DCIT 1(2), V. POLYCHEM LTD,

MA 469/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 7406 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI BEFORE SHIRI N. V. VASUDEVAN, JM AND SHRI R.K. PAND A, AM M.A. NO. 469/MUM/2011 (ARISING OUT OF I.T.A NO. 4212/MUM/2007) ASSESSMENT YEAR 2003-04 DCIT - 1(2), R.NO. 535, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 VS. M/S. POLYCHEM LTD. ORIENTAL HOUSE, 4 TH FLOOR, 7, J. TATA ROAD, CHURCHGATE , MUMBAI-400 020 PAN NO: AAACP 7184 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A. K. NAYAK RESPONDENT BY : SHRI HARSH SHAH DATE OF HEARING : 23.12.2011 DATE OF PRONOUNCEMENT : 23.12.2011 ORDER PER R. K. PANDA (AM) : THE REVENUE THROUGH THIS MISCELLANEOUS APPLICATION REQUESTS THE TRIBUNAL TO RECTIFY AND PASS APPROPRIATE ORDER SINC E THE TRIBUNAL WHILE DECIDING THE ISSUE HAS NOT CONSIDERED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DALMIA INVEST MENT COMPANY LTD. REPORTED IN 52 ITR 567 AND, THEREFORE, A MISTAKE HA S CREPT IN THE ORDER OF THE TRIBUNAL. 2. THE LD. DR REFERRED TO THE MISCELLANEOUS APPLICA TION FILED BY THE REVENUE WHICH READS AS UNDER :- MA NO: 469/MUM/2011 M/S. POL YCHEM LTD. 2 1. THE HON'BLE ITAT HAS BEEN PLEASED TO DECIDE THE APPEAL IN ITA NO.4212/MUM/07 IN THE CASE OF DCIT 1( 2) VS. M/S. POLYCHEM LTD. VIDE ORDER DATED 19.02.2008, HOL DING THAT RECEIPT OF A LESSER NUMBER OF SHARES IN LIEU O F ORIGINAL UMBER OF SHARES CONSEQUENT ON REDUCTION OF SHARE CA PITAL OF THE RELEVANT COMPANY AMOUNTED TO EXTINGUISHMENT OF RIGHTS OF THE ASSESSEE AND HENCE A TRANSFER WITHIN THE MEAN ING OF SECTION 2(47). CONSEQUENTLY, LONG TERM CAPITAL LOS S CLAIMED BY THE ASSESSEE HAS BEEN HELD TO BE ALLOWABLE. 2. IN DECIDING THE ISSUE, THE HON'BLE ITAT HAS RELIED UPON THE SUPREME COURT JUDGMENT IN CIT VS. M/S. GRACE CO LLIS & OTHERS (248 ITR 323), WHERE IT WAS HELD THAT RECEIP T OF SHARES IN THE AMALGAMATED COMPANY IN LIEU OF SHARES HELD IN THE AMALGAMATING COMPANY AMOUNTED TO EXTINGUISHMENT OF RIGHTS IN SHARES OF THE AMALGAMATING COMPANY AND HE NCE A TRANSFER WITHIN THE MEANING OF SECTION 2(47). 3. IT IS SUBMITTED WITH RESPECT THAT IN THE PRESENT CA SE, THE ASSESSEE RECEIVED SHARES IN THE SAME COMPANY IN LIEU OF ORIGINAL SHARES HELD THEREIN AND THE PROPORTIONATE SHARE CAPITAL HELD BY THE ASSESSEE REMAINED THE SAME. HEN CE, THERE WAS NO EXTINGUISHMENT OF ANY RIGHT AND THE JU DGMENT I THE CASE OF CIT VS. M/S. GARCE COLLIS & OTHERS WAS NOT APPLICABLE. 4. IT IS FURTHER SUBMITTED THAT THE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. DALMIA INVESTMENT C O. LTD. (52 ITR 567) REMAINED TO BE CONSIDERED BY THE HON'B LE BENCH. IN VIEW OF THIS JUDGMENT, THE COST OF ACQUISITION O F THE SHARE ORIGINALLY HELD BY THE ASSESSEE WAS TO BE SPREAD OV ER THE COST OF THE NEW SHARES, AND HENCE THERE WAS NO GAIN OR LOSS ARISING TO THE ASSESSEE IN THE VALUE OF THE SHARES HELD. 5. IN VIEW OF THE ABOVE, THE HON'BLE BENCH MAY BE PLEASED TO MODIFY THEIR DECISION DATED 19.02.2009 I N ITA NO.4212/MUM/07 IN THE CASE OF DCIT VS. M/S. POLYCHE M LTD. AND PASS SUCH ORDERS AS MAY BE DEEMED TO BE APPROPRIATE. 2.1. HE SUBMITTED THAT THE MISCELLANEOUS APPLICATIO N FILED BY THE REVENUE IS SELF-EXPLANATORY AND, THEREFORE, THE BEN CH MAY PASS APPROPRIATE ORDER. MA NO: 469/MUM/2011 M/S. POL YCHEM LTD. 3 3. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, STRONGLY OBJECTED TO THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE AND SUBMITTED THAT THE TRIBUNAL AFTER CONSIDERING THE D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MRS. GRACE COLLIS & O RS REPORTED IN 248 ITR 323 HAS PASSED THE ORDER AND, THEREFORE, ANY OR DER PASSED BY THE TRIBUNAL RECTIFYING THE ORDER WILL AMOUNT TO REVIEW OF ITS OWN ORDER BY THE TRIBUNAL WHICH IS NOT PERMISSIBLE IN LAW. 4. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES. THE TRIBUNAL IN THE ORDER PASSED HAS RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MRS. GRACE CO LLIS & ORS (SUPRA). THE LD. DR COULD NOT POINT OUT ANY OTHER FACTUAL ER ROR IN THE ORDER OF THE TRIBUNAL. THEREFORE, IN ABSENCE OF ANY APPARENT MISTAKE BEING POINTED OUT IN THE ORDER OF THE TRIBUNAL ANY RECTIF ICATION BY THE TRIBUNAL, IN OUR OPINION, WILL AMOUNT TO REVIEW OF ITS OWN ORDER BY THE TRIBUNAL WHICH IS NOT PERMISSIBLE IN LAW. THE APPRO PRIATE FORUM FOR THE REVENUE LIES ELSEWHERE AND CERTAINLY NOT THROUGH A MISCELLANEOUS APPLICATION. IN THIS VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS D EVOID OF ANY MERIT AND DESERVES TO BE DISMISSED. 5. IN THE RESULT, THE MISC. APPLICATION FILED BY TH E REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ITSELF I.E. ON 23 RD DAY OF DECEMBER, 2011. SD/- SD/- ( N. V. VASUDEVAN ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTAT MEMBER MUMBAI, DT: 23/12/2011 MA NO: 469/MUM/2011 M/S. POL YCHEM LTD. 4 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI