M/s. Portside Estates Ltd., Kolkata v. ITO, Ward - 5(2), Kolkata, Kolkata

ITA 182/KOL/2012 | 2006-2007
Pronouncement Date: 07-04-2014

Appeal Details

RSA Number 18223514 RSA 2012
Assessee PAN AABCP4832D
Bench Kolkata
Appeal Number ITA 182/KOL/2012
Duration Of Justice 2 year(s) 2 month(s)
Appellant M/s. Portside Estates Ltd., Kolkata
Respondent ITO, Ward - 5(2), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 07-04-2014
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 07-04-2014
Assessment Year 2006-2007
Appeal Filed On 06-02-2012
Judgment Text
B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE /AND . . . . ' '' ''# '#'# '# $% ) [BEFORE SHRI MAHAVIR SINGH JM & SHRI ABRAHAM P. GEORGE AM] & & & & / I.T.A NO. 1673/KOL/2011 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2005-06 & & & & & / I.T.A NO. 182/KOL/2012 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2006-07 M/S. PORTSIDE ESTATES LTD. VS. INCOME-TAX OFFIC ER WD-5(2) KOLKATA (PAN:AABCP4832D/AACCP6416G) ( - /APPELLANT ) (./ -/ RESPONDENT ) DATE OF HEARING: 06.03.2014 DATE OF PRONOUNCEMENT: 07.04.2014 FOR THE APPELLANT: SHRI RAVI TULSIYAN FCA FOR THE RESPONDENT: SMT. SUCHETA CHATTOPADHYAY JCIT SR. DR $0 / ORDER PER SHRI MAHAVIR SINGH JM: BOTH THESE APPEALS BY ASSESSEE ARE ARISING OUT OF S EPARATE ORDERS OF CIT(A)-VI KOLKATA IN APPEAL NO. 1219 & 1111/VI/WD-5(2)/09-10 KOL DAT ED 10.10.2011 AND 20.12.2011. ASSESSMENTS WERE FRAMED BY ITO WARD-5(2) KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEARS 2005-06 AND 2006-07 VIDE HIS SEPARTE ORDERS DATED 12.10.2007 AND 23.10.2008. 2. THE FIRST COMMON ISSUE IN THESE TWO APPEALS OF A SSESSEE IS AS REGARDS TO THE ORDER OF CIT(A) UPHLODING THE ACTION OF AO THAT ASSESSEE COM PANY IS NOT A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. FOR THIS ASSESSEE I N ITA NO.1673/K/2011 FOR AY 2005-06 HAS RAISED FOLLOWING GROUNDS: 2(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN UPHOLDING THE FINDING OF THE LD. AO THAT THE APPELL ANT COMPANY IS NOT A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT COMPANY IS NOT ENTITLED TO SET O FF OF THE LOSS OF RS.21 70 905/- BROUGHT 2 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 FORWARD FROM EARLIER YEARS WITH CURRENT YEAR INCOME IN TERMS OF SECTION 79 OF THE INCOME-TAX ACT 1961. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT COMPANY IS NOT ENTITLED TO SET O FF THE CARRY FORWARD LOSS OF RS.64 79 715/- WITH ITS BUSINESS INCOME. IN ITA NO.182/K/2012 FOR AY 2006-07 ASSESSEE RAISE D FOLLOWING GROUNDS: 2(A). ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN UPHOLDING THE FINDING OF THE LD. AO THAT THE APPELL ANT COMPANY IS NOT A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT COMPANY IS NOT ENTITLED TO SAT O FF OF THE LOSS OF RS.39 16 723/- BROUGHT FORWARD FROM EARLIER YEARS IN TERMS OF SECT ION 79 OF THE INCOME-TAX ACT 1961. AS THE ISSUE IS EXACTLY SIMILAR AND FACTS ARE IDENT ICAL IN BOTH THE YEARS AND LEAD YEAR AS NOTED BY THE AUTHORITIES BELOW I.E. AO AS WELL AS CIT(A) IS AY 2005-06 WE WILL TAKE THE FACTS AND CIRCUMSTANCES AND DISCUSS THIS ISSUE FOR AY 2005-06 . 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT FOR THE RELEVANT ASSE SSMENT YEAR 2005-06 ASSESSMENT WAS FRAMED U/S. 143(3) OF THE ACT. DURING THE COURSE OF ASSES SMENT PROCEEDINGS AO NOTICED FROM THE ACCOUNTS FILED ALONG WITH THE RETURN OF INCOME THAT ASSESSEE HAD CLAIMED CARRY FORWARD OF FOLLOWING LOSSES INCURRED IN DIFFERENT YEARS: AY LOSS UNDER THE HEAD AMOUNT 2000-01 BUSINESS RS.10 96 105/- 2001-02 -DO- RS.31 82 935/- 2002-03 -DO- RS. 8 160/- 2003-04 -DO- RS. 10 150/ 2004-05 -DO- RS. 11 460/- RS.43 08 810/- THE AO WHEN SCRUTINIZED THE ACCOUNTS FOUND THAT THE SHAREHOLDING OF THE COMPANY HAS BEEN CHANGED DURING THE PREVIOUS YEAR AND PUBLIC ARE NOT SUBSTANTIALLY INTERESTED IN THE COMPANY AND THEREFOR ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE T O EXPLAIN AS TO WHY THIS CLAIM OF CARRY FORWARD LOSSES SHOULD NOT BE DISALLOWED. THE ASSES SEE FILED SUBMISSIONS BEFORE THE AO BUT AO DISALLOWED THE CARRY FORWARD LOSSES BY STATING THAT DURING THE PREVIOUS YEAR RELEVANT TO THIS ASSESSMENT YEAR THE ASSESSEE COMPANY IS NOT A COMP ANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. AGGRIEVED ASSESSEE PREFERRED APPEAL B EFORE CIT(A) WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED NOW ASSESSEE IS IN APPEAL BEFORE US. 3 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 4. FIRST OF ALL WE HAVE TO DISCUSS THE BARE FACTS OF THE ASSESSEE COMPANY. THE SHAREHOLDING PATTERN OF THE ASSESSEE COMPANY PORTSI DE ESTATES LTD. IS AS UNDER: SL. NO. SHAREHOLDERS NAME FOLIO NO. NOS. % OF TOTAL 1 2 3 4 5 6 7 8 MR. M.K. JALAN & KEVENTER PROJECTS LTD. MRS. S.P. JALAN & KEVENTER PROJECTS LTD. MR. MAYANK JALAN & KEVENTER PROJECTS MR. RATANLAL SETHIA & KEVENTER PROJECTS LTD. MR. SANJAY GUPTA & KEVENTER PROJECTS MR. RADHE SHYAM KHETAN & KEVENTER PROJECTS LTD. KEVENTER PROJECTS LTD. MANOHARLAL PHOOLCHAND KANUNGO TOTAL : 25 26 27 28 29 30 31 32 10 10 10 10 10 10 6 517 940 725 000 7 243 000 0% 0% 0% 0% 0% 0% 90% 10% 100% FROM THE ABOVE IT IS SEEN THAT THE ASSESSEE HAS ON LY EIGHT SHAREHOLDERS OUT OF WHICH SIX SHAREHOLDERS ARE HAVING ONLY 10 SHARES EACH OUT OF TOTAL SHARES OF 72.43 LAKHS. IT IS SEEN THAT 90% OF HOLDING IS WITH KEVENTER PROJECTS LTD. IN TH E SHAREHOLDING PATTERN OF THE ASSESSEE COMPANY. NOW WE HAVE TO SEE THE HOLDING COMPANY O F THE ASSESSEE KEVENTER PROJECTS LTD. WHICH HAS FIVE COMPANIES THEIR JOINTLY SHAREHOLDIN G IS AT 50.002% AND DETAILS ARE AS UNDER: SL. NO. NAME OF LISTED COMPANIES NOS. % 1 2 3 4 5 M/S. MKJ ENTERPRISES LIMITED M/S. THE RIGHT ADDRESS LIMITED M/S. MKJ DEVELOPERS LIMITED M/S. MADANLAL LIMITED M/S. TWENTY FIRST CENTURY SECURITIES LTD. SHARES HLED BY LISTED COS. 125 030 125020 125 020 125 020 30 500 120 12.5005% 12.4995% 12.4995% 12.4995% 0.0030% 50.002% AS NARRATED ABOVE THE ASSESSEE CLAIMED CARRIED FOR WARD AND BROUGHT FORWARD LOSSES PERTAINING TO PREVIOUS YEARS AMOUNTING TO RS.43 08 810/- AND A O DISALLOWED THE SAME AS THE ASSESSEE IS A COMPANY ACCORDING TO HIM IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. THE AO REACHED TO THIS CONCLUSION FOR VARIOUS REASONS AS NARRATED BY HIM MAINLY ON ACCOUNT OF LACK OF EVIDENCE BEING FILED BY ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS IN SUPPORT OF ITS CLAIM THAT FIVE COMPANIES WHICH WERE ACTUALLY HOLDING 50.0020 SHARE S OF KEVENTER PROJECTS LTD. ARE NOT THE COMPANIES IN WHICH PUBLIC ARE SUBSTANTIALLY INTERES TED. FURTHER THE ALLEGATION OF THE AO IS THAT THE ASSESSEE FAILED TO ESTABLISH THAT 89.9895% OF I TS SHARES WERE ACQUIRED UNCONDITIONALLY BY KEVENTER PROJECTS LTD. NOW BEFORE US LD. SR. DR S MT. SUCHETA CHATTOPADHYAY JCIT HEAVILY RELIED ON THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A). ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE SHRI RAVI TULSIYAN ARGUED FOR ASSE SSEE COMPANY AND FILED PAPER BOOK CONSISTS 4 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 OF PAGES 1 TO 49. LD. COUNSEL ALSO STATED THAT ALL THE DOCUMENTS WERE FILED BEFORE THE LOWER AUTHORITIES. 5. FROM THE FACTS NARRATED BY BOTH THE SIDES IT IS SEEN THAT PRIOR TO 28.09.2004 ASSESSEE COMPANY WAS WHOLLY OWNED SUBSIDIARY OF WILIAMSON MA GOR & CO. LTD. REGISTERED OFFICE AT 4 MANGOE LANE KOLKATA AND ASSESSEE HAS FILED THE EXT RACT OF ANNUAL REPORT OF WILLIAMSON MAGOR & CO. LTD. FOR FY 2002-03 AND 2003-04 IN ASSESSEES PAPER BOOK AT PAGES 32-39. THIS CLEARLY SHOWS THAT THE ASSESSEE WAS A 100% SUBSIDIARY OF TH E AFORESAID COMPANY DURING THOSE YEARS. THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO THE EX TRACT OF ANNUAL REPORT ENCLOSED AT ASSESSEES PAPER BOOK PAGES 32 TO 39 WHEREIN IT IS CLEAR THAT THE SHARES OF WILLIAMSON MAGOR & CO. LTD. ARE LISTED IN VARIOUS STOCK EXCHANGES I.E. CALCUTTA STOCK EXCHANGE VIDE STOCK CODE NO.33013 GUWAHATI STOCK EXCHANGE VIDE STOCK CODE NO.L/558 M UMBAI STOCK EXCHANGE VIDE STOCK CODE NO.519224 AND NATIONAL STOCK EXCHANGE. IT MEA NS THAT PRIOR TO 28.09.2004 ASSESSEE WAS 100% SUBSIDIARY OF WILLIAMSON MAGOR & CO. LTD. A C OMPANY LISTED AND ALSO WIDELY HELD COMPANY I.E. A COMPANY IN WHICH PUBLIC ARE SUBSTANT IALLY INTERESTED IN TERMS OF SECTION 2(18)(B)(A) OF THE ACT. IT CONCLUDES THAT PRIOR TO 28.09.2004 THE ASSESSEE COMPANY WAS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTE D. ON 28.09.2004 THE SHAREHOLDING OF THE ASSESSEE COMPANY WAS PURCHASED BY KEVENTER PROJECTS LTD. TO THE EXTENT OF 89.99% I.E. MORE THAT 50% SHARES. FROM THE ABOVE CHART REPRODUCED IT IS CLEAR THAT MORE THAN 50% SHARES OF KEVENTER PROJECTS LTD. ARE HELD BY FIVE COMPANIES. THE ASSESSEE HAS ENCLOSED A LIST AT PAGE 2 OF THE PAPER BOOK SHOWING THE SHAREHOLDING PATTERN OF KEVENTER PROJECTS LTD. WHEREIN IT IS STATED THAT ALL THE FIVE COMPANIES ARE QUOTED WITH THE FOL LOWING STOCK EXCHANGES: NAME OF LISTED COMPANIES QUOTED WITH STOCK EXCHANGE I) MKJ ENTERPRISES LTD. CALCUTTA & UTTAR PRADES H II) THE RIGHT ADDRESS LIMITED CALCUTTA III) MKJ DEVELOPERS LTD. CALCUTTA & UTTAR PRADE SH IV) MADANLAL LIMITED CALCUTTA & GUWAHATI V) TWENTY FIRST CENTURY SECURITIES LTD. DELHI & U TTAR PRADESH THESE DETAILS IN RESPECT TO MARKET QUOTATION OF THE AFORESAID FIVE COMPANIES AT THE RELEVANT STOCK EXCHANGES AS ON 31.03.2005 ARE ENCLOSED AT PA GES 8 TO 14 OF ASSESSEES PAPER BOOK. IT MEANS THAT THE AFORESAID FIVE COMPANIES ARE LISTED COMPANIES WITH THE STOCK EXCHANGES AS NARRATED ABOVE AS REQUIRED U/S. 2(18)(B)(C) OF THE ACT AND THEREFORE IT WAS ARGUED ON BEHALF OF ASSESSEE THAT THEY ARE WIDELY HELD COMPANIES ON WHI CH SECTION 2(18)(B) OF THE ACT IS APPLICABLE. SINCE MORE THAN 50 EXACT 50.0020% SHAREHOLDING OF KEVENTER PROJECTS LTD. ARE HELD BY 5 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 AFORESAID FIVE COMPANIES COMPANIES IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED IT WAS ARGUED THAT KEVENTER PROJECTS LTD. IS ALSO A WIDELY HELD C OMPANY TO WHICH SECTION 2(18)(B) IS APPLICABLE. ONCE THIS IS THE POSITION WHETHER THE ASSESSEE COMPANY WHOSE SHARES MORE THAN 50% WERE HELD BY KEVENTER PROJECTS LTD. THE ASSESS EE COMPANY CAN BE HELD TO BE A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED OR IT CAN BE CONCLUDED THAT THE ASSESSEE IS A WIDELY HELD COMPANY IN TERMS OF SECTION 2(18)(B) OF THE AC T OR NOT. 6. WE HAVE GONE THROUGH THE ORDER OF CIT(A) AND FIN D THAT THE CIT(A) UPHELD THE ACTION OF AO BY OBSERVING AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND SUBMISSIONS OF THE ASSESSEE DA TED 16.12.2008 AND 28.6.2001. THE ASSESSING OFFICER HAS HELD THAT THERE A CHANGE IN T HE SHARE HOLDING FOR MORE THAN 51% OF THE COMPANY DURING THE PREVIOUS YEAR AND THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED IN THE COMPANY. HE FURTHER HELD THAT AS PER SECTION 2( 18)(B)(B)(C) THE ASSESSEE COMPANY CANNOT BE HELD AS A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTALLY INTERESTED. THE ASSESSEE WAS A WHOLLY OWNED SUBSIDARY OF M/S WILLI AMSON MAGOR & COMPANY LTD. KOLKATA. THERE WAS A CHANGE IN THE SHARE HOLDING ON 28.9.2004 AND MAJOR SHARE HOLDING (90%) OF THE ASSESSEE WAS PURCHASED BY M/S KEVENTER PROJECTS LTD WHICH WAS NOT A LISTED COMPANY. HOWEVER AS PER THE ASSESSEE THE SHARES OF M/S KEVENTER PROJECTS LTD ARE HELD BY 11 PERSONS OUT OF WHOM FOLLOWING SHARE HOLDING C OMPANIES ARE CLAIMED TO BE LISTED COMPANY. SL. NO. NAME OF LISTED COMPANIES NOS. % 1 2 3 4 5 M/S. MKJ ENTERPRISES LIMITED M/S. THE RIGHT ADDRESS LIMITED M/S. MKJ DEVELOPERS LIMITED M/S. MADANLAL LIMITED M/S. TWENTY FIRST CENTURY SECURITIES LTD. SHARES HLED BY LISTED COS. 125 030 125020 125 020 125 020 30 500 120 12.5005% 12.4995% 12.4995% 12.4995% 0.0030% 50.002% 5. M/S WILLIAMSON MAGOR & CO. WAS A LISTED COMPANY WHILE M/S KEVENTER PROJECTS LTD. IS NOT A LISTED COMPANY. TWENTY FIRST CENTURY SECUR ITIES LTD. WHICH IS ONE OF THE SHARE HOLDING COMPANY AND IS TAKEN AS LISTED COMPANY IS H OLDING ONLY 30 SHARES OUT OF 10 00 200 SHARES. NONE OF THE 5 CLAIMED LISTED COMP ANY IS LISTED EITHER IN BOMBAY STOCK EXCHANGE OR NATIONAL STOCK EXCHANGE WHILE M/S WILLI AM MAGOR & CO. WAS LISTED COMPANY AT BOTH BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCHANGE. THE ASSESSEE HAS NO WHERE PRODUCED THE EVIDENCE THAT THE SHARES OF THESE FIVE (5) LISTED COMPANIES WERE BEING QUOTED IN THE CASH SECTION IN ROUTINE T HERE WERE ANY FLUCTUATIONS IN THE PRICE OF SHARES SALE/PURCHASE TRANSACTIONS WERE BEING EN TERED FREQUENTLY AND/OR REPORTED IN THE STOCK EXCHANGE REGULARLY ON DAILY/WEEKLY BASIS OR PERIODICALLY ETC. 6. THE SHARE HOLDING OF M/S PORTSDE ESTATES LIMITE D I.E. APPELLANT IS AS FOLLOWS: SL. NO. SHAREHOLDERS NAME FOLIO NO. NOS. % OF TOTAL 1 2 MR. M.K. JALAN & KEVENTER PROJECTS LTD. MRS. S.P. JALAN & KEVENTER PROJECTS LTD. 25 26 10 10 0% 0% 6 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 3 4 5 6 7 8 MR. MAYANK JALAN & KEVENTER PROJECTS MR. RATANLAL SETHIA & KEVENTER PROJECTS LTD. MR. SANJAY GUPTA & KEVENTER PROJECTS MR. RADHE SHYAM KHETAN & KEVENTER PROJECTS LTD. KEVENTER PROJECTS LTD. MANOHARLAL PHOOLCHAND KANUNGO TOTAL : 27 28 29 30 31 32 10 10 10 10 6 517 940 725 000 7 243 000 0% 0% 0% 0% 90% 10% 100% 7. M/S PORTSIDE ESTATES LIMITED HAS ONLY 8 SHARE-H OLDERS OUT OF WHICH 6 SHARE HOLDERS HAVE ONLY 10 SHARES EACH OUT OF A TOTAL 72 43 000 S HARES. THE ASSESSEE IS A SUBSDIARY COMPANY OF A COMPANY WHICH IS ALSO NOT LISTED. FUR THER THE HOLDING COMPANY OF THE ASSESSEE I.E. M/S KEVENTER PROJECTS LTD. HAS 5 (FIV E) COMPANIES WHO JOINTLY HOLDS 50.002% SHARE HOLDING AND ARE CLAIMED TO BE LISTED IN STOCK EXCHANGE(S). THE LAW PROVIDED IN SEC 2(18)(B)(B)(C) DOES NOT APPLY AS TH E ASSESSEE DOES NOT HAVE A SUBSIDIARY COMPANY WHICH IS A LISTED COMPANY. IT IS CLARIFIED THAT THERE IS NO SUBSIDIARY COMPANY OF M/S PORTSIDE ESTATES LIMITED WHICH IS LISTED. THE A SSESSEE ITSELF IS A SUBSDIARY COMPANY OF M/S KEVENTER PROJECTS LTD. WHICH IS ALSO NOT A L STED COMPANY. WHILE M/S KEVENTER PROJECTS LIMITED HAS 11 SHARE HOLDERS WITH NONE OF THEM HAVING EVEN 13% SHARE HOLDING. THE SECTION 2(18)(B)(B)(C) PROVIDES EXCEPTION ONLY FOR ANY COMPANY AND NOT GROUP OF COMPANIES IN AGGREGATE/COMBINATION TO HOLD MORE THA N 50% SHARES AS LISTED HOLDING COMPANY(IES). THIS CHAIN CANNOT GO ON TILL AT LAST SOME COMPANIES AS A GROUP ARE FOUND TO BE LISTED COMPANIES FOR MAKING IT AS AN EXCEPTIO N TO SECTION 79. 8. M/S KEVENTER PROJECTS LIMITED IS A HOLDING COMPA NY AND FURTHER THERE ARE SHAREHOLDING COMPANIES OF M/S KEVENTER PROJECTS LIM ITED WHO ARE CLAIMED TO BE LISTED COMPANIES. THE FIVE HOLDING COMPANIES OF ONE OF THE HOLDING COMPANY OF THE APPELLANT ARE CLAIMED TO BE LISTED WHILE THE PROVISIONS REQI RE THAT THE IMMEDIATE SUBSDIARY COMPANY TO BE A LISTED COMPANY. THE REQUIREMENTS OF SECTION 2(18)(B)(B)(C) ARE NOT FULFILLED/COMPLIED BY THE APPELLANT. THERE IS A FUR THER REQUIREMENT THAT THE WHOLE OF SHARE CAPITAL OF SUCH SUBSIDARY COMPANY HAS TO BE HELD B Y THE PARENT COMPANY WHICH IS ALSO NOT BEING FULFILLED BY THE ASSESSEE. THE SO CALLED FIVE (5) LISTED COMPANIES HOLD ONLY 50% SHARES OF M/S KEVENTER PROJECTS LIMITED AND M/S KEV ENTER PROJECTS LIMITED FURTHER HOLDS ONLY 90% SHARES OF THE APPELLANT AND NOT WHOLE OF T HE SHARE-CAPITAL. THEREFORE THE APPELLANT DOES NOT FULFILL THE CONDITIONS AND REQUI REMENTS OF SECTION 2(18)(B)(B)(C) IN TERMS OF HAVING A LISTED AND WHOLLY OWNED SUBSIDIAR Y. 9. IF IT IS CONSIDERED FOR THE SAKE OF ARGUMENT TH AT SECTION 2(18)(B)(B)(C) IS APPLICABLE TO THE FIVE LISTED COMPANIES I.E. M/S. MKJ ENTERPRISES LIMITED; M/S THE RIGHT ADDRESS LIMITED; M/S MKJ DEVELOPERS LIMTED M/S. MADANLAL L IMTED; M/S TWENTY FRST CENTURY SECURITES LIMITED THEN THESE DO NOT OWN THE WHOLE CAPITAL OF M/S. KEVENTER PROJECTS LTD. THEREFORE THE CONDITIONS OF SECTION 2(18)(B)(B)(C) ARE NOT FULFILLED TO RECOGNISE M/S. KEVENTER PROJECTS LTD. AS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED UNDER SECTION 2(18)(B)(B)(C). THEREFORE M/S. KEVENTER PR OJECTS LTD. BEING A HOLDNG COMPANY CANNOT GIVE FURTHER STATUS TO THE APPELLANT I.E. M/ S PORTSIDE ESTATES LIMITED OF A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED UNDER SECTION 2(18)(B)(B)(C). FURTHER ALSO M/S. KEVNTER PROJECTS LTD. HOLDS ONLY 90% SHARE- HO LDING AND NOT WHOLE CAPITAL OF THE APPELLANT THEREBY NOT FULFILLING THIS CONDITION OF SECTION 2(18)(B)(B)(C). 10. THE CHANGE OF SHARE HOLDNG OF THE ASSESSEE FRO M M/S WILLIAMSON MAGOR LTD. TO M/S. KEVENTER PROJECTS LTD. HAS A CHANGE OF SHARE HOLDIN G FOR MORE THAN 51% AS REQUIRED IN SECTION 79 AND IT ALSO DOES NOT FALL UNDER EXPLANAT ION OF THE SECTION 2(18)(B)(B)(C) ON VARIOUS COUNTS AS DISCUSSED IN DETAIL (SUPRA). THER EFORE IT IS HELD THAT THE APPELLANT IS NOT ENTITLED TO SET OFF THE BROUGHT FORWARD LOSS OF RS. 43 08 810/- AS CALCULATED BY THE 7 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 ASSESSING OFFICER IN THE ASSESSMENT ORDER. IT IS CL ARIFIED THAT NO BROUGHT FORWARD LOSS UP TO ASSESSMENT YEAR 2004-05 IS ALLOWED TO BE SET OFF WTH THE INCOME OF ASSESSMENT YEAR 2005- 06. THEREFORE THE GROUNDS OF APPEAL NO. 3 & 7 ARE DISMISSED WHILE THE OTHER GROUNDS HAVE BEEN DISCUSSED AS FACTS IN THE ORDER A ND NONE OF THESE GROUNDS ALLOW THE ASSESSEE TO CARRY FORWARD THE LOSS. IN THE RESULT T HE ASSESSEE IS NOT ALLOWED TO SET OFF THE CARRY FORWARD LOSS OF RS.64 79 715/- WITH ITS BUSIN ESS INCOME. 7. WE FIND THAT PRIOR TO 28.09.2004 THE ASSESSEE CO MPANY WAS WHOLLY OWNED SUBSIDIARY OF WILLIAMSON MAGOR & CO. LTD. AS IS EVIDENT FROM EXTR ACT OF ANNUAL REPORT OF WILLIAMSON MAGOR & CO. LTD. FOR FY 2002-03 AND 2003-04 WHICH CLEARLY SHOWS THAT THE ASSESSEE WAS A 100% SUBSIDIARY OF THIS COMPANY DURING THOSE YEARS. IT IS ALSO A FACT THAT WILLIAMSON MAGOR & CO. LTD. IS LISTED IN SEVERAL STOCK EXCHANGES AS NARRAT ED IN THE ABOVE FACTS WITH EVIDENCE. PRIOR TO 28.09.2004 THE ASSESSEE COMPANY REMAINED A 100% SU BSIDIARY OF WILLIAMSON MAGOR & CO. LTD. WHICH IS A LISTED AND WIDELY HELD COMPANY. F ROM THE ABOVE IT FOLLOWS THAT BEFORE ACQUISITION OF THE ASSESSEE COMPANY BY KEVENTER PRO JECTS LTD. ON 28.09.2014 THE ASSESSEE REMAINED A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALL Y INTERESTED. ON 28.09.2004 THE SHAREHOLDING OF THE ASSESSEE COMPANY WAS PURCHASED BY KEVENTER PROJECTS LTD. TO THE EXTENT OF 89.99% AND 50.200% OF THAT ARE HELD BY THE COMPANIE S NAMELY (I) MKJ ENTERPRISES (II) THE RIGHT ADDRESS LTD. (III) MKJ DEVELOPERS LTD. (IV) MADANLAL LTD. AND (V) TWENTY FIRST CENTURY SECURITIES LTD. ALL THE AFORESAID COMPANIE S ARE QUOTED IN THE STOCK EXCHANGES AS NARRATED ABOVE AND EVIDENCES ARE FILED IN ASSESSEE S PAPER BOOK AS DISCUSSED ABOVE. THE ASSESSEE HAS ALSO FILED LIST SHOWING THE MARKET QUO TATIONS OF THE AFORESAID FIVE COMPANIES WHO HAVE INVESTED IN KEVENTER PROJECTS LTD. SHOWING MAR KET QUOTATION AT THE RELEVANT STOCK EXCHANGES AS ON 31.03.2005 AND 31.03.2006. FROM TH IS IT IS CLEAR THAT THE ABOVE STATED FIVE COMPANIES ARE LISTED COMPANIES AS REQUIRED U/S. 2(1 8)(B)(A) OF THE ACT AND THEREFORE SAFELY CAN BE PRESUMED THAT THEY ARE WIDELY HELD COMPANIES ON WHICH THIS SECTION APPLIES. SINCE MORE THAN 50% OF SHAREHOLDING OF KEVENTER PROJECTS LTD. ARE HELD BY ABOVE STATED FIVE COMPANIES WHICH ARE ESTABLISHED COMPANIES IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND IN SUCH SITUATION IT AMPLY FOLLOWS THAT KEVENTER PROJE CTS LTD. IS ALSO A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. BUT THE CIT(A) UPHEL D THE ACTION OF AO ON THE FOLLOWING POINTS: I) ACCORDING TO HIM THE PROVISIONS OF SECTION 2(18 )(B)(B)(C) DOES NOT APPLY TO THE FACTS OF THE ASSESSEES CASE AS A SUBSIDIARY COMPANY IS NOT A LISTED COMPANY. FOR THIS HE GAVE REASONING THAT THE LAW PROVIDED IN SECTION 2(18)(B(B)(C) DOES NOT APPLY AS THE ASSESSEE DOES NOT HAVE A SUBSIDIARY COMPANY WHICH IS A LISTED COM PANY. THIS CLARIFIES THAT THERE IS NO SUBSIDIARY COMPANY OF M/S. PORTSIDE ESTATES LTD. WH ICH IS A LISTED COMPANY. THE ASSESSEE ITSELF 8 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 IS A SUBSIDIARY COMPANY OF M/S. KEVENTER PROJECTS L TD. WHICH IS ALSO NOT A LISTED COMPANY. WHILE M/S. KEVENTER PROJECTS LTD. HAS 11 SHAREHOLDE RS WITH NONE OF THEM HAVING EVEN 13% OF SHAREHOLDING. II) THE CIT(A) WAS OF THE VIEW THAT THE FIVE HOLDI NG COMPANIES OF WHICH ONE OF THE HOLDING COMPANIES OF THE ASSESSEE ARE CLAIMED TO BE LISTED WHILE THE PROVISION REQUIRES THAT THE IMMEDIATE SUBSIDIARY COMPANY TO BE LISTED COMPANY. ACCORDING TO CIT(A) SECTION 2(18)(B)(B)(C) PROVIDES EXCEPTION ONLY FOR ANY COMP ANY AND NOT GROUP OF COMPANIES IN AGGREGATE/COMBINATION TO HOLD MORE THAN 50% SHARES AS LISTED HOLDING COMPANIES. ACCORDING TO HIM THIS CHAIN CANNOT GO ON TILL AT LAST SOME C OMPANIES AS A GROUP ARE FOUND TO BE LISTED COMPANIES FOR MAKING IT AS AN EXCEPTION TO SECTION 79 OF THE ACT. ACCORDING TO HIM THE REQUIREMENT OF THE SECTION IS THAT WHOLE OF THE SHA RE CAPITAL OF SUCH SUBSIDIARY COMPANY HAS TO BE HELD BY PARENT COMPANY WHICH IS NOT FULFILLED BY THE ASSESSEE COMPANY. THE SO-CALLED FIVE LISTED COMPANIES HELD ONLY 50% SHARES OF KEVENTER P ROJECTS LTD. AND IN TURN KEVENTER PROJECTS LTD. FURTHER HOLDS ONLY 90% SHARES OF THE ASSESSEE AND NOT THE ENTIRE SHARE CAPITAL. CIT(A) FURTHER NOTED THAT THIS PROVISION PROVIDES EXCEPTIO N ONLY FOR ANY COMPANY AND NOT GROUP COMPANIES IN AGGREGATE/COMBINATION TO HOLD MORE THA N 50% SHARES AS A LISTED HOLDING COMPANY. III) HE FURTHER HELD THAT NONE OF THE AFOREMENTIONE D FIVE COMPANIES ARE LISTED ON ANY OF THE STOCK EXCHANGES UNLIKE WILLIAMSON MAGOR & CO. LTD. THE FINDING OF CIT(A) IS NOT BASED ON FACTS AS THE FACTS SPEAK SOMETHING ELSE THAT THE AF ORESAID FIVE COMPANIES ARE LISTED COMPANIES AND THEREFORE CAN SAFELY BE PRESUMED AS WIDELY HE LD COMPANIES ON WHICH THIS PROVISION WILL APPLY BECAUSE THE ASSESSEE HAS FILED COMPLETE DETAI LS SHOWING MARKET QUOTATION OF THE AFORESAID FIVE COMPANIES AT THE RELEVANT STOCK EXCHANGES AS ON 31.03.2005 AND 31.03.2006. 8. FURTHER ON THE BASIS OF ABOVE FACTS AND AS ARGU MENTS MADE BY BOTH THE SIDES NOW WE HAVE TO GO TO THE PROVISIONS OF SECTIONS 79 AND 2(1 8)(B) OF THE ACT AND THE RELEVANT PROVISIONS READ AS UNDER: SEC. 79 CARRY FORWARD AND SET OFF OF LOSSES IN TH E CASE OF CERTAIN COMPANIES: NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER WHERE A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR IN THE CASE OF A COM PANY NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED NO LOSS INCURR ED IN ANY YEAR PRIOR TO THE PREVIOUS YEAR SHALL BE CARRIEDFORWARD AND SET OFF AGAINST THE INC OME OF THE PREVIOUS YEAR UNLESS- (A) ON THE LAST DAY OF THE PREVIOUS YEAR THE SHARES OF THE COMPANY CARRYING NOT LESS THAN FIFTY- ONE PER CENT. OF THE VOTING POWER WERE BENEFICIALLY HELD BY PERSONS WHO BENEFICIALLY HELD 9 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 SHARES OFTHE COMPANY CARRYING NOT LESS THAN FIFTY-O NE 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 SH ALL APPLY TO A CASE WHERE A CHANGE IN THE SAID VOTING POWER TAKES PLACE IN A PREVIOUS YEAR CO NSEQUENT 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 SEC TION SHALL APPLY TO ANY CHANGE IN THE SHAREHOLDING OF AN INDIAN COMPANY WHICH IS A SUBSID IARY OF A FOREIGN COMPANY AS A RESULT OF AMALGAMATION OR DEMERGER OF A FOREIGN COMPANY SU BJECT TO THE CONDITION THAT FIFTY-ONE PER CENT. SHARE HOLDERS OF THE AMALGAMATING OR DEME RGEDF OREIGN COMPANY CONTINUE TO BE THE SHAREHOLDERS OF THE AMALGAMATED OR THE RESULTIN G FOREIGN COMPANY. SECTION 2(18). COMPANY IN WHICH THE PUBLIC ARE SUB STANTIALLY INTERESTED --A COMPANY IS SAID TO BE A COMPANY IN WHICH THE PUBLIC ARE SUBSTA NTIALLY INTERESTED (B) IF IT IS A COMPANY WHICH IS NOT A PRIVATE COMPA NY AS DEFINED IN THE COMPANIES ACT 1956 (1 OF 1956) AND THE CONDITIONS SPECFIED EITHER IN ITEM (A) OR IN ITEM (B) ARE FULFILLED NAMELY. (A) SHARES IN THE COMPANY ( ) WERE AS ON THE LAST DA Y OF THE RELEVANT PREVIOUS YEAR LISTED IN A RECOGNISED STOCK EXCHANGE IN INDIA IN ACCORDAN CE WITH THE SECURITIES CONTRACTS (REGULATION) ACT 1956 (42 OF 1956) AND ANY RULES M ADE THEREUNDER; (B) SHARES IN THE COMPANY ( ) CARRYING NOT LESS THAN FIFTY PER CENT OF THE VOTING POWER HAVE BEEN ALLOTTED UNCONDITIONALLY TO OR ACQ UIRED UNCONDITIONALLY BY AND WERE THROUGHOUT THE RELEVANT PREVIOUS YEAR BENEFICIALLY HELD BY (A) THE GOVERNMENT OR (B) A CORPORATION ESTABLISHED BY A CENTRAL STATE OR PR OVINCIAL ACT OR (C) ANY COMPANY TO WHICH THIS CLAUSE APPLIES OR ANY SUB SIDIARY COMPANY OF SUCH COMPANY [IF THE WHOLE OF THE SHARE CAPITAL OF SUCH SUBSIDIARY C OMPANY HAS BEEN HELD BY