9911796707
TMI Blog2013 (12) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case?" 3. The respondent in ITA No. 95/2002 is HCL Employees and Investment Company Limited (HEICL), whereas the respondent in ITA No. 20/2000 is Associated Techno Plastics Private Limited (ATPPL). In ITA No. 95/2002, the order passed by the Income Tax Appellate Tribunal is dated 15th October, 2001 and in ITA No. 20/2000 the order passed by the tribunal is dated 4th May, 1999. We have heard the two ITAs together in view of the order dated 8th July, 2005 passed in ITA No. 95/2002. We record and notice that facts are inter-twined and the questions raised relate to a transaction(s) in which both the assessees were involved or connected. At this stage, we also record that no one has appeared for the respondent-ATPPL in ITA No.20/2000, though it is apparent that they are aware of the present proceedings and were earlier represented by a counsel. However, HEICL has been represented and have contested the present proceedings. 4. ATPPL, it is claimed, had purchased 77929 shares of HCL Limited, which were sold by HEICL. These shares were purportedly purchased at the price of Rs.6.02 per share though the market price on the date of sale, i.e., 16th December, 1988 was Rs.41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 360000 Shyamlee Vaidya 8.9.88 143252 12/- 14/- 1719024/- Mr. Y.C. Vaidya 8.9.88 80000 12/- 14/- 960000/- Mrs. Prasanna Vaidya 8.9.88 20000 12/-14/- 240000/- Y.C. Vaidya (HUF) 16.12.88 77929 6/02 41/- 469143/- HCL Employees Investment Co. Ltd. 9. AIPPL, however, succeeded before the CIT (Appeals), who held that Section 69B of the Act was not applicable. Revenue preferred an appeal before the tribunal but did not succeed. 10. At this stage, we may notice that the tribunal in the case of ATPPL has not examined the factual aspect but has recorded a finding that Section 69B cannot be applied as the Assessing Officer had not disputed that the actual sale consideration paid as disclosed by the assessee. In other words, it was not the case of the revenue that the assessee-ATPPL had paid higher sale consideration than one disclosed by them. Reliance was placed by the tribunal on the decision of the Supreme Court in K.P. Varghese versus Income Tax Officer, (1981) 131 ITR 597 (SC). 11. Facts have been discussed in detail in the case of HEICL. We may note the facts as found by the tribunal. U.P. Electronics Corporation Limited (UPLC), a State Government und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en below: 16. The aforesaid chart also mentions the market value of the share on the date, what the HEICL calls/states was the date of acceptance of offer. This date of acceptance was not the date on which payment was received from the buyer by HEICL. The Assessing Officer has taken into consideration the date on which payment was received by HEICL as the relevant date and accordingly had made addition of Rs.2,39,86,572/-. 17. Sale consideration collected/received by HEICL of Rs.1,31,90,498/- on the sale of shares, it was stated was paid to Citi Bank towards payment of the loan granted by them and their dues were satisfied. HEICL claims that they only received trusteeship fee of Rs.43,600/- for entering into these transactions. HEICL was neither the shareholder nor had any other interest in the shares. Their role was to solely sell the shares as trustees to the employees of HCL Limited, in accordance with the directions of the settlers, i.e., the principal promoters of Hindustan Computers Limited. 18. The Assessing Officer in the assessment order has held as under:- 1. HEICL had purchased 12,70,000 shares for Rs.1,31,46,898/- and sold them for Rs.1,31,90,498/-. 2. HEICL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res had to be allotted to employees of HCL Ltd. by 31st March, 1987, but no attempts were made till April, 1988, when for the first time S.S. Nadar wrote letters. Letters written to purported employees by S.S. Nadar did not have dates and number of shares offered to the said persons had not been disclosed. S.S. Nadar and Arjun Malhotra were allotted 1,55,857 shares each but the other promoter director Y.C. Vaidya was allotted 77,929 shares. Two other persons were allotted 1,00,000 shares each. 50,000 and 38,964 shares allotted to two others. There was inconsistency in the sale price. S.S. Nadar, Arjun Malhotra, Y.C. Vaidya and one D.S. Puri were allotted shares @ Rs.6.02 per share, whereas another person Vishwanath was allotted shares at Rs.10/- per share, T.C Prabhu was allotted shares at Rs.12/- per share and S. Bhattacharya was allotted shares at Rs.14/- per share. 2,00,000 shares were sold to CIFCO on the same date at Rs.18.9/- per share. 20. Commissioner (Appeals) held that the substance and not form which was relevant and applying the test of human probabilities, the tax authorities were entitled to look at the surrounding circumstances and find out the reality. Addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph 15 above. The sales were duly recorded and there is no allegation that money or under table consideration was paid. There is no such finding by the Assessing Officer and the tribunal has categorically stated that there is no evidence or material to the said effect. 23. In fact there is contradiction between the contention and the argument of the Revenue. If we accept the contention that HEICL did not have any right to sell the shares or deal with them, then it is obvious that no addition or income can be made in their hands. They were not the beneficiaries. Further, once consideration received is accepted as the actual amount paid, there cannot be any notional addition to the income of HEICL on the ground that they could have and should have received the market price. It is obvious that the shares were not transferred and sold for commercial considerations but at the behest and at the interest of the promoter directors of Hindustan Computers Limited as well as Microcomp Ltd. But there is no provision or mandate in law, under which concession or difference can be taxed as deemed or notional income in the hands of HEICL. 24. HEICL, which was incorporated on 29th December, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of 18% per annum from the date hereof upto the date of realisation by SBICAP of the sum of Rs.1,27,00,000/- (Rupees one crore and twenty seven lakhs) payable by the said employees or the proposed trust as hereinafter mentioned as the case may be. The said amount of carrying cost shall be reduced by the gross dividend that may be declared by either the Company or HCLL and paid to SBICAP on or before 31st December, 1987. The said sum shall be paid prior to the execution by SBICAP of the relevant Transfer Forms. 7. The Principal Promoters as the Promoters and Directors of HCLL guarantee to exchange and/or issue 12,70,000 Shares equivalent to 4000 equity Shares of the Company of SBICAP immediately on the Company, HRL, HIL and ICSCL or the Company alone shall merge with HCLL. 8. The Principal Promoters hereby guarantee that the said Shares or the Shares of HCLL (as the case may be) shall be purchased by the said employees through the Principal Promoters on or before 31st December, 1987, time being of essence. If the same are not purchased by the employees represented by the Principal Promoters, the Principal Promoters guarantee to acquire the said Shares at or for the price of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are enquiries and this aspect is being examined separately below while dealing with the case of ATPPL. 29. What is clearly discernible from the facts stated above is that the Revenue started inquiries but were not able to cut through and ascertain affirmatively and conclusively whether there was any clandestine objective and purpose in the entire transaction, whether there was any motive or intention to evade or even avoid payment of taxes, who was the actual beneficiary; the acquirers to whom the shares were sold, Microcomp Ltd. or the promoter company of Hindustan Computers Ltd. who had entered into an agreement with U.P. Electronics Cooperation Ltd. etc. In fact, there are several questions which remain unanswered and do raise needle of suspicion; that there could be possibly an element to avoid or even evade payment of tax or to lower the quantum of taxation etc. Possibly the scheme or the plan could be to avoid legal and technical problems as HCL Ltd. could not have acquired and dealt with the its own shares or could not have ensured purchase of shares at a cheaper price by their promoter directors or the directors/officer in-charge of the said company. Possibly, a case of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not remember the exact date. He had stated that mode of payment was cheque and funds were arranged by way of pledge loan from Citi Bank. The said statement is factually incorrect and this is not the stand of the Revenue before us or in the assessment order. This contention and our attention was not drawn to the said assertion during arguments. This portion of the statement was not highlighted and relied upon by the Revenue before the tribunal. Certainly Citi Bank had granted loan to pay dues of SBI Capital Markets Ltd. S. Shankar perhaps was not fully aware of the facts as he did not know how the loan was repaid to Citi Bank and could not also tell why the transfer of shares was not registered in the name of HEICL and the shares had continued to be in the name of SBI Capital Markets Ltd. 32. This brings us to the appeal in the case of ATPPL. The entire reasoning given by the tribunal to dismiss the appeal of the Revenue is as under:- "11. We have heard rival submissions, perused the record, gone through the orders of authorities below. We have gone through the documentary evidence to which our attention was drawn. We have also looked into the case law as cited by the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh adjudication in the two appeals as facts in this regard are not clear and certainly have not been examined and gone into by the tribunal. 36. In view of what is being noted above, we have remanded the transaction relating to Associated Techno Plastics (P) Ltd. to the tribunal. To the extent permissible and proper, the tribunal can examine the said question provided that the facts and materials are on record. 37. In view of the aforesaid findings, the substantial question of law mentioned above in ITA No. 95/2002 has to be treated as partly answered in favour of the Revenue and against the respondent insofar as transfer of 77929 shares by HEICL to V.C. Vaidya or ATPPL is concerned, on which we have passed an order of remit to the tribunal. However, on other aspects/transactions of HEICL, the appeal is dismissed and the question of law is answered in favour of the respondent-assessee and against the appellant-Revenue. 38. In view of the aforesaid findings in ITA No. 95/2002, the question of law mentioned in ITA No. 20/2000 has to be treated as answered in favour of the appellant-Revenue and against the respondent-assessee, but with an order of remit to the tribunal for fresh de ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
