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TMI Blog2018 (10) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... n law, the Ld. CIT(A) has erred in not appreciating the Assessing Officer has incorrectly adopted 22.06.2010 as the date of the transaction. 4) That on the facts and in the circumstances of the appellant's case and in law, the Ld. CIT(A) has erred in not appreciating that Assessing Officer has incorrectly worked out fair market value of the shares of M/s Global Energy Pvt. Ltd. (GEPL) as on 22.06.2010 at the rate of Rs. 31.05 per share. 5) The Ld. CIT(A)'s order being contrary to law, evidence and facts of the case should be set aside, amended or modified in the light of the ground deducted above. 6) The grounds of appeal above are independent of a without prejudice to each other. 3. Short facts apropos are that the appellant had purchased during the year under consideration, 30,00,000 shares of Global Energy Pvt. Ltd. ('GEPL') @ Rs. 30/- each from Belgundi Cements Pvt. Ltd. ('BCPL') worth Rs. 9 crores (face value of each share Rs. 10/-). BCPL had received during the financial year (FY) 2009-10 relevant to the assessment year (AY) 2010-11, Rs. 10 crores from the appellant and as such had a closing credit balance of Rs. 10,23,00,000/-. Also BPCL had an outstanding amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of shares as on 31.03.2011 (per share) = Net worth /No. of shares = 166,46,77,754*/2,95,91,625 = Rs. 39.36 Incremental for FY 2010-11= Rs. 39.36 - Rs. 28.61 = Rs. 10.75 Proportionate for 22.06.2010 (83 days) = Rs. 10.75 x 83/364 = Rs. 2.44 FMV per share as on 22.06.2010 = Rs. 28.61 + Rs. 2.44 Rs.31.05 Accordingly, the AO computed the FMV of these shares on the valuation date i.e. 22.06.2010 at Rs. 31.05/- and brought to tax the excess amount of Rs. 31,50,000/- u/s 56(2)(vii). 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) held that (i) the definition of 'balance sheet' in Rule 11U prior to amendment stated that the same should be the balance sheet drawn up as on date of valuation, (ii) the amended rule gave an option to adopt the immediately preceding approved and adopted balance sheet in cases where there was no balance sheet drawn up as on date of valuation, (iii) GEPL is a closely held company where the appellant and his wife are the only shareholders and therefore, there was nothing preventing them from drawing up a balance sheet as on valuation date. Further the Ld. CIT(A) held that there was already a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reliance was placed by him on Rule 11U(b) r.w. Rule 11UA. The Ld. counsel submits that the Ld. CIT(A) did not follow the amended definition of balance sheet provided in Rule 11U(b) merely on the ground that the said amendment to the Rule came only w.e.f. 29.11.2012 i.e. post the date of transaction. It is stated that the Ld. CIT(A) failed to appreciate the well-settled principle of law that amended rules of procedure which are beneficiary would be applicable to all pending proceedings. Reliance is placed by him on the decision in (i) C.W.S. (India) Ltd. v. CIT (1994) 73 Taxman 174 (SC), (ii) Urvi Chirag Sheth v. ITO (2016) 70 taxmann.com 33 ITAT Ahmedabad, (iii) DCIT v. Paras D. Gundecha (2015) 62 taxmann.com 170 ITAT Mumbai, (iv) K.P. Varghese v. ITO (1981) 7 Taxman 13 (SC), (v) CIT, Gauhati v. Sati Oil Udyog Ltd. (2015) 56 taxmann.com 285 (SC), (vi) CIT v. Tainwala Chemicals & Plastics India Ltd. (2013) 34 taxmann.om 159 (Bom.), (vii) CIT v. Berry Plastics (P.) Ltd. (2013) 35 taxmann.com 296 (Guj.) and (viii) CIT v. B.C. Srinivasa Setty (1981) 5 Taxman 1 (SC). The Ld. counsel also files a 'Paper Book' (P/B) containing (i) Copy of Acknowledgement of return of income, Return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accident compensation, being a capital receipt, is not taxable as income. In Paras D. Gundecha (supra), it is held that where assessee received certain sum out of family settlement, the same was not taxable u/s 56(2)(v). In K.P. Varghese (supra), it is held in case of capital gains u/s 52 (2) that understatement of consideration in a transfer of property is a necessary condition for attracting applicability of section 52(2) and it is not enough for the revenue to show that FMV of property as on date of transfer exceeds full value of consideration declared by the assessee in respect of transfer by an amount of not less than 15% of value so declared. In Sati Oil Udyog Ltd. (supra), it is held that amendment made to section 143(1A) by Finance Act 1993, with retrospective effect from 01.04.1999, was constitutionally valid. In Tainwala Chemicals & Plastics India Ltd. (supra), it is held that the Tribunal has rightly allowed the assessee's claim holding that AO had merely alleged that shares were sold at very low price, but he had not discharged burden, which was cast upon him in terms of decision of the Apex Court in K.P. Varghese (supra). In Berry Plastics (P.) Ltd. (supra), it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 142/21/2009-SO (TPL) dated 08.04.2010: [2010] 322 ITR (St.) 25. The meaning of "balance sheet" has been given in Rule 11U(b) of the Rules and the same has been substituted by the IT (15th Amendment) Rules, 2012, w.e.f. 29.11.2012 and the same has been relied upon by the Ld. counsel. Prior to their substitution, clause (b) reads as under: (b) "balance sheet", in relation to any company, means the balance-sheet of such company (including the notes annexed thereto and forming part of the accounts) as drawn up on the valuation date; 7.2 In view of the above factual matrix, it is crystal clear that the case of the appellant is distinguishable from the cases relied on by the Ld. counsel. 7.3 The legal nodus confronting us has been considered by the Constitution Bench of the Hon'ble Supreme Court in CIT v. Vatika Township Pvt. Ltd. (2015) 1 SCC. Their Lordships held at para 27-31 and 35 as under: "General Principles concerning retrospectivity 27. A legislation, be it a statutory Act or a statutory Rule or a statutory Notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special pecul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. 30. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India v. Indian Tobacco Association [2005] 7 SCC 396, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3rd Edn.) and reiterated in several decisions of this Court as well as English courts is that 'all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only.' (emphasis supplied)" 7.4 The present factual matrix is to be tested on the anvil of the aforesaid enunciation of law. We hold that the AO has rightly arrived at the FMV per share as on 22.06.2010 at Rs. 31.05/- as worked out by the assessee. Also he has rightly followed Rule 11U as applicable for the FY 2010-11 relevant to the AY 2011-12. To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose. It is made clear that all the case-laws relied on by both sides have been duly taken into ..... X X X X Extracts X X X X X X X X Extracts X X X X
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