9911796707
TMI Blog2023 (1) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... on of mind i.e. non application of mind to relevant material; or if an order is not in accordance with fact or law i.e. if there is an incorrect assumption of facts or an incorrect application of law. The facts of the present case reveal that the invocation of power under Section 263(3) was justified. Though the said company viz., M/s.Sri Solaiandaver Textile Mills Limited had closed down its business in the year 2002, it was endowed with sufficient valuable assets in the form of land. Therefore, the value of the shares ought to have been properly determined by the appellant and the Assessing Officer. The value of the share has been under valued by making it seem that the transfer to their father was only at Rs.4/- per share without any records. When the records were culled out by the Commissioner, the value of the share was re-determined at Rs.19.33 per share as against the nominal value of Rs.10/- per share. We therefore, find no reason to differ with the views expressed by the Tribunal the value of the shares were undervalued. We therefore answer the substantial questions of law against the appellant and in favour of the Income Tax Department. Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration stated in the agreement was the actual consideration or not? Therefore, it is necessary for the Assessing Officer to examine the basic facts before applying the principle laid down by the Supreme Court in the case of K.P.Varghese v. Income Tax Officer & Another (1981) 131 ITR 597(SC). 15. In the present case, it is obvious that the Assessing Officer has not computed the break-up value of shares transferred by the assessee to his father. It is very pertinent to note that the companies are closely held companies. It is further to be noted that the transaction was between father and son. The close personal relationship of the parties involved in the transaction ought to have invoked inquisitiveness in the mind of the Assessing Officer while examining the computation of long term capital loss. Only on the basis of such a necessary inquisitiveness that the Assessing Officer could make a meaningful examination of the circumstances leading to the long term capital loss. This is more necessary because the shares were transferred by the assessee in favour of his father for a value less than the face value of the shares. The face value of share is Rs.10 per share. The share wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and real benefits flowing out of the sale transaction. The break-up value is one of the accepted methods of finding of value of shares in a realistic manner. The Commissioner has adopted that method. There is no illegality or infirmity in that method. Therefore, the computation suggested by the Commissioner is also justified on the facts of the case. 18. Therefore, in the facts and circumstances of the case, the revision order passed by the Commissioner is upheld and the appeal filed by the assessee is dismissed." 4. The above order was followed by the Tribunal in its order dated 22.10.2009 in I.T.A.No.1362/Mds/2007 for the same assessment year which has been impugned in T.C.A.No.441/2010. T.C.A.No.441 of 2010 and T.C.A.No.175 of 2012 was admitted on 08.06.2010 and 20.06.2012 respectively on the following substantial question of law: "Whether on the facts and circumstances of the case, the Tribunal was right in sustaining the order of revision passed by the Commissioner of Income Tax by invoking the provisions of Section 263 of the Income Tax Act, 1961?" 5. In these cases, the respective appellants are brothers namely S.Palaniappan and S.Manickavasaga, who had fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded 31.03.2003, he has failed to reach any logical conclusion about the genuineness of the claim of loss in shares of the company. There is no mention of break-up method by the Assessing Officer anywhere in the assessment record. In these circumstances, when no proper enquires have been made before accepting the claim of loss, the assessment order is erroneous and prejudicial to the interest of revenue in view of the following rulings: K.A.Ramaswamy Chettiar and another vs. CIT 220 ITR 657 (Mad.) CIT vs. South India Shipping Corporation Ltd., 333 ITR 546 (Mad.) The learned Authorised Representative claims that for computing Capital Gains only, full value of consideration received should be considered received should be considered ( for which he relies on apex court rulings). However, the same applies to genuine sales only. In the present case, the assessee has claimed huge capital loss through colourable device by selling the shares at the rate of Rs.4 per share against break up value of Rs.19.33 as on 31.03.2003. It is not understood as to why the father wanted controlling interest in the company alter the closure of business w.e.f. 01.04.2002. There is no evidence produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are. 10. The case of the respective appellant is that the power to revise an order of assessment under Section 263 of the Income Tax Act, 1961 can arise only when the order passed by the Assessing Officer is both erroneous and prejudicial to the interest of the revenue. The respective appellants contend that the Commissioner of Income Tax has no power to re-determine the value of shares as against the value determined by the Assessing Officer while exercising power under Section 263 of the Income Tax Act, 1961. 11. It is further submitted that the Assessing Officer while scrutinizing the taxable income in the case of the respective appellant passed the assessment orders taking a different plausible view and accepted the valuation declared by the respective appellants. Thus, the total tax liability was reduced by Rs.25,47,704/- and Rs,25,34,508/- for the appellant in Mr.S.Palaniappan in TCA.No.441 of 2010 & Mr.S.Manickavasam in TCA.No.175 of 2012 respectively. 12. The learned counsel for the appellants has relied on the following decisions:- Principal Commissioner of Income Tax, New Delhi., vs. M/s Brahma Centre Development Pvt Ltd, ITA.Nos.116 & 118 of 2021, dated 05.07.2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
