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TMI Blog2016 (12) TMI 1540X X X X Extracts X X X X X X X X Extracts X X X X ..... t is prejudicial to the interest of revenue, as the issue of capital gains and exemption u/s 54EC and 54F has been examined by the A.O. and also there is no prejudice is caused to the interest of revenue as investments in 54EC and 54F is in accordance with law. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) of the Act dated 16-01-2013 is not erroneous in so far as it is prejudicial to the interest of the revenue. - Decided in favour of assessee. - I.T.A.No.177/Vizag/2015, I.T.A.No.178/Vizag/2015 - - - Dated:- 9-12-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri C. Kameswara Rao, AR For The Respondent : Shri G. Guruswamy, DR ORDER PER G. MANJUNATHA, Accountant Member: These appeals filed by different assessee s are directed against order of the Commissioner of Income-tax,-1, Visakhapatnam dated 20- 03-2015, u/s 263 of the Income Tax Act, 1961 for the assessment year 2010-11. Since, facts are identical and issues are common, they are heard together and disposed off, by this common order for the sake of convenience. 2. The brief facts extracted from ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with details furnished by the assessee, has chosen to accept computation of capital gain and hence, the assessment order cannot be termed as erroneous within the meaning of sec. 263 of the Act. In so far as computation of capital gain from sale of shares, the assessee has furnished details of transaction along with copy of investment agreement dated 12-08-2009 between Aquarius Capital (Mauritius) Limited and Vijay Nirman Company Private Limited and its share holders along with share transfer form in Form no 7B of the Companies Act, 1956 and form no. FC-TRS filed with designated AD(authorized dealer) branch. The assessee also furnished details of investments in NHAI bonds and sale deed copy of residential property in support of exemption claimed u/s 54EC and 54F of the Act. The A.O. after satisfied with details furnished by the assessee, allowed exemption claimed u/s 54EC and 54F, therefore, assessment order cannot be termed as prejudicial to the interest of revenue within the meaning of sec. 263 of the Act. 5. The CIT, after considering submissions of the assessee and analysis of investments agreement and other documents, held that assessment order passed u/s 143(3) dated 16-01- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly signed and stamped which was delivered to the company on 24-11-2009 which was approved by the company on same date, therefore the effective transfer took place on 24-11-2009 and the period of investments should be computed from the date of transfer, but not from the date amount received by the assessee. The CIT, failed to appreciate the fact that receipt of money is not the criteria to determine the limitation period referred to in section 54EC and 54F, as the section clearly specified the date which is six months or 2 years as the case may be from the date of such transfer. Since, valid transfer took place on 24-11-2009, the period should be reckoned from 24-11-2009, but not from the date of receipt of money, i.e. on 10-09-2009. The assessee has invested in NHAI bonds on 4-5-2010 which is within six months from the date of transfer and also purchased residential house property on 31-10-2011, which is within 2 years from the date of transfer and hence, the assessee is eligible for exemption u/s 54EC and 54F of the Act . The A.O. has verified all details before allowing exemption and hence, the order passed by the A.O. cannot be termed erroneous in so far as it is prejudicial t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 263 of the Act, are that the assessee is a share holder of Vijay Nirman Company Private Limited, has transferred his shares in pursuant of a investments agreement dated 12-08-2009 between Aquarius Capital (Mauritius) Limited and Vijay Nirman Company Private Limited and its share holders. The assessee being one of the promoter share holder of the Company has transferred 133420 equity shares for a consideration of ₹ 1,99,98,613/. The said investment agreement dated 12-08-2009 has prescribed terms and conditions of share transfer and completion of statutory formalities by filing necessary forms under the Companies Act, 1956 with concerned authorities. As per the said agreement, the assessee has received amount on 10-09-2009 from Aquarius Capital (Mauritius) Limited towards transfer of shares. The assessee has completed share transfer on 24-11-2009 by filing valid instrument of transfer in form no. 7B duly stamped and signed by transferor and transferee and presented to the Company along with share certificates which was endorsed by the company on 24-11-2009. The assessee has invested part of sale consideration of ₹ 50,00,000/- in NHAI bonds on 4-5-2010 and claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is prejudicial to the interest of the revenue. 10. It is the contention of the assessee that the A.O. has examined the issue of computation of capital gain towards sale of shares and exemption claimed u/s 54EC and 54F of the Act, by specific questionnaire dated 13-12-2012 and 28-12-2012. The assessee had furnished complete details of shares transfer and proof of investment in 54EC and 54F of the Act. The A.O. having satisfied with details furnished by the assessee, has chosen to accept computation of capital gain and hence, the assessment order cannot be termed as erroneous within the meaning of sec. 263 of the Act. Having heard both the sides, we find force in the arguments of the assessee for the reason that on perusal of paper book filed by the assessee, we find that the assessee has furnished details of show cause notice issued by the A.O. and replies filed by the assessee. On perusal of details filed by the assessee, we find that the A.O. issued two notices on 13-12-2012 and 28-12-2012 calling for specific details about share transfer, computation of capital gain and proof of investments to claim exemption u/s 54EC and 54F of the Act. The assessee has filed his detailed rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed it to be transferred. The D.R. also referred to CBDT. Circular No. 704, dated 28-04-1995 and argued that in the case the transactions take place directly between the parties and not through stock exchanges the date of contract of sale as declared by the parties shall be treated as the date of transfer provided it is followed up by actual delivery of shares and the transfer deeds. 12. Having heard both the sides, we do not find any merits in the findings of the CIT. The word transfer of shares is an act of the parties, i.e. transferor and transferee by which title to share is transferred from one person to another for a consideration or otherwise. Share transfer is governed by section 108 of the Companies Act, 1956. As per section 108 of the Companies Act, 1956 registration of transfer of shares is possible only if a proper transfer deed in form no. 7B duly stamped and signed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any of the transferee and has been delivered to the company along with share certificates and endorsed by the Company by changing such details in the share holder register maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(47) of the Act, took place on 24-11- 2009 which was further supported by the letter issued by the Company wherein it was stated that share transfer form has been lodged with the Company on 24-11-2009 and actual transfer had taken place 24-11- 2009. Therefore, we are of the view that actual transfer as defined u/s 2(47) has been taken place on 24-11-2009 when valid share transfer form in form no. 7B duly stamped and signed by both transferor and transferee and presented to the Company, but not on the date of receipt of money from the buyer to the seller, i.e. 0n 10-09-2009. The investment agreement between Aquarius Capital (Mauritius) Limited and Vijay Nirman Company Private Limited may give a enforceable right to the parties to the agreement, but it cannot be regarded as transfer, unless individual share holders transfers their title in shares by filing share transfer form along with physical delivery of shares and endorsed by the company in the register of share holders. Since, the assessee has transferred his title in the share on 24-11-2009, transfer referred to in section 2(47) took place on the date share transfer was accepted by both transferor and transferee, i.e. 24-11-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this case, assessment order passed by the A.O. is neither erroneous nor it is prejudicial to the interest of revenue, as the issue of capital gains and exemption u/s 54EC and 54F has been examined by the A.O. and also there is no prejudice is caused to the interest of revenue as investments in 54EC and 54F is in accordance with law. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) of the Act dated 16-01-2013 is not erroneous in so far as it is prejudicial to the interest of the revenue. 15. Now, it is pertinent to discuss case law relied upon by the assessee. The assessee relied upon the decision of coordinate bench of Visakhapatnam Tribunal, in the case of Nu Tech Engineers Vs. CIT in ITA No.570/Vizag/2013 dated 10.6.2016. The coordinate bench of this Tribunal, under similar circumstances held that once the A.O. examined the issues on which the CIT wants further verification, the CIT cannot assume jurisdiction on the same issues which was already examined by the A.O. at the time of assessment by stating that the A.O. has conducted inadequate enquiry or there is a lack of enquiry. The relevant portion of the order is reproduced hereunder: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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