AI Drafter 
TaxTMI 
TaxTMI 
2022 (9) TMI 499
X X X X Extracts X X X X
X X X X Extracts X X X X
....he return of income for the year under consideration was filed by M/s. Krishi Raj Trading Ltd. @ Rs.87,93,59,786/-. Assessing Officer (AO) framed assessment under section 143(3) of the Act vide order dated 31.12.2010 at the total income at Rs.1,35,23,232/- under normal provisions and under section 115JB of the Act at Rs.9,27,34,44,000/-. Thereafter, matter went to the CIT(A), then to the Tribunal. The Tribunal set aside the matter to the AO who has framed the assessment under section 143(3) read with section 254 of the Act on 26.04.2017 at the total income under normal provisions at loss of Rs.2,31,025/- and book profit under section 115JB of the Act at the loss of Rs.1,67,64,201/-. 3. The Ld. PCIT while invoking the provisions contained under section 263 of the Act noticed that during the year under consideration two wholly owned subsidiaries namely M/s. Vikram Capital Resource Pvt. Ltd. and M/s. Midfin Cap Lease Ltd. were amalgamated with the assessee. The transferee companies were holding 90,33,701 shares of M/s. Adani Enterprises Ltd. at the time of amalgamation which were sold during the year under consideration for Rs.869.17 crore. Amalgamation of M/s. Midfin Cap Lease Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....these shares which is in fact Rs.679.46 cores in the original as well as the order passed under section 143(3) read with section 254 of the Act dated 26.01.2017. Since the AO has computed the book profit under section 115JB of the Act without making any enquiry or verification as to correct book profit which is Rs.679.46 crore, the order passed by the AO becomes prima-face erroneous in so far as prejudicial to the interest of Revenue within the meaning of explanation 2(a) to section 263(1) of the Act. After considering the submissions made by the assessee Ld. PCIT proceeded to conclude that the AO did not make enquiries and verification which a prudent and reasonable officer should have made in this case and thereby set aside the assessment order dated 26.04.2017 passed by the AO under section 143(3) read with section 254 of the Act being erroneous in so far as prejudicial to the interest of the Revenue within the meaning of clause (a) of explanation 2 to section 263(1) of the Act and directed him to pass fresh assessment order after computing the book profit under section 115JB of the Act after making necessary enquiries and ascertaining correct facts. 5. Feeling aggrieved from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are of Adani Enterprises as on 01.04.2007 was taken at Rs. 864/- per share (total consideration of Rs. 780.51 crore / 90,33,701 shares). However, the value adopted by the assessee in respect of share of Adani Enterprises Ltd as on 01.04.2007 is found not correct as it was seen from the historical price quoted in NSE/BSE and also from share price quotation shown in Annual Report of Adani Enterprises Ltd for FY 2006-07 & 2007-08 that closing price of share of Adani Enterprises on 31.03.2007 was Rs. 210 only. In view of the scheme of amalgamation approved by Hon'ble Gujarat High Court, fair value per share for computing capital gain as per books, therefore, should have been taken at Rs. 210/- per share and not at Rs.864/- as adopted in the valuation report. The book profit computed by the assessee by adopting this value, therefore, is not in compliance to High Court order and AS-14. 5. The cost of acquisition shares of Adani Enterprises @210/per share comes to Rs.189.71 crores (for 90,33,701/- share) and not Rs.780.51 crores adopted by the assessee. The book profit on transfer of these shares comes to Rs.679.46 crores (i.e. 869.17 crores - 189.71 crores). As against this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er dated 04.08.2011. 10. Assessee then preferred appeal before the Tribunal which has restricted the addition made by the AO and confirmed by the Ld. CIT(A) under section 14(A) to Rs.24,77,461/- vide its order dated 07.03.2016 . Department has also preferred an appeal against the aforesaid addition/relief granted by the Ld. CIT(A) qua short term capital loss of Rs.87.66 crores allowed by Ld. CIT(A) and in the appeal the Tribunal remitted the issue back to the AO for further verification vide its order dated 07.03.2006. 11. Pursuant to the order passed by the Tribunal the AO framed fresh assessment under section 254 read with section 143(3) of the Act vide order dated 26.04.2017 by disallowing the short term capital loss (STCL) and appeal against the said order is pending before the Ld. CIT(A). 12. Assessment order dated 26.04.2017 framed by the AO under section 254 read with section 143(3) of the Act being the subject matter of order passed under section 263 of the Act by the Ld. PCIT, has been set aside directing the AO to pass fresh order after computing the book profit under section 115JB of the Act after making necessary enquiries. 13. Undisputedly, two wholly owned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder the normal provisions as well as under provisions contained under section 115JB of the Act before the AO and thereafter he has passed the assessment order. The Ld. A.R. relied upon the order passed by co-ordinate Bench of the Tribunal in case of Aishwarya Rai Bachchan vs. PCIT (2022) 135 taxmann.com 335 (Mumbai- Trib.) and in case of Mrs. Jyoti Harshad Mehta-Legal Heir of Late Husband S. Mehta vs. PCIT in ITA No.1159/M/2020 order dated 26.03.2021. 15. However, on the other hand, Ld. D.R. for the Revenue in order to repel the argument addressed by the Ld. A.R. for the assessee contended inter alia that in the original assessment passed by the AO under section 143(3) of the Act the AO has not ascertained and examined the correct book profit on transfer of these shares in the original as well as order passed under section 143(3) read with section 254 of the Act; that even the Ld. CIT(A) in its order dated 04.08.2011 has not examined the issue but he has merely given a reference as to the value of the share in para 2 of page 32; that when the issue in question has never been decided by the AO /CIT(A) there is no question of merger and relied upon the decision rendered by Hon'bl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee, thus making the assessment order prima-facie erroneous in so far as prejudicial to the interest of the Revenue within the meaning of explanation 2(a) to section 261(3) of the Act. 20. Hon'ble Bombay High Court in case of CIT vs. Ballarpur Industries Ltd. (supra) held that when the AO had allowed claim without examining it with due verification, exercise of jurisdiction of commissioner under section 263 of the Act was justified. In another case cited as Vedanta Ltd. vs. CIT (2021) 124 taxmann.com 435 (Bombay) Hon'ble Bombay High Court held that when assessment was completed without proper enquiries, the Commissioner was competent to invoke revisionary jurisdiction and direct fresh assessment under section 263 of the Act. 21. The Ld. D.R. for the Revenue relied upon a decision rendered by Hon'ble Supreme Court of India in case of CIT vs. Shri Arbuda Mills Ltd. (supra) wherein "Commissioner has exercised his powers under section 263 of the Act in respect of the claim relating to 3 items which were decided by the ITO in favour of the assessee and were not subject matter of the appeals by the assessee - assessee contended that order of ITO merged with that of Commissioner ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act. As discussed in the preceding paras Hon'ble Bombay High Court in case of Ballarpur Industries Ltd. (supra) and in case of Vedant Ltd. vs. CIT (supra) held that when the assessment was completed without proper enquiry the Commissioner was competent to invoke the jurisdiction and direct fresh assessment under section 263 of the Act. 26. Identical issue has also been decided by the Hon'ble Supreme Court in case of Shri Arbuda Mills Ltd. (supra) as discussed in preceding para No.19 the ratio of which is when Ld. PCIT exercises his power under section 263 of the Act in respect of claim relating to 3 items which was decided by the ITO in favour of the assessee and were not subject matter of the appeal by the assessee there is no question that order of ITO merged with that of Commissioner(Appeals) so as to exclude jurisdiction under section 263 of the Act because under the amended provisions contained under section 263 of the Act power of Commissioner under section 263 of the Act would extend and would be deemed to have been extended to three items because the same had not been considered and decided in appeal filed by the assessee. 27. In the instant case also the issue fl....