ITO 12(3)(4), MUMBAI V. GLOBE MARKETING SERVICES, MUMBAI

ITA 8723/MUM/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0594 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORADR
• Assessee Lawyers: PARESH BAKHARIA
• Keywords: Share purchase agreement; Cost of acquisition

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.8723/MUM/2010 ASSESSMENT YEAR: 2007-08 DCIT-12(3), ROOM NO.121, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S GLOBE MARKETING SERVICES, 18-B-2001, STELING, ST. MARTINS ROAD, BANDRA (W) MUMBAI-400050 ( / REVENUE) ( !'# /ASSESSEE) P.A. NO. AAAFG1696C / REVENUE BY SHRI VIJAY KUMAR BORA-DR !'# / ASSESSEE BY SHRI PARESH BAKHARIA $ % & #' / DATE OF HEARING 22/04/2015 & #' / DATE OF ORDER: 01/05/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 23/09/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX M/S GLOBE MARKETING SERVICES 2 (APPEALS) ERRED IN ALLOWING INDEXATION OF COST OF A CQUISITION IN RESPECT OF PROPERTY SOLD DURING THE ASSESSMENT YEAR UNDER REFERENCE WITH EFFECT FROM ASSESSMENT YEAR 1994-95 INSTEAD OF ASSESSMENT YEAR 2004-05, BEING THE ACTUAL DATE O F OWNERSHIP OF THE ASSET BY THE ASSESSEE. 2. DURING HEARING OF THIS APPEAL, LD. DR, SHRI VIJA Y KUMAR BORA, ADVANCED HIS ARGUMENTS, WHICH ARE IDENT ICAL TO THE GROUND RAISED BY CONTENDING THAT THE ORIGINAL I NVESTMENT WAS MADE IN DEBENTURES WHICH WERE ALLOTTED IN THE Y EAR 1993 AND THE AGREEMENT IS OF DATED 11/10/2006, THEREFORE , THE INDEXATION OF COST OF ACQUISITION SHOULD HAVE BEEN ALLOWED WITH EFFECT FROM AY 2004-05 AND NOT FROM AY 1994-95 . ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, S HRI PARESH VAKHARIA, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IN THE FINANCIAL YEAR 1993-94 SUBSCRIBED TO 15,000 DEBENTURES AT THE RATE OF 1200 ISSUED BY M/S MATURED TRADING AND INVESTMENT PVT. LTD. TH E PAYMENT IN THIS REGARD WAS TO BE MADE AT VARIOUS ST AGES DEPENDING UPON THE CALL AND THUS, THE ASSESSEE MADE THE PAYMENTS AT VARIOUS STAGES AS HAS BEEN SUMMARIZED A T PAGE ONE OF THE ASSESSMENT ORDER. THE DEBENTURES WERE SUBSEQUENTLY CONVERTED INTO EQUITY SHARES OF EQUIVA LENT NUMBERS. IT WAS NOTED FROM THE SCHEME/CORRESPONDEN CE, FILED DURING ASSESSMENT PROCEEDINGS, THAT ONE OF TH E OPTION M/S GLOBE MARKETING SERVICES 3 AVAILABLE WITH THE ASSESSEE TO HOLD THE DEBENTURES/ SHARES TO TAKE THE OFFICE PREMISES IN LIEU OF SUCH INVESTMENT , WHICH WAS ACCEPTED BY THE ASSESSEE. ASSESSEE ALSO FILED LETTER DATED 25/09/2002, ISSUED BY MATURED TRADING AND INVESTMEN T PVT. LTD., CONFIRMING THAT THE ASSESSEE IS A REGISTERED MEMBER OF THE COMPANY AND ENTITLED TO OFFICE PREMISES AT 201- C, 2 ND FLOOR, A-WING, FORTUNE 2000, BANDRA KURLA COMPLEX, BANDRA(EAST), MUMBAI, SUBJECT TO RIGHT OF OCCUPANCY FURTHER SUBJECTED TO ARTICLE OF ASSOCIATION AND TERMS AND C ONDITIONS CONTAINED IN APPENDIX-A. THE LD. ASSESSING OFFICER CALCULATED INDEX COST OF ACQUISITION FROM AY 2004-05 AGAINST T HE CLAIM OF ASSESSEE FROM ASSESSMENT YEAR 1994-95. THE LONG TERM CAPITAL GAIN WAS ACCORDINGLY TAKEN AT RS.4,14,32,20 0/- AGAINST RS.2,33,22,421/-, SHOWN BY THE ASSESSEE. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX ( APPEALS), THE FACTS WERE EXAMINED AND IT WAS FOUND THAT THE A SSESSEE WAS ALLOTTED 130 EQUITY SHARES IN M/S MATURED TRADI NG INVESTMENT PVT. LTD. VIDE SHARE CERTIFICATE NO.34 I SSUED ON 21/06/1993 BEARING DISTINCTIVE NUMBER 6871 TO 7000. THE COPY OF THE MINUTES BOOK OF THE AFORESAID COMPANY W AS ALSO EXAMINED BY THE LD. COMMISSIONER OF INCOME TAX (APP EALS) ALONGWITH THE MINUTES RECORDED ON 10/10/1994, WHICH HAS BEEN REPRODUCED AT PAGE 7 ONWARDS OF THE IMPUGNED O RDER. THE MINUTES OF MEETING OF THE COMPANY DATED 10/10/1 994 WERE ALSO EXAMINED IN WHICH IT WAS FOUND THAT THE A SSESSEE WAS HOLDER OF THE EQUITY SHARES WITH EXCLUSIVE RIGH T IN THE DESIGNATED OFFICE PREMISES WITH VESTED RIGHT OF OC CUPANCY RIGHT FROM FINANCIAL YEAR 1993-94. THIS RIGHT WAS H ELD M/S GLOBE MARKETING SERVICES 4 WITHOUT BREAK AND CONTINUOUSLY UPTO THE DATE OF SAL E OF PROPERTY. THUS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN VIEW OF THE DECISION OF THE TRIBUNAL I N CHARANBIR SINGH JOLLY (2006) 5 SOT 89 (BOM.) AND THE SAME PRI NCIPLE LAID DOWN IN SMT. LATAJI ROHRA (2008) 21 SOT 541 (B OM.) HELD THAT INDEXATION HAS TO BE DONE FROM THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE I.E. FINAN CIAL YEAR 1993-94. MORE SPECIFICALLY, WHEN THE REVENUE HAS NO T PRODUCED ANY EVIDENCE CONTROVERTING THE STAND TAKEN IN THE IMPUGNED ORDER OR THE OBSERVATION MADE IN THE ASSES SMENT ORDER, THUS, IN VIEW OF THE UNCONTROVERTED FACT AND THE JUDICIAL PRONOUNCEMENT DISCUSSED HEREINABOVE, WE FI ND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMIS SIONER OF INCOME TAX (APPEALS). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF HEARING ON 22/04/2015. SD/- SD/- ( R.C.SHARMA ) (JOGI NDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 01/05/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. $ 1# ( +, ) / THE CIT, MUMBAI. P. $ 1# / CIT(A)- , MUMBAI 5. 34 /# ! , +,' +!5 , $ % / DR, ITAT, MUMBAI M/S GLOBE MARKETING SERVICES 5 6. 6 7% / GUARD FILE. / BY ORDER, 03,# /# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI