ACIT CIR 23(1), V. BOMI S. BILLIMORIA,

MA 27/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3574 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 1993-1994
• Appeal Filed On: 18-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F,MUMBAI BEFORE SHRI D. MANMOHAN (VICE-PRESIDENT) & SHRI J. SUDHAKAR REDDY (ACCOUNTANT MEMBER) M.A.NO.27/MUM/2010 (ARISING OUT OF ITA NO.2120/MUM/98) (A.Y. 1993-94) MR.BOMI S. BILLIMORIA, 11, JUPITER, ANSTEY ROAD, OFF AKLTAMOUNT ROAD, MUMBAI-400 026. PAN: VS. ASST.COMMR. OF INCOMESA-TAX- 23(1), CHARNI ROAD, MUMBAI-400 026, APPLICANT RESPONDENT APPLICANT BY SHR I PRAKASH JOTWANI. RESPONDENT BY SHRI MO HD. USMAN. O R D E R PER D. MANMONAN, VICE-PRESIDENT: BY THIS APPLICATION, THE REVENUE SUBMITS THAT CERTA IN OBSERVATION OF THE TRIBUNAL, IN ITS ORDER DATED 30-06-2009, SUFFERS FROM A MISTAKE APPARENT FROM RECORD IN TERMS OF SEC. 254(2) OF THE ACT. THE CASE OF THE REVENUE, AS COULD BE NOTICED FROM THE MISC. APPLICATION, IS AS FOLLOWS : IT MAY BE SEEN THAT THE ASSESSEE, SH. BOMI S. BILL IMORIA WAS AS EMPLOYEE OF M/S. JOHNSON AND JOHNSON, BOMBAY, A SUB SIDIARY OF M/S. JOHNSON AND JOHNSON OF USA. HE WAS GRANTED OPT ION OF 2500 SHARES OF US CO. @ $57.88 BUT DUE TO RESTRUCTURING NO. OF SHARES ALLOTTED INCREASED TO 5000 AND PRICE OF SHARE HALVE D TO $28.94 PER SHARE. ASSESSEE DID NOT PAY ANY AMOUNT TO PURCHASE THESE SHARE, OWING TO THE RBI RESTRICTIONS TO REMIT THE PURCHASE AMOUNT. HOWEVER, THE FACT REMAINS AFTER THE SALE OF 1000 SH ARES IN A.Y. 1993-94 ASSESSEE DID NOT RECEIVE THE NET AMOUNT FRO M BROKER I.E. NET OF PURCHASE AMOUNT. IT IS CORRECT TO SAY THAT A SSESSEE DID NOT PAY THE PURCHASE COST BUT IT IS NOT THE CASE THAT I T WAS NOT DEDUCTED FROM THE SALE VALUE. MERELY BECAUSE THE COST OF SHA RE WAS DEDUCTED FROM THE SALE AMOUNT DOES NOT MEAN THAT PURCHASE CO ST WAS NEVER PAID. NO WHERE ASSESSEE HAS CONTENDED THAT IT WAS N OT DEDUCTED BY THE BROKER AND HENCE HONBLE ITAT HAS ERRED IN APPR ECIATING THE CASE IN THE LIGHT OF THE FACTS OBSERVED BY A.O. IN HIS A.O. AND CONFIRMED BY THE LD. CIT(A) IN HIS APPELLATE ORDER. THE DECISION OF B.C.SRINIVAS SHETTY IS APPLICABLE IF THE COST IS NI LL OR COST IS NOT MA 27/M/10 BOMI S.BILLIMORIA 2 ASCERTAINABLE, BUT THE RATIO-DECIDENDI OF THE CASE OF B.C. SRINIVAS SHETTY IS NOT APPLICABLE TO THE FACTS OF THIS CASE, AS ASSESSEE DID NOT RECEIVE THE FULL SALE VALUE OF SHARES BUT HE ACTUAL LY RECEIVED AMOUNT OF SALES LESS COST OF SHARES FROM BROKER. 2. THE LD. D.R. SUBMITTED THAT THE FACTUM OF DEDUCT ION OF COST OF SHARES FROM THE SALE AMOUNT IMPLIED THAT THERE WAS COST OF PURC HASE OF THOSE SHARES, IN WHICH EVENT THE APPELLATE TRIBUNAL WAS NOT JUSTIFIED IN A PPLYING THE RATIO OF THE DECISION OF THE APEX COURT IN THE CASE OF B.C. SRINIVAS SHET TY (128 ITR 294) TO HOLD THAT THE COST OF ACQUISITION IS NIL/UNASCERTAINABLE AND HENCE THE ULTIMATE SALE CONSIDERATION IS NOT ASSESSABLE TO TAX UNDER CAPIT AL GAINS. 3. ON THE OTHER HAND, THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE BENCH HAD TAKEN A CONSCIOUS DECI SION, AFTER ANALYZING THE FACTS OF THE CASE, AND CAME TO THE CONCLUSION THAT THERE WAS NO COST OF ACQUISITION AND THUS ACCEPTANCE OF THE PLEA OF THE REVENUE AT THIS STAGE WOULD AMOUNT TO REVIEW OF THE MATTER, WHICH IS NOT PERMIS SIBLE UNDER LAW. IT WAS FURTHER SUBMITTED THAT THE BENCH HAD ALSO DECIDED T HE ISSUE BY ACCEPTING THE ALTERNATIVE CONTENTION OF THE ASSESSEE BY OBSERVING THAT EVEN IF ANY AMOUNT IS ASSESSABLE TO TAX, IT WOULD BE THE DIFFERENCE BETWE EN THE MARKET VALUE ON THE DATE OF PURCHASE AND THE MARKET VALUE ON THE DATE OF SALE, WHEREAS IN THE INSTANT CASE, THE DIFFERENCE BEING NIL, NOTHING IS ASSESSABLE TO TAX UNDER THE HEAD SHORT-TERM CAPITAL GAINS. THE REVENUE HAS NOT CHA LLENGED THE ORDER PASSED BY THE BENCH ON THE ALTERNATIVE CONTENTION AND HENCE T HE DECISION ON THE FIRST ISSUE IS MERELY OF ACADEMIC IMPORTANCE SINCE IT HAS NO TA X EFFECT. HE HAS ALSO ADVERTED OUR ATTENTION TO PAGE 4 OF THE PAPER BOOK TO SUBMIT THAT ESOP WAS OFFERED AS PER THE STRICT RBI NORMS, WHEREBY NO PAYMENT AT ANY POI NT OF TIME, EITHER IN INDIA OR ABROAD, NEED BE MADE BY THE EMPLOYEES FOR ACQUIRING THE SHARES. THE BENCH MA 27/M/10 BOMI S.BILLIMORIA 3 HAVING TAKEN NOTE OF THE DETAILED FACTS, THERE IS N O MISTAKE APPARENT FROM THE RECORD IN THE ORDER PASSED BY THE TRIBUNAL. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. IN OUR CONSIDERED OPINION, THE ORDER PASSED BY THE TRIBUNAL DOES NOT SUFFER FROM ANY MISTAKE APPARENT FROM RECORD INASMU CH AS THE TRIBUNAL HAD TAKEN NOTE OF THE SCHEME OF ESOP AND LETTER OF RBI IN COMING TO THE CONCLUSION THAT THERE WAS NO COST OF ACQUISITION AND, THUS, R ECONSIDERATION OF THE SAME ISSUE WOULD AMOUNT TO REVIEW OF THE MATTER, WHICH I S NOT PERMITTED IN EXERCISE OF THE POWERS U/S.254(2) OF THE ACT. EVEN OTHERWISE, A S RIGHTLY POINTED OUT BY THE LD. COUNSEL, IN VIEW OF OUR DECISION ON THE ALTERNA TIVE CONTENTION, AGAINST WHICH THE REVENUE HAVING NOT CHALLENGED EITHER BY FILING AN APPEAL BEFORE A HIGHER FORUM, OR BY WAY OF A MISC. APPLICATION, ANY DECIS ION ON THE LIMITED ISSUE OF COST OF ACQUISITION WOULD BE OF ACADEMIC IMPORTANCE. THU S, EVEN ON THIS GROUND, THE MISC. APPLICATION DESERVES TO BE REJECTED. 5. IN THE RESULT, THE MISC. APPLICATION FILED BY TH E REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 14TH DAY OF MAY, 2010. SD/- SD/- (J. SUDHAKAR REDDY) ( D. MANMOHAN) ACCOUNTANT MEMBER VICE-PRESIDE NT MUMBAI: 14TH MAY, 2010. NG: MA 27/M/10 BOMI S.BILLIMORIA 4 COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-XXXV,,MUMBAI. 4 CIT-MC-XI,MUMBAI. 5.DR,F BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. MA 27/M/10 BOMI S.BILLIMORIA 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 7-5-2-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 7-5-2010 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER