THE DCIT, CIRCLE-2(1)(2), SURAT V. DEEPU SYAMAPRAKASH VAIDYAN, SURAT

MA 02/SRT/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4730 (ITAT-SURAT)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 03-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS T BIDANI
• Keywords: Share purchase agreement; Revised return; Set aside
• Section: 254(2); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH SURAT (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER SR. NO. M.A /ITA NO. ASSTT. YEAR NAME OF APPELLANT NAME OF RESPONDENT 1. M.A NO.01/SRT/2020 ITA NOS.32/SRT/2017 2012-13 D.C.I.T, CIRCLE-2(1)(2), SURAT. SMT. SUSEELAN NANOO VAIDYAN, FLAT NO.213, G-TOWER, ASHIRWAD PALACE, NEAR JAMNA NAGAR BUS STAND, BHATAR ROAD, SURAT. PAN NO.ABTPN4977B 2. M.A NO.02/SRT/2020 ITA NOS.33/SRT/2017 2012-13 D.C.I.T, CIRCLE-2(1)(2), SURAT. SHRI DEEPU SHYAMPRAKASH VAIDYAN, FLAT NO.832, Q-TOWER, ASHIRWAD PALACE, NR. JAMNA NAGAR BUS STAND, BHATAR SURAT. 3. M.A NO.03/SRT/2020 ITA NOS.34/SRT/2017 2012-13 D.C.I.T, CIRCLE-2(1)(2), SURAT. SURENDRAN NANOO VAIDYAN, FLAT NO., G-TOWER, ASHIRWAD PALACE, NEAR JAMNA NAGAR BUS STAND, BHATAR ROAD, SURAT. PAN NO.ABTPN4976A 4. M.A NO.04/SRT/2020 ITA NOS.35/SRT/2017 2012-13 D.C.I.T, CIRCLE-2(1)(2), SURAT. SHRI SHYAMPRAKASH NANOO VAIDYAN, Q-TOWER, ASHIRWAD PALACE, NR. JAMNA NAGAR BUS STAND, BHATAR ROAD, SURAT. ( APPLICANT ) ( RESPON D ENT ) REVENUE BY : SHRI SRINIVAS T. BIDANI, CIT, D.R ASSESSEEBY : SHRI DHINAL SHAH, A .R / DATE OF HEARING : 26/08/2020 / DATE OF PRONOUNCEMENT: 20/10/2020 M.A N OS.1 TO 3/SRT/2020(ITA NO.32 TO 35/SRT/2017 A.Y. 2012-13 2 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE REVENUE, BY WAY OF THESE MISCELLANEOUS APPLICAT IONS IS SEEKING RECTIFICATION IN THE ORDER OF THE ITAT DATED 31 ST JULY 2019BEARING ITA NOS. 32 TO 35/SRT/2017 ON THE REASONING THAT THERE IS A MISTAK E APPARENT FROM RECORD WITHIN THE PROVISIONS OF SECTION 254(2) OF THE ACT. FIRST, WE TAKE UP THE MA BEARING NO. 01/SRT/2020(IN ITA NO.32/SRT/2017), FILED BY THE REVENUE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L. THE ASSESSEE ALONG WITH FAMILY MEMBERS HAVE SOLD THE SHARES OF TWO COMPANIE S NAMELY NEO STRUCTO CONSTRUCTION PVT. LTD AND SPEETECH EQUIPMENT PVT. L TD TO M/S BILFINGER BERGER INDUSTRIAL SERVICE VIDE SHARE PURCHASE AGREEMENT DA TED 23 RD NOVEMBER 2011. THE ASSESSEE ON THE SALE OF SUCH SHARES DECLARED A LONG -TERM CAPITAL GAIN OF 466,95,77,001/- WHICH WAS REDUCED TO 461,44,85,340/ - IN THE REVISED RETURN OF INCOME RESULTING THE REDUCTION IN THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN BY 45,50,91,661/- ONLY. 2.1 THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS CONTENDED THAT SHE, ALONG WITH RELATIVES, WAS CALLED UPON TO REPAY A SUM OF 4 22,08,91,206/- TO THE BUYER OF THE SHARES NAMELY