D.C.I.T.,CIRCLE-6(1), KOLKATA vs. SHRI SAROJ KUMAR PODDAR, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘A’, KOLKATA VIRTUAL HEARING [Before Shri J. Sudhakar Reddy, Hon’ble Accountant Member & Shri Aby T. Varkey, Hon’ble Judicial Member] I.T.A. No. 2406/Kol/2019 Assessment Year: 2014-15 Deputy Commissioner of Income Tax, Circle-6(1), Kolkata..................................………......Appellant Vs. Shri Saroj Kumar Poddar..........................................…..………………………….………………….…..Respondent Hongkong House 31, B.B.D. Bag (South) Kolkata – 700 001 [PAN : AFTPP 2386 N]

Appearances by: Shri S.K. Tulsiyan, Advocate, appeared on behalf of the assessee. Shri Vijay Shankar, CIT, D/R. appearing on behalf of the Revenue. Date of concluding the hearing : June 16th, 2021 Date of pronouncing the order : June 29th, 2021 ORDER Shri Sudhakar Reddy AM :- This appeal filed by the Revenue is directed against the order of the Commissioner of Income-tax-(A)-2, Kolkata [‘CIT(A)’] dated 01/08/2019 passed u/s 250 of the Income-tax Act, 1961 (‘the Act’) for AY 2014-15.

3.1 To address this preliminary issue, it would be first relevant to discuss the background facts of the case and the appellate orders in the first round of appellate

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proceedings, particularly the order passed by this Tribunal dated 16/11/2018. The proceedings, particularly the order passed by this Tribunal dated 16/11/2018. The proceedings, particularly the order passed by this Tribunal dated 16/11/2018. The author of this order was also the author and part of the Bench which passed the author of this order was also the author and part of the Bench which passed the author of this order was also the author and part of the Bench which passed the aforesaid order dated 16/11/2018. This discussion is necessitated due aforesaid order dated 16/11/2018. This discussion is necessitated due aforesaid order dated 16/11/2018. This discussion is necessitated due to the peculiar facts involved in the case and because both the parties have heavily quoted and relied facts involved in the case and because both the parties have heavily quoted and relied facts involved in the case and because both the parties have heavily quoted and relied on the earlier appellate orders, particularly the order dated 16/11/2018 in support on the earlier appellate orders, particularly the order dated 16/11/2018 in support on the earlier appellate orders, particularly the order dated 16/11/2018 in support of their contentions. The said order dated 16/11/2018 cannot however of their contentions. The said order dated 16/11/2018 cannot however of their contentions. The said order dated 16/11/2018 cannot however be read in isolation and the reasoning and conclusions drawn therein have to be understood in isolation and the reasoning and conclusions drawn therein have to be understood in isolation and the reasoning and conclusions drawn therein have to be understood in the context of the background facts and the arguments then placed before the Bench. the context of the background facts and the arguments then placed before the Bench. the context of the background facts and the arguments then placed before the Bench.

(i) the Assessee would be entitled to nominate 2 director the Assessee would be entitled to nominate 2 director the Assessee would be entitled to nominate 2 directors of the 7 directors in the board of directors, of which the Assessee would be the directors in the board of directors, of which the Assessee would be the directors in the board of directors, of which the Assessee would be the chairman of ISP; chairman of ISP; (ii) the Managing Director (MD) the Managing Director (MD) is be appointed by Gillette who will have be appointed by Gillette who will have the management of the whole of the affairs of the company. The MD has the management of the whole of the affairs of the company. The MD has the management of the whole of the affairs of the company. The MD has always been appoi always been appointed by Gillette and ISP has always been managed by nted by Gillette and ISP has always been managed by Gillette; and Gillette; and (iii) certain matters (special rights) as enumerated in clause 3.9 would certain matters (special rights) as enumerated in clause 3.9 would certain matters (special rights) as enumerated in clause 3.9 would require the approval of three require the approval of three-fourth majority of the board of directors. fourth majority of the board of directors.

In 2001, ISP was renamed to Gillette India Limited (“the Company” or “GIL”). In the year In 2001, ISP was renamed to Gillette India Limited (“the Company” or “GIL”). In the year In 2001, ISP was renamed to Gillette India Limited (“the Company” or “GIL”). In the year 2005 Gillette USA was acquired by Procter and Gamble Company USA (“P&G”). Accordingly, 2005 Gillette USA was acquired by Procter and Gamble Company USA (“P&G”). Accordingly, 2005 Gillette USA was acquired by Procter and Gamble Company USA (“P&G”). Accordingly,

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the two promoter groups of GIL were P&G holding 75.9% and various entities who w the two promoter groups of GIL were P&G holding 75.9% and various entities who w the two promoter groups of GIL were P&G holding 75.9% and various entities who were either related to or connected with the Assessee known as “Poddar Group” holding 12.86% either related to or connected with the Assessee known as “Poddar Group” holding 12.86% either related to or connected with the Assessee known as “Poddar Group” holding 12.86% of the Company. Thus, in total the promoter group of GIL held 88.76% of the equity capital of the Company. Thus, in total the promoter group of GIL held 88.76% of the equity capital of the Company. Thus, in total the promoter group of GIL held 88.76% of the equity capital and balance shareholding of 11.24% was held by general public. and balance shareholding of 11.24% was held by general public.

In June 2010, the Securities Contracts (Regulation) Rules, 1957 (“SCRR”) were amended to 010, the Securities Contracts (Regulation) Rules, 1957 (“SCRR”) were amended to 010, the Securities Contracts (Regulation) Rules, 1957 (“SCRR”) were amended to stipulate the Minimum Public Shareholding (“MPS”) of 25% in case of listed companies. stipulate the Minimum Public Shareholding (“MPS”) of 25% in case of listed companies. stipulate the Minimum Public Shareholding (“MPS”) of 25% in case of listed companies. Those companies whose MPS was less than 25%, as on June 04, 2010. were required to Those companies whose MPS was less than 25%, as on June 04, 2010. were required to Those companies whose MPS was less than 25%, as on June 04, 2010. were required to achieve the same within a period of three years. the same within a period of three years.

In order to comply with these provisions, it was open to the parties to put forth various In order to comply with these provisions, it was open to the parties to put forth various In order to comply with these provisions, it was open to the parties to put forth various methods to achieve the objective of MPS and it was at the discretion of SEBI to accept such methods to achieve the objective of MPS and it was at the discretion of SEBI to accept such methods to achieve the objective of MPS and it was at the discretion of SEBI to accept such method. The assessee and P&G ac method. The assessee and P&G according held discussions and application were submitted cording held discussions and application were submitted to SEBI from time to time. Finally, the assessee, as a promoter of GIL, made a proposal to to SEBI from time to time. Finally, the assessee, as a promoter of GIL, made a proposal to to SEBI from time to time. Finally, the assessee, as a promoter of GIL, made a proposal to SEBI for compliance with the MPS norms which was accepted by SEBI vide its Letter dated SEBI for compliance with the MPS norms which was accepted by SEBI vide its Letter dated SEBI for compliance with the MPS norms which was accepted by SEBI vide its Letter dated September 25, 2013. The terms of, the which were as under: he terms of, the which were as under: i. Promoters of GIL would undertake an Offer for Sale (“OFS”) for 8.77% (7.87% by Promoters of GIL would undertake an Offer for Sale (“OFS”) for 8.77% (7.87% by Promoters of GIL would undertake an Offer for Sale (“OFS”) for 8.77% (7.87% by Poddar Group and 0.90% by the P& Poddar Group and 0.90% by the P&G) of the paid-up share capital held by them. The up share capital held by them. The OFS would to the general public and through the stock exchange. This would reduce OFS would to the general public and through the stock exchange. This would reduce OFS would to the general public and through the stock exchange. This would reduce the shareholding of Poddar Group in the Company to 4.99%. the shareholding of Poddar Group in the Company to 4.99%. ii. The SHA would be terminated and consequently the Articles of Assoc The SHA would be terminated and consequently the Articles of Assoc The SHA would be terminated and consequently the Articles of Association (“the Articles”) of the Company would be suitably amended, thereby the Poddar Group Articles”) of the Company would be suitably amended, thereby the Poddar Group Articles”) of the Company would be suitably amended, thereby the Poddar Group being classified as public shareholders. being classified as public shareholders. iii. The assessee would be entitled to receive a s The assessee would be entitled to receive a severance compensation everance compensation of Rs. 200 crores which would be paid by P&G Nether which would be paid by P&G Netherlands. This amount is over and above the lands. This amount is over and above the amounts received by the sh amounts received by the shareholders for the sale of shares. In order to give effect to the terms of proposal accepted by SEBI, the Assessee entered In order to give effect to the terms of proposal accepted by SEBI, the Assessee entered In order to give effect to the terms of proposal accepted by SEBI, the Assessee entered into Severance Agreement dated 3 I into Severance Agreement dated 3 Is’ October, 2013 and Termination ’ October, 2013 and Termination Agreement dated 11th November, 2013 (Pg. 59 November, 2013 (Pg. 59-63 of Annexure to AO’s order). order).

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The assessee claimed the receipt of such compensation of Rs.200 crores from P&G The assessee claimed the receipt of such compensation of Rs.200 crores from P&G The assessee claimed the receipt of such compensation of Rs.200 crores from P&G Netherlands to be in the nature of capital receipt not exigible to tax. Netherlands to be in the nature of capital receipt not exigible to tax.

Assessment Order dated 30/12/2016 30/12/2016

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“But though rights of all the members in assessee Group got terminated it was only “But though rights of all the members in assessee Group got terminated it was only “But though rights of all the members in assessee Group got terminated it was only the assessee who got the Compensation. Consequently it was diversion of income the assessee who got the Compensation. Consequently it was diversion of income the assessee who got the Compensation. Consequently it was diversion of income to assessee by other Group Members. TO that extent the income becomes taxable to assessee by other Group Members. TO that extent the income becomes taxable to assessee by other Group Members. TO that extent the income becomes taxable us 56(2)(vii) as money received without consideration where rights of all members (2)(vii) as money received without consideration where rights of all members (2)(vii) as money received without consideration where rights of all members of the shareholders get terminated but Compensation is received only by the of the shareholders get terminated but Compensation is received only by the of the shareholders get terminated but Compensation is received only by the individual representing the Group. individual representing the Group.

However the entire compensation is not to be taxed under section 56 However the entire compensation is not to be taxed under section 56 However the entire compensation is not to be taxed under section 56 and the shareholders who are individuals and relatives of the assessee to that extent will shareholders who are individuals and relatives of the assessee to that extent will shareholders who are individuals and relatives of the assessee to that extent will not be taxable in the hands of the assessee under Section 56 not be taxable in the hands of the assessee under Section 56. Thus the total . Thus the total compensation is apportioned in ratio of the shares held by all members of the compensation is apportioned in ratio of the shares held by all members of the compensation is apportioned in ratio of the shares held by all members of the assessee group as below: group as below: Who held by % Amount Whether Taxable Whether Taxable transfer transfer Assessee 0.69 0.69 Rs.10,72,26,107/- No Not taxable as per the No Not taxable as per the above discussion above discussion Family 0.97 0.97 Rs.15,07,38,150/- No Not taxable as per the No Not taxable as per the Members of above above discussion discussion and and Assessee exempt as received exempt as received from relatives Group Entities of 11.21 11.21 Rs.174.20.35.742/- Taxable under Section 56 Taxable under Section 56 Assessee Total 12.87 12.87 Rs.200,00,00,000/-

Further, it can be clearly seen that the aforementioned compensation was devised Further, it can be clearly seen that the aforementioned compensation was devised Further, it can be clearly seen that the aforementioned compensation was devised to be paid to the Assessee to save the further to be paid to the Assessee to save the further payment by the Assessee Group payment by the Assessee Group Companies to the Assessee as this would necessarily suffer tax, either as DDT or Companies to the Assessee as this would necessarily suffer tax, either as DDT or Companies to the Assessee as this would necessarily suffer tax, either as DDT or any compensation which is taxable under the various heads of income. Thus, the any compensation which is taxable under the various heads of income. Thus, the any compensation which is taxable under the various heads of income. Thus, the above receipt is in the nature of dividend given out to the Asses above receipt is in the nature of dividend given out to the Asses above receipt is in the nature of dividend given out to the Assessee who is a shareholder of the Group Company and hence is taxable under Section 56 shareholder of the Group Company and hence is taxable under Section 56 shareholder of the Group Company and hence is taxable under Section 56.

Any payment received by Assessee without consideration in excess of Rs.50,000/ Any payment received by Assessee without consideration in excess of Rs.50,000/ Any payment received by Assessee without consideration in excess of Rs.50,000/- is taxable u/s 56(2)(vii).”

5.1 Thereafter, the AO at Para 71 of the assessment order su Thereafter, the AO at Para 71 of the assessment order summed up the issue of mmed up the issue of taxability of compensation on two mutually exclusive factual situation which read as follows: taxability of compensation on two mutually exclusive factual situation which read as follows: taxability of compensation on two mutually exclusive factual situation which read as follows:

“Thus it can be summed up that the Thus it can be summed up that the entire taxability lies mainly on two facts entire taxability lies mainly on two facts: 1. The entire compensation is not receivable by the Assessee and there has been an 1. The entire compensation is not receivable by the Assessee and there has been an 1. The entire compensation is not receivable by the Assessee and there has been an gift or dividend from the Assessee’s group companies and family members to the gift or dividend from the Assessee’s group companies and family members to the gift or dividend from the Assessee’s group companies and family members to the assessee.

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5.2 According to AO, on the given facts, the case of the assessee fell under the According to AO, on the given facts, the case of the assessee fell under the According to AO, on the given facts, the case of the assessee fell under the first situation and therefore he assessed sum to the extent of Rs.174,20,35,742/ and therefore he assessed sum to the extent of Rs.174,20,35,742/ and therefore he assessed sum to the extent of Rs.174,20,35,742/- u/s 56(2)(vii) of the Act. According to him, only if the facts led to the the Act. According to him, only if the facts led to the second situation, then , then the entire sum of Rs.200 crores would be held to be belonging to the assessee and hence would be taxable Rs.200 crores would be held to be belonging to the assessee and hence would be taxable Rs.200 crores would be held to be belonging to the assessee and hence would be taxable under the head ‘Business Income’ or ‘Capital Gains’. This however, according to AO, was not under the head ‘Business Income’ or ‘Capital Gains’. This however, according to AO, was not under the head ‘Business Income’ or ‘Capital Gains’. This however, according to AO, was not the facts involved in the present case. To protect the int the facts involved in the present case. To protect the interests of the Revenue, the AO erests of the Revenue, the AO accordingly discussed the possibilities of taxing it under this accordingly discussed the possibilities of taxing it under this second situation second situation from Paras 72 to 122 of the Act and also hypothetically quantified the amount of income which would then to 122 of the Act and also hypothetically quantified the amount of income which would then to 122 of the Act and also hypothetically quantified the amount of income which would then be taxable under either of Heads, provid be taxable under either of Heads, provided if the second situation is found to hold true. The is found to hold true. The AO at Para 123 of the order observed that, his discussions from Para 72 onwards would AO at Para 123 of the order observed that, his discussions from Para 72 onwards would AO at Para 123 of the order observed that, his discussions from Para 72 onwards would stand only if the facts showed that the facts showed that the assessee was the sole beneficial owner of the said the assessee was the sole beneficial owner of the said compensation and that he exercised substantial management rights exercised substantial management rights. He however reiterated . He however reiterated that at Para 123 of the assessment order, that it was clear from the record, that the case of that at Para 123 of the assessment order, that it was clear from the record, that the case of that at Para 123 of the assessment order, that it was clear from the record, that the case of the assessee fell under first situation first situation and that only the compensation received by him by way and that only the compensation received by him by way of gift from group entities was taxable u/s 56(2)(vii) of the Act in terms of his discussions set ft from group entities was taxable u/s 56(2)(vii) of the Act in terms of his discussions set ft from group entities was taxable u/s 56(2)(vii) of the Act in terms of his discussions set out Para 42 & 43 of the order. The relevant extracts from Para 123 & 124 of the order are as out Para 42 & 43 of the order. The relevant extracts from Para 123 & 124 of the order are as out Para 42 & 43 of the order. The relevant extracts from Para 123 & 124 of the order are as follows: “123. Tax Treatment- The taxability of assessee’s income on account of receipts of account of receipts of payment of Rs.200 crs, which has already been mentioned in Para payment of Rs.200 crs, which has already been mentioned in Para payment of Rs.200 crs, which has already been mentioned in Para -71, earlier, is being once again underscored at the cost of repetition from which it is clear having being once again underscored at the cost of repetition from which it is clear having being once again underscored at the cost of repetition from which it is clear having regard to the facts of the case discussed in detail not that such t regard to the facts of the case discussed in detail not that such t regard to the facts of the case discussed in detail not that such taxability may involve two situations which are given below: involve two situations which are given below: 1. The entire compensation is not receivable by the Assessee and there has been The entire compensation is not receivable by the Assessee and there has been The entire compensation is not receivable by the Assessee and there has been an gift or dividend from the Assessee’s group companies and family members to the an gift or dividend from the Assessee’s group companies and family members to the an gift or dividend from the Assessee’s group companies and family members to the assessee.

Both the situations have been discussed between Para 70 and Para 71 (treating said Both the situations have been discussed between Para 70 and Para 71 (treating said Both the situations have been discussed between Para 70 and Para 71 (treating said payment to be taxable as income from other sources) and between Para 72 and payment to be taxable as income from other sources) and between Para 72 and payment to be taxable as income from other sources) and between Para 72 and

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Para 123 (treating said payment to be taxable as business income and income from Para 123 (treating said payment to be taxable as business income and income from Para 123 (treating said payment to be taxable as business income and income from capital gains respectively) in the earlier part of this assessment order spectively) in the earlier part of this assessment order spectively) in the earlier part of this assessment order.

It may be noted that discussions from Para 72 to 123 is on the point that if the It may be noted that discussions from Para 72 to 123 is on the point that if the It may be noted that discussions from Para 72 to 123 is on the point that if the assessee takes the stand that the compensation was to be received by him alone, assessee takes the stand that the compensation was to be received by him alone, assessee takes the stand that the compensation was to be received by him alone, then he also needs to establish as t then he also needs to establish as to how the amount is not taxable under Section o how the amount is not taxable under Section 28(ii)(a) or Section 45 of the Income Tax Act, 1961. However it is clear from the 28(ii)(a) or Section 45 of the Income Tax Act, 1961. However it is clear from the 28(ii)(a) or Section 45 of the Income Tax Act, 1961. However it is clear from the record that the assessee was representative of the entire Poddar Group and hence record that the assessee was representative of the entire Poddar Group and hence record that the assessee was representative of the entire Poddar Group and hence the compensation received only by him is the in the compensation received only by him is the income of all the members gifted to come of all the members gifted to him. The said discussion is made in pursuance of Paras 42 and 43 of this assessment him. The said discussion is made in pursuance of Paras 42 and 43 of this assessment him. The said discussion is made in pursuance of Paras 42 and 43 of this assessment order.

5.3 From the above narrated facts, it is therefore of importance to take note that despite From the above narrated facts, it is therefore of importance to take note that despite From the above narrated facts, it is therefore of importance to take note that despite the alternate discussion set out in relation to the the alternate discussion set out in relation to the purported second situation purported second situation, which according to AO, was not the case at hand, th to AO, was not the case at hand, the AO in conclusion, held the proportionate compensation e AO in conclusion, held the proportionate compensation accruing to the assessee in his individual capacity was not taxable and it was only that accruing to the assessee in his individual capacity was not taxable and it was only that accruing to the assessee in his individual capacity was not taxable and it was only that portion of the compensation due to the group entities which was received by the assessee portion of the compensation due to the group entities which was received by the assessee portion of the compensation due to the group entities which was received by the assessee without consideration, that was taxed as ‘gift’ / ‘dividend’ in terms of Section 56(2)(vii) of that was taxed as ‘gift’ / ‘dividend’ in terms of Section 56(2)(vii) of that was taxed as ‘gift’ / ‘dividend’ in terms of Section 56(2)(vii) of the Act.

CIT(A) Order dated 10/07/2017 CIT(A) Order dated 10/07/2017 6. Aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. Aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. Aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A) who by his order dated 10/07/2017 confirmed the CIT(A) who by his order dated 10/07/2017 confirmed the action of the AO and dismissed action of the AO and dismissed the appeal of the assessee.

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First Round ITAT Order dated 16/11/2018 First Round ITAT Order dated 16/11/2018

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according to AO, these two legal propositions i.e. Section 28(iia) and Section 45 could be ccording to AO, these two legal propositions i.e. Section 28(iia) and Section 45 could be ccording to AO, these two legal propositions i.e. Section 28(iia) and Section 45 could be tested. However, this Tribunal noted that the Ld. CIT(A) had passed a cryptic order and tested. However, this Tribunal noted that the Ld. CIT(A) had passed a cryptic order and tested. However, this Tribunal noted that the Ld. CIT(A) had passed a cryptic order and therefore to come to an appro therefore to come to an appropriate conclusion on the matter and to conduct priate conclusion on the matter and to conduct further enquiries if required and remitted the matter back to the file of the ld. CIT(A), who enjoys co and remitted the matter back to the file of the ld. CIT(A), who enjoys co and remitted the matter back to the file of the ld. CIT(A), who enjoys co- terminus powers as that of the Assessing Officer. terminus powers as that of the Assessing Officer.

7.1 This Tribunal accordingly set aside this issue to the file of the ld. CIT(A). The relevant This Tribunal accordingly set aside this issue to the file of the ld. CIT(A). The relevant This Tribunal accordingly set aside this issue to the file of the ld. CIT(A). The relevant final findings of the Tribunal are as follows: findings of the Tribunal are as follows:

“38. As the ld. CIT(A), as passed a cryptic order, we set aside this issue to the file ld. “38. As the ld. CIT(A), as passed a cryptic order, we set aside this issue to the file ld. “38. As the ld. CIT(A), as passed a cryptic order, we set aside this issue to the file ld. CIT(A), for fresh adjudication, in accordance with law after giving the assessee CIT(A), for fresh adjudication, in accordance with law after giving the assessee CIT(A), for fresh adjudication, in accordance with law after giving the assessee adequate opportunity of being heard. adequate opportunity of being heard.

While doing so, the ld. CIT(A) may, if he thinks fit or necessary call for a remand ile doing so, the ld. CIT(A) may, if he thinks fit or necessary call for a remand ile doing so, the ld. CIT(A) may, if he thinks fit or necessary call for a remand report, so as to bring all the facts of the issue on record. report, so as to bring all the facts of the issue on record.

The ld. CIT(A) shall, adjudicate the matter de The ld. CIT(A) shall, adjudicate the matter de-novo, in accordance with law, novo, in accordance with law, uninfluenced by the observations a uninfluenced by the observations and statements made by us in this order.” nd statements made by us in this order.”

7.2 Therefore, on a holistic reading of the order, it is apparent that the original case ( Therefore, on a holistic reading of the order, it is apparent that the original case ( Therefore, on a holistic reading of the order, it is apparent that the original case (first situation) of the AO u/s 56(2)(vii) of the Act, had been conceded by the Revenue and not ) of the AO u/s 56(2)(vii) of the Act, had been conceded by the Revenue and not ) of the AO u/s 56(2)(vii) of the Act, had been conceded by the Revenue and not pressed before this Tribunal. The addition under this Section 56(2)(vii) of the Act, does not The addition under this Section 56(2)(vii) of the Act, does not survive. Therefore, the limited issue set aside to the ld. CIT(A) de novo was to examine Therefore, the limited issue set aside to the ld. CIT(A) de novo was to examine Therefore, the limited issue set aside to the ld. CIT(A) de novo was to examine whether the second situation existed and consequentially, whether the receipt could be taxed existed and consequentially, whether the receipt could be taxed existed and consequentially, whether the receipt could be taxed either u/s 28(iia) or Section 45 of the Act. To examine this factual aspect, the ld. CIT(A) was /s 28(iia) or Section 45 of the Act. To examine this factual aspect, the ld. CIT(A) was /s 28(iia) or Section 45 of the Act. To examine this factual aspect, the ld. CIT(A) was entitled to call for remand report from the AO. entitled to call for remand report from the AO.

Second Round CIT(A) Order dated 31/01/2019 Second Round CIT(A) Order dated 31/01/2019 8. In the second round of the appellate proceedings, the ld. CIT(A) sought for a remand In the second round of the appellate proceedings, the ld. CIT(A) sought for a remand In the second round of the appellate proceedings, the ld. CIT(A) sought for a remand report from the AO vide letter dated 10/12/2018 on the issue of taxability under Section 28 report from the AO vide letter dated 10/12/2018 on the issue of taxability under Section 28 report from the AO vide letter dated 10/12/2018 on the issue of taxability under Section 28 and Section 45 of the Act. In response, the AO submitted his remand report vide and Section 45 of the Act. In response, the AO submitted his remand report vide and Section 45 of the Act. In response, the AO submitted his remand report vide letter dated 31/01/2019. In the said remand report, the AO initially simply reproduced the Note dated 31/01/2019. In the said remand report, the AO initially simply reproduced the Note dated 31/01/2019. In the said remand report, the AO initially simply reproduced the Note dated 30/08/2018 of the ld. senior counsel, Shri Girish Dave which was furnished before this 30/08/2018 of the ld. senior counsel, Shri Girish Dave which was furnished before this 30/08/2018 of the ld. senior counsel, Shri Girish Dave which was furnished before this Tribunal in the first round, wherein he had set out his reasoning Tribunal in the first round, wherein he had set out his reasoning for conceding the addition for conceding the addition

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made by the AO u/s 56(2)(vii) of the Act and his alternate possible scenarios of taxing the made by the AO u/s 56(2)(vii) of the Act and his alternate possible scenarios of taxing the made by the AO u/s 56(2)(vii) of the Act and his alternate possible scenarios of taxing the receipt u/s 28(iia) or 45 of the Act. After that the AO went on to observe that there was receipt u/s 28(iia) or 45 of the Act. After that the AO went on to observe that there was receipt u/s 28(iia) or 45 of the Act. After that the AO went on to observe that there was nothing on record to show that the assessee was nothing on record to show that the assessee was the owner of the entire compensation of the owner of the entire compensation of Rs.200 crores. After making further enquiries, the AO in his remand report fell back again on Rs.200 crores. After making further enquiries, the AO in his remand report fell back again on Rs.200 crores. After making further enquiries, the AO in his remand report fell back again on the ultimate finding of his predecessor i.e. taxability u/s 56(2)(vii) of the Act. He the ultimate finding of his predecessor i.e. taxability u/s 56(2)(vii) of the Act. He the ultimate finding of his predecessor i.e. taxability u/s 56(2)(vii) of the Act. He categorically observed that the pay categorically observed that the payment of Rs.200 crores had direct connection with the sale ment of Rs.200 crores had direct connection with the sale of shares by group entities and consequently the amount is relatable to the shareholding of and consequently the amount is relatable to the shareholding of and consequently the amount is relatable to the shareholding of the group entities. After examining the fresh documents put before him, he noted that there . After examining the fresh documents put before him, he noted that there . After examining the fresh documents put before him, he noted that there was nothing to throw light as to why the entire compensation was paid to the assessee only. throw light as to why the entire compensation was paid to the assessee only. throw light as to why the entire compensation was paid to the assessee only. Hence, he again reverted back to the detailed discussion as made in assessment order and Hence, he again reverted back to the detailed discussion as made in assessment order and Hence, he again reverted back to the detailed discussion as made in assessment order and required the Ld. CIT(A) to consider the same. The relevant observations made by the AO in required the Ld. CIT(A) to consider the same. The relevant observations made by the AO in required the Ld. CIT(A) to consider the same. The relevant observations made by the AO in the remand report are extracted hereunder: the remand report are extracted hereunder: “On the issue of why was the assessee paid the entire compensation of entire Rs.200 “On the issue of why was the assessee paid the entire compensation of entire Rs.200 “On the issue of why was the assessee paid the entire compensation of entire Rs.200 crores the assessee has given reason in Page 3 & 4 of his submission dated crores the assessee has given reason in Page 3 & 4 of his submission dated crores the assessee has given reason in Page 3 & 4 of his submission dated 25.01.2019. The contention of the assessee is that he 25.01.2019. The contention of the assessee is that he had the rights under the had the rights under the shareholder’s agreement and he had the right to severance compensation of Rs.200 shareholder’s agreement and he had the right to severance compensation of Rs.200 shareholder’s agreement and he had the right to severance compensation of Rs.200 crores. The assessee has further stated that there is no document which provides crores. The assessee has further stated that there is no document which provides crores. The assessee has further stated that there is no document which provides that other Poddar Group entities/relatives had right to receive any that other Poddar Group entities/relatives had right to receive any that other Poddar Group entities/relatives had right to receive any compensation. The contention of the assessee is not acceptable. Had there been no sale of shares by The contention of the assessee is not acceptable. Had there been no sale of shares by The contention of the assessee is not acceptable. Had there been no sale of shares by the other entities, there would have been no question of making payment of Rs.200 the other entities, there would have been no question of making payment of Rs.200 the other entities, there would have been no question of making payment of Rs.200 crores to the assessee. The payment of RS. 200 crores has direct connectio crores to the assessee. The payment of RS. 200 crores has direct connectio crores to the assessee. The payment of RS. 200 crores has direct connection with sale of shares by the group entities. Consequently, the amount is relatable to sale of shares by the group entities. Consequently, the amount is relatable to sale of shares by the group entities. Consequently, the amount is relatable to shareholding of the group entities. In this regard, detailed discussion has been made shareholding of the group entities. In this regard, detailed discussion has been made shareholding of the group entities. In this regard, detailed discussion has been made in the assessment order which may kindly be perused in the assessment order which may kindly be perused.

In the matter of production of In the matter of production of copies of all documents of negotiations between the copies of all documents of negotiations between the assessee, members of the Poddar Group as well as P&G Group, assessee has stated assessee, members of the Poddar Group as well as P&G Group, assessee has stated assessee, members of the Poddar Group as well as P&G Group, assessee has stated that there were various discussions/deliberations orally or otherwise in addition to that there were various discussions/deliberations orally or otherwise in addition to that there were various discussions/deliberations orally or otherwise in addition to documents already submitted in assessm documents already submitted in assessment proceedings which form part of ent proceedings which form part of Annexure to the assessment order. Apart from these, the assessee could file a copy of Annexure to the assessment order. Apart from these, the assessee could file a copy of Annexure to the assessment order. Apart from these, the assessee could file a copy of letter dated September 30, 2017 from GIllete India Ltd. which is attached with the letter dated September 30, 2017 from GIllete India Ltd. which is attached with the letter dated September 30, 2017 from GIllete India Ltd. which is attached with the letter dated 25.01.2019. The assessee furnished with letter dated 25.01.2019. The assessee furnished with its letter dtd. 29 its letter dtd. 29-01-2019 copy of email correspondence as stated earlier. These correspondences do not throw any of email correspondence as stated earlier. These correspondences do not throw any of email correspondence as stated earlier. These correspondences do not throw any light as to why the entire compensation of Rs. 200 crores was paid to the assessee light as to why the entire compensation of Rs. 200 crores was paid to the assessee light as to why the entire compensation of Rs. 200 crores was paid to the assessee only. Further, assessee has not produced any document of n only. Further, assessee has not produced any document of negotiations within egotiations within members of the Poddar Group although the transaction involved relinquishment of members of the Poddar Group although the transaction involved relinquishment of members of the Poddar Group although the transaction involved relinquishment of huge interest of the group concerns in holding their shares in the company. huge interest of the group concerns in holding their shares in the company. huge interest of the group concerns in holding their shares in the company. It is mentioned at the cost of repetition that detailed discussions in this manne mentioned at the cost of repetition that detailed discussions in this manne mentioned at the cost of repetition that detailed discussions in this manner has been

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made in the assessment order and necessary documentation has been made made in the assessment order and necessary documentation has been made made in the assessment order and necessary documentation has been made available in the annexure to the assessment order which may kindly be perused available in the annexure to the assessment order which may kindly be perused available in the annexure to the assessment order which may kindly be perused while considering the case de while considering the case de-novo.

Your kind attention is invited to Page 117 of the Annexure to the assessment order, Your kind attention is invited to Page 117 of the Annexure to the assessment order, Your kind attention is invited to Page 117 of the Annexure to the assessment order, being copy of letter dated 08.11.2016 from Gillete India Ltd. In the last Para of the being copy of letter dated 08.11.2016 from Gillete India Ltd. In the last Para of the being copy of letter dated 08.11.2016 from Gillete India Ltd. In the last Para of the letter, it is stated as follows: letter, it is stated as follows:

“If additional information is required with regard to this transaction, kindly direct “If additional information is required with regard to this transaction, kindly direct “If additional information is required with regard to this transaction, kindly direct your enquiries to Procter & Gamble India Holdings BV, Watermanweg 100, 3067 your enquiries to Procter & Gamble India Holdings BV, Watermanweg 100, 3067 your enquiries to Procter & Gamble India Holdings BV, Watermanweg 100, 3067 GG, Rotterdam, Netherlands, the entity that was a party to the aforementioned GG, Rotterdam, Netherlands, the entity that was a party to the aforementioned GG, Rotterdam, Netherlands, the entity that was a party to the aforementioned transaction.”

In view of the submission dated 25.01.2019 and 29.01.2019, n view of the submission dated 25.01.2019 and 29.01.2019, I am to conclude that I am to conclude that the assessee is apparently not in possession of any further documentary evidences the assessee is apparently not in possession of any further documentary evidences the assessee is apparently not in possession of any further documentary evidences which can throw any light in the related transaction as has been indicated by the which can throw any light in the related transaction as has been indicated by the which can throw any light in the related transaction as has been indicated by the Hon’ble Tribunal at Para 37.2 of their order unal at Para 37.2 of their order.”[Emphasis supplied by us ] .”[Emphasis supplied by us ]

8.1 Perusal of the aforesaid facts shows that, the AO again relied on findings of his Perusal of the aforesaid facts shows that, the AO again relied on findings of his Perusal of the aforesaid facts shows that, the AO again relied on findings of his predecessor that the compensation belonged to and was related to the shares sold by the predecessor that the compensation belonged to and was related to the shares sold by the predecessor that the compensation belonged to and was related to the shares sold by the group entities. The AO concluded that there was no new material or documentary evidence AO concluded that there was no new material or documentary evidence AO concluded that there was no new material or documentary evidence in his possession which threw light in the related transaction as indicated by the Tribunal at in his possession which threw light in the related transaction as indicated by the Tribunal at in his possession which threw light in the related transaction as indicated by the Tribunal at Para 37.2 of their order viz., wherein the Tribunal had sought further enquiries to ascertain Para 37.2 of their order viz., wherein the Tribunal had sought further enquiries to ascertain Para 37.2 of their order viz., wherein the Tribunal had sought further enquiries to ascertain taxability u/s 28(iia) & 45 of the Act. The AO thus continued to standby the order of his taxability u/s 28(iia) & 45 of the Act. The AO thus continued to standby the order of his taxability u/s 28(iia) & 45 of the Act. The AO thus continued to standby the order of his predecessor taxing sum of Rs.174,20,35,742/ predecessor taxing sum of Rs.174,20,35,742/- u/s 56(2)(vii) of the Act and tacitly stated that u/s 56(2)(vii) of the Act and tacitly stated that there was no material on record to prove the there was no material on record to prove the second situation so as to invoke taxability u/s 28 and 45 as discussed by the Tribunal in their order dated 16/11/2018. 28 and 45 as discussed by the Tribunal in their order dated 16/11/2018. 28 and 45 as discussed by the Tribunal in their order dated 16/11/2018.

8.2 Taking into account the above remand report, the Ld. CIT(A) concluded on merits Taking into account the above remand report, the Ld. CIT(A) concluded on merits Taking into account the above remand report, the Ld. CIT(A) concluded on merits that, the receipt in question could neither be charged to tax under the head that, the receipt in question could neither be charged to tax under the head that, the receipt in question could neither be charged to tax under the head ‘Profits & Gains of Business’ u/s 28(iia) of the Act nor by way of ‘capital gains’ u/s 45 of the Act. Thereafter, of Business’ u/s 28(iia) of the Act nor by way of ‘capital gains’ u/s 45 of the Act. Thereafter, of Business’ u/s 28(iia) of the Act nor by way of ‘capital gains’ u/s 45 of the Act. Thereafter, the Ld. CIT(A) also considered the case made out by the AO in his remand report i.e., the Ld. CIT(A) also considered the case made out by the AO in his remand report i.e., the Ld. CIT(A) also considered the case made out by the AO in his remand report i.e., taxability u/s 56(2)(vii) of the Act and held that when taxability u/s 56(2)(vii) of the Act and held that when the Revenue had already conceded the Revenue had already conceded this ground before the Tribunal, the same could not be again agitated by the AO. The relevant this ground before the Tribunal, the same could not be again agitated by the AO. The relevant this ground before the Tribunal, the same could not be again agitated by the AO. The relevant findings of the Ld. CIT(A) are as under: findings of the Ld. CIT(A) are as under:

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“In the course of appeal before the Hon’ble Tribunal, the Departmental “In the course of appeal before the Hon’ble Tribunal, the Departmental “In the course of appeal before the Hon’ble Tribunal, the Departmental Representative has not pressed or denied to press his arguments in support of has not pressed or denied to press his arguments in support of has not pressed or denied to press his arguments in support of conclusions of AO, except 28(iia) and 45 rws 55(2)(a). Thus, the Department conclusions of AO, except 28(iia) and 45 rws 55(2)(a). Thus, the Department conclusions of AO, except 28(iia) and 45 rws 55(2)(a). Thus, the Department Representative conceded that receipt in question cannot be taxes u/s 56(2) or Representative conceded that receipt in question cannot be taxes u/s 56(2) or Representative conceded that receipt in question cannot be taxes u/s 56(2) or 56(2)(vii). The relevant extracts of th 56(2)(vii). The relevant extracts of the same is as under:

“The ld. Special Counsel submitted that he would not be pressing the argument that, “The ld. Special Counsel submitted that he would not be pressing the argument that, “The ld. Special Counsel submitted that he would not be pressing the argument that, the amount in question can be brought to tax u/s 56(2) of the Act. As per Mr.Girish the amount in question can be brought to tax u/s 56(2) of the Act. As per Mr.Girish the amount in question can be brought to tax u/s 56(2) of the Act. As per Mr.Girish Dave, the amount cannot be brought to tax u/s 56(2)(vii) of the Act Dave, the amount cannot be brought to tax u/s 56(2)(vii) of the Act Dave, the amount cannot be brought to tax u/s 56(2)(vii) of the Act as done by the AO. He submitted that his arguments in this case would be that the receipt in He submitted that his arguments in this case would be that the receipt in He submitted that his arguments in this case would be that the receipt in question is taxable u/s 28(ii)(a) of the Act and also on the ground that, the receipt question is taxable u/s 28(ii)(a) of the Act and also on the ground that, the receipt question is taxable u/s 28(ii)(a) of the Act and also on the ground that, the receipt in question is taxable as capital gains u/s 45 of Act in view of Section 55( in question is taxable as capital gains u/s 45 of Act in view of Section 55( in question is taxable as capital gains u/s 45 of Act in view of Section 55(2)(a) of the Act. To a specific query from the Bench, the ld. Special Counsel for the revenue Shri Act. To a specific query from the Bench, the ld. Special Counsel for the revenue Shri Act. To a specific query from the Bench, the ld. Special Counsel for the revenue Shri Girish Dave submitted that he is not putting forth any other argument in support of Girish Dave submitted that he is not putting forth any other argument in support of Girish Dave submitted that he is not putting forth any other argument in support of the conclusions of the AO, for bringing the receipt in question to tax, e the conclusions of the AO, for bringing the receipt in question to tax, e the conclusions of the AO, for bringing the receipt in question to tax, except that the receipt in question is income u/s 28(ii)(a) of the Act and that the amount in receipt in question is income u/s 28(ii)(a) of the Act and that the amount in receipt in question is income u/s 28(ii)(a) of the Act and that the amount in question is also alternatively and without prejudice to the above contention that the question is also alternatively and without prejudice to the above contention that the question is also alternatively and without prejudice to the above contention that the amount is taxable u/s 28(ii)(a) of the Act is also taxable as capital gains i amount is taxable u/s 28(ii)(a) of the Act is also taxable as capital gains i amount is taxable u/s 28(ii)(a) of the Act is also taxable as capital gains in u/s 45 of the Act r.w. section 55(2)(a) of the Act. the Act r.w. section 55(2)(a) of the Act.

Thus in view of the above submission of Sri Girish Thus in view of the above submission of Sri Girish Dave the ld. Special counsel for Dave the ld. Special counsel for the revenue, this Bench would not be adjudicating the sections that were considered the revenue, this Bench would not be adjudicating the sections that were considered the revenue, this Bench would not be adjudicating the sections that were considered at length by the AO and the conclusions drawn by the AO that the amount in at length by the AO and the conclusions drawn by the AO that the amount in at length by the AO and the conclusions drawn by the AO that the amount in question is taxable as income under those Section except, the A question is taxable as income under those Section except, the AO’s finding that the O’s finding that the receipt in question is taxable u/s 28(ii)(a) of the Act and that it is alternatively u/s receipt in question is taxable u/s 28(ii)(a) of the Act and that it is alternatively u/s receipt in question is taxable u/s 28(ii)(a) of the Act and that it is alternatively u/s 45 of the Act under the head ‘capital gains’ specifically with reference to section 45 of the Act under the head ‘capital gains’ specifically with reference to section 45 of the Act under the head ‘capital gains’ specifically with reference to section 55(2)(a) of the Act.”

It is on this basis also that the Hon’b It is on this basis also that the Hon’ble ITAT further in its order has held dealt with le ITAT further in its order has held dealt with issue regarding taxability of the receipt under Section 2 issue regarding taxability of the receipt under Section 28(ii)(a) and Section 45 of (ii)(a) and Section 45 of the Act and did not deal with the Section 56.”(Emphasis supplied by us) the Act and did not deal with the Section 56.”(Emphasis supplied by us) the Act and did not deal with the Section 56.”(Emphasis supplied by us)

8.3 The Ld. CIT(A) accordingly allowed the appeal The Ld. CIT(A) accordingly allowed the appeal of the assessee. Aggrieved by the said of the assessee. Aggrieved by the said order, the Revenue has filed the present appeal. order, the Revenue has filed the present appeal.

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the assessee are that, the Assessing Officer has made an addition o the assessee are that, the Assessing Officer has made an addition only u/s 56(2)(vii) of the nly u/s 56(2)(vii) of the Act in the assessment order and the special counsel engaged by the revenue to argue the Act in the assessment order and the special counsel engaged by the revenue to argue the Act in the assessment order and the special counsel engaged by the revenue to argue the matter, before this Tribunal in the first round had categorically agreed with the submissions matter, before this Tribunal in the first round had categorically agreed with the submissions matter, before this Tribunal in the first round had categorically agreed with the submissions of the senior advocate who argued on behalf of t of the senior advocate who argued on behalf of the assessee, that the amount in question he assessee, that the amount in question cannot be brought to tax u/s 56(2)(vii) of the Act and that the ITAT in its order dt. cannot be brought to tax u/s 56(2)(vii) of the Act and that the ITAT in its order dt. cannot be brought to tax u/s 56(2)(vii) of the Act and that the ITAT in its order dt. 16/11/2018 has clearly recorded this facts and adjudicated this issue in favour of the 16/11/2018 has clearly recorded this facts and adjudicated this issue in favour of the 16/11/2018 has clearly recorded this facts and adjudicated this issue in favour of the assessee. He submitted that this order of assessee. He submitted that this order of the ITAT has attained finality as the revenue has the ITAT has attained finality as the revenue has not gone in appeal before the Hon’ble Calcutta High Court, nor has sought any rectification of not gone in appeal before the Hon’ble Calcutta High Court, nor has sought any rectification of not gone in appeal before the Hon’ble Calcutta High Court, nor has sought any rectification of mistake apparent on record u/s 254(2) of the Act. Thus, the income assessed and computed mistake apparent on record u/s 254(2) of the Act. Thus, the income assessed and computed mistake apparent on record u/s 254(2) of the Act. Thus, the income assessed and computed by the Assessing Officer in the impugned assessment order dt. 30/12/2016, consequent to er in the impugned assessment order dt. 30/12/2016, consequent to er in the impugned assessment order dt. 30/12/2016, consequent to the order of the ITAT dt 16/11/2018, remains the same as the amount of income returned the order of the ITAT dt 16/11/2018, remains the same as the amount of income returned the order of the ITAT dt 16/11/2018, remains the same as the amount of income returned by the assessee.

9.1. He further submitted that the ld. CIT(A), who had co He further submitted that the ld. CIT(A), who had co-terminus powers with that o terminus powers with that of the Assessing Officer came to a conclusion that the receipt in question cannot be brought to tax, Assessing Officer came to a conclusion that the receipt in question cannot be brought to tax, Assessing Officer came to a conclusion that the receipt in question cannot be brought to tax, either u/s 28(ii)(a) of the Act or u/s 45 r.w.s. 55(2)(a) of the Act. No addition was made to either u/s 28(ii)(a) of the Act or u/s 45 r.w.s. 55(2)(a) of the Act. No addition was made to either u/s 28(ii)(a) of the Act or u/s 45 r.w.s. 55(2)(a) of the Act. No addition was made to returned income under these sections nor was a demand raised b returned income under these sections nor was a demand raised by the department. He y the department. He argues that no addition to the returned income survives for adjudication by the Tribunal. He argues that no addition to the returned income survives for adjudication by the Tribunal. He argues that no addition to the returned income survives for adjudication by the Tribunal. He reiterated that the ground on which the addition was made was u/s 56(2)(vii) of the Act and reiterated that the ground on which the addition was made was u/s 56(2)(vii) of the Act and reiterated that the ground on which the addition was made was u/s 56(2)(vii) of the Act and the computation of income and the corresponding de the computation of income and the corresponding demand u/s 156 of the Act was raised, mand u/s 156 of the Act was raised, stood nullified by the order of the Tribunal dt. 16/11/2018, resulting in the returned income stood nullified by the order of the Tribunal dt. 16/11/2018, resulting in the returned income stood nullified by the order of the Tribunal dt. 16/11/2018, resulting in the returned income as the assessed income.

9.2. He submitted that, the ITAT has set aside the issue to the file of the ld. CIT(A) for fresh He submitted that, the ITAT has set aside the issue to the file of the ld. CIT(A) for fresh He submitted that, the ITAT has set aside the issue to the file of the ld. CIT(A) for fresh adjudication with a limited scope of examining whether Section 28(ii)(a) and/or Section 45 adjudication with a limited scope of examining whether Section 28(ii)(a) and/or Section 45 adjudication with a limited scope of examining whether Section 28(ii)(a) and/or Section 45 of the Act can be considered as grounds for addition of the severance compensation. It was of the Act can be considered as grounds for addition of the severance compensation. It was of the Act can be considered as grounds for addition of the severance compensation. It was contended that in set aside proceedings the authorities below are bound to contended that in set aside proceedings the authorities below are bound to contended that in set aside proceedings the authorities below are bound to decide the issue as per directions contained in the order of the ITAT and that it is not open for the authorities as per directions contained in the order of the ITAT and that it is not open for the authorities as per directions contained in the order of the ITAT and that it is not open for the authorities to conduct fresh enquiry and that no other question can be considered nor can the scope of to conduct fresh enquiry and that no other question can be considered nor can the scope of to conduct fresh enquiry and that no other question can be considered nor can the scope of proceedings be enlarged. For this proposition, rel proceedings be enlarged. For this proposition, reliance was placed on the following iance was placed on the following decisions:- a) Katihar Jute Mills (P) Ltd. vs. CIT [1979] 120 ITR 861 (Cal.) Katihar Jute Mills (P) Ltd. vs. CIT [1979] 120 ITR 861 (Cal.)

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b) CIT vs. Indo-Aden Salt Works Co. reported at (1959) 36 ITR 0429 (Bom.) Aden Salt Works Co. reported at (1959) 36 ITR 0429 (Bom.) Aden Salt Works Co. reported at (1959) 36 ITR 0429 (Bom.) c) Krishna Terine (P) Ltd. vs. ACIT reported in 130 TTD 0411 (Ahd.) Krishna Terine (P) Ltd. vs. ACIT reported in 130 TTD 0411 (Ahd.) Krishna Terine (P) Ltd. vs. ACIT reported in 130 TTD 0411 (Ahd.)

9.3. The ld. Counsel for the assessee further submitted that the revenue has not brought . Counsel for the assessee further submitted that the revenue has not brought . Counsel for the assessee further submitted that the revenue has not brought to tax severance compensation under any particular head of income as the Assessing Officer to tax severance compensation under any particular head of income as the Assessing Officer to tax severance compensation under any particular head of income as the Assessing Officer has not computed the income afresh or raised a fresh demand subsequent to the order of has not computed the income afresh or raised a fresh demand subsequent to the order of has not computed the income afresh or raised a fresh demand subsequent to the order of the Tribunal dt. 16/11/2018 and as the ld. CIT(A) in the impugned order dt. 25/07/2019 has Tribunal dt. 16/11/2018 and as the ld. CIT(A) in the impugned order dt. 25/07/2019 has Tribunal dt. 16/11/2018 and as the ld. CIT(A) in the impugned order dt. 25/07/2019 has not made any specific addition to the assessed income or enhance it and that in the remand not made any specific addition to the assessed income or enhance it and that in the remand not made any specific addition to the assessed income or enhance it and that in the remand report no such addition under any specific section was made by the Assessi report no such addition under any specific section was made by the Assessi report no such addition under any specific section was made by the Assessing Officer. As per the ld. Counsel for the assessee, the question is whether the Department can file an appeal the ld. Counsel for the assessee, the question is whether the Department can file an appeal the ld. Counsel for the assessee, the question is whether the Department can file an appeal before the ITAT when no addition is made, by the Assessing Officer or the ld. CIT(A) either before the ITAT when no addition is made, by the Assessing Officer or the ld. CIT(A) either before the ITAT when no addition is made, by the Assessing Officer or the ld. CIT(A) either under section 28(ii)(a) or under Section 45 of the Ac under section 28(ii)(a) or under Section 45 of the Act. When in Form 36 in the present t. When in Form 36 in the present appeal i.e., ITA No. 2406/Kol/2019, the figures quoted is Rs.174,20,35,742/ appeal i.e., ITA No. 2406/Kol/2019, the figures quoted is Rs.174,20,35,742/ appeal i.e., ITA No. 2406/Kol/2019, the figures quoted is Rs.174,20,35,742/-, in column 7(c) as the amount in dispute referring to the additions made u/s 56(2)(vii) of the Act by the as the amount in dispute referring to the additions made u/s 56(2)(vii) of the Act by the as the amount in dispute referring to the additions made u/s 56(2)(vii) of the Act by the Assessing Officer in the original asses Assessing Officer in the original assessment order dt. 30/12/2016 though the department sment order dt. 30/12/2016 though the department stated that this addition cannot be sustained u/s 56(2)(vii) of the Act, in the first round of stated that this addition cannot be sustained u/s 56(2)(vii) of the Act, in the first round of stated that this addition cannot be sustained u/s 56(2)(vii) of the Act, in the first round of litigations by the ITAT. He argued that it is not open for the Assessing Officer at the litigations by the ITAT. He argued that it is not open for the Assessing Officer at the litigations by the ITAT. He argued that it is not open for the Assessing Officer at the assessment stage to make protective orders and when the Assessing Officer has failed in protective orders and when the Assessing Officer has failed in protective orders and when the Assessing Officer has failed in specifying as to what was the charging section/substantive section under which he was specifying as to what was the charging section/substantive section under which he was specifying as to what was the charging section/substantive section under which he was seeking to make an addition, then it was for the ld. CIT(A) to specify the section which is seeking to make an addition, then it was for the ld. CIT(A) to specify the section which is seeking to make an addition, then it was for the ld. CIT(A) to specify the section which is attracted to bring the amount to tax by using his co ring the amount to tax by using his co-terminus power. The Assessing Officer in terminus power. The Assessing Officer in the remand report was not specific as to which of these different sections and heads of the remand report was not specific as to which of these different sections and heads of the remand report was not specific as to which of these different sections and heads of income, the addition in question was sought to be made so as to compute the income of th income, the addition in question was sought to be made so as to compute the income of th income, the addition in question was sought to be made so as to compute the income of the assessee and raise additional demand. He argued that by not doing so the revenue could not assessee and raise additional demand. He argued that by not doing so the revenue could not assessee and raise additional demand. He argued that by not doing so the revenue could not have filed this appeal, as no income is assessed either the income u/s 28(ii)(a) or Section 45 have filed this appeal, as no income is assessed either the income u/s 28(ii)(a) or Section 45 have filed this appeal, as no income is assessed either the income u/s 28(ii)(a) or Section 45 of the Act and as the sole addition made u/s 56 (2)(vii) of the Act of the Act and as the sole addition made u/s 56 (2)(vii) of the Act does not survive. The does not survive. The department in essence, is now seeking to re department in essence, is now seeking to re-agitate the very same substantive ground of agitate the very same substantive ground of addition i.e., 56(2)(vii) of the Act, which the department had voluntarily and consciously addition i.e., 56(2)(vii) of the Act, which the department had voluntarily and consciously addition i.e., 56(2)(vii) of the Act, which the department had voluntarily and consciously withdrawn, which is not permissible. withdrawn, which is not permissible.

