TMI Blog2010 (3) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding replacement of machinery : We have heard the learned authorised representative as well as the learned Departmental representative and considered the relevant records. At the outset, we note that the hon'ble Jurisdictional High Court in the case of CIT v. Sri Ranga Textiles Ltd. in T. C. Appeal Nos. 1290 and 1291 of 2009 has remitted back the issue to the learned Commissioner of Income-tax (Appeals) in terms of the decision of the hon'ble apex court in the case of CIT v. Hindustan Textiles dated November 3, 2009 in Civil Appeal No. 7297 of 2009 arising out of S. L. P. (C) No. 2037 of 2009 ([2009] 190 Taxman 294). Respectfully following the precedent, we remit the matter to the record of the learned Commissioner of Income-tax (Appeals) to pass a fresh order in view of the decision of the hon'ble apex court in the case of CIT v. Hindustan Textiles supra as well as CIT v. Sugavaneeshwara Spg. Mills Ltd. dated November 16, 2009 in Civil Appeal No. 7593 of 2009 ([2009] 190 Taxman 277) arising out of S. L. P. (C) No. 3854/Mds/2008. Issue No. 2-Regarding difference in tariff charged from sister concern : The assessee-company sold wind power generated by it to its sister co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ightly lower than the rate sold to TNEB and the rate is not disputed, then, keeping in view the business interest and particularly the commercial expediency, the Assessing Officer is not permitted to adopt a rate contrary to the actual rate agreed upon between the parties. We find that this issue is covered by the decision of the hon'ble apex court in the case of S. A. Builders Ltd. v. CIT [2007] 288 ITR 1 wherein it was held as under (headnote) : "In order to decide whether interest on funds borrowed by the assessee to give an interest free loan to a sister concern (e.g., a subsidiary of the assessee) should be allowed as a deduction under section 36(1)(iii) of the Income-tax Act, 1961, one has to enquire whether the loan was given by the assessee as a measure of commercial expediency. The expression `commercial expediency' is one of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as business expenditure if it was incurred on grounds of commercial expediency. Decisions relating to section 37 will also be applicable to section 36( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught during 1994-95 to 2000-01. The total index cost of the shares was claimed at Rs. 1,77,93,600. The sale value of these shares was shown by the assessee at Rs. 96 lakhs. Consequently, long-term capital loss was claimed at Rs. 81,93,600. The Assessing Officer was of the view that the transaction was a sham transaction especially being a transaction between unlisted companies on the ground that the assessee did not produce the details as to whom the sales were made and further no details were furnished to show how it determined the prevailing market price. The Assessing Officer has also taken into consideration the subsequent merger of M/s. Meridian Industries Ltd. with the assessee-company. On appeal, the learned Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer on the basis that the assessee has not established the date and year of acquisition of the shares as well as not placed primary evidence on record regarding the identity of the purchasers of the shares and the market value of the shares. Before us, learned counsel for the assessee has submitted that the assessee sold the shares through a broker and, therefore, the transactions cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any related party transaction or sham transaction especially, being unlisted company. Further when the assessee says these shares were sold at the prevailing market price, the assessee has not furnished any details to show how it determines the prevailing market prices, in the absence of open market of trading. Further considering the other facts, like, Meridian Industries (related company) whose shares are sold has merged with the assessee for the assessment year 2006-07, it has only brought us to the conclusion that this transaction is a sham transaction. Thus the long-term capital loss claimed by the assessee is disallowed." From the above recording of the Assessing Officer, it is evident that the assessee did not produce the details of the purchasers to whom the sales were made so as to enable the Assessing Officer to examine the relevant facts including whether there is any related transaction or sham transaction. Since the transaction in shares of unlisted companies was involved, and the assessee has claimed the losses, then it was necessary for the Assessing Officer to verify and examine all the related aspects including the market price or the basis on which the sale pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted. In the case in hand, the assessee has failed to discharge its onus as the barest minimum of details like particulars and evidence has not been produced by the assessee before the lower authorities and even before us. In these facts and circumstances, the case relied upon by learned counsel for the assessee will not help the assessee. Accordingly, we do not find any error or illegality in the order of the lower authorities in holding that the assessee has failed to prove the identity of the buyers and produce necessary details of the transactions. The order of the learned Commissioner of Income-tax (Appeals) is upheld. I. T. A. No. 2262/Mds/2008 : This appeal by the assessee is directed against the order dated October 4, 2008 of the Commissioner of Income-tax (Appeals) for the assessment year 2005-06. The assessee has raised various grounds in this appeal. From the grounds of appeal, the only issue that arises is whether the Commissioner of Income-tax (Appeals) is justified in confirming the order of the Assessing Officer in disallowing the claim of long-term capital loss. The assessee has also filed an application for admission of additional grounds of appeal along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order and, thereafter, the impugned assessment order was passed in the name of M/s. Meridian Industries Ltd., which was not in existence. Accordingly, learned counsel for the assessee has contended that there cannot be an assessment of a non-existent person though subsequent to the assessment order and even after the appeal filed by the assessee before the learned Commissioner of Income-tax (Appeals), the Assessing Officer passed a rectification order under section 154 along with section 292B on September 29, 2008, whereby the Assessing Officer has rectified the name of the assessee-company as M/s. Precot Meridian Ltd. Learned counsel for the assessee has further contended that the rectification order dated September 29, 2008 has been passed by the Assessing Officer after final hearing of the appeal of the assessee on September 26, 2008. Therefore, the learned Commissioner of Income-tax (Appeals) has not given an opportunity of hearing to the assessee before passing the impugned order in which the rectification order dated September 29, 2008 was taken into consideration. Learned counsel for the assessee has relied upon the following decision of the hon'ble jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., then there was no question of doubt or misunderstanding in the minds of the parties that the assessment proceedings were going on in regard to that assessee. Thus, the learned Departmental representative has submitted that merely because the name of the assessee was mistakenly written as Meridian Industries Ltd. in the assessment order in column (1), it cannot be said that the assessment order was passed against a non-existing company. The mistake in recording the name of the assessee very much comes under the realm of section 292B as pointed out by the learned Commissioner of Income-tax (Appeals) and, therefore, once the mistake is rectified, there is no error or illegality in the assessment order. He has relied upon the order of the lower authorities. After considering the rival contentions and relevant records, at the outset, we note that a rectification order under section 154 has been passed by the Assessing Officer on August 29, 2008 whereas undisputedly, the appeal was finally heard on September 26, 2008 by the learned Commissioner of Income-tax (Appeals). Therefore, while deciding the issue of validity of assessment, the learned Commissioner of Income-tax (Appeals) h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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