BILFINGER BERGER INDUSTRIAL SERVI CES AS PER THE TERMS OF THE SHARE PURCHASE AGREEMENT. THE BREAKUP OF THE RECOVE RIES OF 422,08,91,206/-, CALLED UPON BY THE BUYER OF THE SHARES, STAND AS UN DER: SR. NO. DESCRIPTION NEO STRUCTO SPETECH TOTAL 1. SHORT RECOVERY OF NAFTO GAS (NET OF DISCOUNT) 13,74,74,271 -- 13,74,74,271 2. WRITE OFF DEBTORS NOT RECOVERABLE 8,99,72,823 36,81,709 9,36,54,532 M.A N OS.1 TO 3/SRT/2020(ITA NO.32 TO 35/SRT/2017 A.Y. 2012-13 3 RS.7,20,38,896/ - AND PAYMENT OF VARIOUS LIABILITIES ON BEHALF OF THE SELLERS RS.1,79,33,927) 3. LESS: SUBSEQUENT RECOVERY FROM NAFTO GAS (1,02,37,597) - (1,02,37,597) 4. 21,72,09,497 36,81,709 22,08,91,206 2.2 OUT OF THE TOTAL AMOUNT OF RECOVERIES OF RS. 22 ,08,91,206/-, A SUM OF 45,50,91,661/- IS ATTRIBUTABLE TO THE ASSESSEE. ACC ORDINGLY, THE ASSESSEE FILED THE REVISED RETURN OF INCOME BY REDUCING THE AMOUNT OF CAPITAL GAIN BY THE SUM OF 45,50,91,661/- FOR THE RECOVERIES MADE BY THE BUYER OF THE SHARES AS PER THE SHARE PURCHASE AGREEMENT. 3. HOWEVER, THE AO REJECTED THE CONTENTION OF THE A SSESSEE BY HOLDING THAT THE AMOUNT OF RECOVERIES AS CLAIMED BY HER (THE ASS ESSEE) ARE NOT ASCERTAINABLE AND THEREFORE THESE ARE CONTINGENT IN NATURE. THE V IEW TAKEN BY THE AO WAS UPHELD BY THE LEARNED CIT (A). 4. HOWEVER, THE ITAT ON APPEAL BY THE ASSESSEE, HAS SET ASIDE THE ISSUE TO THE FILE OF THE AO AFTER MAKING CERTAIN OBSERVATION S AS DETAILED UNDER: I. THE FACTS OF SUBSEQUENT RECOVERY AND ITS QUANTUM BY THE BUYER WAS NOT EMANATING FROM THE SETTLEMENT AGREEMENT WITH RESPEC T TO NAFTOGAZ INDIA PVT. LTD. THEREFORE THE SAME NEEDS VERIFICATI ON BY THE AUTHORITIES BELOW AFTER TAKING CONFIRMATION FROM NEO STRUCTO CO NSTRUCTION PVT. LTD. II. SIMILARLY OTHER RECOVERIES FOR THE DEBTORS AND PAYM ENT OF VARIOUS LIABILITIES AS DISCUSSED ABOVE WERE NOT VERIFIED BY THE AUTHORITIES BELOW AND CORRESPONDINGLY, NO CONFIRMATION WAS EITHER OBT AINED BY THE AO OR FILED BY THE ASSESSEE FROM NEO STRUCTO CONSTRUCTION PVT. LTD AND SPEETECH EQUIPMENT PVT. LTD. M.A N OS.1 TO 3/SRT/2020(ITA NO.32 TO 35/SRT/2017 A.Y. 2012-13 4 4.1 FINALLY THE ITAT IN ITS ORDER DATED 31 ST JULY 2019 DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AFTER NECESSARY VERIFICAT ION AND EXAMINATION. 5. THE REVENUE BEING DISSATISFIED WITH THE ORDER OF THE ITAT CLAIMED THAT THERE IS A MISTAKE IN THE ORDER OF THE ITAT ON THE GROUND THAT THE ITAT IN ITS ORDER HAS OBSERVED THE FACT THAT THE MATTER NEEDS TO BE E XAMINED AND VERIFIED BY THE LOWER AUTHORITIES IN ITS PARAGRAPH NO. 40 AND 41 OF THE ORDER BUT DIRECTED THE AO IN THE PARAGRAPH NO. 42 OF THE ORDER TO ALLOW THE C LAIM OF THE ASSESSEE FOR THE SHORT RECOVERIES AS DISCUSSED ABOVE AFTER NECESSARY VERIFICATION AND EXAMINATION WHICH IS CONTRARY TO THE OBSERVATION MADE IN PARAGR APH NO. 40 AND 41 OF THE ORDER VIZ A VIZ DIRECTION PROVIDED IN PARAGRAPH NO. 42 OF THE ORDER. ACCORDINGLY THE REVENUE PRAYED TO RECTIFY THE MISTAKE WHICH IS APPA RENT FROM RECORD. 