TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 44
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....erewith the Misc. Application captioned as above, for favour of consideration by your honours. 2. The above referred order is a consolidated one passed by the Hon'ble ITAT in six appeals being - Sl.No. ITA Nos. Names of the parties (i) 217/LKW/2012 Dy. CIT, Kanpur Vs. Shri Sanjay Gupta (ii) 218/LKW/2012 Dy. CIT, Kanpur Vs. Shri Sameer Gupta (iii) 219/LKW/2012 Dy. CIT, Kanpur Vs. Shri Rahul Gupta (iv) 220/LKW/2012 Dy. CIT, Kanpur Vs. Shri Sandeep Gupta (v) 221/LKW/2012 Dy. CIT, Kanpur Vs. Shri Yogendra Mohan Gupta (vi) 222/LKW/2012 Dy. CIT, Kanpur Vs. Shri Siddharth Gupta all relating to Assessment Year 2008-09. I. BACKGROUND OF THE CASE 3. The grounds on which Revenue has preferred the above mentioned six appeals, are identical. Taking the case of Sri Sanjay Gupta, the leading case, the grounds of appeal taken by the Revenue in his case are reproduced hereunder :- "1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) was right in deleting the addition made by A.O. in spite of the fact that these shares were purchased by the assessee on an extraneous consideration for the benefit of preference share holders being assessee himself....
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.... short term capital loss incurred on sale of shares in SSAIL, which had been purchased on 07.12.2007 and sold to M/s India Glycol Ltd. on 15.12.2007. 6. Aggrieved by the assessment order dated 16.12.2010, as has been referred to in the "Facts of the case" (Annexure-I), the assessee (respondent before the Hon'ble Tribunal) had filed an appeal under section 246A before the learned Commissioner of Income-tax (Appeals) -I, Kanpur on the grounds reproduced hereunder:- "(i) Because the learned Deputy Commissioner of Income Tax, Circle-4, Kanpur has wrongly, illegally and arbitrarily disallowed the short term capital loss amounting to Rs. 1,30,10,881/-. (ii) Because the learned Deputy Commissioner of Income Tax, Circle-4, Kanpur has wrongly, illegally and arbitrarily assumed and presumed that the business transaction done as per the agreed conditions precedent between two unrelated independent business entities was the transaction essentially of sham character and therefore the loss resulting from such sham transaction is not allowable. (iii) Because the learned Deputy Commissioner of Income Tax, Circle-4, Kanpur has taken much pains to workout the avoidable short term los while not a....
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....ch the sale of shares held as short term "capital asset" took place, nor there was any controversy about the sale price of Rs. 3.15 per share as has been determined with reference to the valuation of the 'enterprise' as stood incorporated in the agreement for purchase of shares entered into with M/s India Glycol Ltd. II - PROCEEDINGS IN APPEAL BEFORE THE HOBN'BLE I.T.A.T. 11. It was against the above referred order of the first appellate authority that the Revenue came up in appeal before the Hon'ble ITAT, on the grounds that have been reproduced in Para 3 hereinfore. The said appeal, being ITA No.217/LKW/2012, has been decided by the Hon'ble ITAT vide order dated 13.06.2014, which gives rise to this Miscellaneous Application. A copy of the said order, which is subject matter of this Misc. Application, is enclosed and the same has been marked as ANNEXURE - III (pages 20 to 28) hereto. 12. During the course of hearing of the said appeal, the assessee/respondent had relied upon a very comprehensive 'compilation' running into 138 pages, which included all such material as was relevant for the purposes of decision of the issue involved in appeal filed by the Revenue, and from the s....
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....re-I) that had been considered by the ld.CIT(A) vide paras 4, 4.1,4.2,4.3,4.4,4.5 & 5 (reproduced in Annexure-II) while deciding the issue that had arisen from the assessment order, have not been disputed. 14. It is stated that - (a) the grounds taken by the Revenue, particularly the grounds no.1 & 2 (which are the substantive grounds) did not arise from the order dated 31.01.2012 passed by the ld. First Appellate Authority; (b) the provisions of section 40A(2a)/(b) had never been in the reckoning either at the assessment stage or even at the stage of the ld. First Appellate Authority, and it could not have been so as the said section refers to "reasonableness" or otherwise of the expenditure incurred (claimed as deduction in the computation of business income); and (c) the said grounds suffered from "irrelevance" and "vagueness" also and are, therefore, not in accordance with the procedure for filing the appeal. On a due consideration of these infirmities alone, the appeal filed by the Revenue deserved to be held as non-maintainable and non-adjudicable by the Hon'ble ITAT. 15. As stated in Para 12 hereinfore, the assessee/respondent had submitted a comprehensive compilation ....
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....tion of the case laws as per the judgment and order dated 16.07.2012 in Income tax Reference No.91 of 1998 in the case of CIT, Kanpur Va. Quality Steel Tubes Limited, relevant portion of which is reproduced hereunder :- "We do not find any difference in the circumstances where the Tribunal ignores the judgment of the jurisdictional court, or wrongly relies upon the principle of law laid down by the jurisdictional court. In case of misreading or relying upon a principle, which was never laid down in such judgment, the reasoning would be the same as if the Tribunal had not noticed the judgment." A copy of the said judgment is enclosed and the same has been marked as ANNEXURE - V (pages 31 to 37) hereto. 18. Further, while deciding the Revenue's appeal vide order dated 13.06.2014 under reference here, the Hon'ble ITAT has directed for a 'review' of the market price of the entire share holding (including the share held as long term capital asset) on 07.12.2007 and for re-working' not only the 'short term capital loss', but also the 'long term capital loss' by way of guidelines as given in Para 6 of the order (passed by the Hon'ble ITAT). The said Para 6 and the subsequent Para 7 are....
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....ability by such market value of shares as on 07.12.2007. The sale price of the shares as on 15.12.2007 should be the same price as determined by market value on 07.12.2007 and this will result into no profit no loss in respect of new shares to be acquired on 07.12.2007 but the long term capital loss in respect of sale of old shares will go up." 19. The effect of the guidelines given by the Hon'ble Tribunal (as have been reproduced in the foregoing paragraph), which are in the nature of directions to the authorities below, is that a fresh controversy got created about the "valuation of enterprise" on 07.12.2007, which was wholly non-existent at all the stages. This could not have been done, looking to the powers of an authority of the Tribunal on deciding the appeal. 20. Moreover, such guidelines affect and interfere even with the working of loss on the on "long term capital asset" which had attained finality at the stage of the Assessing Officer himself and which has never been the issue at any of the stages below. With great respect, it is submitted that the guidelines (which were in the nature of directions, were beyond the scope of appeal (with which the Hon'ble Tribunal was s....
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....eating the entire transaction as sham. When the assessee carried the matter in appeal before the CIT(A), the issue was decided in favour of the assessee and being aggrieved, the Revenue filed appeals before the Tribunal and while deciding these appeals of the Revenue, it was held by the Tribunal in these cases that it cannot be accepted that any loss was incurred during this period from 07/12/2007 to 15/12/2007 and therefore, the claim of the assessee regarding short term capital loss is not allowable. However, it was held by the Tribunal as per Para 6 of the impugned Tribunal order that since the assessee was also holding old shares on 07/12/2007, the loss incurred by the assessee should be held to be allowable as long term capital loss having been incurred on sale of these old shares. Now in these Misc. Applications, this is the argument of the assessee as per Para 20 of the Misc. Application, as reproduced above, that the issue regarding long term capital loss was not before the Tribunal and therefore, the direction of the Tribunal in this regard is beyond the authority of the Tribunal. In this regard, reliance has been placed on a judgment of Hon'ble Allahabad High Court re....
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....ion is consequential direction in course of deciding the issue raised before the tribunal regarding allowability of Short Term Capital Loss on sale of shares of SSAIL to India Glycol Ltd. After holding that there cannot be a loss during 7.12.2007 to 15.12.2007, the tribunal held that there is extra loss on sale of old shares which was claimed by the assessee as Short Term Capital Loss. This is a settled position of law that the tribunal can decide the issue in dispute by way of passing an order it deems fit and proper. Hence, if the tribunal found it fit and proper that on disallowing the claim of Short Term Capital Loss on sale of shares of SSAIL to India Glycol Ltd. in respect of purchase of those shares on 07.12.2007 and sale on 15.12.2007, the assessee deserved allowing of extra long term capital loss on sale of old shares of SSAIL to India Glycol Ltd., it cannot be termed as exceeding the power of the tribunal and hence a mistake in tribunal order. 6. One more contention has been raised by the assessee in Para 15 of the Misc. Application that the assessee had submitted a comprehensive compilation which included case laws also running into 138 pages but the Tribunal has decide....
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....not in the statute book in the relevant year. Hence, this judgment is also not applicable. 7.3 The next judgment is of Hon'ble apex Court in the case of CIT vs. Shivakami Co. (P) Ltd., 159 ITR 71. In this case, the issue in dispute was regarding increasing the capital gain by invoking the provisions of section 12B of 1922 Act without bringing any evidence on record to show that extra consideration over and above the stated consideration was received. It was held that the provisions of section 12B cannot be invoked in the absence of such evidence. In the present case, this is not the dispute that any section is invoked by the A.O. which is not in the statute book in the relevant year. Hence, this judgment is also not applicable. 7.4 The next judgment is of Hon'ble Madras High Court in the case of Lalchand Bhagat Ambica Ram vs. CIT 37 ITR 288. In this case, the issue in dispute before Hon'ble Apex Court was regarding interference by High court in finding of fact by the tribunal. It was held that if the finding of fact recorded by the tribunal is on conjecture, surmises or mere suspicion, it can be interfered with by the High Court. In the present case, the finding of fact by the tr....
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....o question of law arose from the order of the Tribunal and, therefore, the High Court was not justified in directing the Tribunal to state a case and the answer given by the High Court to the question referred to it is unsustainable. In the present case also, the finding of fact by the tribunal that no loss was incurred in the sale of shares purchased on 07.12.2007 at Rs. 10 per share and sold on 15.12.2007 at Rs. 3.15 per share is not on the basis of appreciation of facts of the present case which shows that as against Book Value of the share at Rs. 1.086 per share on 07.12.2007, the assessee has agreed to buy new shares at Rs. 10 per share and sold the same for Rs. 3.15 per share within 8 days. Hence, as per this judgment of Hon'ble Apex Court, it is a finding of fact. Since it could not be shown that the facts noted are incorrect, it cannot be said that there is any apparent mistake in the tribunal order. Hence, this judgment is also not rendering any help to the assessee. 8. One more contention has been raised in Para 14 of the Misc. Application that the grounds taken by the Revenue, particularly ground No. 1 & 2 did not arise from the order dated 31/01/2012 passed by learned ....