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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, Dr. Amita Mitra (hereinafter referred to as ‘the assessee’), by filing the present appeal, sought to set aside the impugned order dated 21.12.2015 passed by Ld. CIT(A)-20, New Delhi qua the assessment year 2007-08 on the grounds inter alia that:- “1. The Ld. Commissioner of Income Tax has erred in law and on facts in sustaining the addition of Rs.1,00,000/- made u/s 28(iv) of Income Tax Act, 1961 on account of issuance of sweat equity shares to her by the company.
2. The Ld. Commissioner of Income Tax has erred in law and on facts in ignoring the face value of Rs.10/- and taking the notional value at Rs.200/- of each share without appreciating that there was a lock-in period of five years and no actual profit was derived by the assessee and the shares were returned to the company on her leaving the job.”
Briefly stated, the facts of this case are : assessee filed the return for the assessment year 2007-08 declaring income at Rs.2,29,556/- which was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter ‘the Act’). The case was subsequently opened for reassessment u/s 147 of the Act on 08.03.2013 and consequently notices u/s 148 and 143(2) of the Act were served upon. In response thereto, Shri Virender Kalra, CA put in appearance, filed necessary details, information / documents etc.
During the search and seizure operation conducted u/s 132 of the Act on 06.09.2011 on M/s. Rockland group of cases, it was found that M/s. Rockland Hospital Ltd. had issued sweat equity shares without any amount being paid as consideration to the Directors/Employees/Professionals including Dr. Amita Mitra, the present assessee. Consequently, various enquiries and informations were obtained u/s 133 (6) of the Act. During the assessment proceedings, assessee admitted to have received 500 equity shares of Rs.10/- each as sweat equity shares from M/s. Rockland Hospital Ltd. on 26.02.2007 with lock-in period of five years and in the opinion of management, possibly value of one equity share in question after five years could be Rs.200/- which was a notional value arrived at on the basis of guesswork. So, from the facts, it has come on record that book value of one share in financial year 2006-07 was in fact less than its face value of Rs.10/- and even after five years, it has reached at the value of Rs.45.03 and as such, any other expected amount was notional in nature.
The AO examined the issue as to the taxability of sweat equity shares in the hands of assessee and found that the same be treated as professional income in the hands of the assessee in view of the provisions u/s 28(iv) of the Act. So keeping in view the fact that 500 shares of the face value of Rs.10/- and premium of Rs.190/- was received by the assessee and consequently, an addition of Rs.1,00,000/- has been made to the total income of the assessee under section 28(iv) of the Act.
The assessee carried the matter before the ld. CIT (A) who has dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
At the very outset, the ld. AR for the assessee contended that in the similar facts and circumstances, in case of Dr. (Mrs.) Lona Mohapatra, 1000 sweat equity shares of the value of Rs.10/- each with premium of Rs.190/- were issued who has filed a review petition F.No.Pr.CIT-21/Review Petition/2015-16 before Pr.CIT, available on the file, u/s 264 of the Act challenging the order passed by the Income- tax Officer which has been accepted vide order dated 30.11.2015, but the said order has not been considered by the CIT (A) while passing the impugned order. This factual position has not been controverted by the ld. DR for the revenue.
Since assessee in this case is similarly placed as Dr. (Mrs.) Lona Mohapatra, we are of the considered view that without entering into the merits of the case, the matter is required to be restored to the CIT (A) to pass fresh order in the light of the order dated 30.11.2015 (supra) passed by Pr.CIT u/s 264 of the Act. Consequently, file is ordered to be restored to the file of CIT (A) to decide afresh after providing an opportunity of being heard to the assessee. 8. In view of what has been discussed above, the present appeal filed by the assessee is hereby allowed for statistical purposes. Order pronounced in open court on this 28th day of April, 2016.