TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1540
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....ct, 1961. The case has been selected for scrutiny under 'CASS' and accordingly, notice u/s 143(2) was issued. In response to notice, the authorized representative of the assessee appeared and furnished details called for. The assessment was completed u/s 143(3) on 16-01- 2013, determining total income as returned by the assessee. 3. The Commissioner of Income Tax-1, Visakhapatnam issued a show-cause notice u/s 263 of the Act, dated 19-06-2014 and asked to explain as to why the assessment order passed u/s 143(3) dated 16-01- 2013 for the A.Y. 2010-11 shall not be reviewed for the reasons recorded in the show-cause notice. The CIT, proposed to review the assessment order for the reason that the A.O. has erred in allowing exemption u/s 54EC and u/s 54F towards investment in capital gains bonds and purchase of residential property, which is otherwise not allowable, as the assessee has invested sale consideration from sale of shares beyond the time limit specified under said provisions. The CIT, further, observed that the assessee ought to have invested sale consideration within six months or two years from the date of receipt of money, however the assessee has invested in the bonds an....
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....ey, however invested in the bonds and property beyond the period of six months or 2 years from the date of receipt of money, which is because the issue got crystallized when the buyer paid money to the seller. Giving a share certificate along with share transfer form at a subsequent date would not change the nature of transaction. The date of receipt of money which concluded the issue should be taken into account to determine the time limits for investment, but not the date of transfer of shares by signing share transfer form. Since, the issue got concluded on the date of receipt of money, that date is only crucial for determining the period of limitation for investments to claim exemption u/s 54EC and 54F of the Act. If, the period of limitation is computed from the date of receipt of money, then investments in 54EC and 54F is beyond the time limit specified under the provisions, accordingly, the assessee is not eligible for exemption. The A.O. not only failed to examine crucial aspects of the issue, but also failed to apply his mind before allowing exemption u/s 54EC and 54F which rendered assessment order erroneous in so far as it is prejudicial to the interest of the revenue. S....
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....e CIT rightly assumed jurisdiction to review the assessment order. The Ld. A.R. referring to clause 4.1 (page no. 14), clause 5.2.4 and clause 6.1 and 6.2 (page no. 17) of investments agreement dated 12-08-2009, submitted that transfer got crystallized on the date of payment of consideration towards transfer of shares by the purchaser to the seller and subsequent execution of share transfer form and filing such form with designated authorities is only a statutory requirement which is nothing to do with transfer. The D.R. referring to clause 5.2.4, 6.1 and 6.2. of investment agreement, submitted that effective transfer took place on 10-09-2009 which is the closing date and on this date the assessee had received full consideration towards transfer of shares which was credited to the assessee account, therefore, it is incorrect to state that transfer would happen only when transfer deed is executed. The ld. D.R. referring to section 19 of sale of Goods Act, 1930 submitted that where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intended it to be transferred. The D.R. also ....
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....essee has purchased a house property on 31-10-2011 out of amount deposited under capital gain deposit scheme. These facts were not disputed by both the parties. 9. In this factual back ground, let us examine whether the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT observed that the A.O. failed to examine facts in a proper perspective in the light of relevant materials and also failed to apply his mind before allowing exemption u/s 54EC and 54F claimed by the assessee. The CIT, further, observed that to claim exemption u/s 54EC and 54F, the assessee ought to have invested sale consideration within six months/ 2 years from the date of receipt of money, however on perusal of facts, the assessee made investments in NHAI bonds on 4-5-2010 and purchase of property on 31-10-2011 which is beyond the period of six months or 2 years from the date of receipt of money. According to the CIT, the effective transfer took place on the date the buyer paid money to the seller. Giving a share certificate along with share transfer form at a subsequent date would not change the nature of transaction. The date of receipt of mone....
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....me to the conclusion that the A.O. has not examined the issue. Once, the A.O. has called for details of the issue which is subject matter of revision proceedings and the assessee has furnished details called for, it is the general presumption that the A.O. has examined the issue with necessary evidences, applied his mind and took a possible view of the matter before completion of assessment. The CIT cannot assume jurisdiction to review the assessment order by holding the A.O. has conducted inadequate enquiry and also not applied his mind. Therefore, we are of the view that the assessment order passed by the A.O. is not erroneous within the meaning of section 263 of the Act. 11. Having said, let us examine whether the assessment order is prejudicial to the interest of revenue. The facts relating to the transaction, except date of transfer was not disputed by both the parties. The only dispute is with regard to date of transfer. Both the parties have vehemently argued on the point. The assessee contends that transfer had taken place on 24-11-2009, when valid instruments of share transfer in form no. 7B is duly stamped and signed by the both the parties and presented to the Company a....
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.... to the company and endorsed by the Company. Therefore, for effective transfer of shares a mere agreement for transfer of shares is not sufficient, unless it is physically transfer shares by delivery of share certificate along with duly signed and stamped share transfer form. The agreement to transfer share can give enforceable right to the parties, but it cannot be a valid transfer unless it is followed up by actual delivery of shares. In so far as the Ld. D.R. argument that transfer would take place when parties intended to transfer, we find that when a specific provision in section 108 of the Companies Act, 1956 is provided for dealing with transfer of shares, referring to the provisions of section 19 of the Sale of Goods Act, 1930 to define share transfer is unwarranted and uncalled for. Even, the Board, by way of a circular no. 704, dated 28-04-1995 has dealt the issue and clarified that in the case of transactions took place directly between the parties and not through recognized stock exchanges the date of contract of sale as declared by the parties shall be treated as the date of transfer provided it is followed up by actual delivery of shares and the transfer form. Therefo....
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....nd accordingly, the assessee is eligible for exemption and thus, there is no prejudice is caused to the revenue from the order of the A.O. within the meaning of section 263 of the Act. Therefore, the CIT was incorrect in assuming jurisdiction to review the assessment order. 14. The CIT has power to revise the assessment order u/s 263 of the Act. But, to invoke the provisions of section 263 of the Act, the twin conditions must be satisfied, i.e.(1) the order of the A.O. is erroneous (2) further it must be prejudicial to the interest of the revenue. Unless both the conditions are satisfied, the CIT cannot assume jurisdiction u/s 263 of the Act. It is not necessary that every order which is erroneous must be prejudicial to the interest of the revenue or vice-versa. In some cases, the order passed by the A.O. may be erroneous, but it may not be prejudicial to the interest of revenue or vice-versa. Unless the order passed by the A.O.is erroneous and prejudicial to the interest of the revenue, the CIT cannot assume jurisdiction to revise the assessment order, this is because the twin conditions i.e. the order is erroneous and the same is prejudicial to the interest of the revenue are co....
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....t. The assesses filed a paper book which contains the details furnished before the A.O. at the time of assessment. On perusal of the paper book filed by the assessee, ITAT find that the A.O. has issued a detailed questionnaire in respect of net profit and also TDS in respect of rent and hire charges. The A.O. after satisfied with the explanations furnished by the assessee has accepted the income returned. Therefore, ITAT are of the view that once the issues which are subject matter of revision u/s 263 of the Act, have been examined by the A.O. at the time of assessment, the CIT has no jurisdiction to entertain fresh enquiry on the same issues, because he has a different opinion on the issues. In ITAT considered opinion, the issue of net profit and TDS on rent and hire charges has been examined by the A.O. at the time of assessment, therefore, the CIT was not correct in coming to the conclusion that the A.O. has not examined the issues". 16. Considering the facts and circumstances of this case and also applying the ratios of the coordinate bench, we are of the view that assessment order passed by the A.O. u/s 143(3) of the Act dated 16.01.2013 is not erroneous in so far as it is p....