TMI Blog2013 (10) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... yeing (present assessee), since the construction was carried out by the said company as stipulated in the agreement. After making minor adjustments to the proportionate value of market shares, the AO has accepted the entire sale transaction in the hands of the shareholder i.e. M/s. Calico Associates. This also proves that the Revenue has collected tax from the hands of the shareholders - Following decision of Westwind Realtors (P) Ltd. Vs DCIT [2006 (3) TMI 559 - ITAT MUMBAI] - Decided against Revenue. - ITA No.4297/Mum/2009 - - - Dated:- 5-6-2013 - Vijay Pal Rao And N K Billaiya, JJ. For the Appellant : Shri A.C. Tejpal For the Respondent : Shri Dharmesh Shah ORDER:- Per: N K Billaiya: The appeal filed by the Revenue and the Cross objection filed by the assessee are directed against the order of the Ld. CIT(A)-VI, Mumbai dt. 22.5.2009 pertaining to assessment year 2006-07. Since the appeal and the cross objection were heard together, they are disposed of by this common order for the sake of convenience and brevity. ITA No. 4297/Mum/2009 Revenue s appeal 2. The Revenue has raised following substantive grounds of appeal: 1. On the facts and in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of booking of the premises were not share holders of the company. The AO further observed that the flat owners have no right other than the flats occupied by them. The AO further observed that principle of mutuality does not apply on the facts of the case because there is no reciprocity or mutual dependence which is necessary conditions in the case of mutuality. The AO was of the view that the claim of the assessee is nothing but a sham and a colourable device used by it to divert and avoid taxable income in its own hands. 4.1. The AO further observed that the assessee has constructed building on Plot No. 5. However, a part of the said plot was transferred to M/s. Creative Enterprises on which a profit of Rs. 59,97,873/- has accrued to the assessee but at the same time the shareholders/flat owners did not shared this profit earned. The AO went on to rely upon the decision of the Tribunal in the case of Janata Bazar Stores Pvt. Ltd. in ITA Nos. 3849 to 3855/Mum/2003 dt. 17th October, 2006 and concluded that there can be no division of property of the company by metes and bounds unless it is a case of liquidation. The AO also rejected the plea of the assessee that it has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the AO that the transfer of shares was in no way connected to the construction of building and the assessee company could have transferred the shares immediately and would not have waited for the construction to be completed. The Ld. CIT(A) thus concluded as under: Moreover Assessing Officer has also not brought any evidence to prove that the entire transaction was a planning to avoid the tax liability and hence the same was sham although the department had carried out survey action u/s. 1 33A of the IT Act on 11 .03.2008. No incriminating documents are found and referred to by the Assessing Officer to prove that the said transaction was sham and a colourable device to avoid tax. In fact, in my opinion, since the tax sought to be collected by the Assessing Officer from the appellant was paid by the shareholders, M/s. Calico Associates. Moreover, the transactions have been duly supported by the agreements between various parties and duly registered with the respective authorities. No defect or default in the said transactions have been noted by the Assessing Officer. The transaction of acquisition of the shares by M/s. Calico Associates from the erstwhile management w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 01.06.1955 and subsequent deed of assignment dated 29.1 2.1955, M/s. Calico Dyeing and Printing Works sold the specified assets and liabilities of the firm including the plot of land bearing no. 5 occupied by it to the appellant. All these years thereafter, the land was held by the appellant. Later, the appellant had sub-leased part of the Plot No. 5 admeasuring 7784.87 sq. mts. to M/ Vardhman Estates under an agreement dated 20.11.1998. The balance portion of the land was in the possession of the appellant. C. M/s. Calico Associates under an agreement dated 30.10.2001 acquired the shares of the appellant company from the earlier owners for an aggregate consideration of Rs. 6,87,12,000/- with the declaration of intention that the shareholders were intending to acquire the property through purchase of shares of the company. The approval u/s. 269UL was also sought and granted on 28.01.2002 by the Appropriate Authority. Accordingly, the articles of association of the appellant company were amended to attach occupancy rights with respect to the premises to be constructed on the land held by the appellant to the shares held by the shareholders. Out of 12,100 shares, 9,980 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing owned at Lal Baug, Mumbai a Commercial /Residential building(s) to be known as Kamal Darshan for and on behalf of its Shareholders. The shareholders for the time being of the Company shall be bound to contribute such amounts as may be required prorata for the purpose of the said construction at such phases and upon such terms and conditions as may be decided by the Board of Directors. c) Such Shareholders shall have no claim save and except occupancy rights of the premises specified by them subject however, such rights shall only accrue on the shares being fully paid up and the liability towards proportionate construction cost of the premises being discharged in full to the satisfaction of the Board of Directors of the Company. 9.2. These Articles of Association were amended in financial year 2001-02. The Ld. DR in his submissions has objected to the tripartite sale agreement and has vehemently submitted that it is a contract in violation of law and therefore void ab-initio. This contention of the Ld. DR cannot be accepted because the agreement is in line with the provisions of Articles of Association of the company. The Articles of Association of the company has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calico Associates. This also proves that the Revenue has collected tax from the hands of the shareholders. Therefore considering all these facts in totality, we do not find any reason to tamper with the findings of the Ld. CIT(A). Appeal filed by the Revenue is accordingly dismissed. C.O. No. 28/Mum/2010 10. In this cross objection the assessee has challenged the order of the Ld. CIT(A) on the points which have not been decided by the Ld. CIT(A) on merits. A perusal of the order of the Ld. CIT(A) shows that the Ld. CIT(A) has not decided the grievance of the assessee raised vide ground No. 5 to 11. Since the Ld. CIT(A) has decided ground of appeal No. 3 4 in favour of the assessee, a perusal of the order of the Ld. CIT(A) shows that he was of the opinion that no adjudication is required in respect of the said grounds of appeal. Similarly for ground No. 12 also, the Ld. CIT(A) did not allow the set off of the taxes paid by the share holders against the liability of the assessee company since he has already held that the said income is not liable in the hands of the assessee company. As we have confirmed the findings of the Ld. CIT(A), we find that the cross objections raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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