DCIT, New Delhi v. Sh. Sanjay Chandra, New Delhi

ITA 5230/DEL/2014 | 2011-2012
Pronouncement Date: 08-11-2019 | Result: Dismissed

Appeal Details

RSA Number 523020114 RSA 2014
Assessee PAN AACPC5804C
Bench Delhi
Appeal Number ITA 5230/DEL/2014
Duration Of Justice 5 year(s) 1 month(s) 14 day(s)
Appellant DCIT, New Delhi
Respondent Sh. Sanjay Chandra, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2019
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 08-11-2019
Assessment Year 2011-2012
Appeal Filed On 24-09-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER AND SHRI B.R.R. KUMAR ACCOUNTANT MEMBER I.T.A. NO.5230/DEL/2014 ASSESSMENT YEAR: 2011-12 DCIT CIRCLE-18(1) NEW DELHI. VS. SHRI SANJAY CHANDRA C-41 MAYFAIR GARDEN NEW DELHI. TAN/PAN: AACPC5804C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.S. RANA CIT-DR RESPONDENT BY: S/SHRI SALIL AGARWAL & SHAILESH GUPTA ADV. DATE OF HEARING: 29 08 2019 DATE OF PRONOUNCEMENT: 08 11 2019 O R D E R PER AMIT SHUKLA JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AND AGAINST THE IMPUGNED ORDER DATED 31.07.2014 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS)-XXI NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2011-12. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A MA NAGING DIRECTOR IN THE REAL ESTATE COMPANY UNITECH LTD. AN D UNITECH HOLDINGS PVT. LTD. UNITECH LTD. HAD FLOATED 8 SUBSI DIARY COMPANIES WHICH WERE CHANGED AS UNITECH WIRELESS COMPANIES AS UNDER: I.T.A. NO.5230/DEL/2014 2 I. UNITECH WIRELESS (NORTH) PVT. LTD. II. UNITECH WIRELESS (SOUTH) PVT. LTD. III. UNITECH WIRELESS (KOLKATA) PVT. LTD. IV. UNITECH WIRELESS (DELHI) PVT. LTD. V. UNITECH WIRELESS (EAST) PVT. LTD. VI. UNITECH WIRELESS (TAMILNADU) PVT. LTD. VII. UNITECH WIRELESS (MUMBAI) PVT. LTD. VIII. UNITECH WIRELESS (WEST) PVT. LTD. 3. THE EIGHT WIRELESS COMPANIES HAD APPLIED FOR GRA NT OF UNIFIED ACCESS SERVICES LICENSES (UASL) 2G LICENSE S TO THE DOT. THE UNITECH COMPANIES HAD FLOATED THREE AFFILI ATED COMPANIES NAMELY CESTOS UNITECH WIRELESS PVT. LTD . SIMPSON UNITECH WIRELESS PVT. LTD. AND ACORUS UNITE CH WIRELESS PVT. LTD. THE FACTS AND BACKGROUND AS NARR ATED IN THE IMPUGNED ASSESSMENT ORDER ARE EXACTLY THE SAME WHICH HAVE BEEN DISCUSSED IN DETAIL BY US IN ITA NO.1953/ DEL/2014 IN OUR ORDER OF EVEN DATE. FURTHER ADDITIONAL FACT S ARE THAT THE 8 UNITECH WIRELESS COMPANIES WERE LATER ON MERG ED IN ONE COMPANY IN THE NAME OF UNITECH WIRELESS (TAMILN ADU) PVT. LTD. SIMPSON UNITECH WIRELESS PVT. LTD. AND AC ORUS UNITECH WIRELESS PVT. LTD. WERE HOLDING THE SHARES OF UNITECH WIRELESS (TAMILNADU) PVT. LTD. THE ASSESSEE HAD ACQ UIRED / PURCHASED THE 37 750 SHARES OF SIMPSON UNITECH WIRE LESS PVT. LTD. AND ACORUS UNITECH WIRELESS PVT. LTD. FRO M UNITECH HOLDINGS PVT. LTD. AT PAR I.E. @ RS 10/- OF 25 000 SHARES FOR RS. 2 50 000/- AND 12 750 SHARES FOR RS. 1 27 500/- RESPECTIVELY FOR A TOTAL CONSIDERATION OF RS. 3 77 500/- (RS. I.T.A. NO.5230/DEL/2014 3 2 50 000/- (+) RS. 127 500/-). THE AO HAD RAISED TH E ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS TO W HY THE ASSESSEE HAD ACQUIRED THE SHARES OF SIMPSON UNITECH WIRELESS PVT. LTD. AND ACORUS UNITECH WIRELESS PVT. LTD. FROM UNITECH HOLDINGS PVT. LTD. AT PAR I.E. @ RS 10/- W HEREAS THE ACTUAL VALUATION OF THE 8 WIRELESS COMPANIES AND IT S SHARES WERE MUCH HIGHER AT RS.179.73 PER SHARE AT WHICH RA TE THE TELENOR MADE FRESH SUBSCRIPTION OF SHARES IN THE 8 WIRELESS COMPANIES. THE ASSESSING OFFICER WAS OF THE VIEW TH AT THE ASSESSEE HAD ACQUIRED THE SHARES AT THE FACE VALUE OF RS. 10/- ONLY WHICH WAS BASICALLY AN UNDER VALUATION OF THE SHARES WHEN THE MARKET VALUE OR ACTUAL VALUE OF THE SHARES WERE @ RS. 179.73/- AT WHICH RATE THE TELENOR HAD ACQUIRED THE SHARES AND AS SUCH THE AO INVOKED THE PROVISIONS OF SECTION 56 (2)(VII)(C) READ WITH RULE 11UA AND VALUED THE F MV OF THE SHARES AT RS. 646 84 50 498/- WHICH THE ASSESSEE HA D ACQUIRED AT RS. 3 77 500/- ONLY AND ACCORDINGLY TH E AO MADE THE ADDITION OF RS. 646 80 72 998/- (RS. 646 84 50 498/- (-) RS. 3 77 500/-). 4. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED TH AT HE DID NOT RECEIVE ANYTHING MORE THAN FACE VALUE OF THE SH ARES WHICH WAS RS.10/- AND THE TOTAL CONSIDERATION PAID WAS RS.3 77 500/-. THE TELENOR HAD MADE A FRESH SUBSCRI PTION OF SHARES OF EIGHT SHAREHOLDERS COMPANIES AFTER THE 75 % OF STAKE WAS UPLOADED BY THE UNITECH LTD. IN THE SAID COMPAN Y SO THAT TELENOR HAD A CONTROL STAKE IN THAT EIGHT COMPANIES . IT WAS SUBMITTED THAT ASSESSEE DID NOT RECEIVE ANYTHING MO RE THAN I.T.A. NO.5230/DEL/2014 4 THE NORMAL FACE VALUE OF THE SHARES @ RS.10/- AND E NTIRE ADDITION IS MADE ON PRESUMPTIVE BASIS. IT WAS FURTH ER SUBMITTED AS PER 11UA THE BOOK VALUE OF THE SHARE W AS RS.8.99 PAISA IN THE CASE OF ACORUS UNITECH PVT. LT D. AND NEGATIVE VALUE OF (-) RS. 9178/- IN THE CASE OF SIM PSON UNITECH WIRELESS PVT. LTD. AND THEREFORE ASSESSIN G OFFICER WAS NOT JUSTIFIED TO INVOKE THE PROVISION OF SECTION 56(2)(VII)(C). EVEN THE MARKET VALUATION OF THE MAI N COMPANY I.E. UNITECH WIRELESS (TAMILNADU) PVT. LTD. WAS NE GATIVE VALUATION AS THE COMPANY HAD MADE HUGE LOSSES FROM ASSESSMENT YEARS 2009-10 TO 2012-13. THE ASSESSING OFFICER HAS VALUED 25000 SHARES OF ACORUS UNITECH WIRELESS PVT. LTD. AT THE NOTIONAL VALUE OF RS.1 54 599/- FOR RS.386 4 9 83 500/- AND 12 750 SHARES OF SIMPSON UNITECH WIRELESS PVT. LTD. @ RS.2 04 193/- FOR RS.260 34 66 998/- AND THUS MAKI NG THE TOTAL VALUATION OF THE SHARE AT RS.646 84 50 498/-. LD. CIT (A) HAD DELETED THE SAID ADDITIONS ON THE GROUND THAT T HESE TWO COMPANIES WERE HEAVY LOSS MAKING COMPANIES AND EVEN UNITECH WIRELESS (TAMILNADU) PVT. LTD. WAS ALSO A L OSS MAKING COMPANY AND THEREFORE A NEGATIVE FAIR MARKET VALU E SHARE OF THESE COMPANIES. THE ASSESSING OFFICER HAS NOT FOLL OWED EVEN THE PROVISION OF SECTION 56(2)(VII)(C) READ WITH RU LE 11UA BECAUSE THE BOOK VALUE OF THE SHARE IS BELOW THE FA CE VALUE OF RS.10/-. SINCE NO REAL INCOME HAS ACCRUED TO THE AS SESSEE OR HAS BEEN RECEIVED BY THE ASSESSEE AS THE FAIR MARKE T VALUE OF THE SHARES AND EVEN THE BOOK VALUE OF THE SHARES IS BELOW THE FACE VALUE OF RS.10/-. I.T.A. NO.5230/DEL/2014 5 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE IMPUGNED ORDER WE FIND THAT IT IS AN UNDISPUTED FA CT THAT THE SHARES PURCHASED BY THE ASSESSEE OF SIMPSON UNITECH WIRELESS PVT. LTD. AND ACORUS UNITECH WIRELESS PVT. LTD. FROM UNITECH HOLDINGS PVT. LTD. AT RS.10/- WAS NOT ONLY BELOW THE BOOK VALUE BUT ALSO BELOW THE FAIR MARKET VALUE BE CAUSE THESE COMPANIES WERE HAVING NEGATIVE VALUE DUE TO H UGE LOSSES MADE IN THE EARLIER YEARS. THE ASSESSING OFF ICER HAD TRIED TO MAKE THE ADDITION SOLELY ON THE GROUND THA T PREMIUM OF RS. 179.73 PER SHARE IN RESPECT OF EIGHT UNITECH WIRELESS COMPANY PAID BY THE TELENOR COMPANY IS THE BASIS TO VALUE THE SHARES. SUCH A REASONING FIRST OF ALL COULD NO T BE UPHELD BECAUSE THE VALUATION IF AT ALL OF THE SHARE HAS TO BE DONE EITHER IN TERMS OF RULE 11UA OR IN TERMS OF SECTION 56(2)(VII)(C) WHICH PROVIDES THAT IT HAS TO BE AS PER THE MARKET VALUE AND THE MARKET VALUE OF THE SHARE HAS BEEN FOUND TO BE NEGATIVE AND FAR BELOW THE VALUE OF THE SHARES PAID BY THE A SSESSEE. LD. CIT DR ALSO COULD NOT REBUT THE FACTUAL FINDING ARRIVED BY THE LD. CIT (A) WHICH IS BASED ON MATERIAL ON RECOR D. THUS WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD . CIT (A) AND THEREFORE THE SAME IS CONFIRMED. CONSEQUENTLY THE APPEAL FILED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH NOVEMBER 2019. SD/- SD/- [B.R.R. KUMAR] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 8 TH NOVEMBER 2019