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TMI Blog2022 (9) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... exclude jurisdiction under section 263 because under the amended provisions contained under section 263 of the Act power of Commissioner under section 263 would extend and would be deemed to have been extended to three items because the same had not been considered and decided in appeal filed by the assessee. In the instant case also the issue flagged by Ld. CIT(A) as to not ascertaining and examining the correct book profit on transfer of 9033701 shares of Adani Enterprises at the rate of Rs.201 per share which comes to Rs.189.71 crore and not at the rate of Rs.864 per share which comes to Rs.780.51 crore, which the AO has accepted without ascertaining and examining the correct facts and without making necessary enquiries/verifications which made the assessment order erroneous so far as prejudicial to the interest of the Revenue, was never agitated or decided by CIT(A) or Tribunal in original assessment or assessment framed under section 143(3) read with section 254 of the Act. So in these circumstances the PCIT has the power under section 263 of the Act. So we are further of the view that in the case laws relied upon by the assessee referred are not applicable to the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere amalgamated with the assessee. The transferee companies were holding 90,33,701 shares of M/s. Adani Enterprises Ltd. at the time of amalgamation which were sold during the year under consideration for Rs.869.17 crore. Amalgamation of M/s. Midfin Cap Lease Ltd. and M/s. Vikram Capital Resource Pvt. Ltd. was approved by Hon'ble Gujarat High Court on 08.10.2007. As per the scheme of amalgamation the purchase method had to be followed and accordingly the fair value of assets and liabilities was to be determined as defined in the accounting standard (AS)-14. It was also noticed that shares of M/s. Adani Enterprises Ltd. were to be re-valued as on the effective date of amalgamation i.e. on 01.04.2007 on the basis of equated market price on that date. It was also noticed by the Ld. PCIT that the value per share of M/s. Adani Enterprises Ltd. as on 01.04.2007 was taken at Rs.864/- per share (total consideration of Rs.780.51 crore/ 90,33,701 shares) for the purpose of computing the net profit on the sale of shares as per books, however, the value adopted by the assessee in respect of the shares of M/s. Adani Enterprises Ltd. is found not correct because the closing price of share of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order after computing the book profit under section 115JB of the Act after making necessary enquiries and ascertaining correct facts. 5. Feeling aggrieved from the impugned order passed by the Ld. PCIT under section 263 of the Act the assessee has come up before the Tribunal by way of filing the present appeal. 6. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 7. For ready perusal notice issued by Ld. PCIT under section 263 of the Act is extracted as under: "2. M/s Krishiraj Trading Ltd. (PAN AAACK2257N) is now Now amalgamated with MGN Agro Properties Private Limited (PAN AACCM3422H). Therefore the proceedings u/s. 263 of the Incometax Act, 1961 in the case of M/s. Krishiraj Trading Ltd. (PAN AAACK2257N) are initiated in the name of MGN Agro Properties Private Limited (PAN AACCM3422H). 3. The return of income for A.Y. 2008-09 was filed BY M/s Krishiraj Trading Ltd, (hereinafter the assessee) on 1 6-09-2008 declaring the total loss at Rs.87,93,59,786/-. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The book profit on transfer of these shares comes to Rs.679.46 crores (i.e. 869.17 crores - 189.71 crores). As against this book profit, the assessee has shown book profit of Rs.89.94 crores on this transaction and the AO has accepted this value without ascertaining and examining the correct book profit on transfer of these shares (which is in fact Rs.679.46 crore) in the original as well as the order passed u/s. 143(3) r.w.s. 254 of the Income-tax Act, 1961 dated 26.01.2017. Since the AO has accepted the book profit without making any enquiring on verification with regard to correct book profit which is Rs.679.46 crores as discussed above, the order passed by AO becomes prima facie erroneous in so far as prejudicial to the interest of revenue within the meaning of explanation 2(a) to section 263(1) of the Income-tax Act, 1961. 6. In this connection, you are hereby given an opportunity of being heard under sub-section (1) of section 263 of the Income-tax Act, 1961. Your case is fixed for hearing on 25-03-2021 at 4:00 PM. On that day, you may attend before the undersigned at the above-mentioned address, either in person or through your authorized representative, or make wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 115JB of the Act after making necessary enquiries. 13. Undisputedly, two wholly owned subsidiaries namely M/s. Vikram Capital Resources Pvt. Ltd. and M/s. Midfin Cap Lease Ltd. were amalgamated with assessee as approved by Hon'ble Gujarat High Court with effective date of amalgamation as 01.04.2007. It is also not in dispute that the transferee companies were holding 9033701 shares of M/s. Adani Enterprises Ltd. at the time of amalgamation which was sold for Rs.869.17 crore. It is also not in dispute that assessee has taken the value of per share of M/s. Adani Enterprises Ltd. as on 01.04.2007 at Rs.864/- per share (total consideration of Rs.780.51 crores for 9033701 shares) for the purpose of computing net profit on sale of shares under section 115JB of the Act whereas closing price of share of M/s. Adani Enterprises Ltd. on 31.03.2007 was Rs.210 per share only. It is also not in dispute that for the purpose of computing the capital gain as per books per share value was required to be taken at Rs.210 per share and not Rs.864 per share as adopted in the valuation report in view of the scheme of amalgamation approved by the Hon'ble High Court. It is also not in dispute that M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /CIT(A) there is no question of merger and relied upon the decision rendered by Hon'ble Supreme Court in case of CIT vs. Shri Arbuda Mills Ltd. (1998) 98 Taxman 457 (SC), Hon'ble Bombay High Court in case of CIT vs. Ballarpur Industries Ltd. (2017) 85 taxmann.com 10 (Bombay) & Vedanta Ltd. vs. CIT (2021) 124 taxmann.com 435 (Bombay) and Hon'ble Karnataka High Court in case of CIT vs. Namdari Seeds (2011) 16 taxmann.com 9 (Kar.). 16. In the backdrop of the aforesaid undisputed facts, order passed by the Ld. Lower Revenue Authorities, argument addressed by Ld. Authorised Representative of the parties to the appeal and case law relied upon the sole question arises for determination in this case is: "as to whether AO has framed the original assessment under section 143(3) and assessment under section 263 read with section 254 of the Act without ascertaining and examining correct value of shares @ Rs.864 per share as adopted in the valuation report as against Rs.210 per share as per scheme of amalgamation approved by the High Court effective from 01.04.2007." 17. We have perused the order passed by the co-ordinate Bench of the Tribunal in case of Mrs. Jyoti Harshad Mehta-Legal Heir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee contended that order of ITO merged with that of Commissioner (Appeals) so as to exclude jurisdiction of the Commissioner under section 263 of the Act. The question arose before the Hon'ble Apex Court as to whether in view of the amendment in section 263 by the Finance Act, 1989 with retrospective effect, power of Commissioner under section 263 of the Act would extend and would be deemed always to have extended to three items because same had not been considered and decided in appeal filed by the assessee." Answer to this question was given by the Hon'ble Supreme Court in affirmative. 22. We have perused the order dated 04.08.2011 passed by the Ld. CIT(A) available at page 72 to 111 of the paper book and order passed by co-ordinate Bench of the Tribunal available at page 124 to 136 of the paper book. 23. Perusal of the order passed by Ld. CIT(A) and co-ordinate Bench of the Tribunal in assessee's own case goes to prove that the issue flagged by Ld. PCIT while invoking the jurisdiction under section 263 of the Act as to the cost of acquisition of shares of Adani Enterprises "at the rate of Rs.210 per share which comes to Rs.189.71 crores (for 90,33,701 shares) and not Rs.780 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 27. In the instant case also the issue flagged by Ld. CIT(A) as to not ascertaining and examining the correct book profit on transfer of 9033701 shares of Adani Enterprises at the rate of Rs.201 per share which comes to Rs.189.71 crore and not at the rate of Rs.864 per share which comes to Rs.780.51 crore, which the AO has accepted without ascertaining and examining the correct facts and without making necessary enquiries/verifications which made the assessment order erroneous so far as prejudicial to the interest of the Revenue, was never agitated or decided by the Ld. CIT(A) or Tribunal in original assessment or assessment framed under section 143(3) read with section 254 of the Act. So in these circumstances the Ld. PCIT has the power under section 263 of the Act. So we are further of the view that in the case laws relied upon by the assessee referred to para 12 of the order are not applicable to the facts and circumstances of the case. 27. In view of what has been discussed above when the issue flagged by Ld. PCIT has never been ascertained/examined to compute the correct book profit qua the transfer of these shares there is no question of merger of the order. M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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