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2021 (5) TMI 791
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....rn, carbon black, insulators, branded apparels and readymade garments. The assessee had filed its original return of income for the Asst Year 2013-14 on 28.11.2013 which was later revised on 30.3.2015 declaring total income of Rs. 283,15,81,630/- under normal provisions of the Act and Rs. 411,70,32,063/- u/s 115JB of the Act. The reasons for revising the return was duly explained by the assessee company vide its letter dated 15.11.2016 which has already been considered by the ld AO while framing the assessment. The ld AO completed the assessment u/s 143(3) of the Act on 9.2.2017 determining total income at Rs. 366,01,24,600/- under normal provisions of the Act and Rs. 440,88,34,676/- u/s 115JB of the Act. In the said computation of income in the assessment order, the ld AO had specifically mentioned that a sum of Rs. 267,17,80,899/- for the Asst Year 2013-14 would be eligible to be carried forward for set off in subsequent years in bold letters. The assessee challenged the assessment by preferring an appeal before the learned Commissioner of Income Tax (Appeals) [ ld CITA] on the aggrieved issues. 4. We find that with effect from 1.7.2017, M/s Aditya Birla Nuvo Ltd (ABNL) amalga....
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....n year of purchase Cost Inflation Index in previous year in purchase Index Cost of Acquisition Cost of Acquisition (Short Term) Sale consideration Profit as per Books Long Term Profit / (Loss) as per Income Tax 1 Aditya Birla Minacs Worldwide Limited ABNL IT & ITES Limited (Note-1) Various 14.03.2013 2,56,62,266 4,43,63,44,411 Various 852 (7,10,71,26,351) 4,43,63,44,411 (2,67,07,81,942) 2 Aditya Birla Housing Finance Limited Aditya Birla Finance Limited (Note-2) 30.10.2009  ....
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....well as the queries raised by the ld AO at the time of personal hearing. With regard to the queries raised by the ld AO at the time of personal hearing, we find that the ld AR had enclosed the order sheet copies in pages 177 to 179 of the factual paper book filed before us. We find that the assessee had vide its letter dated 21.10.2016 (enclosed in page 125 of the factual paper book) furnished a detailed reply regarding details of long term capital loss on sale of shares of Aditya Birla Minacs Worldwide Limited (ABMWL) as under:- "Details of long term capital loss on sale of shares of Aditya Birla Minacs Worldwide Limited 4.1. The Assessee company was holding investment (99.60%) in the shares of Aditya Birla Minacs Worldwide Limited ("Minacs India‟), which was engaged into the business of Information Technology & Enabled Services (ITeS). 4.2. The IT & ITes business of Minacs India was not performing as expected and therefore, due to commercial expediency, the Assessee Company wanted to exit from the ITeS business and it was in talks with the various investors. 4.3. In order to achieve the object of exiting from IT & ITes business by divestm....
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....the Assessee Company submits that provisions of Section 47(iv) of the Act does not apply in the instant case. (emphasis supplied by us herein) Computation of long term capital loss for A.Y.2013-14 carried forward by the Assessee Company (Annexure 5). Copy of audited financial statements for the year ended 31 March 2016 of Minacs India (Annexure 6). 4.11. Further, during FY 14-15, the object of incorporating the SPV was achieved as SPV divested the stake in Minacs India to certain investors. Aditya Birla Minacs IT Services Ltd (PSI Data Systems Ltd.) Company stands merged with Aditya Birla Minacs Worldwide Ltd. w.e.f. F.Y.2011-12 Years of Purchase Nos. of Shares Cost as per books Cost Inflation Index in the year of purchase Indexed Cost (F.Y.) 12-13=852 2001-02 5,311,669 1,002,853,083 426 2,005,706,166 2004-05 3,440 126,282 480 224,151 2008-09 463,240 33,024,192 582 48,344,693 2009-10 482,686 28,438,503 632 38,337,982 2010-11 200,367 12,002,161 711 14,382,336 6,461,402 1,076,444,221 A 2,106,995,328 Aditya Birla Minacs W....
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.... assessee had relied on earlier submissions made before the ld AO which fact is also mentioned in the order sheet noting recorded on 15.12.2016 enclosed in Page 179 of the factual paper book filed before us. 8. One more excruciating fact to be considered in the instant appeal is that the ld AO vide letter dated 3.7.2017 had addressed a letter to The Deputy Director, RA-1, ITRA, C-25, Audit Bhavan, Bandra-Kurla Complex, Bandra(E ) , Mumbai - 400051 objecting to the audit objection raised by the audit party . In this letter, the ld AO had actually accepted to the entire contentions of the assessee by placing all facts and legal points thereon before the Audit Party. For the sake of convenience, the said letter dated 3.7.2017 addressed by the ld AO to the audit party is reproduced hereunder:- "Kindly refer to the above. The Revenue Audit has raised audit objection as under: "As per section 47(iv) of the Act, any transfer of capital asset by a company to its Indian subsidiary company is not regarded as transfer if the parent company or its nominees hold the whole of the share capital of the subsidiary company. In the instant case, the assessment w....
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...."As per Section 47(iv) of the Act, any transfer of capital asset by a company to its Indian subsidiary company is not regarded as transfer of the parent company or its nominees hold the whole of the share capital of the subsidiary company. In the instant case, the assessment was completed under section 143(3) r.w.s. 144C of the Act determining taxable income at Rs. 3,66,01,24,600. It was seen that the assessee claimed and was allowed Long Term Capital loss of Rs. 2,67,17,80,899/- to be carried forward to future years. This LTCL of Rs. 2,67,17,80,899/- included LTCL of Rs. 2,67,07,81,942 on sale of 25662266 shares of Aditya Birla Minacs Worldwide Limited to ABNL IT & ITES Ltd., It was seen that the transferee ABNL IT & ITES Ltd., was a 100 percent subsidiary of the assessee. As the said transaction is not to be treated as transfer under section 47, the allowance of Long Term Capital Loss was not in order. By generating LTCL in violation of the Act, the assessee would be able to reduce future LTCG tax liability by this action. Non disallowance of the irregular claim of LTCL on account of transfer of assets to its subsidiaries resulted in excess carry forwar....
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.... within the Income Tax Department itself. There is absolutely no incorrect assumption of fact or incorrect application of law by the ld AO. Hence it could be safely concluded that the ld AO had taken one of the possible view. Once a possible view has been taken by the ld AO, his order cannot be termed as erroneous warranting revision proceedings u/s 263 of the Act. In any case, we find that there is no dispute that the Revenue Audit Party had indeed raised an objection on the very same subject of allowability of Long Term Capital loss and that the ld AO had not accepted the same. This is evident from the detailed reply given by the ld AO to the Revenue Audit Party vide his letter dated 3.7.2017 reproduced supra. We find that the ld PCIT had invoked revision jurisdiction u/s 263 of the Act on the very same point of allowability of LTCL. Hence it could be safely concluded that the revision proceedings has been invoked by the ld PCIT u/s 263 of the Act based on audit objection, which is nothing but borrowed satisfaction. Hence the said revision proceedings u/s 263 of the Act need to be construed as bad in law. Reliance in this regard has been rightly placed by the ld AR on the decisio....
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....l enquiry was already made by the ld AO in the original assessment proceedings itself. Infact the stand of the assessee was accepted by the ld AO in the assessment proceedings and also before the Revenue Audit Party which is evident from the reply to audit objection as reproduced supra. Reliance in this regard is placed on the following decisions, the operative portion are not reproduced for the sake of brevity:- a) Decision of Co-ordinate Bench of this Tribunal in the case of Narayan Tatu Rane vs ITO reported in 70 taxmann.com 227 (Mumbai) ( Paras 19 & 20) b) Decision of Co-ordinate Bench of Delhi Tribunal in the case of Hero Honda Motors Ltd vs DCIT in ITA No. 2148/Del/2009 dated 2.2.2017 (Paras 14 to 17) 11. In view of the aforesaid elaborate observations and respectfully following the various judicial precedents relied upon hereinabove, we hold that - a) Adequate enquiries were indeed carried out by the ld AO in the original assessment proceedings and hence the ld PCIT was not justified in invoking revisionary jurisdiction u/s 263 of the Act ; b) A possible view has been taken by the ld AO on the issue of LTCL on the facts of the case and ....