TMI Blog2015 (11) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... INDIA) supports the case of the assessee wherein it was held that if prospective benefit is in the nature of income or specifically included, by the legislature as part of income, the same is not taxable. We are of the considered opinion that the adoption of Fair Market Value of share in lieu of value of sale consideration as declared by the assessee is not valid particularly when there is no provision under the law to include prospective benefit in the ambit of the word "income". Therefore, the Ld. CIT(A) has rightly allowed this ground and deleted the addition in dispute, which does not need any interference on our part - Decided in favour of assessee. Assessment u/s 153C - Held that:- We find considerable cogency in the assessee’s counsel submission that if no incriminating material belonging to the assessee were found during search period, the assessment made is without jurisdiction and proceedings initiated u/s. 153C is null and void. See CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in favour of assessee. - I.T.A. No. 4315/Del/2011, C.O. No. 355/Del/2011 - - - Dated:- 9-10-2015 - Shri H. S. Sidhu, Judicial Member And Shri L. P. Sahu, Accountan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2010 in response to notice u/s 153A of the I.T. Act may be treated as having been filed in response to this notice. Return declaring net taxable income of ₹ 6,69,800/- was filed on 18.02.20I0. Subsequently, notice u/s 143(2), 142(I) along with questionnaire was issued on 22.11.2010 fixing the case for 26.11.2010. In response to this notice, the proceedings were attended by the Authorised Representatives of the assessee from time to time as per order sheet and the information filed has been examined and placed on record. 4.1 As per the return filed; the assessee derives salary income in her capacity as director of Mahagun Group of companies, income from capital gain and income from other sources which includes bank interest and interest on loan advanced to Mahagun (India) Pvt.Ltd. and Mahagun Developers Ltd. During the year, the assessee has sold 3000 shares of Mahagun Realtors Pvt.Ltd. @ ₹ 100/- per share. On 01.12.2006, these shares have been sold outside the normal market channels amongst the members of the group only. The shares had a paid up value of Rs.I00/- each and had been acquired on 29.9.2004 for acquisition cost of ₹ 30,000/-. The only question t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- as declared by her. Accordingly, the total income was assessed at ₹ 3,41,17,363/- vide order dated 29.12.2010 passed u/s. 153C read with Section 143(3) of the I.T. Act, 1961. 5. Aggrieved with the aforesaid assessment order, assessee appealed before the Ld. CIT(A), who vide impugned order dated 07.7.2011 has partly allowed the appeal of the assessee. 6. Now the Revenue is in Appeal and Assessee has filed Cross Objections before the Tribunal. REVENUE S APPEAL 7. First we deal with the Revenue s appeal i.e. ITA 4315/Del/2011 (AY 2007-08) wherein the only effective issue was relating to deletion of addition of ₹ 3,34,47,563/- made on account of long term capital gain has been raised by the Revenue. We have heard both the parties and perused the records available with us, especially the orders of the authorities below and Brief Synopsis filed by the Ld. Counsel of the Assessee. 8. As regards the issue involved in the Revenue appeal is concerned, the Ld. CIT(DR) relied upon the order passed by the AO and the contention raised in the Grounds of Appeal filed by the Revenue. On the contrary, the Ld. Counsel for the assessee relied upon the order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an aggregate actual sale consideration of ₹ 3,00,000/- in consideration of transfer of her 3000 shares. PB 22-24 is the Computation of Income of the assessee showing sale consideration at ₹ 3,00,000/-. PB 41 is letter to Ld. A. O. submitting that sale of share by the assessee was an independent transaction and share of Private Limited Company are not freely transferable and therefore, such sale has got nothing to do with the merger scheme. PB 12-21 are the submission before Ld. CIT (A) submitting that sale of these shares already took place on 01.12.2006 and even the petition was filed in Delhi High Court for merger only on 26.02.2007 i.e. after the date of sale and the capital gain is taxable u/s 48 on the basis of full value of the consideration received by the assessee and not on the basis of fair market value and relying upon several judicial decisions as under:- CIT vs. Infosys Technologies Ltd. reported in [2008] 297 ITR 167 (SC) Hilder vs. Dexter (1902) AC 474 (HL). Head Co. Ltd. vs. Ropner Holding Ltd. (1951) 2 AIi ER 994 (Ch. D) followed in Shearer (Inspector of Taxes vs. Bercain Ltd. (1980) 3 All ER 295 K.P. Varghese's Case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. A.O. submitting that the document was not incriminating and was disclosed in the return and relying upon the following decision:- Saraya Industries vs. UOI 306 ITR 189 (Delhi) Jurisdiction is bad on this reason also that the assessment of the assessee was not pending and therefore, could not be reopened up 153C in view of the following decisions reported at PB 37:- Anil P. Khimani v/s. DCIT 2010 - TIOL -177 ITAT - Mumbai B Bench Anil Kumar Bhatia vis. ACIT (ITA No. 2660to2665/Del/2009 ITAT 'B' Bench LMJ International Ltd. vls. DCIT (2008) 119 TTJ 214 (Kol) Ms. Shyam Lata Kaushik vls. ACIT (2008) 114 TTJ 940 (Del) Shivnath Rai Harnarain (India) Ltd. (2008) 304 ITR (AT) 271 (Del) PB 3-12 are the submission before Ld. CIT(A). PB 43-44 is the copy of remand report of this issue giving the satisfaction note u/s 153C and it may please be seen, based on that, that the only basis was the document relating to B-66, Vivek Vihar, which was already disclosed. PB 46-47 are the reply to remand report giving few more judicial decisions which are reproduced as under:- LMJ International Ltd. vls. DCIT (2008) 119 TTJ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders Arbuthnot and Co. v/s. Commissioner of Income Tax (1973) 087 ITR 0407 (SC) CIT v/s Shivakami Co. P Ltd. [1986]159 ITR 0071. CIT v. Vania Silk Mills P. Ltd. [1977]107 ITR 300 (Guj) 10. Further, the AR submitted before me that the appellant was allotted 3000 shares of M/s MRPL on 29.09.2004 at its face value of ₹ 10/- each. The same has been sold on 01.12.2006 to its group company. The merger scheme in which the exchange ratio of shares Of MIPL MRPL was formulated was on 26.02.2007. The exchange ratio so determined was further subject to approval of Delhi High Court, which came on 10.09.2007 i.e. after a gap of 9 months (approx) from the date of sale of shares. Had ,the appellant kept the shares, he would have got 1,35,000 equity shares of MIPL only on 08.04.2008 i.e. the date of allotment of shares after merger as stated above or in other words after 18 months from the date of sale. In other words, it was only prospective benefit attached with the shareholding of the appellant in the MRPL as on date of sale. The AR relied upon Hon'ble Apex Court decision in the case of CIT vis. Infosys Technologies Ltd. (2008) ITR 167. Where it was held that if pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derson and Co. Ltd. (1967) 066 ITR 0622 (SC) Commissioner of Income Tax vis. Gillianders Arbuthnot and Co. Gillanders Arbuthnot and Co. v/s. Commissioner of Income Tax (1973) 087 ITR 0407 (SC) CIT v/s Shivakami Co. P Ltd. [1986]159 ITR 0071. CIT v. Vania Silk Mills P. Ltd. [1977]107 ITR 300 (Guj) 9.2 In this case the assessee was allotted 3000 shares of M/s MRPL on 29.09.2004 at its face value of ₹ 10/- each. The same has been sold on 01.12.2006 to its group company. The merger scheme in which the exchange ratio of shares Of MIPL MRPL was formulated was on 26.02.2007 and the exchange ratio so determined was further subject to approval of Delhi High Court, which came on 10.09.2007 i.e. after a gap of 9 months (approx) from the date of sale of shares. The assessee kept the shares and he would have got 1,35,000 equity shares of MIPL only on 08.04.2008 i.e. the date of allotment of shares after merger as stated above or in other words after 18 months from the date of sale. In other words, it was only prospective benefit attached with the shareholding of the assessee in the MRPL as on date of sale. We find that the case law referred by the Ld. CITA(A) in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial are found relating to assessee in the course of search, then the proceedings initiated u/s. 153C is null and void and this issue has already been adjudicated and decided in favor of the assessee by the Hon ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla (Supra), which shall be followed in the present case of the assessee. In this behalf, he draw our attention towards the relevant para no. 38 of the order, which is reproduced hereunder:- 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made ot the income already assessed. 12. On the other hand, Ld. CIT(DR) opposed the request of the assessee s counsel. 13. We have heard both the counsel and perused the records, we find considerable cogency in the assessee s counsel submission that if no incriminating material belonging to the assessee were found during search period, the assessment made is without jurisdiction and proceedings initiated u/s. 153C is null and void. To support this contention, we follow the Hon ble Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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