DETAILS BEFORE THE AO. ACCORDINGLY, THE DATE OF TRANSFER OF CAPITAL ASSET AS PER SECTION 2(47) W ILL OBVIOUSLY BE THE DATE OF EXTINGUISHMENT OF RIGHT I.E. THE DATE OF REDEMPT ION I.E. 15.10.97. FOR ITA NO.567/AHD/2005 ASST. YEAR 1998-99 7 SUCH REDEMPTION, THE CHEQUES WERE ALSO ADMITTEDLY I SSUED BY THE COMPANY ON 24.10.97. THE DATE OF REALIZATION OF THE AMOUNT WILL HAVE NOTHING TO DO WITH THE DATE OF TRANSFER OF ASSET. I T IS A FACT OF COMMON KNOWLEDGE THAT IN SOME OF THE CASES, THOUGH THE TRA NSFER OF PROPERTY TAKES PLACE IN SOME EARLIER DATE, BUT THE SALE CONSIDERAT ION IS ACTUALLY GIVEN AFTERWARDS AS PER THE MUTUAL AGREEMENT BETWEEN BOTH THE PARTIES. BUT THIS WILL NOT AND CANNOT CHANGE THE DATE OF TRANSFER OF THE ASSET. 4.4 IN VIEW OF THESE FACTS, IT IS HELD THAT THE AO HAS CORRECTLY TAKEN THE DATE OF TRANSFER OF ASSET IN THE FORM OF SAR AS 15. 10.97. AS THE INVESTMENT TO THE EXTENT OF RS.86 LACS (RS.46 LACS + RS.40 LAC S) HAS BEEN MADE ON 17.06.98 & 18.06.98 RESPECTIVELY, WHICH IS BEYOND S IX MONTHS FROM THE DATE OF TRANSFER, ACTION OF THE AO IN NOT CONSIDERI NG THE AFORESAID SUM AS ELIGIBLE FOR DEDUCTION U/S 54EA, IS HEREBY CONFIRME D. 4. AGAINST THIS, LD. AR FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS NOT PAID ANY CONSIDERATION AT THE TIME OF CONFERRING ON HIM SARS, THEREFORE, HE IN FACT NOT INCURRED ANY COST. WHATEVER NET CONS IDERATION HE HAS RECEIVED WAS ACCORDINGLY INVESTED IN THE SPECIFIED SECURITIES FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SECTION 54EA. O NCE ASSESSEE HAS NOT RECEIVED ANY GROSS AMOUNT CALCULATED AT RS.7,46 ,44,405/- THE QUESTION OF CONSIDERING IT FOR THE PURPOSE OF DETERMINING EX EMPTION U/S 54EA SHOULD NOT ARISE. ANOTHER POINT RAISED BY LD. AR WA S THAT ASSESSEE HAS ACTUALLY RECEIVED THE REDEMPTION MONEY ON JANUARY 2 0, 1998 ONLY AS UNDER :- SL.NO. SAR GRANT DATE SAR ENCASHED DATE SAR VALUE INCREASED TOTAL GAINS EXCHANGE RATE TOTAL GAIN NOS. GRANT PRICE $ ENCHASED PRICE $ $ 1$ =RS. IN RS. A B C A X (C-B) 1. 26.1.91 20.1.98 6,800 20.94 71.97 47,012.84 38.7 13,429,396 .9 2 24.4.92 20.1.98 7,200 25.53 71.97 334,350 38.7 12,939,345 3 26.2.93 20.1.98`` 6.400 25.78 71.97 295,600 38.7 11,439,720 25.2.94 28.1.98 6.400 78.41 71.97 278,800 38.7 10,789,560 48,598,021.9 ITA NO.567/AHD/2005 ASST. YEAR 1998-99 8 THEREFORE, IN PLACE OF SUM OF RS.7,46,44,405/- AN A CTUAL AMOUNT RECEIVED SHOULD BE TAKEN AT RS.4,85,98,022/-. ACCORDING TO H IM NET CONSIDERATION AS CONTEMPLATED IN SECTION 54EA OF THE ACT COULD ON LY MEAN THE SUM RECEIVED BY THE ASSESSEE. 5. THE ASSESSEE WAS REQUIRED TO INVEST A NET CONSID ERATION SO RECEIVED WHICH HAS BEEN INVESTED BY HIM AS UNDER :- NAME OF THE SECURITIES AMOUNT INVESTED DATE OF INVE STMENT ALLIANCE MUTUAL FUND RS.1,00,00,000/- MARCH 18,1998 ALLIANCE MUTUAL FUND RS.33,33,300/- MARCH, 18, 1998 TEMPLETON MUTUAL FUND RS.1,00,00,000/- MARCH 18,199 8 TEMPLETON GROWTH FUND RS.33,33,000/- MARCH 18,1998 BIRLA MUTUAL FUND RS.1,00,00,000/- MARCH 18,1998 BIRLA MUTUAL FUND (ADVANTAGE) RS.33,33,000/- MARCH 18,1998 UTI BONDS 46,00,000/- JUNE 17, 1998 ICICI MUTUAL FUND RS.40,00,000/- JUNE 17, 1998 TOTAL RS.4,85,99,900/- THUS THE PERIOD OF 6 MONTHS AS REQUIRED FOR ALLOWIN G EXEMPTION UNDER SECTION 54EA SHOULD BE RECKONED FROM 20 TH JANUARY, 1998 AND NOT 15 TH OCTOBER, 1997. 6. ON THE OTHER HAND, LD. DR SUBMITTED THAT COMPUTA TION DONE BY AO IS CORRECT AND IN ACCORDANCE WITH THE DIRECTIONS OF THE TRIBUNAL. THE TRIBUNAL HAS CONSIDERED THAT ACQUISITION OF STOCK B Y THE ASSESSEE WAS NOT WITHOUT CONSIDERATION AND, THEREFORE, SALE PROCEEDS HAS TO BE COMPUTED BY INCLUDING COST OF ACQUISITION PLUS NET AMOUNT RECEI VED BY THE ASSESSEE AS DONE BY THE AO. 7. REGARDING DATE OF REDEMPTION LD. DR SUBMITTED TH AT ONCE SHARES ARE REDEEMED ON 15 TH OCTOBER, 1997 THEN PERIOD OF SIX MONTHS FOR EXEMPTION UNDER SECTION 54EA SHOULD BE RECKONED FRO M THIS DATE. IT IS IMMATERIAL WHEN ASSESSEE ACTUALLY RECEIVED THE CONS IDERATION, IN CASH. ITA NO.567/AHD/2005 ASST. YEAR 1998-99 9 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE ARE TWO ISS UES INVOLVED IN THE PRESENT APPEAL. ONE IS WHAT SHOULD BE THE NET CONSI DERATION, WHETHER THE NET AMOUNT RECEIVED BY THE ASSESSEE OR THE MARKET V ALUE OF SARS WHICH COMPRISED OF NET AMOUNT RECEIVED BY THE ASSESSEE PL US COST OF ACQUISITION (WHICH WAS IN FACT NOT PAID BY THE ASSESSEE AND WAS FINALLY DEDUCTED BY THE P & G USA FROM MARKET VALUE OF SARS). THIS ISSU E IS SETTLED BY THE TRIBUNAL IN ITS ORDER DATED 27.6.2003 OUT OF WHICH WE MADE A REFERENCE AS ABOVE. IT IS HELD THEREIN THAT IT IS A CASE OF ACQU ISITION OF SARS WITH CONSIDERATION. THE TRIBUNAL HELD THAT EVEN NOTHING WAS ACTUALLY PAID AT THE TIME OF ACCEPTANCE OF SARS BUT THE ELEMENT OF C ONSIDERATION NOT ONLY INCLUDES ACTUAL PAYMENT BUT ALSO THE PROMISE TO PAY THE SUM. AT THE TIME OF ALLOTMENT OF SARS, THE EMPLOYEE IMPLIEDLY PROMIS ED TO PAY FOR THE COST. IN FACT THE TRIBUNAL HAD RESTORED THE MATTER ONLY FOR THE PURPOSE OF COMPUTATION OF EXEMPTION UNDER SECTION 54EA AND NOT FOR DETERMINING WHAT SHOULD BE THE NET CONSIDERATION. THE ISSUE IS ALREADY SETTLED BY THE TRIBUNAL IN THEIR EARLIER ORDER IN THE CASE OF THE ASSESSEE, WHICH WE HAVE REFERRED TO. ACCORDINGLY WE HOLD THAT THE NET CONSI DERATION WILL INCLUDE THE AMOUNT RECEIVED IN CASH BY THE ASSESSEE AND THE AMOUNT DEDUCTED BY THE P & G, USA AS COST OF ALLOTMENT OF SARS. ACCORD INGLY THIS PART OF THE GROUND OF ASSESSEE IS REJECTED. 9. THE SECOND ISSUE IS AS FROM WHICH DATE COMPUTATI ON OF SIX MONTHS SHOULD BE RECKONED. IN OUR CONSIDERED VIEW THE AUTH ORITIES BELOW WERE JUSTIFIED IN TREATING OCTOBER 15, 1997 AS DATE OF R EDEMPTION OF SHARES AND TO RECKON THE PERIOD OF SIX MONTHS THERE-FROM. IT I S A CASE OF TRANSFER OF STOCKS BY BOOK ENTRIES ON THAT DATE AND THEREFORE, THE PERIOD OF SIX MONTHS HAS TO BE RECKONED FROM THE DATE OF TRANSFER. ACCOR DINGLY THIS PART OF THE ITA NO.567/AHD/2005 ASST. YEAR 1998-99 10 GROUND OF ASSESSEE IS REJECTED. WE ACCORDINGLY UPHO LD THE ORDERS OF AUTHORITIES BELOW. THE APPEAL FILED BY THE ASSESSEE IS THEREFORE, DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 24/9/10. SD/- SD/- (BHAVNESH SAINI) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R AHMEDABAD, DATED : 24/9/10. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 30/8/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..