2015 (1) TMI 248 - HC - Income Tax

Order passed by CIT u/s 263 - Erroneous and prejudicial to the interest of the Revenue or not Held that - The Tribunal was convinced with the argument because it found that four shareholders of Unisole Infraservices Services Pvt. Ltd. executed an agreement with M/s. Radhakrishna Hospitality Pvt. Ltd. under which all the shares of Unisole Infraservices were purchased - the Tribunal pointed out the fallacy in the conclusion of the Commissioner by referring to the agreement that set out outer and maximum limit of ₹ 20 crores, which the purchaser was willing to pay to the Assessee - the Tribunal rightly concluded that the AO s view was possible and could not have been interfered with in the revisional jurisdiction the findings of the Tribunal cannot be termed as perverse or vitiated by any error of law apparent on the face of the record as such no substantial question of law arises for consideration Decided against revenue.

Summary

Issues:
Challenging the order of the Income Tax Appellate Tribunal regarding the assessment year 2006-07.

Analysis:
The judgment pertains to an appeal challenging the order passed by the Income Tax Appellate Tribunal for the assessment year 2006-07. The Commissioner of Income Tax (Appeals)-II, Thane had passed an order on 8 March 2011 under section 263 of the Income Tax Act, 1961, which was contested by the Assessee through two appeals. The crux of the argument was whether the Assessing Officer's order was erroneous and prejudicial to the interest of the Revenue. The Tribunal found that the initial consideration of Rs. 2.7 crores received for the purchase of shares was brought to tax, and an exemption under section 54EC was claimed. The Commissioner, however, concluded that the consideration under the agreement should have been Rs. 20 crores and not just the initial amount. The Tribunal disagreed with this conclusion, highlighting that the agreement specified an outer limit of Rs. 20 crores, with further payments contingent on performance over several financial years. Therefore, the Tribunal held that the Assessing Officer's view was reasonable and could not be interfered with in the revisional jurisdiction.

The High Court affirmed the Tribunal's decision, stating that the finding of fact was not perverse or legally flawed. The Court found no substantial question of law raised in the appeal and dismissed it, along with a similar appeal related to the same issue. The judgment emphasized that the Tribunal's analysis and conclusion were valid, as the initial consideration brought to tax was in line with the agreement's terms and conditions. Consequently, the appeals were dismissed, and no costs were awarded in either case.