SBI Cards Payment Services Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 5879/DEL/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5275 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 01-11-2013

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI N.K.SAINI, HONBLE VICE PRESID ENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.5879/DEL/2013 ASSESSMENT YEAR: 2008-09 SBI CARDS PAYMENT SERVICES PVT. LTD. 401,402, 4 TH FLOOR, AGGARWAL MILLENIUM TOWER, E 1,2,3, NETAJI SUBHASH PLACE, WAZIRPUR NEW DELHI PAN : AAECS5981K VS. ACIT CIRCLE-7(1), C.R.BUILDING, I.P.ESTATE NEW DELHI APPELLANT RESPONDENT REVENUE BY : SHRI K. TEWARI, SR. DR ASSESSEE BY : SHRI TUSHAR JARWAL , RAHUL SATEEJA, ADV. DATE OF HEARING : 26.07. 2018 DATE OF PRONOUNCEMENT : 23.10.2018 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AG AINST ORDER DATED 28.08.2013 PASSED BY THE LD. CIT (A)-X, NEW DELHI FOR ASSESSMENT YEAR 2008-09. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS A JOINT VENTURE NON-BANKING FINANCE COMPANY PROMOTED BY STATE BANK OF INDIA AND GE CAPITAL (MAURITIUS) INVESTMENT COMPANY ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 2 LTD. IT IS ENGAGED IN ISSUANCE, SALES AND MARKETING OF CREDIT CARDS. THE RETURN OF INCOME WAS FILED DECLARING A LOSS OF RS. 8,98,49,289/-. THE RETURN WAS INITIALLY PROCESSED U /S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE A CT) AND WAS LATER SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COM PLETED AT A TAXABLE INCOME OF RS. 1,33,19,01,833/- AFTER MAKING THE FOLLOWING ADDITIONS / DISALLOWANCES (I) DISALLOWANCE ON ACCOUNT OF REWARD POINTS 8,52,72,000/- (II) DISALLOWNCE OF CREDIT INVESTIGATION EXPENSES 4,90,73,276/- (III) DISALLOWANCE OF EXPENDITURE ON APPLICATION CA PTURE 2,57,61,950/- (IV) DISALLOWANCE OF ADVERTISEMENT EXPENSES 105,27,85,289/- (V) CARD ACQUISITION EXPENSES CLAIMED UP FRONT 17,85,92,045/- (VI) ADDITION ON A/C OF GAIN ON REDEMPTION OF SHARE S 11,55,38,563/- 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT (A) CHALLENGING THE ADDITIONS AND DISALLOWANCES WHO PAR TLY ALLOWED THE ASSESSEES APPEAL BY DISMISSING ASSESSEES CHAL LENGE TO DISALLOWANCE OF RS. 8,52,72,000/- ON ACCOUNT OF REW ARD SCHEME POINTS. THE LD. CIT (A) DELETED THE DISALLOWANCE OF RS. 4,90,73,276/- MADE ON ACCOUNT OF CREDIT INVESTIGATI ON EXPENSES. THE LD. CIT (A) ALSO DELETED THE DISALLOWANCE OF EX PENDITURE OF RS. 2,57,61,950/- ON ACCOUNT OF APPLICATION CAPTURE EXP ENSES. WITH RESPECT TO THE DISALLOWANCE OF ADVERTISEMENT EXPENS ES OF ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 3 105,27,85,289/-, THE LD. CIT (A) PARTLY SUSTAINED T HE DISALLOWANCE BY HOLDING THAT AN AMOUNT OF RS. 1 CRO RE NEEDED TO BE DISALLOWED IN THIS REGARD. WITH RESPECT TO DISAL LOWANCE OF RS. 17,85,92,045/- ON ACCOUNT OF CARD ACQUISITION EXPEN SES THE LD. CIT(A) DISMISSED THE ASSESSEES CHALLENGE. WITH RES PECT TO THE DISALLOWANCE OF RS. 11,55,38,563/- ON ACCOUNT OF RE DEMPTION SHARES OF VISA, THE LD. CIT (A) UPHELD THE ADDITION . APART FROM THIS, THE LD. CIT (A) ALSO HELD THAT THE AMOUNT OF RS. 14,81,63,008/- SHOWN AS SHORT TERM CAPITAL GAIN BY THE ASSESSEE ON THIS ACCOUNT WAS ALSO TO BE TREATED AS BUSINESS INCOME. 2.2 NOW, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT AND HAS CHALLENGED THE VARIOUS DISALLOWANCES AND ADDITIONS SUSTAINED BY THE LD. CIT (A). FOLLOWING GROUNDS HAVE BEEN RAISED :- 1. DISALLOWANCE OF PROVISION FOR REWARD POINT REDEMPTI ON 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF PROVISION F OR REWARD POINT REDEMPTION AMOUNTING TO RS. 8,52,72,000/- MAD E BY THE ASSESSING OFFICER (LD. AO) CONSIDERING THE SA ME AS UNASCERTAINED / CONTINGENT LIABILITY. 1.2. THAT THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE PROVISION FOR REWARD POINT REDEMPTION WAS ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 4 RECOGNIZED ON SCIENTIFIC BASIS; DULY SUPPORTED BY T HE ACTUARIAL VALUATION CERTIFICATE AND THE OPINION OF THE EXPERT ADVISORY COMMITTEE OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. FURTHER, THE LD. CIT(A) HAS DISREGARDED THE FACT THAT THE SAID ACCOUNTING POLIC Y OF THE APPELLANT HAS BEEN DULY VERIFIED BY THE STATUTORY A UDITORS AS MENTIONED IN NOTE 15 TO THE AUDITED FINANCIAL STATEMENTS. 1.3. THAT THE LD. CIT (A) HAS NOT INDEPENDENTLY EXAMINE D THE ISSUE; SUBMISSIONS PLACED BEFORE HIM; THE DECIS IONS RELIED UPON BY THE APPELLANT AND HAS MERELY PROCEED ED TO CONCLUDE BASED ON THE ORDERS PASSED BY HIS PREDECES SORS FOR AY 2006-07 AND 2007-08. 1.4. THAT THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT RELIANCE PLACED BY THE LD. AO ON DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VI NITEC CORPORATION PVT. LTD. (2005) 278 ITR 337 (DEL) IN F ACT SUPPORTS THE CLAIM OF THE APPELLANT THAT WHERE A PR OVISION IS CAPABLE OF BEING CONSTRUED IN DEFINITE TERMS THO UGH ITS ACTUAL QUANTIFICATION AND DISCHARGE IS DEFERRED TO A FUTURE DATE, IT IS AN ALLOWABLE EXPENSE. 2. DISALLOWANCE OF AD-HOC ADVERTISEMENT EXPENSES 2.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF ADVERTISEMENT EXPENSES TO THE EXTENT OF RS. 1 CRORE ON AD HOC BASIS BY REGARDING THE SAME TO BE EXPENSES ON GIFTS AND OTHERS WITHOUT GIVING ANY OPPORTUNITY OF BEIN G HEARD TO THE APPELLANT AND WITHOUT CONSIDERING THE SUBMIS SIONS OF ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 5 THE APPELLANT. 2.2 THAT THE LD. CIT (A) HAS ERRED IN OBSERVING THAT THE EXPENSE OF RS. 1 CRORE HAVE NOT BEEN INCURRED WHOLLY AND EX CLUSIVELY FOR BUSINESS PURPOSE AND MAY HAVE BEEN GIVEN TO PER SONS WHO ARE NOT RELATED TO ANY BUSINESS ACTIVITIES OF T HE COMPANY. 3. DISALLOWANCE OF CARD ACQUISITION EXPENSES 3.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF CARD ACQUISITION EXPENSES AMOUNTING TO RS. 17,85,92,045 MADE BY THE LD. AO ON THE GROUND T HAT THE APPELLANT HAD ACCOUNTED FOR THESE EXPENSES AS DEFERRED REVENUE EXPENDITURE IN ITS BOOKS OF ACCOUN TS AND THAT THESE EXPENSES WERE PROVIDING ENDURING BENEFIT TO THE APPELLANT. 3.2 THAT, THE LD. CIT(A) HAS ERRED IN MERELY PLACING RELIANCE ON THE ORDER PASSED BY HIS PREDECESSORS FO R AY 2006-07 WITHOUT INDEPENDENTLY EXAMINING THE ISSUE A ND DISTINGUISHING THE DECISIONS RELIED UPON BY THE APP ELLANT. 3.3 THAT, THE LD. CIT(A) AND THE LD. AO HAVE FAILED TO APPRECIATE THAT: I. THE TREATMENT IS BOOKS OF ACCOUNT IS NOT DECISIVE / CONCLUSIVE FOR DECIDING THE TAXABILITY OF AN ITEM I N THE ACT WHICH IS A TRITE LAW ; AND II. THE TEST OF ENDURING BENEFIT IS NOT THE CONCLUSIV E TEST TO DECIDE THE NATURE OF EXPENDITURE AS CAPITAL. 3.4 THAT THE LD. CIT(A) AND THE LD. AO HAVE ERRED IN NOT ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 6 FOLLOWING DECISIONS OF THE HONBLE ITAT DECIDED IN FAVOR OF THE APPELLANT ON SIMILAR ISSUE FOR AY 2002-03. 4 ADDITION MADE ON ACCOUNT OF ALLOTMENT OF SHARES B Y VISA INC. 4.1 IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 11,55,38,563 MADE BY THE LD. AO IN RESPECT O F SHARES ALLOTTED BY VISA INC AS CONSIDERATION UNDER SECTION 28(IV) OF THE ACT BEING ANY BENEFIT OR PERQUISITE A RISING FROM BUSINESS OF THE APPELLANT. 4.2 THAT WHILE CONFIRMING THE DISALLOWANCE, THE LD. CIT(A) AND THE LD. AO HAVE PROCEEDED ON INCORRECT ASSUMPTIONS THAT THE ALLOTMENT OF SHARES BY VISA IN C WAS DIRECTLY RELATED TO THE BUSINESS ACTIVITIES OF THE APPELLANT AND THE ALLOTMENT WAS ON ACCOUNT OF BUSINESS RELATI ONS WITH VISA INC. 4.3 THE LD. CIT(A) FAILED TO APPRECIATE THAT IN TERMS OF SECTION 28(IV) WHAT WAS TAXABLE WAS A BENEFIT OR PE RQUISITE ARISING IN THE COURSE OF BUSINESS I.E. TO SAY THE B ENEFIT MUST BE IN THE FORM OF CONSIDERATION OF A TRANSACTI ON BETWEEN THE TWO PARTIES. 5 SHORT GRANT OF PREPAID TAXES 5.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT DIRECTING T HE LD. AO IN GRANTING TDS CREDIT TO THE EXTENT OF RS. 33,91,8 87 AS CLAIMED BY THE APPELLANT IN THE REVISED RETURN OF I NCOME. 5.2. THAT THE LD. AO HAS CONSEQUENTIALLY ERRED IN LEVYI NG EXCESS INTEREST UNDER SECTION 234B, 234D AND WITHDR AWING ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 7 INTEREST UNDER SECTION 244A OF THE ACT IN THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT. 3.0 AT THE OUTSET, THE LD. AUTHORISED REPRESENTATI VE SUBMITTED THAT GROUND NOS. 1.1 TO 1.4 WERE NOT BEING PRESSED BY THE ASSESSEE AS THE PROVISION MADE FOR REWARD POINT RED EMPTION HAS ALREADY BEEN ALLOWED BY THE DEPARTMENT ON ACTUAL BA SIS IN THE SUBSEQUENT YEARS. 3.1 WITH RESPECT TO GROUND NO. 2 CHALLENGING THE AD HOC DISALLOWANCE OF ADVERTISEMENT EXPENDITURE AND SUSTA INED BY THE LD. CIT (A) TO THE EXTENT OF RS. 1 CRORE, THE LD. A UTHORISED REPRESENTATIVE SUBMITTED THAT THE ISSUE WAS COVERED BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE ASS ESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 WHEREIN THE HONBL E DELHI HIGH COURT HAD ALLOWED THE ENTIRE ADVERTISEMENT EXPENDIT URE. A COPY OF THE ORDER OF THE HONBLE HIGH COURT WAS PLACED O N RECORD. IT WAS SUBMITTED THAT THE OBSERVATION OF THE LD. CIT ( A) THAT THE ASSESSEE HAD NOT FURNISHED PROPER DETAILS WAS INCOR RECT AND THE DETAILS WERE AVAILABLE IN THE PAPER BOOK FILED BY T HE ASSESSEE. 3.2 WITH RESPECT TO GROUND NO. 3 PERTAINING TO DISA LLOWANCE OF CARD ACQUISITION EXPENSES IT WAS SUBMITTED THAT THI S ISSUE WAS ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 8 ALSO COVERED BY THE JUDGMENT OF THE HONBLE DELHI H IGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 WHE REIN THE HONBLE DELHI HIGH COURT HAD ALLOWED THE ENTIRE CRE DIT CARD ACQUISITION EXPENDITURE IN THE YEAR OF INCURRENCE U /S 37(1) OF THE ACT. WITH RESPECT TO GROUND NO. 4 ON TAXABILITY OF ALLOTMENT OF SHARES BY VISA INC. IT WAS SUBMITTED THAT THE ISSUA NCE OF SHARES IS ON CAPITAL ACCOUNT IN THE SAME CANNOT BE TAXED A S INCOME FROM BUSINESS. IT WAS FURTHER SUBMITTED THAT OUT OF TOTA L SHARES NUMBERING 1,54,609 SHARES ALLOTTED TO THE ASSESSEE, THE ASSESSEE HAD SOLD 86,565 SHARES DURING THE YEAR UNDER CON SIDERATION ON WHICH TAX HAD ALREADY BEEN PAID UNDER THE HEAD CAP ITAL GAINS AS SHORT TERM CAPITAL GAINS AND ACCORDINGLY NO FURTHE R ISSUE OF TAXABILITY AROSE ON THIS ACCOUNT. THE LD. AUTHORISE D REPRESENTATIVE ALSO SUBMITTED THAT THE ASSESSEE HAD ALSO FILED AN ADDITIONAL GROUND WITH RESPECT TO GROUND NO. 4 AS T HERE WAS A TYPOGRAPHICAL ERROR IN THE GROUNDS OF APPEAL FILED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE ADDITION MADE BY THE LD. CIT (A) WAS RS. 26,37,01,557/- WHICH WAS IN ADVERTENTLY TAKEN A S RS. 11,55,38,563/- IN THE GROUNDS OF APPEAL. 3.3 THE LD. AUTHORISED REPRESENTATIVE, WITH RESPECT TO GROUND NO. 5, SUBMITTED THAT THE GROUND PERTAINED TO SHORT GRANT OF TDS ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 9 CREDIT TO THE EXTENT OF RS. 33,91,887/- AND PRAYED THAT THE ISSUE CAN BE RESTORED TO THE FILE OF THE AO FOR ALLOWANCE OF THE TAX CREDIT AFTER PROPER VERIFICATION. 4.0 IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESENT ATIVE PLACED EXTENSIVE RELIANCE ON THE ORDER OF THE LD. CIT (A) AND VEHEMENTLY ARGUED THAT THE LD. CIT (A) HAD RIGHTLY SUSTAINED T HE DISALLOWANCE. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIAL ON RECORD. SINCE GROUND NO. 1 HAS NOT BEEN PRESSED BY THE ASSESSEE, THE SAME IS DISMISSED AS NOT PRESS ED. 5.1 AS FAR AS THE ASSESSEES GROUND NO. 2 IS CONCER NED, IT HAS BEEN SUBMITTED BY THE LD. AUTHORISED REPRESENTATIVE THAT THE ISSUE IS COVERED BY THE JUDGMENT OF THE HONBLE DEL HI HIGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA 603/2014 AND ITA NO. 604/2014. WE FULLY AGREE WITH THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE THA T THE HONBLE DELHI HIGH COURT HAS ALLOWED ADVERTISEMENT AND SALE S PROMOTION EXPENDITURE IN AY 2006-07 AND HAS HELD THAT THE SAM E WAS TO BE TREATED AS REVENUE EXPENDITURE. HOWEVER, WE DO NOTE THAT IN THE PRESENT APPEAL, WHILE SUSTAINING THE DISALLOWANCE T O THE EXTENT OF ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 10 RS. 1 CRORE ON THIS ACCOUNT, THE LD. CIT (A) HAS NO TED IN PARA 5.3 (D) OF THE IMPUGNED ORDER THAT THE ASSESSEE WAS NOT IN A POSITION TO ESTABLISH WITH PROPER DETAILS AND DOCUMENTS OF V ARIOUS ITEMS WHICH WERE DISTRIBUTED AND UNDER WHICH SCHEME GIFTS WERE GIVEN TO WHICH PARTY AND FOR WHAT PURPOSE. THE LD. CIT (A ) HAS ALSO NOTED THAT THE EXPENSES SHOWN UNDER THE HEAD GIFTS AND OTHERS WERE NOT FULLY SUPPORTED BY ADEQUATE DOCUMENTARY EV IDENCES AND DETAILS. ALTHOUGH THE LD. CIT (A) HAS MADE AN AD HOC DISALLOWANCE WITHOUT POINTING OUT ANY SPECIFIC INST ANCE WHERE THE VOUCHERS WERE NOT AVAILABLE AND THE LD. AUTHORISED REPRESENTATIVE HAS ALSO DRAWN OUR ATTENTION TO THE VARIOUS DOCUMENTARY EVIDENCES FILED IN SUPPORT OF THESE EXP ENSES AS AVAILABLE ON PAGES 148,149,151,154, 155,169,171,174 AND 176 OF THE PAPER BOOK FILED BY THE ASSESSE, IT WOULD BE IN FITNESS OF THINGS THAT THE ISSUE BE RE-EXAMINED BY THE AO IN T HIS REGARD. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF T HE AO TO BE ADJUDICATED AFRESH AFTER DULY CONSIDERING THE EVIDE NCES WHICH THE ASSESSEE SEEKS TO RELY UPON AND ALSO AFTER DULY CON SIDERING THE RATIO OF THE JUDGMENT OF THE HONBLE DELHI HIGH COU RT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07. TH E AO WILL ALSO PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE B EFORE ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 11 ADJUDICATING THIS ISSUE. ACCORDINGLY GROUND NOS. 2. 1 AND 2.2 STAND ALLOWED FOR STATISTICAL PURPOSES. 5.2 GROUND NO. 3 WHICH CHALLENGES THE DISALLOWANCE OF CARD ACQUISITION EXPENSES AMOUNTING TO RS. 17,85,92,045/ - IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN ASSES SEES OWN CASE BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN ASSESSMENT YEAR 2006-07. WHILE UPHOLDING THE ORDER OF THE ITAT , THE HONBLE DELHI HIGH COURT HELD THAT THE ASSESSEE IS ENTITLED TO TREAT THE SAME AS REVENUE EXPENDITURE IN VIEW OF SECTION 37(1 ) OF THE ACT AND THE RIGHT TO CLAIM DEFERRED REVENUE EXPENDITURE IS GIVEN TO THE ASSESSEE AND NOT TO THE REVENUE. THE LD. SR. DE PARTMENTAL REPRESENTATIVE ALSO COULD NOT POINT OUT IF THERE WA S ANY DIFFERENCE IN THE FACTS OF THE CASE IN THE IMPUGNED YEAR AND ASSESSMENT YEAR 2006-07. ACCORDINGLY, RESPECTFULLY FOLLOWING THE RATIO OF THE JUDGMENT OF THE HONBLE DELHI HIGH COU RT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 AS AFORESAID, WE SET ASIDE THE ORDER OF THE LD. CIT (A) ON THIS I SSUE AND DIRECT THE AO TO ALLOW THE ENTIRE CARD ACQUISITION EXPENSE S OF RS. 17,85,92,045/- AS REVENUE EXPENDITURE IN THE YEAR UNDER CONSIDERATION. THUS, GROUND NOS. 3.1, 3.2, 3.3 AND 3.4 STAND ALLOWED. ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 12 5.3 COMING TO GROUND NO. 4 PERTAINING TO TAXING THE ALLOTMENT OF SHARES BY VISA INC. BY INVOKING SECTION 28(IV) OF T HE ACT, IT IS SEEN THAT THE TRANSACTION IN QUESTION PERTAINS TO A SSESSMENT YEAR 2008-09 WHEREAS IT WAS ONLY IN JUNE 2010 THAT THE L EGISLATURE HAS BROUGHT TO TAX THESE KIND OF TRANSACTIONS BY IN TRODUCING SECTION 56(2)(VII)(A) READ WITH SECTION 2(24)(XV) O F THE ACT WHEREIN SUCH KIND OF TRANSACTIONS HAVE BEEN MADE TAXABLE AS INCOME FROM OTHER SOURCES. HOWEVER, THIS AMENDMENT IS PROS PECTIVE IN NATURE AND NOT RETROSPECTIVE. WE ALSO FIND THAT THE CASE OF THE ASSESSEE FINDS SUPPORT FROM THE JUDGMENT OF THE HON BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. K.N.B. IN VESTMENTS PVT. LTD. REPORTED IN 272 CTR 201 (AP) WHEREIN IT HAS BE EN HELD THAT THE WORD USED IN SECTION 28(IV) OF THE ACT ARE ARI SEN FROM BUSINESS WHERE ARISEN SIGNIFIES THAT BENEFIT ITS ELF MUST HAVE ARISEN. IT WAS HELD THAT MERE ISSUANCE OF SHARES DO ES NOT RESULT IN ANY BENEFIT. WE ALSO NOTE THAT THE ASSESSEE HAS ALREADY PAID SHORT TERM CAPITAL GAINS AT THE RATE OF 30% ON 8656 5 SHARES WHICH WERE SOLD DURING THE YEAR UNDER CONSIDERATION . THE TAXABILITY ON THE REST OF THE SHARES WOULD ARISE ON LY WHEN SUCH SHARES ARE SOLD. ACCORDINGLY, WE HOLD THAT THE LOWE R AUTHORITIES WERE NOT JUSTIFIED IN BRINGING THE NOTIONAL SHARE P RICE TO TAX AND ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 13 FURTHER THE LD. CIT(A) HAD ERRED IN CONFIRMING THE ADDITION AS WELL AS ENHANCING SAME TO RS. 26,37,01,571/-. ACCORDINGL Y WE SET ASIDE THE ORDER OF THE LD. CIT (A) ON THE ISSUE AND DIRECT THE AO TO DELETE THIS ADDITION. THUS, GROUND NOS. 4.1, 4.2 AND 4.3 ALONG WITH THE ADDITIONAL GROUND STAND ALLOWED. 5.4 AS FAR AS GROUND NO. 5 IS CONCERNED WHICH CHALL ENGES THE ACTION OF THE AO IN NOT GRANTING TDS CREDIT TO THE EXTENT OF RS. 33,91,887/-, WE RESTORE THIS ISSUE TO THE FILE OF T HE AO FOR GRANT OF TDS CREDIT AS PER LAW AFTER DULY VERIFYING THE CLAI M OF THE ASSESSEE AND AFTER GIVING DUE OPPORTUNITY TO THE AS SESSEE TO PRESENT ITS CASE. ACCORDINGLY, GROUND NO. 5.1 STAND S ALLOWED FOR STATISTICAL PURPOSES. 5.5 GROUND NO. 5.2 IS A CONSEQUENTIAL AND IS NOT BE ING ADJUDICATED UPON. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED IN TERMS OF OUR OBSERVATIONS AND DIRECTIONS CONTAINED IN THE PRECEDING PARAGRAPHS. ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 14 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER, 2018. SD/- SD/- (N.K.SAINI) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER *BR* DATED: 23 RD OCTOBER, 2018 COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR TRUE COPY BY ORDER ASSTT. REGISTRAR DATE OF DICTATION 22.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 23.10.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS 23.10.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 23.10.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 23.10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 23.10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER ITA NO. 5879/DEL/2013 (SBI CARDS PAYMENT SERVICES PVT. LTD.) 15