TaxTMI 
TaxTMI 
2015 (11) TMI 539
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....in the Assessee's Cross Objection being CO No. 355/Del/2011 (A.Y. 2007-08) read as under:- "1. That having regard to the facts and circumstances of the case Ld. CIT(A) has rightly deleted the addition of Rs. 2,34,47,563/-, which was made by AO on the ground of alleged sale proceeds of shares received by the appellant as against Rs. 3,00,000/- declared by her. 2. The Ld. CIT(A) is erred under the law while holding that AO has a valid jurisdiction u/s. 153A of the Act. 3. That the Cross Objectors craves the leave to add, amend, modify, delete any of the ground(s) of cross objection before or at the time of hearing." 4. Briefly stated the facts are that the Original return declaring net taxable income of Rs. 6,69,800/- was filed on 30.7.2007 with ACIT, Circle-35(1), New Delhi. The return was duly processed u/s 143(1) of the l.T. Act. She is one of the directors of M/s Mahagun (India) Pvt. Ltd. The search was conducted on 26.8.2008 at the business premises i.e. Plot No.A-19, Sector-63, Noida. Consequent upon search, the case was centralized with Central Circle-5, New Delhi vide order dt.06.11.2009. At the time of search, certain documents pertaining to the....
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....he members of the Mahagun Group. 4.3 Fortunately, there is concrete proof about the value of shares of Mahagun (India) Pvt. Ltd. as on 31.3.2006 (the case is also assessed in this Circle only). On 31.3.2006, Mahagun (India) Pvt.Ltd. had issued and allotted the. following shares at the rate and premium mentioned below.- Name of the Share Applicant No. of shares Face Value (per share) Share Premium (per share) Total amount received Mahagun Developers Ltd. 280000 10/- 240/- 7,00,00,000/- Mahagun Realtors Pvt. Ltd. 236000 10/- 240/- 5,90,00,000/- ADR Home Décor Pvt. Ltd. 11600 10/- 240/- 29,00,000/- 4.4 Thus, there is independent evidence that the value of shares of Mahagun (lndia) Pvt.Ltd. was Rs. 250/- per share after including premium of Rs. 240/- per equity share. The assessee, Smt. Divya Jain, possessed 3000 shares of Mahagun Realtors Pvt. Ltd. which were equivalent to 3000 x 45 -1,35,000 shares of Mahagun (India) Pvt. Ltd. The value of each share of Mahagun (India) Pvt. Ltd. on 31.3.2006 was Rs. 250/- and on that basis the fair market value of 3000 shares of Mahagun Realtors Pvt. Ltd. comes to 1,35,000 x 250 -Rs.3,37,50,000/-. Theref....
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....es. Therefore, according to Ld. A.O., assessee ought to have received sale proceeds equal to Rs. 3,37,50,000/- (3000x45x250) and not Rs. 3,00,000/- as claimed by the assessee and computed the capital gain based on this fictional amount. Ld. CIT(A) deleted the addition and held that so far assessee is concerned, she sold her shares on 01.12.2006 much before the date of the order of High Court and she received Rs. 3,00,000/- only and when High Court approved the scheme on 10.09.2007, the share were not held by the assessee because she had already sold her shares on 01.12.2006. In fact, there is no infirmity in the order of Ld. CIT (A) as u/s 45 read with section 48, actual sale consideration in the hands of the assessee is the sole determining factor 'for computing the capital gain. Assessee sold her shares on 01.12.2006 on "as is where is" basis @ Rs. 100/shares. If by subsequent order of High Court dated 10.09.2007, some more consideration in the form of shares were to be received, it was to be received and in fact was received by the holder of shares on the date of the order of High Court which in any case was not the assessee. Therefore, there was no questio....
