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TMI Blog2011 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... - But in absence of any evidence of receipt etc. of more than stated consideration, the computation of capital gains made by the assessee cannot be altered – Hence the ld. CIT(Appeals) was right in directing the AO to compute the income on the basis of consideration actually received and there is no need to refer the matter to the valuer for finding out correct fair market value of the share, as suggested by the ld. DR.- The appeal is dismissed. - ITA NO. 4474 (DELHI)/2009 - - - Dated:- 25-2-2011 - ORDER Per K.G. BANSAL,: Accountant Member ‑ The only question raised by the revenue in this appeal is whether, on the facts and in the circumstances of the case and in law, the ld. CIT(Appeals) erred in deleting the addition of Rs. 6,06,27,500, being undisclosed sale consideration of shares, in the transactions which have been used as a devise to pass undue monetary benefit directly or indirectly to the persons related to the company? 2. The facts are that the assessee had purchased shares of Nalwa Sponge Iron Ltd. (NSIL) in the previous year relevant to assessment year 2003-04 @ Rs. 10 per share. The book value of the share on the date of purchase was Rs. 31.80. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material and evidence in its hands which suggest that the consideration exceeded the amount shown in the document. Reliance is placed on the decision of the Supreme Court in CIT v. George Henderson Co. Ltd. [1967] 66 ITR 622 (SC), CIT v. Gillanders Arbuthnot Co. [1973] 87 ITR 407 (SC), K.P. Verghese v. ITO [1981] 131 ITR 597 (SC), CIT v Shivakami Co. (P.) Ltd. [1986] 159 ITR 71 (SC) and CIT v. Godawari Corpn. Ltd. [1993] 200 ITR 567 (SC), wherein it has been held that unless there is evidence that more than what was stated, was received no higher price or value can be taken to be the basis for computation of capital gains. Reliance is also placed on the decisions of the jurisdictional High Court of Delhi in CIT v. Gulshan Kumar (Decd.) [2002] 257 ITR 703 (Delhi) and CIT v. Naresh Khattar HUF [2003] 261 ITR 664 (Delhi), CIT v. Smt. Sushila Devi [2002] 256 ITR 179 (Delhi) and CIT v. Smt. Nilofer I. Singh [2009] 221 CTR 277/[2009] 176 Taxman 252(2008) 14 DTR 108. These decisions make it more than clear that the expression the full value of consideration as contemplated in section 48 of the Act does not have any reference to the market value but only to the consideration referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the book value of the share is about Rs. 254.50 and the EPS is Rs. 43.21. Therefore, it is incomprehensible as to why the share was sold at Rs. 12. The argument of the ld. DR is that each case has to be examined on its own facts and the decided case law in the matter may not be of great relevance looking to abnormally low sale price. 4.2. In reply, the ld. counsel for the assessee submitted that it is a company and, therefore, it cannot have a relative. He made a statement at Bar that none of the directors of the assessee-company is a relative of any one of the three ladies. Since transactions are done with the independent parties, they cannot take any colour. Referring to the provision contained in section 48 regarding computation of capital gains, it is submitted that what is to be seen is consideration received or accruing. There is no evidence that any amount over and above stated by the assessee had been received. Similarly, there is no evidence of accrual of the amount taken by the AO as sale consideration. Therefore, it is argued that the computation of income is against the provision contained in section 48. It is also against the ratio of several cases decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid up and the shareholders were Padmanabha (P.) Ltd. and Pudukkottah Corporation (P.) Ltd., equally. The assessee company sold 800 shares held by it in East India Corporation Ltd. and 1000 shares held by it in Madura Insurance Co. Ltd. to Pachnayaki (P.) Ltd. for Rs. 60,000 Rs. 75,000 respectively. The cost price of the shares of East India Corporation Ltd. was Rs. 81,201 and that of Madura Insurance Co. was Rs. 1.00 lakh. On the same date, the assessee sold 499 shares in Pudukkottah Corporation (P.) Ltd. to Padmanabha Co. (P.) Ltd. at cost price of Rs. 4,990. All these shares were not quoted on the stock exchange. The break-up value of the shares of the East India Corporation Ltd. was Rs. 1,72,800 and shares of Madura Insurance Co. Ltd. was Rs. 1,54,000. After deducting the cost, the profit had been determined under the head "capital gains" at Rs. 91,599 and Rs. 54,000 respectively. The question before the High Court was whether, the computation of capital gain shown by the assessee and upheld by the Tribunal was correct under the 1922 Act? The High Court answered the question in favour of the assessee. The Hon ble Supreme Court held that the words "full value of consideration" i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. 5.4. Reliance has also been placed on the decision of Hon ble Delhi High Court in the case of CIT v. Smt. Nilofer I. Singh [2009] 221 CTR 277. Following the decision of Hon ble Supreme Court in the case of CIT v. Gillanders Arbuthnot Co., [1973] 87 ITR 407 and CIT v. George Henderson Co., [1967] 66 ITR 622, it was held that the words "full value of consideration received or accruing" used in section 48, do not have the same meaning as the words "fair market value", but mean only the consideration referred to in the sale deed as price for which the capital asset has been transferred. Therefore, while making the computation, the matter cannot be referred to the valuation cell under section 55A of the Act. Such was also the decision of Hon ble Delhi High Court in the case of CIT v. Smt. Sushila Devi, [2002] 256 ITR 179. 5.5. Coming to the facts of the case, there is no evidence on record that the transferees were related to the directors of the company. In any case, they cannot be said to be related to the company, as held by the AO, as a company does not have a corporeal existence. The ld. counsel has also made a statement at the Bar that none of the ladies i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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