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TMI Blog2013 (4) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Authorities. If the assessee, in the view of the Income-tax Authorities, had committed any violation of these Guidelines, the appropriate course open to them was to bring it to the notice of the banks. No further. Then, since the Guidelines have been issued for FEMA purposes, it is the FEMA Authorities who are competent to take appropriate action against the assessee on breach of the Guidelines. Rather, it is seen that no objection whatsoever has been raised by the RBI. In view of the above, finding the grievance of the assessee to be justified, we accept it as such. Appeal allowed. - IT Appeal No. 5179 (Delhi) of 2010 - - - Dated:- 12-4-2013 - A. D. Jain AND T.S. KAPOOR, JJ. For the Appellant Smt. Indra Bansal. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sold part of the shares held by it in its Indian subsidiary to M/s Sintex Industries Ltd. The assessee filed its original return of income under Section 139 (1) of the Income Tax Act, 1961 for Assessment Year 2007-08 on 18.10.2007, reporting total income of Rs. 9,55,73,488/- on account of capital gain from sale of shares. Pursuant to scrutiny assessment proceedings, the Assessing Officer issued a draft order dated 29th December, 2009 under Section 143 (3) of the Act as per provisions of Section 144C(1) of the Act wherein the total income was proposed to be assessed at Rs. 9,91,56,204/- after making, inter alia, the following adjustment:- S.No. Nature of Adjustments Amount Rs. 1. .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be done and the assessee has no choice to negotiate the price; that therefore, the assessee was wrong in contending that the Assessing Officer had wrongly observed that the RBI Guidelines should be adopted; and that therefore, the Assessing Officer was correct in adopting the valuation of the shares @ Rs. 400 per share as against the negotiated price of Rs. 390 per share disclosed by the assessee. 5. The aforesaid relevant portion of the RBI Guidelines, as reproduced in the order passed by the DRP is as follows:- "2.3 Transfer by non-resident to resident Sale of shares by a non-resident to resident shall be in accordance with Regulation 10B(2) of Notification No.FEMA 20/2000-RRB dated May 3, 2010 which as below (b) Where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the RBI Guidelines are for remittance of money, on sale of shares and they are not binding for the purposes of the IT Act; that the ld. DRP has also not taken into consideration the fact that as per the certificate of remittance (APB, page 6) in the assessee's case, qua Sintex Industries Ltd., to which company, the assessee had sold the shares held by it in its Indian subsidiary, the rate of sale has been shown at Rs. 390 per share; that the ld. DRP has also wrongly ignored the Memorandum of Understanding (APB 12-17, relevant portion in para 8.2 at APB 17) between, inter alia, Sintex Industries Ltd. and the assessee, as per the conditions whereof, Sintex Industries Ltd. agreed to the said rate of Rs. 390/- per share; and that still fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them was to bring it to the notice of the banks. No further. Then, since the Guidelines have been issued for FEMA purposes, it is the FEMA Authorities who are competent to take appropriate action against the assessee on breach of the Guidelines. Rather, it is seen that no objection whatsoever has been raised by the RBI to the rate of Rs. 390/- per share, as maintained by the assessee and the RBI has accorded its approval. Had the alleged difference between the rates existed, thereby constituting a violation of the RBI Guidelines by the assessee, such violation would obviously have been taken care of and the approval would not have been accorded. On merits also, Sintex Industries Ltd., to whom the shares were sold by the assessee, has not de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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