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....nd report submitting that capita gain is taxed on the actual sale consideration and is not calculated based upon fair market value and any addition based upon fair market value was brought on the statute w.e.f. 01.10.2009 u/s 56(2)(vii). Therefore, there is no infirmity in the order of Ld. CIT(A). Assessee's Cross Objections The only issue in Cross Objection is regarding assumption of jurisdiction u/s 153C (wrongly mentioned as 153A in the grounds of appeal). Submission of the assessee is that for assuming jurisdiction u/s 153C, not only the documents of the assessee should be found and seized but those documents found and seized must be of incriminating nature. To treat a person as searched u/s 153C is very harsh and mere discovery of disclosed documents should not confer this harsh jurisdiction, as held in the judicial decisions given herein after. PB 25 is the copy of notice u/s 153C. PB 26-29 is the copy of document, which is copy of the sale deed of property, B-66, Vivek Vihar, purchased by the assessee for Rs. 22,00,000/- on the basis of which the jurisdiction has been assumed u/s 153C. PB 30-33 in the copy of return o....
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....t, adduced any evidence found either during search proceeding on the group company's business premises u/s 132 or post search proceedings of the appellant which may establish that the appellant has received the consideration more than what she has declared in her I.T. Return for the year under review. A combined reading of section 45(1)(a) and section 48 of the Act shows that when a sale of capital assets take place the capital gain arising out of such transfer has to be computed by looking at full value of consideration received or accruing as a result of such transfer. The expression "full value of consideration" is not the same as "fair market value" as appearing in section 55A of the Act. Thus for the purpose of computing capital gain there is no necessity to determine the fair market value unless it is specifically provided in the Act. Reliance is placed on the following authorities:- Moral Trading & Investment Ltd. vis. DCIT (2011) 007 ITR (Trib) 0548 (Delhi) CIT vis. I.P. Chaudhari (2010) 328 ITR0007 (Del) CIT v. Lake Palace Hotels and Motels Ltd. [2010]321 ITR 165 (Raj) CIT vis. Ni/ofar I Singh (2009) 309 ITR 0233 (Del) Rupee....
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....ation of capital gain is fairly valid. We note that in the present case the A.O. has not adduced any evidence found either during search proceeding on the group company's business premises u/s 132 or post search proceedings of the assessee which may establish that the assessee has received the consideration more than what she has declared in her I.T. Return for the year under review. A combined reading of section 45(1)(a) and section 48 of the Act shows that when a sale of capital assets take place the capital gain arising out of such transfer has to be computed by looking at full value of consideration received or accruing as a result of such transfer. The expression "full value of consideration" is not the same as "fair market value" as appearing in section 55A of the Act. Thus for the purpose of computing capital gain there is no necessity to determine the fair market value unless it is specifically provided in the Act. We have perused the following case laws as relied cited by the Ld. CIT(A), which supports the case of the Assessee:- Moral Trading & Investment Ltd. vis. DCIT (2011) 007 ITR (Trib) 0548 (Delhi) CIT vis. I.P. Chaudhari (2010) 328 ITR0007 (Del....
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....on of the Ld. CIT(A) on this ground and dismissed the ground no. 1 raised by the Revenue in its Appeal. In the result, the Appeal filed by the Revenue stands dismissed. ASSESSEE'S CROSS OBJECTION 10. With regard to ground no. 1 relating to rightly deletion of addition of Rs. 3,34,47,563/- which was made by the AO on the ground of alleged sale proceeds of shares received by the assessee as against Rs. 3,00,000/- declared by her. Since we have already dismissed this ground of appeal raised in the Revenue's Appeal by upholding the action of the Ld. CIT(A) of deletion of the addition, as aforesaid, hence, this issue has become infructuous as such. 11. As regards the issue involved in ground no. 2 of the Cross Objection regarding the assumption of jurisdiction u/s. 153(C) (wrongly mentioned as 153A in the ground of appeal) is concerned. Ld. Counsel of the assessee has stated that certain documents belonging to the assessee were seized by the Search Party of the Department, which the assessee has already disclosed while filing the return of income for the assessment year in dispute. Therefore, no incriminating material belonging to the assessee were found during search period. T....