SATCO SECURITIES & FINANCIAL SERVICES LTD, MUMBAI V. ACIT 4(2), MUMBAI

ITA 8541/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6676 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 16-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADGIRI
• Keywords: Depreciation; Cost of acquisition; Revised return

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.8541/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR-2008-09 M/S SATCO SECURITIES & FINANCIAL SERVICES LTD., MAKHIJA CHAMBERS, 196, TURNER ROAD, BANDRA (W), MUMBAI-400020 VS CIT 8, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 PAN: AAACS6813N ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : SHRI HARIDAS BHAT + * / REVENUE BY : SHRI B. YADGIRI ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 12-06-2014 -.# + ), / DATE OF PRONOUNCEMENT : 12-06-2014 ' ' ' ' , 1961 + ++ + 254 )1( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DATED 14.06.2011 OF THE CIT(A )-8,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE COMMISSIONER OF INCOME TAX 13,(CIT) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 3,81,706/- ON THE ENHANCEMENT OF THE CAPITAL GAINS AS WORKED OUT BY THE ASSESSING OFFICER. 2.THE CIT FAILED TO APPRECIATE THAT:- A) THE SHARE OF BSE WERE ALLOTTED IN LIEU OF THE BSE CARD. B) THE COST OF ACQUISITION OF THE SAME IS THE DEPRE CIATED VALUE OF THE CARD AS ON THE ALLOTMENT OF SHARES AS TAKEN BY THE AO AND ACCEPTED BY THE ASSESSEE. C) THE STAND TAKEN BY THE ASSESSEE IS WHERE TWO VIE WS ARE POSSIBLE AND DOES NOT AMOUNT TO FILING OF INACCURATE PARTICULARS. D) ALL THE FACTS AND PARTICULARS OF INCOME WERE DIS CLOSED AND THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE. 3.THE APPELLANT PRAYS THAT THE PENALTY LEVIED OF RS . 3,81,706/- MAY BE DELETED. THE APPELLANT CRAVES LEAVE TO PRODUCE ADDITIONAL EV IDENCE IF ANY IN SUPPORT OF ITS CLAIM IN THE COURSE OF APPEAL HEARING. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF SECURIT IES BROAKING,FILED ITS RETURN OF INCOME ON 29.10.2007, DECLARING TOTAL INCOME OF RS. 1.97 CROR ES.ON 29.09.08 A REVISED RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME AT RS.3.89 CRORES.ASSE SSING OFFICER(AO) COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT ON 30.11.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 4.92 CRORES. ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) WHO DETERMINED THE INCOME ON LONG TERM CAPITAL GAINS (LTCG) AT RS.3.89 CRORES AGAINST THE INCOME OF RS.3.73 CRORES ASSESSED BY THE AO. AS A RESULT OF HIS ORDER, THERE WAS ENHANCEMENT OF INCOME ON LTCG BY RS. 16,84,491/-.IN PURSUANCE OF THE ADDITION,PENALTY PR OCEEDINGS U/S.271(1)(C)OF THE ACT WERE INITIATED BY THE FAA AND PENALTY OF RS.3.81 LAKHS W AS IMPOSED.THE ASSESSEE-COMPANY HAS 2 ITA NO. 8541/MUM/2011 M/S SATCO SECURITIES & FINANCIA L SERVICES LTD. CHALLENGED THE PENALTY ORDER BEFORE US. BRIEF HISTORY AND FACTS OF THE CASE: 3. ASSESSEE-COMPANY HAD SOLD 75,000 SHARES OF BSE LTD. AND HAD CALCULATED THE LTCGS THEREON. IT HAD CLAIMED DEPRECIATION ON THE BSE CARD TILL AY 2005-06 AND HAD TAKEN ORIGINAL COST OF BSE CARD AS THE COST OF ACQUISITION FOR THE PURPOSE OF COMPUTATION OF LTCG. AO WAS OF THE OPINION THAT ASSESSEE WAS NOT ENTITLED TO CLAIM DOUBLE DEDU CTIONS ON THE SAME ASSET.THEREFORE, REJECTING THE CLAIM REGARDING COST OF INDEXATION BENEFIT WHIC H WAS CLAIMED BY TAKING THE COST IN 1999-2000, HE COMPUTED LTCG.AS THE ASSESSEE HAD CLAIMED DEPREC IATION ONLY TILL AY 2005-06,SO THE AO PROVIDED INDEXATION BENEFIT FROM AY 2005-06.HE DETE RMINED THE LTCG AT RS. 3.73 CRORES. AGAINST THE SAID COMPUTATION THE ASSESSEE FILED AN APPEAL BEFORE THE FAA.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,HE COMPUTED THE LTCG AT RS. 3.86 CRORES,AS STATED EARLIER.THE ENHANCEMENT MADE BY THE FAA IN THE LTCG WAS CHALLEN GED BY THE ASSESSEE BEFORE THE TRIBUNAL. 