PR. COMMISSIONER OF INCOME TAX-4 vs. M/S VECTRA CONSULTING

PR. COMMISSIONER OF INCOME TAX-4 BMTC COMPLEX, KORMANGALA BENGALURU.

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-11 (5) BENGALURU. ... APPELLANTS (BY SRI E.I.SANMATHI, ADVOCATE)

The facts of the case reveal that the assessee filed a return of income for the assessment year 2009 – 2010, by declaring the total income of Rs.82,89,120/-. The return was processed under Section 143(1) of the Income Tax Act, 1961. It was noticed by the Assessing Officer that the assessee has offered long term capital loss of Rs.4.38 crores.

Being aggrieved by the findings of the Assessing Officer in the matter, an appeal was preferred before the Commissioner of Income Tax (Appeal) and the Commissioner of Income Tax (Appeal) has given a finding that the investment by the assessee Company in the shares of M/s.Jupiter Capital Private Limited and the shares of private limited company are not tradable in the market as other assets and consequently, such shares cannot be considered to be stock-in-trade. The appeal of the assessee was allowed by the Commissioner of Income Tax (Appeal) and against which, the Revenue has preferred an appeal before the Tribunal and the Tribunal dismissed the appeal. The important aspect of the case is that, the Commissioner of Income Tax (Appeal) nor the Tribunal has taken into account the fact that the Company has arranged the transfer of shares of M/s.Jupiter Capital Private Limited to Mr. M.K.Chandrashekhar, father of Mr.Rajeev Chandrashekhar, the Director of the Company for one day for lesser price then

Sri Sanmathi E.I., learned counsel for the appellant - Income Tax Department has vehemently argued before this Court that the Appellate Authority as well as the Tribunal have ignored the grounds of appeal raised by the Revenue and therefore, the orders passed by both the Appellate Courts deserves to be set aside.

Sri A. Mahesh Chowdhary along with Ms.Krishika Vaishav, learned counsel appearing for the assessee has vehemently argued before this Court that though in plain and simple words, question No.ii has not be answered but if the entire order is looked into, the question No.ii has also been answered by the Commissioner of Income Tax (Appeal), as well as Income Tax Appellate Tribunal and the present appeal filed by the Revenue deserves to be dismissed.

This Court while admitting the matter, framed the following substantial question of law: “ii) Whether on the facts and in the circumstances of the case, the order passed by Tribunal as well as CIT(A) can be said as perverse as both the authorities failed to observe that the whole transaction was colourable device adopted by assessee to evade tax and both the authorities failed to observe that the assessee has sold shares of its subsidiary company during the FY 2008 – 09 and entire transaction was among the group companies namely, M/s.Epsilson Advisors (P) Ltd., M/s. Coimbotore Cable Net (P) Ltd., M/s. Tanya Consultancy (P) Ltd.,?”

Therefore, an adjudication is required to be done by the first Appellate Authority on the aforesaid issue and hence, the matter is remanded back to the Commissioner of Income Tax (Appeal) to decide the aforesaid issue after affording opportunity of hearing to both the parties. The Commissioner of Income Tax (Appeal) shall decide the matter in accordance with law after hearing both the parties.