TMI Blog2020 (8) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence on record to which it can be assumed that the own money has been introduced which liable to be addition u/s 68 Hemant Tools Pvt. Ltd. during the investing activity which was never treated as business activity. The investment was from other sources as well as from capital gain. The investment activity was not liable to be treated as business activity of M/s. Hemant Tools Pvt. Ltd. Accordingly, demerger of the Hemant Tools Pvt. Ltd. with the appellant cannot be held within the provisions of Section 2(19AA). The facts are not distinguishable at this stage. We nowhere found illegality and infirmity and the order passed by the CIT(A) in question. CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, all these issues are decided in favour of the assessee against the revenue. - I.T.A. No. 3321/Mum/2017 - - - Dated:- 24-8-2020 - SHRI PRAMOD KUMAR, AM AND SHRI AMARJIT SINGH, JM Revenue by : Shri Shishir Dhamija (DR) Assessee by : Shri R. Murlidhar (AR) ORDER PER AMARJIT SINGH, JM The revenue has filed the present appeal against the order dated 03.02.2017 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was receiving the funds continuously from Hemant Tools Pvt. Ltd. during the year. Thus making it is crystal clear that no assets whatsoever was ever transferred to the resulting company from the demerged company thereby beating the provisions of demerger provisions of de-merger as defined of Section 2(19AA). The AO also treated the said transaction as share transaction and accordingly the share premium in sum of ₹ 16,50,08,000/- was brought to tax u/s 68 of the I. T. Act 1961. The total income of the assessee was assessed to the tune of ₹ 18,00,60,094/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who deleted the addition, therefore, the revenue has filed the present appeal before us. ISSUE NOs.1 2 4. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. Both the issues are in connection with the allowance of the claim of the assessee by deleted the addition of ₹ 16,50,08,000/- u/s 68 of the Act on account of unexplained share premium. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly deleted the said addition whereas the AO passed the order correctl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans of demerger and creating unjustified share premium account to infuse the money as and when required and at the same time to avoid levy of tax. but the AO has not brought out on record that the appellant has unexplained money which is brought into the appellant's business in the garb of demerger of investment division of Hemant Tools Pvt Ltd. From the records itself, it is found that M/s Hemant tool; Pvt Ltd has large Reserve and surplus. The AO himself noted in the assessment order that on perusal of the bank statement of the assessee it was fond that the assessee had received funds continuously form Hemant Tools Pvt Ltd . This makes clear that the AO has complete knowledge of receipt of fund and facts of the case. The AO did not bring on record any evidence of unexplained money of the appellant received. in the garb of demerger of these companies. 'Therefore, no addition u/s 68 of the Act is called for. Accordingly ground no 1 of the appeal is partly allowed. 5. On appraisal of the above mentioned finding, we noticed that the Hon ble Mumbai High Court had sanctioned the scheme of demerger of investment division of Hemant Tools Pvt. Ltd. with Jayvik Foresi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable to do so on the ground of exceptional and extraordinary circumstances, the bench could fix a future date of pronouncement of the order which shall not ordinarily be a day beyond a further period of 30 days. Thus, a period of 60 days has been provided under the extant rule for pronouncement of the order. This period could be extended by the bench on the ground of exceptional and extraordinary circumstances. However, the extended period shall not ordinarily exceed a period of 30 days. 6.2 Although the order was well drafted as well as approved before the expiry of 90 days, however, unfortunately, on 24/03/2020, a nationwide lockdown was imposed by the Government of India in view of adverse circumstances created by pandemic covid-19 in the country. The lockdown was extended from time to time which crippled the functioning of most of the government departments including Income Tax Appellate Tribunal (ITAT). The situation led to unprecedented disruption of judicial work all over the country and the order could not be pronounced despite lapse of considerable period of time. The situation created by pandemic covid-19 could be termed as unprecedented and beyond the control of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia, directed that We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile(emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor controlled‟ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excludingat least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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