Shri Ramesh Mangal, Indore V. The ACIT 1(1), Indore

MA 129/IND/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0258 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: PANKAJ MOGRA CAS; SSHRI S N AGARWAL
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABWPM2673E M.A.NO.129/IND/ 201 2 (ARISING OUT OF I.T.A.NO. 113/IND/2012) A.Y. : 2007-08 SHRI RAMESH MANGAL, PRESS COMPLEX, A.B. ROAD. VS. ACIT, 1(1), RANGE I, INDORE INDORE. APP LICANT RESPONDENT APP LICANT BY : SHRI S/SHRI S.N. AGARWAL & PANKAJ MOGRA, CAS RESPONDENT BY : SHRI R.R.MEENA, SR. DR DATE OF HEARING : 10 . 0 5 .201 3 DATE OF PRONOUNCEMENT : 14. 0 5 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS MISC. PETITION AROSE OUT OF ORDER OF TRIBUNAL DATED 30.8.2012, IN I.T.A.NO. 113/IND/2012. 2. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT TRIBUNAL HAVE DECIDED THE ISSUE WITHOUT CONSID ERING THE -: 2: - 2 WRITTEN SYNOPSIS FILED DURING THE COURSE OF HEARING , WHICH READS AS UNDER :- (I) 222000 EQUITY SHARES OF M/S. DEEPAK COLONISERS PVT.LIMITED WERE ALLOTTED TO THE ASSESSE E ON 5.6.2006 I.E. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL AT RS. 100/- EVEN WHEN BOOK VALUE OF THESE SHARES WAS HIGHER THAN ITS FACE VALUE. (II) THE ASSESSEE AFTER ALLOTMENT SOLD THESE SHARE S TO THREE DIFFERENT COMPANIES AT THREE DIFFERENT RAT ES. (III) THE ASSESSEE TRIED TO SELL THESE SHARES AT A RATE AS MAXIMUM POSSIBLE HOWEVER, TRANSACTION FOR PURCHASE AND SALE OF SHARES HAS TO BE EXECUTED WITH THE CONSENT OF THE BUYER AND SELLER BOTH. THAT SELL ER CANNOT INSIST PARTICULAR BUYER TO PURCHASE HIS SHARES AT A PARTICULAR RATE. (IV) THE ASSESSEE IN THE YEAR UNDER PRESENT APPEAL HAD SOLD HIS SHARES AT THREE DIFFERENT RATES. THE DETAILS OF THE SAME WERE GIVEN IN THE PARA 2.4.2 OF -: 3: - 3 THE SYNOPSIS FILED. THE SAME IS ALSO REPRODUCED FOR YOUR READY REFERENCE AS UNDER :- S.NO. NAME OF THE BUYER DATE OF SALE NO. OF SHARES RATE AMOUNT (RS.) 1. SHIVANI BUILDERS P.LTD. 01-01-07 41070 112 45,99,840 2. MANGAL ALLIED FIN LEASING CONSTRUCTION P.LTD. 31-03-07 54000 141 76,14,000 3. MANGAL RESORTS & REC P.LTD. 31-03-07 158745 105 1,66,68,225 2,53,815 2,88,82,065 AVERAGE RATE OF SHARE SOLD CALCULATED COMES TO RS. 113.80. THAT ON PERUSAL OF THE ABOVE TABLE, YOUR HONOUR WILL FIND THAT THE ASSESSEE HAD SOLD THESE SHARES AT DIFFERENT RATES BUT THE PRICE AS CHARGED FORM A PARTICULAR COMPANY WAS SAME. THE SAID FACT WAS ALSO POINTED OUT AT THE TIME OF OUR ARGUMENTS. 3. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTE D THAT OUT OF THE SHARES ALLOTTED IN THE YEAR UNDER A PPEAL WHICH WERE ALLOTTED AT RS. 100/- PER SHARE, THE ASSESSEE HAD SOLD SAME SHARES TO M/S. MANGAL ALLIED FIN LEASING CONST RUCTION P.LTD. AT RS. 141/-. HOWEVER, THE SAID BUYER IS NOT WILLING FOR -: 4: - 4 PURCHASING SHARES MORE THAN WHAT WAS ACTUALLY SOLD BY THE ASSESSEE TO IT. HENCE, THERE IS NO OPTION WITH THE ASSESSEE TO SELL THESE SHARES TO SOME OTHER COMPANIES. FOR THIS REASON 1,58,745 EQUITY SHARES OF DEEPAK COLONIZERS WERE SO LD BY HIM TO M/S. MANGAL RESORTS RECREATION P.LIMITED AT RS. 105/-. IT IS PERTINENT TO NOTE THAT THESE SHARES WERE ALLOTTED T O THE ASSESSEE AT RS. 100/- IN THIS YEAR ITSELF EVEN WHEN BOOK VALUE OF THESE SHARES IS HIGHER THAN ITS FACE VALUE. THE PRICE OF THE SHARES DEPEND UPON THE REQUIREMENT OF THE FUNDS OF THE COMPANY AND SIMILARLY FOR THE INVESTOR ALSO. THIS I S AN INVESTMENT DECISION TO SELL THESE SHARES EVEN AT RS . 105/-TO EARN NOT ONLY PROFIT OF RS. 5/- PER SHARE BUT ALSO TO GET ITS LIQUID FUND FREE FOR OTHER INVESTMENT. 4. THE LD. AUTHORIZED REPRESENTATIVE FURTHER CONTENDE D THAT THERE WAS NO PROVISION UNDER THE INCOME-TAX AC T, 1961, TO CALCULATE THE FAIR MARKET VALUE PRIOR TO INSERTI ON OF THE PROVISION OF SECTION 56(1)(VII) AND 56(1)((VII) OF THE INCOME-TAX ACT, 1961. THAT AS PER SCHEDULE III OF THE WEALTH T AX ACT, 80 % OF THE BREAKUP VALUE OF THE SHARES IS TO BE CONSI DERED AS MARKET PRICE. RELEVANT PORTION OF THE WEALTH TAX AC T WAS ALSO -: 5: - 5 FILED BEFORE THE HON'BLE BENCH AS TO JUSTIFY THE ST AND OF THE ASSESSEE. THAT FOR VALUATION OF SHARES OF A PRIVATE LIMITED COMPANY SCH III IS BINDING AS HELD BY THE HON'BLE A PEX COURT IN THE CASE OF BHARAT HARI SINGHANIA AS REPORTED IN 207 ITR 1. THE SAID FACT ALSO DISCUSSED BY THE HON'BLE I.T.A.T . INDORE BENCH, INDORE, IN THE CASE OF BANSIDHAR MUTIBUILDER S PVT.LTD. VIDE ITS ORDER DATED 08.05.1997 FOR THE ASSESSMENT YEAR 1991- 92 IN I.T.A.NO. 58/IND/96. 5. ON THE OTHER HAND, THE CONTENTION OF LD. SENIOR DR WAS THAT THERE IS NO MISTAKE IN THE ORDER OF THE TR IBUNAL, ACCORDINGLY, NO RECTIFICATION SHOULD BE CARRIED OUT . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT PART OF THE ADDITION DELETED BY TH E LD.CIT(A) WAS RETAINED ON THE PLEA THAT THE ASSESSEE HAD SOLD SHARES ON THE VERY SAME DAY AT A DIFFERENT PRICE. AFTER DELIB ERATING IN DETAIL IN PARA 9, 10 & 11, THE TRIBUNAL REACHED TO THE CONCLUSION THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SHORT TERM CAPITAL GAINS, WHICH WERE ADDED BY THE A SSESSING OFFICER BY WORKING OUT VALUE OF SHARES AS PER THE N ET WORTH OF M/S. DEEPAK COLONIZERS PRIVATE LIMITED AS ON 31.3.2 007. THE -: 6: - 6 POWERS OF THE TRIBUNAL U/S 254(2) IS VERY LIMITED T O THE EXTENT OF RECTIFYING A MISTAKE APPARENT FROM RECORD. THE T RIBUNAL HAVE NO POWER TO ENTERTAIN A REASONING FOR ARRIVING AT A DIFFERENT CONCLUSION THAN WHAT HAS ALREADY BEEN ARR IVED AT. PRECISELY, WE DO NOT FIND ANY APPARENT MISTAKE IN T HE ORDER DATED 30 TH AUGUST, 2012, WHICH COULD BE RECTIFIED U/S 254(2) OF THE ACT. 7. IN THE RESULT, THE MISC. APPLICATION FILED BY THE ASSESSEE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 14 TH MAY, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH MAY, 2013. CPU* 1013145