THE PARENT COMPANY OR BY ITS NOMINEES THROUGHOUT THE PREVIOUS YEAR.] FROM THE ABOVE PROVISIONS OF SECTION 79 IT IS CLEAR THAT THIS IS APPLICABLE WHERE A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR IN THE CASE OF A COMPANY BUT THERE IS ONE EXCEPTION THAT IT EXCLUDES A COMPANY IN WHICH PUBLI C ARE SUBSTANTIALLY INTERESTED. IT MEANS THAT SECTION 79 IS VERY CLEAR ON THE FACTS OF THE CASE. 9. THE PROVISIONS OF SECTION 2(18)(B)(B) OF THE ACT CLEARLY REVEALS THAT THIS PROVISION IS IN TWO PARTS. THE REQUIREMENT OF SUB CLAUSE (C) COULD BE FULFILLED EITHER BY ANY COMPANY TO WHICH THIS CLAUSE APPLIES OR ANY SUBSIDIARY COMPANY OF SU CH COMPANY WHERE SUCH SUBSIDIARY COMPANY FULFILLS THE CONDITIONS LAID DOWN IN CLAUSE (B) OF SECTION 2(18) OF THE ACT BY VIRTUE OF 10 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 BEING A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY I NTERESTED OR A WIDELY HELD COMPANY. IT WOULD BE SUFFICIENT IF NOT LESS THAN 50% OF THE SHA RES OF THE ASSESSEE COMPANY HAVE BEEN ALLOTTED UNCONDITIONALLY TO OR ACQUIRE UNCONDITIONA LLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY A HOLDING COMPANY WHICH IS A COMP ANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND TO WHICH THIS PROVISION APPLIES. AL TERNATIVELY THE CONDITION COULD ALSO BE FULFILLED IF MORE THAN 50% OF SHARES HAVE BEEN ALLO TTED OR ACQUIRED BY ANY SUBSIDIARY COMPANY OF SUCH COMPANY WHERE SUCH SUBSIDIARY COMPANY FULFI LLS THE CONDITIONS LAID DOWN IN THIS PROVISION AND WHICH IS A COMPANY IN WHICH THE PUBLI C ARE SUBSTANTIALLY INTERESTED. SUB CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT HAVE TWO PART S AND BOTH ARE SEPARATE AND INDEPENDENT OF EACH OTHER. WE FIND THAT THE CIT(A) WHILE INTERPRE TING SUB-CLAUSE (C) OF SECTION 2(18)(B)(B) OF THE ACT HOLDS THAT THE PROVISION OF THE SECTION TO ASSESSEES CASE IS NOT APPLICABLE AND ACCORDING TO HIM THE REASON IS THAT SINCE THE SAME DOES NOT HAVE A SUBSIDIARY COMPANY WHICH IS A LISTED COMPANY. HERE WE WANT TO MENTION THAT CIT(A) COMP LETELY IGNORED THE FACT THAT THERE WILL BE SUFFICIENT COMPLIANCE OF SECTION 2(18)(B)(B)(C) OF THE ACT WHERE NOT LESS THAN 50% OF SHARES OF THE ASSESSEE COMPANY HAVE BEEN ALLOTTED UNCONDITION ALLY TO OR ACQUIRED UNCONDITIONALLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY ANY C OMPANY WHICH IS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND IN TURN THI S CLAUSE WILL APPLY. IN THE PRESENT CASE 89.90% OF SHARES OF THE ASSESSEE COMPANY ARE HELD BY KEVEN TER PROJECTS LTD. AND KEVENTER PROJECTS LTD.S SHARE TO THE EXTENT OF 50.002% ARE HELD BY F IVE LISTED COMPANIES WHICH ARE COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND ARE W IDELY HELD COMPANIES. THIS FACT IS PROVED BY THE DOCUMENTARY EVIDENCE PRODUCED BEFORE US IN ASSE SSEES PAPER BOOK WHICH WERE ALREADY AVAILABLE BEFORE THE CIT(A). FURTHER CIT(A) HELD THAT THE AFORESAID FIVE HOLDING COMPANIES OF ONE OF THE HOLDING COMPANIES OF THE ASSESSEE ARE CL AIMED TO BE LISTED YET THE REQUIRED PROVISIONS ARE NOT FULFILLED FOR THE REASON THAT TH E PROVISION REQUIRES THAT THE IMMEDIATE SUBSIDIARY COMPANY IS TO BE A LISTED COMPANY. IN O UR VIEW THE INTERPRETATION OF THE PROVISION IS NOT LIKE THIS. THE REQUIREMENT IS THAT THE AFOR ESAID FIVE HOLDING COMPANIES OF ONE OF THE HOLDING COMPANY ARE LISTED COMPANIES WITH THE STOCK EXCHANGES AND ARE COMPANIES IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND ARE WIDELY HELD COMPANIES. THE FIRST REQUIREMENT FOR FULFILLING OF SUB-CLAUSE (C) OF SECTION 2(18)(B)(B) OF THE ACT IS WHERE NOT LESS THAN 50% OF SHARES OF THE ASSESSEE COMPANY HAVE BEEN ALLOTTED U NCONDITIONALLY TO OR ACQUIRE UNCONDITIONALLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY HOLDING COMPANY TO WHICH THIS CLAUSE APPLIES. IN THE PRESENT CASE TH E FIRST CONDITION STANDS SATISFIED FOR THE REASON THAT THE HOLDING COMPANY KEVENTER PROJECTS LTD. WHI CH IS HOLDING 89.99% SHARES OF THE 11 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 ASSESSEE COMPANY HAS BEEN JOINTLY HELD BY THE AFORE SAID FIVE COMPANIES WHICH ARE ALL ESTABLISHED AS ABOVE ARE LISTED IN RECOGNISED STOC K EXCHANGES. THIS MAKES CLEAR AND EVIDENT THAT KEVENTER PROJECTS LTD. IS A WIDELY HELD COMPAN Y TO WHICH THIS PROVISION OF SECTION 2(18)(B)(B)(C) IS APPLICABLE AND ASSESSEE IS A WIDE LY HELD COMPANY OR A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. 10. ANOTHER CONCLUSION ARRIVED AT BY CIT(A) THAT S ECTION 2 (18)(B)(B)(C) PROVIDES EXCEPTION ONLY FOR ANY COMPANY AND NOT GROUP OF COMPANIES IN AGGREGATE/GROUP HELD MORE THAN 50% SHARES AS LISTED SUBSIDIARIES. WE ARE OF THE VIEW THAT THE WORD ANY WHICH IS OF UTMOST IMPORTANCE IS TO BE TAKEN INTO CONSIDERATION. THE T ERM ANY HAS BEEN DEFINED IN THE THE LAW LEXICON BY P. RAMANATHA AIYAR 2 ND EDITION 1997 AT PAGE NO. 117 AS ONE OR SAME OR A LL. THE WORD ANY HAS BEEN REFERRED IN THE CASE OF BENGAL CHAMBER OF COMMERCE RULES OF TRIBUNAL OF ARBITRATION WHICH MEANS ONE OR MORE OUT OF SEVERAL AND INCLUDES ALL. THIS HAS BEEN DECIDED IN THE CASE OF SATYANARAYAN BISWANATH VS. HARAKCHAND R UPCHAND AIR 1955 CAL 225. FURTHER WHILE DEALING WITH THE BIHAR PANCHAYAT ELECTION RUL ES 1959 HONBLE PATNA HIGH COURT IN THE CASE OF ASHIQ HASSAN VS. SDO AIR 1965 PATNA 446 W HEREIN IT WAS HELD THAT THE WORD ANY MEANS ALL. EVEN THE DICTIONARY OF OXFORD THE WO RD ANY HAS BEEN TAKEN TO BE MEANING AS ALL. IN VIEW OF THE ABOVE THE MEANING OF THE WO RD ANY INCLUDES ALL AND THE WORD ANY COMPANY AS CONTAINED IN SUB-CLAUSE (C) ESSENTIALLY DENOTES MORE THAN ONE COMPANY AND NOT ONLY ONE COMPANY. HERE ALL THE FIVE COMPANIES IN A GGREGATE ARE HOLDING MORE THAN 50% SHARES ARE LISTED SUBSIDIARY COMPANIES OF THE HOLDING COMP ANY OF THE ASSESSEE COMPANY. HERE THE ISSUE IS SETTLED BY HONBLE GUJARAT HIGH COURT IN T HE CASE OF CIT VS. EMTICI ENGINEERING LTD. (2009) 310 ITR 0266 WHEREIN THE PRINCIPLE LAID DOW N WAS AS UNDER: UPON CAREFUL READING OF SUB-CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT IT WOULD EMERGE THAT THE SAME IS IN TWO PARTS. THE REQUIREME NTS OF SUBCLAUSE (C) COULD BE FULFILLED EITHER BY ANY COMPANY TO WHICH THIS CLAUSE APPLIES OR ANY SUBSIDIARY COMPANY OF SUCH COMPANY WHERE SUCH SUBSIDIARY COMPANY FULFILS THE CONDITIONS LAID DOWN IN CLAUSE (B) OF SECTION 108. IT CAN THUS BE SEEN THAT TO FULFIL THE REQUIREMENT NOTED ABOVE IT WOULD BE SUFFICIENT IF NOT LESS THAN 50 PER CENT. OF THE SHA RES OF THE ASSESSEE-COMPANY HAVE BEEN ALLOTTED UNCONDITIONALLY TO OR ACQUIRED UNCONDITION ALLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY A HOLDING COMPANY. FOR CO MPANY TO WHICH THIS CLAUSE APPLIES ALTERNATIVELY THE CONDITION COULD ALSO BE FULFILLE D IF MORE THAN 50 PER CENT. OF THE SHARES HAVE BEEN ALLOTTED OR ACQUIRED BY ANY SUBSIDIARY C OMPANY OF SUCH COMPANY (I.E. ANY COMPANY TO WHICH SUCH CLAUSE APPLIES) WHERE SUCH S UBSIDIARY COMPANY FULFILS CONDI TIONS LAID DOWN IN CLAUSE (B) OF SECTION 108. THE T WO PARTS OF SUB-CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT ARE SEPARATE AND INDEPENDEN T OF EACH OTHER. IF THE COMPANY WHICH IS A SUBSIDIARY COMPANY OF THE HOLDING COMPANY SATI SFIES THE REQUIREMENT OF BEING ANY COMPANY TO WHICH THIS CLAUSE APPLIES IT NEED NOT THEREAFTER FULFIL THE FURTHER REQUIREMENT OF BEING A COMPANY THE WHOLE OF WHOSE SHARE CAPITAL HAS BEEN HELD BY THE 12 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 PARENT COMPANY AS PROVIDED IN SECTION 108(B). IN O THER WORDS THERE IS NOTHING IN THE FIRST PART OF SUB-CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT NAMELY ANY COMPANY TO WHICH THIS CLAUSE APPLIES WHICH WOULD EXCLUDE THE COMPANY WHICH IS A SUBSIDIARY OF A PARENT COMPANY. THUS IF A COMPANY WHICH IS SUBSIDI ARY OF A PARENT COMPANY INDEPENDENTLY FULFILS THE REQUIREMENT OF BEING COMP ANY TO WHICH THIS CLAUSE APPLIES THE REQUIREMENT OF SUBCLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT STANDS FULFILLED. WITH THIS CLARITY IN MIND IF ONE REVERTS BACK TO T HE PRESENT CASE IT IS AN ADMITTED POSITION THAT BETWEEN P. B. INVESTMENTS AND TRUSTS LTD. AND K. B. INVESTMENTS LTD. THE TWO COMPANIES HOLD MORE THAN 50 PER CENT. OF THE SHARE CAPITAL OF THE ASSESSEE-COMPANY. P.B. INVESTMENTS AND TRUSTS LTD. AND K. B. INVESTM ENTS LTD. ARE COMPANIES TO WHICH THIS CLAUSE APPLIES AS PER SUB-CLAUSE (C) IN SECTION 2( 18)(B)(B) OF THE ACT. THIS BEING THE CASE SO FAR AS THE ASSESSEE-COMPANY IS CONCERNED ITS NO T LESS THAN 50 PER CENT. OF SHARES HAVING BEEN UNCONDITIONALLY ALLOTTED TO P. B. INVES TMENTS AND TRUSTS LTD. AND K. B. INVESTMENTS LTD. TOGETHER AND SINCE P. B. INVESTMEN TS AND TRUSTS LTD. AND K. B. INVESTMENTS LTD. ARE COMPANIES TO WHICH THIS CLAUSE APPLIES THE ASSESSEE-COMPANY STANDS COVERED WITHIN THE DEFINITION OF SECTION 2( 18) OF THE ACT. IN OUR OPINION THE TRIBUNAL WAS JUSTIFIED IN SO HOLDING. WE THUS ANSWE R THE QUESTION IN THE AFFIRMATIVE I.E. AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AN D CASE LAW CITED ABOVE WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE . THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. THIS ISSUE OF ASSESSEES APPEAL IN ITA NO.182/K/201 2 FOR AY 2006-07 IS ALSO ALLOWED. 12. THE NEXT ISSUE IN ITA NO. 1673/K/2011FOR AY 200 5-06 IS AS REGARDS TO THE ORDER OF CIT(A) IN UPHOLDING THE FINDING OF THE AO THAT THE ASSESSEE COMPANY IS NOT ENTITLED TO CARRY FORWARD OF LONG TERM CAPITAL LOSS ON SALE OF SHARES OF CESC AND SMIFS CAPITAL MARKET. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NO.3: 3(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN UPHOLDING THE FINDING OF THE AO THAT THE APPELLANT HAD SOLD 90 600 SHARES OF CESC AND 74 000 SHARES OF SMIFS CAPITAL MARKET OFF MARKET IN TENTIONALLY TO AVOID PAYMENT OF STT AND TO TAKE BENEFIT OF CARRY FORWARD OF LOSS OF RS. 1 13 79 400/- WHICH COULD NOT HAVE BEEN AVAILABLE IF THESE HAD BEEN AVAILABLE IF THESE HAD BEEN SOLD THROUGH THE STOCK EXCHANGE AFTER PAYMENT OF STT ON 1 ST OCTOBER 2004 THEREBY IGNORING THE CONTENTION OF THE APPELLANT THAT THE SHARES HAD ACTUALLY BEEN SOLD ON 30.09.2004. 3(B). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT COMPANY IS NOT ENTITLED TO CARRY FORWARD OF THE LONG TERM CAPITAL LOSS OF RS.1 13 58 364/- ON SALE OF 90 600 SHARES OF CES C AND 74 000 SHARES OF SMIFS CAPITAL MARKET. 13. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS CLAIMED LOSS OF RS.1 13 58 364/- ON SALE OF 90600 SHARES OF CESC AND 74000 SHARES OF SMIFS CAPI TAL MARKET. THE AO DURING THE COURSE 13 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 OF ASSESSMENT PROCEEDINGS NOTICED THAT THE SALE WAS MADE TO METAL CENTRAL LTD. (MCL) ON 30.09.2004 BY WAY OF OFF MARKET TRANSACTION AND PAY MENT WAS RECEIVED ON 04.10.2004. THE AO DISALLOWED THE CLAIM OF ASSESSEE BY OBSERVING AS UNDER: IT WAS ALSO SEEN THAT THE ASSESSEE HAS INCURRED A LOSS OF RS.1 13 58 364/- ON SALE OF 90600 SHARES OF CESC AND 74000 SHARES OF SMIFS CAPI TAL MARKET. THE A/R WAS ASKED TO FILE THE DETAIL OF SALE OF THE SHARES. FROM THE DE TAILS IT WAS NOTICED THAT THE SALE WAS MADE TO ONE MCL OF 4 MANGO LANE KOL-1 ON 30.09.20 04 AT A TOTAL CONSIDERATION OF RS.1 13 79 400/-. THE PAYMENT WAS RECEIVED BY THE ASSESSEE ON 04.10.2004. THE A/R WAS ASKED TO EXPLAIN WHY THE QUOTED SHARES HAVE NOT BEEN SOLD THROUGH ANY STOCK EXCHANGE. IN REPLY THE ASSESSEE ONLY STATED THAT T HE SALE OF SHARES WERE OFF MARKET TRANSACTIONS. IT MAY BE MENTIONED HERE THAT SECURI TY TRANSACTION TAX WAS ENFORCED FROM 01.10.2004 AND IF THE SHARES ERE SOLD THROUGH STOCK EXCHANGE THE STT HAD TO BE PAID ON THE TRANSACTION AND THE LTCG THAT ARISES SUBSEQUENT LY WILL BE EXEMPTED FROM THE TAX UNDER SECTION 10(38) OF THE I.T.ACT. IT IS A GENER AL PRINCIPLE THAT TRANSACTIONS ON WHICH ANY GAIN ARISES AND THE GAIN IS EXEMPT FROM TAX THE N LOSS IF ANY ARISES ON THE SAME TRANSACTIONS WILL NOT BE ALLOWED TO BE CARRIED FORW ARD OR SET OFF FROM ANY OTHER INCOME. ON THE DATE THE ASSESSEE HAS CALCULATED THE MARKET PRICE OF THE SHARE AND FOUND THAT HE IS GOING TO INCUR THE HUGE LONG TERM CAPITAL LOSS AFTE R TAKING COST INFLATION INDEX. THUS HE DELIBERATELY SOLD THE SHARES OFF MARKET TO AVO ID THE PAYMENT OF STT AND THERE BY TAKING THE BENEFIT OF CARRY FORWARD OF LOSS. IT MA Y ALSO BE OBSERVED THAT PAYMENT WAS NOT CREDITED INTO BANK ACCOUNT ON 30.09.2004 BUT ON 04 .10.2004. AS PER THE SEBIS GUIDELINES IF ANY QUOTED SHARES IS SOLD OFF MARKET THEN SPOT DELIVERY OF PAYMENT HAS TO BE COMPLETED IN THIS CASE THE PAYMENT WAS RECEIVED AFT ER 4 DAYS OF TRANSFER. FROM THE ABOVE CIRCUMSTANCES IT MAY BE CONDUCTED THAT THE ASSESSE E HAS INTENTIONALLY SOLD THE QUYOTED SHARES OFF MARKET TO AVAIL TWO BENEFITS VIZ. I) NOT TO PAY THE STT II) AND TAKE BENEFIT OF CARRY FORWARD OF HUGE LOSS WHICH WAS OTHERWISE NOT ALLOWABLE TO BE CARRIED FORWARD. THUS IT WAS A DELIBERATE AND COLOURFUL DEVISE TO DE FRAUD THE REVENUE. 14. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CI T(A) WHO CONFIRMED THE ACTION OF AO VIDE PARA 13 AND 14 OF HIS APPELLATE ORDER AS UNDER : 13. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS O F THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND SUBMISSIONS OF THE ASSESSEE. THE ASSESSEE HOLDS THE PAPER SHARES OF 90 600 SHARES OF CESC AND 74 000 SHARES OF SMIFS CAPITAL MARKET ON THURSDAY I.E. 30.9.2004. THE ASSESSEE HAS BEEN HOLDING THESE SHA RES SINCE LONG. HE SOLD THE SHARES OFF MARKET. THE STT WAS TO BECOME APPLICABLE FROM 1.10 .2004. THE PAYMENT WAS CREDITED IN THE ACCOUNT OF THE ASSESSEE ON 4.10.2004 . THE A SSESSEE HAS SUBMITTED THAT THE PAYMENT WAS RECEIVED ON 1.10.2004 IN LATE HOURS I.E. ARFTER THE CLOSE OF BANKING HOURS. THE PAYMENT CHEQUE WAS DEPOSITED ON 4.10.2004 IN THE AC COUNT OF THE ASSESSEE. AS PER THE SEBIS GUIDELINES IF ANY QUOTED SHARES IS SOLD OFF MARKET THEN SPOT DELIVERY OF PAYMENT HAS TO BE COMPLETED. THE ASSESSEE COULD FIND A BUY ER FOR A SALE OF SHARES AMOUNT TO RS.1 13 79 400/- BUT DID NOT RECEIVE THE PAYMENT IM MEDIATELY ON 30 TH SEPT. 2004 ON THE LAST DAY BEFORE THE STT BECOME APPLICABLE. THE BUYE R IS A TOTAL PERSON. THE ASSESSING OFFICER HAS LRIGHTLY POINTED OUT THAT THE ASSESSEE SOLD THESE SHARES OFF MARKET INTENTIONALLY TO AVOID PAYMENT OF STT AND TO TAKE B ENEFIT OF CARRY FORWARD OF LOSS OF RS.1 13 79 400/- WHICH COULD NOT HAVFE BEEN AVAILAB LE IF THESE HAVE BEEN SOLD THROUGH THE STOCK EXCHANGE AFTER PAYMENT OF STT ON 1 ST OCTOBER 2004. 14. THE ASSESSEE HAS VIOLATED THE GUIDELINES OF SEB I BY ANY TAKING PAYMENT ON SPOT AND DEPOSIT IF LAFTER 4 (FOUR) DAYS OF THE ALLEGED SALE . THE ASSESSEE IS WELL AWARE ABOUT THE GUIDELINES OF SEBI AND THE PROVISIONS OF LAW ON THE SE ISSUES AND SOME OF THE ASSOCIATED 14 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 COMPANIES OF THE GROUP ARE LISTED COMPANIES IN STOC K EXCHANGE. THE ASSESSEE DID NOT FOLLOW THE GUIDELINES OF SEBI STRICTLY AND USED COL OURFUL DEVICE TO AVOID STT PAYMENT AND TO CLAIM CARRY FORWAR4D OF LOSS. THEREFORE OBSERV ATIONS OF ASSESSING OFFICER ARE RIGHT AND THE GROUNDS OF APPEAL ARE DISMISSED. THE ASSES SEE IS NOT ALLOWED TO CARRY FORWARD THE LOSS OF RS.1 13 79 400/-. 15. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT BOTH THE LOWER AUTHORITIES HAVE CONCLU DED THAT THE ASSESSEE HOLDS PAPER SHARES 90600 OF CESC AND 74000 SHARES OF SMIFS CAPITAL MAR KET AND SOLD THE SAME TO ONE MCL ON 30.09.2004. ACCORDING TO LOWER AUTHORITIES THE SE CURITIES TRANSACTION TAX (STT) WAS BECAME APPLICABLE W.E.F. 01.10.2004 AND THE PAYMENT IN ASS ESSEES ACCOUNT WAS CREDITED ON 04.10.2004. THE ASSESSEE BEFORE THE LOWER AUTHORIT IES AS WELL AS BEFOR US CONTENDED THAT THE SALE CONSIDERATION WAS RECEIVED VIDE CHEQUE DATED 0 1.10.2004 IN THE LATE HOURS AND CHEQUE WAS DEPOSITED IN THE BANK ON 4 TH OCTOBER 2004 AND ULTIMATELY IT WAS CREDITED TO TH E ASSESSEES ACCOUNT ON 04.10.2004 IN VIEW OF THE FACT THAT 2 ND AND 3 RD OCTOBER 2004 WERE HOLIDAYS. THERE IS NO DISPUTE ON THE FACT THAT THIS IS OFF MARKET T RANSACTION AND THERE IS NO DENIAL TO THE FACT THAT AFOREMENTIONED SHARES WERE HELD IN PHYSICAL FORM. IT IS AN ADMITTED FACT THAT THE TRANSACTION OF SALE OF THESE SHARES TOOK PLACE ON 30.09.2004 AND C OPY OF SALE BILL IS ENCLOSED IN ASSESSEES PAPER BOOK AT PAGE 41. THE ASSESSEE ALSO RECEIVED PAYMENT ON THE VERY NEXT DAY OF TRANSACTION I.E. ON 01.10.2004 BUT ONLY DURING LATE HOURS AFTER THE CLOSE OF BANKING HOURS. THE CONSECUTIVE NEXT TWO DAYS BEING HOLIDAYS I.E. ON 2 ND AND 3 RD OCTOBER AS GANDHI BIRTHDAY AND SUNDAY RESPECTIVELY THE ASSESSEE WAS UNABLE TO DEPOSIT TH E CHEQUE AND PAYMENT WAS CREDITED IN ITS BANK ACCOUNT ONLY ON MONDAY I.E. ON 04.10.2004 IT MEANS THAT THERE IS NO DELAY ON THE PART OF THE ASSESSEE AND THERE IS NO VIOLATION OF ANY PROVI SIONS OF LAW. IN OUR VIEW THERE IS NO SHIFTING OF DATE BCAUSE THE TRANSACTION ACTUALLY TOOK PLACE ONLY ON 30.09.2004 MUCH BEFORE THE ENFORCEMENT OR APPLICABILITY OF STT. ONCE THERE IS NO SHIFTING OF DATE THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COU RT IN THE CASE OF UNION OF INDIA VS. AMBALAL SARABHAI ENTERPRISES LTD. (1984) 147 ITR 29 4 (GUJ) WHEREIN IT IS HELD (FROM HEADNOTES) THAT (III) THAT UNDER THE ORIGINAL SCHE ME OF AMALGAMATION IT WAS TO TAKE EFFECT FROM JULY 1 1981. UNDER THE MODIFIED SCHEME IT WAS TO TAKE EFFECT FROM APRIL 1 1980. IT WAS TRUE THAT INCIDENTALLY AS A RESULT OF THE SHIFTING OF TH E DATE THE TRANSFEREE-COMPANY WOULD GET THE ADVANTAGE OF SETTING OFF THE LOSS SUFFERED BY THE T RANSFEROR-COMPANY AS THIS LOSS WOULD BE TREATED AS LOSS OF THE TRANSFEREE-COMPANY BUT THAT COULD HARDLY BE CONSIDERED TO BE A GOOD OR SUFFICIENT GROUND FOR REFUSING TO SANCTION THE MODI FIED SCHEME. AVOIDANCE OF TAX LIABILITY BY SO ARRANGING COMMERCIAL AFFAIRS THAT CHARGE OF TAX IS DISTRIBUTED IS NOT PROHIBITED; 15 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 FURTHER HONBLE BOMBAY HIGH COURT IN THE CASE OF A VM CAPITAL SERVICES PRIVATE LIMITED CSP 670 OF 2011 WHEREIN IT HAS BEEN OBSERV ED AS UNDER: THE PURPOSE OF THE SCHEME IS TO PROVIDE LONG TERM STABILITY AND TRANSPARENCY IN THE TRANSFEREE COMPANY. THE TRANSFEROR COMPANIES ARE I N EXISTENCE SINCE 1975. IT WAS FELT THAT IT WOULD BE IN THE INTEREST OF THE TRANSFEREE COMPANY TO MERGE THE FIVE TRANSFEROR COMPANIES WITH THE TRANSFEREE COMPANY AND TO ENABL E THE PROMOTER THEREOF TO HOLD SHARES DIRECTLY IN THE TRANSFEREE COMPANY RATHER TH AN INDIRECTLY. THE OBJECT OF THE SCHEME IS NOT TO AVOID ANY TAX. EVEN TODAY THE SHA RES ARE OWNED/CONTROLLED BY THE SAME PROMOTER ALBEIT THROUGH THE TRANSFEOR COMPANIES. U NDER THE SCHEME THE ONLY DIFFERENCE IS THAT THE PROMOTER WILL NOW HOLD SHARES DIRECTLY IN THE TRANSFEREE COMPANY. IT IS CORRECTLY SUBMITTED BY THE TRANSFEREE COMPANY THAT THERE IS NOTHING ILLEGAL OR UNLAWFUL OR DUBIOUS OR COLOURFUL IN THE SCHEME AND THE SAME IS A PERFECTLY LEGITIMATE SCHEME AND PERMISSIBLE BY LAW. THEREFORE THE OBJECTION OF THE OBJECTOR THAT THE SCHEME IS A TAX AVOIDANCE DEVICE AND OUGHT NOT TO BE APPROVED STAN DS REJECTED. 16. IN VIEW OF THE ABOVE IT CAN BE SAFELY CONCLUDE D THAT THERE IS NO INFIRMITY IN THE SALE TRANSACTION OF THE ASSESSEE WHICH ACTUALLY HAPPENED ON 30.09.2004 AND NOT ON 01.10.2004. ACTUALLY CONTRACT WAS COMPLETED ONLY ON 30.09.2004 AND PAYMENT WAS CREDITED ON THAT VERY DAY OF SALE BUT IT WAS PAID ON NEXT DAY. ADMITTED P OSITION IS THAT SELLING OF PHYSICAL SHARES OFF MARKET WAS ON 30.09.2004. STT WAS MADE APPLICABLE W.E.F. 01.10.2004 AND TRANSACTION OF OFF MARKET SALE WAS CONCLUDED ON 30.09.2004 MUCH BEFORE THE DATE WHEN THE STT BECAME ENFORCEABLE HENCE THE ASSESSEE IS ELIGIBLE FOR AL L BENEFITS INCLUDING CLAIM OF LONG TERM CAPITAL GAINS OR LOSS. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 17. THE NEXT ISSUE IN ITA NO. 182/K/2012 FOR AY 200 6-07 IS AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN DISALLOWING L EGAL AND PROFESSIONAL CHARGES BY HOLDING THE SAME TO BE CAPITAL IN NATURE. FOR THIS ASSESS EE HAS RAISED FOLLOWING GROUND NO.3: 3(A). ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN DISALLOWING THE LEGAL AND P ROFESSIONAL CHARGES OF RS.9 17 450/- INCURRED LIN CONNECTION WITH THE RENEWAL OF LEASE/T ENANCY AGREEMENT BY CONSIDERING THE EXPENSE TO BE OF CAPITAL NATURE. 3(B). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN UPHOLDINGTHE ACTION OF THE AO IN DISALLOWING THE LE GAL & PROFESSIONAL CHARGES OF RS.9 17 450/- INCURRED IN CONNECTION WITH THE RENEW AL OF LEASE/TENANCY AGREEMENT BY FOLLOWING THE DECISION OF THE ITAT VISHAKHAPATNAM BENCH IN THE CASE OF ACIT VS. EFFTRONICS SYSTEMS (P) LTD. (2011) (133 ITD 460) IN PREFERENCE TO THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. SAMTEL COLO R LTD. (326 ITR 425). 18. BRIEFLY STATED FACTS ARE THAT DURING FY 2004-05 RELEVANT TO AY 2005-06 ASSESSEE GOT RIGHTS IN LAND SITUATED AT 34/1 DIAMOND HARBOUR RO AD KOLKATA AND LEASE RIGHTS IN PORT LANDS 16 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 PENDING RENEWAL BELONGING TO CALCUTTA PORT TRUST TH ROUGH THE SCHEME OF ARRANGEMENTS VIDE JUDGMENT OF HONBLE CALCUTTA HIGH COURT VIDE CO. PE TITION NO. 213 OF 2003 AND ANOTHER CO. APPLICATION NO. 132 OF 2003 DATED 19.05.2004. THES E STATEMENTS FACTS PAPERS/DOCUMENTS RELATING TO LEASEHOLD RIGHTS IN LAND AND PORT LAND ARE ALREADY ON RECORD OF THE ASSESSMENT FOR AY 2005-06 COMPLETED U/S. 143(3) OF THE ACT. THE ASSES SEE DURING THE RELEVANT AY 2006-07 CLAIMED LEGAL AND PROFESSIONAL CHARGES AMOUNTING TO RS.9 17 450/- FOR WHICH NECESSARY DETAILS INCLUDING BILLS AND VOUCHERS WERE FILED BEFORE THE AO. THE ASSESSEE CLAIMED THAT THESE EXPENSES ARE AGAINST THE SAID LEASEHOLD PROPERTY BE ING LEASEHOLD/TENANCY RIGHTS IN THE IMMOVABLE PROPERTY AT PORT LAND PENDING FOR RENEWAL BELONGING TO CALCUTTA PORT TRUST AND SEVERAL LEGAL MATTERS PENDING BEFORE HONBLE HIGH C OURT AT CALCUTTA DELHI AND HONBLE SUPREME COURT AND ALSO AT OTHER COURTS OF LAW IN CI VIL MATTERS FOR AND AGAINST THE ASSESSEE COMPANY. THE ASSESSEE CONTENDED THAT IN ORDER TO P ROTECT AND SAFEGUARD THE RIGHTS ENTITLEMENTS AND BENEFITS OF LEASEHOLD PROPERTY AT PORT LAND BEI NG THE ASSET OF THE ASSESSEE COMPANY THE COMPANY HAS INCURRED THESE LEGAL AND PROFESSIONAL E XPENSEX AND THE SAME WAS CLAIMED AS BUSINESS EXPENSES. THE AO TREATED THESE EXPENSES A S CAPITAL EXPENDITURE FOR THE REASON THAT THESE EXPENSES PRODUCE ENDURING BENEFITS FOR SEVERA L PREVIOUS YEARS AND HE DISALLOWED THE SAME. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED THE ACTION OF AO VIDE PARA 11 OF THE APPELLATE ORDER AS UNDER: 11. IN VIE OF THE JUDGMENT OF THE HONBLE ITAT VI SHAKHAPATNAM BENCH THE EXPENSES ON LEASE OF PROPERTY CAN ALSO BE CAPITAL IN NATURE ALTHOUGH INCURRED FOR THE RENOVATION OF PROPERTY. THE ASSESSEE HAS INCURRED AN EXPENDIT URE ON THE PROTECTION OF THE TITLE WHICH WILL LAST FOR ANOTHER 50 YEARS THE BENEFIT I S OF AN ENDURING AND CAPITAL IN NATURE ALSO BEING INCURRED FOR THE TITLE OF THE PROPERTY. THEREFORE THIS GROUND OF APPEAL IS DISMISSED AND THE ORDER OF THE ASSESSING OFFICER IS UPHELD. AGGRIEVED NOW ASSESSEE IS IN APPEAL BFORE US. 19. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAS FILED COMPLETE DETAILS OF LEGAL AN D PROFESSIONAL CHARGES PAID IN CONNECTION WITH SETTLING THE DISPUTES AND REGULARISING ITS LEA SEHOLD RIGHTS IN THE ABOVE PROPERTY. THUS IT IS CLEAR THAT THE EXPENDITURE ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES WAS INCURRED ONLY TO SAFEGUARD ITS INTEREST IN THE LEASEHOLD PROPERTY T HE RIGHTS OF WHICH WERE ALREADY TRANSFERRED IN FAVOUR OF THE ASSESSEE PURSUANT TO THE SANCTION OF SCHEME OF MERGER WAS INDEED IN THE NATURE OF REVENUE EXPENDITURE SINCE SAME WAS MADE IN THE COUR SE OF CARRYING ON THE BUSINESS OF THE ASSESSEE COMPANY. IT IS ALSO A FACT THAT THE ASSES SEE HAS NOT ACQUIRED ANY NEW ASSET BY VIRTUE OF 17 ITA NOS.1673/K/2011 & ITA NO.182/K/2012 M/S. PORTSIDE ESTATES LTD. AY:2005-06 & 2006-07 THIS EXPENDITURE AND ONCE THIS IS THE CASE THE EXPE NSES ARE ALLOWED AS REVENUE EXPENDITURE. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 20. IN THE RESULT BOTH APPEALS OF ASSESSEE ARE ALL OWED. 21. ORDER IS PRONOUNCED IN THE OPEN COURT ON 7 TH APRIL 2014. SD/- SD/- . . . . ' '' ''# '#'# '# $% (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 7 TH APRIL 2014 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . - / APPELLANT- M/S. PORTSIDE ESTATES LTD. 2. CLIVE GH AT STREET KOLKATA-700 001. 2 ./ - / RESPONDENT ITO WARD-5(2) KOLKATA. 3 . 0' ( )/ THE CIT(A) KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR KOLKATA BENCHES KOLKATA / ./ TRUE COPY $0'>/ BY ORDER ' /ASSTT. REGISTRAR .