TaxTMI 
TaxTMI 
2020 (2) TMI 121
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....d on by the Shareholder as at the date of this agreement, at any time hereafter and until the expiration of one year from the date it ceases to be beneficially interested in any Shares, either alone or jointly with any other person through or as manager, adviser, agent, consultant, employee or agent for or shareholder in any person, firm or company directly or indirectly carry on or be engaged or concerned or interested in the provision of retailing of books, magazines, stationary items. 3.The petitioner sold 1/25th share in Landmark and its Associates Companies to Trent Ltd and affiliates for Rs. 5,76,00,000 in the Assessment year 2006-07 (30.08.2015 & 10.03.2006). On 30.04.2008, the petitioner entered into an another agreement with Trent Ltd and its affiliates for sale of 21% stake in the Land Mark Group Companies. The said agreement contained non-compete clause which reads as under:- "10.(c). At any time hereafter and upto 30th April, 2009 shall not start her own retail store dealing in books, music, magazines and stationary items." 4.The petitioner thus sold 849900 equity shares, 525000 warrants and 25350 cumulative preference shares for an aggregate consideratio....
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....ed. 10.The Assessing Officer wrote a letter to the petitioner on 05.02.2014 and asked for clarification on the sale of shares. In the letter, the respondent has stated as under:- "Since the shares were alloted on non competitor restriction, the gain on sale of the same requires to be reconsidered as business income u/s 28(va). Hence the long term capital gains of Rs. 37,91,81,581/- requires to be taxed as business profit of the assessee. In this connection you are required to submit a clarification for the same." 11.Pursuant to the above letter, the Charted Accountant of the petitioner appeared and has explained the transaction of sale of shares stating that the consideration received for the transfer of shares was not remotely connected to any business activity or coming under ambit of Section 28(va) of the Income Tax Act, 1961. The respondent had become functus officio after the assessment order was passed for the assessment year 2009-10 under Section 143(3) of the Income Tax Act, 1961 and had no power to seek any clarification vide letter dated 05.02.2016 from the petitioner. 12.The petitioner offered her explanation and assumed that the respondent was satis....
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....e holder agreement), the consideration was paid as share warrant and shares redeemable at pre-fixed minimum rate. Since the shares were allotted on non-competitor restriction, the gain on sale of the same requires to be considered business income u/s.28(va). Hence the long Term Capital Gain of Rs. 37,91,81,581/- requires to be taxed as business profit of the assessee. In this connection you are required to submit a clarification for the same. Your reply should reach this office on or before 06.03.2014. 14.After lapse of two years thereafter, on 31.03.2016, the above notice was issued under Section 148 of the Income Tax Act, 1961. The notice merely stated that the officer concerned has reason to believe that the income declared by petitioner chargeable to tax for the assessment year 2009-10 has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961 and thereafter proposed to assess/re-assess the income for the said assessment period and called upon the petitioner to deliver a return in the prescribed form for the said assessment year. It states that the notice was issued after obtaining necessary to the satisfaction of the Pr. ....
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....ounsel relies on the decision of the Hon'ble Supreme Court in Kisan Agro Mart (P.) Ltd. Vs. Income Tax officer, (2019) 109 taxmann.com 496 (SC), wherein the Hon'ble Supreme Court directed the Appellant therein to approach the concerned Appellate Commissioner as the Appellant had already availed remedy of appeal by filing a substantive appeal before the Commissioner Appeals challenging the Assessment Order. 20.The learned Senior Standing Counsel for the respondent Income Tax Department referred to the decision of the Hon'ble Supreme Court of India in S.Narayanappa Vs. Commissioner of Income-tax, (1967) 63 ITR 219 (SC), wherein the Hon'ble Supreme Court of India had earlier held that there was no necessity under any of the provision of Act or any Section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under Section 34 must also be communicated to the assessee. 21.The learned Senior Standing Counsel for the respondent submits that it is only after the decision of the Hon'ble Supreme Court in G.K.N.Driveshafts (India) Ltd. Vs. Income Tax Officer and Others, (2003) 1 ....
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.... exempt U/s.10(38), in the memo of computation of total income. Under the circumstances, due to mismatch of turnover, it is clear that the taxable income in the form of STCG on the differential value of redemption of Rs. 31,12,25,363/- has escaped assessment within the meaning of S.147. Further, it is also seen that in computing the eligible quantum U/s.10(34) the provisions of S.94(7) and 94 (8) have not been enforced STCL in respect of Mirea Asset (Rs. 7,14,922/-) Reliance medium Term Fund (Rs. 30,808/-). Franklin Templeton Short Term Income (Rs. 47,111/-) and Sundaram BNPP interest Fund (Rs. 12,014) summing up to Rs. 8,04,855/- therefore it cannot be allowed. For the reasons discussed above, I have clear reasons to believe that the income of the assessee has escaped assessment within the meaning of S.147 and I solicit the approval of the CIT for issue of notice U/s.148. S/-(I.P.ROOPA) Assistant Commissioner of Income Tax Non-Corporate Circle 3, Chennai. Date: 29/03/2016 12. Whether the Joint Commissioner is satisfied with the reasons recorded by the ACIT that it is a fit case for issue of Notice U/s.148 - Yes I am satisfied Recommended. Sd/-(K.N.DHANDA....
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.... one year from the date it ceases to be beneficially interested in any shares, either alone or jointly with any other person through or as manager, adviser, agent, consultant, employee or agent for a shareholder in any person, firm or company directly or indirectly carry on or be engaged or concerned or interested in the provision of retailing books, magazines, stationary items." Hence, there is a clear non-compete clause. Section 28(va) of the Income Tax Act states that, "any sum, whether received or receivable, in cash or kind, under an agreement for- (a) not carrying out any activity in relation to any business [or profession]; or (b) not sharing any know-how, patent, copyright, trademark, licence, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services:" There is a clear cut restriction on the assessee to carry out any business in the field of retailing books, magazines, stationary items. Hence, as per the provisions of section 28 (va) of the Income Tax Act, the amount received in return for this is in the na....
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.... clearly barred under law as it was on account of change of opinion of the respondent. 31.It is noticed that before regular scrutiny assessment was completed, on 11.07.2011 details were called from the petitioner. The petitioner furnished the same vide letter dated 11.08.2011. Thereafter, notice under Section 142(1) was issued, which called upon the petitioner to furnish shareholder agreement dated 01.04.2006 with Land mark and other particulars. These were furnished by the petitioner on 04.11.2011. Thus, there was full disclosure by the petitioner. 32.That apart, the reason to invoke proviso to Section 147 r/w. Section 148 is not the basis of impugned order. The amount which has been made liable to tax in the impugned order dated 29.12.2016 was subject matter of discussion with the respondent prior to passing of the impugned notice dated 31.03.2016 vide communications exchanged pursuant to letter dated 05.02.2014 seeking clarification from the petitioner. After the scrutiny assessment order dated 21.12.2011 came to be passed, the said letter dated 05.02.2014 was issued to the petitioner calling upon the petitioner to furnish explanation regarding computation of income.....