4. MEANWHILE,FAA ISSUE A NOTICE U/S. 271 R.W.S. 274 AN D ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY SHOULD NOT BE LEVIED IN RESPECT OF THE ABOV E ADDITION.AFTER CONSIDERING THE REPLY OF THE ASSESSEE,FAA HELD THAT THE ASSESSEE HAD CLAIMED DEP RECIATION ON BSE CARD AND SAME HAD BEEN DISALLOWED SINCE BEGINNING,THAT THE ASSESSEE ACCEPT ED THE HIGH COURT DECISION IN THIS REGARD AND DID NOT FILE ANY APPEAL BEFORE THE SUPREME COURT,TH AT IT REVISED ITS RETURN OF INCOME AND REWORKED THE CAPITAL GAINS ON SALE OF BSE SHARES WHICH WERE ALLOTTED TO IT ON THE BASIS OF BSE CARD HELD BY IT,THAT ACQUISITION COST OF THE SHARES OF BSE, RECE IVED UNDER SCHEME OF BSE CORPORATIZATION AND DEMUTUALIZATION(SCHEME 2005) HAD TO DETERMINED IN A PARTICULAR MANNER, THAT SAID ACQUISITION COST COULD NOT BE TAKEN AS THE COST OF PRE-EXISTING BSE CARD PRIOR TO CORPORATIZATION OF BSE CONVERTING THE SAME INTO BOMBAY STOCK EXCHANGE LTD.THAT THERE WAS NO BASIS TO JUSTIFY THE CONTENTION THAT THE ERSTWHILE TRADING RIGHTS WERE CONVERTED INTO EQ UITY SHARES AND HENCE THE ALLOCATION OF ORIGINAL COST OF BSE CARD TO THE NUMBER OF SHARES ALLOTTED W AS INCORRECT,THAT THE ASSESSEE HAD ADOPTED THE COST OF ACQUISITION OF SHARES AT RS. 97 LAKHS ALONG WITH RS. 10,000/- AND DETERMINED THE INDEXED COST OF ACQUISITION AS 1999-2000 FOR COMPUTATION OF CAPITAL GAINS FROM SALE OF SHARES,THAT BY ADOPTING THE ABOVE INDEXED COST ASSESSEE HAD CONCEA LED ITS INCOME AND RENDERED ITSELF LIABLE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT.REFERRING TO THE PROVISIONS OF SECTION 271(1)(C) R.W. EXPLANATION 1,FAA FURTHER HELD THAT THE ASSESSEE HA D FAILED TO OFFER EXPLANATION ABOUT THE TRANSACT -TION IN QUESTION.FINALLY,HE IMPOSED PENALTY U/S.27 1(1)(C) OF THE ACT,AS STATED EARLIER. 5. BEFORE US, AUTHORISED REPRESENTATIVE (AR) STATED TH AT THE ENHANCEMENT MADE BY THE FAA UNDER THE HEAD CAPITAL GAINS FROM RS. 3.73 CRORES TO 3.86 CRORES HAD BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 27.02.2012 (ITA NO. 6032/MUM/2011), THAT AS THE ADDITION HAS BEEN DELETED SO THERE WAS NO JUSTIFICATION FOR SUSTAINING THE PENAL TY.DEPARTMENTAL REPRESENTATIVE(DR)LEFT THE ISSUE TO THE DISCRETION OF THE BENCH.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE QUANTUM APPEAL,TRIBUN AL HAS DECIDED THE ISSUE AS UNDER : 4.3 AFTER HEARING BOTH THE PARTIES AND AFTER CONSID ERING THEIR SUBMISSIONS WE FOUND THAT THE ISSUE RAISED BY THE ASSESSEE IS COVERED BY THE AFOREMENTI ONED DECISION. THEREFORE, WE HOLD THAT THE AO HAD RIGHTLY COMPUTED THE CAPITAL GAIN IN THE HANDS OF THE ASSESSEE AT RS. 3,73,06,900/- AND LD. CIT(A) HAS WRONGLY CALCULATED THE LONG TERM CAPITAL GAIN IN THE HANDS OF ASSESSEE AT RS. 3,86,91,391/-.THE ORDER OF THE CIT(A) ON THIS ISSUE IS SET ASIDE AND THAT OF AO IS RESTORED AND THE APPEAL FILED BY THE ASSESSEE IS TREATED TO BE ALLOW ED IN THE MANNER AFORESAID. WE FIND THAT FAA HAD MADE CERTAIN ADDITIONS TO THE LTCG CLAIMED BY THE ASSESSEE.PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE ALSO INIT IATED BECAUSE OF THE SAID ENHANCEMENT. AS THE TRIBUNAL HAS STRUCK DOWN THE ADDITION MADE BY THE F AA;VIDE ITS ORDER DATED.27.02.2012 (SUPRA) IN 3 ITA NO. 8541/MUM/2011 M/S SATCO SECURITIES & FINANCIA L SERVICES LTD. QUANTUM APPEAL;SO,IN OUR OPINION PENALTY ORDER OF T HE FAA NEEDS TO BE REVERSED.EFFECTIVE GROUND OF APPEAL,FILED BY THE ASSESSEE,IS ALLOWED. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 1)2 '() 1)2 '() 1)2 '() 1)2 '() 3 4 + / 3 4 + / 3 4 + / 3 4 + / 5 + ) 67 5 + ) 67 5 + ) 67 5 + ) 67. .. . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH ,JUNE,2014 0 + -.# 8 9' 12 TWU , 201 4 . + / : SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 9' /DATE:12.06 . 2014. SK 0 0 0 0 + ++ + &); &); &); &); < ;#) < ;#) < ;#) < ;#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR E BENCH, ITAT, MUMBAI / ;?/ &)' , . . . 6. GUARD FILE/ / 1 ';) ';) ';) ';) &) &)&) &) //TRUE COPY// 0' / BY ORDER, @ / 6 DY./ASST. REGISTRAR , /ITAT, MUMBAI