MAHINDRA TELECOMMUNICATIONS INVESTMENT PRIVATE LIMITED (FORMERLY KNOWN AS MAHINDRA AIR SERVICES LIMITED ), MUMBAI V. ITO 2(2)(3), MUMBAI

ITA 6248/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0752 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 13-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: H P MAHAJANI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI M. BALAGANESH , HON'BLE ACCOUNTANT MEMBER ITA NO. 6248 & 6249 /MUM/201 7 (A.Y S : 20 13 - 14 & 2014 - 15 ) M/S. MAHINDRA TELECOMMUNICATIONS INVESTMENT PVT. LTD., {FORMERLY KNOWN AS MAHINDRA AIR SERVICES LTD.} SEQUENTLY MERGED WITH MAHINDRA HOLDINGS LIMITED MAHINDRA TOWERS, DR.G.M. BHOSALE MARG WORLI, MUMBAI 400 018 PAN: AAACM3774E V. INCOME TAX OFFICER RANGE - 2(2)(3 ) AAYAKAR BHAVAN CHURCH GATE MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI H.P. MAHAJANI DEPARTMENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING : 26.07.2019 DATE OF PRONOUNCEMENT : 08 .08.2019 O R D E R PER C. N. PRASAD (JM) 1. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 5, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 10.07.2017 FOR THE A.Y S . 20 13 - 14 & 2014 - 15. 2. ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUND IN BOTH THESE APPEALS EXCEPT FOR THE FIGURES: - 2 ITA NO. 6248 & 6249/MUM/2017 (A.YS: 2013 - 14 & 2014 - 15) M/S. MAHINDRA TELECOMMUNICATIONS INVESTMENT PVT. LTD., 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF .47,86,212 TO INCOME AS INTEREST ON CAPITAL CONTRIBUTED BY THE APPELLANT COMPANY IN THE SHARES OF THE ANOTHER COMPANY WITHOUT APPRECIATING THAT THE SAID AMOUNT WAS EMBEDDED IN OPTION PRICE RECEIVABLE ON THE SALE OF THE SAID SHARES AND HENCE, NOT ACCRUED AND DUE FOR THE YEAR UNDER CONSIDERATI ON . 3. AT THE TIME OF HEARING , LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAD AN INVESTMENT IN EQUITY SHARES AT & T GLOBAL NETWORK SERVICES INDIA P. LTD, WHICH HAS BEEN PURCHASED IN PURSUANCE OF SHAREHOLDER'S AGREEMENT DATED 07.03.2006. THE SHAR EHOLDER'S AGREEMENT AMONG OTHER TERMS ALSO PROVIDED THAT AT & T GLOBAL NETWORK HOLDINGS LLC, SHALL HAV E THE FIRST RIGHT TO PURCHASE THE ASSESSEE'S SHAREHOLDING IN AT & T GLOBAL NETWORK SERVICES INDIA P. LTD. EITHER DIRECTLY OR THROUGH A THIRD PARTY BY EX ERCISING ITS CALL OPTION AND PAYING TO THE ASSESSEE OPTION PRICE WHICH IS AGREED TO BE THE PRICE PAYABLE FOR THE TOTAL EQUITY INVESTMENT OF THE ASSESSEE PLUS 11% ANNUAL RETURN, COMPUTED ANNUALLY ON THE CAPITALIZATION DATE OVER THE LIFE OF THE EQUITY HOLDIN G PERIOD AND PRO - RATED FOR THE PERIOD OF HOLDING BETWEEN THE IMMEDIATELY PRIOR ANNIVERSARY CAPITALIZATION DATE AND THE DATE OF DIVESTITURE. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSING OFFICER AND THE LD.CIT(A), FOLLOWING THE ITAT ORDER FOR A Y 2008 - 09, HELD THAT, THE ASSESSEE WAS ENTITLED TO AN ASSURED RETURN @11% ON ITS EQUITY INVESTMENT ON ACCRUAL BASIS WHICH WAS ASSESSABLE ON TIME PROPORTION BASIS. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE SAID RETURN COULD BE ASSESSED ONLY AS 3 ITA NO. 6248 & 6249/MUM/2017 (A.YS: 2013 - 14 & 2014 - 15) M/S. MAHINDRA TELECOMMUNICATIONS INVESTMENT PVT. LTD., A GAIN AT THE TIME OF TRANSFER OF THE SAID SHARES AND NOT EARLIER. THE ADDITION WAS MADE UNDER THE HEAD BUSINESS INCOME . 4. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT HON'BLE ITAT HAS UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. COPY OF THE ORDER IS PLACED ON RECORD AT PAGE . NO. 61 TO 93 OF THE PAPER BOOK. I T IS F URTHER SUBMITTED THAT THE ASSESSEE HAS FILED AN APPEAL BEFORE HON'BLE HIGH COURT AND THE SAME HAS BEEN ADMITTED. COPY OF THE ORDER IS PLACED ON RECORD. 5. LD. DR VEHEMENTLY SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN VIEW OF THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A .Y. 2008 - 09 IN ITA.NO . 2832/MUM/20 12 DATED 24.05.2016 THE GROUND RAISED BY THE ASSESSEE IS REJECTED. 7. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 08 TH AUGUST , 2019 SD/ - SD/ - ( M. BALAGANESH ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 08 / 0 8 / 2019 GIRIDHAR , S R. PS 4 ITA NO. 6248 & 6249/MUM/2017 (A.YS: 2013 - 14 & 2014 - 15) M/S. MAHINDRA TELECOMMUNICATIONS INVESTMENT PVT. LTD., COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM