TaxTMI 
TaxTMI 
2022 (1) TMI 593
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....ed that assessee in his return of income claimed long term capital gain from sale of shares of unlisted share of Anant Developers Pvt. Ltd., of Rs..12,95,77,586/- and the sale is completed off market against which assessee has claimed deduction of Rs..50 lacks u/s.54EC of the Act. He observed that no details to ascertain the valuation adopted for the sale price of unquoted shares and no details regarding proof of acquisition of shares was examined. Further he observed that deduction u/s. 54EC of the Act claimed by the assessee also needs to be verified. Accordingly, he observed that Assessing Officer has not verified the details which were gathered by him during the assessment proceedings. Further, he considered the order passed u/s. 143(3) of the Act dated 11.04.2018 is erroneous in so far as it is prejudicial to the interest of the Revenue within the meaning of section 263 of the Act. Accordingly, he issued show cause notice u/s. 263 of the Act and served on the assessee. In response assessee made the following submissions "Claim for deduction based on merits and was otherwise allowable as per law a. The assessee had filed a return of income on 17.10.2016 declar....
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.... the value that is adopted by me in computing the capital gains in accordance with the Income Tax Act, 19617. i. I respectfully submit that the term 'Full Value Consideration' referred to in S. 48 is the value that is the amount determined by the parties to the transfer. Once the said value becomes final, such agreed value alone represents the full value consideration for the purposes of computing Capital Gains. No other value can be substituted unless otherwise provided by the express provisions of Income Tax Act, 1961. Kindly note that there are no provisions in the Income Tax Act that provides for substituting the fictional value for computing capital gains on the Shares of the company in place of the agreement value. ii. It is settled position in law that the amount actually received by me as per the agreement would constitute the full value consideration and that is the value adopted by the Ld. AO after due inquiry into the facts of the case and consideration of the law on the subject. The AO has computed the capital gains as per the provisions of law and there are no two views about the adoption of full value consideration by the AO. iii. The term '....
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....axman 252 held that for the purposes of S. 48 the full value of consideration is only the consideration referred to in the sale deed as the sale price of the asset transferred and not the market value. x. I respectfully submit that this settled position in Law has been reiterated and accepted, in the context of computation of capital gain, on transfer of shares of the company many number of cases including the following recent cases • Celenty Power L.L.P, 174 1TD 433 (Mum) • R.K.B.K. Fiscal Services Ltd., 19 taxmann.com 351 (Kol) f. Your kind attention is invited to provision of S. 50CA which are introduced by Finance Act, 2017 w.e.f AY 2018-19 i. 50CA. Special provision for full value of consideration for transfer of share other than quoted share.-Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being share of a company other than a quoted share, is less than the fair market value of such share determined in such manner as may be prescribed, the value so determined shall, for the purposes of section 48, be deemed to be the full value of consideration received or accruing....
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....erroneous and simultaneously prejudicial to the interest of revenue. When the Assessing Officer takes the only permissible view in law and which the Commissioner does not agree with and which is alleged to result in a loss of revenue, it cannot be treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is completely unsustainable in law. The Assessee begs to rely upon the above cited decisions to humbly submit that the Ld. A.O. after due examination of facts taken a particular view of the matter. The said view of the Ld. AO is in line with the established law with regards to computation of capital gains on sale of equity shares. The view taken by the Ld. AO therefore cannot be said to be erroneous." 4. After considering detailed submissions of the assessee, Ld. Pr.CIT rejected submissions made by the assessee. Ld. Pr.CIT observed that Assessing Officer has not verified the transactions relating to the long term capital gain or sale of shares and deduction claimed u/s. 54EC of the Act after gathering informations relating to the above by relying on section 263(1) Explanation 2 and case laws of Malabar Industries C....
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....on transfer of shares (including for AY 2015-16) and re-investment of part of capital gains in Bonds eligible for exemption u/s. 54EC. The correctness of capital gains on transfer of shares and the claim u/s 54EC for exemption was allowed by the A.O only after due consideration of the fact and of the law of allowability of such claim and in that view of the matter the order could not have been termed as erroneous or prejudicial to the interest of the revenue. The capital gains on transfer of shares and the claim u/s 54EC was in any case allowable as per the provisions of law and the order passed by the A.O did not require any revision u/s 263. The said order was passed by the A.O. u/s 143(3) on 11.04.2018. iii. The appellant had made complete disclosure of the facts. iv. there was no error committed in law in as much as the capital gains on transfer of shares and the claim u/s 54 EC was in accordance with law, and v. the order sought to be revised is neither prejudicial to the interest of the revenue nor is it erroneous in any manner. c. Your appellant pleads that such an order of PCIT be held to be bad in law and be quashed. 2. SERIOUS ....
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....ing information: - Sr. No of PB PARTICULARS Page No. of PB ASARIA LALJI VADOR - A.Y.: 2015-16 [24] 1st submission with Annexures - letter dt. 14.02.17 166 - 168 [25] 2nd submission with Annexures - letter dt. 20. 11.17 169 - 170 [26] 3rd submission with Annexures - letter dt. 30. 11.17 171-173 [27] Notice u/s. 142(1) dt. 31.01.17 174-176 [28] Computation of income 177-183 [29] Assessment order u/s. 143(3) dt. 22.12.17 184-186 MANJULA VADOR - A.Y.: 2015-16 [30] 2nd submission with Annexures - letter dt. 15.02.17 187 - 188 [31] 3rd submission with Annexures - letter dt. 14.08.17 189-190 [32] 4th submission with Annexures - letter dt. 17.11.17 191 [33] Notice u/s. 143(2) dt. 26.07.2016 192-193 [34] Notice u/s. 142(1) dt. 10.02.2017 194-195 [35] Notice u/s. 142(1) dt. 25.07.2017 196-197 [36] Notice u/s. 142(l)di. 14.11.2017 198-199 [37] Computation of income 200-202 [38] Assessment order u/s. 143(3) dt. 20.12.17 203-207 NITINVA....
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....e has sold the shares of same company in A.Y. 2015-16 and current assessment year also. The assessment was reopened with a limited purpose scrutiny to verify the transactions involving long term capital gain and Assessing Officer has called for all the information relevant to these transactions and assessee has submitted all the documents relevant for these transactions. He further submitted that since the similar transactions was carried on in A.Y. 2015-16 assessee also brought to the notice of the Assessing Officer all the information relating to the A.Y.2015-16 as well. Since the Assessing Officer is same in both the Assessment Years he has verified all the information and appreciated the facts in present assessment year and accepted the documents and explanation offered by the assessee. Further he brought to our notice Page No. 124 of the Paper Book relating to the shares purchase agreement and he brought to our notice assessment records and submissions made before the Assessing Officer relating to A.Y. 2015-16 and A.Y. 2016-17 and he submitted that the Assessing Officer has appreciated the submissions made by the assessee which are similar to the previous assessment year and h....
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....sactions were carried in A.Y.2015-16. The Assessing Officer has verified the same and allowed the claim of the assessee. We observed that no doubt Assessing Officer has passed cryptic Assessment Order, however, the informations submitted before us clearly indicate that Assessing Officer has collected all the relevant information and the same Assessing Officer who has assessed the income of the assessee in the A.Y. 2015-16 wherein assessee has sold same shares and made investment and accordingly Assessing Officer has accepted the submissions of the assessee and taken one of the possible view that transactions are in order. Further it is brought to our notice that same transactions were carried on by not only assessee but also by other members of the family as well, and the Assessing Officer has verified the same issues in the case of other family members and accepted the return of income filed by them. Now we observed that Ld. Pr.CIT after considering the information available on record came to the conclusion that Assessing Officer has collected all the information and however, not carried out verification of the same. Afterwards issued notice u/s.263 and called for submissions. Aft....