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TMI Blog2013 (12) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... concrete foundation justifying and asserting a firm apprehension. Even before us during the course of hearing, the standing counsel for the Revenue did not press or make any headway. The suspicions raised remained in the realm of conjectures and surmises and do not have a firm basis. The substantial question of law has to be treated as partly answered in favour of the Revenue and against the respondent insofar as transfer of 77929 shares by HEICL to V.C. Vaidya or ATPPL is concerned, on which we have passed an order of remit to the tribunal. However, on other aspects/transactions of HEICL, the appeal is dismissed and the question of law is answered in favour of the respondent-assessee and against the appellant-Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of Rs.2,39,86,572/- by bringing to tax the difference between market price and the sale consideration as declared. 6. HEICL did not succeed in the first appeal but has succeeded before the tribunal. We shall subsequently refer to the order of the tribunal. 7. ATPPL for the Assessment year 1989-90 had filed its return of income on 17th November, 1989, declaring income of Rs.10,28,136/-. 8. In the regular assessment proceedings, it was noticed that investments of ATPPL had increased from Rs.13,85,359/- to Rs.61,71,068/-. On query, it was explained that assessee-ATPPL had purchased 3,90,181 equity shares of HCL Limited for Rs.41,26,362/-, from different persons by way of private arrangements and no share broker was involved in the said transactions. The Assessing Officer took notice of these transactions and brought to tax an amount of Rs.26,48,017/- on account of difference between the sale consideration paid by the assessee and the quoted market price on the date of purchase. The Assessing Officer invoked Section 69B of the Act. These details are mentioned and recorded in the assessment order in form of a chart, which is as under:- Date Of purchase Number of shares Rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een UPLC, Microcomp Limited and Hindustan Computers Limited to the effect that UPLC shall sell 4,000 shares of Rs.100/ each to Microcomp Limited or their nominee for consideration of Rs.1.27 crores. 12. Subsequently and as per the tripartite agreement, SBI Capital Markets Limited paid Rs.1.27 crores to UPLC on or before 31st December, 1987. It appears that Microcomp Limited did not have sufficient funds to make the said payment and they entered into an agreement dated 28th February, 1987 with SBI Capital Markets Limited for payment of the said amount to UPLC. This agreement was between SBI Capital Markets Limited, Hindustan Computers Limited and the three principal promoters. 4,000 shares were transferred and registered in the name of SBI Capital Markets Limited. 13. In the meanwhile, Directors of HCL Limited, who were also Directors in Microcomp Limited, negotiated with Citi Bank to take over the loan granted by SBI Capital Markets Limited. Citi Bank made payment of Rs.1.31 crores to SBI Capital Markets Limited and discharged their dues/claims. SBI Capital Markets Limited, who were the registered shareholders, in turn executed blank transfer deeds of the shares of HCL Limited an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account on different occasions. HEICL had deliberately delayed filing of return for the assessment year in question till 26th March, 1991, though their accounts were purportedly audited in May, 1989. They also delayed furnishing of information and asked for repeated adjournments. Their books were finally impounded by the Assessing Officer, Circle-1(ii). (v) As shares were sold at less than the market price, this constitutes breach of trusteeship and also results in violation of the provisions of the Companies Act, 1956 as the transactions could have been entered into only for the benefit of the employees and not for the benefits of the promoter directors. 4. The Assessing Officer worked out the market price of the shares in the stock exchange as on 1st August, 1988, 6th December, 1988, 8th December, 1988 and 16th December, 1988 and accordingly held as under:- "S.No. No of shares sold Date of Sale Rate of Sale Total Amount 01 7500 1.8.88 14.00 105000 02 254500 6.12.88 18.91 4812595 03 412500 8.12.88 18.91 7800375 04 595500 16.12.88 41.00 24415500 1270000 37133470 The assessee has purchased these shares for a total consideration of Rs.1,31,46,898/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble income in the hands of HEICL. The transaction was not sham and the consideration mentioned was the actual sale consideration received and to that extent there was no dispute. Revenue had not pleaded or argued that any consideration over and above the declared consideration was received by HEICL. HEICL could not have acquired ownership title as no payment was made by them from their own resources or by way of raising loan. As title of the shares never vested with HEICL, they were mere custodian of the shares, who had to distribute the shares. The shares were not registered in the name of HEICL. The principal promoters had paid fee of 3.5% to SBI Capital Markets Limted. HCL Ltd. had raised a loan from Citi Bank against pledge of shares and on the basis of the guarantee, loan was granted. Interest on loan was debited to HCL Ltd. 22. We have considered the contentions of the Revenue in this appeal. In spite of certain gaps and doubts/suspicion, we do not think that there are sustainable reasons or grounds to hold that the impugned order passed by the tribunal in the case of HEICL is perverse and contrary to evidence on record. The primary contention of the Revenue is that the so-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from UPLC at the request of the Principal Promoters is that the Principal Promoters shall arrange that the said shares of the Company or the shares of HCLL allotted to SBICAP on amalgamation in lieu thereof would be transferred to the said employees on payment of Rs.1,27,00,000/- on or before 31st December, 1987. XXXXX SBICAP shall acquire the said shares of the Company for the purpose of ultimately transferring the same or the Shares of HCLL an allotted in lieu thereof (as the case may be) to the employees of HCLL or the Company as hereinafter provided on receipt inter alia of the sum of Rs.1,27,00,000/- (Rupees one crore Twenty Seven Lakhs only) for such transfer. XXXXX (c) That on SBICAP holding HCLL shares the employees of HCLL shall purchase the shares held by SBICAP at or for the price of Rs.1,27,00,000/- plus carrying cost on or before the 31st December, 1987; (d) That if the said Scheme (with or without modifications) is not sanctioned, then the employees of the Company shall purchase the shares held by SBICAP of the Company at or for the price of Rs.1,27,00,000/- plus carrying cost; XXXXX In consideration of SBICAP agreeing to enter into this arrangement and acquiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es therein are not known. The Assessing Officer also did not call for the said agreement and the same is not referred to in the assessment order. The date on which payment was made to SBI Capital Markets Limited is not indicated or stated in the Tribunal‟s order and is not on record. 27. It is an undisputed position that the processing fee of 3.5% paid to SBI Capital Markets Limited was paid by principal promoters. The interest paid to Citi Bank was paid by HCL Limited but the quantum thereof has not been indicated or mentioned in the order of the tribunal. 28. It was stated before us that shares of HCL Ltd. were listed in the stock exchange on 18th July, 1987 and it is apparent that share prices of HCL Ltd. had jumped or escalated between September and December, 1988. HCL Ltd. had declared dividend, it appears, in the Annual General Meeting held in November/December, 1988, but the details are not available and have not been ascertained by the Assessing Officer, Commissioner (Appeals) or were put to and agitated before the tribunal by the departmental representative. Relevance of these details was not argued even before us. Similarly, Y.C. Vaidya it has come on record was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idend is paid and received by the said company. As Y.C. Vaidya was a non-resident Indian there may have been prohibition or requirement to obtain permissions etc. under the exchange regulations or the requirement that the payment should be made in convertible foreign currency. These aspects have remained unenquired for reasons best know to the Revenue but it would not be correct and proper to remand the case to the Assessing Officer stage. The matters pertains to the assessment year 1989-90 and it was an obligation and duty of the Assessing Officer as an investigator to go deep and thoroughly. 30. At this stage on mere suspicion, the matter cannot be remitted to the Assessing Officer to conduct fresh inquiry without there being any concrete foundation justifying and asserting a firm apprehension. Even before us during the course of hearing, the standing counsel for the Revenue did not press or make any headway. The suspicions raised remained in the realm of conjectures and surmises and do not have a firm basis. Revenue should have ensured that investigations were conducted and undertaken at the initial stage in detailed and proper manner. They should not expect order of remand on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the order of CIT (A) we dismiss the appeal of the revenue. As a result, appeal of the revenue gets dismissed." 33. We have noted above that 77,929 shares were allotted to Y.C. Vaidya. These shares have been registered in the name of ATPPL but without giving full details and particulars on how, the shares were transferred by Y.C. Vaidya to the said company ATPPL. The respondent-assessee in their letter dated 25th March, 1992 had stated that these shares were transferred in the records of HCL Ltd. in the name of ATPPL on 16th November, 1988 and they had also received dividend declared in the Annual General Meeting of HCL held in December, 1988, but they had recorded purchase of these shares in their books on 28th February, 1989 but had received telephonic information about registration of shares from HCL Ltd. on 24th March, 1992. Sale consideration of these shares was paid on 9th March, 1989 by way of cheque of Rs.4,69,143/- by ATPPL. 34. Ashim Kanth, attorney of Y.C. Vaidya could not answer several questions put to him in his statement recorded under Section 131 of the Act on the ground that only directors were aware about the relevant information/facts and could answer. S. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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