ADDL CIT RG 10(1), MUMBAI v. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD, MUMBAI

ITA 2842/MUM/2011 | 2006-2007
Pronouncement Date: 23-10-2013 | Result: Dismissed

Appeal Details

RSA Number 284219914 RSA 2011
Assessee PAN AAACI0989F
Bench Mumbai
Appeal Number ITA 2842/MUM/2011
Duration Of Justice 2 year(s) 6 month(s) 11 day(s)
Appellant ADDL CIT RG 10(1), MUMBAI
Respondent INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 23-10-2013
Date Of Final Hearing 13-08-2013
Next Hearing Date 13-08-2013
Assessment Year 2006-2007
Appeal Filed On 11-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI . BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMBER . / ITA NO. 2842 /MUM./20 11 ( / ASSESSMENT YEAR : 200 6 07 ) ASSTT . COMMISSIONER OF INCOME TAX RANGE 1 0 ( 1 ) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .. / APPELLANT V/S M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD . PLOT NO.C 22 G BLOCK BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400 051 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAA CI0989F / REVENU E BY : MR. O.P. SINGH / ASSESSEE BY : MR. DILIP V. LAKHANI / DATE OF HEARING 13 .08.2013 / DATE OF ORDER 23.10.2013 / ORDER / PER AMIT SHUKLA J.M. THE PRESENT APPEAL HA S BEEN PREFERRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 31 ST JANUARY 2011 PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXI MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R/W SECTION 147 OF THE INCOME TAX ACT 1961 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 2 (FOR SHORT THE ACT) FOR THE ASSESSMENT YEAR 20 0 6 07 VIDE WHICH FOLLOWING GROUNDS HAVE BEEN RAISED: 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE REOPENING OF THE ASSE SSMENT U/S 147 WAS PURELY BASED ON CHANGE OF OPINION AND THEREFORE THE REOPENING WAS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE EXPENDITURE OF RS. 1 60 03 911/ - WAS INCURRED WHO LLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF SHARES OFFLOADED IN PUBLIC ISSUE AND THE EXPENDITURE WAS CORRECTLY CLAIMED BY THE ASSESSEE UNDER SECTION 48( 1) OF THE INCOME TAX ACT 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE LONG TERM CAPITAL GAINS ON SHARES ALLOTTED TO THE PUBLIC IN A PUBLIC ISSUE WAS TAXABLE AT THE RATE OF 10% AND NOT 20% AS COMPUTED BY THE ASSESSING OFFICER. 2 . FACTS IN BRIEF : THE ASSESSEE IS A COMPANY WHICH IS ENGAGED IN VARIOUS KIND OF PROJECT DEVELOPMENT AND FINANCIAL SERVICES AND HAS FILED ITS RETURN OF INCOME ON 28 TH NOVEMBER 2006 AT AN INCOME OF ` 83 59 73 203. ALONG WITH THE COMPUTATION OF INCOME THE ASSESSEE HAD ALSO SHOWN INCOME FROM SHORT TERM CAPI TAL GAIN AND LONG TERM CAPITAL GAIN. THIS ALSO INCLUDED INCOME FROM DIVESTMENT OF LISTED SHARES IN IL& FS INVEST MART LTD. OF ` 25 41 65 133 AFTER INDEXATION. AFTER DETAIL SCRUTINY THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED AT AN INCOME OF ` 142 51 48 030 VIDE ORDER DATED 29 TH DECEMBER 2008. THEREAFTER PROCEEDINGS UNDER SECTION 154 WERE INITIATED WITH REGARD TO CERTAIN MISTAKE S IN THE COMPUTATION OF TOTAL INCOME. ACCORDINGLY THE SAID MISTAKE WAS RECTIFIED UNDER SECTION 154 VIDE ORDER DATED 13 TH FE BRUARY 2009 AND THE ASSESSMENT WAS COMPLETED AT AN INCOME OF ` 205 59 07 357. AFTER THE COMPLETION OF THE ASSESSMENT IN THE AFORESAID MANNER THE ASSESSMENT WAS REOPENED UNDER SECTION 148 VIDE NOTICE DATED 28 TH FEBRUARY 2009 AFTER RECORDING THE FOLLOWING REASONS: 'RETURN OF INCOME WAS FILED BY THE ASSESSEE COMPANY ON 28.11.2006 DECLARING TOTAL INCOME AT RS.83 59 73 203/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OR 29.12.2008 AT TOTAL INCOME OF RS.142 51 48 030/ - . THEREAFTER ORDER U/S 154 THE ACT WAS PASSED O N 11.02.2009 REVISING THE TOTAL INCOME RS.205 59 07 357/ - . M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 3 IT IS NOTICED FROM THE INFORMATION AVAILABLE THAT THE EXPENSES OF RS.1 60 03 911/ - CLAIMED AS EXPENDITURE ON TRANSFER OF SHARES WHILE COMPUTING THE TAXABLE LONG TERM CAPITAL GAIN ON SALE OF IL&F S INVESTMART LTD. PERTAIN TO THE IPO OF SHARES BROUGHT OUT BY IL&FS INVESTMENT LTD. THE SAID EXPENSES WERE NOT INCURRED BY THE ASSESSEE C OMPANY. FURTHER THE SAID EXPENSES INCURRED FOR THE PURPOSE OF IPO BY LL&FS INVESTMART LTD. CANNOT BE CONSIDERED AS EXP ENSES INCURRED BY THE ASSESSEE COMPANY WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF CAPITAL ASSET VIZ. THE SAID SHARES FOR THE PURPOSE OF LONG TERM CAPITAL GAIN. HENCE I AM OF THE VIEW THAT INCOME TO THE EXTENT OF THE SAID CLAIM OF EXPENSES OF RS .1 60 03 911/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF THE PROVISIONS OF SECTION 147 OF THE ACT. THEREFORE NOTICE U/ S 148 OF THE ACT IS HEREBY ISSUED. 3 . IN THE RE ASSESSMENT ORDER THE ASSESSING OFFICER OBSERVED THAT WHILE COMPUTING THE CAPITAL GAIN ON SALE OF IL&FS I NVESTM AR T LTD. THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION OF ` 1 60 03 911 IN RELATION TO THE PROPORTIONA TE EXPENDITURE REIMBURSED TO IL& FS INVESTM AR T LTD. WHICH HAD INCURRED THE SAID EXPENDITURE IN RELATION TO ITS PUBLIC ISSUE TO BE OF FERED. THE INVOICES OF THE EXPENDITURE RAISED BY IL & FS WERE AS UNDER: COURIER EXPENSES ` 10 51 488 LEAD MANAGER FEES & SELLING COMMISSION CHARGES ` 1 06 98 430 PRINTING & STATIONERY ` 26 40 040 REGISTRATION CHARGES ` 16 13 953 4 . THE ASSESSING OFF ICER CONCLUDED THAT THESE EXPENDITURES HAVE NOT BEEN INCURRED BY THE ASSESSEE COMPANY BU T BY IL& FS INVESTMENTS THEREFORE IT CANNOT BE THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF ASSESSEES SHARE . ACCORDINGLY HE HEL D THAT THESE EXPENDITURE S INCURRED BY OTHER COMPANY AND REIMBURSED BY THE ASSESSEE CANNOT BE DEDUCTED WHILE COMPUTING THE CAPITAL GAIN UNDER SECTION 48. 5 . BEFORE THE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE HAD SUBMITTED THAT THE ASSESSEE WAS ONE OF TH E PROMOTERS OF IL&FS INVESTMART M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 4 LTD. IN WHICH THE ASSESSEE HAD INVESTMENTS IN ITS SHARES. THE SAID COMPANY HAD MADE A PUBLIC ISSUE IN THE FINANCIAL YEAR 2005 06 OF 88 00 000 SHARES. THE ASSESSEE BEING ONE OF THE SHAREHOLDERS OFFERED 26 00 000 SHARES TO THE PUBLIC. THIS ASPECT WAS DULY MENTIONED IN THE PROSPECTUS ISSUED TO THE PUBLIC AND APPROVED BY THE SEBI. THE MARKET PRICE PER SHARE WAS DETERMINED AT ` 125 PER SHARE WHICH WAS REALIZED BY THE ASSESSEE. THIS RESULTED INTO AGGREGATE SALE CONSIDERATION OF ` 3 2 50 000 ON WHICH CAPITAL GAIN WAS SHOWN AND OFFERED. THE WORKING OF THE CAPITAL GAIN WAS SHOWN AS UNDER: A . SALE CONSIDERATION ` 32 50 00 000 B . COST OF SHARES ` 5 48 30 956 C . SELLING & DISTRIBUTION EXPENSES ` 1 60 03 911 D . NET CAPITAL GAINS ` 25 41 65 133 IT WAS ALSO SUBMITTED BEFORE THE LEARNED COMMISSIONER (APPEALS) THAT THE DETAILS OF INVESTMENTS SOLD DURING THE YEAR WAS FURNISHED BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS INCLUDING THE COST OF EXPENSES INCURRED TOW ARDS THE SALE OF SHARES. IN THE RECTIFICATION ORDER PASSED UNDER SECTION 154 THE ASSESSING OFFICER HAS EVEN COMPUTED THE LONG TERM CAPITAL GAIN WHICH SHOWS THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND HENCE SUCH A RE OPENING AMOUNTS TO CHANGE OF OPI NION AND RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN CIT V/S KALVINATOR OF INDIA [ 2010] 320 ITR 561 (SC ). 6 . THE LEARNED COMMISSIONER (APPEALS) AFTER EXAMINING THESE FACTS CAME TO THE CONCLUSION THAT SUCH A RE OPENING ON THESE FAC TS AMOUNTS TO CHANGE OF OPINION . THE RELEVANT FINDINGS ON THIS ISSUE AS RECORDED BY THE LEARNED COMMISSIONER (APPEALS) IS REPRODUCED HEREIN BELOW: 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. DURING THE YEAR THE APPELLANT SOLD THE SHARES OF IL & FS INVESTMENT LTD. AND THE CAPITAL GAIN THEREON WAS DULY SHOWN BY THE APPELLANT IN THE RETURN OF INCOME. THE APPELLAN T' S RETURN OF INCOME WAS SELECTED FOR SCRUTINY. DURING ORIGINAL ASSESSMENT PROCEEDINGS THE AO VIDE POINT NO. 18 & 19 OF THE QUESTI ONNAIRE ANNEXED TO THE NOTICE U ] S.142(1) ASKED FOR THE DETAILS OF CAPITAL GAINS AND DETAILS OF M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 5 INVESTMENTS SOLD DURING THE YEAR. THE APPELLANT FILED DETAILS OF CAPITAL GAINS ALONG WITH OTHER DETAILS I.E. DETAILS OF SALES CONSIDERATION THE COST THE EXPENS ES TOWARDS SALES OF SHARES ETC. THESE DETAILS WERE FILED BY THE APPELLANT DURING ORIGINAL ASSESSMENT PROCEEDINGS. THE AO DID NOT MAKE ANY ADDITION/DISALLOWANCES ON THIS ISSUE AND DID NOT MAKE ANY DISCUSSION IN THE ASSESSMENT ORDER. IN FACT THE AO OMITTED TO ASSESS/BRING TO TAX THE CAPITAL GAINS OFFERED BY THE APPELLANT. THIS OMISSION WAS RECTIFIED BY THE AO VIDE ORDER U/S 154 PASSED ON 13 - 02 - 2009. THUS APPELLANT'S ARGUMENT APPEARS TO BE CORRECT THAT DURING ORIGINAL ASSESSMENT PROCEEDINGS THE AO CONSIDERE D THIS ISSUE AND FORMED AN OPINION THAT THE EXPENDITURE CLAIMED BY THE APPELLANT ON ACCOUNT OF SALE OF SHARES WAS CORRECT. THEREFORE THE CASE UNDER CONSIDERATION WAS CORRECTLY A CASE OF CHANGE OF OPINION ON THE SAME SET OF FACTS WHICH WERE ALREADY CONSIDE RED BY THE AO DURING ORIGINAL ASSESSMENT PROCEEDINGS. SINCE THE ASSESSMENT WAS REOPENED WITHIN FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR THEREFORE THE CONDITION - OF FAILURE ON THE PART OF APPELLANT TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WAS NOT APPLICABLE. HOWEVER THE HONOURABLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA (SUPRA) HAS HELD THAT THE REOPENING ON THE BASIS OF CHANGE OF OPINION IS NOT PERMISSIBLE UNDER THE ACT/LAW EVEN WITHIN FOUR YEARS FROM THE END OF RELEVANT ASSESS MENT YEAR. IN THE FACTS AND CIRCUMSTANCES IT IS HELD THAT THE REOPENING WAS PURELY BASED ON CHANGE OF OPINION AND THEREFORE THE REOPENING WAS BAD IN LAW. EVEN ON MERITS ALSO THERE WAS NO CASE FOR DISALLOWING APPELLANTS CLAIM OF EXPENSES INCURRED ON AC COUNT OF SALE / TRANSFER OF SHARES. 7 . THEREAFTER THE LEARNED COMMISSIONER (APPEALS) HAS PROCEEDED TO CONSIDER THE MATTER ON MERITS ALSO. FROM THE MATERIAL PLACED ON RECORD THE LEARNED COMMISSIONER OBSERVED THAT IL&FS INVESTMART LTD. HAD INCURRED THE EXP ENDITURE IN RELATION TO THE INITIAL PUBLIC OFFER AND ASSESSEES PROPORTIONATE SHARE OF SUCH AN EXPENDITURE WAS AT ` 1 60 03 911. A COPY OF INVOICES IN THIS REGARD WHICH WERE FILED BEFORE THE ASSESSING OFFICER WAS ALSO NOTED BY H IM AND FURTHER THAT THE TOT AL EXPENDITURE INCURRED WAS ` 7 01 70 994 FOR THE TOTAL SHARES OF 1 14 000 WHEREAS THE ASSESSEE HAD OFFERED SALE OF 26 00 000 SHARES WHICH I S 22.81% OF THE TOTAL SHARES OFFERED. IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED COMMISSIONER (APPEA LS) THAT IF THE ASSESSEE WOULD HAVE TRIED TO SELL THESE SHARES INDEPENDENTLY THEY COULD NOT HAVE REALIZED THE SHARE PRICE VALUE OF ` 125 PER SHARE. THE PUBLIC ISSUE REQUIRES A LOT OF EXPENDITURE AND THEREFORE ANY EXPENDITURE INCURRED HAS TO BE ALLOWED A S DEDUCTION WHILE COMPUTING CAPITAL GAIN UNDER SECTION 48(1). M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 6 THIS EXPENDITURE WAS SOLELY AND EXCLUSIVELY CONNECTED WITH THE TRANSFER OF SHARES TO THE PUBLIC. A CERTIFICATE TO THIS EFFECT WAS ALSO FURNISHED FROM IL&FS INVESTMART LTD. THE LEARNED COMMISSION ER (APPEALS) AFTER EXAMINING THESE FACTS ALLOWED THE DEDUCTION AND ACCEPTED THE ASSESSEES CLAIM AFTER OBSERVING AND HOLDING AS UNDER: 3.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. AS PER PROVISIONS T O SECTION 48 THE EXPENDITURE INCURRED WHO LLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES WAS ALLOWABLE AS A DEDUCTION FOR COMPUTING THE CAPITAL GAINS. THERE IS NO RESTRICTION IN THE ACT AS TO HOW THE SHARES SHOULD BE SOLD I.E. THROUGH STOCK EXCHANGE THROUGH DIRECTED TRANSACTION WITH TH E CUSTOMER OR THROUGH SALE IN PUBLIC ISSUE OF SHARES. EVEN OTHERWISE THE AC HAS NOT DISCUSSED THAT THE SHARES SHOULD HAVE BEEN SOLD THROUGH STOCK EXCHANGE AND NOT IN PUBLIC ISSUE OF SHARES. IN THE CASE UNDER CONSIDERATION IN FACT THE AO FAILED TO CORRECT LY APPRECIATE THE FACTS OF THE CASE I.E. M ADE ON TRANSACTION. THE APPELLANT WAS HOLDING SHARES OF IL&FS INVESTMENT LTD. AS AN PROMOTER OF THE COMPANY. THE SAID COMPANY OFFERED A PUB LIC ISSUE OF SHARES TO THE PUBLIC AT LARGE. IN THE SAID PUBLIC ISSUE THE A PPEL LANT ALSO OFFLOADED ITS SHARES IN THE SAID COMPANY BY OFFERING THE SAME TO THE PUBLIC. THUS THE APPELLANT SOLD ITS SHAREHOLDING THROUGH PUBLIC ISSUE. THE TOTAL EXPENDITURE OF THE PUBLIC ISSUE WAS SHARED BY THE APPELLANT WITH M / S . IL&FS LTD. IN PROPORTIO N TO HARES SOLD. THUS THE APPELLANT DID' NOT CLAIM THE ENTIRE EXPENDITURE OF PUBLIC ISSUE BUT CLAIMED ONLY ITS SHARE OF EXPENDITURE IN THE PUBLIC ISSUE. ADMITTEDLY THIS EXPENDITURE WAS INCURRED BY THE APPELLANT WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SUCH SHARES OFFLOADED IN PUBLIC ISSUE BY OFFERING THE SAME TO THE PUBLIC AT LARGE. IN THE FACTS AND CIRCUMSTANCES THE EXPENDITURE WAS CORRECTLY CLAIMED BY THE APPELLANT UNDER SECTION 48(1) OF THE ACT. THEREFORE THE AO WAS NO T JUSTIFIED IN DIS ALLOWING APPELLANTS CLAIM. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 8 . THERE WAS ANOTHER ISSUE WHETHER LONG TERM CAPITAL GAIN ON SALE OF SHARES IN THE PRESENT CASE WOULD BE TAXED @ 20% OR @ 10%. IT WAS ARGUED BY THE ASSESSEE THAT THE LONG TERM CAPITAL G AIN IN RESPECT OF LISTED SECURITIES HAS TO BE TAXED @ 10% AND THE ASSESSEE HAD OPTED NOT TO AVAIL INDEXATION AND THE CORRECT RATE OF TAX WAS 10% AND NOT 20% AS PER SECTION 112 OF THE ACT. THE LEARNED COMMISSIONER (APPEALS) ACCEPTED THIS CONTENTION ON THE G ROUND THAT THESE SHARES WERE ALLOTTED TO THE PUBLIC AFTER LISTING OF THE SAID SHARES ON THE STOCK EXCHANGE . THE PUBLIC AT LARGE WOULD NOT PURCHASE ANY UNLISTED SHARES. THUS THE CORRECT RATE OF TAX SHOULD BE AT 10%. ACCORDINGLY M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 7 THE LEARNED COMMISSIONER (A PPEALS) ALLOWED THE ASSESSEES APPEAL. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 9 . THE LEARNED DEPARTMENTAL REPRESENTATIVE BEFORE US SUBMITTED THAT FIRST OF ALL IT IS NOT A CASE OF CHANGE OF OPINION BECAUSE THE ASSESSING OFFICER HAS NE ITHER FORMED ANY OPINION IN THE ORDER PASSED UNDER SECTION 143(3) / 154 NOR THERE IS ANY MENTION OR DISCUSSION ON THIS ISSUE . THEREFORE THE REOPENING HAS RIGHTLY BEEN DONE BY THE ASSESSING OFFICER FOR THE PURPOSE OF EXAMINING OF DEDUCTION OF EXPENSES UNDE R SECTION 48(2). ON THE ISSUE OF ALLOWABILITY OF EXPENSES HE STRONGLY RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER. REGARDING 3 RD ISSUE OF APPLICABILITY OF RATE HE SUBMITTED THAT THESE SHARES WERE THROUGH IPO WHEN IT WAS NOT LISTED. THE LISTING OF S HARES WAS A SUBSEQUENT EVENT AND THEREFORE THE RATE OF TAX APPLICABLE SHOULD BE 20%. 10 . THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT ONCE THE ASSESSING OFFICER HAD REQUIRED THE REQUISITE DETAILS DURING THE COURSE OF ORIGINAL ASSE SSMENT PROCEEDINGS IN THE QUESTIONNAIRE ISSUED ALONG WITH THE NOTICE UNDER SECTION 142(1) AND IN RESPONSE THESE DETAILS HAVE BEEN FURNISHED THEN IT IS A NORMAL PRESUMPTION THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND AND FORMED HIS OPINION. THE COMPUTA TION OF CAPITAL GAIN WAS ALSO MADE BY THE ASSESSING OFFICER IN HIS ORDER UNDER SECTION 154. THUS TO RE EXAMINE THE NATURE OF EXPENSES IN THE COMPUTATION OF CAPITAL GAIN AMOUNTS TO CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN THE LAW. HE THUS STRONGLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) ON THIS SCORE. ON MERITS HE SUBMITTED THAT THE ASSESSEE HAD SUBMITTED THE DETAILS OF ENTIRE EXPENSES WHICH WAS INCURRED BY IL&FS AND ALSO THE PROPORTIONATE SHARES OF THE EXPENDITURE WHICH WAS TO BE SHARED BY THE ASSESSEE. THE ASSESSEE HAD SOLD 26 00 000 SHARES AND PROPORTIONATE EXPENDITURE RELATING TO IPO WAS THE LIABILITY OF THE ASSESSEE WHICH HAS BEEN PAID. THEREFORE SUCH AN EXPENDITURE HAS TO BE ALLOWED WHILE COMPUTING THE CAPITAL GAIN UND ER SECTION 48(1). ON THIS ISSUE HE STRONGLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). ON THE APPLICABILITY OF RATE M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 8 OF TAX HE SUBMITTED THAT THE DATE OF SALE DEED IS 21 ST JULY 2005 AND IT WAS A LISTED SECURITY. ON THE DATE OF ALLOTME NT TO THE PUBLIC IT IS A LISTED SECURITY AND NOT UNLISTED. THIS ISSUE HAS ALSO BEEN CLARIFIED FROM THE SEBI. THUS THE CORREC T RATE APPLICABLE SHOULD BE 10% ONLY AS PER SECTION 112. 11 . WE HAVE HARD THE RIVAL CONTENTIONS PERUSED THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER (APPEALS) AND THE MATERIAL AVAILABLE ON RECORD. THE MAIN DISPUTE IN THE PRESENT APPEAL IS DISALLOWANCE OF THE CLAIM OF EXPENDITURE OF ` 1 60 03 911 IN COMPUTATION OF CAPITAL GAIN WHICH WAS ON ACCOUNT O F EXPENDITURE INCURRED IN CONNECTION WITH THE TRANSFER OF CAPITAL ASSET RESULTING INTO LONG TERM CAPITAL GAIN. ON A PERUSAL OF THE RECORDS IT IS SEEN THAT THE COMPUTATION OF THE INCOME AS WELL AS THE EXPENDITURE WERE SUBMITTED BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. WHILE COMP LE TING THE ASSESSMENT UNDER SECTION 143(3) THE ASSESSING OFFICER HAS NOT MADE ANY COMPUTATION IN THE ASSESSMENT ORDER. HOWEVER I N THE PROCEEDINGS UNDER SECTION 154 HE HAS ACCEPTED THE COMPUTATIO N AS SHOWN BY THE ASSESSEE. WITHOUT G OING INTO THE ISSUE OF WHETHER THE RE OPENING IS ON ACCOUNT OF CHANGE OF OPINION OR NOT WE WOULD FIRST LIKE TO DISCUSS THE MERITS OF THE CASE. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAD OFFERED SALE OF ` 26 00 00 0 SHARES TO THE PUBLIC WHICH WAS PART OF THE ENTIRE LOT OF SHARES OFFERED TO THE PUBLIC. THE IL&FS HAS INCURRED THE EXPENDITURE AGGREGATING TO ` 7 01 70 994 FOR THE SAID IPO I.E. THE PUBLIC OFFER FOR THE ENTIRE SHARES INCLUDING THAT OF THE ASSESSEE. THE P ROPORTIONATE EXPENDITURE RELATING TO THE ASSESSEE AGGREGATED TO ` 1 60 03 911 AS PER THE DETAILS MENTIONED IN THE FORGOING PARAGRAPHS. IN SUPPORT OF THIS A CERTIFICATE FROM IL&FS WAS ALSO PLACED BEFORE THE AUTHORITIES BELOW WHICH HAS NOT BEEN DISPUTED. TH US THE PROPORTIONATE EXPENDITURE WHICH HAS BEEN PAID BY THE ASSESSEE TO THE IL&FS WAS ASSESSEES LIABILITY AND DIRECTLY RELATES TO SALE OF SHARES I.E. TRANSFER OF CAPITAL ASSET. THUS T HE FINDING RECORDED BY THE LEARNED COMMISSIONER (APPEALS) AFTER VERIF YING THE ENTIRE RECORDS AS DISCUSSED ABOVE IS FACTUALLY AND LEGALLY CORRECT AND THERE IS NO REASON TO DEVIATE FROM SUCH FINDINGS. M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 9 THEREFORE ALLOWING THE CLAIM OF DEDUCTION OF SUCH AN EXPENDITURE UNDER SECTION 48 BY THE LEARNED COMMISSIONER (APPEALS) IN TH E COMPUTATION OF LONG TERM CAPITAL GAIN IS HEREBY UPHELD. 12 . OTHERWISE ALSO WE AGREE WITH THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) THAT THE LONG TERM CAPITAL GAIN WAS IN RESPECT OF LISTED SECURITIES AND THEREFORE THE RATE OF TAX SHOULD BE 10% A ND NOT 20% AS PER SECTION 112 BECAUSE FOR A PUBLIC ISSUE THE SHARES HAVE TO BE LISTED AT THE STOCK EXCHANGE AND THEN ONLY THEY ARE ALLOTTED TO THE PUBLIC IN THE RATIO APPROVED BY THE STOCK EXCHANGE . IT IS AFTER LISTING THE PUBLIC RECEIVES THE SHARES AND I S ALSO ENTITLED TO SELL THE SHARES IN THE STOCK EXCHANGE. THUS THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) ON THIS SCORE IS ALSO UPHELD . ONCE THAT IS SO THE OTHER ISSUES BECOME PURELY ACADEMIC. SINCE WE HAVE ALREADY UPHELD THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) ON MERITS WE DO NOT WISH TO GIVE OUR CONCLUSION ON THE VALIDITY OF RE OPENING ON THE GROUND OF CHANGE OF OPINION . CONSEQUENTLY TECHNICALLY SPEAKING THE GROUND S RAISED BY THE REVENUE ARE TREATED AS DISMISSED. 13 . 12 . IN THE RESULT REVENUES APPEAL IS TREATED AS DISMISSED . 23 RD OCTOBER 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER 2013 SD/ - . B. RAMAKOTAIAH AC COUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI DATED : 23 RD OCTOBER 2013 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD 10 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE C IT(A ) ; ( 4 ) / THE CIT MUMBAI CITY CONCERNED ; ( 5 ) / THE DR ITAT MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI