ACIT, CHENNAI v. Resch Extrusion Technic (I) P Ltd., Hosur

ITA 807/CHNY/2011 | 2006-2007
Pronouncement Date: 18-07-2011 | Result: Dismissed

Appeal Details

RSA Number 80721714 RSA 2011
Assessee PAN AAACR1722R
Bench Chennai
Appeal Number ITA 807/CHNY/2011
Duration Of Justice 2 month(s) 16 day(s)
Appellant ACIT, CHENNAI
Respondent Resch Extrusion Technic (I) P Ltd., Hosur
Appeal Type Income Tax Appeal
Pronouncement Date 18-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 22-07-2011
Assessment Year 2006-2007
Appeal Filed On 02-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI N.S. SAINI AM AND SHRI GEORGE MATHAN J.M. .. I.T.A. NO. 807/MDS/2011 [ASSESSMENT YEAR 2006-07] ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE V(3) CHENNAI 600 034. VS. M/S RESCH EXTRUSION TECHNIC [INDIA] PVT. LTD PLOT NO. 9C SIPCOT INDUSTRIAL COMPLEX HOSUR 635 126. PAN NO. AAACR 1722 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUBHASH CHANDRA DIRECTOR OF THE COMPANY DEPARTMENT BY : SHRI K.E.B. RENGARAJAN JR. STANDING COUNSEL O R D E R PER N.S. SAINI A.M :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER PASSED BY THE CIT(A)- V CHENNAI DATED 07.02.2011. PAGE 2 OF 7 I.T.A. NO. 807/MDS/2011 2. GRIEVANCE OF THE REVENUE IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT T HE SALE OF 1 LAKHS SHARES OF M/S PUSHPA PACKAGES LTD AS GENUINE THERE BY ALLOWING THE LONG TERM CAPITAL LOSS OF RS. 18 18 919/- TO BE S ET OFF AGAINST THE LONG TERM CAPITAL GAIN ON SALE OF LAND. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2006 -07 ON 8.11.2006 HAD SHOWN TOTAL INCOME AT RS. 15 63 500 /-. WHILE COMPLETING ASSESSMENT THE ASSESSING OFFICER DISALL OWED RS. 18 18 919/- WHICH WAS CLAIMED BY THE ASSESSEE AS LO NG TERM CAPITAL LOSS ON SALE OF EQUITY SHARES OF M/S PUSHPA PACKAGE S LTD. FOR THE FOLLOWING REASONS: A) THE APPELLANT HAD NOT SUBMITTED BROKERS BILL AN D EVIDENCE OF DELIVERY; B) THE SALE PROCEEDS OF THE SHARES SOLD AND TRANSFE RRED ON 29.3.2006 HAD NOT BEEN RECEIVED TILL 31.3.2006; AND C) THE SALE OF SHARES WAS AN ARRANGEMENT TO SET OFF A LONG TERM CAPITAL GAINS ON SALE OF LAND. PAGE 3 OF 7 I.T.A. NO. 807/MDS/2011 4. IN APPEAL THE LD. CIT(A) DELETED THE DISALLOWAN CE BY OBSERVING HELD AS UNDER: 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E PAPER BOOK INCLUDING WRITTEN SUBMISSIONS FILED AND DETAILS PRODUCED BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT. IT IS NOTED FROM THE PAPER BOOK (PAGE 40) FILED BEFORE THE UNDE RSIGNED ACKNOWLEDGEMENT FROM SHRI SEKHAR R. IYER FOR RECEIP T OF ONE LAKH SHARES FOR A CONSIDERATION OF RS. 1 OO OOO/- I S ALSO FURNISHED. FURTHER THE MONEY THAT IS RECEIVED FROM H IM IS ALSO REALISED ON 29.03.2006 BY THE APPELLANT COMPANY IN THE BANK ACCOUNT WITH SBI BASAVANGUDI BANGALORE VIDE CHEQUE NO.297443 FOR RS. 1 OO OOO/- (PAGE 45 OF THE PAPER BOOK). 6. THE ISSUE RAISED BY THE APPELLANT COMPANY IS THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS STA TED THAT THE SHARES ARE UNQUOTED SINCE BROKERS NOTE BILL AND EVID ENCE FOR DELIVERY OF SHARES WERE NOT PRODUCED. THE SUBMISSION MADE IS THAT IF THE SHARES ARE UNQUOTED AND NO BROKER WAS INV OLVED HOW THE APPELLANT CAN PRODUCE THE BROKERS' NOTE. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPEL LANT COMPANY SUBMITTED A PAPER BOOK WHEREIN IT HAS FURNIS HED THE EVIDENCE FOR DELIVERY OF SHARES BY PRODUCING COPY OF THE SHARE TRANSFER FORM AND RECEIPT DATED 29.03.2006 TAKEN FR OM SHRI PAGE 4 OF 7 I.T.A. NO. 807/MDS/2011 SHEKHAR R. IYER. IN THIS CONTEXT THE RELEVANT PORT ION OF THE WRITTEN SUBMISSION IS REPRODUCED HEREUNDER: A) THE LEARNED ACIT HAS NOT DISPUTED THE FACT THAT WE HAD ACQUIRED 1 00 000 EQUITY SHARES OF PUSHPA PACKAGES LTD. (PPL) IN F.Y. 1995-96 FOR A CONSIDERATION OF RS. 1 LAKH B) THE SHARES OF PPL WHICH WERE LISTED ON THE BANGALORE STOCK EXCHANGE INITIALLY WERE DE-LISTED AS THE SAID COMPANY RAN INTO HUGE LOSSES AND BECAME SICK. C) THERE WERE NO BUYERS OF THE SAID SHARES FOR A NUMBER OF YEARS. FINALLY WE WERE APPROACHED BY ONE MR. SHEKHAR R. IYER WHO AGREED TO BUY THE ENTIRE LOT OF 1 00 000 SHARES FOR A CONSIDERATION OF RS.1 OO OOOI-. D) SINCE WE HAD NO OTHER ALTERNATIVE WE SOLD THE SAID UNLISTED SHARES TO MR. SHEKHAR R. IYER FOR A CONSIDERATION OF RS.1 OO 000I- ON 29.03.2006. THE LEARNED A.O. HAS NOT DISPUTED THIS FACT ALSO IN THE ASSESSMENT ORDER. PAGE 5 OF 7 I.T.A. NO. 807/MDS/2011 6.2 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE THAT THESE SHARES HAVE BEEN PURCHASED IN 1975 AND PUR CHASER IS GIVING CONFIRMATION I HAVE NO HESITATION TO DEC IDE THE ISSUE IN FAVOUR OF THE APPELLANT. THEREFORE THE ASSE SSING OFFICER IS DIRECTED TO TREAT THE SALE AS GENUINE ON E AND ALLOW THE LOSS OF RS. 18 18 919/- INCURRED ON SALE OF SHA RES OF M/S PUSHPA PACKAGES LTD TO SHRI SHEKHAR R. IYER. 5. THE LD. D.R. SUPPORTED THE ORDER OF THE ASSESSIN G OFFICER WHEREAS THE LD. A.R. RELIED ON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSING OFFICER DISALLOWED LOSS OF RS. 18 18 919/- CLAIMED BY THE ASSESSEE ON SALE OF SHAR ES OF M/S PUSHPA PACKAGES LTD ON THE GROUND THAT SUCH SALE WAS BOGUS OR A DEVICE ADOPTED BY THE ASSESSEE TO REDUCE TAX LIABILITY. 7. ON APPEAL THE LD. CIT(A) DELETED THE ABOVE DISA LLOWANCE AND ACCEPTED THE SALE OF SHARES AS GENUINE TRANSACTION. WE FIND THAT IT PAGE 6 OF 7 I.T.A. NO. 807/MDS/2011 IS NOT IN DISPUTE THAT THE ASSESSEE OWNED THE AFORE SAID SHARES SINCE 1995 AT THE COST OF RS. 10 LAKHS. WE FIND THAT IT I S ALSO NOT IN DISPUTE THAT THE ASSESSEE IN SUPPORT OF ITS TRANSA CTION OF SALE OF SHARES FILED BEFORE THE LOWER AUTHORITIES COPIES O F TRANSFER DEED EXECUTED BY IT CONFIRMATION OF PURCHASER AND RECEI PT OF PAYMENT BY CHEQUE. THE CONTENTION OF THE REVENUE IS THAT AS THE CHEQUE WAS NOT ENCASHED DURING THE YEAR AND ASSESSEE HAS NOT B ROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE SHARES WERE TRA NSFERRED IN THE NAME OF THE PURCHASER IN PURSUANCE TO ITS SALE TRAN SACTION AND THEREFORE THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLD ING THE TRANSACTION AS GENUINE. IN OUR CONSIDERED OPINION THE SHARES A RE MOVABLE PROPERTY AND THE OWNERSHIP OVER THE SAME IS TRANSFE RRED ON DELIVERY OF SHARES. SIMPLY BECAUSE THE PAYMENT OF CHEQUE WA S NOT ENCASHED DURING THE PREVIOUS YEAR DOES NOT MEAN THAT THE SHA RES WERE NOT ACTUALLY SOLD DURING THE YEAR. FURTHER THE TRANSFE R IN THE NAME OF THE PURCHASER OF SHARES IS NOT A CONDITION PRECEDEN T FOR COMPLETING THE TRANSACTION OF SALE OF SHARES. WE FIND THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE AFTER MAKING ENQUI RIES FROM THE PURCHASER OF SHARES OR COMPANY WHOSE SHARES WERE SO LD TO SHOW THAT SHARE TRANSACTIONS WERE NOT GENUINE. IN ABSENC E OF ANY SUCH PAGE 7 OF 7 I.T.A. NO. 807/MDS/2011 MATERIAL BROUGHT ON RECORD WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). IT IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 22 ND JULY 2011. SD/- SD/- ((GEORGE MATHAN ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 22 ND JULY 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE