TaxTMI 
TaxTMI 
2022 (1) TMI 593
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....d 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 declaring Total Income at Rs. 13,61,55,860/comprising of business i....
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....hat 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 'Full Value of Consideration' is neither the market value not any other value in the context of the shares. It is the full value consideration in my case repres....
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.... 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 as a result of such transfer. ii. These provisions do not apply to the Assessment Year under consideration. S. 50CA has introduced a deeming fiction for the 1st time for substituting the rule value for the agreement value in determining the full va....
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....sustainable 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 Co. Ltd., v. CIT [2000] 243 ITR 83 (SC), Bismillah Trading Co. v. Intelligence Officer [2001] 248 ITR 292 (Ker.), Venkatakrishna Rice Co. v. CIT [1987] 163 ITR 129 (Mad.) and CIT v. Pushpa Devi [1987] 164 ITR 639 (Pat.) and accordingly, he set aside the order passed u/s. 143(3) of the Act and directed the Assessing Officer to pass afresh Assessment Order considering the issues raised i....
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.... 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 VIOLATION OF NATURAL JUSTICE a. The Ld. PCIT erred in law and on facts in completing the revisionary proceedings in a complete haste and without giving sufficient time and opportunity and erred in law in ignoring all the evidences and proofs and documents available on records and further erred in treating the order passed by AO as erroneous and prejudicial to the interest of the revenue and setting aside the same without bringing any material of whatsoever nat....
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.... [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 NITINVADOR-A.Y.: 2015-16 [39] 2nd submission with Annexures - letter dt. 14.08.17 208-209 [40] 3rd submission with Annexures - letter dt. 17.11.17 210-211 [41] Notice u/s. 143(2) dt. 25.07.2016 212-213 [42] Notice u/s. 143(2) dt. 07.10.2017 214-217 [43] Computation of income 214-217 [44] Assessment order u/s. 143(3) dt. 20.12.17 224 - 228 BHARAT N NARSANA - A.Y.: 2015-16 [45] 2nd submission with Annexures - letter dt. 16.02.17 229-231 [46] 3rd submission with Annexures - letter dt. 12.10.17 232-233 [47] 4th submission with Annexures - letter dt. 1....
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....ments 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 he accepted the same explanation and completed the assessment. Therefore, Assessing Officer has applied his mind and passed the Assessment Order. Now, Ld. Pr.CIT again set-aside the orders based on his opinion that verification was not carried by the Assessing Officer. 9. On the other hand, Ld. DR submitted that Ld. Pr.CIT has observed that no verification was carried by the Assessing Officer considering the fact that there is nothing on record to show that verification is carried on during this assessment year. Ld. DR submitted that with reference to Page No. 9 of the Paper Book which is the notice u/s. 143 of the Act issued by the Assessing Officer and he submitted that this notice is not issued for scrutiny of capital gain and it is only gene....
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....mily 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. After considering the submissions Ld. Pr.CIT came to the conclusion that assessment passed u/s. 143(3) of the Act is erroneous as well as prejudicial to the interest of the Revenue and he set-aside the order without bringing on record how the order passed by the Assessing Officer is prejudicial to the interest of the Revenue. Various courts have held that in order to invoke provisions of section 263 of the Act twin conditions has to be fulfilled i.e., not only erroneous but also has to be prejudicial to the interest of the Revenue. In the given case Ld. Pr.CIT has never found/quantified the prejudicial to the interest of the Revenue. In our considered view, he cannot invoke the provisions of section 263(1) when the Assessing Officer has made the enquiry ....