Almonds Capital & Management Services Ltd, New Delhi v. ACIT Circle 1 (1), New Delhi

ITA 4714/DEL/2007 | 2003-2004
Pronouncement Date: 08-01-2010 | Result: Allowed

Appeal Details

RSA Number 471420114 RSA 2007
Bench Delhi
Appeal Number ITA 4714/DEL/2007
Duration Of Justice 2 year(s) 1 month(s) 3 day(s)
Appellant Almonds Capital & Management Services Ltd, New Delhi
Respondent ACIT Circle 1 (1), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 08-01-2010
Date Of Final Hearing 21-12-2009
Next Hearing Date 21-12-2009
Assessment Year 2003-2004
Appeal Filed On 05-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI R.P.TOLANI AND SHRI A.K.GARODIA ITA NO.4714/DEL/2007 ASSESSMENT YEAR : 2003-04 ALMONDZ CAPITAL & MANAGEMENT SERVICES LTD. 3 SCINDIA HOUSE 3 RD FLOOR JANPATH NEW DELHI. VS. ASSTT. CIT CIRCLE 1(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT JAIN ADVCATE RESPONDENT BY : MS. PRATIMA KAUSHIK SR.D.R. ORDER PER A.K.GARODIA AM: THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT(A)- IV NEW DELHI DATED 04/10/2009 FOR ASSESSMENT YEAR 2003-04. 2. THE GROUND RAISED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LOWE R AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN INCREASING THE APPARENT CONSIDERATION BY RS.9 81 800/- ON TRANSFER OF CERTA IN SHARES BY THE ASSESSEE COMPANY TO ITS ASSOCIATE COMPANY AT IT S COST PRICE BY ADOPTING AN AD HOC FORMULA FOR VALUATION OF UNQU OTED SHARE. 2. ON FACTS AND CIRCUMSTANCES LEARNED ASSESSING OF FICER HAS FAILED TO NOTICE THAT THE AGGREGATE BOOK VALUE (ALL ASSET LIABILITIES) OF ALL IMPUGNED SHARES OF 12 COMPANIES WHOSE SHARES WERE TRANSFERRED TO THE ASL AMOUNTED TO RS.1 04 25 30O/- AS AGAINST APPARENT CONSIDERATION (AT COST TO ASSESSEE) OF RS.1 51 50 000/- THUS RESULTING IN ACT UAL BOOK LOSS OF RS.47 24 700/- AND THUS ARBITRARILY APPLYING THE AFORESAID 2 METHOD OF VALUATION OF UNQUOTED SHARES TO SPECIFIC SHARES INSTEAD OF APPLYING THE METHOD TO ALL SHARES UNDER CONSIDERATION WITH ALL DISREGARD TO THE PRINCIPLES OF CONSISTENCY. 3. BRIEF FACTS ARE THAT IT IS NOTED BY THE ASSESSIN G OFFICER IN PARAGRAPH NO.3 OF THE ASSESSMENT ORDER THAT DURING THIS YEAR THE ASSESSEE HAS CLAIMED CAPITAL LOSS ON ACCOUNT OF SALE OF SHARES HELD BY I T AS INVESTMENT. HE NOTED THAT THESE SHARES WERE SOLD BY THE ASSESSEE TO ITS SISTER CONCERN. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT SOME OF SHARES WERE SOLD BELOW THE BOOK VALUE AS PER DETAILS NOTED IN THE ASSESSMENT ORDER. IT IS NOTED BY THE ASSESSING OFFICER ON PAGE 2 OF THE ASSESSMENT ORDER THAT 75 000 SHARES OF PRITI MERCANTILE CO. LTD. WERE SOLD AT A PRICE OF R S.10 PER SHARE WHEREAS THE BOOK VALUE OF THESE SHARES AS PER BALANCE SHEET OF THAT COMPANY IS RS.19.60 PER SHARE. THE ASSESSING OFFICER HAS WORKED OUT A D IFFERENCE OF RS.7.20 LACS BEING THE EXCESS OF BOOK VALUE OVER THE SALE VALUE. ACCORDINGLY REGARDING THE SHARES OF DELHI LIQUORS LIMITED IT IS NOTED BY THE ASSESSING OFFICER THAT 1 40 000 SHARES OF THIS COMPANY WERE SOLD AT RS.10 PER SHARE WHEREAS BOOK VALUE OF THESE SHARES AS PER BALANCE SHEET OF THAT COMPANY IS RS.11.87 PER SHARE. THE ASSESSING OFFICER HAS WORKED OUT A DIFFE RENCE OF RS.2 61 800/- BEING THE EXCESS OF BOOK VALUE OVER SALE VALUE. REG ARDING THE SALE OF THESE TWO SHARES THE ASSESSING OFFICER MADE AN ADDITION OF RS.9 81 800/- BY HOLDING THAT REGARDING SALE OF THESE SHARES THE AS SESSEE HAS ACCOUNTED LESSER AMOUNT OF SALE CONSIDERATION AND AS A RESULT CLAIME D EXCESS CAPITAL LOSS. HE MADE ADDITION ON THIS ACCOUNT. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT ON PAGE NO.4 OF THE PAPER BOOK IS THE COMPLETE DETAILS OF ALL THE SHARE S SOLD BY THE ASSESSEE AS A 3 BLOCK DEAL. IT IS SUBMITTED THAT THERE ARE SHARES O F 12 COMPANIES AND OUT OF THE SAME ONLY IN TWO CASES THE BOOK VALUE IS HIGHER THAN SALE CONSIDERATION. IT IS ALSO POINTED OUT THAT TOTAL SALE CONSIDERATIO N DECLARED BY THE ASSESSEE IS RS.151.50 LACS AS AGAINST THE TOTAL BOOK VALUE OF T HESE 12 SHARES BEING ONLY RS.104.25 LACS AND HENCE EVEN IF THE TOTAL BOOK VA LUE IS CONSIDERED THAN ALSO THE ASSESSEE HAS DECLARED MORE SALE CONSIDERAT ION AS COMPARED TO BOOK VALUE IN 10 SHARES OUT OF TOTAL 12 SHARES. IN SUPPO RT OF THIS CONTENTION THAT IT WAS A BLOCK DEAL THE LD. A.R. OF THE ASSESSEE SUBM ITTED A COPY OF BOARD RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE ASSESSEE COMPANY AT ITS MEETING HELD ON 30/1/2002. IT IS ALSO SUBMITTED THA T INSTEAD OF WORKING OUT BOOK VALUE OF ALL THESE SHARES AND FIXING THE SALE PRICE ACCORDING TO THAT ALL THE SHARES WERE SOLD AT PAR I.E. AT FACE VALUE OF T HESE SHARES AND HENCE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDIT ION ON THIS ACCOUNT ON THE BASIS OF DIFFERENCE IN SALE VALUE AND BOOK VALUE IN CASE OF TWO SHARES OUT OF TOTAL 12 SHARES. THE LD. D.R. OF THE REVENUE SUPPOR TED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORI TIES BELOW. WE FIND THAT IT IS AN ADMITTED POSITION THAT SHARES WERE SOLD BY THE ASSESSEE COMPANY TO A SISTER CONCERN AND THE ENTIRE BLOCK OF 12 SHARES WE RE SOLD AS A BLOCK DEAL BY WAY OF BOARD RESOLUTION OF THE SAME DATE. THE SALE WAS MADE IN ORDER TO LIQUIDATE THE OUTSTANDING POSITION. AS PER THE CO NFIRMATION AVAILABLE ON PAGE 202 OF THE PAPER BOOK THERE WAS AN AMOUNT OUT STANDING OF RS.154.81 LACS AND ALL THESE 12 SHARES WERE SOLD AS A BLOCK D EAL TO LIQUIDATE ITS OUTSTANDING. THE CASE OF THE ASSESSING OFFICER IS T HAT SINCE THE BOOK VALUE IS HIGHER IN THE CASE OF TWO COMPANIES SHARES OF THOS E COMPANIES CANNOT BE SOLD AT A LESSER PRICE. IN THE FACTS AND CIRCUMSTAN CES OF THE PRESENT CASE WE 4 ARE NOT IN AGREEMENT WITH THE AUTHORITIES BELOW ON THIS ACCOUNT BECAUSE ONLY BOOK VALUE OF THE SHARES OF ANY COMPANY CANNOT BE THE YARDSTICK TO DETERMINE ITS SALEABLE VALUE. IF THAT BE SO THEN H OW THE SHARES OF OTHER 10 COMPANIES CAN FETCH HIGHER PRICE. WE FIND THAT AS P ER THE DETAILS AVAILABLE ON PAGE NO.4 OF THE PAPER BOOK AGAINST THE BOOK VALUE OF SHARES OF RS.1.34 PER SHARE THE ASSESSEE IS SHOWING SALE OF SHARES OF BL ACK PATRIDGE HOLDING PVT. LTD. AT RS.10 PER SHARE AND AGAINST THE BOOK VALUE OF RS.4.69 LACS ONLY THE SALE CONSIDERATION SHOWN BY THE ASSESSEE IS RS.35 L ACS. NO OTHER BASIS HAS BEEN SHOWN BY THE ASSESSING OFFICER TO HOLD THAT TH ESE TWO SHARES IN QUESTION WERE SOLD BY THE ASSESSEE AT A HIGHER PRIC E BUT LESS AMOUNT OF SALE CONSIDERATION WAS DISCLOSED. IF THE ASSESSEE WOULD HAVE WANTED TO SHOW LESSER SALE PRICE HE COULD HAVE EASILY DONE IT BY SHOWING SALE OF ALL 12 SHARES AT BOOK VALUE OF RS.104.25 LACS AS AGAINST R S.151.50 LACS SHOWN BY THE ASSESSEE. CONSIDERING ALL THESE FACTS WE ARE O F THE CONSIDERED OPINION THAT NO ADDITION CAN BE MADE ON THIS BASIS ALONE TH AT SINCE THE BOOK VALUE IS HIGHER THE SALE CONSIDERATION SHOWN BY THE ASSESSE E IS NOT CORRECT. WE THEREFORE DELETE THIS ADDITION. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . DECISION PRONOUNCED IN THE OPEN COURT ON 8TH JANUAR Y 2010. SD/- SD/- (R.P.TOLANI) (A.K.GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08.01.2010 PSP 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR