INTER GOLD GEMS P. LTD, V. DCIT RG 5(2),

MA 316/MUM/2013

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 3880 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2006-2007
• Appeal Filed On: 26-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Assessee Lawyers: P J PARDIWALA
• Keywords: Gift

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH ( JM ) , AND B.R.BASKARAN (AM) , . . , MISCELLANEOUS A PPLICATION NO. 316 /MUM/201 3 ARISING OUT OF I.T.A. NO. 5760 / MUM/20 09 ( / ASSESSMENT YEAR : 2 0 0 6 - 07 ) INTER GOLD GEMS PVT.LTD., 58/60, JARIWAL A MANSION, HUG HES ROAD, MUMBAI. / VS. DY.COMMISSIONER OF INCOME TAX RANGE 5(2), MUMBAI . ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN : AAACI1062K / APPELLANT BY SHRI P J PARDIWALA, AND SHRI NITESH JOSHI / RESPONDENT BY SHRI CHANDRA VIJAY / DATE OF HEARING : 9.10. 201 5 / DATE OF PRONOUNCEMENT : 1.1 . 201 6 / O R D E R PER B.R. BASKARAN (AM) THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATION AGAINST THE ORDER DATED 05 - 06 - 2013 PASSED IN IT A NO.5760/M/2009 FOR THE ASSESSMENT YEAR 2006 - 07 WITH THE PLEA THAT THERE IS A MISTAKE APPARENT FROM RECORD, WHICH REQUIRES RECTIFICATION U/S 254(2) OF THE ACT. 2. THE SUBMISSIONS MADE BY THE LD A.R IN THIS REGARD ARE SET OUT IN BRIEF. DURING THE YEAR UNDER CONSIDERATION, THERE WAS A CHANGE IN THE SHAREHOLDING PATTERN, CONSEQUENT TO THE SALE OF SHARES BY ONE OF THE SHARE HOLDERS NAMED INTER GOLD GEMS PVT LTD (IGGPL) TO ANOTHER SHAREHOLDER M A NO . 316 /MUM/201 3 2 NAMED ROSY BLUE (INDIA) PVT LTD (RBPL). THE IGIPL HELD 10,99,85 0 SHARES REPRESENTING 54.99% OF SHARE CAPITAL AND RBPL HELD 5,99,900 SHARES REPRESENTING 30% OF THE SHARE CAPITAL AS AT THE BEGINNING OF THE YEAR. ALL THROUGH, I.E., BEFORE THE AO, CIT(A) AND TRIBUNAL, IT WAS SUBMITTED THAT THE ENTIRE SHAREHOLDING OF 54.9 9% OF SHARE CAPITAL WAS TRANSFERRED BY IGGPL TO RBPL. THE EFFECT OF THE SAID TRANSFER OF SHARES WAS THAT THE ASSESSEE WAS DENIED THE BENEFIT OF SETTING OFF OF BROUGHT FORWARD LOSSES IN VIEW OF THE PROVISIONS OF SEC. 79 OF THE ACT. THE SAID PROVISIONS READ AS UNDER: - CARRY FORWARD AND SET OFF OF LOSSES IN THE CASE OF CERTAIN COMPANIES. 79. NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER, WHERE A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR IN THE CASE OF A COMPANY, NOT BEING A COMPANY IN WHI CH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, NO LOSS INCURRED IN ANY YEAR PRIOR TO THE PREVIOUS YEAR SHALL BE CARRIED FORWARD AND SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR UNLESS ( A ) ON THE LAST DAY OF THE PREVIOUS YEAR THE SHARES OF THE COMPANY CA RRY - ING NOT LESS THAN FIFTY - ONE PER CENT OF THE VOTING POWER WERE BENEFICIALLY HELD BY PERSONS WHO BENEFICIALLY HELD SHARES OF THE COMPANY CARRYING NOT LESS THAN FIFTY - ONE PER CENT OF THE VOTING POWER ON THE LAST DAY OF THE YEAR OR YEARS IN WHICH THE LOSS WAS INCURRED [* * *] : [ PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO A CASE WHERE A CHANGE IN THE SAID VOTING POWER TAKES PLACE IN A PREVIOUS YEAR CONSEQUENT UPON THE DEATH OF A SHAREHOLDER OR ON ACCOUNT OF TRANSFER OF SHARES BY WAY OF GIFT TO ANY RELATIVE OF THE SHAREHOLDER MAKING SUCH GIFT :] [ PROVIDED FURTHER THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO ANY CHANGE IN THE SHAREHOLDING OF AN INDIAN COMPANY WHICH IS A SUBSIDIARY OF A FOREIGN COMPANY AS A RESULT OF AMALG AMATION OR DEMERGER OF A FOREIGN COMPANY SUBJECT TO THE CONDITION THAT FIFTY - ONE PER CENT SHAREHOLDERS OF THE AMALGAMATING OR DEMERGED FOREIGN COMPANY CONTINUE TO BE THE SHAREHOLDERS OF THE AMALGAMATED OR THE RESULTING FOREIGN COMPANY.] M A NO . 316 /MUM/201 3 3 SINCE I T WAS SUBMITTED THAT THE ENTIRE SHAREHOLDING OF IGGPL, I.E., 54.99% SHARE CAPITAL WAS TRANSFERRED, THE AO NOTICED THAT THE SHARE HOLDING PATTERN HAS CHANGED BY MORE THAN 51% AND ACCORDINGLY HELD THAT THE ASSESSEE IS NOT ENTITLED TO SET OFF THE BROUGHT FORW ARD LOSSES IN VIEW OF THE PROVISIONS OF SEC. 79 OF THE ACT. THE SAID DECISION OF THE AO WAS UNSUCCESSFULLY CHALLENGED BEFORE THE LD CIT(A) AND THE TRIBUNAL. 3. IT APPEARS THAT THE ASSESSEE HAS LATER REALIZED THAT IGPPL HAS NOT TRANSFERRED ITS ENTIRE 54.99% OF THE SHARE CAPITAL BUT IT HAS TRANSFERRED ONLY 54.79% OF THE SHARE CAPITAL RETAINING 4000 SHARES REPRESENTING 0.20% OF THE SHARE CAPITAL. THE EFFECT OF THE SAME WAS THAT MORE THAN 51% OF THE SHARES CAME TO BE HELD BY THE SAME GROUP OF SHAREHOLDER S AND HENCE THE BAR PRESCRIBED IN SEC. 79 SHALL NOT BE APPLICABLE TO THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE ASSESSEE APPEARS TO HAVE NOTED THIS FACT AFTER THE DISPOSAL OF APPEAL FILED BEFORE THE TRIBUNAL. HENCE, THE ASSESSEE HAS FILED THIS MISCEL LANEOUS APPLICATION. 4. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS FAILED TO BRING THE ACTUAL FACTS BEFORE THE TAX AUTHORITIES AS WELL AS BEFORE THE TRIBUNAL UNDER THE MISTAKEN IMPRESSION THAT THE ENTIRE SHARE HOLDING OF IGPPL HAS BEEN TRANSFERRED. SUB SEQUENTLY, WHEN THE ASSESSEE WAS DISCUSSION ABOUT THE PROSPECTS OF FILING APPEAL BEFORE THE HONBLE HIGH COURT CHALLENGING THE ORDER OF THE TRIBUNAL THE FACTUAL ASPECTS WERE EXAMINED AGAIN AND IT CAME TO LIGHT THAT IGPPL HAS NOT TRANSFERRED ITS ENTIRE SHAR E HOLDINGS, BUT HAS RETAINED 4000 SHARES. THEN IT WAS NOTICED THAT THE ASSESSEE WAS NOT HIT BY THE PROVISIONS OF SEC. 79, SINCE 51% OF THE SHARE HOLDINGS AS AT THE BEGINNING AND END OF THE YEAR REMAINED WITH THE SAME GROUP OF SHARE HOLDERS. IN THAT CASE, THE ASSESSEE IS ENTITLED TO SET OFF BROUGHT FORWARD LOSSES. M A NO . 316 /MUM/201 3 4 5. THE LD A.R SUBMITTED THAT THE ASSESSMENT ORDER HAS NOW MERGED WITH THE ORDER OF THE TRIBUNAL UNDER THE PRINCIPLES OF DOCTRINE OF MERGER AND HENCE THE ASSESSEE HAS THOUGHT IT APPROPRIATE T O MOVE THE MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL U/S 254(2) OF THE ACT. THE LD A.R, BY PLACING RELIANCE ON THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAKUNTHALA RAJESHWAR (160 ITR 840), SUBMITTED THAT THE ACCEPTANCE O F A SITUATION UNDER AN ERRONEOUS IMPRESSION IS A MISTAKE RECTIFIABLE U/S 254(2) OF THE ACT. HE FURTHER PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF SUPREME INDUSTRIES LTD VS. CIT (2014)(369 ITR 758), WHEREIN THE HONBLE BOMBAY HIGH COURT HAS OBSERVED THAT THE TRIBUNAL SHOULD ADOPT A JUSTICE ORIENTED APPROACH AND NOT DEFEAT THE LEGITIMATE RIGHTS ON THE ALTAR OF PROCEDURES AND TECHNICALITIES. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE MISCELLANEOUS APPL ICATION OF THE ASSESSEE SHOULD BE ACCEPTED AND THE IMPUGNED ORDER SHOULD BE AMENDED. 6. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE IS BRINGING NEW FACTS THROUGH THIS MISCELLANEOUS APPLICATION, WHICH WAS NOT AVAILABLE ON RECORD BEFORE THE T AX AUTHORITIES AS WELL AS THE TRIBUNAL. ACCORDINGLY HE SUBMITTED THE PRAYER OF THE ASSESSEE CANNOT BE CONSIDERED TO BE A MISTAKE APPARENT FROM RECORD AND HENCE THE ORDER PASSED BY THE TRIBUNAL DOES NOT CALL FOR ANY INTERFERENCE. HE FURTHER SUBMITTED THAT THE ISSUE BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SUPREME INDUSTRIES LTD (SUPRA) WAS ABOUT THE TECHNICAL APPROACH ADOPTED BY THE TRIBUNAL, I.E., THE ASSESSEE THEREIN FILED A MISCELLANEOUS APPLICATION IN THE APPEALS FILED BY IT. IN THE RECTIFI CATION ORDER PASSED, THE TRIBUNAL WRONGLY MENTIONED THE ITA NUMBERS OF THE APPEALS FILED BY THE REVENUE IN RESPECT OF THE SAME ASSESSMENT YEARS INSTEAD OF MENTIONING THE ITA NUMBER OF APPEALS FILED BY THE ASSESSEE. WHEN THE ASSESSEE FILED ANOTHER M A NO . 316 /MUM/201 3 5 RECTIFIC ATION PETITION SEEKING RECTIFICATION OF THE ITA NUMBERS, THE TRIBUNAL REJECTED THE SAME BY HOLDING THAT IT CANNOT CORRECT THE ERROR IN THE ORDER PASSED U/S 254(2) OF THE ACT. THIS APPROACH OF THE TRIBUNAL WAS NOT FOUND TO BE ACCEPTABLE TO THE HONBLE HIGH COURT AND IN THAT CONTEXT, THE HONBLE HIGH COURT HAS MADE THE ABOVE SAID OBSERVATIONS. THE LD D.R SUBMITTED THAT THE ASSESSEE CANNOT DERIVE SUPPORT FROM THE ABOVE SAID DECISION OF HONBLE BOMBAY HIGH COURT, AS THE FACTS PREVAILING IN THE INSTANT CASE AR E TOTALLY DIFFERENT. 7. THE LD D.R SUBMITTED THAT THE DECISION IN THE CASE OF SHAKUNTALA RAJESHWAR (SUPRA) WAS RENDERED ON THE PECULIAR FACTS AVAILABLE IN THAT CASE. THE LD D.R SUBMITTED THAT IT WAS A CASE OF COMPUTATION OF CAPITAL GAIN ARISING ON SALE OF PROPERTY IN THE HANDS OF ONE OF THE CO - OWNERS. BEFORE THE TRIBUNAL, THE ASSESSEE REFERRED TO THE DECISION RENDERED BY LD CIT(A) IN THE HANDS OF ANOTHER CO - OWNER, WHEREIN THE LD CIT(A) HAD DETERMINED THE MARKET VALUE OF THE PROPERTY AT RS.42.50 LAK HS. THE REPRESENTATIVE OF THE ASSESSEE SUBMITTED BEFORE THE TRIBUNAL THAT THE VALUE DETERMINED BY LD CIT(A) HAS BEEN ACCEPTED BY THE DEPARTMENT AND HENCE THE ASSESSEE WOULD BE SATISFIED IN THE SAME VALUE WAS ADOPTED. ACCORDINGLY THE ORDER WAS PASSED BY THE TRIBUNAL. LATER ON, IT CAME TO THE NOTICE OF THE ASSESSEE THAT THE OTHER CO - OWNER HAS CHALLENGED THE ORDER PASSED BY LD CIT(A) AND THE TRIBUNAL HAS DETERMINED THE VALUE AT RS.18.00 LAKHS. UNDER THESE SET OF FACTS, THE ASSESSEE FILED A MISCELLANEOUS A PPLICATION WITH THE PLEA THAT IT WAS A BONA FIDE MISTAKE ON THE PART OF THE REPRESENTATIVE AND IT WAS ACCEPTED BY THE TRIBUNAL BY RECALLING ITS EARLIER ORDER. THE REVENUE CHALLENGED THE DECISION OF THE TRIBUNAL TO RECALL THE ORDER BEFORE THE HIGH COURT OF DELHI. THE HONBLE HIGH COURT HELD THAT THE INEVITABLE ACCEPTANCE OF A SITUATION UNDER AN ERRONEOUS IMPRESSION IS AN ERROR NOT ONLY ON THE PART OF THE REPRESENTATIVE M A NO . 316 /MUM/201 3 6 BUT ALSO ON THE PART OF THE TRIBUNAL AND ACCORDINGLY HELD THAT THE TRIBUNAL WAS JUSTIFIE D IN INVOKING ITS POWERS U/S 254(2) OF THE ACT. THE LD D.R SUBMITTED THAT THE ABOVE SAID DECISION WAS RENDERED UNDER THE PECULIAR FACTS PREVAILING THEREIN. THE LD D.R SUBMITTED THAT, IN THE INSTANT CASE, THE ASSESSEE IS BRINGING A NEW FACT RELATING TO TH E PATTERN OF SHAREHOLDING, WHICH WAS NOT AVAILABLE ON RECORD BEFORE THE TAX AUTHORITIES AS WELL AS THE TRIBUNAL. FURTHER, THE ABOVE SAID SHAREHOLDING PATTERN ALSO REQUIRES EXAMINATION. THE LD D.R SUBMITTED THAT THE ACCEPTANCE AND CONSIDERATION OF NEW FACT BY THE TRIBUNAL, THAT TOO WHICH ARE NOT AVAILABLE ON RECORD AND WHICH REQUIRE VERIFICATION WOULD RESULT IN REVIEW OF ITS OWN ORDER BY THE TRIBUNAL, WHICH THE TRIBUNAL IS NOT EMPOWERED TO DO U/S 254(2) OF THE ACT. 8. WE HAVE HEARD THE RIVAL CONTENTION S AND PERUSED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE SHARE HOLDING PATTERN, NOW PRESENTED BEFORE US, WAS NOT AVAILABLE BEFORE THE TAX AUTHORITIES AS WELL AS THE TRIBUNAL DURING THE HEARING OF APPEAL. THE ASSESSEE HAS ACCEPTED THR OUGHOUT THE PROCEEDINGS THAT THERE WAS CHANGE IN SHARE HOLDING PATTERN BY MORE THAN 51%. THE DECISION ON THE ISSUE OF ELIGIBILITY OF THE ASSESSEE TO SET OFF THE BROUGHT FORWARD LOSSES WAS ADJUDICATED ON THE BASIS OF THE ABOVE SAID FACTS ORIGINALLY PRESENT ED BY THE ASSESSEE. THROUGH THIS MISCELLANEOUS APPLICATION, THE ASSESSEE IS BRINGING ALTOGETHER A NEW FACT, WHICH HAS THE EFFECT OF CHANGING THE POSITION BY 360 DEGREES. FURTHER, AS SUBMITTED BY THE LD D.R, THE SAME IS A NEW FACT, WHICH WAS NOT AVAILABLE ON RECORD AND WHICH REQUIRES VERIFICATION ALSO. 9. IT IS A WELL SETTLED PROPOSITION THAT THE TRIBUNAL IS EMPOWERED TO RECTIFY THE MISTAKES APPARENT FROM RECORD, I.E., MISTAKES AVAILABLE ON THE FACE OF RECORD. THE ASSESSEE MAY ALSO AGREE WITH THE POSITION THAT THE ORDER PASSED BY THE TRIBUNAL DOES NOT SUFFER FROM ANY MISTAKE ON THE M A NO . 316 /MUM/201 3 7 BASIS OF FACTS AVAILABLE ON RECORD AT THE RELEVANT POINT OF TIME. ONLY, IF THE NEW FACTS ARE TAKEN INTO ACCOUNT, THE DECISION RENDERED BY THE TRIBUNAL MAY TURN OUT TO I NCORRECT ONE. HOWEVER, IN OUR CONSIDERED VIEW, THE SAME MAY NOT RESULT IN A MISTAKE APPARENT FROM RECORD AS CONTEMPLATED U/S 254(2) OF THE ACT. IN OUR VIEW, THE REMEDY LIES SOMEWHERE ELSE AND NOT BEFORE THE TRIBUNAL. 10. THE CASE LAWS, ON WHICH THE LD A.R PLACED RELIANCE, HAVE BEEN WELL DISTINGUISHED BY THE LD D.R AND WE FULLY AGREE WITH HIM THAT THEY DO NOT SUPPORT THE CASE OF THE ASSESSEE. HENCE, WE ARE OF THE VIEW THAT THE TRIBUNAL IS NOT EMPOWERED TO RECTIFY ITS ORDER ON THE BASIS OF NEW FACTS, AS THE SAME DOES NOT FALL IN THE CATEGORY OF MISTAKES APPARENT FROM RECORD. ACCORDINGLY, WE ARE NOT CONVINCED WITH THE PETITION FILED BY THE ASSESSEE AND ACCORDINGLY DISMISS THE SAME. 11. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSE SSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 1ST JAN , 201 6 . 1ST JAN, 2016 SD SD ( /JOGINDER SINGH ) ( . . / B.R. BASKARAN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI: 1ST JAN, 2016 . . . ./ SRL , SR. PS M A NO . 316 /MUM/201 3 8 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI