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TMI Blog2023 (8) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... lude Rs. 7.2 crore as part of sale consideration without considering the fact that the issue was dealt in detail in the assessment order where it was established by the AO that payment of Rs. 7.2 crores made by DLF to Sh. Gun Nidhi Dalmia was not related to sale of equity shares of EKT, but for some other purposes. (C) Ld. CIT(A) has erred in directing the AO to treat FMV of shares of EKL at Rs. 16,750/- instead of Rs. 10/- as on 01.04.1981 without considering the fact that the issue was already examined in details in the assessment order where the facts and circumstances for adopting the FMV of shares of EKL as on 01.04.1981 at Rs. 10/- are clearly enumerated. 3. Insofar as ground no. 'A' is concerned, briefly the facts are, the assessee is a resident individual. For the assessment year under dispute, the assessee filed its return of income on 27.07.2006, declaring income of Rs. 9,21,24,691/-. In course of assessment proceedings, while perusing the return of income filed by the assessee, the Assessing Officer observed that while computing income from long term capital gain on sale of unquoted equity shares of M/s Edward Keventers (s) Pvt. Ltd. (in short 'EKPL') to M/s. DLF Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to the transfer of shares. At the same time, the Assessing Officer has not disputed the fact that the assessee has incurred expenditure towards availing professional services in relation to transfer of shares, as, he has himself allowed an amount of Rs. 12,000/-, though, purely on estimate basis. Whereas, learned Commissioner (Appeals) has allowed expenditure of Rs. 23,62,750/- towards payment made to solicitor firm M/s. Luthra & Luthra. 6. Facts on record reveal that the assessee, indeed, had availed professional services from M/s. Luthra & Luthra, a firm of lawyers, who have been engaged to facilitate the transfer of shares. It is observed, M/s. Luthra & Luthra has made legal research, arranged documentation, held discussion with the buyers on various issues, including due diligence and ultimate process of transfer of equity shares in terms with legal provisions and specific needs of the seller and the buyer. Thus, when the assessee has furnished supporting documentary evidences to establish on record that it had incurred expenditure in connection with transfer of shares, such claim of the assessee cannot be rejected/disallowed on conjectures and surmises. We further find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shares. Further, he observed that an amount of Rs. 7,07,92,500/- was paid to the assessee on 18.06.2005 as an advance for purchase of land. It is further evident from Board Resolution, dated 04.12.1987 of EKL, as per which, the assessee was entitled for special consideration of 7.5% on sale of land, though, the resolution was revoked on 30.05.2005 in another Board Meeting. Thus, finally the Assessing Officer observed that assessee's claim that he has received the amount of Rs. 7.20 crores towards sale of equity shares is a concocted story, hence, not believable. Thus, ultimately, he concluded that the amount of Rs. 7.20 crores was received by the assessee not for sale of shares but for some other purpose. Accordingly, he treated the amount as income from other sources. 10. Being aggrieved with the aforesaid decision of the Assessing Officer, the assessee challenged the order before learned Commissioner (Appeals). While considering the issue in the context of facts and materials on record, learned Commissioner (Appeals), being convinced that the amount in dispute was received towards consideration of sale of shares, accepted assessee's claim and deleted the addition made towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Moreover, the Assessing Officer has observed that the amount of Rs. 7.20 crores was paid to the assessee for some other purpose. The aforesaid observation of the Assessing Officer clearly indicates that he himself was not sure for what purpose the payment was made. Thus, when the Assessing Officer had no other material in his possession to disprove the claim of the assessee that the amount was received towards sale consideration of shares, he could not have disallowed the claim on conjectures and surmises. Further, learned counsel has brought to our notice judicial precedents, wherein, it has been held that controlling interest is an incidence of share holding, hence, the consideration received is required to be considered for the purpose of computing capital gain. In this context, we refer to the following decisions: 1. Venkatesh Vs. CIT, reported in 243 ITR 367 (Mad.) 2. Smt. Maharani Ushadevi Vs. CIT, reported in 131 ITR 445 (MP) 13. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals). Ground raised is dismissed. 14. In ground no. 'C', the Revenue has challenged the decision of learned Commissioner (Appeals) in accepting the Fair Market V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yor, the Assessing Officer observed that Valuer has referred to a number of immovable property transactions claiming to be properties in the same locality. Whereas, none of the properties were as large as the property under consideration. He further observed, under the Income Tax Act, no specific formula is laid down to determine the FMV of the unquoted shares. Therefore, in absence of any specific procedure, other acts are to be examined, in which the procedure has been laid down. Having held so, he referred to Rule 1D of the Wealth Tax Rules and held that the valuation report of Accurate Surveyors obtained much after the date of relevant balance sheet is not relevant at all in determining the FMV of unquoted shares of EKPL under section 55(2)(b)(i) of the Act. He further observed that the assessee was allotted unquoted shares of EKPL from time to time during the period 1982-83 to 2000-01 and all throughout the rate of each equity share remained Rs. 10 per share. Thus, he observed, when there was no increase in the value of shares over a period of almost 20 years, the FMV of shares as on 01.04.1981 could not be Rs. 1675/- per share. On the aforesaid premises, he concluded that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... damental error in determining the value of shares by referring to Rule 1D of the Wealth Tax Rules. It is observed, the said Rule stood omitted from the statute w.e.f. 01.04.1989. Therefore, the Assessing Officer has erred in law in determining the FMV by referring to Rule 1D of Wealth Tax Rules. He has committed further error by saying that there is no mode and mechanism for determining the FMV under the Income Tax Act. Whereas, section 55(2)(b) read with section 2(22B) of the Act provides mechanism for determining the cost of acquisition. In any case of the matter, to support the FMV of the shares as on 01.04.1981, the assessee has furnished valuation report of experts. Whereas, without taking assistance of DVO, the Assessing Officer has himself assumed role of an expert without having the requisite expertise or experience to determine the FMV of the equity shares as on 01.04.1981. It is well known that valuation is a highly technical subject, hence, has to be dealt by the experts. Therefore, when the Departmental Valuation Cell is available, the Assessing Officer, instead of referring the valuation process to the Valuation Cell, should not have taken the burden of valuation himse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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