TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1077
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....gladesh and Gillette Sri Lanka held as long-term investments liable to tax as long-term capital gains, is neither erroneous nor prejudicial to the interest of the revenue; and as such, the learned CIT has no valid jurisdiction u/s 263 to set aside the order on this issue." 2. Ground No.1 is general. 3. Apropos Grounds 2 and 3, the facts, as available from the record are that the CIT observed from the assessment records of the assessee for Assessment Year 2007-08, i.e., the year under consideration, the assessee had derived profits on sale of investment, amounting to Rs. 5,07,04,136/- and had derived income in the form of dividends and long-term capital gain and short-term capital gain on sale of investments. Observing that the activities carried on by the assessee were transactions related to shares, the CIT was of the opinion that these shares constituted stock-in-trade of the assessee and not capital investment. It was observed that there was no separate head for stock-in-trade/inventory in the assessee's Profit & Loss Account, rather all the shares had been shown as investment. From this, the CIT was of the opinion that the assessee's profit from the sale of stock of shares wa....
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....al care; that the main source of income of the assessee company is interest income on money lent to the joint venture companies or companies promoted by it and dividend income from investments made in these companies; that it has ever been that loss or gain on investment liquidated by way of some joint venture, merger or sale is disclosed as capital gain, as already noted by the ld. CIT in the impugned order; that day-to-day business of trading in shares is not the business of the assessee company; that the said gains or losses on disinvestment of any portfolio has always been declared by the assessee company as capital gains and the same has always been accepted in scrutiny assessments; that during the year also, there was such acceptance by the Assessing Officer, on due scrutiny; that specific inquiry was made in this regard by the Assessing Officer and it was only after being satisfied with the assessee's response thereto, that the acceptance was ordered; that therefore, evidently, it was not a case of non-application of mind which resulted in an assessment order which was erroneous and prejudicial to the interests of the revenue; that the ld. CIT, in fact, sought to review the ....
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....t-term capital gain; that this resulted in under assessment of income of Rs. 5,07,04,136/-, involving a tax effect of Rs. 1,70,67,012/-; that under these circumstances, the ld. CIT was well justified in invoking the provisions of Section 263 of the Act revising the order and directing the Assessing Officer to reframe the assessment order on causing sufficient inquiries to be made after providing due opportunity of hearing to the assessee; that by such directions of the ld. CIT, no prejudice has been caused to the assessee; that therefore, the appeal of the assessee does not carry any merit whatsoever; and that therefore, the appeal of the assessee be dismissed, upholding the well reasoned order passed by the ld. CIT. 6. We have heard the parties and have perused the material on record. Undisputedly, the assessee company during the year, has carried on its business in accordance with its business activity in the earlier years right from its inception, on 03.01.1994. The principal business of the assessee company as per its Memorandum of Association has been to enter into the joint venture agreements and acquire or promote other companies, engaged in the same business as that of the....
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....n being duly satisfied with the aforesaid details called for from and duly furnished by the assessee, that the Assessing Officer accepted the amount declared under the head of capital gains. This amount was set off against the brought forward capital loss of earlier years. 11. In the face of above pointed detailed inquiry carried out by the Assessing Officer, obviously, the ld. CIT was not justified in invoking the provisions of Section 263 of the Act, treating, wrongly, the assessment order to be erroneous and prejudicial to the interests of the revenue. In fact, this action of the ld. CIT amounted to nothing other than a review of the assessment order which is not warranted in the light of the following decisions rightly relied on on behalf of the assessee:- i) 'Malabar Industries Co. Ltd.', 243 ITR 83 (SC); ii) 'CIT vs. Greenworld Corpn.', 2009-TIOL-69-SC; iii) 'CIT vs. Max India Ltd.', 295 ITR 282 (SC); and iv) 'CIT vs. R.K. Construction Co.', 175 Taxman 165; 12. In 'CIT vs. Sunbeam Auto Ltd.', 332 ITR 167 (Del) and in 'CIT vs. Vikas Polymer', 236 CTR 476 (Del), it has been held that it is only where no inquiry has been carried on by the Assessing Officer that power u/s 2....