Bhushan Capital & Credit Services Ltd, V. ITO Ward-2 (4),

ITA 967/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8206 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 14-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT; A ND SRI AAKASH DEEP JAIN : JUDICIAL MEMBER ITA NO. 967/DEL/08 ASSTT. YR: 2005-06 M/S BHUSHAN CAPITAL & VS. ITO WARD 2(4), CREDITS SERVICES LTD., NEW DELHI. PAN/GIR NO. AAACB3924D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI ASHWANI KUMAR CA RESPONDENT BY : SHRI PRATIMA KAUSHIK DR O R D E R PER G.E. VEERABHADRAPPA, V.P: THIS APPEAL, BY THE ASSESSEE , ARISES OUT OF THE OR DER DATED 17-4-2007 OF THE CIT(A), NEW DELHI, FOR A.Y. 2005-06. 2. THE ONLY DISPUTE IN THIS APPEAL RELATES TO THE DISALLOWANCE OF RS. 73,90,800/- CLAIMED IN RESPECT OF LOSS ON SALE OF 4 9850 SHARES HELD BY THE ASSESSEE OF M/S RAIL TRACK INDIA LIMITED AND 6300 SHARES OF M/S EVERGROWING IRON AND FINVEST LIMITED. 3. THE ASSESSEE IS A LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS OF INVESTMENTS IN QUOTED AND UNQUOTED SHARES OF CROSS HOLDING COMPANIES OF M/S BHUSHAN GROUP. THE ASSESSEE SOLD SHARES OF ONE OF THE GROUP CONCERNS, NAMELY, NAGESHWAR INVESTMENTS LTD. AND PROFIT AROSE THEREFROM TO THE EXTENT OF RS. 74,50,285/-. THE ASSESSEE ALSO SOLD SHARES O F RAIL TRACK INDIA LTD. AND EVERGROWING IRON & FINVEST LTD. AND INCURRED A LOSS OF RS. 73,19,800/-. THE AO ASSESSED THE INCOME AND HELD THAT THE LOSS D ERIVED BY THE ASSESSEE 2 WAS MAINLY WITH A VIEW TO REDUCE THE CAPITAL GAIN B Y SELLING SHARES OF CROSS HOLDING IN GROUP COMPANIES. HE TREATED THE TRANSAC TIONS AS CAMOUFLAGED OR MAKE BELIEF TRANSACTIONS, MAINLY DONE WITH A VIEW T O THWART THE TAX BURDEN. THE LOSS WAS DISALLOWED. IN APPEAL, THE CIT(A) CONF IRMED THE ORDER OF THE AO AND THE ASSESSEE IS AGGRIEVED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY AR GUED THAT THERE IS NO CONCEPT OF GROUP COMPANIES IN THE INCOME-TAX ACT AN D IT IS WRONG ON THE PART OF THE AO TO HAVE ASSESSED THE INCOME FROM SAL E OF SHARES WITHOUT SETTING OFF THE LOSS SUFFERED ON ACCOUNT OF SALE OF SHARES. AT NO STAGE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO JU STIFY THE PURCHASE PRICE. THE PURCHASE PRICE HAS BEEN BASED ON HISTORICAL REC ORDS AS THE SHARERS WERE PURCHASED A COUPLE OF YEARS BACK AND DULY REFLECT ED IN THE ANNUAL ACCOUNTS OF THE ASSESSEE COMPANY FROM TIME TO TIME AND IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE COMPANY HAS NOT SOLD T HE SHARES. IN FACT THE BUYERS HAVE REGISTERED THE SHARES IN THEIR NAMES AN D THE SALE PRICE WAS ALSO ARRIVED AT AFTER LOOKING TO THE NET WORTH OF THE RE SPECTIVE COMPANIES. ALL EVIDENCES TO JUSTIFY THE SALE PRICE HAVE BEEN SUBMI TTED BEFORE THE AO AND ARE ALSO PART OF THE SUBMISSIONS BEFORE THE ITAT. I N THE LIGHT OF THESE DETAILS THE LOSS SUFFERED IN THE DEALING OF SHARES OUGHT NO T HAVE BEEN IGNORED. THE ASSESSEES COUNSEL HAS RELIED UPON THE WRITTEN SUB MISSIONS FIELD BEFORE THE CIT(A) IN SUPPORT OF HIS CONTENTIONS. 5. THE LEARNED D.R., ON THE OTHER HAND, STRONGLY JU STIFIED THE IMPUGNED ORDER IN THE LIGHT OF THE DISCUSSIONS IN THE ORDER OF THE CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND GONE THROUGH THE RECORDS. IN OUR VIEW THE AO WAS NOT JUSTIFIED I N DISALLOWING ANY PART OF THE LOSS WITHOUT APPRECIATING THE TRANSACTIONS. THE TRANSACTION OF PURCHASE WAS DONE ON THE BASIS OF THE NET WORTH OF THE SHAR ES AS IS CLEAR FROM THE 3 WORKING GIVEN BY THE ASSESSEE BEFORE THE AO AND ALS O BEFORE US. THE DEPARTMENT HAS NOT DISPUTED THE PURCHASE PRICE NOR TRANSACTIONS OF PURCHASES. THE SALE PRICES ARE SEEN TO BE BASED ON REASONABLE PRICES, ON THE BASIS OF NET WORTH AS ON THE RELEVANT DATES. THESE DETAILS ARE ON OUR FILE. IT IS NOT THE CASE OF THE DEPARTMENT THAT SALE PRICES AR E NOT GENUINE. IT IS SEEN FROM THE RECORDS THAT PARTIES HAVE ACTED UPON THE T RANSFER DEED IN THE MANNER REQUIRED UNDER THE COMPANIES ACT. IT IS NOBODYS CA SE THAT TRANSFER AS PER THE CONTRACT NOTES DID NOT TAKE PLACE IN FAVOUR OF THE BUYERS. IN THE LIGHT OF THESE, IT CANNOT BE SAID THAT THE TRANSACTIONS ARE IN ANY WAY CAMOUFLAGED. IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF UNION OF INDIA VS. AZADI BACHAO ANDOLAN (2003) 132 TAXMAN N 373, WE ARE UNABLE TO UPHOLD THE ORDER OF AUTHORITIES BELOW ON THE I SSUE IN QUESTION. ACCORDINGLY, THE DISALLOWANCE MADE BY THE AO AND SU STAINED BY THE CIT(A) IS DELETED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 19-6-2009. SD/- SD/- ( AAKASH DEEP JAIN ) ( G.E. VEERABHADRA PPA ) JUDICIAL MEMBER VICE PRESIDENT DATED: 19-06-2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 4