TMI Blog2011 (10) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... never examined by him. Said agreement was filed without the annexures relevant thereto and this finding of CIT has not been rebutted by the assessee. Conclusion of CIT that through the said agreement, not only had the assessee acquired shares of BPL Communications Ltd. but had also taken over receivables and liabilities of M/s Suryasamudra Finance and Investments Pvt. Ltd. has not been disputed by the assessee. There has been a total non-examination of the issue as to whether the assessee was indulging in any business activity by trading in shares or whether it was engaged in a business of buying and selling investment. An order without application of mind is definitely prejudicial to the interests of the revenue. CIT was justified in invoking powers vested in him u/s 263 - Decided in favor of Revenue. - ITA No. 959/Mds/2011 - - - Dated:- 31-10-2011 - Hari Om Maratha, Abraham P. George, JJ. C. Ramesh, CA, for the Appellant R.B. Naik, CIT-DR for the Respondent ORDER Abraham P. George: In this appeal filed by the assessee, against the order dated 25.3.2011 passed by Commissioner of Income Tax-I, Coimbatore, under Section 263 of Income-tax Act, 1961 (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 Crores along with certain other receivables and liabilities as mentioned in such share purchase agreement with the said M/s Suryasamudra Finance and Investments Pvt. Ltd. Ld. CIT observed that assessee was purchasing and trading in unquoted shares from assessment year 2004-05 onwards and such trading was one of the ancillary objects of the assessee-company. Alternatively, according to ld. CIT, the business loss which comprised of professional charges, bank charges, etc. ought not have been allowed since it did not relate to any business activities. 4. To the show-cause notice, reply given by the assessee was that the Assessing Officer had considered the surplus arising from the sale of shares of BPL Communications Ltd. under the head "Capital gains" rightly appreciating the facts relating to it. As per the assessee, the shares were held as investments and therefore, the view taken by the Assessing Officer that it should be considered as "Long Term Capital Gains" was a possible view which was lawful also. Further, it was submitted by the assessee that though its main object was to provide internet services and distribute cable TV signals, it was unable to carry out such busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares of BPL Communications Ltd. and also took over receivables and liabilities of the said M/s Suryasamudra Finance and Investments Pvt. Ltd., as mentioned in article-2 of the said agreement, for a total consideration of Rs. 7 Crores and 7.86 Crores respectively. Though a copy of the agreement was filed during the assessment proceedings, it seems the annexure to the agreement was not filed by the assessee. As per ld. CIT, the agreement being a consolidated one, and assessee having taken over entire liabilities of Suryasamudra Finance and Investments Pvt. Ltd., purchase of shares of BPL Communications Ltd. was part of a consolidated transaction and this could only be considered as a business venture. Again as per the CIT, there was no intention for the assessee to hold the shares as investments, and assessee had never derived any dividend income from these shares. Therefore, according to him, Circular No.4/2007 dated 15.6.2007 could not be relied upon. He, therefore, reached an opinion that Assessing Officer had come to a wrong conclusion regarding surplus arising from sale of shares of BPL Communications Ltd., being considered as Long Term Capital Gain, while it ought have been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted the order of ld. CIT. 8. We have perused the orders and heard the rival contentions. Vis- -vis both the issues raised, it is very important to reproduce the relevant para in the order dated 30.12.2008 passed under Section 143(3) of the Act by the A.O. for the impugned assessment year, which run as under:- "In response to the above, the authorized representative of the assessee Shri M.S. Ram, Chartered Accountant of M/s Velu Pillai and Co., Bangalore appeared and the case was discussed with him. Books of accounts, bills, and other relevant details were called for and examined. During the year, the assessee has sold shares and admitted Long Term Capital Gain of Rs. 35,06,67,990/-. On going through the Profit and Loss Account, it was found that the assessee has claimed 'Professional Charges paid at Rs. 1,02,50,000/-'. The details for this Professional Charges paid and TDS deducted were called for and verified. The assessee has stated by his letter dated 08.09.2008, that it has paid Professional Charges to J.M. Morgan Stanley Private Limited for the transfer of Shares and filed the details as under: Date of Deduction Amount Deducted Amount Paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.7.2004 though produced before Assessing Officer, was never examined by him. Said agreement was filed without the annexures relevant thereto and this finding of ld. CIT has not been rebutted by the assessee. Conclusion of ld. CIT that through the said agreement, not only had the assessee acquired shares of BPL Communications Ltd. but had also taken over receivables and liabilities of M/s Suryasamudra Finance and Investments Pvt. Ltd. has not been disputed by the assessee. There has been a total non-examination of the relevant facts by the Assessing Officer. Assessing Officer during the assessment proceedings, never asked for any details vis- -vis the transaction with M/s Suryasamudra Finance and Investments Pvt. Ltd. nor had the assessee furnished any such details. So, there has been no examination of the issue as to whether the assessee was indulging in any business activity by trading in shares or whether it was engaged in a business of buying and selling investment. Assessing Officer believed the nomenclature given in the balance-sheet and simply accepted the claim of the assessee that the surplus was Long Term Capital Gain. As held by Hon'ble Apex Court in the case of Malabar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
