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TMI Blog2022 (8) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of sec 94(7)? - HELD THAT:- In the assessee s case, units were purchased much before 3 months period prior to record date, hence condition prescribed in clause (a) of sec 94(7) is not satisfied hence sec 94(7) can t be applied to the assessee s case. A.O. has not brought any evidence on record about motive of the assessee in indulging the transaction to earn loss. It is also on record that the transactions entered into by the assessee is with the SEBI regulated mutual fund scheme of a very big and reputed asset management company. Even remotely it can t be assumed that the intentions of the assessee are to earn the loss with the gloves in hand with a reputed AMC. We are in agreement with a finding of Ld. CIT(A) and sustained the deletions made by him. Hence this ground of appeal filed by revenue is dismissed. - ITA No. 1185 to 1187/Mum/2020 And ITA No. 1309/Mum/2020 And ITA No. 1310/Mum/2020 - - - Dated:- 10-8-2022 - Shri Aby T Varkey, Judicial Member And Shri Gagan Goyal, Accountant Member For the Appellant/Assessee : Sh. Mani Jain/Prateek Jain For the Respondent : Sh. Vinay Sinha, CIT-DR, Sh. Prasoon Kabra, Sr. DR ORDER PER GAGAN GOYAL, A.M: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared the same under the head long term capital gain. 4. Value per share as certified by valuer as per rule 11UA of the IT Rules, 1962. Comes to Rs 609.823/-, whereas assessee received consideration of Rs 1183.704/- per share. This difference of Rs 5,73,881/- per share, considered as income under the head business and profession by applying sec 28(va) of the IT. Act 1961 by the A.O. being aggrieved with the assessment order passed, assessee preferred an appeal before the Ld. CIT(A)-53, Mumbai. 5. Ld. CIT(A) partly allowed the claim of the assessee and treated Rs. 59/- under the head Income from business and profession as compare to Rs 5,73,881/- as considered by A.O. assessee still being aggrieved preferred this appeal before us. 6. We have gone through and considered the order of the A.O., Ld. CIT(A) and submissions of the assessee along with factual and legal paper book filed by the assessee. Assessee was a shareholder in M/s KLIPL and holding shares to the tune of 3,13,270. This company KLIPL was part of Loparex BV (Netherlands based company). As a matter of gaining full control over its business partner based at India namely KLIPL, Loparex group based at Netherland of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any time during the 12 months immediately preceding such date was a customer, client distributor, agent or supplier of the Company; c)seek to interfere with the continuance of the supply of goods or services to the Company or terms of any supply; and d) carry on, engage in or be concerned or interested in (whether as shareholder, lender, director, consultant, principal or as a partner, employee or agent of any person or otherwise), any business or activity which competes with the business and activities in which the Company is engaged. Except that the VENDORS can continue to carry on their existing business of contract toll manufacturing of release liner papers for the customer Mudrika Labels Put. Ltd., as well as manufacturing and marketing/ selling of label stocks (using internally manufactured release liners) as is currently carried out by them under the name and style of M/s Capri Coating Solutions, a partnership firm. VENDORS are in no means limited by this agreement from any external purchases of release liners. The Vendors through Capri Coating Solutions can also, subject to the prior approval of the Company, explore the new business opportunity of only contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all submit to orders and injunctions prayed and waive objections, if any, to such actions or proceedings or relief sought to the extent permitted by applicable Law. 8. A perusal of the above covenants clearly established the terms and conditions of the transactions and duties and rights of both the parties, without any specific consideration assigned to any of the covenant. It is clearly established that basically the transaction was entered into to buy the shares from assessee and other shareholders of KLIPL. 9. We have gone through the financials of the KLIPL for the year 2013-14 and 2014-15. The EPS was Rs 124.5/- and Rs 134.07/- respectively. It means purchase price of Rs1183.704/- is 8.82 times of the EPS. This ratio of 8.82 of EPS is not excessive or unreasonable assuming shares of KLIPL would have been listed although they are not. The overall transaction of this share sale looks to be fair and reasonable as evident from the order of the A.O. and the order of Ld. CIT(A). 10. Now we will analyse the nature of transaction to determine the character of receipts to be assessed. In this regard provisions of proviso to sec 28(va) is relevant which is reproduced herein b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittedly, in the share purchase agreement no consideration was assigned towards non-compete fees and the parties had entered into the share purchase agreement after mutually settling the price of shares. This clause clearly shows that in the purchase price of shares, consideration towards Restraint Clause was embedded. Admittedly, assessee on her own was not carrying on business and it was the company in which she was shareholder was carrying on the business, ... Thus, section 28(va) would be attracted where the assessee was carrying on business and not where assessee only had right to carry on business in the form of capital asset. 14. In view of the above facts, pronouncement of Hon ble High Court and jurisdictional ITAT, we are of the considered view that the assessee had rightly declared income under the head Capital gains. No portion of considerations can be attributed for the purposes of sec 28(va) hence we set aside the finding of Ld. CIT(A)., attributing 5% of the consideration as income covered by sec 28(va). 15. In the result, appeal filed by the assessee is allowed. ITA No. 1186/Mum/2020 (A.Y. 2016-17) 16. The facts and law applicable to this appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee (Partly), i.e., M/s Kaygee Investments Pvt Ltd. Facts and figures involved are similar to what we discussed (Supra) in ITA No. 1187/Mum/2020 (A.Y. 2016-17). 21. Ground No-1 and 2, issues raised in these two grounds are already been discussed, analysed and decided in favour of assessee (ITA No. 1186/Mum/2020 (A.Y. 2016-17). Hence in the light of our decisions in assessee s appeal there is no need to further adjudicate these two grounds of appeal raised by revenue. In view of this, these two grounds became infructuous and accordingly dismissed. 22. During the AY under consideration assessee has claimed exempted income u/s 10(35) of the act on dividend income received on the units of Religare Invesco Contra Fund (Mutual fund) amounting to Rs 3,09,71,101/-. In addition to this assessee also claimed short term capital loss (STCL) of Rs 4,18.42,536/-. On the sale of abovementioned units of mutual Fund. To verify this transaction A.O. issued notice u/s 142(1), that the said transactions are not hit by the provisions of sec 94(7) of the act. 23. In order to understand the provisions of Sec. 94(7), the same is reproduced hereunder: a). any person buys or acquires any sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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