9.4. Thereafter, the ld. Counsel for the assessee relied upon certain case the ld. Counsel for the assessee relied upon certain case the ld. Counsel for the assessee relied upon certain case-law on the principles of ‘doctrine of waiver’. The ld. Counsel for the assessee summarised his arguments principles of ‘doctrine of waiver’. The ld. Counsel for the assessee summarised his arguments principles of ‘doctrine of waiver’. The ld. Counsel for the assessee summarised his arguments

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by submitting that the present departmental appeal and Form 36 are not maintainable since by submitting that the present departmental appeal and Form 36 are not maintainable since by submitting that the present departmental appeal and Form 36 are not maintainable since no addition has been made by the Assessing Officer or for the matter deleted by the ld. addition has been made by the Assessing Officer or for the matter deleted by the ld. addition has been made by the Assessing Officer or for the matter deleted by the ld. CIT(A) which causes a grievance to the assessee for filing this appeal. He prayed that this CIT(A) which causes a grievance to the assessee for filing this appeal. He prayed that this CIT(A) which causes a grievance to the assessee for filing this appeal. He prayed that this Bench of the ITAT should dismiss this appeal as not maintainable as the entire Bench of the ITAT should dismiss this appeal as not maintainable as the entire Bench of the ITAT should dismiss this appeal as not maintainable as the entire appeal as infructuous, bereft of jurisdiction and thus, bad in law. infructuous, bereft of jurisdiction and thus, bad in law.

10.1. The ld. D/R argued that, though the Assessing Officer brought to tax The ld. D/R argued that, though the Assessing Officer brought to tax The ld. D/R argued that, though the Assessing Officer brought to tax Rs.174,20,35,742/- u/s. 56(2)(vii) of the Act in an assessment completed u/s 143(3) of the 56(2)(vii) of the Act in an assessment completed u/s 143(3) of the 56(2)(vii) of the Act in an assessment completed u/s 143(3) of the Act on 30/12/2016, he had also expressed his view that the amount of Rs.200 Crores is Act on 30/12/2016, he had also expressed his view that the amount of Rs.200 Crores is Act on 30/12/2016, he had also expressed his view that the amount of Rs.200 Crores is alternatively taxable u/s 28(ii)(a) or u/s. 45 of the Act. He referred to the grounds taken by alternatively taxable u/s 28(ii)(a) or u/s. 45 of the Act. He referred to the grounds taken by alternatively taxable u/s 28(ii)(a) or u/s. 45 of the Act. He referred to the grounds taken by the assessee in the first round of appellate proceedings before the ld. CIT(A) and submitted essee in the first round of appellate proceedings before the ld. CIT(A) and submitted essee in the first round of appellate proceedings before the ld. CIT(A) and submitted that, the assessee had challenged the substantive addition made u/s 56(2)(vii) of the Act and that, the assessee had challenged the substantive addition made u/s 56(2)(vii) of the Act and that, the assessee had challenged the substantive addition made u/s 56(2)(vii) of the Act and also the view of the Assessing Officer that the amount is taxable u/s 28(ii) also the view of the Assessing Officer that the amount is taxable u/s 28(ii) also the view of the Assessing Officer that the amount is taxable u/s 28(ii)(a) or Section 45 of the Act. Thus, he submits that it cannot be argued now that no income was computed by the Act. Thus, he submits that it cannot be argued now that no income was computed by the Act. Thus, he submits that it cannot be argued now that no income was computed by these Assessing Officer under the sections of the Act. these Assessing Officer under the sections of the Act.

10.2. The ld. D/R quoted extensively from the order of this Bench of the ITAT in first round The ld. D/R quoted extensively from the order of this Bench of the ITAT in first round The ld. D/R quoted extensively from the order of this Bench of the ITAT in first round of appellate proceedings in ITA 1695/Kol/2017, order dt. 16/11/2018. He specifically read of appellate proceedings in ITA 1695/Kol/2017, order dt. 16/11/2018. He specifically read of appellate proceedings in ITA 1695/Kol/2017, order dt. 16/11/2018. He specifically read and relied upon paragraph 30, 31, 32, 36, 37 & 38 of the order of the ITAT dt. 16/11/2018. and relied upon paragraph 30, 31, 32, 36, 37 & 38 of the order of the ITAT dt. 16/11/2018. and relied upon paragraph 30, 31, 32, 36, 37 & 38 of the order of the ITAT dt. 16/11/2018. The ld. D/R submitted that the term The ld. D/R submitted that the term ‘de novo’ used by the ITAT in the above used by the ITAT in the above order means to start afresh. He also emphasised the fact that the Tribunal has stated that the ld. CIT(A) was start afresh. He also emphasised the fact that the Tribunal has stated that the ld. CIT(A) was start afresh. He also emphasised the fact that the Tribunal has stated that the ld. CIT(A) was

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to frame its appellate order uninfluenced by the observations and statements made by the to frame its appellate order uninfluenced by the observations and statements made by the to frame its appellate order uninfluenced by the observations and statements made by the ITAT in its order dt. 16/11/2018 and hence being bound b ITAT in its order dt. 16/11/2018 and hence being bound by the submissions of the special y the submissions of the special counsel does not arise. He pointed out that the ld. CIT(A), in the second round of appellate counsel does not arise. He pointed out that the ld. CIT(A), in the second round of appellate counsel does not arise. He pointed out that the ld. CIT(A), in the second round of appellate proceedings, in its order dt. 01/08/2019, called for a remand report and the Assessing proceedings, in its order dt. 01/08/2019, called for a remand report and the Assessing proceedings, in its order dt. 01/08/2019, called for a remand report and the Assessing Officer has reiterated the assessment order Officer has reiterated the assessment order before him and has also submitted a copy of the before him and has also submitted a copy of the submissions made by the revenue in its written arguments before the bench of the ITAT in submissions made by the revenue in its written arguments before the bench of the ITAT in submissions made by the revenue in its written arguments before the bench of the ITAT in the first round of appellate proceedings. He argued that the jurisdiction of the ITAT was to the first round of appellate proceedings. He argued that the jurisdiction of the ITAT was to the first round of appellate proceedings. He argued that the jurisdiction of the ITAT was to decide the taxability of the entire severance compensation taking into account the facts and the entire severance compensation taking into account the facts and the entire severance compensation taking into account the facts and the provisions of the Act.

10.3. The ld. CIT D/R submitted that, the department has never waived its right to contest The ld. CIT D/R submitted that, the department has never waived its right to contest The ld. CIT D/R submitted that, the department has never waived its right to contest the taxability of the compensation u/s 56(2)(vii) of the Act. He subm the taxability of the compensation u/s 56(2)(vii) of the Act. He submits that the averments of its that the averments of the special counsel before the Tribunal were his personal/private views and not the views of the special counsel before the Tribunal were his personal/private views and not the views of the special counsel before the Tribunal were his personal/private views and not the views of the Department. He further argues that there was no direction given by the department to the Department. He further argues that there was no direction given by the department to the Department. He further argues that there was no direction given by the department to the Special counsel, not to press this argument the Special counsel, not to press this argument of taxability of the receipt u/s 56(2)(vii) of of taxability of the receipt u/s 56(2)(vii) of the Act and consequently this submission of the special counsel is of no consequence. He the Act and consequently this submission of the special counsel is of no consequence. He the Act and consequently this submission of the special counsel is of no consequence. He further submitted that as the proceedings were remanded back to the ld. CIT(A) further submitted that as the proceedings were remanded back to the ld. CIT(A) further submitted that as the proceedings were remanded back to the ld. CIT(A) de novo all the arguments taken by the As the arguments taken by the Assessing Officer in the original assessment order and the sessing Officer in the original assessment order and the remand report survived without prejudice to one another. He vehemently contended that, remand report survived without prejudice to one another. He vehemently contended that, remand report survived without prejudice to one another. He vehemently contended that, the ld. CIT(A) was wrongly influenced by the statements of the Tribunal that a special the ld. CIT(A) was wrongly influenced by the statements of the Tribunal that a special the ld. CIT(A) was wrongly influenced by the statements of the Tribunal that a special counsel has not pressed the arguments u/s 56(2)(vii) of the Act and he has erroneously held he arguments u/s 56(2)(vii) of the Act and he has erroneously held he arguments u/s 56(2)(vii) of the Act and he has erroneously held that the department has conceded the ground of taxability under Section 56(2)(vii) of the that the department has conceded the ground of taxability under Section 56(2)(vii) of the that the department has conceded the ground of taxability under Section 56(2)(vii) of the Act.

10.4. The ld. CIT D/R further submitted that the power of the ld. CIT(A) is co The ld. CIT D/R further submitted that the power of the ld. CIT(A) is co The ld. CIT D/R further submitted that the power of the ld. CIT(A) is co-terminus with that of the Assessing Officer and he was required to consider the taxability of severance that of the Assessing Officer and he was required to consider the taxability of severance that of the Assessing Officer and he was required to consider the taxability of severance compensation under the provisions of the Act compensation under the provisions of the Act de novo and having not done so, has grossly and having not done so, has grossly violated the directions of the ITAT. He once again reiterated that the submis violated the directions of the ITAT. He once again reiterated that the submis violated the directions of the ITAT. He once again reiterated that the submissions of the Special Counsel Shri Girish Dave that, Section 56(2)(vii) of the Act does not apply to the facts Special Counsel Shri Girish Dave that, Section 56(2)(vii) of the Act does not apply to the facts Special Counsel Shri Girish Dave that, Section 56(2)(vii) of the Act does not apply to the facts of the case, was his personal/private view and does not bind the revenue in any manner. He of the case, was his personal/private view and does not bind the revenue in any manner. He of the case, was his personal/private view and does not bind the revenue in any manner. He submits that the ld. CIT(A) has grossly erred in holdin submits that the ld. CIT(A) has grossly erred in holding that the receipt is not taxable both g that the receipt is not taxable both u/s 28(ii)(a) and under Section 45 of the Act. He argued that the ld. CIT(A) has not examined u/s 28(ii)(a) and under Section 45 of the Act. He argued that the ld. CIT(A) has not examined u/s 28(ii)(a) and under Section 45 of the Act. He argued that the ld. CIT(A) has not examined

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the broader issue as to how the amount received can be taxed under other provisions of the the broader issue as to how the amount received can be taxed under other provisions of the the broader issue as to how the amount received can be taxed under other provisions of the Income Tax Act, 1961, which caus Income Tax Act, 1961, which causes grievance to the revenue and hence gives it a statutory es grievance to the revenue and hence gives it a statutory right to come in appeal before the ITAT. right to come in appeal before the ITAT.

10.4.1. The department filed revised grounds from (i) to (viii) which we would be extracting The department filed revised grounds from (i) to (viii) which we would be extracting The department filed revised grounds from (i) to (viii) which we would be extracting during the course of this order. On a query from the Bench, th during the course of this order. On a query from the Bench, the ld. CIT D/R submitted that e ld. CIT D/R submitted that these grounds should be taken as the grounds of the revenue in this appeal. Hence we ignore these grounds should be taken as the grounds of the revenue in this appeal. Hence we ignore these grounds should be taken as the grounds of the revenue in this appeal. Hence we ignore the original grounds filed and take the revised grounds as the grounds of appeal of the the original grounds filed and take the revised grounds as the grounds of appeal of the the original grounds filed and take the revised grounds as the grounds of appeal of the department in this appeal.

10.5. The ld. CIT D/R submitted that the arguments of the assessee that substantive The ld. CIT D/R submitted that the arguments of the assessee that substantive The ld. CIT D/R submitted that the arguments of the assessee that substantive addition was made by the Assessing Officer u/s 56(2)(vii) of the Act and that only protective addition was made by the Assessing Officer u/s 56(2)(vii) of the Act and that only protective addition was made by the Assessing Officer u/s 56(2)(vii) of the Act and that only protective additions were made u/s 28(ii)(a) and u/s 45 of teh Act as misconceived. He argued t additions were made u/s 28(ii)(a) and u/s 45 of teh Act as misconceived. He argued t additions were made u/s 28(ii)(a) and u/s 45 of teh Act as misconceived. He argued that there is nothing like protective assessments in the case of the assessee and that the there is nothing like protective assessments in the case of the assessee and that the there is nothing like protective assessments in the case of the assessee and that the submissions of the ld. Counsel for the assessee that the appeal does not lie on protective submissions of the ld. Counsel for the assessee that the appeal does not lie on protective submissions of the ld. Counsel for the assessee that the appeal does not lie on protective additions is erroneous and is legally incorrect. He submitted that when the additions is erroneous and is legally incorrect. He submitted that when the additions is erroneous and is legally incorrect. He submitted that when the same income is assessed in the hands of two or more assessees, then it would be a protective addition in one assessed in the hands of two or more assessees, then it would be a protective addition in one assessed in the hands of two or more assessees, then it would be a protective addition in one hand and substantive in another and that this is not the case here. He referred to the order of hand and substantive in another and that this is not the case here. He referred to the order of hand and substantive in another and that this is not the case here. He referred to the order of the ld. CIT(A) in the second round of proceedings the ld. CIT(A) in the second round of proceedings dt. 01/08/2019 and submitted that the ld. dt. 01/08/2019 and submitted that the ld. CIT(A) has considered all these arguments of the Assessing Officer in his order on addition CIT(A) has considered all these arguments of the Assessing Officer in his order on addition CIT(A) has considered all these arguments of the Assessing Officer in his order on addition u/s 28(ii)(a) and u/s 45 of the Act as well as u/s 56(2)(vii) of the Act and decided the issue u/s 28(ii)(a) and u/s 45 of the Act as well as u/s 56(2)(vii) of the Act and decided the issue u/s 28(ii)(a) and u/s 45 of the Act as well as u/s 56(2)(vii) of the Act and decided the issue against the revenue and hence the revenue has the right to appeal. nce the revenue has the right to appeal.