6. ON THE OTHER HAND, THE LEARNED AR BEFORE US SUBM ITTED THAT THE ORDER OF THE ITAT HAS BEEN UPHELD BY THE HONBLE GUJARAT HIG H COURT IN TAX APPEAL NUMBER 90 OF 2020 VIDE ORDER DATED 17 FEBRUARY 2020. ACCOR DINGLY, THE LEARNED AR CLAIMED THAT THERE IS NO MISTAKE IN THE ORDER OF TH E ITAT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING D ISCUSSION WE NOTE THAT THE MA WAS FILED BY THE REVENUE DATED 31 ST DECEMBER 2019 WHEREAS ORDER OF THE HONBLE HIGH COURT WAS PASSED ON 17 TH FEBRUARY 2020, SUBSEQUENT TO THE DATE OF FILING TH E MA BY THE REVENUE. THUS IT IS INFERRED THAT THE ORD ER OF THE HONBLE HIGH COURT WAS NOT AVAILABLE AT THE RELEVANT POINT OF TIME WIT H THE REVENUE I.E. AT THE TIME OF FILING THE MA. WE FURTHER DRAW OUR ATTENTION TO THE QUESTION POSE D BEFORE THE HONBLE COURT WHICH IS DETAILED AS UNDER: (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE HONBLE ITAT IS CORRECT IN NOT SETTING ASIDE THE MA TTER TO THE FILE OF THE ASSESSING OFFICER INSTEAD OF DELETING THE ADDITION IN RELATION TO REDUCTION IN SALES CONSIDERATION TO THE EXTENT OF RS.8,85,60,312 /- DESPITE ITSELF OBSERVING THAT THE ISSUE AT POINT WOULD ALSO NEED APPROPRIATE VERIFICATION BY THE LOWER M.A N OS.1 TO 3/SRT/2020(ITA NO.32 TO 35/SRT/2017 A.Y. 2012-13 5 THE ABOVE QUESTION WAS ANSWERED BY THE HONBLE COUR T BY OBSERVING AS UNDER: 9. IT IS HEREBY CLARIFIED THAT THE TRIBUNAL HAS ALL OWED THE GROUND NO.2 OF THE ASSESSEES APPEAL SO FAR AS IT RELATES TO REDUCTION IN SALES CONSIDERATION SUBJECT TO THE DIRECTIONS ISSUED IN THE SAME PARAGRAPH FOR NEC ESSARY VERIFICATION OR EXAMINATION OF THE CLAIM OF THE ASSESSEE. THUS, TRI BUNAL HAS REMANDED THE MATTER BACK TO THE ASSESSING OFFICER, DIRECTING HIM TO CON SIDER IN DETAIL AND VERIFY THE CLAIM OF THE ASSESSEE. 7.1 AS THE ORDER OF THE ITAT HAS MERGED WITH THE OR DER OF THE HONBLE GUJARAT HIGH COURT ON THE ISSUE RAISED BY THE REVENUE IN TH E MA AS DISCUSSED ABOVE, THEREFORE THERE IS NO QUESTION OF ANY MISTAKE IN TH E ORDER OF THE ITAT IN TERMS TO THE PROVISION OF SUB-SECTION (2) OF SECTION 254 OF THE ACT. THE LD. DR AT THE TIME OF HEARING HAS NOT BROUGHT ANYTHING ON RECORD TO SUPPO RT THE GRIEVANCE RAISED BY THE REVENUE IN THE MA. ACCORDINGLY, WE DISMISS THE MA F ILED BY THE REVENUE. 8. COMING TO THE FOLLOWING OTHER MAS FILED BY THE REVENUE 1. M.A NO.03/SRT/2020(IN ITA NO.34/SRT/2017) IN THE CASE OF SURENDRAN NANOO VAIDYAN 2. M.A NO.04/SRT/2020 (IN ITA NO.35/SRT/2017 IN THE CASE OF SYAMAPRAKASH NANOO VAIDYAN 9. AT THE TIME OF HEARING, BOTH THE LEARNED AR AND THE AR BEFORE US SUBMITTED THAT THE ISSUE RAISED IN THESE MAS ARE SIMILAR TO THE ISSUE RAISED IN MA NUMBER 01/SRT/2020 AND FURTHER AGREED THAT WHATEVER WILL B E THE OUTCOME IN THE MA NO. 01/SRT/2020 WOULD BE APPLIED IN THESE MAS MUTATIS MUTANDIS . AS WE HAVE REJECTED THE MA BEARING NO. 01 /SRT/2020 FILED BY R EVENUE, RESPECTFULLY FOLLOWING THE SAME WE REJECT THE MAS ON HAND FILED BY THE RE VENUE. 