TMI Blog2022 (9) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 263 of the Act power of Commissioner under section 263 would extend and would be deemed to have been extended to three items because the same had not been considered and decided in appeal filed by the assessee. In the instant case also the issue flagged by Ld. CIT(A) as to not ascertaining and examining the correct book profit on transfer of 9033701 shares of Adani Enterprises at the rate of Rs.201 per share which comes to Rs.189.71 crore and not at the rate of Rs.864 per share which comes to Rs.780.51 crore, which the AO has accepted without ascertaining and examining the correct facts and without making necessary enquiries/verifications which made the assessment order erroneous so far as prejudicial to the interest of the Revenue, was never agitated or decided by CIT(A) or Tribunal in original assessment or assessment framed under section 143(3) read with section 254 of the Act. So in these circumstances the PCIT has the power under section 263 of the Act. So we are further of the view that in the case laws relied upon by the assessee referred are not applicable to the facts and circumstances of the case. When the issue flagged by Ld. PCIT has never been asce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lease Ltd. were amalgamated with the assessee. The transferee companies were holding 90,33,701 shares of M/s. Adani Enterprises Ltd. at the time of amalgamation which were sold during the year under consideration for Rs.869.17 crore. Amalgamation of M/s. Midfin Cap Lease Ltd. and M/s. Vikram Capital Resource Pvt. Ltd. was approved by Hon ble Gujarat High Court on 08.10.2007. As per the scheme of amalgamation the purchase method had to be followed and accordingly the fair value of assets and liabilities was to be determined as defined in the accounting standard (AS)-14. It was also noticed that shares of M/s. Adani Enterprises Ltd. were to be re-valued as on the effective date of amalgamation i.e. on 01.04.2007 on the basis of equated market price on that date. It was also noticed by the Ld. PCIT that the value per share of M/s. Adani Enterprises Ltd. as on 01.04.2007 was taken at Rs.864/- per share (total consideration of Rs.780.51 crore/ 90,33,701 shares) for the purpose of computing the net profit on the sale of shares as per books, however, the value adopted by the assessee in respect of the shares of M/s. Adani Enterprises Ltd. is found not correct because the closing price of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the submissions made by the assessee Ld. PCIT proceeded to conclude that the AO did not make enquiries and verification which a prudent and reasonable officer should have made in this case and thereby set aside the assessment order dated 26.04.2017 passed by the AO under section 143(3) read with section 254 of the Act being erroneous in so far as prejudicial to the interest of the Revenue within the meaning of clause (a) of explanation 2 to section 263(1) of the Act and directed him to pass fresh assessment order after computing the book profit under section 115JB of the Act after making necessary enquiries and ascertaining correct facts. 5. Feeling aggrieved from the impugned order passed by the Ld. PCIT under section 263 of the Act the assessee has come up before the Tribunal by way of filing the present appeal. 6. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 7. For ready perusal notice issued by Ld. PCIT under section 263 of the Act is extracted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the scheme of amalgamation approved by Hon'ble Gujarat High Court, fair value per share for computing capital gain as per books, therefore, should have been taken at Rs. 210/- per share and not at Rs.864/- as adopted in the valuation report. The book profit computed by the assessee by adopting this value, therefore, is not in compliance to High Court order and AS-14. 5. The cost of acquisition shares of Adani Enterprises @210/per share comes to Rs.189.71 crores (for 90,33,701/- share) and not Rs.780.51 crores adopted by the assessee. The book profit on transfer of these shares comes to Rs.679.46 crores (i.e. 869.17 crores - 189.71 crores). As against this book profit, the assessee has shown book profit of Rs.89.94 crores on this transaction and the AO has accepted this value without ascertaining and examining the correct book profit on transfer of these shares (which is in fact Rs.679.46 crore) in the original as well as the order passed u/s. 143(3) r.w.s. 254 of the Income-tax Act, 1961 dated 26.01.2017. Since the AO has accepted the book profit without making any enquiring on verification with regard to correct book profit which is Rs.679.46 crores as discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al loss of Rs.87.66 crores allowed by Ld. CIT(A) and in the appeal the Tribunal remitted the issue back to the AO for further verification vide its order dated 07.03.2006. 