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TMI Blog2022 (9) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has raised an additional ground before the Ld.CIT(A) claiming that the actual consideration received on sale of shares of WMI Cranes Ltd was less than the consideration taken for computing the capital gains after reducing the amount of consideration which was transferred to the escrow account. CIT(A) though has called for the remand report from the AO has failed to adjudicate on the additional ground filed by the assessee on the contention that the same was a subject of petition under section 264 before the Principal CIT-7, Mumbai. CIT(A) has held that since this ground was raised in an application u/s 264 before the PCIT thereby rejected, the Ld.CIT(A) held that he had no jurisdiction to consider the same grounds in appeal before him. CIT(A) has erred in not deciding this ground of appeal filed as additional ground before him by the assessee which ought to have been decided on merits. CIT(A) is not barred from deciding this ground of appeal on merits inspite of the fact that section 264 application was rejected by the PCIT-7, Mumbai. On the above observation, we direct the Ld.CIT(A) to consider this ground of appeal on merits and adjudicate the issue pertainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) dated 8/11/2013 was passed thereby determining the total income at Rs.22,68,51,530/- by way of disallowance of claim of foreign travel expenses of Rs.5,44,023/- on the ground that the same was not incurred for business purpose and on various other grounds. The assessee was in appeal before the Ld.CIT(A) wherein certain claims of the assessee was allowed and certain claims such as foreign travel expenses incurred by the assessee was disallowed. The assessee further stated that the additional ground for reducing the long term capital gain on account of sale of shares of M/s MWI Cranes Pvt Ltd of Rs.1,42,44,725/- was not decided by the Ld.CIT(A). It is stated that the assessee works as an agent in India and abroad and dealing with non conventional energy engineering equipments. The assessee company is also into imports / exports / material handling equipment activities, etc. which is evident from the Memorandum and Articles of Association. The expenses of foreign travel of Rs.5,44,023/- was stated to be the foreign travel of Shri Gopal Vazirani, the Chaiman and MD and Mrs. Padma Vazirani, the director of the assessee company to London and other places. It was further stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived lesser consideration from the funds that was in the escrow account as per the terms of sale agreement. 7. It is contended that the assessee being an Indian company alongwith three other individuals were the promoters of M/s WMI Cranes Ltd which is a public limited company incorporated in India and was engaged in the business of manufacturing of EOT cranes and material handling equipments. There was an agreement by name share subscription and purchase agreement dated 11/10/2010 between the promoters and M/s Konecranes Finance Corporation (the purchasers) which is a Finland based company. It was stated that M/s WMI Cranes Ltd had total issued and paid up shares 9,99,920 equity shares of Rs.10 each in which the promoters collectively owned 100% of the issued and paid up share capital of the company. The assessee company held 1,23,800 equity shares i.e. 12.38% of the total equity shares of the company. As per the agreement, the promoters agreed to sell 4,82,519 equity shares i.e. 48.25% of the issued and paid up equity share capital of the company to M/s Konecranes Finance Corporation or to its affiliates initially at Rs.3,02,012.31 per share amounting to Rs.155,00,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the escrow account. The assessee contends that the impugned amount is not considered to have been received by the promoters and was only towards the liabilities which arose against M/s WMC Cranes Ltd and that the impugned amount ought to have been reduced from the sale consideration in computing the capital gains arising on the transfer of shares of the company. The assessee stated that the capital gain at a higher amount of Rs.22,17,09,427/- being proportion of sale consideration of Rs.155,00,00,000/- without reducing the consideration by Rs.1,42,44,725/- being proportionate amount of Rs.9,17,04,240/- which was withdrawn from the escrow account for meeting out the liabilities which arose before the sale of share, was not considered by the Ld.CIT(A). This ground of appeal was raised before the Ld.CIT by an application under section 264 on the ground that the amount withdrawn from the escrow account cannot at any time be in the coffers of the promoters. Consequently resulting in the reduction of consideration of sale of shares of the company. The Ld.CIT(A) had rejected the claim of the assessee on the ground that there is no express provision in the Income-tax Act to reduce the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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