10. COMING TO THE MA NO. 2/SRT/2020(ITA NO.33/SRT/2 017) IN THE CASE OF DEEPU SYAMAPRAKASH VAIDYAN 11. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ITAT PASSED A COMBINED ORDER DATED 31-07-2019 WITH RESPECT TO THE FOUR ASS ESSEE AS DISCUSSED ABOVE BY M.A N OS.1 TO 3/SRT/2020(ITA NO.32 TO 35/SRT/2017 A.Y. 2012-13 6 RESTORING THE ISSUE TO THE FILE OF THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AFTER CARRYING OUT NECESSARY VERIFICATION AND EXAMINATION . BUT THE REVENUE DID NOT PREFER ANY APPEAL TO THE HONBLE HIGH COURT IN THE PRESENT CASE. THEREFORE THE ORDER IN THE PRESENT CASE HAS NOT MERGED WITH THE O RDER OF THE HONBLE GUJARAT HIGH COURT. HOWEVER, THE FACTS OF THE CASE ARE IDEN TICAL TO THE FACTS OF THE CASE AS DISCUSSED IN MA NO. 1/SRT/2020. ACCORDINGLY HE CLAI MED THAT THERE IS NO MISTAKE APPARENT ON RECORD IN THE ORDER OF THE ITAT. THUS HE VEHEMENTLY SUPPORTED THE ORDER OF THE ITAT. 12. ON THE OTHER HAND, THE LEARNED DR HAS NOT BROUG HT ANYTHING ON RECORD CONTRARY TO THE ARGUMENTS ADVANCED BY THE LEARNED A R FOR THE ASSESSEE BUT REITERATED THE CONTENTIONS RAISED IN THE MA FILED B Y THE REVENUE. 13. HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS OF THE CASE ON HAND ARE IDENTICAL TO THE FACTS OF THE CASE AS DISCUSSED ABOVE IN THE MA BEARING NO. 1/SRT /2020 EXCEPT THAT THERE WAS NO APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDE R OF THE ITAT. AS THE FACTS OF THE CASE ARE IDENTICAL AS DISCUSSED ABOVE, WE ARE A CCORDINGLY OF THE VIEW THAT THE REASONING AS GIVEN IN THE MA BEARING NO. 1/SRT/2020 SHALL APPLY MUTATIS MUTANDIS THE PRESENT CASE. MOREOVER, THE LEARNED DR HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE ARGUMENT WAS BY THE LEARNED AR FOR THE ASSESSEE. ACCORDINGLY, THE MA FILED BY THE REVENUE IS DISMISS ED. 14. IN THE COMBINED RESULT, ALL THE MAS FILED BY T HE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 20/10/2020 AT AH MEDABAD. SD/- SD/- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/10/2020 MANISH/TANMAY TRUE COPY M.A N OS.1 TO 3/SRT/2020(ITA NO.32 TO 35/SRT/2017 A.Y. 2012-13 7 / COPY OF THE ORDER FORWARDED TO : !' # $!% / BY ORDER, &/$'!( )*+!% ( DY./ASSTT.REGISTRAR) (% ,+-( ,./%0, ,'2!3! / ITAT, AHMEDABAD 1. DATE OF DICTATION : 27-08-2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. : 20-10-2020 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. DATE OF DESPATCH OF THE ORDER 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A) 5. $%& '' , / DR, ITAT, 6. &)* + / GUARD FILE.