11. Pursuant to the order passed by the Tribunal the AO framed fresh assessment under section 254 read with section 143(3) of the Act vide order dated 26.04.2017 by disallowing the short term capital loss (STCL) and appeal against the said order is pending before the Ld. CIT(A). 12. Assessment order dated 26.04.2017 framed by the AO under section 254 read with section 143(3) of the Act being the subject matter of order passed under section 263 of the Act by the Ld. PCIT, has been set aside directing the AO to pass fresh order after computing the book profit under section 115JB of the Act after making necessary enquiries. 13. Undisputedly, two wholly owned subsidiaries namely M/s. Vikram Capital Resources Pvt. Ltd. and M/s. Midfin Cap Lease Ltd. were amalgamated with assessee as approved by Hon ble Gujarat High Court with effective date of amalgamation as 01.04.2007. It is also not in dispute that the transferee companies were holding 9033701 shares of M/s. Adani Enterprises Ltd. at the time of amal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oti Harshad Mehta-Legal Heir of Late Husband S. Mehta vs. PCIT in ITA No.1159/M/2020 order dated 26.03.2021. 15. However, on the other hand, Ld. D.R. for the Revenue in order to repel the argument addressed by the Ld. A.R. for the assessee contended inter alia that in the original assessment passed by the AO under section 143(3) of the Act the AO has not ascertained and examined the correct book profit on transfer of these shares in the original as well as order passed under section 143(3) read with section 254 of the Act; that even the Ld. CIT(A) in its order dated 04.08.2011 has not examined the issue but he has merely given a reference as to the value of the share in para 2 of page 32; that when the issue in question has never been decided by the AO /CIT(A) there is no question of merger and relied upon the decision rendered by Hon ble Supreme Court in case of CIT vs. Shri Arbuda Mills Ltd. (1998) 98 Taxman 457 (SC), Hon ble Bombay High Court in case of CIT vs. Ballarpur Industries Ltd. (2017) 85 taxmann.com 10 (Bombay) Vedanta Ltd. vs. CIT (2021) 124 taxmann.com 435 (Bombay) and Hon ble Karnataka High Court in case of CIT vs. Namdari Seeds (2011) 16 taxmann.com 9 (Kar.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith due verification, exercise of jurisdiction of commissioner under section 263 of the Act was justified. In another case cited as Vedanta Ltd. vs. CIT (2021) 124 taxmann.com 435 (Bombay) Hon ble Bombay High Court held that when assessment was completed without proper enquiries, the Commissioner was competent to invoke revisionary jurisdiction and direct fresh assessment under section 263 of the Act. 21. The Ld. D.R. for the Revenue relied upon a decision rendered by Hon ble Supreme Court of India in case of CIT vs. Shri Arbuda Mills Ltd. (supra) wherein Commissioner has exercised his powers under section 263 of the Act in respect of the claim relating to 3 items which were decided by the ITO in favour of the assessee and were not subject matter of the appeals by the assessee assessee contended that order of ITO merged with that of Commissioner (Appeals) so as to exclude jurisdiction of the Commissioner under section 263 of the Act. The question arose before the Hon ble Apex Court as to whether in view of the amendment in section 263 by the Finance Act, 1989 with retrospective effect, power of Commissioner under section 263 of the Act would extend and would be deemed alway ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 of the Act. 26. Identical issue has also been decided by the Hon ble Supreme Court in case of Shri Arbuda Mills Ltd. (supra) as discussed in preceding para No.19 the ratio of which is when Ld. PCIT exercises his power under section 263 of the Act in respect of claim relating to 3 items which was decided by the ITO in favour of the assessee and were not subject matter of the appeal by the assessee there is no question that order of ITO merged with that of Commissioner(Appeals) so as to exclude jurisdiction under section 263 of the Act because under the amended provisions contained under section 263 of the Act power of Commissioner under section 263 of the Act would extend and would be deemed to have been extended to three items because the same had not been considered and decided in appeal filed by the assessee. 27. In the instant case also the issue flagged by Ld. CIT(A) as to not ascertaining and examining the correct book profit on transfer of 9033701 shares of Adani Enterprises at the rate of Rs.201 per share which comes to Rs.189.71 crore and not at the rate of Rs.864 per share which comes to Rs.780.51 crore, which the AO has accepted without ascertaining and exam ..... 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