M/s Gajjala Madhusudhan Reddy-HUF, Hyderabad V. ITO, Ward 6(3), Hyderabad

ITA 611/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69812 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M RAVINDER SAI
• Keywords: Unexplained cash credit; Capital asset; Gift; Share purchase agreement; Additional evidence; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.611/HYD/ 2013 ASSESSMENT YEAR 2009-10. GAJJALA MADHUSUDHAN REDDY V- INCOME -TAX OFFICER, HYDERABAD. WARD-6(3), HYDERABAD. PAN:AACHG 1524K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K.C. DEVDAS RESPONDENT BY SHRI M. RAVINDER SAI DATE OF HEARING 0 1 - 07 - 2013 DATE OF PRONOUNCEMENT 27 - 09 - 2013 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25-3-2013 PASSED BY THE CIT (A)-IV, HYDERABAD FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED ALTOGETHER FOUR GROUNDS . GROUND NO.4 BEING A GENERAL GROUND IS NOT REQUIRED TO BE ADJUDICATED UPON. GROUND NO.1 ALONG WITH ITS SUB-G ROUNDS RELATES TO THE ISSUE OF CHARGING LONG TERM CAPITAL GAINS OF 2 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. RS.58,69,95,045/- ON SALE OF SHARES TO M/S. M/S. DL F RETAIL DEVELOPERS LIMITED (REFERRED TO HEREINAFTER AS DRDL ). 3. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPU TE ARE, THE ASSESSEE IS A HUF. FOR THE ASSESSMENT YEAR UNDER D ISPUTE, THE ASSESSEE HAS FILED ITS RETURN ON 30-3-2010 DECL ARING AN INCOME OF RS.8,51,090/-. DURING THE SCRUTINY ASSES SMENT PROCEEDINGS INITIATED BY ISSUANCE OF NOTICE U/S 143 (2) OF THE ACT, THE ASSESSING OFFICER AFTER EXAMINING THE INFO RMATION AND OTHER MATERIALS AVAILABLE ON RECORD NOTICED THA T AS PER THE INFORMATION RECEIVED FROM ITO, WARD-2-(2), THE ASSESSEE HAD ENTERED INTO TRANSACTION OF SALE OF SHARES DURI NG THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDE R DISPUTE. THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO F URNISH THE DETAILS OF TRANSACTION OF SHARES. ON VERIFICATION OF DETAILS SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER NO TICED THAT THE ASSESSEE HAD ENTERED INTO A MEMORANDUM OF UNDERSTANDING ON 23-5-2008 AS PER WHICH THE ASSESSE E HAS SOLD SHARES OF VARIOUS COMPANIES TO DLF LIMITED. IN CONSIDERATION WHEREOF THE ASSESSEE HAD RECEIVED CER TAIN AMOUNT AS ADVANCES AND IN THE ANNUAL RETURN OF THE COMPANY THE TRANSFER OF SHARES IS REFLECTED. HE FURTHER NO TED THAT AS PER CLAUSE-1 OF MOU DATED 23 RD MAY, 2008 THE ASSESSEE HAD AGREED TO TRANSFER THE ENTIRE SHARE CAPITAL AND HAN DED OVER OWNERSHIP AND MANAGEMENT OF THE COMPANIES TO DRDL. AS PER CLAUSE -5 OF MOU, THE ASSESSEE HAS TRANSFERRED THE ENTIRE SHARE CAPITAL TO DRDL AND DELIVERED THE SHARE CERTI FICATES DULY SIGNED. HE FURTHER NOTED THAT IN PARA-4 OF TH E MOU DATED 24 TH JUNE, 2009 ENTERED BY THE ASSESSEE WITH DRDL, 3 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. THE ASSESSEE HAD TRANSFERRED THE ENTIRE SHARE CAPIT AL OF VARIOUS COMPANIES IN FAVOUR OF DRDL IN CONSIDERATIO N OF THE ADVANCE SALE CONSIDERATION AND DEPOSITING THE BALAN CE SALE CONSIDERATION IN ESCROW ACCOUNT. IN THE ANNUAL RETU RN FILED BEFORE THE ROC ON 9 TH JULY, 2008 THE ASSESSEE HAS SHOWN TRANSFER OF SHARES OF VARIOUS COMPANIES TO DRDL AND THE ENTIRE SHARE HOLDING OF THE COMPANY WAS IN THE NAME OF DRDL AND ITS ASSOCIATES. THE ASSESSING OFFICER THE REFORE CONCLUDED THAT THE ASSESSEE HAD TRANSFERRED THE ENT IRE SHARE CAPITAL IN VARIOUS COMPANIES TO DRDL DURING THE FIN ANCIAL YEAR 2008-09. HOWEVER, SINCE THE ASSESSEE HAD NOT SHOWN THE INCOME FROM TRANSFER OF SHARES IN THE RETURN FI LED, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ON 13-12-2011 REQUIRING HIM TO EXPLAIN AS TO WHY CA PITAL GAINS ARISING ON SALE OF SHARE SHOULD NOT BE BROUGH T TO TAX. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED A DETAILED REPLY CLAIMING TH AT NO CAPITAL GAINS ACCRUES DUE TO THE FOLLOWING REASONS: - 1) THERE WAS NO TRANSFER OF SHARES IN THE REAL SENSE O F THE TERM. THE INTENTION OF THE PARTIES TO THE TRANSACTION MAY BE JUDGED. 2) THE SALE OF SHARES WAS CONDITIONAL WHICH WERE TERMINATED. THE SAME DID NOT FRUCTIFY AS NO CONSIDERATION WAS PASSED EFFECTIVELY. WHAT WAS KEP T IN THE ESCROW ACCOUNT WAS TAKEN BACK BY THE BUYER. 3) THERE WAS NO GAIN TO TAX THE ASSESSEE ARISING OU T FOR THE TRANSACTION AS EXPLAINED IN THE PRECEDING PARAGRAPHS. 4 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. 4) THE PROVISIONS OF THE CHARGING SECTION 45 FAILS UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AS THERE WA S NO TRANSFER AND NO GAIN. 5) NO CONSIDERATION COULD BE SAID TO ACCRUE OR ARIS E TO THE ASSESSEE. NO CONSIDERATION WAS RECEIVED EITHER ON ACCOUNT OF THE TRANSACTION IN SHARES. HENCE FUL L VALUE OF CONSIDERATION NEVER ACCRUED OR RECEIVED. 6) THE COMPUTATION SECTION 48 FAILS. 7) ANY ATTEMPT TO TAX A NOTIONAL INCOME WOULD MILIT ATE AGAINST THE THEORY OF REAL INCOME WHICH IS SO FUNDAMENTAL TO TAX ANY INCOME. 8) THE ENTIRE TRANSACTION FROM THE BEGINNING TILL D ATE SHOULD BE EVALUATED WHOLLY. 9) THIS IS A CASE IN WHICH EMPHASIS SHOULD BE PLACE D ON THE SUBSTANCE OF THE TRANSACTION RATHER THAN FORM O F THE TRANSACTION. 10) IT IS SUBMITTED THAT THE PROPOSAL TO TAX THE IN COME MAY BE DROPPED. 4. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBM ISSION OF THE ASSESSEE FOUND THEM TO BE NOT ACCEPTABLE FOR THE FOLLOWING REASONS:- (A) THE VARIOUS MOU ENTERED INTO BETWEEN THE ASSESSEE AND HIS FAMILY MEMBERS WITH DRDL AND PARTICULARLY T HE MOU DATED 23-5-2008 SHOWS THAT THE ASSESSEE IS THE SELLER AND DRDL IS THE BUYER AND THE SELLER AND BUYER HAVE AGREED FOR TOTAL SALE CONSIDERATION OF RS.67,47,58, 000/- AT THE RATE OF RS.943.72 PER SHARE FOR 55,000 SHARES O F EACH 5 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. COMPANY TOTALLING TO RS. 13 COMPANIES. THE BUYER H AD AN ADVANCE OF RS.19,90,90,323/- TO THE ASSESSEE AND AN AMOUNT OF RS.47,35,67,678/- WAS KEPT IN A ESCROW AC COUNT. (B) AS PER THE LAST PARA OF THE MOU ON PAGE 3, THE SELLERS HAVE APPROACHED THE BUYER AND OFFERED TO TRANSFER T HE ENTIRE 13 COMPANIES SHARE CAPITAL AND HAND OVER OWN ERSHIP AND MANAGEMENT OF THE 13 COMPANIES TO THE BUYER ON THE CONDITION THAT THE BALANCE SHARE SALE CONSIDERATION IS KEPT IN ESCROW ACCOUNT AND THE LOAN AMOUNT IS RETURNED T O THE SELLER. ACCORDINGLY, THE BALANCE SALE CONSIDERATIO N OF RS.47,35,67,678/- WAS KEPT IN THE FORM OF FDR IN ES CROW ACCOUNT AND THE SELLERS HAVE ISSUED A POST DATED CH EQUE FOR THE LOAN AMOUNT, WHICH WAS KEPT IN JOINT LOCKER. T HE SELLER HAS TRANSFERRED THE ENTIRE SHARE CAPITAL IN THE NAM E OF THE BUYER AND DELIVERED THE PHYSICAL SHARE CERTIFICATE WITH REQUISITE SHARE TRANSFER DEEDS DULY SIGNED BY THE S ELLER. THE SELLER HAS APPOINTED NOMINEE DIRECTORS OF THE B UYER IN THE 13 COMPANIES. THE SELLER HAS VACATED THE OFFIC E ALONG WITH DULY SIGNED RESIGNATION LETTERS. THE BUYER HA S TAKEN POSSESSION OF ALL THE RECORDS, REGISTERS AND OTHER DOCUMENTS OF 13 COMPANIES. THE SELLER HAS COMPLETE D ALL CORPORATE AND LEGAL FORMALITIES INCLUDING FILING OF FORMS WITH ROC. THE ASSESSING OFFICER NOTED THAT THE ANNUAL REPORT OF ONE OF THE COMPANIES FILED WITH THE ROC C LEARLY INDICATES THE TRANSFER OF SHARES IN FAVOUR OF THE D RDL. THE DLF LIMITED HAS ALSO INCLUDED THE NAMES OF THE COMP ANIES IN ITS ANNUAL REPORT FOR THE FINANCIAL YEAR 2008-09 AS ITS SUBSIDIARY COMPANY. THEREFORE, THE ASSESSING OFFIC ER NOTED THAT ALL THE TECHNICAL FORMALITIES OF TRANSFE R OF SHARES OF THE 13 COMPANIES WAS COMPLETED AND THE DRDL HAS BECOME THE OWNER FOR ALL THE 13 COMPANIES DURING TH E YEAR. 6 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. 6. THE ASSESSING OFFICER ACCORDINGLY PROCEEDED TO H OLD THAT THE ASSESSEE IS LIABLE FOR LONG TERM CAPITAL GAINS ON SALE OF SHARES. ON VERIFYING THE DETAILS FURNISHED BY THE A SSESSEE, THE ASSESSING OFFICER CONSIDERED THE TOTAL CONSIDER ATION ON SALE OF SHARES AT RS.67,35,31,170/- AND AFTER DEDUC TING THERE FROM THE INDEXED COST OF ACQUISITION ARRIVED AT TH E LONG TERM CAPITAL GAINS AT RS.58,69,95,045/- WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEA R UNDER DISPUTE. BEING AGGRIEVED OF THE ADDITION SO MADE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). 7. DURING THE HEARING OF APPEAL BEFORE THE CIT (A) , IT WAS SUBMITTED BY THE ASSESSEE THAT SALE OF GOODS OTHER THAN IMMOVABLE PROPERTY IS GOVERNED BY SALE OF GOODS ACT 1930. AS PER THE DEFINITION OF GOODS IN THE SALE OF GOODS ACT, IT INCLUDES STOCK IN SHARES. IT WAS FURTHER SUBMITTED THAT SECTION-4 OF SALE OF GOODS ACT PROVIDES THAT CONTRA CT OF SALE MAY BE ABSOLUTE AND CONDITIONAL AND U/S 4(4), AN AG REEMENT TO SELL BECOMES A SALE WHEN THE CONDITIONS SUBJECT TO WHICH THE PROPERTY WAS TO BE TRANSFERRED ARE FULFILLED. IT WAS FURTHER SUBMITTED THAT IN THE CASE OF THE ASSESSEE SINCE ALL THE MOU WERE CANCELLED AND THE SALE CONSIDERATION K EPT IN THE ESCROW ACCOUNT HAD BEEN APPROPRIATED BY DRDL, THEREFORE NO TRANSFER CAN BE SAID TO HAVE TAKEN PL ACE. IT WAS FURTHER CONTENDED THAT INCOME IS CHARGEABLE TO TAX WHEN THE RIGHT TO RECEIVE THE INCOME BECAME VESTED IN THE AS SESSEE AND SINCE THE RIGHT TO RECEIVE THE SALE CONSIDERATI ON IN ESCROW ACCOUNT AND TO RETAIN THE ADVANCE RECEIVED W ITHOUT PAYMENT WOULD ACCRUE ONLY WHEN IT BECAME PAYABLE I .E., 7 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. WHEN THE ASSESSEE COMPANY WOULD HAVE COMPLETELY SE TTLED THE LITIGATION AT ITS COST AND EXPENSES WITHIN THE TIME FRAME OF 12 MONTHS AND TO THE SATISFACTION OF THE DRDL. IT WAS FURTHER SUBMITTED THAT TERMS OF MOU DATED 14-11-200 5 REQUIRED THE ASSESSEE TO SETTLE ALL LITIGATION AND AMOUNT SPENT FOR FULFILLING THE OBLIGATION FELL WITHIN THE REALM OF EXPENSES INCURRED WHOLLY AND EXCLUSIVELY IN CONNECT ION WITH THE TRANSFER OR ALTERNATELY THE COST OF IMPROVEME NT TO THE TITLE OF PROPERTY. IT WAS SUBMITTED THAT THE AMOUN T OF MONEY TO BE SPENT TO COMPLY WITH THE CONDITIONS WAS NEITH ER KNOWN NOR ASCERTAINABLE. SINCE THE LITIGATION WAS CONTI NUING EVEN TILL DATE, IT WAS SUBMITTED THAT SINCE THE COMPUTAT ION HAD FAILED IN THE CASE, CAPITAL GAINS COULD NOT BE CHA RGED FOLLOWING THE DECISION IN THE CASE OF CIT VS. BC SR INIVASA SHETTY (1981) 128 ITR 294. THE ASSESSEE ALSO RELIE D UPON VARIOUS OTHER DECISIONS OF HONBLE SUPREME COURT AN D DIFFERENT HIGH COURTS. 8. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE NOTED THAT IN NONE OF THE GROUNDS RAISED I N MEMORANDUM OF APPEAL THE ASSESSEE HAS DISPUTED THE FACT THAT THE TRANSFER OF SHARES HAS TAKEN PLACE. HENCE , GOING BY THE GROUNDS OF APPEAL, IT IS PRESUMED THAT THE ASSE SSEE HAS ACCEPTED THAT THERE WAS TRANSFER OF SHARES AND ACCO RDINGLY THE ASSESSEE MUST BE HELD TO BE LIABLE TO CAPITAL G AINS. THE CIT (A) FURTHER DELIBERATING ON THE ISSUE RELIED UPON A DECISION OF THE INCOME-TAX APPELLATE TRIBUNAL IN CA SE OF MAX TELECOM VENTURES LTD. VS. ACIT (301 ITR (AT) 90 (AM R.) WHEREIN THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR 8 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. SALE OF SHARES. IN THE RETURN OF INCOME THE ASSESS EE HAD SHOWN CAPITAL GAINS ARISING ON THE SALE OF SHARES. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A REVISE D RETURN OF INCOME WITH A NOTE STATING THAT THE SALE OF SH ARES WAS DISCLOSED IN THE RETURN AS AN ABUNDANT PRECAUTION AND THAT SINCE SOME OF THE CONDITIONS IN THE AGREEMENT FOR S ALE OF SHARES HAD NOT BEEN COMPLIED WITH AND TRANSFER DEED S OF SHARES AND SHARE CERTIFICATES WERE HANDED OVER TO T HE PURCHASER ALONG WITH RECEIPT OF CONSIDERATION, THE ASSESSEE STATED THAT LONG TERM CAPITAL GAIN ON SALE OF SHAR ES WAS LIABLE TO BE CONSIDERED IN THE SUBSEQUENT ASSESSMEN T YEAR. THE ASSESSING OFFICER HOWEVER HELD THAT THE TRANSAC TION WAS COVERED BY THE CBDT CIRCULAR NO.704 DATED 28TH APRI L, 1995 AND THE DATE OF CONTRACT OF SALE WOULD BE THE DATE OF TRANSFER PROVIDED IT WAS FOLLOWED UP BY ACTUAL DELIVERY OF S HARES AND THE TRANSFER DEEDS. SINCE THE CONTRACT DOCUMENT WA S EXECUTED ON 17-3-1998, THE ASSESSING OFFICER HELD T HAT CAPITAL GAINS ARISING ON SALE OF SHARES WERE TAXABL E IN THE ASSESSMENT YEAR UNDER DISPUTE. WHEN THE MATTER WEN T UP TO THE INCOME-TAX APPELLATE TRIBUNAL, THE TRIBUNAL HEL D THAT THE SHARE PURCHASE AGREEMENT WAS NOT ONLY ACTED UPON BUT WAS FOLLOWED BY DELIVERY OF SHARE CERTIFICATES ALONG WI TH TRANSFER DEEDS ON APRIL23, 1998. THE MERE FACT THAT THERE WAS A CLAUSE TO RESCIND THE AGREEMENT DID NOT MAKE THE TR ANSFER CONDITIONAL. THE ENTIRE AGREEMENT WAS EXECUTED ON MARCH, 17, 1998 AND THE ENTIRE SHARES WERE DELIVERED ALONG WITH TRANSFER DEEDS ON 23-4-1998. THE CIT(A) ALSO RELIE D UPON A DECISION OF HONBLE KERALA HIGH COURT N THE CASE O F K.M. NARAYANAN & ANR. V. ITO (145 ITR 373). THE CIT (A) 9 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. CONCLUDED THAT AS THE ASSESSEE HAD HANDED OVER SHAR ES AND THE TRANSFER DEEDS HAVE BEEN DULY REGISTERED IN T HE RECORDS OF THE COMPANIES, THE TRANSFER HAD BEEN DULY TAKEN NOTE OF BY THE REGISTRAR OF COMPANIES, AND THE MANAGEMENT OF THE COMPANIES HAD BEEN HANDED OVER TO DRDL THERE IS TRA NSFER OF SHARES. THE CIT (A) FURTHER HELD THAT THIS FACTUAL POSITION IS ALSO ACKNOWLEDGED IN THE MOU DATED 24-6-2009 AS THE SAID MOU RECOGNISED THAT THE ASSESSEE WAS EARLIER THE O WNER OF THE SHARES, THAT THESE SHARES WERE TRANSFERRED BY I T TO DRDL AND THAT SHARES WERE BEING TRANSFERRED BACK BY DRDL TO THE ASSESSEE. THE MOU FURTHER MAKES IT CLEAR THAT THE TRANSFER OF THE SHARES FROM THE ASSESSEE TO DRDL WAS COMPLET E AND FINAL. THE CIT (A) THUS CAME TO A CONCLUSION THAT UNDER THE CIRCUMSTANCES TRANSFER OF SHARES HAVE TAKEN PLACE F ROM THE ASSESSEE TO DRDL, HENCE, THE ASSESSEE IS LIABLE TO CAPITAL GAINS. SHE FURTHER HELD THAT THE SUBSEQUENT TRANSA CTIONS INVOLVING THE PURCHASE OF SHARES BY THE ASSESSEE, CANNOT BE HELD TO NEGATE THE FACT OF EARLIER TRANSFER. ON THE AFORESAID FINDING, THE CIT (A) SUSTAINED THE ADDITI ON MADE BY THE ASSESSING OFFICER. BEING AGGRIEVED, THE ASSESSE E IS IN APPEAL BEFORE US. 9. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE AS SESSEE REITERATING ALMOST IDENTICAL SUBMISSIONS AS ADVANCE D BEFORE THE CIT (A) AND ASSESSING OFFICER SUBMITTED THAT TH E ASSESSEE IS IN THE REAL ESTATE BUSINESS. ON 26-4-2 004, THE 14399 SQ. YARDS OF LAND WAS PURCHASED FROM ONE SM T. LAKSHMI NARAIN BHAVANANI IN THE NAME OF M/S GAJJAL A CONSTRUCTIONS PRIVATE LIMITED AND 12 OTHER COMPANIE S AND 10 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. TWO OTHERS FOR A CONSIDERATION OF RS.54,03,300/-. ON 3-8- 2005, UNREGISTERED MOU WAS ENTERED INTO BETWEEN 13 COMPANIES AND M/S DLF RETAIL LIMITED FOR SALE OF TH E ABOVE LAND. HOWEVER, SINCE THE TITLE WAS IN DISPUTE WITH REGARD TO THE PROPERTY IN QUESTION THE BUYER DRDL EXPRESSED I TS RELUCTANCE TO GO AHEAD WITH THE DEAL AS PER THE MOU AND AS A RESULT, THE SAME WAS RESCINDED. ON 14-11-2005 ANOT HER UNREGISTERED MOU WAS ENTERED BETWEEN THE SHAREHOLDE RS OF 13 COMPANIES WITH M/S DRDL FOR THE PURPOSE OF SALE OF SHARES OF THESE COMPANIES WHEREIN THE 13 COMPANIES ALSO ACTED AS CONSENTING PARTIES. ON 23-5-2008, THE THI RD UNREGISTERED MOU WAS ENTERED BETWEEN M/S DRDL WITH THE SHAREHOLDERS OF 13 COMPANIES FOR PURCHASE/TRANSFER OF SHARES OF THESE COMPANIES WHEREIN 13 COMPANIES ACTED AS CONSENTING PARTIES. AS PER THE AFORESAID MOU, 55,0 00 FULLY PAID SHARES OF 100 EACH IN 13 COMPANIES WERE TRANS FERRED TO DRDL FOR TOTAL CONSIDERATION OF RS.67,47,58,000. O UT OF WHICH AN AMOUNT OF RS.47,35,67,678/- WAS KEPT IN ES CROW DEPOSIT ACCOUNT WITH ORIENTAL BANK OF COMMERCE AND THE ASSESSEE RECEIVED TOTAL ADVANCE OF RS. 19,19,90,323 . IT WAS SUBMITTED THAT THE RECITALS IN THE MOU WOULD CLEARL Y INDICATE THAT THE REAL INTENTION OF THE BUYER FOR ACQUIRING THE SHARES WAS FOR THE PURPOSE OF ACQUIRING THE LAND IN THE NA MES OF 13 COMPANIES. 10. THEREFORE, IT CANNOT BE SAID THAT THE INTENTION OF THE PARTIES WERE TO TRANSFER THE SHARES. IT WAS SUBMIT TED THAT AS PER THE MOU, THE SALE OF SHARES WAS CONDITIONAL. I T WAS CLEARLY MENTIONED THAT UNLESS THE SELLERS ARE ABLE TO SETTLE 11 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. THE LITIGATION AND MAKE THE LAND FREE FROM ALL ENCU MBRANCES, THE DEAL WILL NOT BE COMPLETED. THE LEARNED AUTHOR ISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT SINC E THE SELLERS COULD NOT FREE THE LAND FROM LITIGATION ALL THE MOUS ULTIMATELY WERE RESCINDED/TERMINATED VIDE UNREGIST ERED MOU DATED 24-6-2009 AND THE AMOUNT OF RS.47,35,67,678/ - STANDING IN THE ESCROW DEPOSIT ACCOUNT WITH OBC ALO NG WITH ITS ACCRUED INTEREST WAS RELEASED IN FAVOUR OF THE BUYER AND THE BUYER ALSO TOOK CREDIT OF TDS THEREON. IT WAS THEREFORE SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT THE REAL INTENTION BETWEEN THE PARTIE S IS NOT TRANSFER OF SHARES WHICH WOULD BE FURTHER EVIDENT FROM THE FACTS THAT THERE WAS NO INDEPENDENT VALUE OF SHARES WHICH IS DEMONSTRABLE FROM SHARE APPLICATION FORM, WHERE V ALUE OF SHARES HAVE NOT BEEN MENTIONED. THE LEARNED AUTHO RISED REPRESENTATIVE FOR THE ASSESSEE REFERRING TO THE SH ARE CERTIFICATES SUBMITTED IN THE PAPER BOOK, CONTENDED THAT SHARE CERTIFICATE ALSO MENTIONED NEITHER CONSIDERAT ION NOR THE VALUE OF SHARES. THE LEARNED AUTHORISED REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT AS PER THE DEFINITI ON OF GOODS UNDER THE SALE OF GOODS ACT SHARES ARE MOVABLE PROP ERTIES. HE SUBMITTED THAT AS PER SECTION 4(2) OF THE SALE O F GOODS ACT, A CONDUCT OF SALE MAY BE ABSOLUTE AND CONDITI ONAL. U/S 4(3) OF SALE OF GOODS ACT, WHERE UNDER A CONTRACT OF SALE THE PROPERTY IN THE GOODS IS TRANSFERRED FROM THE SELLE R TO THE BUYER, THE CONTRACT IS CALLED AS SALE, BUT WHERE TH E TRANSFER OF THE PROPERTY IN THE GOODS IS TO TAKE PLACE AT A FUTURE TIME OR SUBJECT TO SOME CONDITION THEREAFTER TO BE FUL FILLED, THE CONTRACT IS CALLED AN AGREEMENT TO SELL AND U/S 4(4 ) OF SALE OF 12 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. GOODS ACT AN AGREEMENT TO SELL BECOMES A SALE WHEN THE TIME ELAPSES OR THE CONDITIONS ARE FULFILLED SUBJEC T TO WHICH THE PROPERTY IN THE GOODS IS TO BE TRANSFERRED. HE FURTHER SUBMITTED THAT SECTION 19(1) OF SALE OF GOODS ACT P ROVIDES THAT WHERE THERE IS A CONTRACT FOR THE SALE OF SP ECIFIC OR ASCERTAINED GOODS THE PROPERTY IN THEM IS TRANSFERR ED TO THE BUYER AT SUCH TIME AS THE PARTIES TO THE CONTRACT I NTEND IT TO BE TRANSFERRED. U/S 19(2) OF SALE OF GOODS ACT, FO R THE PURPOSE OF ASCERTAINING INTENTION OF THE PARTIES, R EGARD SHALL BE HAD TO THE TERMS OF THE CONTRACT, THE CONDUCT OF THE PARTIES AND THE CIRCUMSTANCES OF THE CASE. 11. SECTION 60 OF SALE OF GOODS ACT DEALS WITH REPU DIATION OF CONTRACT WHERE EITHER PARTY TO A CONTRACT OF SA LE REPUDIATES THE CONTRACT BEFORE THE DATE OF DELIVERY AND THE OTHER PARTY MAY EITHER TREAT THE CONTRACT AS SUBSIS TING AND WAIT TILL THE DATE OF DELIVERY, OR HE MAY TREAT THE CONTRACT AS RESCINDED AND SUE FOR DAMAGES FOR THE BREACH. THE LD AR SUBMITTED IF THE TERMS OF THE MOU DATED 24-6-2009 UNDER WHICH THE EARLIER MOUS WERE CANCELLED ANNULLING TH E EARLIER TRANSACTIONS AND TRANSFERS IS EXAMINED IN THE CONTE XT OF THE PROVISIONS OF SALE OF GOODS ACT THEN THERE CANNOT B E ANY TRANSFER OF SHARES IN THE REAL SENSE OF THE TERM. HENCE, NO CAPITAL GAINS ACCRUE TO THE ASSESSEE IN THE IMPUGNE D ASSESSMENT YEAR. IT WAS FURTHER SUBMITTED THAT THO UGH UNDER THE MOU, THE SHARES OF THE 13 COMPANIES WERE TRANSFERRED BUT THE REAL INTENTION OF THE PARTIES I S TRANSFER OF THE IMMOVABLE PROPERTY WHICH IS GOVERNED UNDER THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT. IT WAS SUBMITTED 13 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. THAT AS PER THE TRANSFER OF PROPERTY ACT, TRANSFER TAKES PLACE ONLY WHEN POSSESSION IS GIVEN. 12. IN THE FACTS OF THE PRESENT CASE, SINCE THE PO SSESSION OF IMMOVABLE PROPERTY WHICH WAS THE SUBJECT MATTER OF TRANSFER WAS NOT GIVEN POSSESSION THERE IS NO TRANSFER AS PE R THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT. THE L EARNED AR SUBMITTED THAT THE FACTS AND MATERIALS ON RECORD WO ULD SHOW THAT THE STIPULATIONS IN THE MOU ENTERED DURING THE PREVIOUS YEAR EXPLICITLY INDICATE THAT THE SALE WAS CONDITIO NAL WHICH PROMPTED THE BUYER TO EXPECT THE SELLER TO CLEAR AL L PENDING CASES. IT FURTHER STATED THAT THE CASES SHOULD BE SETTLED IN THE MANNER ACCEPTABLE TO THE BUYER AND THERE ARE IN ALL ABOUT 11 CASES PENDING IN LAND GRAB COURT AND 5 CAS ES IN CIVIL COURTS AS ON THE DATE OF ENTERING INTO THE AGREEMEN T AND WHICH ARE MOSTLY UNRESOLVED EVEN TILL DATE. IT WAS THEREFORE SUBMITTED THAT SUCH A CONDITIONAL SALE CANNOT FASTE N THE LIABILITY U/S 45 OF THE ACT. THE REAL INTENTION OF THE PARTIES FROM THE TERMS OF THE AGREEMENT IS TO BE SEEN WITHO UT GOING TO THE FORM. THE LEARNED AR SUBMITTED THAT IF A LL THE MOUS ARE READ AS A WHOLE THE FACT WHICH WILL EMERGE THAT THERE WAS NO TRANSFER OF SHARES IN THE REAL SENSE OF THE TERM S. THE SALE OF SHARES WAS CONDITIONAL AND WHICH WAS ULTIMATELY TERMINATED. WHAT WAS KEPT IN ESCROW ACCOUNT WAS TA KEN BY THE BUYER. NO CONSIDERATION COULD BE SAID TO ARISE AS NO CONSIDERATION WAS RECEIVED ON ACCOUNT OF TRANSACTI ONS IN SHARES. HENCE FULL VALUE OF CONSIDERATION HAS NEVER ACCRUED AND RECEIVED. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE SUBSTANCE OF THE TRANSA CTION HAS 14 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. TO BE SEEN OVER THE FORM. THE LEARNED AR SUBMITTED THAT IN RESPECT OF SHARES, THE PROVISION OF TP ACT WILL APP LY AND NOT THE COMPANIES ACT. IN THIS CONTEXT, THE LEARNED AR RELIED UPON OF THE HONBLE SUPREME COURT IN CASE OF VASU DEV RAMACANDRA SHELAT VS. PRANLAL JAYANAND THAKUR AIR 1 974 SC 1728. 13. THE LEARNED AR SUBMITTED THAT THE SUBSTANCE HA S TO BE SEEN WHETHER ANY INCOME REALLY ACCRUES TO THE ASSES SEE. IN THIS CONTEXT, THE LEARNED AR RELIED UPON THE DECISI ONS OF HONBLE SUPREME COURT IN THE FOLLOWING CASES:- 1) E.D. SASOON & CO. VS. CIT (26 ITR 27) 2) SHOORJI VALLABHDAS & CO. (46 ITR 144) 3) KEDARNATH JUTE MFG. CO. LTD. VS. CIT (82 ITR 363) HE FURTHER SUBMITTED THAT PRESENCE OR ABSENCE OF E NTRY IS NOT CONCLUSIVE TO DECIDE WHETHER INCOME ACCRUES TO THE ASSESSEE OR NOT. TREATMENT GIVEN IN THE BOOKS OF A CCOUNTS BY THE PURCHASERS IS ALSO NOT RELEVANT. IN THIS C ONTEXT, THE LEARNED AR RELIED UPON THE FOLLOWING:- A) CIT VS. ASHOKBHAI CHIMANBHAI (56 ITR 342) B) CIT VS. MOTILAL C. PATEL & CO. (173 ITR 666) 14. SO FAR AS THE DECISION IN CASE OF MAX TELECOM V ENTURES LTD. VS. ACIT ( 114 ITD 46) RELIED UPON BY THE LEA RNED CIT (A) , THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE 15 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. SUBMITTED THAT THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. WITH REGARD TO THE DECISION O F THE HONBLE KERALA HIGH COURT IN THE CASE OF K M NARAY ANAN AND ANR. (SUPRA) RELIED UPON BY THE LD CIT (A), THE LEA RNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTE D THAT THE SAID DECISION IS ALSO DISTINGUISHABLE ON FACTS AS IN THAT CASE, THERE IS NO DISPUTE WITH REGARD TO THE TRANSF ER. RELYING UPON A DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS. BOKORO STEEL LTD. (236 ITR 315), THE LEARNED AUTHOR ISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT AS P ER THE THEORY OF REAL INCOME, NO INCOME ACCRUES TO THE ASS ESSEE. 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTING THE ORDERS OF THE REVENUE AUTHORITIES SUBMITTED THAT THERE IS NO DISPUTE TO T HE FACT THAT SHARES ARE CAPITAL ASSETS. THERE IS ALSO NO DISPUT E TO THE FACT THAT THE COST OF SHARES HAS BEEN QUANTIFIED. THE LE ARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE SHARE TRANSFER FORMS AND TRANSFER CERTIFICATES ARE ONLY IN CONSEQUENCE OF MOU WHERE THE VALUE OF SHARES IS MEN TIONED. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT IT IS NOT DENIED THAT THE SHARES IN 13 COMPANIES STAND TRANSFERRED IN THE NAME OF THE BUYER DRDL NOT ONLY IN THE BOOKS OF ACCOUNTS BUT ALSO HAVE BEEN RECORDED WITH ROC. HENCE, IT CANNOT BE SAID THAT THERE IS NO TRANSFER OF SHARES. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO NO T REFUNDED THE ADVANCE AMOUNT RECEIVED FROM DRDL. TH E RECITALS IN THE MOU ALSO MENTIONS THAT THERE WAS T RANSFER OF 16 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. SHARES. IN THE CIRCUMSTANCES, IT CANNOT BE SAID TH AT THERE IS NO ACCRUAL OF CAPITAL GAIN ON ACCOUNT OF TRANSFER O F SHARES. 16. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDER S PASSED BY THE REVENUE AUTHORITIES. WE HAVE ALSO EXAMINED THE DOCUMENTS SUBMITTED IN THE FORM OF PAPER BOOK FILED BY THE ASSESSEE. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE PARTIES. THE ISSUE BE FORE US IS WHETHER THERE IS TRANSFER OF SHARES OF 13 COMPANIES MADE BY THE ASSESSEE TO DRDL SO AS TO MAKE IT CHARGEABLE TO CAPITAL GAINS TAX. FOR DECIDING THIS ISSUE, IT IS NECESSAR Y TO LOOK INTO THE MOUS ENTERED INTO BETWEEN THE PARTIES. THE AFO RESAID MOUS THOUGH ARE UNREGISTERED BUT THEY CERTAINLY IND ICATE THE INTENTION OF THE PARTIES. IN THE FIRST MOU DATED 3 -8-2005, WHICH WAS ENTERED INTO BETWEEN THE ASSESSEE ALONG WITH 13 COMPANIES WITH DRDL AGREEING TO SELL THE ENTIRE LA ND ON THE TERMS INDICATED THEREIN AND THE TOTAL SALE CONSIDER ATION WAS AGREED AT RS.67,47,58,000/-. THE SECOND MOU DATED 14-11- 2005 WAS ENTERED INTO BETWEEN THE PARTIES FOR SALE OF SHARES HELD BY SHAREHOLDERS IN THE 13 COMPANIES TO DRDL. T HE THIRD MOU DATED 23-5-2008 PROVIDED THAT THE ASSESSEE AND THE CONSENTING PARTIES I.E. 13 COMPANIES HAVE TRANSFERR ED THE ENTIRE SHARE CAPITAL TO DRDL AND HANDED OVER THE CO NTROL AND MANAGEMENT OF THESE COMPANIES TO DRDL. IT ALSO MEN TIONED THE SALE CONSIDERATION OF THE TOTAL SHARES AT RS.67,47,58,000/- AND THE SAID MOU ALSO MENTIONS TH AT THE BUYER DRDL HAS GIVEN A PART OF THE SALE CONSIDERATI ON IN ADVANCE TO THE ASSESSEE AND THE BALANCE SALE CONSID ERATION S 17 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. IS TO BE DEPOSITED INTO THE ESCROW ACCOUNT. WE ARE CONCERNED WITH THE AFORESAID MOU AS IT PERTAINS TO THE FINANC IAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE. THE AFORESAID MOU MAKES IT CLEAR THAT IT IS FOR THE PURPOSE OF TR ANSFER OF SHARES OF 13 COMPANIES TO THE BUYER DRDL. IN THE P REAMBLE OF MOU DATED 23-5-2008, IT HAS BEEN MENTIONED AS UN DER:- AND WHEREAS IN CONSIDERATION OF RECEIPT OF THE ADVANCE SHARE SALE CONSIDERATION, THE CONFIRMING PA RTY AND THE SELLERS HAVE ALREADY HANDED OVER VACANT PHYSICAL PEACEFUL, LAWFUL AND ACTUAL POSSESSION OF THE SUBJECT PROPERTY TO THE BUYER ON 14 NOVEMBER 2005 AND THE BUYER IS IN VACANT, PHYSICAL, PEACEFUL, LAW FUL AND ACTUAL POSSESSION OF THE SUBJECT PROPERTY, AND EVERY PART THEREOF TO THE EXCLUSION OF ALL SINCE 14 NOVEMBER, 2005. FURTHER, IT HAS BEEN MENTIONED AS UNDER:- AND WHEREAS THE SELLERS HAVE NOW APPROACHED THE BUYER AND OFFERED TO TRANSFER THE ENTIRE CP SHARE CAPITAL AND HAND OVER OWNERSHIP AND MANAGEMENT OF THE CONFIRMING PARTY TO THE BUYER ON THE CONDITION THAT AN AMOUNT EQUIVALENT TO THE BALANCE SHARE SALE CONSIDERATION IS KEPT IN ESCROW AND THE LOAN AMOUNT IS RETURNED BY THE CONFIRMING PARTY TO SELLERS AND THE SELLERS SHALL KEEP THE SAID LOAN AMOUNT ALSO IN ESCROW. 18 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. 17. CLAUSE-1 OF MOU ALSO SPEAKS OF TRANSFER OF THE ENTIRE SHARE CAPITAL AND HANDING OVER CONTROL AND MANAGEME NT OF THE CONFIRMING PARTIES I.E., 13 COMPANIES IN FAVOUR OF THE BUYER. CLAUSE 2(C) OF MOU READS AS UNDER:- THAT THE CONFIRMING PARTY AND THE SELLERS HAVE ALRE ADY HANDED OVER VACANT, PHYSICAL, PEACEFUL LAWFUL AND ACTUAL POSSESSION OF THE SUBJECT PROPERTY TO THE BU YER ON 14 NOVEMBER, 2005 AND THE BUYER IS IN VACANT, PHYSICAL, PEACEFUL, LAWFUL AND ACTUAL POSSESSION OF THE SUBJECT PROPERTY AND EVERY PART THEREOF TO THE EXCLUSION OF ALL SINCE 14 NOVEMBER, 2005. 18. IN CLAUSE-5 OF THE AFORESAID MOU, IT HAS BEEN SPECIFICALLY MENTIONED THAT THE SELLER HAS TRANSFER RED THE ENTIRE SHARE CAPITAL IN THE NAME OF THE BUYER I.E. DRDL AND HAS DELIVERED TO THE BUYER SHARE CERTIFICATES REPRE SENTING THE ENTIRE CP SHARE CAPITAL ALONG WITH SHARE TRANSFER DEEDS DULY SIGNED BY THE SELLER. IT FURTHER SPECIFIES THAT T HE SELLERS HAVE ENSURED VACATION OF THE OFFICE OF THE DIRECTOR OF THE CONFIRMING PARTIES BY THE SELLERS AND BY THE OTHER DIRECTORS OF THE COMPANY OTHER THAN THE NOMINEE DIRECTORS OF THE BUYER, IF ANY, ALONG WITH DULY SIGNED RESIGNATION L ETTERS FOR THE SAID PURPOSE BEING DELIVERED BY THE SELLERS TO THE BUYER. IT FURTHER SPECIFIES THAT THE BUYER HAS TAKEN POSSE SSION OF STATUTORY RECORDS AND DOCUMENTS FILED WITH ROC, REC EIPT BY THE BUYER OF ALL RECORDS, REGISTERS, STATUTORY RECO RDS, DOCUMENTS FILED WITH THE ROC, PAN, TAN, DIN OF THE EXISTING DIRECTORS, CORPORATE DOCUMENTS, CERTIFICATE OF INCO RPORATION 19 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. MINUTE BOOKS, CORPORATE RECORDS, CHEQUE BOOKS BANK STATEMENTS, ETC., AND ALL OTHER RECORDS CONCERNED T HE 13 COMPANIES. THE ESCROW AGREEMENT ENTERED INTO BETWE EN THE SELLER, BUYER AND ORIENTAL BANK OF COMMERCE ALSO IN CLEAR TERMS MENTIONS THAT THE SELLERS HAVE TRANSFERRED TH E ENTIRE SHARE CAPITAL OF 13 COMPANIES TO THE BUYERS FOR AN AGGREGATE SALE CONSIDERATION OF RS.67,47,58,000/-. OUT OF THE AFORESAID SALE CONSIDERATION, THE BUYERS HAVE ALREADY GIVEN A DVANCE OF RS. 19,19,90,323/- TO THE SELLERS AND THE BALANCE S ALE CONSIDERATION OF RS.47,35,67,678/- IS TO BE DEPOSIT ED IN ESCROW ACCOUNT BY WAY OF FDS IN THE JOINT NAMES OF THE SELLER AND BUYER. IT IS ALSO SPECIFIED IN THE AFORESAID E SCROW AGREEMENT THAT IN CONSIDERATION OF RECEIPT OF THE A DVANCE SHARE SALE CONSIDERATION, THE 13 COMPANIES AND THE SELLERS HAVE HANDED OVER POSSESSION OF THE LARGER PROPERTY . THE MOU DATED 24-6-2009 UNDER WHICH ALL THE EARLIER MOU S WERE CANCELLED/TERMINATED ALSO CONFIRMS THE FACT THAT THE SHARE HOLDING OF THE THESE COMPANIES AS WELL AS OWNERSHI P CONTROL AND MANAGEMENT WAS EARLIER OWNED BY THE BUYER I.E. DRDL FOR READY REFERENCE THE RELEVANT CLAUSE FROM THE MO U IS EXTRACTED HEREUNDER:-. AND WHEREAS THE SHAREHOLDING OF THE LAND OWNING COMPANIES WAS EARLIER OWNED AND HELD BY ONE OR MORE OF THE BUYERS AND VIDE 13 (THIRTEEN) SEPARATE MEMORANDUM OF UNDERSTANDING(S), COPIES OF WHICH ARE ATTACHED HEREWITH, SUCH BUYERS HAD SOLD THEIR ENTIR E SHAREHOLDING OF THE LAND OWNING COMPANIES TO DRDL FOR A TOTAL SALE CONSIDERATION OF RS.67,47,58,000/- (THE TOTAL SALE CONSIDERATION WHICH INCLUDES LOAN AMOU NT 20 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. OF RS.3,65,86,791/-) OUT OF WHICH A SUM OF RS.20,11,90,332/- (RUPEES TWENTY CRORE ELEVEN LAC NINETY THOUSAND THREE HUNDRED THIRTY TWO ONLY)( THE ADVANCE SAE CONSIDERATION HAS ALREADY BEEN PAID BY DRDL TO THE BUYERS AND A SUM OF RS.47,35,67,676/- I S YET TO BE PAID BY DRDL TO THE BUYERS ... 19. THE AFORESAID MOU FURTHER CONFIRMS THE FACT THA T IN CONSIDERATION OF THE ADVANCE SALE CONSIDERATION AMO UNT AND ON DEPOSITING THE BALANCE CONSIDERATION AMOUNT IN E SCROW ACCOUNT, THE BUYER HAD TRANSFERRED THE SAME IN FAVO UR OF DRDL. CLAUSE-2 OF THE AFORESAID MOU MENTIONS ABOUT THE TRANSFER OF ENTIRE SHARE HOLDING BY DRDL BACK TO TH E SELLER AND ALSO HANDING OVER ALL BOOKS OF ACCOUNTS AND OTH ER DOCUMENTS RELATING TO THE COMPANIES WHICH ARE IN TH E POSSESSION OF DRDL ON RELEASE OF THE BALANCE SALE CONSIDERATION OF RS.47,35,67,676/- ALONG WITH ACCR UED INTEREST THEREON IN ESCROW ACCOUNT IN FAVOUR OF THE DRDL. 20. A CAREFUL READING OF THE AFORESAID MOUS WOULD R EVEAL THE FACT THAT THE ASSESSEE HAS TRANSFERRED THE SHAR ES OF 13 COMPANIES IN FAVOUR OF THE BUYER DRDL FOR A TOTAL CONSIDERATION OF RS. 67,47,58,000/-. IN THE AFORES AID FACTUAL BACKGROUND, IT HAS TO BE SEEN WHETHER THE TRANSFER OF SHARES TO DRDL COMES WITHIN THE MEANING OF THE EXPRESSIO N TRANSFER AS DEFINED IN SECTION 2(47) OF THE ACT. THE SAID PROVISION IS EXTRACTED HEREUNDER:- 2(47) TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES,- (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET; OR 21 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNE R THEREOF INTO, OR IS TREATED BY HIM AS, STOCK- IN- T RADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT;] 6[ OR] (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POS SESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RET AINED IN PART PERFORMANCE OF ....... 21. AS PER CLAUSE-1 OF SECTION 2(47) THE SALE, EXCH ANGE OR RELINQUISHMENT OF THE ASSET WILL AMOUNT TO TRANSFER . IN SUB- SECTION (2) OF SECTION 2(47), IT IS PROVIDED THAT T HE TRANSFER ALSO WOULD MEAN THE EXTINGUISHMENT OF ANY RIGHT IN THE ASSET. IN THE AFORESAID CONTEXT, IT HAS TO BE SEEN WHETHER THERE IS A SALE, RELINQUISHMENT OR EXTINGUISHMENT O F RIGHTS OF THE SELLERS IN SHARES. AS WE HAVE STATED HEREIN BEF ORE THE READING OF THE DIFFERENT CLAUSES OF MOUS DATED 23- 5-2008, 24-6-2009 ESCROW AGREEMENT DATED 28-5-2008 CERTAIN LY GIVES AN IMPRESSION THAT THE INTENTION OF THE PARTI ES IS TO TRANSFER THE SHARES IN FAVOUR OF THE BUYER I.E. DRD L. FOR ACHIEVING THE AFORESAID OBJECT, THE ASSESSEE-APPELL ANT I.E., THE SELLERS HAVE EXECUTED TRANSFER FORMS IN FAVOUR OF THE BUYER DRDL, TRANSFERRING THE ENTIRE SHARE CAPITAL O F ALL 13 COMPANIES. THE TRANSFER FORMS BEAR THE SIGNATURE OF BOTH THE SELLERS AND THE BUYERS AND ALSO MENTION THE SHA RE CERTIFICATE NUMBER. THE TRANSFER OF SHARES IN THE N AME OF THE BUYER DRDL HAS ALSO BEEN MENTIONED IN THE SHARE CER TIFICATES COPIES OF WHICH ARE ALSO PLACED IN THE PAPER BOOK. THE TRANSFER OF SHARES HAVE ALSO BEEN RECORDED IN THE B OOKS OF ACCOUNTS OF THE RESPECTIVE COMPANIES AND ALSO HAS BEEN REFLECTED IN THE ANNUAL RETURN SUBMITTED BEFORE THE ROC BY 22 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. THE TRANSFEROR COMPANY AS WELL AS TRANSFEREE COMPAN Y. THE MOUS ALSO IN CATEGORICAL TERMS SPECIFY THAT THE OWN ERSHIP, CONTROL AND MANAGEMENT OF THE COMPANIES HAVE BEEN TRANSFERRED IN FAVOUR OF THE BUYER BY THE SELLER. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT NO TRANSFER H AS TAKEN PLACE. SECTION 108 OF COMPANIES ACT, 1956 PROVIDES THAT THE TRANSFER OF SHARES SHALL NOT BE REGISTERED UNLESS A PROPER INSTRUMENT DULY STAMPED AND EXECUTED BY OR ON BEHAL F OF THE TRANSFEROR OR BY ON BEHALF OF THE TRANSFEREE IS THE RE. IN THE PRESENT CASE, IT IS NOT DISPUTED THAT THE TRANSFERO R AND TRANSFEREE HAVE EXECUTED THE INSTRUMENT OF TRANSFER BY PUTTING THEIR SIGNATURE. IT IS ALSO NOT DISPUTED T HAT THE TRANSFER HAS ALSO BEEN RECORDED IN THE SHARE CERTIF ICATES. THEREFORE, IT CANNOT BE DENIED THAT THE TRANSFER OF SHARE HAS BEEN EFFECTED BY THE ASSESSEE IN FAVOUR OF THE BUYER DRDL. IT IS ALSO A FACT ON RECORD THAT AS PER THE RECITALS IN THE MOU THE BUYER COMPANY AFTER PAYMENT OF THE SALE CONSIDERATION HAS TAKEN OVER THE CONTROL AND MAN AGEMENT OF THE 13 COMPANIES WHOSE SHARE CERTIFICATES WERE TRANSFERRED TO THE BUYER. 22. THEREFORE, THE TRANSFER OF SHARES IS COMPLETE I N ALL RESPECTS FROM THE ASSESSEE TO THE DRDL AS THERE IS EXTINGUISHMENT OF RIGHTS OF THE ASSESSEE OVER THE C ONCERNED SHARES. IN THESE CIRCUMSTANCES, IN OUR VIEW, THERE IS A TRANSFER OF SHARES BY THE ASSESSEE IN FAVOUR OF DRD L WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. THE HON BLE DELHI HIGH COURT IN CASE OF CIT VS. BHARAT NIDHI LIMITED (133 ITR 447) AFTER CONSIDERING VARIOUS PROVISION OF THE SAL E OF GOODS 23 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. ACT HELD THAT ONLY WHEN THE SHARES ARE ASCERTAINED AND IN A DELIVERABLE STATE IT CAN BE SAID THAT THERE IS A T RANSFER OF SHARES. AN AGREEMENT TO TRANSFER SHARES IN A COMPA NY ACCOMPANIED WITH ACTUAL INSTRUMENT OF TRANSFER WOUL D DENOTE THE TRANSFER OF SHARES. IN THE CASE OF K.N. NARAYA NAN (145 ITR 373), THE HONBLE KERALA HIGH COURT HELD THAT I F AN INSTRUMENT OF TRANSFER IS DULY EXECUTED AND IS D ELIVERED TO THE COMPANY ALONG WITH THE CONCERNED SHARE CERTIFIC ATES AND WHEN THE TRANSFER IS REGISTERED IN THE BOOKS, THE TRANSFEREE GETS FULL TITLE FOR THE PURPOSE OF COMPANIES ACT, 1 956. THE HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. MAN GAL CHAND (255 ITR 329) AFTER EXAMINING THE PROVISIONS OF THE SALE OF GOODS ACT AS WELL AS COMPANIES ACT HELD THAT SO FAR AS THE TRANSFEREE IS CONCERNED, DELIVERY OF ALL SHARE CER TIFICATES WILL RESULT IN COMPLETING THE TRANSACTION BETWEEN T HE TRANSFEROR AND TRANSFEREE NOTWITHSTANDING THE FACT THAT THE SAME MAY NOT BE REGISTERED IN THE REGISTER OF MEMB ERS. UNTIL SUCH ALTERATION IN THE COMPANYS RECORD TAKES PLACE HOWEVER THE INTERACTION BETWEEN THE COMPANY AND ITS SHAREHOLDERS OR DEBENTURE HOLDERS AS PER ITS RECORD S, DOES NOT AFFECT THE GENUINENESS OF THE TRANSACTION OF TR ANSFER WHICH IN FACT HAS TAKEN PLACE BETWEEN ITS SHAREHOLDER/DEBENTURE HOLDER AND OTHER PERSONS AND SUBSEQUENT TRANSFERS WHICH HAVE OTHERWISE TAKEN PLA CE IN ACCORDANCE WITH THE LAW OF TRANSFER OF MOVABLE PROP ERTY. THE COURT FURTHER REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN CASE OF HOWRAH TRADING CO. LTD VS. CIT (3 6 ITR 215) WHEREIN IT IS HELD THAT TRANSFER OF SHARES OF A COMPANY TAKES PLACE EITHER BY A FULLY EXECUTED DOCUMENT AS PROVIDED 24 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. UNDER THE COMPANIES ACT OR BY WHAT ARE KNOWN AS BL ANK TRANSFERS WHERE THE NAME OF THE TRANSFEROR IS EN TERED AND THE TRANSFER DEED SIGNED BY THE TRANSFEROR IS HANDE D OVER WITH THE SHARE SCRIP TO THE TRANSFEREE WHO IF HE SO CHOOSES, COMPLETES THE TRANSFER BY ENTERING HIS NAME AND THE N APPLYING TO THE COMPANY TO REGISTER HIS NAME IN PLA CE OF TAHE PREVIOUS HOLDER OF SHARES. THE COMPANY RECOGNISES NO PERSON EXCEPT ONE WHOSE NAME IS ON THE REGISTER OF MEMBERS. THE SAME VIEW HAS ALSO BEEN EXPRESSED BY THE HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. RAMA SWAMY (151 ITR 122). THE HONBLE DELHI HIGH COURT IN CA SE OF AJAY GULLIYA VS. ACIT VIDE JUDGMENT DATED 16-7-2012 IN I TA NO.423 OF 2012 HELD AS UNDER:- IT WAS LASTLY SUBMITTED THAT THE TRIBUNALS FINDING S ARE BASED UPON AS UNDERSTANDING ABOUT THE CHARACTERISATION OF THE RECEIPT AND IT HAS NOT DEAL T WITH THE DEEMING FICTION ABOUT THE ACCRUAL WHICH IS DEALT WITH BY SECTION 48. WE ARE UNABLE TO AGREE. THE TENOR OF THE TRIBUNALS ORDER IS THAT THE ENTIRE IN COME BY WAY OF CAPITAL GAINS IS CHARGEABLE TO TAX IN THE YEAR IN WHICH THE TRANSFER TOOK PLACE. THIS IS WHAT IS STATED IN SECTION 45(1). MERELY BECAUSE THE AGREEMENT PROVIDES FOR PAYMENT OF THE BALANCE OF CONSIDERATIO N UPON THE HAPPENING OF CERTAIN EVENTS, IT CANNOT BE SAID THAT THE INCOME HAS NOT ACCRUED IN THE YEAR OF TRANSFER. 23. THE RATIO LAID DOWN BY THE INCOME-TAX APPELLA TE TRIBUNAL, AMRITSAR BENCH IN CASE OF MAX TELECOM VE NTURES LIMITED VS. ACIT (SUPRA) ALSO SUPPORTS THIS VIEW. SO FAR AS THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE IN CASE OF VASUDEV RAMACANDRA SHELAT VS. PRANLAL JAYANAND THAKUR REPO RTED IN AIR 1974 (SC) 1728, IT IS COMPLETELY IN A DIFFERE NT CONTEXT 25 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. AND DOES NOT APPLY TO THE FACTS OF THE PRESENT CASE . IN THAT CASE, THE SHARE CERTIFICATES WERE GIVEN AS GIFTS BY THE DONOR TO THE DONEE, THE DONOR ALSO SIGNED SEVERAL BLANK FORMS SO AS TO BRING TRANSFER OF DONATED SHARES IN THE REGISTER S OF THE VARIOUS COMPANIES AND SHARE CERTIFICATES IN HIS OWN NAME. HOWEVER, THE SHARE CERTIFICATE COULD NOT BE TRANSFE RRED IN THE REGISTER OF VARIOUS COMPANIES BEFORE THE DEATH OF T HE DONOR. IN THIS FACTUAL CONTEXT, THE HONBLE SUPREME COURT HELD THAT A TRANSFER OF PROPERTY RIGHTS IN SHARES RECOGNISED BY TRANSFER OF PROPERTY ACT MAY BE ANTECEDENT TO THE ACTUAL VES TING OF ALL RIGHTS OF OWNERSHIP OF SHARES AND EXERCISE OF THE R IGHTS OF SHAREHOLDERS IN ACCORDANCE WITH THE PROVISIONS OF T HE COMPANY LAW. HOWEVER, THE RATIO LAID DOWN CANNOT BE CONSTRUED TO MEAN THAT THE PROVISIONS OF COMPANYS ACT WILL NOT APPLY TO THE TRANSFER OF SHARES. SO FAR AS THE RELIANCE PLACED BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE ON THE DECISIONS OF THE HONBLE SUPREME CO URT TO CONTEND THAT INCOME MUST BE HELD TO HAVE ACCRUED IN THE REAL SENSE OF TERM, WE WOULD LIKE TO OBSERVE THAT, WE RE SPECTFULLY AGREE WITH THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE APEX COURT IN THOSE DECISIONS. HOWEVER, SUFFICE IT TO SAY THAT RATIO LAID DOWN IN A DECISION IS IN CONSIDERAT ION OF CERTAIN FACTS AND CIRCUMSTANCES INVOLVED IN THAT CA SE. IT CANNOT BE APPLIED UNIFORMLY TO ALL THE CASES, UNLES S THE FACTS ARE IDENTICAL. IN THE FACTS OF THE PRESENT CASE, TH E RECITALS IN MOUS AND THE CONDUCT OF THE PARTIES IN EXECUTING THE TRANSFER FORMS BY THE SELLERS IN FAVOUR OF THE BUYE R RECORDING OF TRANSFERS IN THE SHARE CERTIFICATES AND BOOKS OF ACCOUNTS OF THE RESPECTIVE COMPANIES AND THE ANNUAL RETURN FILED 26 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. BEFORE ROC WOULD CLEARLY DEMONSTRATE THE FACT THAT THE INTENTION OF THE ASSESSEE WAS TO TRANSFER THE SHARE S TO THE BUYER DRDL FOR A CONSIDERATION AND THE TRANSACTION IS COMPLETE ON DELIVERY OF SHARE CERTIFICATES AND EXEC UTING THE INSTRUMENT OF TRANSFER. THIS IS FURTHER EVIDENT FROM THE FACT THAT IN PURSUANCE TO THE TRANSFER OF SHARES, CONTRO L AND MANAGEMENT OF ALL 13 COMPANIES WERE HANDED OVER TO THE BUYER DRDL. WE ARE NOT CONVINCED WITH THE CONTENTIO N OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT MERE ENTRIES IN THE BOOKS OF ACCOUNTS DO NOT PROVE TRANS FER. IN THE PRESENT CASE NOT ONLY THERE ARE ENTRIES IN THE BOOKS OF ACCOUNTS OF THE TRANSFEROR COMPANIES AND TRANSFEREE COMPANY BUT ALL OTHER FORMALITIES UNDER THE PROVISI ONS OF THE COMPANIES ACT, 1956 LIKE EXECUTION OF INSTRUMENT OF TRANSFER, RECORDING OF TRANSFER IN SHARE CERTIFICATES HANDING OVER THE SHARE CERTIFICATES, BOOKS OF ACCOUNTS, ALL OTHER RE CORDS AND DOCUMENTS AS WELL AS CONTROL AND MANAGEMENT OF THE COMPANIES HAVE BEEN CARRIED OUT WHICH PROVES THAT T HERE IS TRANSFER OF SHARES TO THE BUYER DRDL. THUS THERE IS AN EXTINGUISHMENT OF ASSESSEES RIGHTS OVER THE SHARE S. IN AFORESAID VIEW OF THE MATTER, WE HOLD THAT THERE IS TRANSFER OF SHARES WITHIN THE MEANING OF SECTION 2(47) OF THE A CT WHICH IS CHARGEABLE TO CAPITAL GAINS. WE THEREFORE UPHOLD THE ORDER OF THE CIT (A) AND DISMISS THE GROUNDS RAISED BY TH E ASSESSEE. 24. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE CIT (A) IN CONFIRMING THE ADDITION OF RS.19,58,156/- REPRESENTING THE ADVANCE TAKEN FROM SEVERAL 27 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. PARSONS. THE FACTS OF THE ISSUE ARE, DURING THE AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED CERTAI N CREDITS APPEARED IN THE CASH BOOK TOTALLING TO RS.19,58,156 /-. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAI N SUCH ENTRIES, THE ASSESSE FAILED TO EXPLAIN THE DEPOSITS BY FURNISHING THE NAMES AND ADDRESSES, AMOUNTS RECEIVE D ETC., AND EVEN CONFIRMATION LETTERS WERE ALSO NOT PRODUCE D BY THE ASSESSEE IN ABSENCE OF EITHER CONFIRMATION LETTERS OR OTHER INFORMATION CALLED FOR, THE ASSESSING OFFICER THER EFORE TREATED THE AMOUNT OF RS.19,58,156/- AS UNEXPLAINED CREDIT AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE BEING AGGRIEVED PREFERRED AN APPEAL BEFORE THE CIT (A). BEFORE THE CIT (A), IT WAS SUBMITTED BY THE A SSESEE THAT THE SUM OF RS.19,58,156/- WAS REFUND OF ADVANC E PREVIOUSLY MADE AND HAS BEEN DULY DISCLOSED IN THE BOOKS OF ACCOUNTS. THE CIT (A) HOWEVER CONFIRMED THE ADDITI ON BY OBSERVING THAT THE ASSESSEE HAS NOT SUBSTANTIATED I TS STAND THAT THE SUM OF RS.19,58,156/- WAS THE REPAYMENT OF THE ADVANCE. 26. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. IT IS THE CONTENTIO N OF THE ASSESSEE THAT THE AMOUNT OF RS.19,58,156/- REPRESEN TS THE REFUND OF ADVANCE PREVIOUSLY MADE AND IT HAS BEEN D ULY REFLECTED IN THE BOOKS OF ACCOUNTS. CONSIDERING SU CH SUBMISSIONS OF THE ASSESSEE, WE REMIT THIS ISSUE BA CK TO THE FILE OF THE ASSESSING OFFICER FOR GIVING AN OPPORTU NITY TO THE ASSESSEE TO EXPLAIN THE SOURCE OF RS.19,58,156/- A ND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 28 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. 27. IN GROUND NO.3, THE ASSESSEE CHALLENGED THE CONFIRMATION OF ADDITION OF RS.5 LAKHS REPRESENTING THE LOAN TAKEN FROM K. SUVARNA. BRIEFLY, THE FACTS ARE, IN C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FINDI NG THAT THE ASSESSEE HAD SHOWN UNSECURED LOAN FROM DIFFEREN T PERSONS, ASKED HIM TO FURNISH THE DETAILS. THE ASSE SSEE SUBMITTED THE DETAILS OF THE UNSECURED LOAN BY FURN ISHING NAMES, ADDRESSES AND AMOUNT ADVANCES AND PAN NOS. ETC. THE ASSESSING OFFICER ON VERIFYING THE DETAILS NOTI CED THAT IN RESPECT OF K. SUVARNA AN AMOUNT OF RS.5 LAKHS WAS RECEIVED BUT SHE DOES NOT HAVE PAN NUMBER. ON VERIFICATION OF CONFIRMATION LETTER, HE FURTHER NOTICED THAT THE CR EDITOR ALSO DID NOT MENTION THAT THE LOAN WAS ADVANCED OUT OF P AST SAVINGS. SINCE THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE TO PROVE THE SOURCE OF CREDITORS PAST SAV INGS, THE ASSESSING OFFICER ADDED THE AMOUNT OF RS. 5 LAKHS T O THE INCOME OF THE ASSESSEE BY TREATING IT AS UNEXPLAINE D CASH CREDIT. THE ASSESSED CHALLENGED THE SAME BEFORE THE CIT (A). 28. IN COURSE OF HEARING BEFORE THE CIT (A), THE AS SESSEE SUBMITTED CERTAIN ADDITIONAL EVIDENCES BY FURNISHIN G THE PAN AND BANK STATEMENT OF THE CREDITOR AND ALSO EXPLAIN ED THE SOURCE OF THE SUM OF RS.5 LAKH ADVANCED BY HER. TH E CIT (A) HOWEVER REFUSED TO CONSIDER THE ADDITIONAL EVIDENC E BY OBSERVING THAT THE ASSESSEE HAS NOT EXPLAINED AS TO WHY THE PAN AND BANK STATEMENT WAS NOT FILED BEFORE THE ASS ESSING OFFICER AND ACCORDINGLY CONFIRMED THE SAID ADDITION . 29. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. ON A PERUSAL OF THE 29 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. ASSESSMENT ORDER, IT IS CLEAR THAT THE ASSESSING OF FICER HAS TREATED THE AMOUNT OF RS.5 LAKH AS UNEXPLAINED CASH CREDIT ONLY DUE TO THE FACT THAT THE ASSESSEE HAS NOT FU RNISHED PAN AND BANK STATEMENT. HOWEVER, IT APPEARS FROM T HE ORDER OF THE CIT (A) THAT THE ASSESSEE HAS SUBMITTE D THE PAN AND BANK STATEMENT OF LOAN CREDITOR BEFORE THE CIT (A). THE CIT (A) HAS CONFIRMED THE ADDITION WITHOUT CONSIDER ING THE EVIDENCES SUBMITTED BY THE ASSESSEE. IN OUR VIEW, THE EVIDENCES SUBMITTED BY THE ASSESSEE ARE REQUIRED TO BE CONSIDERED BEFORE MAKING THE ADDITION. IN THE AFOR ESAID FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO REMIT T HE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL CONSIDER THE ISSUE AFRESH AFTER TAKING INTO ACCOUNT THE EVID ENCES PRODUCED BY THE ASSESSEE. 30. IN THE RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 27 -9-2013. SD/- ( CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER H YDERABAD, DATED THE 27 TH SEPT. 2013 JMR* 30 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD. COPY TO:- 1) M/S GAJJALA MADHUSUDHANA REDDY- HUF, PLOT NO.1112, MLA COLONY, ROAD NO12, BANJARA HILLS, HYDERABAD. 2) ITO, IT TOWERS, AC GUARDS, HYDERABAD. 3) CIT (A)IV, HYDERABAD. 4) CIT-III, HYDERABAD. 5.THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. JMR* * 31 ITA NO.611 OF 2013 GAJJALA MADHUSUDHAN REDDY,, HYD.