10.6. The ld. CIT D/R reiterated his submissions that when the Tribunal has set aside the The ld. CIT D/R reiterated his submissions that when the Tribunal has set aside the The ld. CIT D/R reiterated his submissions that when the Tribunal has set aside the matter to the file of the ld. CIT(A) for matter to the file of the ld. CIT(A) for de novo consideration, the concession of the Special consideration, the concession of the Special counsel on the applicability o counsel on the applicability of Section 56(2)(vii) also goes and the ld. CIT(A) is duty bound f Section 56(2)(vii) also goes and the ld. CIT(A) is duty bound to examine the issue of taxability u/s 56(2)(vii) on merits, which he did. He referred to to examine the issue of taxability u/s 56(2)(vii) on merits, which he did. He referred to to examine the issue of taxability u/s 56(2)(vii) on merits, which he did. He referred to Section 251 of the Act and argued that the ld. CIT(A) has vast powers to consider any issue Section 251 of the Act and argued that the ld. CIT(A) has vast powers to consider any issue Section 251 of the Act and argued that the ld. CIT(A) has vast powers to consider any issue and grounds which were not raised before him and also to enhance the assessment. He s which were not raised before him and also to enhance the assessment. He s which were not raised before him and also to enhance the assessment. He submitted the reason of taxability u/s 56 of the Act, was set out in the assessment order and submitted the reason of taxability u/s 56 of the Act, was set out in the assessment order and submitted the reason of taxability u/s 56 of the Act, was set out in the assessment order and when the remand report of the Assessing Officer is read along with the assessment order, when the remand report of the Assessing Officer is read along with the assessment order, when the remand report of the Assessing Officer is read along with the assessment order, it is clear that the addition made u/s 56(2)(vii) of the Act is not squashed or set aside by the is clear that the addition made u/s 56(2)(vii) of the Act is not squashed or set aside by the is clear that the addition made u/s 56(2)(vii) of the Act is not squashed or set aside by the

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ITAT. He repeated that, the department has never waived its right to appeal or contest on ITAT. He repeated that, the department has never waived its right to appeal or contest on ITAT. He repeated that, the department has never waived its right to appeal or contest on the issue of the receipt becoming taxable under Section 56(2)(vii) o the issue of the receipt becoming taxable under Section 56(2)(vii) o the issue of the receipt becoming taxable under Section 56(2)(vii) of the Act. He again referred to the order of the Tribunal’s order dt. 16/11/2018 in the first round of appellate referred to the order of the Tribunal’s order dt. 16/11/2018 in the first round of appellate referred to the order of the Tribunal’s order dt. 16/11/2018 in the first round of appellate proceedings and the case-law relied upon therein and extensively quoting there from and law relied upon therein and extensively quoting there from and law relied upon therein and extensively quoting there from and submitted that the appeal is maintainable before the IT submitted that the appeal is maintainable before the ITAT. He contended that there is no AT. He contended that there is no estoppel against the statute and the ITAT has to adjudicate the issue whether severance against the statute and the ITAT has to adjudicate the issue whether severance against the statute and the ITAT has to adjudicate the issue whether severance compensation of Rs.200 Crores received by the assessee is taxable under the Income Tax Act compensation of Rs.200 Crores received by the assessee is taxable under the Income Tax Act compensation of Rs.200 Crores received by the assessee is taxable under the Income Tax Act or not. Thus, he submits that the appeal be or not. Thus, he submits that the appeal before the ITAT is maintainable u/s 253(2) of the fore the ITAT is maintainable u/s 253(2) of the Act and the amount in dispute is Rs.200 Crores. Act and the amount in dispute is Rs.200 Crores.

10.7. He further relied on the judgment of the Hon’ble Supreme Court in the case of He further relied on the judgment of the Hon’ble Supreme Court in the case of He further relied on the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs Commissioner Of Income Tax 1998 229 ITR National Thermal Power Co. Ltd. vs Commissioner Of Income Tax 1998 229 ITR National Thermal Power Co. Ltd. vs Commissioner Of Income Tax 1998 229 ITR 383 SC and submits that the Hon’ble Supreme Court has held that any additional ground of appeal can submits that the Hon’ble Supreme Court has held that any additional ground of appeal can submits that the Hon’ble Supreme Court has held that any additional ground of appeal can be taken by either of the parties at any stage of appellate proceedings when the facts are on be taken by either of the parties at any stage of appellate proceedings when the facts are on be taken by either of the parties at any stage of appellate proceedings when the facts are on record and hence the revised grounds of appeal, have to be ad record and hence the revised grounds of appeal, have to be admitted and adjudicated by the mitted and adjudicated by the ITAT on merits and that the statutory right of the revenue to appeal against the order of the ITAT on merits and that the statutory right of the revenue to appeal against the order of the ITAT on merits and that the statutory right of the revenue to appeal against the order of the ld. CIT(A) cannot be taken away from the department. ld. CIT(A) cannot be taken away from the department.

10.8. Without prejudice, he submitted that, under Rule 12 of the ITAT Rules, the ITAT can Without prejudice, he submitted that, under Rule 12 of the ITAT Rules, the ITAT can Without prejudice, he submitted that, under Rule 12 of the ITAT Rules, the ITAT can return Form 36 to the appellant for being amended, if it is not in the prescribed form and return Form 36 to the appellant for being amended, if it is not in the prescribed form and return Form 36 to the appellant for being amended, if it is not in the prescribed form and that in this case the registry has not pointed out any defect or error in the dep that in this case the registry has not pointed out any defect or error in the dep that in this case the registry has not pointed out any defect or error in the departmental appeal and hence, there is not defect or mistake in Form 36 warranting returning or appeal and hence, there is not defect or mistake in Form 36 warranting returning or appeal and hence, there is not defect or mistake in Form 36 warranting returning or rejection of the appeal. He ultimately concluded saying that the appeal is maintainable u/s rejection of the appeal. He ultimately concluded saying that the appeal is maintainable u/s rejection of the appeal. He ultimately concluded saying that the appeal is maintainable u/s 252 of the Act.

10.9. The ld. Counsel for the assessee, in his rejoin The ld. Counsel for the assessee, in his rejoinder, vehemently opposed these der, vehemently opposed these submissions of the revenue and repeated the contentions raised by him earlier. He submissions of the revenue and repeated the contentions raised by him earlier. He submissions of the revenue and repeated the contentions raised by him earlier. He submitted that the submissions made by the Special counsel of the revenue before the ITAT submitted that the submissions made by the Special counsel of the revenue before the ITAT submitted that the submissions made by the Special counsel of the revenue before the ITAT cannot be stated as his private view or personal view. cannot be stated as his private view or personal view. He argued that the order of the He argued that the order of the Tribunal has become final as the department has not carried the matter before the High Tribunal has become final as the department has not carried the matter before the High Tribunal has become final as the department has not carried the matter before the High Court nor has filed a miscellaneous application. He submitted that a plain reading of the Court nor has filed a miscellaneous application. He submitted that a plain reading of the Court nor has filed a miscellaneous application. He submitted that a plain reading of the order of the ITAT shows that the addition made order of the ITAT shows that the addition made u/s 56(2)(vii) of the Act was struck down as u/s 56(2)(vii) of the Act was struck down as

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mutually agreed by the counsels. He submitted that, the appeals scrutiny report of the mutually agreed by the counsels. He submitted that, the appeals scrutiny report of the mutually agreed by the counsels. He submitted that, the appeals scrutiny report of the department is an internal document, which has no bearing on the case. He contended that department is an internal document, which has no bearing on the case. He contended that department is an internal document, which has no bearing on the case. He contended that the scope and ambit of maintainabil the scope and ambit of maintainability of the appeal is now settled in law. He relied on ity of the appeal is now settled in law. He relied on certain case law and argued that the department cannot approbate or reprobate by choosing certain case law and argued that the department cannot approbate or reprobate by choosing certain case law and argued that the department cannot approbate or reprobate by choosing to agree consciously that Section 56(2)(vii) of the Act, is not applicable to the case and to agree consciously that Section 56(2)(vii) of the Act, is not applicable to the case and to agree consciously that Section 56(2)(vii) of the Act, is not applicable to the case and accepting the order of the ITAT on the issue at the first instance and later trying to reverse f the ITAT on the issue at the first instance and later trying to reverse f the ITAT on the issue at the first instance and later trying to reverse its stand by invoking this section once again. He submitted that, the ITAT had set aside the its stand by invoking this section once again. He submitted that, the ITAT had set aside the its stand by invoking this section once again. He submitted that, the ITAT had set aside the two alternative protective grounds i.e., Section 28(ii)(a) and Section 45 of the Act for two alternative protective grounds i.e., Section 28(ii)(a) and Section 45 of the Act for two alternative protective grounds i.e., Section 28(ii)(a) and Section 45 of the Act for fresh adjudication by the ld. CIT(A). He submitted that even in the assessment proceedings the adjudication by the ld. CIT(A). He submitted that even in the assessment proceedings the adjudication by the ld. CIT(A). He submitted that even in the assessment proceedings the Assessing Officer chose not to compute income either u/s 28(ii)(a) or u/s 45 of the Act nor Assessing Officer chose not to compute income either u/s 28(ii)(a) or u/s 45 of the Act nor Assessing Officer chose not to compute income either u/s 28(ii)(a) or u/s 45 of the Act nor raised a tax demand. He submitted that when the Assessing Officer doe raised a tax demand. He submitted that when the Assessing Officer doe raised a tax demand. He submitted that when the Assessing Officer does not make an addition/disallowance to the returned income, the revenue cannot file an appeal before the addition/disallowance to the returned income, the revenue cannot file an appeal before the addition/disallowance to the returned income, the revenue cannot file an appeal before the ITAT. He refuted the arguments of the ld. CIT D/R that this set aside was ITAT. He refuted the arguments of the ld. CIT D/R that this set aside was ITAT. He refuted the arguments of the ld. CIT D/R that this set aside was de novo and hence all aspect can be taken up in the second round of appellate all aspect can be taken up in the second round of appellate proceedings before the ITAT. He proceedings before the ITAT. He also quoted exclusively from the order of the Tribunal dt. 16/11/2018 in the first round of also quoted exclusively from the order of the Tribunal dt. 16/11/2018 in the first round of also quoted exclusively from the order of the Tribunal dt. 16/11/2018 in the first round of proceedings and submitted that this is a limited remand. He reiterated that there is no proceedings and submitted that this is a limited remand. He reiterated that there is no proceedings and submitted that this is a limited remand. He reiterated that there is no assessment order computing income on this r assessment order computing income on this receipt either u/s 28(ii)(a) or u/s 45 of the Act eceipt either u/s 28(ii)(a) or u/s 45 of the Act and that no tax demand has been raised by invoking these sections and hence the Assessing and that no tax demand has been raised by invoking these sections and hence the Assessing and that no tax demand has been raised by invoking these sections and hence the Assessing Officer cannot file an appeal in this case. He argued that as the addition made u/s 56 (2)(vii) Officer cannot file an appeal in this case. He argued that as the addition made u/s 56 (2)(vii) Officer cannot file an appeal in this case. He argued that as the addition made u/s 56 (2)(vii) failed in the first round of appellate proceedings before the ITAT and hence there is no ound of appellate proceedings before the ITAT and hence there is no ound of appellate proceedings before the ITAT and hence there is no surviving addition or demand of tax made by the Assessing Officer which can be challenged surviving addition or demand of tax made by the Assessing Officer which can be challenged surviving addition or demand of tax made by the Assessing Officer which can be challenged before the Tribunal. He relied on a number of case before the Tribunal. He relied on a number of case-law, which we would be discussing as and law, which we would be discussing as and when required. He prayed that the appeal of the revenue be dismissed as not maintainable. equired. He prayed that the appeal of the revenue be dismissed as not maintainable. equired. He prayed that the appeal of the revenue be dismissed as not maintainable.

FINDINGS 11. We have heard rival contentions. To answer this preliminary objection raised by the We have heard rival contentions. To answer this preliminary objection raised by the We have heard rival contentions. To answer this preliminary objection raised by the assessee regarding the maintainability of the appeal, it would be first be assessee regarding the maintainability of the appeal, it would be first be assessee regarding the maintainability of the appeal, it would be first be relevant to set out the scope of powers of this Tribunal in relation to adjudication of an appeal. the scope of powers of this Tribunal in relation to adjudication of an appeal. the scope of powers of this Tribunal in relation to adjudication of an appeal.

11.1 It is by now well settled in law that, the powers of this Tribunal under section 254 of It is by now well settled in law that, the powers of this Tribunal under section 254 of It is by now well settled in law that, the powers of this Tribunal under section 254 of the Act can be exercised only in relation to the grounds arisi the Act can be exercised only in relation to the grounds arising in the appeal. It cannot go ng in the appeal. It cannot go beyond the scope of the appeal and decide a question which does not form the subject beyond the scope of the appeal and decide a question which does not form the subject beyond the scope of the appeal and decide a question which does not form the subject-

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matter of the appeal. This Tribunal is not authorized to take back the benefit granted to the matter of the appeal. This Tribunal is not authorized to take back the benefit granted to the matter of the appeal. This Tribunal is not authorized to take back the benefit granted to the assessee by the AO and the Tribunal has no pow assessee by the AO and the Tribunal has no power to enhance the assessment. Reference in er to enhance the assessment. Reference in this regard may be made to the decision of the Hon’ble Supreme Court in the cases of this regard may be made to the decision of the Hon’ble Supreme Court in the cases of this regard may be made to the decision of the Hon’ble Supreme Court in the cases of Mcorp Global (P.) Ltd. v. CIT [2009] 209 ITR 434/178 Taxman 347 (SC) and Hukumchand Mills Ltd. v. Global (P.) Ltd. v. CIT [2009] 209 ITR 434/178 Taxman 347 (SC) and Hukumchand Mills Ltd. v. Global (P.) Ltd. v. CIT [2009] 209 ITR 434/178 Taxman 347 (SC) and Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC).

The Hon’ble Madras High Court in the case of The Hon’ble Madras High Court in the case of Sanmar Speciality Chemicals Ltd. vs. ITO Sanmar Speciality Chemicals Ltd. vs. ITO reported in [2018] 93 taxmann.com 330 (Madras) 93 taxmann.com 330 (Madras), held as follows:- “In this regard, it is relevant to take note of the legal position as to whether the Tribunal has In this regard, it is relevant to take note of the legal position as to whether the Tribunal has In this regard, it is relevant to take note of the legal position as to whether the Tribunal has power to enhance the assessment and take back the benefit granted to the Assessee by the power to enhance the assessment and take back the benefit granted to the Assessee by the power to enhance the assessment and take back the benefit granted to the Assessee by the Assessing Officer. This question is no longer res integra and has been Assessing Officer. This question is no longer res integra and has been Assessing Officer. This question is no longer res integra and has been answered by the Supreme Court in MCORP Global (P.) Ltd. v. CIT Supreme Court in MCORP Global (P.) Ltd. v. CIT [2009] 178 Taxman 347/309 ITR 434 [2009] 178 Taxman 347/309 ITR 434. It was held that the Tribunal was not authorized to take back the benefit granted to the was held that the Tribunal was not authorized to take back the benefit granted to the was held that the Tribunal was not authorized to take back the benefit granted to the Assessee by the Assessing Officer Assessee by the Assessing Officer and the Tribunal has no power to enhance the assessment. and the Tribunal has no power to enhance the assessment. The Hon'ble Supreme Court referred to an earlier decision in the case of Hukumchand Mills The Hon'ble Supreme Court referred to an earlier decision in the case of Hukumchand Mills The Hon'ble Supreme Court referred to an earlier decision in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 [1967] 63 ITR 232. The operative portion of the judgment reads . The operative portion of the judgment reads as follows: "6.In the case of Hukumchand Mills Ltd. v. CIT "6.In the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC) [1967] 63 ITR 232 (SC) this Court has held that under s.33(4) of the IT Act, 1922 [equivalent to s.254(1) of the 1961 has held that under s.33(4) of the IT Act, 1922 [equivalent to s.254(1) of the 1961 has held that under s.33(4) of the IT Act, 1922 [equivalent to s.254(1) of the 1961 Act]. The Tribunal was not authorized to take Act]. The Tribunal was not authorized to take back the benefit granted to the back the benefit granted to the assessee by the AO. The Tribunal has no power to enhance the assessment. Applying assessee by the AO. The Tribunal has no power to enhance the assessment. Applying assessee by the AO. The Tribunal has no power to enhance the assessment. Applying the ratio of the said judgment to the present case, we are of the view that in this the ratio of the said judgment to the present case, we are of the view that in this the ratio of the said judgment to the present case, we are of the view that in this case, the AO had granted depreciation in respect of 42,00 case, the AO had granted depreciation in respect of 42,000 bottles out of the total 0 bottles out of the total number of bottles (5,46,000), by reason of the impugned judgment. That benefit is number of bottles (5,46,000), by reason of the impugned judgment. That benefit is number of bottles (5,46,000), by reason of the impugned judgment. That benefit is sought to be taken away by the Department, which is not permissible in law. This is sought to be taken away by the Department, which is not permissible in law. This is sought to be taken away by the Department, which is not permissible in law. This is the infirmity in the impugned judgment of the High Court and th the infirmity in the impugned judgment of the High Court and th the infirmity in the impugned judgment of the High Court and the Tribunal." 5. The decision in the case of MCORP Global (P) Ltd., was followed by the Division Bench of The decision in the case of MCORP Global (P) Ltd., was followed by the Division Bench of The decision in the case of MCORP Global (P) Ltd., was followed by the Division Bench of the High Court of Gujarat in Fidelity Shares & Securities Ltd. v. Dy. CIT the High Court of Gujarat in Fidelity Shares & Securities Ltd. v. Dy. CIT the High Court of Gujarat in Fidelity Shares & Securities Ltd. v. Dy. CIT [2017] 82 taxmann.com 108/390 ITR 267 taxmann.com 108/390 ITR 267, wherein it was held that the Tribunal has no power under wherein it was held that the Tribunal has no power under the Income Tax Act to enhance the assessment in appeal in view of the statutory provisions. the Income Tax Act to enhance the assessment in appeal in view of the statutory provisions. the Income Tax Act to enhance the assessment in appeal in view of the statutory provisions. Further it was held that the benefit, which was sought to be taken away by the Department, Further it was held that the benefit, which was sought to be taken away by the Department, Further it was held that the benefit, which was sought to be taken away by the Department, was not permissible in law and this is the infirmity in the judgment of the Tribunal as the ble in law and this is the infirmity in the judgment of the Tribunal as the ble in law and this is the infirmity in the judgment of the Tribunal as the Tribunal has no power to enhance the assessment in appeal.” Tribunal has no power to enhance the assessment in appeal.”

The Hon’ble Gujarat High Court in the case of The Hon’ble Gujarat High Court in the case of CIT vs. Orient Prospecting Co. CIT vs. Orient Prospecting Co. reported in [1983] 141 ITR 301 (Gujarat), held as follows:- “The subject-matter of the appeal before the Tribunal was confined to the claim as regards matter of the appeal before the Tribunal was confined to the claim as regards matter of the appeal before the Tribunal was confined to the claim as regards messing and tea expenses. The disallowance of interest under section 40( messing and tea expenses. The disallowance of interest under section 40( messing and tea expenses. The disallowance of interest under section 40(b) was not the subject-matter of the appeal. matter of the appeal. Therefore, when the revenue sought to raise the additional Therefore, when the revenue sought to raise the additional grounds, what in effect and substance it did was to prefer for the first time an appeal grounds, what in effect and substance it did was to prefer for the first time an appeal grounds, what in effect and substance it did was to prefer for the first time an appeal against the AAC's order upholding the assessee's claim for adjustment of the interest paid by against the AAC's order upholding the assessee's claim for adjustment of the interest paid by against the AAC's order upholding the assessee's claim for adjustment of the interest paid by the partners while making the disallowance under section 40( hile making the disallowance under section 40(b ). Therefore, for all practical ). Therefore, for all practical purposes, it was a fresh or new appeal so far as this claim was concerned. Such appeal, even purposes, it was a fresh or new appeal so far as this claim was concerned. Such appeal, even purposes, it was a fresh or new appeal so far as this claim was concerned. Such appeal, even assuming that it could be filed by raising additional grounds, could not have been assuming that it could be filed by raising additional grounds, could not have been assuming that it could be filed by raising additional grounds, could not have been filed beyond the period of limitation without applying for condonation of delay and it could not beyond the period of limitation without applying for condonation of delay and it could not beyond the period of limitation without applying for condonation of delay and it could not

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have been entertained by the Tribunal without being satisfied that there were sufficient have been entertained by the Tribunal without being satisfied that there were sufficient have been entertained by the Tribunal without being satisfied that there were sufficient grounds for the delay. Rule 11 of the Income grounds for the delay. Rule 11 of the Income-tax (Appellate Tribunal) tax (Appellate Tribunal) Rules, 1963 does not permit introducing an altogether new subject permit introducing an altogether new subject-matter of appeal in respect of which the matter of appeal in respect of which the decision was accepted by the appellant. The additional grounds permitted to be raised decision was accepted by the appellant. The additional grounds permitted to be raised decision was accepted by the appellant. The additional grounds permitted to be raised under the said rule must relate to the subject under the said rule must relate to the subject-matter of the appeal and a new item or peal and a new item or matter cannot be allowed in the guise of additional grounds.” subject-matter cannot be allowed in the guise of additional grounds.”

11.2 The power to modify the assessment order to the advantage of the Revenue, apart The power to modify the assessment order to the advantage of the Revenue, apart The power to modify the assessment order to the advantage of the Revenue, apart from suo motu action by the AO under Sections 147 or 154 of the Act, lies onl from suo motu action by the AO under Sections 147 or 154 of the Act, lies onl from suo motu action by the AO under Sections 147 or 154 of the Act, lies only with the CIT under Section 263 of the Act and such powers cannot be usurped by the Departmental under Section 263 of the Act and such powers cannot be usurped by the Departmental under Section 263 of the Act and such powers cannot be usurped by the Departmental Representative (in short “DR ) appearing on behalf of the Revenue, while arguing the appeal Representative (in short “DR ) appearing on behalf of the Revenue, while arguing the appeal Representative (in short “DR ) appearing on behalf of the Revenue, while arguing the appeal before this Tribunal. It is impermissible for the DR to come out w before this Tribunal. It is impermissible for the DR to come out with a submission contrary ith a submission contrary to the finding of the AO, as he had no jurisdiction to go beyond the order passed by the AO. to the finding of the AO, as he had no jurisdiction to go beyond the order passed by the AO. to the finding of the AO, as he had no jurisdiction to go beyond the order passed by the AO. The scope of arguments of the DR has to be restricted to support the view taken by the AO. The scope of arguments of the DR has to be restricted to support the view taken by the AO. The scope of arguments of the DR has to be restricted to support the view taken by the AO. He can strengthen the view taken by the AO fro He can strengthen the view taken by the AO from any angle he likes, but he cannot bring out m any angle he likes, but he cannot bring out an altogether different case de hors the view of the AO. The scope of arguments has to be an altogether different case de hors the view of the AO. The scope of arguments has to be an altogether different case de hors the view of the AO. The scope of arguments has to be confined to supporting or defending the impugned assessment order and the DR cannot set confined to supporting or defending the impugned assessment order and the DR cannot set confined to supporting or defending the impugned assessment order and the DR cannot set up an altogether different case up an altogether different case than what was made out by the AO, as it would mean that the than what was made out by the AO, as it would mean that the DR was stepping into the shoes of the CIT exercising jurisdiction under Section 263 of the DR was stepping into the shoes of the CIT exercising jurisdiction under Section 263 of the DR was stepping into the shoes of the CIT exercising jurisdiction under Section 263 of the Act. The arguments which the Revenue can put forth before us is indeed unlimited but the Act. The arguments which the Revenue can put forth before us is indeed unlimited but the Act. The arguments which the Revenue can put forth before us is indeed unlimited but the same has to be within the boundary limits marked by the AO. Useful reference in this regard ithin the boundary limits marked by the AO. Useful reference in this regard ithin the boundary limits marked by the AO. Useful reference in this regard may be made to the following observations made by the Special Bench of this Tribunal in the may be made to the following observations made by the Special Bench of this Tribunal in the may be made to the following observations made by the Special Bench of this Tribunal in the case of Asstt. CIT v. Prakash L.Shah [2008] 115ITD167 (Mum.) Asstt. CIT v. Prakash L.Shah [2008] 115ITD167 (Mum.), wherein it was held as , wherein it was held as under:

“12. The contention raised by the ld. DR that such foreign exchange difference be “12. The contention raised by the ld. DR that such foreign exchange difference be “12. The contention raised by the ld. DR that such foreign exchange difference be treated as 'Income from other sources' and, hence, no deduction be allowed is sans treated as 'Income from other sources' and, hence, no deduction be allowed is sans treated as 'Income from other sources' and, hence, no deduction be allowed is sans merits for more than one reason. Firstly, the Assessing Officer has not disturbed t merits for more than one reason. Firstly, the Assessing Officer has not disturbed t merits for more than one reason. Firstly, the Assessing Officer has not disturbed the nature of foreign exchange gain as part of 'export turnover' as claimed by the nature of foreign exchange gain as part of 'export turnover' as claimed by the nature of foreign exchange gain as part of 'export turnover' as claimed by the assessee. He has nowhere held that it be treated as 'Income from other sources' on assessee. He has nowhere held that it be treated as 'Income from other sources' on assessee. He has nowhere held that it be treated as 'Income from other sources' on that 90 per cent of the same warrants deduction from the profits of the business as that 90 per cent of the same warrants deduction from the profits of the business as that 90 per cent of the same warrants deduction from the profits of the business as per Explanation ( baa) below sub lanation ( baa) below sub-section (4C) to section 80HHC. His area of dispute section (4C) to section 80HHC. His area of dispute is that since the amount has been realized in the subsequent year, hence, the is that since the amount has been realized in the subsequent year, hence, the is that since the amount has been realized in the subsequent year, hence, the deduction cannot be allowed. deduction cannot be allowed. In our opinion the ld. DR cannot go beyond the In our opinion the ld. DR cannot go beyond the assessment order and brin assessment order and bring an altogether different case, thereby undoing what has g an altogether different case, thereby undoing what has been done by the Assessing Officer. The power to modify the assessment order to the been done by the Assessing Officer. The power to modify the assessment order to the been done by the Assessing Officer. The power to modify the assessment order to the advantage of the Revenue, apart from suo motu action by the Assessing Officer advantage of the Revenue, apart from suo motu action by the Assessing Officer advantage of the Revenue, apart from suo motu action by the Assessing Officer

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under sections 147 or 154, lies only under sections 147 or 154, lies only with CIT under section 263, which cannot be with CIT under section 263, which cannot be usurped by the ld. DR while arguing the appeal. The scope of the arguments of the usurped by the ld. DR while arguing the appeal. The scope of the arguments of the usurped by the ld. DR while arguing the appeal. The scope of the arguments of the ld. DR is restricted to support the view taken by the Assessing Officer. He can ld. DR is restricted to support the view taken by the Assessing Officer. He can ld. DR is restricted to support the view taken by the Assessing Officer. He can strengthen the view taken by the Assessing Officer strengthen the view taken by the Assessing Officer from any angle, he likes, but from any angle, he likes, but cannot bring out an altogether different case de hors the view of the Assessing cannot bring out an altogether different case de hors the view of the Assessing cannot bring out an altogether different case de hors the view of the Assessing Officer. His area of arguments is unlimited but within the boundary limit marked by Officer. His area of arguments is unlimited but within the boundary limit marked by Officer. His area of arguments is unlimited but within the boundary limit marked by the Assessing Officer. We are equally not persuaded to fall i the Assessing Officer. We are equally not persuaded to fall in line with this view on n line with this view on merits also in the light of the discussion made in the foregoing paras merits also in the light of the discussion made in the foregoing paras merits also in the light of the discussion made in the foregoing paras.

(emphasis supplied) (emphasis supplied)

11.3 Gainful reference in this regard may also be made to the following observations of the Gainful reference in this regard may also be made to the following observations of the Gainful reference in this regard may also be made to the following observations of the Tribunal at Mumbai in the case of Tribunal at Mumbai in the case of ACIT Vs Maersk Global Service Centre (India) (P) Ltd (133 rsk Global Service Centre (India) (P) Ltd (133 ITD 543) which has since been affirmed by the Hon’ble Bombay High Court in their order in which has since been affirmed by the Hon’ble Bombay High Court in their order in which has since been affirmed by the Hon’ble Bombay High Court in their order in ITA No. 692 & 693 of 2012 dated 22 ITA No. 692 & 693 of 2012 dated 22-08-2014.

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(emphasis supplied) (emphasis supplied)

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The Hon’ble Supreme Court in the case of The Hon’ble Supreme Court in the case of Parimisetti Seetharamamma vs. CIT Parimisetti Seetharamamma vs. CIT reported in 1965 AIR 1905, held as follows: held as follows:- “In so observing, the High Court, in our judgment, has committed an error of law. By In so observing, the High Court, in our judgment, has committed an error of law. By In so observing, the High Court, in our judgment, has committed an error of law. By sections 3 and 4 the Act imposes a general liability to tax upon all income. But the Act sections 3 and 4 the Act imposes a general liability to tax upon all income. But the Act sections 3 and 4 the Act imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income l does not provide that whatever is received by a person must be regarded as income l does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision. Where however a receipt is the department to prove that it is within the taxing provision. Where however a receipt is the department to prove that it is within the taxing provision. Where however a receipt is of the nature of income, the burden of proving that it is not tax of the nature of income, the burden of proving that it is not taxable because it falls within able because it falls within an exemption provided by the Act lies upon the assessee. The appellant admitted that she an exemption provided by the Act lies upon the assessee. The appellant admitted that she an exemption provided by the Act lies upon the assessee. The appellant admitted that she had received jewellery and diverse sums of money from Sita Devi and she claimed that had received jewellery and diverse sums of money from Sita Devi and she claimed that had received jewellery and diverse sums of money from Sita Devi and she claimed that these were gifts made out of love and affection. The these were gifts made out of love and affection. The case of the appellant was that the case of the appellant was that the receipts did not fall within the taxing provision : it was not her case that being income the receipts did not fall within the taxing provision : it was not her case that being income the receipts did not fall within the taxing provision : it was not her case that being income the receipts were exempt from taxation because of a statutory provision. It was therefore for receipts were exempt from taxation because of a statutory provision. It was therefore for receipts were exempt from taxation because of a statutory provision. It was therefore for the department to establish that these receipts were chargeable to tax” the department to establish that thes 13.1 If the Revenue is of the view that any item of receipt is in the nature of income which If the Revenue is of the view that any item of receipt is in the nature of income which If the Revenue is of the view that any item of receipt is in the nature of income which is chargeable to tax, then it has to be categorized under any of the particular ‘head of income’ is chargeable to tax, then it has to be categorized under any of the particular ‘head of income’ is chargeable to tax, then it has to be categorized under any of the particular ‘head of income’ set out in Section 14 of the Ac set out in Section 14 of the Act and only if such income can be computed under the t and only if such income can be computed under the provisions provided in respect of the particular head of income, that such income can be provisions provided in respect of the particular head of income, that such income can be provisions provided in respect of the particular head of income, that such income can be brought to tax.No item of income can be taxed as a head No item of income can be taxed as a head-less item, which is not classified less item, which is not classified under any of the five specified heads under Section 14 of the Act. ecified heads under Section 14 of the Act. Even in the ITR Forms, any Even in the ITR Forms, any item of income which is chargeable to income item of income which is chargeable to income-tax has to be compulsorily classified and tax has to be compulsorily classified and offered to tax under the five specified heads of income. There is no sixth head of income offered to tax under the five specified heads of income. There is no sixth head of income offered to tax under the five specified heads of income. There is no sixth head of income specified in the ITR Form nor is there any provision to offer an item of income as head in the ITR Form nor is there any provision to offer an item of income as head in the ITR Form nor is there any provision to offer an item of income as head-less. Any and every item of income which is chargeable to tax is thus required to be mandatorily Any and every item of income which is chargeable to tax is thus required to be mandatorily Any and every item of income which is chargeable to tax is thus required to be mandatorily classified under the five specified heads under Section 14 of the Act. The five classified under the five specified heads under Section 14 of the Act. The five classified under the five specified heads under Section 14 of the Act. The five heads of income specified in Section 14 of the Act are as follows: income specified in Section 14 of the Act are as follows:

A. Salary B. Income from House Property B. Income from House Property C. Profits & Gains From Business C. Profits & Gains From Business D. Capital Gains E. Income from Other Sources E. Income from Other Sources

13.2 In the facts of the present case, the case of the assessee was In the facts of the present case, the case of the assessee was that the compensation that the compensation received by him was in the nature of capital receipt not liable to tax. The AO however was received by him was in the nature of capital receipt not liable to tax. The AO however was received by him was in the nature of capital receipt not liable to tax. The AO however was not agreeable to the contention of the assessee and he was of the view that it was in the not agreeable to the contention of the assessee and he was of the view that it was in the not agreeable to the contention of the assessee and he was of the view that it was in the

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nature of ‘income’ taxable under the Act. After exam nature of ‘income’ taxable under the Act. After examining the facts of the case, the AO in the ining the facts of the case, the AO in the assessment order dated 30/12/2016 held that, the compensation was paid to the assessment order dated 30/12/2016 held that, the compensation was paid to the assessment order dated 30/12/2016 held that, the compensation was paid to the shareholders over and above the price received towards transfer of shares for de shareholders over and above the price received towards transfer of shares for de shareholders over and above the price received towards transfer of shares for de- promotorisation and them becoming ordinary shareholder promotorisation and them becoming ordinary shareholders. According to him, the sum of s. According to him, the sum of Rs.10,72,26,107/- due to the assessee in the proportion of the shareholding of the entire due to the assessee in the proportion of the shareholding of the entire due to the assessee in the proportion of the shareholding of the entire Group was not taxable in his hands. He also held that, the shareholders Group was not taxable in his hands. He also held that, the shareholders Group was not taxable in his hands. He also held that, the shareholders-individuals had gifted their respective right to receive their gifted their respective right to receive their proportionate compensation aggregating to proportionate compensation aggregating to Rs.15,07,38,150/- to the assessee and such gift was also not taxable since all of them were to the assessee and such gift was also not taxable since all of them were to the assessee and such gift was also not taxable since all of them were the ‘relatives’ of the assessee and hence it fell within the exception set out in Section the ‘relatives’ of the assessee and hence it fell within the exception set out in Section the ‘relatives’ of the assessee and hence it fell within the exception set out in Section 56(2)(vii) of the Act. It was only in relation to the proportionate sum of Rs.174,20,35,742/ nly in relation to the proportionate sum of Rs.174,20,35,742/ nly in relation to the proportionate sum of Rs.174,20,35,742/-, which according to AO, was due to the which according to AO, was due to the group entities but they diverted their income to the but they diverted their income to the assessee that was taxed by the AO as monies received without consideration u/s 56(2)(vii) assessee that was taxed by the AO as monies received without consideration u/s 56(2)(vii) assessee that was taxed by the AO as monies received without consideration u/s 56(2)(vii) in the hands of the assessee. It is therefore abundantly clear that the AO had not taxed the in the hands of the assessee. It is therefore abundantly clear that the AO had not taxed the in the hands of the assessee. It is therefore abundantly clear that the AO had not taxed the assessee’s own share in compensati assessee’s own share in compensation and all the respective shares of his relatives which on and all the respective shares of his relatives which were received by him. Applying the were received by him. Applying the ratio decidendi laid down in the decisions of the Hon’ble laid down in the decisions of the Hon’ble Apex Court in the cases of Mcorp Global (P.) Ltd. v. CIT (supra) and Hukumchand Mills Ltd. v. Apex Court in the cases of Mcorp Global (P.) Ltd. v. CIT (supra) and Hukumchand Mills Ltd. v. Apex Court in the cases of Mcorp Global (P.) Ltd. v. CIT (supra) and Hukumchand Mills Ltd. v. CIT (supra), such benefit granted by the AO to the assessee in the assessment order cannot such benefit granted by the AO to the assessee in the assessment order cannot such benefit granted by the AO to the assessee in the assessment order cannot be taken back by this Tribunal, more particularly in this second round of proceedings. be taken back by this Tribunal, more particularly in this second round of proceedings. be taken back by this Tribunal, more particularly in this second round of proceedings.

13.3 As we had discussed earlier, the AO in his assessment order had clearly stated that As we had discussed earlier, the AO in his assessment order had clearly stated that As we had discussed earlier, the AO in his assessment order had clearly stated that in an alternate factual scenario wherein he set out possible situations wherein such an alternate factual scenario wherein he set out possible situations wherein such an alternate factual scenario wherein he set out possible situations wherein such compensation may be taxed as ‘Business Income’ u/s 28(iia) of the Act or ‘Capital Gain’ u/s compensation may be taxed as ‘Business Income’ u/s 28(iia) of the Act or ‘Capital Gain’ u/s compensation may be taxed as ‘Business Income’ u/s 28(iia) of the Act or ‘Capital Gain’ u/s 45 of the Act. This second situation second situation however could have been invoked only if th however could have been invoked only if the said situation was found to hold true i.e. situation was found to hold true i.e. the entire amount belonged to the assessee and there were the entire amount belonged to the assessee and there were substantial management rights being enjoyed by the assessee substantial management rights being enjoyed by the assessee. So, it is very important to note . So, it is very important to note that if this foundational facts are not established or for that if this foundational facts are not established or for that matter is found to be not in that matter is found to be not in existence, then the legal proposition discussed by the AO in Paras 72 to 122 of the existence, then the legal proposition discussed by the AO in Paras 72 to 122 of the existence, then the legal proposition discussed by the AO in Paras 72 to 122 of the assessment order cannot be invoked in the case at hand. assessment order cannot be invoked in the case at hand.

13.4 In this context, the action of AO while submitting the remand report called In this context, the action of AO while submitting the remand report called In this context, the action of AO while submitting the remand report called for by the Ld CIT(A) in the second round becomes crucial and we have to examine as to whether AO Ld CIT(A) in the second round becomes crucial and we have to examine as to whether AO Ld CIT(A) in the second round becomes crucial and we have to examine as to whether AO brought any material in the contents of his report which could bring the receipt u/s 28(iia) brought any material in the contents of his report which could bring the receipt u/s 28(iia) brought any material in the contents of his report which could bring the receipt u/s 28(iia)

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or u/s 45 of the Act. However perusal of the averments made by or u/s 45 of the Act. However perusal of the averments made by the AO in the remand e AO in the remand report dated 31/01/2019 reveal that except for simply reproducing the Note of the senior reveal that except for simply reproducing the Note of the senior reveal that except for simply reproducing the Note of the senior counsel dated 30/08/2018 (which was already there before this Tribunal in the first round which was already there before this Tribunal in the first round which was already there before this Tribunal in the first round), the AO did not make out any case that the second situati AO did not make out any case that the second situation did exist on the facts so as to invoke on did exist on the facts so as to invoke the provisions of Section 28(iia) or Section 45 of the Act the provisions of Section 28(iia) or Section 45 of the Act. Instead the AO categorically stated Instead the AO categorically stated that there was nothing on record to suggest that the compensation entirely belonged to the that there was nothing on record to suggest that the compensation entirely belonged to the that there was nothing on record to suggest that the compensation entirely belonged to the assessee. The AO also did not state that the assessee was enjoying substantial rights. We thus ot state that the assessee was enjoying substantial rights. We thus ot state that the assessee was enjoying substantial rights. We thus find merit in the contention of the Ld. AR of the assessee that, since the AO was unable to find merit in the contention of the Ld. AR of the assessee that, since the AO was unable to find merit in the contention of the Ld. AR of the assessee that, since the AO was unable to make out a case either u/s 28 or 45 as directed by this Tribunal in Para 37.2 of the first order make out a case either u/s 28 or 45 as directed by this Tribunal in Para 37.2 of the first order make out a case either u/s 28 or 45 as directed by this Tribunal in Para 37.2 of the first order dated 16/11/2018, that he fell back on his original case that the compensation was related dated 16/11/2018, that he fell back on his original case that the compensation was related dated 16/11/2018, that he fell back on his original case that the compensation was related to the sale of shares by group entities group entities and therefore such sum was taxable u/s 56(2)(vii) of and therefore such sum was taxable u/s 56(2)(vii) of the Act and hence, he relied upon the discussions in the original order the Act and hence, he relied upon the discussions in the original order. As already stated, the As already stated, the addition made u/s 56(2)(vii) of the Act, does not survive after the first order of the ITAT dt. addition made u/s 56(2)(vii) of the Act, does not survive after the first order of the ITAT dt. addition made u/s 56(2)(vii) of the Act, does not survive after the first order of the ITAT dt. 16/11/2018. The grounds of the assessee against the addition u/s 56(2)(vii) of the Act, were 16/11/2018. The grounds of the assessee against the addition u/s 56(2)(vii) of the Act, were 16/11/2018. The grounds of the assessee against the addition u/s 56(2)(vii) of the Act, were allowed and this has attained finality. allowed and this has attained finality. Thus, when the AO himself failed to bring on us, when the AO himself failed to bring on record/remand report, facts necessary to tax this receipt of compensation as income either record/remand report, facts necessary to tax this receipt of compensation as income either record/remand report, facts necessary to tax this receipt of compensation as income either u/s 28 or Section 45 of the Act as propounded by him [second situation as contemplated in u/s 28 or Section 45 of the Act as propounded by him [second situation as contemplated in u/s 28 or Section 45 of the Act as propounded by him [second situation as contemplated in his assessment order(supra) and his assessment order(supra) and for which the matter was remitted by this Tribunal to the for which the matter was remitted by this Tribunal to the Ld CIT(A)], the Revenue cannot now be permitted again to rake up this issue in their Ld CIT(A)], the Revenue cannot now be permitted again to rake up this issue in their Ld CIT(A)], the Revenue cannot now be permitted again to rake up this issue in their grounds of appeal when the same was neither the case made out in original assessment grounds of appeal when the same was neither the case made out in original assessment grounds of appeal when the same was neither the case made out in original assessment order or for that matter in the remand report furnished before the ld. CIT(A) in the second the remand report furnished before the ld. CIT(A) in the second the remand report furnished before the ld. CIT(A) in the second round. A third innings cannot be granted to the revenue. A third innings cannot be granted to the revenue.

(ii) Whether on the facts and in the (ii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has circumstances of the case, the Ld. CIT(A) has erred in law in holding that the amount of compensation received by the assessee is erred in law in holding that the amount of compensation received by the assessee is erred in law in holding that the amount of compensation received by the assessee is not chargeable to tax at all as income from business under Section 282(ii)(a). not chargeable to tax at all as income from business under Section 282(ii)(a). not chargeable to tax at all as income from business under Section 282(ii)(a).

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(iii) Whether on the facts and in the circums (iii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has tances of the case, the Ld. CIT(A) has erred in law in holding that the amount of compensation received by the assessee is erred in law in holding that the amount of compensation received by the assessee is erred in law in holding that the amount of compensation received by the assessee is not chargeable to tax at all as income from capital gains under Section 45 read with not chargeable to tax at all as income from capital gains under Section 45 read with not chargeable to tax at all as income from capital gains under Section 45 read with Section 55(2) of the Act. Section 55(2) of the Act.

(iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) (iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) acts and in the circumstances of the case, the Ld. CIT(A) wrongly assumed the receipt to be in the nature of “Severance Compensation” as it wrongly assumed the receipt to be in the nature of “Severance Compensation” as it wrongly assumed the receipt to be in the nature of “Severance Compensation” as it was not received directly from the employer and if that be so that the payment was was not received directly from the employer and if that be so that the payment was was not received directly from the employer and if that be so that the payment was in the nature of “Severance Compe in the nature of “Severance Compensation” paid by the holding foreign company at nsation” paid by the holding foreign company at the behest of the employer, then it ought to have been taxes under Section 17(3) of the behest of the employer, then it ought to have been taxes under Section 17(3) of the behest of the employer, then it ought to have been taxes under Section 17(3) of the Act.

(v) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has (v) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has (v) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in holding that the erred in law in holding that the amount of compensation of Rs. 200 crores received amount of compensation of Rs. 200 crores received by the assessee is not taxable u/s 56(2)(vii) of the Act as the payment was not made by the assessee is not taxable u/s 56(2)(vii) of the Act as the payment was not made by the assessee is not taxable u/s 56(2)(vii) of the Act as the payment was not made without consideration.

(vi) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) failed (vi) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) failed (vi) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that receipt of “Severance Compensation” of Rs.200 crores by the ate that receipt of “Severance Compensation” of Rs.200 crores by the ate that receipt of “Severance Compensation” of Rs.200 crores by the assessee is an act of diversion of income by other members of the Poddar Group, assessee is an act of diversion of income by other members of the Poddar Group, assessee is an act of diversion of income by other members of the Poddar Group, who held majority of the shares, in favour of the assessee, in light of different cases who held majority of the shares, in favour of the assessee, in light of different cases who held majority of the shares, in favour of the assessee, in light of different cases of Hon’ble Apex Court including the case of Motilal Chhadami Lai Jain vs CIT rt including the case of Motilal Chhadami Lai Jain vs CIT rt including the case of Motilal Chhadami Lai Jain vs CIT reported in ‘1991 SCR(2) 237. reported in ‘1991 SCR(2) 237.

(vii) Whether on the facts and circumstances of the case, the ld. CIT(A) failed to hold Whether on the facts and circumstances of the case, the ld. CIT(A) failed to hold Whether on the facts and circumstances of the case, the ld. CIT(A) failed to hold that if the income is not chargeable under any heads specified under Section 1 that if the income is not chargeable under any heads specified under Section 1 that if the income is not chargeable under any heads specified under Section 14, items A to E, then such income ought to have been brought to tax under Section items A to E, then such income ought to have been brought to tax under Section items A to E, then such income ought to have been brought to tax under Section 56(1) of the Act.

14.1 With regard to ground (i) ground (i), as already stated in Para 11.1 above, this Tribunal does , as already stated in Para 11.1 above, this Tribunal does not have the power of enhancement nor can it take back the benefit not have the power of enhancement nor can it take back the benefit already granted by the already granted by the AO to the assessee. As stated earlier, the AO sought to tax only sum to the extent of AO to the assessee. As stated earlier, the AO sought to tax only sum to the extent of AO to the assessee. As stated earlier, the AO sought to tax only sum to the extent of Rs.174,20,35,742/- u/s 56(2)(vii) of the Act and the same was again reiterated in the u/s 56(2)(vii) of the Act and the same was again reiterated in the u/s 56(2)(vii) of the Act and the same was again reiterated in the remand report furnished before the ld. CIT(A). In that view remand report furnished before the ld. CIT(A). In that view of the matter, this ground raised of the matter, this ground raised by the Revenue seeking to tax the entire sum of Rs.200 crores cannot be entertained at this by the Revenue seeking to tax the entire sum of Rs.200 crores cannot be entertained at this by the Revenue seeking to tax the entire sum of Rs.200 crores cannot be entertained at this stage before us. Moreover, this ground also contradicts the Form No. 36 filed by the Revenue. stage before us. Moreover, this ground also contradicts the Form No. 36 filed by the Revenue. stage before us. Moreover, this ground also contradicts the Form No. 36 filed by the Revenue. Upon being afforded the opportunity Upon being afforded the opportunity to explain the maintainability of the appeal, the to explain the maintainability of the appeal, the Revenue filed a note dated 30/10/2018 along with revised grounds of appeal but they stood Revenue filed a note dated 30/10/2018 along with revised grounds of appeal but they stood Revenue filed a note dated 30/10/2018 along with revised grounds of appeal but they stood

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by their Form 36 which was filed on 06/11/2019. In Column 7 of the said Form, the Revenue by their Form 36 which was filed on 06/11/2019. In Column 7 of the said Form, the Revenue by their Form 36 which was filed on 06/11/2019. In Column 7 of the said Form, the Revenue has clearly stated that the disputed addition is Rs.174,20,35,742/ e disputed addition is Rs.174,20,35,742/- and not Rs.200 crores as and not Rs.200 crores as claimed in this ground (i). For the reasons as aforesaid, this ground of appeal is held to be claimed in this ground (i). For the reasons as aforesaid, this ground of appeal is held to be claimed in this ground (i). For the reasons as aforesaid, this ground of appeal is held to be not maintainable.

15.1 From a reading of the order of this Tribunal dated 16/11/2018 in the first round, it is From a reading of the order of this Tribunal dated 16/11/2018 in the first round, it is From a reading of the order of this Tribunal dated 16/11/2018 in the first round, it is clear that the Revenue had conceded the taxability of compensation u/s 56(2)(vii) of the Act. at the Revenue had conceded the taxability of compensation u/s 56(2)(vii) of the Act. at the Revenue had conceded the taxability of compensation u/s 56(2)(vii) of the Act. The case of the Revenue was limited to two possible scenarios which were hypothetically The case of the Revenue was limited to two possible scenarios which were hypothetically The case of the Revenue was limited to two possible scenarios which were hypothetically explored by the AO in his assessment order at Paras 72 to 122 i.e., Section 28(iia explored by the AO in his assessment order at Paras 72 to 122 i.e., Section 28(iia explored by the AO in his assessment order at Paras 72 to 122 i.e., Section 28(iia) and Section 45 of the Act. The senior counsel appearing on behalf of the Revenue stated that Section 45 of the Act. The senior counsel appearing on behalf of the Revenue stated that Section 45 of the Act. The senior counsel appearing on behalf of the Revenue stated that Section 56(2)(vii) was not applicable in the facts of the present case and therefore did not Section 56(2)(vii) was not applicable in the facts of the present case and therefore did not Section 56(2)(vii) was not applicable in the facts of the present case and therefore did not wish to press the same. By this statement which was duly recorded in wish to press the same. By this statement which was duly recorded in the findings given by this Tribunal in the order dated 16/11/2018, it would now operate as an estoppel against this Tribunal in the order dated 16/11/2018, it would now operate as an estoppel against this Tribunal in the order dated 16/11/2018, it would now operate as an estoppel against the Revenue since the said finding has not been disputed by them and the same has attained the Revenue since the said finding has not been disputed by them and the same has attained the Revenue since the said finding has not been disputed by them and the same has attained finality and the Ld CIT(A) has acted upon the same in finality and the Ld CIT(A) has acted upon the same in the impugned order. So this admitted the impugned order. So this admitted position of Revenue before this Tribunal during the first round cannot be allowed to be position of Revenue before this Tribunal during the first round cannot be allowed to be position of Revenue before this Tribunal during the first round cannot be allowed to be disturbed as contemplated under section 31 read with section 115 of the Indian Evidence disturbed as contemplated under section 31 read with section 115 of the Indian Evidence disturbed as contemplated under section 31 read with section 115 of the Indian Evidence Act,1872.

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15.2 We also do not find merit We also do not find merit in the ld. CIT, DR’s averment that, this stand taken by the in the ld. CIT, DR’s averment that, this stand taken by the Revenue in the first round of appeal were the private and personal views of the counsel Revenue in the first round of appeal were the private and personal views of the counsel Revenue in the first round of appeal were the private and personal views of the counsel appearing on their behalf and that this statement was made without seeking their approval appearing on their behalf and that this statement was made without seeking their approval appearing on their behalf and that this statement was made without seeking their approval and for that reason they are legally permitted to raise this issue again before this Tribunal. If on they are legally permitted to raise this issue again before this Tribunal. If on they are legally permitted to raise this issue again before this Tribunal. If that had been the case that the Revenue was not agreeable to this stand, nothing prevented that had been the case that the Revenue was not agreeable to this stand, nothing prevented that had been the case that the Revenue was not agreeable to this stand, nothing prevented them from agitating this before the higher appellate forum being the Hon’ble Calcutt them from agitating this before the higher appellate forum being the Hon’ble Calcutt them from agitating this before the higher appellate forum being the Hon’ble Calcutta High Court or file a Miscellaneous Application u/s 254(2) in this regard. Admittedly, the Revenue Court or file a Miscellaneous Application u/s 254(2) in this regard. Admittedly, the Revenue Court or file a Miscellaneous Application u/s 254(2) in this regard. Admittedly, the Revenue did not pursue either of the remedies available to them. Consequentially therefore, this stand did not pursue either of the remedies available to them. Consequentially therefore, this stand did not pursue either of the remedies available to them. Consequentially therefore, this stand of the Revenue before the Tribunal that the compensation was of the Revenue before the Tribunal that the compensation was not taxable u/s 56(2)(vii) has not taxable u/s 56(2)(vii) has since attained finality and the legal effect is that the AO’s order since attained finality and the legal effect is that the AO’s order charging to tax, charging to tax, the receipt u/s 56(2)(vii) also goes. Hence, the pith and substance that one can draw from this event, u/s 56(2)(vii) also goes. Hence, the pith and substance that one can draw from this event, u/s 56(2)(vii) also goes. Hence, the pith and substance that one can draw from this event, that consequent to the order dated 16 that consequent to the order dated 16/11/2018 passed by this Tribunal in the first round of /11/2018 passed by this Tribunal in the first round of appeal proceedings, against which no appeal was preferred by the Revenue, there is no appeal proceedings, against which no appeal was preferred by the Revenue, there is no appeal proceedings, against which no appeal was preferred by the Revenue, there is no addition in existence u/s 56(2)(vii) of the Act of Rs.174.20 crores in the hands of the addition in existence u/s 56(2)(vii) of the Act of Rs.174.20 crores in the hands of the addition in existence u/s 56(2)(vii) of the Act of Rs.174.20 crores in the hands of the assessee for the relevant AY 2014 Y 2014-15.

15.3 Hence, as rightly held by the ld. CIT(A), since the Revenue had conceded this ground Hence, as rightly held by the ld. CIT(A), since the Revenue had conceded this ground Hence, as rightly held by the ld. CIT(A), since the Revenue had conceded this ground before this Tribunal, the AO could not have agitated this issue again in the remand before this Tribunal, the AO could not have agitated this issue again in the remand before this Tribunal, the AO could not have agitated this issue again in the remand proceedings and that the stand on this issue had become final. Estopp proceedings and that the stand on this issue had become final. Estopp proceedings and that the stand on this issue had become final. Estoppel indeed applies on these facts. For the reasons aforesaid, we agree with the contention of the ld. AR of the these facts. For the reasons aforesaid, we agree with the contention of the ld. AR of the these facts. For the reasons aforesaid, we agree with the contention of the ld. AR of the assessee that ground (ii) taken by the Revenue seeking to tax the compensation u/s taken by the Revenue seeking to tax the compensation u/s taken by the Revenue seeking to tax the compensation u/s 56(2)(vii) is unsustainable in law and hence is not being ente 56(2)(vii) is unsustainable in law and hence is not being entertained.

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adjudication. As noted earlier, the ld. CIT(A) had called for a remand report from AO adjudication. As noted earlier, the ld. CIT(A) had called for a remand report from AO adjudication. As noted earlier, the ld. CIT(A) had called for a remand report from AO particularly on this aspect. The Re particularly on this aspect. The Revenue however again changed their tact and revert back to venue however again changed their tact and revert back to their original stand i.e. Section 56(2)(vii) and the AO again repeated and relied on the their original stand i.e. Section 56(2)(vii) and the AO again repeated and relied on the their original stand i.e. Section 56(2)(vii) and the AO again repeated and relied on the findings of his predecessor in the original assessment order, in the remand proceedings. He findings of his predecessor in the original assessment order, in the remand proceedings. He findings of his predecessor in the original assessment order, in the remand proceedings. He again stated that the facts revealed that the compensation was related to the sale of shares the facts revealed that the compensation was related to the sale of shares the facts revealed that the compensation was related to the sale of shares by group entities and consequently this amount is relatable to the shareholding of the group and consequently this amount is relatable to the shareholding of the group and consequently this amount is relatable to the shareholding of the group entities. The ld. AR of the assessee has rightly pointed out that the AO has made a tac entities. The ld. AR of the assessee has rightly pointed out that the AO has made a tac entities. The ld. AR of the assessee has rightly pointed out that the AO has made a tacit admission that he was unable to bring on record any material which showed that the admission that he was unable to bring on record any material which showed that the admission that he was unable to bring on record any material which showed that the second situation indeed existed. The AO was also unable to make out a case that the assessee was indeed existed. The AO was also unable to make out a case that the assessee was indeed existed. The AO was also unable to make out a case that the assessee was the sole beneficial owner of the compensation and that he enjoyed substan the sole beneficial owner of the compensation and that he enjoyed substan the sole beneficial owner of the compensation and that he enjoyed substantial management rights in the company. No new material or fact was brought on record by the AO in the rights in the company. No new material or fact was brought on record by the AO in the rights in the company. No new material or fact was brought on record by the AO in the remand report which would turn the facts of the case towards the remand report which would turn the facts of the case towards the second situation second situation cited by his predecessor in the original assessment order. The ld. AR al his predecessor in the original assessment order. The ld. AR also pointed out that, neither so pointed out that, neither did the AO propose to make any addition either u/s 28(iia) or Section 45 of the Act in the did the AO propose to make any addition either u/s 28(iia) or Section 45 of the Act in the did the AO propose to make any addition either u/s 28(iia) or Section 45 of the Act in the remand report nor did he quantify the additions either under these two sections nor did he remand report nor did he quantify the additions either under these two sections nor did he remand report nor did he quantify the additions either under these two sections nor did he raise any additional demand pursuant thereto. raise any additional demand pursuant thereto. Both in the original assessment order and the Both in the original assessment order and the remand report, the AO stuck to his stand that the case of the assessee fell under the first remand report, the AO stuck to his stand that the case of the assessee fell under the first remand report, the AO stuck to his stand that the case of the assessee fell under the first situation i.e. compensation was taxable under Section 56(2)(vii) of the Act and it was never situation i.e. compensation was taxable under Section 56(2)(vii) of the Act and it was never situation i.e. compensation was taxable under Section 56(2)(vii) of the Act and it was never his case that the second situation situation did exist so as to invoke Section 28(iia) or Section 45 of the did exist so as to invoke Section 28(iia) or Section 45 of the Act. In absence of the same, the purported claim of the Revenue now again changing its stand Act. In absence of the same, the purported claim of the Revenue now again changing its stand Act. In absence of the same, the purported claim of the Revenue now again changing its stand altogether and seeking to tax this amount u/s 28(iia) or Section 45 of the Act is nothing altogether and seeking to tax this amount u/s 28(iia) or Section 45 of the Act is nothing altogether and seeking to tax this amount u/s 28(iia) or Section 45 of the Act is nothing but creating a smokescreen for getting a third innings, which clearly cannot be granted to them. creating a smokescreen for getting a third innings, which clearly cannot be granted to them. creating a smokescreen for getting a third innings, which clearly cannot be granted to them.

16.1 It is elementary that any legal proposition is required to be tested after establishing It is elementary that any legal proposition is required to be tested after establishing It is elementary that any legal proposition is required to be tested after establishing the foundational facts of a case. As discussed earlier, the Rev the foundational facts of a case. As discussed earlier, the Revenue can only support the order enue can only support the order of the AO before us. The Revenue can strengthen their case on the issue raised in the of the AO before us. The Revenue can strengthen their case on the issue raised in the of the AO before us. The Revenue can strengthen their case on the issue raised in the assessment order but the Revenue cannot be permitted to make out an altogether new case assessment order but the Revenue cannot be permitted to make out an altogether new case assessment order but the Revenue cannot be permitted to make out an altogether new case before us de hors the findings of the AO in his as the findings of the AO in his assessment order or for that matter the sessment order or for that matter the remand report. As held earlier, this Tribunal does not have the power to deal with an issue remand report. As held earlier, this Tribunal does not have the power to deal with an issue remand report. As held earlier, this Tribunal does not have the power to deal with an issue raised by the Revenue, which was never the case of the AO in the assessment order or in the raised by the Revenue, which was never the case of the AO in the assessment order or in the raised by the Revenue, which was never the case of the AO in the assessment order or in the remand-report as discussed (supra) report as discussed (supra).

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16.2 Useful reference in this regard may be made to the decision of a Division Bench of the Useful reference in this regard may be made to the decision of a Division Bench of the Useful reference in this regard may be made to the decision of a Division Bench of the Bombay High Court in the case of CIT Vs. Kanga & Co. [IT Appeal No. 2277 of 2013 dated 1 Bombay High Court in the case of CIT Vs. Kanga & Co. [IT Appeal No. 2277 of 2013 dated 1 Bombay High Court in the case of CIT Vs. Kanga & Co. [IT Appeal No. 2277 of 2013 dated 1-2- 2016] wherein the Court observed that, 2016] wherein the Court observed that, it was unable to understand ho it was unable to understand how an additional question of law could arise from the impugned order of the Income Tax Appellate Tribunal, question of law could arise from the impugned order of the Income Tax Appellate Tribunal, question of law could arise from the impugned order of the Income Tax Appellate Tribunal, when no foundation had been laid for the same before the authorities or the said Tribunal. when no foundation had been laid for the same before the authorities or the said Tribunal. when no foundation had been laid for the same before the authorities or the said Tribunal. The Bench further observed that there are questions of fact Bench further observed that there are questions of fact which ought to be raised before the which ought to be raised before the authorities and in the absence thereof, the additional question of law sought to be raised by authorities and in the absence thereof, the additional question of law sought to be raised by authorities and in the absence thereof, the additional question of law sought to be raised by the Revenue could not be considered. In the facts of the present case also, the Revenue has the Revenue could not be considered. In the facts of the present case also, the Revenue has the Revenue could not be considered. In the facts of the present case also, the Revenue has clearly failed to lay down whethe clearly failed to lay down whether the second situation did exist on facts so as to test the did exist on facts so as to test the provisions of Section 28 or Section 45 of the Act. Instead the Revenue’s case before the ld. provisions of Section 28 or Section 45 of the Act. Instead the Revenue’s case before the ld. provisions of Section 28 or Section 45 of the Act. Instead the Revenue’s case before the ld. CIT(A) continued to be the same as the original assessment order i.e. the compensation was CIT(A) continued to be the same as the original assessment order i.e. the compensation was CIT(A) continued to be the same as the original assessment order i.e. the compensation was taxable u/s 56(2)(vii) of the Act. Hence, without laying down the foundational facts, the 56(2)(vii) of the Act. Hence, without laying down the foundational facts, the 56(2)(vii) of the Act. Hence, without laying down the foundational facts, the Revenue cannot be permitted to re Revenue cannot be permitted to re-urge taxability under Section 28 or Section 45 of the Act. urge taxability under Section 28 or Section 45 of the Act.

16.3 As far the decisions relied upon by the ld. CIT, DR is concerned; we note that As far the decisions relied upon by the ld. CIT, DR is concerned; we note that As far the decisions relied upon by the ld. CIT, DR is concerned; we note that they are materially distinguishable. As far as the decision of the Hon’ble Karnataka High Court in the materially distinguishable. As far as the decision of the Hon’ble Karnataka High Court in the materially distinguishable. As far as the decision of the Hon’ble Karnataka High Court in the case of Fidelity Business Services India (P.) Ltd Vs ACIT (257 Taxman 266) Services India (P.) Ltd Vs ACIT (257 Taxman 266) Services India (P.) Ltd Vs ACIT (257 Taxman 266) is concerned, this Tribunal had taken due note of the ratio laid down therein and for that reason and in this Tribunal had taken due note of the ratio laid down therein and for that reason and in this Tribunal had taken due note of the ratio laid down therein and for that reason and in order to protect the interests of the Revenue, the issue to examine taxability u/s 28(iia)/45 order to protect the interests of the Revenue, the issue to examine taxability u/s 28(iia)/45 order to protect the interests of the Revenue, the issue to examine taxability u/s 28(iia)/45 was set aside to the file of the CIT(A). The AO however was set aside to the file of the CIT(A). The AO however chose not to make out a case under chose not to make out a case under these two sections which were urged in the first round but stuck to Section 56(2)(vii) which these two sections which were urged in the first round but stuck to Section 56(2)(vii) which these two sections which were urged in the first round but stuck to Section 56(2)(vii) which was categorically conceded in the first round before us. Hence, this decision in the second was categorically conceded in the first round before us. Hence, this decision in the second was categorically conceded in the first round before us. Hence, this decision in the second round of appeal proceedings is of no round of appeal proceedings is of no assistance to the Revenue. With regard to the decision assistance to the Revenue. With regard to the decision of this Tribunal in the case of of this Tribunal in the case of R.K.B.K. Fiscal Services Ltd vs ACIT in MA No. 42/Kol/2011 s ACIT in MA No. 42/Kol/2011, it is observed that, in the decided case, the Tribunal was required to decide the maintainbility of observed that, in the decided case, the Tribunal was required to decide the maintainbility of observed that, in the decided case, the Tribunal was required to decide the maintainbility of the miscellaneous application filed u/s 254(2) challenging the findings recorded by the ellaneous application filed u/s 254(2) challenging the findings recorded by the ellaneous application filed u/s 254(2) challenging the findings recorded by the Tribunal to be ab initio void. This decision is of no relevance in the facts of the present case. Tribunal to be ab initio void. This decision is of no relevance in the facts of the present case. Tribunal to be ab initio void. This decision is of no relevance in the facts of the present case.

16.4 For the reasons discussed in the foregoing, we therefore hold that even For the reasons discussed in the foregoing, we therefore hold that even For the reasons discussed in the foregoing, we therefore hold that even the ground nos. (iii) & (iv) are not maintainable before us. nos. (iii) & (iv) are not maintainable before us.

I.T.A. No. 2406/Kol/201 I.T.A. No. 2406/Kol/2019 Assessment Year: 2014-15 Shri Saroj Kumar Poddar Shri Saroj Kumar Poddar

I.T.A. No. 2406/Kol/201 I.T.A. No. 2406/Kol/2019 Assessment Year: 2014-15 Shri Saroj Kumar Poddar Shri Saroj Kumar Poddar

terminus powers as that of AO. So, in the absence of material/facts as required to bring the of AO. So, in the absence of material/facts as required to bring the of AO. So, in the absence of material/facts as required to bring the receipt in the teeth of section 28(iia) or under section 45 of the Act, the Ld CIT(A) didn’t receipt in the teeth of section 28(iia) or under section 45 of the Act, the Ld CIT(A) didn’t receipt in the teeth of section 28(iia) or under section 45 of the Act, the Ld CIT(A) didn’t made any addition or raised any demand consequent thereto was raised upon the assessee. any demand consequent thereto was raised upon the assessee. Even Column (7) of Form 36 filed by the Revenue shows that they are disputing addition of Column (7) of Form 36 filed by the Revenue shows that they are disputing addition of Column (7) of Form 36 filed by the Revenue shows that they are disputing addition of Rs.174,20,35,742/- which was made u/s 56(2)(vii) of the Act which was made u/s 56(2)(vii) of the Act (which has already been (which has already been conceded and given up in first round conceded and given up in first round) and not the purported sum of Rs.200 crores under ) and not the purported sum of Rs.200 crores under Section 28(iia) /45/ 17(3)/56(1) of the Act. This shows the self contradictory stand of the Section 28(iia) /45/ 17(3)/56(1) of the Act. This shows the self contradictory stand of the Section 28(iia) /45/ 17(3)/56(1) of the Act. This shows the self contradictory stand of the AO/Revenue. In absence of there being any surviving addition to the returned income AO/Revenue. In absence of there being any surviving addition to the returned income AO/Revenue. In absence of there being any surviving addition to the returned income made by the Assessing Officer or the ld. CIT(A) by the Assessing Officer or the ld. CIT(A) either under Section 56(2)(vii) either under Section 56(2)(vii) or Section 28(iia) or section 45 of the Act, nothing remains in this Revenue’s Appeal which can now be section 45 of the Act, nothing remains in this Revenue’s Appeal which can now be section 45 of the Act, nothing remains in this Revenue’s Appeal which can now be strengthened or argued before us, which only we are empowered to adjudicate upon. We strengthened or argued before us, which only we are empowered to adjudicate upon. We strengthened or argued before us, which only we are empowered to adjudicate upon. We thus, on the peculiar facts and facts and circumstances of this case, in this second round of appellate second round of appellate proceedings before us, hold that the grounds taken by the Revenue in this appeal are not hold that the grounds taken by the Revenue in this appeal are not hold that the grounds taken by the Revenue in this appeal are not maintainable and hence rejected. maintainable and hence rejected.

Kolkata, the Kolkata, the 29th day of June, 2021

Sd/- Sd/- [Aby T. Varkey] [J. Sudhakar Reddy J. Sudhakar Reddy] Judicial Member Accountant Member Accountant Member Dated : 29.06.2021 {SC SPS}

I.T.A. No. 2406/Kol/201 I.T.A. No. 2406/Kol/2019 Assessment Year: 2014-15 Shri Saroj Kumar Poddar Shri Saroj Kumar Poddar

Copy of the order forwarded to: py of the order forwarded to: 1. Shri Saroj Kumar Poddar Hongkong House 31, B.B.D. Bag (South) Kolkata – 700 001 2. Deputy Commissioner of Income Tax, Circle Deputy Commissioner of Income Tax, Circle-6(1), Kolkata