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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-VIII, Kolkata dated 26.11.2012. Assessment was framed by JCIT(OSD), Circle-8, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 21.11.2011 for assessment year 2009-10. The grounds raised by the Revenue per its appeal are as under:- “1. That on the facts and circumstances of e case and in law, the Ld. CIT(A) erred in allowing deduction u/s. 80G of the Act amounting to Rs.2,50,000/- whereas AO was correct in disallowing the deduction claimed by the assessee.
2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee’s short term capital loss from sale of shares A.Y. 209-10 DCIT Cir-8, Kol. vs. M/s Anisha Estate & Finance Pvt. Ltd. Page 2 of UIC Udyog Limited was Rs.2,08,00,000/- without any justification and whereas such loss assessed by the AO at Rs.1,68,06,400/- was based on and by correctly adopting the break-up value of share as selling price, in the absence of any market price of such shares.
3. That the appellant reserves the right to amend, alter or add to any ground of appeal before or at the time of hearing of the appeal.”
Shri Rajat Kumar Kureel, Ld. Departmental Representative represented on behalf of Revenue and Shri Krishna Kumar Chhaparia Ld. FCA appeared on behalf of assessee.
The first issue raised by the Revenue in Ground No.1 is that Ld. CIT(A) erred in allowing the deduction u/s 80G amounting to Rs. 2.50 lakh.
The brief facts as have been brought on record are that the assessee in the present case is a Private Limited Company engaged in the business of real estate and financing. The assessee for the year under consideration has filed its income tax return declaring loss of Rs. 1,15,58,294/-. Thereafter the case was selected for scrutiny through CASS and accordingly notices u/s 143(2) was issue. The assessment was framed at Rs. 93,28,660/- u/s 143(2) of the Act. The assessee has not claimed any deduction u/s 80G in its original return. During assessment proceedings assessee revised its computation of income and claimed the deduction amounting to Rs.2.50 lakh i.e.(50% of Rs.5 lakh) u/s 80G of the Act for the payment made to Bhagwani Devi Jajodia Memorial Trust. The AO observed during the assessment proceedings that the assessee has claimed the deduction without revising the return of income. The assessee has also not given any details regarding the donation made like name and address of the donee, PAN of the donee, amount of donation in the schedule of the return. So the AO has disallowed the deduction claimed by the assessee u/s 80G.
Aggrieved assessee preferred an appeal before CIT(A) who has allowed the deduction claimed by the assessee by observing as under:- “I have considered the Assessment Order and the appellant’s submission along with the case laws relied upon. The AO has not allowed deduction u/s 80G for A.Y. 209-10 DCIT Cir-8, Kol. vs. M/s Anisha Estate & Finance Pvt. Ltd. Page 3 Rs.2,50,000/- on the ground that the same w s not claimed in the return and was claimed only through the revised computation filed at assessment stage. The AO has relied on Apex Court judgment in Goetz (India) Ltd’s case (supra). However, in view of Hyderabad ITAT’s judgment in the case of G.V.K. Industries Ltd. Vs. ACIT (supra), Mumbai ITAT judgment in the case of Pradeep Kumar Harlalka Vs. ACIT (supra) and Special Bench, Mumbai’s decision in the case of Chicago Pneumatic India Ltd. v. Deputy Commissioner of Income-tax (supra), I am of the view that the appellate authorities are within their jurisdiction to allow deduction u/s. 80G, even if no revised return was filed at the assessment stage, if the facts of issue are available on records. Thus, Ground No.1 is decided in favour of appellant and AO is directed to allow deduction u/s. 80G for Rs.2,50,000/-.”
Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us.
Before us Ld. DR vehemently relied on the order of AO whereas Ld. AR relied on the order of Ld. CIT(A) and he submitted paper book which is running pages from 1 to 88.
We have heard rival contentions and perused the materials available on record. At the outset we find that there is no factual dispute with regard to the eligibility of deduction under section 80G of the Act. The deduction benefit was denied by the AO as the assessee failed to claim the same in its original return and no revised return was filed for the same. In this backdrop of the case we find that the assessee cannot be denied the benefit for which he is entitled by the provision of the law. In this connection we rely in the case of G.V.K. Industries Ltd. Vs. ACIT (2013) 56 SOT 0073 (URO) where the Hon’ble Hyderabad Tribunal has held as under :
“In view of the above judgment of the Apex court in the case of Goetze (India) Ltd. vs. CIT 284 ITR 323 (SC), it is evident that the making of a new claim if any before the AO is required to be done only by way of filing the revised return of income and not by way of letters or by way of filing revised computation etc. But when comes to the Tribunal or for that matter the CIT(A), who is also not the assessing officer, but who is the appellate authority, assessee does not have to initiate a new claim before them by way of filing the revised return of income. As such the returns or revised returns are filed under the provisions of section 139 of the Act and it is done before the AO and not before the first or second appellate authorities i.e. CIT(A), ITAT or Higher judiciary. Therefore, the CIT(A) is justified in entertaining and adjudicating and therefore, the ground raised by the revenue is required to be dismissed. CIT(A) can admit an additional ground raised by the assessee, which was not raised before the assessing officer”
A.Y. 209-10 DCIT Cir-8, Kol. vs. M/s Anisha Estate & Finance Pvt. Ltd. Page 4 In view of the above judgment of the Apex court, it is evident that the making of a new claim if any before the AO is required to be done only by way of filing the revised return of income and not by way of letters or by way of filing revised computation etc. But when comes to the Tribunal or for that matter the CIT(A), who is also not the assessing officer, but who is the appellate authority, assessee does not have to initiate a new claim before them by way of filing the revised return of income. As such the returns or revised returns are filed under the provisions of section 139 of the Act and it is done before the AO and not before the first or second appellate authorities i.e. CIT(A), ITAT or Higher judiciary. Therefore, in our opinion, the CIT(A) is justified in entertaining and adjudicating and therefore, the ground raised by the revenue is required to be dismissed. Accordingly, the ground of the revenue’s appeal is dismissed.
The second issue raised by Revenue in Ground No.2 is regarding the action of Ld. CIT(A) for the allowance of Short Term Capital Loss (STCL for short) amounting to Rs. 1,96,35,200.00 while the AO assessed the same amounting to Rs.1,68,06,400/-. So excess allowance of loss of Rs. 28,28,800/- only.
Assessee has claimed a STCL amounting to Rs. 1,96,35,200.00 on account of sale of investment in shares. During assessment proceedings, it was observed by the AO that the assessee had purchased 11,66,881 shares of UIC Udyog Ltd on 31/03/2008 for an amount of Rs. 29,17,20,250/- and on the same date it has received 33,119 shares of the same company without any consideration as a consequence of merger of the companies. Thus, the total consideration of 12,00,000 shares was Rs. 29,17,20,250/-. Accordingly the cost of acquisition per share works out at Rs. 243.00 only. Out of the purchased shares assessee sold 1,66,400 shares @ Rs. 125 per share on two different dates i.e. 22/12/2008 and 02/02/2009 for Rs. 2,08,00,000.00. Accordingly the assessee works out the STCL of Rs.1,96,35,200/- only. However the AO disagreed with the working of capital loss and accordingly calculated the intrinsic value of the shares UIC Udyog Limited as on 31.3.2009 which works out to be at Rs. A.Y. 209-10 DCIT Cir-8, Kol. vs. M/s Anisha Estate & Finance Pvt. Ltd. Page 5 142 per share. The method adopted by the AO for working out the value per share @ 142 is given below : As on 31.03.2008 Fixed Assets Rs.88,33,72,039/- Inventories Rs.46,25,55,091/- Sundry Debtors Rs.104,16,06,995/- Cash & Bank Balances Rs.2,03,44,473/- Loans & Advances (excluding Income-tax/TDS etc.) Rs.22,45,49,327/- Rs.263,24,27,925/- Less: Secured + Unsecured Loans Rs.136,79,37,302/- Sundry Creditors Rs.14,84,46,731/- Rs.151,63,84,033/- Net worth Rs.111,60,43,892/- Total No. of shares issued as on 31.03.2008 : 67,00,000 shares Break up value = 0.85 x (111,60,43,892 / 67,00,000) =Rs.142/- Accordingly, the STCL assessed by the AO works out at Rs. 1,68,06,400/- (142-243 * 166400 = 1,68,06,400/-). Therefore the AO has allowed STCL only to the extent of Rs.1,68,06,400/- based.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that the AO has not doubted the legality of the transactions. The assessee and the buyer were not the sister concern. The AO has no power to overstep its jurisdiction and calculate the break-up value of UIC Udyog Ltd. The assessee has sold the shares of UIC Ltd on two different dates i.e. 22/12/2008 and 02/02/2009 and calculated the break-up value on the basis of the audited figures as on 31/03/2009 which was not available at the time of sale of shares. Considering the submissions of assessee Ld. CIT(A) has allowed the STCL for the total amount of Rs. 1,96,35,200.00 as claimed by the assessee by observing as under: “I have carefully considered the Assessment Order and the submissions of the appellant along with the supporting details/evidences furnished. I agree with the contention of the AR that there is no provision in Income Tax Act, whereby the AO while calculating capital gain, could have substituted the actual sales consideration by adopting break-up value of such shares. It is seen that the AO has not disputed the genuineness and legality of the sale. In the circumstances, it is held that the AO was not justified in assessing short term capital loss at Rs.1,68,06,400/- instead of Rs.2,08,00,000/- claimed by the appellant. Accordingly, Ground No.2 is decided in favour of appellant and AO is directed A.Y. 209-10 DCIT Cir-8, Kol. vs. M/s Anisha Estate & Finance Pvt. Ltd. Page 6 to treat short term capital loss at Rs.2,08,00,000/- as claimed by the appellant.”
Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us.
Before us the ld. DR vehemently supported the order of the AO. On the other hand the ld. AR submitted that the AO has exceeded his jurisdiction by working out the value of the shares on the basis of the balance sheet of M/s UIC Udyog Limited as on 31.3.2009. In support of his claim the ld. AR drew our attention on page 26 to 50 where the balance sheet of M/s UIC Udyog Limited is placed.
We have heard rival contentions and perused the materials available on record. At the outset we find that the assessee in the instant case has sold the shares on different two dates i.e. 22.12.2008 and 2.2.2009. So it is clear that the assessee in the case on hand the assessee has sold the shares before 31.3.2009 but the AO has taken the value for the shares on the basis of balance sheet as on 31.3.2009. In our considered view the action of the AO is baseless. The AO has not brought any defect in the purchase price and sale price of the shares. The AO has made the addition on his own surmise and conjuncture. The break-up value of the share as on 31.3.2008 is of Rs. 126.93 per share which is very close the sale price of the shares i.e. Rs. 125 per share. Therefore the breakup value adopted by the AO as on 31.3.2009 is not correct value of the shares. The ld. DR failed to bring anything contrary to the findings of the ld. CIT(A). In view of above we do not find any infirmity in the order of ld. CIT(A). Hence this ground of Revenue’s appeal is dismissed.
Last issue of Revenue’s Ground No.3 is general and therefore does not require any adjudication.
In the result, Revenue’s appeal stands dismissed. Order pronounced in open court on 07 /09/2016