SHRI SAROJ KUMAR PODDAR,KOLKATA vs. DCIT, CIRCLE - 6(1), KOLKATA , KOLKATA

1. This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax-(A)-2, Kolkata dated 10.07..2017 passed u/s 250 of the Income Tax Act, 1961 (the ‘Act ‘) relating to A.Y. 2014-15, wherein the order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (the ‘ Act’ ) dated 30.12.2016 was confirmed.

The facts in brief : The assessee along with various related entities collectively know as Poddar Group and Gillette USA were promoters of a company called Indian Shaving Product Limited (“ISP”) incorporated in 1984. A promoters’ agreement was also entered into between the promoters. The Company’s shares are listed on the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”). The original promoters agreement was amended on 10th May, 1992 and 5th June, 1992.

We now extract from the share holder agreements, facts relevant to the issue on hand, for ready reference:- “ SHAREHOLDERS AGREEMENT dt. 10/07/1996 2.Equity 2.1 SKP will endeavour within 2 years from the date hereof consolidate all shareholding in ISP controlled by· himself and his wife and male descendants ( SKP's Family') into the name of Sonali Estates Ltd ("Sonali” ). 2.2 On further issue of capital by ISP, neither Gillette .nor SKP (or their respective associates) will renounce its rights to subscribe for further shares in favour of any third party, without 'first offering them to the other. 2:3 If Gillette or SKP (or their respective associates) is desirous of desirous of disposing of any shares in ISP it will not do so to any third party (not including any company owned-or controlled by Gillette or SKP's Family .respectively ) without first offering them, at a price and on terms no less favourable to the other but subject always to compliance with applicable Indian laws and regulations and Stock Exchange regulations. 2.4 Gillette shall be free, subject to compliance with Indian laws and regulations to transfer part or all of its shareholding in ISP to one or more wholly-owned entities in India. 3. Management of ISP 3.1 The parties hereto will concur in reconstituting the Board of ISP so that it will consist of 7 Directors of whom 2 will be elected from nominees of Sonali. Proportional representation will be excluded, Shri Saroj Kumar Poddar A.Y.2014-15 3

In the year 2001, ‘ISP’ was renamed to “Gillette India Limited” (“the Company” or “GIL”). Thereafter in the year 2005, “Gillette USA” was acquired by “Procter and Gamble Company USA (“P&G”)”. The two promoter groups of “GIL” i.e. P&G was holding 75.9% of the share capital (equity) and the assessee alongwith individuals who were related to him and entities which were controlled by the Shri Saroj Kumar Poddar A.Y.2014-15 4 assessee, collectively known as “Poddar Group” was holding 12.86% equity share 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.

In June 2010, the Securities Contracts (Regulation) Rules, 1957 (“SCRR”) were amended to stipulate that, the Minimum Public Shareholding (“MPS”) should be 25% in case of listed companies. 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.

Various proposals made by ISP to achieve the stipulation of 25% MPS were rejected by SEBI. Finally, the assessee, as a promoter of ‘GIL’, made certain proposals to SEBI, for compliance with the MPS norms, which SEBI had approved.

The relevant clauses of the “Severance Agreement” relating to the compensation are extracted for ready reference : “(iv)The contents of the SEBI Approval, along with full particulars of the SEBI Applications that culminated in the SEBI Approval, will be fully disclosed in the explanatory statement accompanying the Shareholder Notice.· The explanatory statement shall also disclose the severance compensation ("Compensation") that will be paid by P&G to SKP for SKP and the existing shareholders acting in concert with him agreeing to remove the special rights held by them in Gillette through the SHA and the Articles, and for P&G asserting its rights as the sole surviving promoter of Gillette. The members of the Poddar Group agree and acknowledge that the Compensation is the sole right of SKP and that the Compensation is being paid to SKP in his individual capacity' and no other shareholder has an right nor is entitled to receive the Compensation or any portion thereof. P&G shall have no recourse to Gillette for payment of the Compensation to SKP, and no interests of the minority shareholders are being affected as this payment is being made to SKP in his personal capacity for removal of the special rights held by the Poddar Group as an original promoter and founder of Gillette at the time of its incorporation and thereafter pursuant to the Articles and the SHA. Subject to compliance with the conditions set out in the SEBI Approval, all parties agree and 'acknowledge that payment of the Compensation will not require an open offer to be made under the Takeover Regulations. (vi) The deletion of articles listed in Schedule 5 from the Articles and the termination of the SHA shall be effective (a) after the OFS is completed and the sale consideration is received by SKP and the Selling Poddar Shareholders pursuant to the OFS and (b) upon SKP receiving the Compensation from P&G”. “Calculation of Compensation 11. For the purpose of calculating the Compensation payable to SKP for termination of the SHA and the special rights incorporated in the Articles, P&G and SKP have mutually agreed that the measure of reasonable compensation payable for such termination is the difference between (i) the weighted average price per share received by P&G, SKP and the Selling Poddar Shareholders, collectively, for sale of their equity shares of Gillette to members of the public in the OFS ("Realisation per Equity Share"); and (ii) INR 3,000 per share. The Realisation per Equity Share shall be the weighted average price at which the Shri Saroj Kumar Poddar A.Y.2014-15 7

AMENDMENT OF CLAUSE 7.1. OF THE SHA 1.1 With effect from November 11, 2013, the existing Clause 7.1 of the SHA shall stand replaced by the following clause: This agreement shall terminate automatically upon either: (a) Procter& Gamble Holdings BV and its affiliates ceasing to hold in aggregate at least 5.00% of the paid-up equity' capital of Gillette India Limited; or LIABILITIES AND CLAIMS The Parties agree that after the termination of the SHA in accordance with the provisions of the revised Clause 7.1 of the SHA as forth above, each Party shall have and/ or be deemed to have discharged and extinguished all rights, duties, liabilities and obligations under the SHA and each Party releases and discharges each other Party and each of their respective affiliates from its obligations to give effect to any of the provisions of the SH.A and shall have no right against any other Party or any of its affiliates under the SHA.”

The issue before us is whether, the severance compensation of Rs.200 crore received by the assessee is chargeable to tax as income under the Income Tax Act, 1961 (The Act).The AO held that the compensation in question is taxable as income. He held that the Company “ Gillette India Ltd.” has no involvement in the said transaction of payment of Severance compensation. He rejected the contentions of the assesee that the compensation in question is a capital receipt and hence cannot be regarded as income under the inclusive definition of the term “income” under the “ Act”. He discussed several alternatives to bring this amount to tax. Ultimately he held that an amount of Rs.1,74,20,35,742/- was taxable u/s 56 of the Act. At para-40 of his order he held as follows :- “40. Since assessee has made elaborate submissions to show that compensation is not taxable under any of the heads of the Income, it is essential to determine, based on the facts available on record in the right perspective and on the basis of relevant provisions of Law in this regard, that the same Compensation which assessee is claiming as not to be taxable under any provision of the Act, is actually taxable under different provisions / heads of income of the Act, alternatively. The above discussion is for refuting / invalidating / rebutting/ the various multiple exemptions claimed by the assessee regarding the Compensation received and underscoring the areas as to where the said compensation may be brought to taxation as per the provisions of the I T Act,1961, if the different contentions are made by the assessee at subsequent stages in a bid to save the said compensation from taxation. The purpose here is to underscore the fact that the said amount is taxable under different provisions of IT Act, 1961 even if assessee takes a different presumption and interpretation of said compensation in due course. This should not be taken as a plea by the assessee that since the same is being discussed as taxable under more than one heads, it is not taxable at all.”

Alternatively and without prejudice to the above stand that the amount in question is taxable u/s 56 of the Act, the AO held that receipt in question was taxable u/s 28(ii) (a) of the Act. He held that the assessee was substantially managing “Gillette India” as the Chairman and his son being one of the directors that he had special rights as mentioned in SHA dated 10th January, 1984 and under the Article of Association of the company.

At para 119 page 66 he held as follows :- “119. Therefore, even if the amount of Rs.200 Crore received by the assessee as Severance Compensation is deemed to be a capital receipt and even if it is understood that the Compensation was not to be received by the other members of the Group as held earlier in this Assessment Order, the said Compensation of Rs.200 Crs would be taxable u/s 28(ii)(a) because of the specific provision in the Act for taxing such Compensation as clear from the discussion made in foregoing part of this assessment order.”

The ld. AO also held that the compensation in question can also be taxed as capital gains u/s 45 of the Act. At Para-122 he computed the long term capital gain on the receipt. Thereafter at para 123 and 124 the AO concluded as follows :- “123. Tax Treatment- The taxability of assessee's income on account of receipts of 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 regard to the facts of the case discussed in detail now that such taxability may involve two situations which are given below: ---- 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 member to the assessee 2. Or the entire amount is belonging to the Assessee and hence there was substantial management rights being enjoyed by the Assessee. Both the situations have been discussed between Para (v) and Para 71 (treating said payment to be taxable as income from other sources) and between Para 72 to 123 treating said payment to be taxable as business income and income from capital gains respectively in the earlier part of this assessment order.

As stated above, it is a clear case of tax evasion by both the Assessee and the Group Companies and the Compensation received is taxable as “income from other sources” u/s 56 as per the discussion made in the earlier portions of this assessment order mentioned in para 70(vi) in the following manner : Shareholder % Amount Taxability transfer Assessee 0.69 Rs.10,72,26,107/- No Not taxable as per the above discussion Family Members 0.97 Rs.15,07,38,150/- No Not taxable as of assessee per the above discussion and exempt as received from relatives Group entities of 11.21 Taxable under Rs.174,20,35,742/- Assessee section 56 Total 12.87 Rs.200,00,00,000/-

Aggrieved the assessee carried the matter in appeal, raising various grounds before the ld. CIT(A). The CIT(A) has extracted the grounds raised by the assessee from pages 1 to 5 of his order and thereafter extracted the submissions of the assessee from pages 5 to 20 of his order and in one paragraph at the end of page 20 he held as follows :- “I have considered the submissions of the appellant as well as the assessment order framed in the light of the materials available on record before the assessing officer during the assessment proceedings. The assessing officer has already discussed the issue in details with various grounds and alternatives grounds. The AO has elaborately mentioned the reasons for taxing the amount under various options. I agree with the views as taken by the AO. There is no doubt that the appellate has received huge amount from the company which is liable to be taxed and accordingly, the AO ha taxed the amount with alternative grounds to protect the interest of the revenue. The assessing officer has also made enquiry from SEBI and discussed the issue in details in the order. In view of above, the order of the AO is upheld. These grounds of appeal are dismissed.”

Aggrieved the assessee is in appeal before us.

The learned Senior Counsel for the assessee Shri J.D.Mistry, at the outset, referred to the interim orders passed by the Tribunal dt 3rd April, 2018 as well as on 3rd July, 2018 and submitted that the department has not granted refund to the assessee till date, in compliance of these orders. He vehemently contended that, this violation of the orders of the ITAT by the department, should be viewed seriously and the revenue be barred from the proceedings. Shri J.D.Mistry further pointed out that the paper books filed by the department is not as per rules, as it is not certified and even pagination is not done. He objected to the same.

The learned Senior Counsel Shri J.D.Mistry, without prejudice to the above stated objections, started his arguments on merits, by taking the bench to the facts of the case. He submitted that the AO ultimately chosen to tax the assessee by invoking section 56(2) (vii) of the Act and holding that Rs.25.79 crore(approx) out of Rs.200 Shri Saroj Kumar Poddar A.Y.2014-15 14 crores of the severance compensation received is not taxable and that only Rs.174 crores (approx.) is only to be taxed. He further submitted that the AO has alternatively discussed a number of possibilities of bringing the amount in question to tax u/s 28(ii)(a) of the Act or alternatively u/s 45 of the Act. He submitted that the AO has not acted on these possibilities and had not based his assessment of income on these sections and hence these sections cannot be invoked by the revenue at this stage. He filed elaborate written submissions on the issue of taxability of the severance compensation u/s 56(2) of the Act, applied by the Assessing Officer to tax the receipt in question. He argued that the ITAT cannot go beyond the issue of examining the applicability of Section 56(2) of the Act as the AO has not chosen to tax the amount in question under any other section of the Act. Nevertheless he proposed to make detailed submissions on all the sections discussed by the AO in his order.

At this stage, the Bench sought to know from the learned Special Counsel for the Revenue Mr.Girish Dave, as to whether he would support the order of the AO wherein, ultimately he chose to tax the receipt of Rs.200 crores in question to tax u/s 56(2) of the Act. 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 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 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(2)(a) of the 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 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 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 in u/s 45 of the Act r.w. section 55(2)(a) of the Act.

Thus in view of the above submission of Sri Girish Dave the ld. Special counsel for 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 question is taxable as income under those Section except, the AO’s finding that the 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 55(2)(a) of the Act.

The learned Sr. Counsel Shri J.D.Mistry submitted that as the learned Special Counsel has stated that the stand of the AO as confirmed by the ld. CIT(A) is basically wrong , as the receipt in question cannot be brought to tax u/s 56(2)(vii) of the Act and hence nothing survives and that the appeal of the assessee has to be allowed. He contended that, though the AO, in an elaborate order, considered various possible Sections based on which the receipt in question can be brought to tax under Income Tax Act, 1961 ultimately, the receipt was brought to tax only u/s 56(2)(vii) of the Act and not under any other section in the Act. His contention is that once the “Special Counsel” has given up the departmental stand that the receipt in question is taxable u/s 56(2)(vii) of the Act, then no other section can be brought into play or relied upon to bring the receipt in question to tax by the revenue before the Tribunal. He argued that the ITAT has to adjudicate the correctness of the final basis/ground taken by the AO to tax the receipt in question.

Alternatively and without prejudice to the above the learned Senior Counsel submitted that, as the AO has brought to tax only an amount Rs.1,74,20,35,742/- the Tribunal cannot bring to tax the amount in excess of the same, as the ITAT has no power of enhancement.

Without prejudice to the above submission the ld. Sr. Advocate made oral and written submissions. The written submissions which sufficiently captures the oral submissions including replies to the submissions of the ld. Special Counsel for the revenue are extracted below :-

Secondly. the Appellant submitted that the amount received by the Appellant under the non-compete agreement has already been held to be a capital receipt by the decision of the jurisdictional High Court of Calcutta in the case of ClT v Saroj Kumar Poddar [151 Taxman 153 ]. There has been no breach of the said agreement and hence there is no question of any further consequence flowing from the said agreement.

Thirdly. the Appellant submitted that, under the non-compete agreement the Appellant had taken an 'obligation not to compete' and not a right' and had received the compensation for the same. Therefore, the Appellant submitted that there is no question of receiving compensation for giving up an obligation. Therefore, the question of correlating the compensation of Rs. 200 crores received by the Appellant with the non-compete agreement is wholly erroneous and bad in law. Hence, the Appellant submitted that the compensation of Rs. 200 crores received by the Appellant cannot even be charged to tax under the head' capital gains.”

The Learned Special Counsel for the Revenue, Sri Girish Dhave on the other hand, opposed the contentions of the assessee and submitted that the main issue is whether the “ Managing Director” appointed by the “ Board of Director “ , can be considered as managing the wholly or substantially the whole affairs of the company or whether the ”Board of Directors” are managing the whole or substantially the Shri Saroj Kumar Poddar A.Y.2014-15 20 whole of the affairs of the Indian company through the Managing Director. He once again took this Bench through the promoters agreement 1992 and the agreements dated 05.06.1992 and 18.01.1996. He also drew the attention of the Bench to the manner in which the assessee sought to evade compliance with SEBI regulations and the adverse order suffered from SAT and ultimately how the assessee and the company GI was forced to take steps to comply with the rules of the SEBI.

He further argued that the receipt in taxable u/s 28(ii)(a) of the Act as income. He argued that the Managing Director of the company is appointed only with a consultation of the chairman and hence the chairman gets supervising rights. He referred to section 255 of the Companies Act and submitted that the Managing Director of a company has to act under the control and direction of the “Board of Directors”. He took the bench through various clauses of the Articles of Association and submitted that the shareholder agreement along with the Article of Association of the company, would lead to a conclusion that “Shri Saroj Kumar Poddar” was managing “substantially the whole affair” of the company. He submitted that the chairman and the director appointed in terms of the “SHA” by the assessee, cannot be considered to be the non executive directors of the company. He drew the attention of the bench to the annual reports, and submitted that the Chairman has reported on the performance of the company year after year and hence it would be wrong to conclude that he was not managing ”substantially the whole of the affairs” of the company. He Shri Saroj Kumar Poddar A.Y.2014-15 21 argued that the bench should draw any inference from the SHA and Articles of Association. He submitted that the assessee is a “key management personnel” of the company GI and that he has given up those rights by way of Termination Agreement and Severance Agreement, for a price. He referred to the following decisions in support of his contention that the assessee is a key management personnel:- a) Ramchandiram Mirchandani vs The India United Mills AIR 1962 Bom 92 b) CIT Kerala vs M/s Alagappa Textile (Cochin )Ltd. (1980) 1 SC 214 ; c) R.B.Seth Multanimal and Sons vs CIT, U.P. AIR 1953 All 31. We would refer to these case law if necessary.

He submitted that the term “Income “ under the Act is a inclusive definition and that this section deems every receipt to be income and if the assessee seeks to claim that a particular receipt is not income, the burden is on the assessee to prove its claim that a particular receipt is not income. He relied on the order of the AO for his arguments that the amount is taxable u/s 28(ii) of the Act and alternatively and without prejudice that the amount in question can be taxed under the head ‘Capital gains’ u/s 45 of the Act.

On query from the Bench the ld. Special Counsel submitted that the ITAT being the final fact finding authority, has the power to initiate enquiry and arrive at the truth of the matter and argued that this bench of the ITAT can go into the issue of taxability of the above receipt under the head “income from business or profession” as well as under the head “capital gains”, as the AO has concluded that the amount in question is taxable.

Heard rival contentions and on careful consideration of the facts and circumstances and on perusal of the papers on record and the orders of the authorities as well as the case laws we hold as follows :- The first issue that has to be considered is whether the ITAT can examine the issue whether the receipt in question is taxable u/s 28(ii)(a) of the Act or alternatively Shri Saroj Kumar Poddar A.Y.2014-15 22 u/s 45 of the Act or under any other section of the Act either considered or not considered by the ld. Assessing Officer, when the Assessing Officer has based his assessment ultimately on Section 56(2)(vii) of the Act under the facts and circumstances of this case.

The AO in this case has examined various provisions of the Act under which he was of the opinion that the receipt in question is taxable. He sought to protect the interest of revenue and to assess the receipt in question under the head “income from business “ as well as under the head “income from capital gains”. After holding that the receipt in question is taxable under those heads, he ultimately held that the receipt is taxable under the head “income from other sources” for the reasons as given in his order. The law, in our view, does not place limitations as to the manner in which the AO proposed to tax particular receipt. To protect the interest of revenue, in our view, it is open for the assessing officer to bring to tax receipt under various sections when he is in doubt. Alternative/Multiple reasoning by the assessing authority while arriving at a conclusion that the receipt in taxable is permissible. The Hon’ble Supreme Court in the case of Lalji Haridas vs I.T.O. and Anr. 43 ITR 387 (SC) on the issue of Protective assessment held as follows :- “ In cases where it appears to the income-tax authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and prima facie it appears that the income may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B. That being so, we do not think that Mr. Nambiar would be justified in resisting the enquiry which is proposed to be held by respondent No. 1 in pursuance of the impugned notice issued by him against the appellant. Under these circumstances we do not propose to deal with the point of law sought to be raised by Mr. Nambiar.

Even otherwise, on the issue as to whether the Tribunal has power to examine the taxability of the receipt in question under Section 28(ii)(a) and Section 45 fo the Act, we find that the powers of the Tribunal have been considered by both the Hon’ble Delhi High Court as well as by the Hon’ble Karnataka High Court.

The Hon’ble Karnataka High Court in the case of M/s Fidelity Business Services in of 2017 judgment dated 23.07.2018 as at paras 59 to 67 held as follows : “59. Thus on the analysis of the provisions of the Act and the case laws discussed above, we are of the clear and considered opinion that the directions of the learned Tribunal in para 7 for holding an inquiry into the matter by the Assessing Authority into the aspect of fair market price of the shares bought back by the Assessee from its major share holding Mauritius Holding Company is not beyond the jurisdiction of the learned Tribunal and the said remand direction of the Tribunal to hold such an enquiry not only falls within the ambit and scope of the "subject matter" of the appeal filed by the Assessee by which he claimed that the remittance by the Assessee Company to its Mauritius Holding Company could not be taxed as dividend, forgetting the aspects relating to Clause (e) of Section 2(22) of the Act and therefore the said directions were within the subject matter or the issues raised by the Assessee and making a direction to hold an enquiry into the aspect of fair market value of shares cannot be said to be beyond the subject matter of the appeal. The said directions cannot be said to be per se amounting to taxability of the said pay- Shri Saroj Kumar Poddar A.Y.2014-15 24 out by the Appellant Assessee as 'Dividend' but the same would depend upon the nature of enquiry to be conducted by the Assessing Authority and findings arrived at in pursuance of the said direction. The power to remand including for conducting an enquiry in the aspect of the matter which was not earlier adjudicated upon by the lower Authorities, cannot, in our considered opinion, be questioned by the Assessee or the Revenue.

The words "as it thinks fit" employed in Section 254 of the Act is only bound by the requirement of giving an opportunity of being heard to the parties to the appeal.

Section 254(1) of the Act clearly stipulates that the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such Orders thereon as it thinks fit. The emphasis on the word 'thereon' sought to be placed by the learned counsel for the Assessee, Mr. Pardiwala on the basis of case laws relied upon by him as against the words 'as it thinks fit' is slightly misplaced. The emphasis while analyzing the powers of the Tribunal should be on the words 'as it thinks fit' rather than on the word 'thereon'. The word 'thereon' only relates to the 'subject matter' of the appeal in first part of the Sub-section (1) and therefore while the Tribunal is dealing with the subject matter of the appeal, it can pass any such relevant Order as it thinks fit, which would be rational, germane, reasonable, appropriate, necessary and expedient in the opinion of the learned Tribunal subject to the requirement that it gives an opportunity of hearing to both the parties to the appeal, viz., the Assessee and the Revenue. Neither the powers are restricted nor the power to allow the fresh and new ground to be raised before it is restricted nor the powers to enhance an assessment or tax liability or reduce the tax especially enumerated in the Proviso to Sub-section (2) of Section 254 of the Act also is restricted.

The powers under Section 254 of the Act with the Tribunal to pass such Orders 'as it thinks fit' cannot be lesser than the powers conferred upon the lower and first Appellate Authority, viz., the Commissioner of Income Tax(Appeals) who under Section 251(1)(a) of the Act has power to dispose of an appeal against the Order of assessment and he may confirm or reduce or enhance or annul the assessment. The higher and final Appellate Authority under the Act cannot be intended by the Parliament to have lesser power than the first Appellate Authority as is well settled that the powers of the Appellate Authorities are always co-extensive with that of the Assessing Authority and therefore what the Assessing Authority or the first Appellate Authority could do in the matter of assessment, the Tribunal cannot be said to have any lesser power to do so.

Section 254 of the Act, in our opinion, does not have any narrower scope to put fetters on the powers of the Tribunal as is sought to be canvassed before us that the Tribunal could not have exceeded the grounds raised before it by the Appellant Assessee. The Appellant may be either Assessee or Revenue before the Tribunal and the Tribunal has also powers to allow fresh ground of appeal or allow the other party to the appeal to file its cross objections and even suo motu pass appropriate Orders 'thereon' and therefore the words 'as it thinks fit' in our opinion, confer wide powers upon the Income Tax Appellate Tribunal to pass such Orders on the subject Shri Saroj Kumar Poddar A.Y.2014-15 25

Similarly the Hon’ble Delhi High Court in the case of CIT vs Jansampark Advertising & Marketing (P)Ltd. (2015 56 Taxmann.com 286 (Delhi) held as follows : “42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a "further inquiry" in exercise of the power under Section 250(4). This approach not having been adopted, the impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld.”

Applying the proposition of law laid down in this case, to the facts of the present case, we are of the considered opinion that we have the power to examine the action of the Assessing Officer in holding that, the receipt in question can also be brought to tax u/s 28(ii)(a) of the Act and u/s 45 of the Act. There is no bar under the statute to the powers of the Tribunal to remand the matter back to the file of the Assessing Officer or to the file of the ld. CIT(A) with or without directions.

As already stated that the severance compensation for termination of special rights enjoyed by the assessee and Poddar Group in GI was a negotiated amount arrived between the parties. This is not a case of ex-gratia payment or windfall much less a casual payment. The payment in question is definitely for extinguishment of special rights, in addition to termination of the significant control and say of the assessee and its group in the affairs of the management of GI. In our view, the ld. CIT(A) should have examined whether such extinguishment of rights in management falls within the ambit of taxability under the head capital gains i.e. Section 45 of the Act. This is not done. Even the arguments of the assessee that the receipt in question is not taxable u/s 28(ii) of the Act, has not been dealt by the ld. CIT(A). The finding of the Assessing Officer is that, the assessee manages substantially the whole of the affairs of GI. The ld. Counsel for the assessee argues that the rights that the non-executive Chairman has, does not tantamount to managing the whole of the affairs of the Indian company or substantially the whole of the affairs of the Indian company.

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 adequate opportunity of being heard. While doing so, the ld. CIT(A) may, if he thinks Shri Saroj Kumar Poddar A.Y.2014-15 29 fir or necessary call for a remand report, so as to bring all the facts of the issue on record. The ld. CIT(A) shall, adjudicate the matter de-novo, in accordance with law, uninfluenced by the observations and statements made by us in this order.

In the result, appeal of the assessee is allowed for statistical purposes.