DCIT, Cir. 13(1), Kolkata V. M/s Saga Medihygience (P) Ltd, Kolkata

ITA 626/KOL/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6340 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 17-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM PATRA
• Keywords: Tax effect; Tax effect
• Section: 147

Judgement Text

1 ITA No.626/Kol/2020 M/s. Saga Medihygiene Pvt. Ltd. AY 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA [Before Shri A. T. Varkey, JM & Shri Rajesh Kumar, AM] I.T.A. No. 626/Kol/2020 Assessment Year: 2010-11 Deputy Commissioner of Income-tax, Circle-13(1), Kolkata Vs. M/s. Saga Medihygiene Pvt. Ltd. (PAN: AALCS9473K) Appellant Respondent Date of Hearing 30.11.2021 Date of Pronouncement 15.12.2021 For the Appellant Shri Gautam Patra, Addl. CIT For the Respondent Shri Amit Agarwal, Advocate ORDER Per Shri A.T.Varkey, JM This appeal has been preferred by the assessee against the order of Ld. CIT(A)-5 dated 12.02.2020 for AY 2010-11. 2. At the outset, the Ld. AR of the assessee drew our attention the fact that the department’s appeal is hit by tax effect circular and since the amount involved in the appeal falls in the ken of the CBDT circular, the AO ought not to have filed this appeal and in any case, now the DR should withdraw the appeal. 3. Per contra, the Ld. DR for the revenue opposes and cites the CBDT Circular No. 23 of 2019 dated 06.09.2019 and submits that the CBDT in its wisdom has made an exemption to this tax effect/limit prescribed by it for this type of cases/appeal. According to him, the exemption against the tax effect of Rs. 50 lacs fixed by the CBDT for appeals to be filed by the department in Tribunal is for organized tax evasion scam cases and cases/appeals of this nature i.e. sale of share to paper companies falls in the exemption to the tax effect/limit prescribed earlier by the CBDT. According to him, in the present case the investment in shares were sold by the assessee to paper/bogus companies which would fall in the ken of the organized tax evasion scam. In his rejoinder, the Ld. Counsel for the assessee pointed 2 ITA No.626/Kol/2020 M/s. Saga Medihygiene Pvt. Ltd. AY 2010-11 out that this circular was intended for Long Term Capital Gain (LTCG) and Short Term Capital Loss (STCL) of penny stock companies which may involve multiple players like stock exchanges, buyers and sellers supposed to be not known to each other etc, where purported rigging is supposed to take place. So, according to him, this circular (supra) cannot be extended to normal sale of investment/shares by a Private Limited Company to another company which did not take place in the stock exchange company and when the transaction happened through banking channel. The Ld. CIT(A) has deleted the addition on merits as well as on the legal issue against reopening u/s 147 of the Act. Therefore, according to the Ld. counsel, the contention of the Ld. DR that this revenue appeal is maintainable and not hit by Tax effect is incorrect due to wrong interpretation of circular No. 23 of 2019 and, therefore, this appeal of revenue since it falls below Rs. 50 Lakhs prescribed by the CBDT for filing appeal in Tribunal, the department ought not to have filed the appeal or it should withdraw the appeal. 4. Heard the rival submissions and gone through the facts and circumstances of the case. It is noted that the CBDT Circular No. 23/2019 dated 06.09.2019 cannot be construed to say that the intention of the CBDT is to carve out an exemption was in respect of normal sale of investment/shares. The CBDT ibid Circular when considered in its entirety shows that it is intended for transaction which results in LTCG/STCL wherein stock exchanges and other stake holders in different parts of the country supposedly not knowing about each other purportedly/allegedly rigs the price of scrips listed in the Electronic Exchanges. In such cases (artificial/alleged rigging where multiple players are involved) the CBDT has carved out an exemption for filing of appeals by the revenue before the Tribunal/ High Court/Hon’ble Supreme Court. Therefore, we are of the view, the present appeal/case cannot be termed as “Organized Tax Evasion Scam” because the assessee a Private Limited company has sold of investment it held in another company to two other Private Limited companies, and the Ld. CIT(A) had allowed the appeal on merits as well as on the legal issue and deleted Rs.10 lacs addition made by AO. Therefore, we are not inclined to accept the contention raised by the Ld. DR as discussed supra, and therefore, since the tax effect in 3 ITA No.626/Kol/2020 M/s. Saga Medihygiene Pvt. Ltd. AY 2010-11 this case is less than Rs. 50 lacs it is hit by the tax effect prescribed by the CBDT. Hence, revenue appeal stands dismissed 5. In the result, the appeal of revenue is dismissed. Order is pronounced in the open court on 15 December, 2021. Sd/- Sd/- (Rajesh Kumar) (Aby. T. Varkey) Accountant Member Judicial Member Dated: 15.12.2021 JD(Sr.P.S.) Copy of the order forwarded to: 1. Appellant- DCIT, Circle-13(1), Kolkata. 2. Respondent – M/s. Saga Medihygiene (P) Ltd., House No. 568, P.O. Kalyan Nagar via Pansila, Near Debendra Sporting Club, Pin-700112.. 3. CIT(A)-5, Kolkata (sent through e-mail) 4. CIT, Kolkata. 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Senior Private Secretary/DDO ITAT, Kolkata Benches, Kolkata