9911796707
TMI Blog2013 (8) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... red to as the 'Appellant'] respectfully submits that the learned CIT(A) erred in upholding the order of the Assistant Director of Income-tax (International Taxation), Range - 3(1), Mumbai, thereby disposing the appeal of the Appellant on the following grounds. 1. In taxing the compensation received by the Appellant from Castrol UK, for delay in payment of proceeds of shares tendered under the open offer (made as per the terms of the Takeover Regulations) as interest income, as against capital gains. 2. Without prejudice to the contention in Ground No. 1 above, in not treating the aforesaid compensation received from Castrol UK as 'income received in respect of securities' under the provisions of section 1 15AD(1)(a) of the Act taxable at the rate of 20 percent. 3. Without prejudice to the contentions in Ground No. 1 and Ground No. 2 above, in taxing the aforesaid compensation received from Castrol UK as interest income during Assessment Year 2002-03, instead of taxing the same in Assessment Year 2003-04 (on receipt basis). &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2001 the SEBI directed the merchant banker to proceed with the offer formalities and pay interest @ 15% per annum on offer price period from 14.3.2000 till the actual date of payment of consideration. The Hon'ble High Court upheld the SEBI directions to revise the offer price based on the price on 14.3.2000 @ Rs. 350.02 per equity share vide its decision dated 8.8.2001. The holding company also challenged the direction of the SEBI to pay interest @ 15% before the Securities Appellate Tribunal but could not succeed. The Tribunal held that Castrol UK is liable to pay interest to the successful offer at 15% per annum on open offer price however from 8.8.2000 till the actual date of payment of consideration instead of 14.3.2000 directed by the SEBI. The holding company again filed an appeal before the Hon'ble High Court against the Securities Appellate Tribunal order upholding payment of interest @ 15%. The Hon'ble High Court upheld the orders of the SAT regarding payment of interest. Subsequently, Castrol UK posted offer letter to shareholders of Castrol India Ltd. on 21.9.2001. The assessee tendered 2053552 equity shares on 17.10.2001 under the open offer however 1042518 equity sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the open offer. He has referred para 6.2 of the impugned order of CIT(A) and submitted that the CIT(A) has given a finding that the amount was in the nature of consideration received for use of money after the shares were accepted by the Castrol UK and a debt was created in favour of the assessee. This findings of the CIT(A) is contrary to the fact because the shares were accepted by the Castrol UK only on 23.11.2001 whereas the additional amount has been paid @ 15% per annum form 8.8.2000 to 22.11.2001 which is prior to the acceptance of the shares. Thus, the Ld. AR has submitted that there is no question of creating any debt in favour of the assessee prior to the acceptance of the shares tendered by the assessee. In support of his contention the Ld. AR has relied upon the following decision: * CIT Vs Govinda Choudhury and Sons 203 ITR 881(SC),DDA Vs ITO 53 ITD 19 * CIT Vs Vidyut Corporation, Mumbai dated 21.4.2010 * Ruling of AAR dated 22.3.2010 in Royal Bank of Canada * decision dated 30.7.2010 of Hon'ble Madras High Court in case of Cauvery Spinning andWeaving Mills v. DCIT and others in writ petition No. 7978/2001. The Ld. AR has further contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of buy back of shares in the open offer after announcement of the intention of acquiring of shares. It is not a case of delay in making the payment of the determined consideration after the transaction of purchase of sale is over. Therefore, in our considered view this amount of interest which relates to the period prior to tendering and acceptance of the shares falls within the ambit of consideration received by the assessee against the shares tendered in the open offer. In the case of CIT v. Govinda Choudhuryand Sons (supra) the Hon'ble Supreme Court has decided the nature of income received as interest as under: "This brings us to a consideration of the second question. The sum of Rs. 2,77,692 was received by the assessee as interest on the amounts which were determined to be payable by the assessee in respect of certain contracts executed by the assessee and in regard to the payments under which there was a dispute between the two parties. The assessee is a contractor. His business is to enter into contracts. In the course of the execution of these contracts, he has also to face disputes with the State Government and he has also to reckon with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
