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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: SHRI G.S.PANNU (AM) & SHRI RAM LAL NEGI (JM)
PER RAM LAL NEGI, JM
This appeal has been preferred by the revenue against order dated 04/01/2013 passed by the Ld. CIT(A)-27, Mumbai for the Asst. year 2009-10.
Brief facts of the case are that the appellant/assessee being a Hindu Undivided Family (HUF) having income from business, capital gains and other sources, filed return of income for the Asst. year 2009-10 declaring the total income of Rs. 2,80,445/-. After scrutiny, the AO passed assessment order u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) assessing the total income at Rs.64,37,979/- making addition of Rs. 63,94,880/-, treating a part of the sale consideration received by the assessee on sale of shares of M/s Soma Textiles & Industries Ltd., as interest income, to be assessed under the head other sources owing to the fact that in the buy-back offer the price offered to public was shown to have included an interest component of Rs. 5.69 per each fully paid up equity share.
Aggrieved by the assessment order the assessee filed an appeal before the CIT(A), inter alia on the ground that the AO has erred in not accepting the working of long term capital gain arising on the sale of share in a buy-back transaction as shown by the appellant in is return of his income. The Ld. CIT(A) after hearing the assessee, allowed this ground of appeal.
4. Dissatisfied with the impugned order passed by the Ld. CIT(A), the revenue has challenged the same on the following effective grounds:-
“1. Whether on facts and circumstances of the case an in law, the Ld. CIT(A) has erred in treating the receipt of interest income of Rs. 63,94,880/-as sale consideration of the shares without appreciating the fact that the interest paid to the assessee was over and above the sale price of the shares as fixed by SEBI to safeguard the interest of the retail investors.
2. Whether on facts and circumstances of the case an in law, the Ld. CIT(A) has erred in considering the offer price of shares at Rs. 40.14/- ignoring the fact that the sale price of the shares transacted through the offer price was fixed by SEBI at Rs. 34.15/- which was higher than the prevalent market price of the share on the date of offer i.e. 23.01.2009 (at Rs. 21.80/- per share).”
Before us, the Ld. Departmental Representative (DR) submitted that the Ld. CIT(A) has erred in treating the receipt of interest income of Rs. 63,94,880/- as sale consideration of the shares without appreciating the fact that the interest paid to the assessee was over and above the sale price of the shares as fixed by SEBI to safeguard the interest of the retail investors. However, the Ld. CIT(A) has wrongly considered the offer price of shares at Rs. 40.14/- ignoring the fact that the sale price of the shares transacted through the offer price was fixed by SEBI at Rs. 34.15/- which was higher than the prevalent market price of the share on the date of offer.
On the other hand the Ld. Authorised Representative (AR) submitted that the Mumbai Bench of ITAT has decided the identical issue in favour of the assessee in the case of Smt. Raminder Kaur Chawla for the A.Y. 2009-10 and assessee’s own case in ITA 846/Mum/2014 for the A.Y. 2009-10, therefore the present case is covered in favour of the assessee by the decisions of the ITAT.
We have heard the rival submissions and gone through the material placed on record including the decision relied upon by the assessee. In Smt. Raminder Kaur Chawla vs ITO, the co-ordinate bench of Mumbai Tribunal has decided the identical issue in favour of the assessee holding as under:-
“5. We have considered the rival arguments and records with us. M/s. Mavi investments Fund Ltd made an open offer on 01/06/2007 at Rs 34.45 per shares but the process of acquisition was delayed and actual transfer took place on 24/01/2009. As per SEBI rules and regulations, the assessee was compensated and was paid interest @ Rs. 5.69 per share for the period commencing from 01/06/2007 to 27/01/2009. Thus the assessee received Rs. 40.14 per share including interest of Rs. 5.69 per share. The DR argued that interest prior to the date of transfer was paid due to delay in payment of sales consideration. The counsel of the assessee argued that right to receive the sales consideration accrued to the assessee on 24/01/2009 when the actual transfer took place and not on the date of open offer by M/s. Mavi Investments Fund Ltd. Assessee further argued that Tribunal “L” Bench in the case of “Genesis Indian Investment Company ltd.” in dated 14th August, 2013, on the identical facts has held that the interest which relates to the period prior to the date of transfer is part of the sales consideration and not income from other sources. We find that the case of the assessee is squarely covered by the above judgment of the Tribunal, hence following the same, we allow the appeal of the assessee.”
Following the decision rendered in Smt. Raminder Kaur Chawla vs ITO (supra), the coordinate Bench has decided the identical issue in favour of the assessee in assessee’s own case Shri. Ajit Singh Chawla Vs ITO (supra)
In our considered view, in the present case the issues involved are identical to the issues involved in Raminder Kaur Chawla vs ITO and Shri. Ajit Singh Chawla Vs ITO (supra). The coordinate Bench has decided the identical issues in favour of the assessee. We, therefore, respectfully following the decision rendered by the co-ordinate bench in the aforesaid cases, dismiss both the grounds of appeal of the revenue and uphold the order passed by the Ld. CIT(A).
In the result appeal of the revenue for A.Y. 2009-10 is dismissed.
Order pronounced in the open court 13th June, 2016.