Appeal details
Counselvise Citation
[2019] 112 COUNSELVISE.COM (IT) 6583 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
20-02-2019
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2001-2002
Appeal Filed On
28-09-2018
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER M.A. NO.600/MUM/2018 (ARISING OUT OF ITA NO.2207/MUM/2014) ASSESSMENT YEAR: 2001-02 LOOP MOBILE HOLDINGS INDIA LTD. 127, MANMALA TANK ROAD, TAIKALWADI, MAHIM WEST, MUMBAI-400016 / VS. ACIT - 16(1), MUMBAI ( /ASSESSEE) ( / REVENUE) P.A. NO.AABFE8165D / DATE OF HEARING : 15/02/2019 / DATE OF ORDER: 20/02/2019 / O R D E R PER G. MANJUNATHA (ACCOUNTANT MEMBER) THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATI ON U/S 254(2) OF THE INCOME TAX ACT, 1961 TO RECALL ORDER PASSED BY THE ITAT, MUMBAI A BENCH IN ITA NO.2207/MUM/2014 FOR AY 2001-02, DATED 16/04/2018. 2. THE ASSESSEE HAS FILED MISCELLANEOUS APPLICATIO N EXPLAINING FACTS AND MISTAKES APPARENT FROM THE ORDER OF THE ITAT, MUMBA I, DATED 16/04/2018. THE / ASSESSEE BY SHRI GANESH RAJGOPALAN / REVENUE BY SHRI RAJEEV GUBGOTRA - DR 2 MA NO.600/MUM/2018 RELEVANT CONTENTS OF THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ARE REPRODUCED HEREUNDER:- 1.1 THE ABOVE APPEAL WAS DISPOSED OF BY THE HON'BL E TRIBUNAL BY ITS ORDER DATED 16TH APRIL, 2018. THE APPELLANT ABOVE-N AMED BEGS TO PRESENT THIS APPLICATION FOR RECTIFICATION OF CERTAIN MISTA KES WHICH ARE APPARENT FROM RECORD IN THE SAID ORDER. 1.2 THE APPELLANT STATES THAT IT HAS NOT FILED ANY MISCELLANEOUS APPLICATION UNDER SECTION 254(2) EARLIER BEFORE THE HON'BLE TRIBUNAL AGAINST THE SAME ORDER. 1.3 THE APPELLANT HAD RAISED THE FOLLOWING GROUNDS OF APPEAL- 1.3.1 GROUND NO. 1(A) RELATED TO THE LEARNED ASSESS ING OFFICER ('AO') INCORRECTLY COMPUTING CAPITAL GAINS ON SALE OF EQUI TY SHARES BY TAKING THE COST OF ACQUISITION OF THE SAID SHARES AT RS. NIL B Y DENYING THE APPLICATION OF THE PROVISIONS SECTION 49(L)(II) AND 49(2A) OF THE INCOME-TAX ACT, 1961 (THE 'ACT'). 1.3.2 GROUND NO. 1(B) RELATED TO THE GRIEVANCE OF T HE APPELLANT THAT THE LOWER AUTHORITIES, DESPITE HAVING HELD THAT THE PROVISION S OF SECTION 49(1) OF THE ACT APPLY AT THE FIRST STAGE (FOR DETERMINING THE COST OF THE ACTIONABLE CLAIM RECEIVED AS A GIFT AS COST TO THE PREVIOUS OWNER), WHEN THE GIFTED ACTIONABLE CLAIM W AS CONVERTED INTO OFCDS, ERRED IN NOT TAKING THE COST OF SUCH DEBENTU RES AS THE COST OF EQUITY SHARES SOLD UNDER SECTION 49(2A) IRRESPECTIVE OF TH E FACT THAT THE ORIGINAL ASSET CEASED TO EXIST. 1.3.3 GROUND NO. 1(C) RELATED TO THE GRIEVANCE OF T HE APPELLANT THAT THE ACTUAL COST OF ACQUISITION OF EQUITY SHARES CANNOT BE REDUCED TO NIL MERELY BECAUSE THE ACTIONABLE CLAIM WHICH WAS RECEIVED AS A GIFT WAS WRITTEN OFF AS RIOT REALISABLE IN THE BOOKS OF THE DONOR. 1.4 IN THE FIRST ROUND OF LITIGATION, THE HON'BLE I TAT VIDE ITS ORDER DATED 161H DECEMBER, 2008 HELD THAT WHAT WAS GIFTED TO TH E APPELLANT WAS AN ACTIONABLE CLAIM WITH 'NIL- VALUE AND THE SALE OF S HARES IS TAXABLE UNDER THE HEAD CAPITAL GAINS SINCE THE GIFTED ASSET IS A CAPI TAL ASSET. THE HON'BLE ITAT, THEN, SENT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE PROCEEDINGS OPEN BEFORE HIM WOUL D BE LIMITED ONLY TO THE COMPUTATION PART OF THE CAPITAL GAIN. 1.5 IN THE CURRENT APPEAL, THE HON'BLE TRIBUNAL DIS POSED OF THE ABOVE- REFERRED GROUNDS IN PARAGRAPH 7 OF ITS ORDER WHICH READS AS UNDER [PAGE 12- 14 OF THE HON'BLE TRIBUNAL'S ORDER]: 'HAVING HEARD BOTH THE SIDES, WE DO NOT FIND ANY ME RIT IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ITAT HAS SETTL ED THE ISSUE OF GIFTED ASSET AND HELD THAT WHAT WAS GIFTED TO THE ASSESSEE WAS THE RIGHT TO RECEIVE THE DEBT WORTH RS. 0 IN THE HANDS OF THE DONOR AND NOT OFCDS. THE ITAT HAS ALSO MADE IT VERY CLEAR THAT ITS FINDINGS AT PARAGR APH 22 WILL NOT BE ARGUED AGAIN BEFORE THE AO. THE SCOPE OF THE PROCEEDINGS O PEN BEFORE AO WOULD BE LIMITED TO THE COMPUTATION PART OF THE CAPITAL G AIN. .............. 3 MA NO.600/MUM/2018 FOR WORKING OUT CAPITAL GAIN ON SALE OF EQUITY SHAR ES, THE PROVISIONS OF SECTION 49(1) ('II) CANNOT BE TAKEN RECOURSE TO.... ........... .........THEREFORE, WE ARE OF THE CONSIDERED VIEW T HAT THE AO WAS RIG/IT IN COMPUTING LONG TERM GAIN FROM TRANSFER OF SHARES WI THOUT CONSIDERING COST OF ACQUISITION OF SUCH SHARES. THE CIT (A'), AFTER CON SIDERING RELEVANT SUBMISSIONS HAS RIGHTLY CONFIRMED THE FINDINGS OF T HE AO. WE DO NO/FIND ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT (A). 1.6 THE ASSESSING OFFICER (AO) HAD HELD IN HIS ASSE SSMENT ORDER AS FOLLOWS: '2.3 SINCE THE ASSESSEE RECEIVED OFGD IN LIEU OF 'A CTIONABLE CLAIM', IT IS OBVIOUS THAT THIS HAS BEEN RECEIVED BY THE ASSESSEE IN EXCHANGE OR FOR RELINQUISHMENT OF THE ASSET ACTIONABLE CLAIM. THE S AME IS TRANSFER AS PER SECTION 2(4 7) OF THE ACT. THEREFORE, THE ASSESSEE SHALL BE CHARGED TO TAX AS FOLLOWS:- CAPITAL GAIN 1 - TRANSFER OF ACTIONABLE CLAIM TO OF C'D NO CAPITAL GAIN - OFCD TO EQUITY SHARES, AS PER SEC TION 47(X) OF THE ACT CAPITAL GAIN 2 TRANSFER OF EQUITY SHARES IT IS APPARENT THAT SUM TOTAL OF THESE TWO CAPITAL GAINS WILL EFFECTIVELY MEAN THAT THE FULL VALUE OF CONSIDERATION OF EQUITY SHAR ES SHOULD BE DECREASED BY THE COST OF ACQUISITION OF ACTIONABLE CLAIM IN THE HANDS OF SGL. 2.4 IN THE CONTEXT OF COST OF ACQUISITION IN THE HA NDS OF SCL, IT IS NOTED THAT 'ACTIONABLE CLAIM' WAS GIFTED TO THE ASSESSEE ON 2. 5.2000 AND THE BOOK VALUE OF THE SAME AS ON 31.3.2000 WAS NIL. SCL HAD ALREAD Y WRITTEN OFF THE LOAN IN ITS BOOKS OF ACCOUNT AND CLAIMED A DEDUCTION THEREO N FOR THE YEAR ENDING 31.3.2000. THUS, THE COST OF ACTIONABLE CLAIM WAS R EDUCED TO NIL BY SUCH WRITING OFF. ONCE A DEBT IS WRITTEN OFF, THE RIGHT TO RECEIVE THE SAME, WHICH IS ACTIONABLE CLAIM, IS ALSO NIL.' 1.7 THE LEARNED CIT (APPEALS) IN HIS ORDER HELD AS FOLLOWS [PAGE 13]: 'IT IS VERY SIGNIFICANT TO NOTE THAT SCL