2017 (6) TMI 238 - AT - Income Tax

Determining the market price of the share - capital gain computation - Held that - The assessee has filed share price on Bombay Stock Exchange for the month of June to August, 2000 as additional evidences, but we find that the Tribunal in the order 2007 (7) TMI 342 - ITAT DELHI-C has already considered the market price quoted on the stock exchange for the month of June and July, 2000, and the Tribunal was not convinced and restored the matter to the Assessing Officer for determining the market price of shares keeping in view the acquisition of shares in bulk as well as transfer of controlling stake. CIT-A has taken into consideration the price of the shares quoted on the Bombay stock exchange for the month of September and November, 2000, which is the period just after completion of the acquisition of the undertaking. The Ld. CIT-A has taken into consideration both the aspect of acquisition of shares in bulk and transfer of controlling stake to the assessee. The Ld. CIT-A has also justified the reference by the Assessing Officer to the valuation officer in view of the direction of the Tribunal (supra) to take assistance of expert valuer. In our view, the Ld. CIT-A has complied with the direction of the Tribunal(supra) for determining the market value of the shares. Before us, the learned counsel of the assessee failed to bring any material to contradict above finding of the learned CIT(A). On the issue of net worth of the undertaking, there is no dispute between the parties. The order of the Ld. CIT-A on the issue in dispute is comprehensive and well reasoned, which do not require any interference on our part. - Decided against assessee.

Issues Involved:
1. Adequate opportunity of being heard.
2. Validity and basis of the valuation report.
3. Compliance with Tribunal's directions.
4. Determination of market value of shares.
5. Acquisition of shares at a premium.

Issue-Wise Detailed Analysis:

1. Adequate Opportunity of Being Heard:
The appellant contended that notices dated 24/01/2013 and 13/03/2013 were not served, thus denying them an adequate opportunity to be heard. The Tribunal noted that the appellant submitted an affidavit and information from the postal department indicating non-receipt of notices. However, the Tribunal found that the Assessing Officer (AO) did provide an opportunity to the appellant to file objections on the valuation report, and the appellant did raise objections. The Tribunal concluded that the appellant was not deprived of natural justice, as opportunities were provided at various stages.

2. Validity and Basis of the Valuation Report:
The appellant argued that the valuation officer did not provide an opportunity to be heard and did not follow the Tribunal's directions. The Tribunal observed that the AO referred the matter to an expert valuer, and the valuation officer estimated the value of the shares at not less than ?10 per share. The AO provided the valuation report to the appellant for objections, which were duly filed. The Tribunal found that the AO and the Commissioner of Income Tax (Appeals) [CIT-A] followed the directions of the Tribunal and justified the valuation based on the net asset value (NAV) of the shares.

3. Compliance with Tribunal's Directions:
The appellant contended that the AO and CIT-A did not follow the Tribunal's directions to obtain authentic information from the stock exchange regarding prevailing rates before and after the date of transfer. The Tribunal noted that the CIT-A considered stock prices from the Bombay Stock Exchange (BSE) for the relevant period and justified the valuation based on the NAV of the shares. The Tribunal found that the CIT-A complied with the Tribunal's directions and considered all relevant aspects, including bulk acquisition and controlling stake.

4. Determination of Market Value of Shares:
The appellant challenged the market rates adopted by the CIT-A, arguing that the shares were transferred on 31/07/2000, and the CIT-A relied on market rates from later months. The Tribunal noted that the CIT-A considered stock prices from September and November 2000, which were just after the acquisition. The Tribunal found that the CIT-A took into account the acquisition in bulk and controlling stake and justified the valuation based on the NAV of the shares. The Tribunal upheld the CIT-A's determination of the market value of the shares.

5. Acquisition of Shares at a Premium:
The appellant contested the CIT-A's finding that the acquisition of shares was at a premium due to bulk purchase and controlling stake. The Tribunal observed that the CIT-A considered the premium factor and justified the valuation based on the NAV of the shares. The Tribunal found that the CIT-A's approach was reasonable and upheld the valuation of ?10 per share.

Conclusion:
The Tribunal concluded that the CIT-A's order was comprehensive and well-reasoned, and there was no need for interference. The appeal of the assessee was dismissed, and the order of the CIT-A was upheld. The decision was pronounced in the open court on 29th May 2017.

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