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TMI Blog2017 (6) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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. - ITA No. 4052/Del/2013 - - - Dated:- 29-5-2017 - Sh. H. S. Sidhu, Judicial Member And Sh. O. P. Kant, Accountant Member Appellant by : S/sh. L.K. Paonam, AR; K.R. Shukla, Adv.; and Bhupendra Respondent by : Sh. Umesh Chand Dubey, Sr.DR ORDER Per O. P. Kant, A. M. This appeal by the assessee is directed against order dated 26/03/2013 of Ld. Commissioner of Income-tax (Appeals)-19, New Delhi, for assessment year 2001-02 raising various grounds. The assessee revised its grounds of appeal vide letter dated 07/09/2015, which were admitted. The revised grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res by the appellant was at a premium to the market rate and conclusion reached by the learned CIT (A) on mere surmises and conjecture to sustain the adoption of face value of ₹ 10/- per share is wholly unwarranted, arbitrary and liable to be set aside. 5. That the order of the CIT (A) is bad in law and against the fact of the case. 2. This is the second round of litigation before the Income Tax Appellate Tribunal (in short the Tribunal ). 3. The brief facts giving rise to the present appeal are that during the year under consideration, the assessee company transferred its undertaking to M/s Virtual Soft Systems Ltd. (formerly known as Suri Capital and Leasing Ltd ) against allotment of 45 lakh equity shares of the face value of ₹ 10 per share. In the assessment completed under section 143(3) of the Income-tax Act (for short the Act ), the Assessing Officer treated the transaction as slump sale under section 50B of the Act and short-term capital gain was computed taking the sale consideration at ₹ 4,50,00 000/-on the basis of book value of ₹ 10 per share and short-term capital gain of ₹ 3,14,58,830/-was brought to tax. In the first appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of the remand report alongwith notice under section 250 dated 24/01/2013 fixing the appeal for hearing on 31/01/2013. This notice was sent by the speed post, however no compliance was made and even an adjournment application was not filed. Again a one more notice dated 13/03/2013 fixing the appeal for hearing on 20/03/2013 was sent by the speed post, however neither any compliance was made nor application for adjournment was filed before the Ld. CIT-A. 3.4 In view of the non-compliance by the assessee of the notices sent, the Ld. CIT-A, decided the appeal and upheld the market value of the shares at ₹ 10 per share and confirmed the short-term gain computed by the Assessing Officer. 3.5 Aggrieved, the assessee in appeal, before the Tribunal raising the grounds as reproduced above. 4. In ground No. 1 of the appeal, the assessee has raised the issue that notices dated 24/01/2013 and 13 /03/2013 allegedly sent by speed post to the assessee were not served and thus the order passed by the Ld. CIT-A was without any adequate opportunity to the assessee. In ground No. 2(a), the assessee has raised issue that no opportunity was provided by the valuation officer while esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be restored back to the Ld. CIT-A for complying the direction of the Tribunal (supra) as to determination of the market rate of the shares . 6. On the contrary, Ld. Senior DR relied on the finding of the lower authorities and submitted that the assessee was provided due opportunity for filing objections on the valuation report by the Assessing Officer. He further submitted that the assessee failed to avail the opportunity allowed by the Ld. CIT-A, without any justified reasons. He further submitted that the Ld. CIT-A has followed the direction of the Tribunal and after taking into consideration the market price of the shares as available on the website of the BSE and other factors affecting the market price, has determined the market price of the shares and thus contentions of the learned counsel are not true and accordingly the order of the Ld. CIT-A, might be sustained. 7. We have heard the rival submissions and perused the relevant material on record including the paper book of the assessee. In the application filed under Rule 29 of the ITAT Rules, the assessee has filed following documents as additional evidences: 1. Stock price of company virtual soft systems Ltd fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or on capital account. 8.8. However, the AO while determining sale consideration took the value at ₹ 4.50 crores. He has not commented as to why the value as shown by the assessee in the written submission, referred to above, should not be taken into account. On going through the order of the learned CIT(Appeals) also, it is found that the assessee objected to the determination of sale consideration on the basis of face value of shares. It appears that on this issue also a remand report was sought from the AO. Vide his report dated 29-11-04, reproduced on page 7 of the learned CIT(Appeals), the Assessing Officer has again justified the approach adopted in the assessment order. It is clear from the following extract of remand report: The assessee pleaded before the CIT(A) that the equity share of M/s Suri Capital Leasing Ltd. are listed at Delhi and Mumbai Stock Exchange. The market value of the share is ₹ 4/- per share as per exchange quotation. The AO ahs rightly taken the value of each share at ₹ 10/- in view of acquisition agreement made between these two parties that the transfer share will be made on face value of ₹ 10 each. 8.9. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Data Source - Asian CERC IT Ltd. 8.10. The above details were submitted before the AO and the learned CIT(Appeals) but they have not commented about the same. On the basis of the quoted price , as per above, the average price per share in any case will be around ₹ 4.70 per share on and near the date of transaction of sale and hence this may be the cost which should normally be taken into account for determining the sale consideration, but in the circumstances of the present case, where the shares of transferee company were acquired in bulk and controlling interest over that company was also acquired by the assessee, the market price of the shares so acquired should be determined after taking into consideration all these relevant aspects including the rates of shares quoted in stock- exchange, wherein too should be considered after obtaining authentic information from concerned exchange, regarding prevailing rates in the market before and after the date of transfer. The AO is, therefore, required to undertake the exercise of determining the market value of .45,00,000 shares of the transferee company on the date of transfer. For this purpose the assistance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.95 10.95 ll-Sep-00 11.35 11.45 11.15 11.15 08-Sep-00 12.05 12.05 11.6 11.6 07-Sep-00 12.05 12.05 12.05 12.05 06-Sep-00 11.65 11.65 11.65 11.65 05-Sep-00 10.65 10.8 10.65 10.8 11. The above shows that the share was quoted at ₹ 12.05 on 7.9.2000 and 8.9.000. It was again quoted at ₹ 11.80 on 1.11.2000 and at ₹ 9.45 on 30.1.2001. This information is available in the public domain on the website of the Bombay Stock Exchange and can be easily accessed. It is clear from the above that the appellant s claim that the shares were quoted at around ₹ 4.70 is not correct. The shares quoted at more than the face value of ₹ 10 around the time of acquisition and sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. This has to be done after providing due opportunity of hearing to the assessee and as per law . The Hon'ble ITAT have directed the A.O. to work out the capital gain in this case as per law. The A.O. was therefore, within the mandate of directions by the Hon ble ITAT in making a reference to the Valuation Officer for the purpose of calculation of capital gain. As discussed above, the sale consideration taken by the A.O. is justified on the basis of the face value of shares and the market rates, and the computation of capital gain is justified even if the valuation report is not considered. In view of these facts, the computation of capital gain by the A.O. cannot be said to be erroneous on the ground that he made a reference to the Valuation Officer. This is because this reference is valid in law and also because even if the valuation report is not considered, the sale consideration taken by the A.O. is justified by the face value of shares and the market rates. The appellant s arguments are therefore, not acceptable. 15. The appellant has also argued that the value of shares has been determined by the A.O. on the basis of totally irrelevant materials. In the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntaining objections has been placed before us from page 42 to 45 of the paper book. In the letter dated 23/12/2008 filed before the Assessing Officer , the assessee objected mainly that approved valuer had not proceeded to determine the market value as directed by the Tribunal and determined the value of the shares on the basis of a report of M/s price water Coopers related to enterprise value of the acquired entity. 14. In our opinion, the Ld. CIT-A has taken into consideration the directions of the Tribunal and referred to the stock prices available on the website of the Bombay stock exchange and also taken into account the factors of purchase in bulk and acquisition of controlling stake and justified the valuation made by the valuation officer based on the net asset value(NAV) of the shares of the acquired entity. The information obtained from the website of the Bombay stock exchange is certainly authentic and cannot be said in violation of the direction of the Tribunal(supra). 15. In the grounds of appeal raised before us, the assessee is having grievances as under: 1. the valuation officer has not provided opportunity 2. the Ld. CIT-A has not provided opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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