HAS CLAIME D THE ENTIRE LOAN OF RS. 275.55 CR. AS BAD DEBTS, IN THE RETURN FLIED FOR AY 2000-01. ALTHOUGH THE SAME WAS DISALLOWED BY THE A0 AND THE MATTER IS STI LL SUB-JUDICE, BUT THE FACT REMAINS THAT THE ASSESSEE HAS CLAIMED THE ENTIRE SU M SO GIVEN TO ADIL AS A DEDUCTION, AS BAD DEBT AND IN THE ALTERNATE, U/S 37 (1). HAVING ALREADY CLAIMED DEDUCTION OF THE ENTIRE MONEY SO GIVEN, THE CLAIM OF THE APPELLANT THAT THE SAME AMOUNT BE TREATED AS COST TOWARDS THE SHARES SOLD, CERTAINLY AMOUNTS TO MAKING A DOUBLE CLAM. IT IS UNDISPUTED T HAT THERE IS ONLY A SINGLE ADVANCE/PAYMENT TO ADIL, FOR SUM AGGREGATING TO RS. 275.55 CR. WHICH WAS CLAIMED AS BAD DEBT IN THE RETURN OF SCL AND THE SA ME IS NOW BEING CLAIMED AS COST TOWARDS SALE OF SHARES BY THE ASSESSEE. ... .' 3 SUBMISSIONS 3.4 THE APPELLANT SUBMITTED THE ORDER OF COMMISSION ER OF INCOME-TAX (APPEALS)-XV, NEW DELHI DATED 15.3.2004 IN THE CASE OF SCL (THEN KNOWN AS HUTCHISON ESSAR TELECOM LTD.) WHEREIN ITS CLAIM FOR DEDUCTION OF A SUM OF RS. 247.55 CRORE TOWARDS ACTIONABLE CLAIM WRITTEN O FF WAS DENIED. THE APPELLANT ALSO SUBMITTED THE HON'BLE ITAT ORDER FOR THAT ASSESSMENT YEAR WHERE THE SAID GROUND WAS NOT AGITATED BY THE SAID COMPANY BEFORE THE HON'BLE ITAT. ACCORD INGLY, THE DENIAL OF 4 MA NO.600/MUM/2018 DEDUCTION TOWARDS WRITE OFF OF ACTIONABLE CLAIM OF RS. 275.55 CR. IN THE HANDS OF SCL HAD BECOME FINAL. 3.5 THE APPELLANT SUBMITS THAT THE HON'BLE TRIBUNAL HAS IN ITS ABOVE-SAID ORDER OVERLOOKED THE ABOVE-SAID ORDERS IN THE CASE OF SCL AND THE FACT THAT SCL DID NOT GET THE BENEFIT OF DEDUCTION IN ITS ASS ESSMENT FOR THE WRITE-OFF OF THE ACTIONABLE CLAIM. THE RATIONALE FOR DENYING THE COST TO THE SAID ACTIONABLE CLAIM PROVIDED BY THE AO AND THE CIT-(A) WHICH WAS BASED ON DENYING A DOUBLE DEDUCTION IS NO LONGER VALID. 3.6 THE APPELLANT SUBMITS THAT DUE TO THIS TREATMEN T, NEITHER SCL NOR THE APPELLANT GOT THE DEDUCTION OF THE COST OF ACTIONAB LE CLAIM. 3.7 IT IS RESPECTFULLY SUBMITTED THAT THE OMISSION ON PART OF THE HON'BLE TRIBUNAL TO CONSIDER THE APPELLATE ORDERS IN THE CA SE OF SCL FOR AY 2000-01 WHICH ESTABLISH THAT SCL DID NOT GET THE BENEFIT OF DEDUCTION TOWARDS WRITE OFF OF ACTIONABLE CLAIM AND ITS APPROVAL OF THE FIND INGS OF THE LOWER AUTHORITIES IN DETERMINING THE COST OF ACQUISITION OF EQUITY SHARE S SOLD AT NIL WHILE COMPUTING CAPITAL GAINS WITH A VIEW TO PREVENT DOUB LE-DEDUCTION (BOTH BY SCL AND THE APPELLANT) EVEN THOUGH SCL DID NOT GET THE DEDUCTION CONSTITUTE MISTAKES APPARENT FROM THE RECORD. 2. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITTED T HAT THERE IS A MISTAKE IN ORDER OF THE ITAT IN AS MUCH AS OMISSION ON PART OF THE T RIBUNAL TO CONSIDER THE APPELLATE ORDERS IN THE CASE OF SCL FOR AY 2000-01 WHICH ESTA BLISH THE SCL DID NOT GET THE BENEFIT OF DEDUCTION TOWARDS WRITE OFF OF ACTIONAB LE CLAIM AND ITS APPROVAL OF THE FINDING OF THE LOWER AUTHORITIES IN DETERMINING THE COST OF ACQUISITION OF EQUITY SHARES SOLD AT NIL WHILE COMPUTING THE CAPITAL GAINS WITH A VIEW TO PREVENT DOUBLE DEDUCTION EVEN THOUGH THE SCL DID NOT GET THE DEDUC TION, CONSTITUTE MISTAKES APPARENT FROM THE RECORD, WHICH REQUIRES RECTIFICAT ION U/S 254(2) OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS TAKEN SP ECIFIC GROUND IN THE LIGHT OF SECTION 49(1)(II) AND 49(2A) OF THE ACT , TO ARRIVE AT COST OF ACQUISITION, BUT THE TRIBUNAL HAS OMITTED TO CONSIDER THE ARGUMENTS OF T HE ASSESSEE IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF KESHAVJI KARSONDAS VS CIT 5 MA NO.600/MUM/2018 (1994) 207 ITR 737 (BOM.). THEREFORE, THE ORDER MAY BE RECALLED FOR THE REASONS STATED ABOVE IN THE INTEREST OF JUSTICE. 3. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT T HE LD. AR OF THE ASSESSEE FAILS TO MAKE OUT A PRIMA FACIE CASE OF MI STAKES APPARENT ONRECORD FROM THE ORDER IN ITAT IN ITA NO.2207/MUM/2014, BUT THE LD. AR FOR THE ASSESSEE WANTS TO REVIEW THE DECISION RENDERED BY THE TRIBUNAL IN THE LIGHT OF THE ARGUMENTS ADVANCED BY BOTH PARTIES, WHICH IS NOT PERMISSIBLE U/S 254(2) OF THE ACT. 4. WE HAVE HEARD BOTH OF PARTIES AND PERUSED THE M ISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ALONG WITH ORDER OF THE TRIBUNAL IN ITA NO. 2207/MUM/2014, DATED 16/04/2018. WE FIND THAT THE T RIBUNAL HAS RECORDED FINDING IN RESPECT OF THREE GROUNDS OF APPEAL TAKEN BY THE ASS ESSEE CHALLENGING THE COMPUTATION OF CAPITAL GAIN ON SALE OF EQUITY SHARE S ON ACCOUNT OF CONVERSION OF OPTIONAL FULLY CONVERTIBLE DEBENTURES. WE FURTHER NOTICED THAT THE TRIBUNAL HAS RECORDED FINDINGS IN THE LIGHT OF THE EARLIER ORDER OF THE TRIBUNAL IN FIRST TIME OF LITIGATION WHERE THE TRIBUNAL HAS MADE IT CLEAR THA T ITS FINDING AT PARAGRAPH NO. 22 WILL NOT BE ARGUED AGAIN BUT THE DISPUTE SHALL BE CONFRO NTED TO THE METHOD OF COMPUTATION IN THE LIGHT OF PROVISION OF SECTION 49 SUB-SECTION (1)(II) AND (2A) OF THE ACT. WE FURTHER NOTICED THAT ALTHOUGH THE LD. AR FO R THE ASSESSEE HAS TAKEN SUPPORT FROM THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KESHAVJI KARSONDAS VS CIT (SUPRA), THE SAID DECISION WAS NOT CITED DUR ING THE COURSE OF HEARING, WHILE DECIDING THE APPEAL, THEREFORE, WE ARE OF THE CONSI DERED VIEW THAT THE ASSESSEE HAS 6 MA NO.600/MUM/2018 FAILED TO MAKE OUT A PRIMA-FACIE MISTAKE APPARENT O N RECORD WHICH REQUIRES RECONSIDERATION U/S 254(2) OF THE ACT. ACCORDINGLY, MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. 5. FINALLY, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/02/2019. SD/- SD/- ( MAHAVIR SINGH ) (G. MANJUNATHA) ! ' /JUDICIAL MEMBER # ' / ACCOUNTANT MEMBER MUMBAI; DATED : 20/02/2019 F{X~{T? P.S / /. . . $!%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT (RESPECTIVE ASSESSEE) 2. #$%!' / THE RESPONDENT. 3. &% &% ' ( ) / THE CIT, MUMBAI. 4. &% &% ' / CIT(A)- , MUMBAI, 5. )*+ % # , , &% % ,. , / DR, ITAT, MUMBAI 6. +/ 0 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
