9911796707
TMI Blog2024 (9) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by CIT(A) vide order dated 07.07.2017 for the assessment year 2014-15. Certain errors apparent from record have inadvertently crept in the aforesaid order which have vitiated the final conclusion arrived by the Tribunal with respect to ground of appeal no 2 and 2.1. Accordingly, rectification of such mistakes apparent from record are prayed for through this application. Brief facts of the case with respect to Ground of Appeal no. 2 and 2.1 are as under: Brief Facts During the relevant previous year ending March 31, 2014, the applicant had sold 15,67,68,789 shares of Scorpio Beverage Private Limited (hereinafter referred as "Scorpio") to a foreign company, i.e., CGP Investment Ltd. ('CGP) [an affiliate of Vodafone International Holdings B.V.] for total lump sum consideration of Rs. 997,92,44,200 and resultant long term capital gains of Rs. 782,92,66,249 was offered to tax in accordance with the provisions of section 45 read with section 48 of the Act. Scorpio was incorporated under Companies Act, 1956 on 02.02.2006 with entire share capital being divided into 10,000 equity shares of Rs. 10 cach, which was wholly held by the Applicant along with his wife, Mrs. Nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are not permissible under 11UA. Accordingly, we hold that the valuation done by the Kotak Mahindra Capital and the value of SBPL's shares is not in accordance with Rules as given in Rule 11UA which is specific for valuing the unquoted shares, The reason for not following the value of Kotak for SBPL shares is that, the Valuer has adopted NAV for valuing the intermediary companies; and if NAV method is to be adopted, then he can reduced liabilities as envisaged under Rule 11UA and not any other liabilities suggested by the companies without being authenticated by the companies or independently examined by the Valuer. Only liability which can be excluded while examining the book value is the liability shown in the balance sheet." In the aforesaid Para, it has been held that for the purposes determining fair market value of unquoted shares as per NAV method, resort has to be made to the provisions of Rule 11UA of the Rules and only the liabilities prescribed therein can be reduced to arrive at the NAV/FMV of the unquoted shares. While the applicant being aggrieved with the aforesaid principal finding of the Hon'ble Tribunal qua enhancement of long term capital gains by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; any amount representing contingent liabilities other than arrears of (vi) dividends payable in respect of cumulative preference shares; PE= total amount of pald up equity share capital as shown in the balance-sheet; PV the paid up value of such equity shares." On perusal of the aforesaid Rule, it would be appreciated that the same provides for computation of the value of net assets of the company by reducing book value of liabilities from the book value of assets. Clauses (i) to (vi) of the aforesaid Rule prescribe certain liabilitics that need to be excluded from the amount of book value of liabilities, which is to be further reduced from the book value of assets. Clause (i) provides for reduction of only paid up capital in respect of equity shares and not preference shares. Further, none of the other clauses provide for exclusion of preference share capital. Clause (vi) of the above Rule provides for exclusion of contingent liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 65 of the impugned order to compute long term capital gains adopting that value. C. Wrong finding that working furnished by Respondent Revenue was not disputed by the applicant The finding recorded by the Hon'ble Tribunal in para 64 of the impugned order that the aforesaid figure was not disputed by the Applicant is also not correct for the following reasons: The applicant had principally disputed the substitution of the actual declared consideration by the alleged FMV, Without prejudice to the aforesaid principal submission, the applicant had submitted that the FMV of shares of Scorpio, as per the valuation report of Kotak, calculated to Rs. 5.40 per share only; on the basis of which the sale consideration receivable would calculate to an amount lower than the amount actually received. Responding to the aforesaid alternate submission of the applicant, the Respondent Revenue disputed Kotak's calculation of FMV at Rs. 5.40 per share. To support its contention, the Respondent Revenue had for the first time submitted before the Hon'ble Tribunal on 05.10.2017 its objection to exclusion of liabilities in respect of preference share capital and arrears of dividend o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f shares of SBP that CGP does not already own from the Sellers. SBP, through a series of companies in the HoldCo Chain, is an indirect shareholder of VIL.. We have carried out the equity valuation of VII. using a Sum of the Parts Approach, which involves valuation of VIL Group (which is involved in providing telecom services across all telecom circles in India) and the value of VIL's 42% equity stake in Indus. The valuation of both VII. Group and Indus has been done using the Discounted Cash Flow methodology ("DCF") primarily based on the information and representations received from CGP and VIL. The valuation of VIL. so arrived at has been factored in while valuing each of the companies in the HoldCo Chain and SBP, considering the net value of other assets and liabilities in the respective companies, to arrive at the value of SBP, This Report is to be used only for the purpose of which it is intended, and is not o be used or referenced for any other purpose. Valuation Methodology and Assumptions We have computed the equity valuation of SBP, and the value of each company in the HoldCo Chain, based on the value of the downstream investments of SBP, or the respective company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermediate companies, which had independent assets and liabilities. Although, the said companies were mainly investment companies, having shareholding in subsidiary companies, such investments were financed through third party borrowings, which in our respectful submission ought to be considered while computing the value of holding companies including Scorpio. Accordingly, since Scorpio had no direct shareholding in VIL, which was held through several intermediate companies, the valuation of Scorpio was to necessarily factor the net assets (i.c. assets less debts) position of all such intermediate companies, as rightly carried out by the Valuation Expert, viz., Kotak in its Valuation Report. It is respectfully submitted that the aforesaid method followed by Kotak in considering the value of intermediaries companies is a universally acceptable method and was also factored in by the parties at the time of negotiating the consideration for transfer of shares under the Framework Agreements, in the following manner: I. The erstwhile Rule 12 relating to valuation of unquoted equity shares of an investment companies contained under the Wealth Tax Act, 1957 provided that the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us agreements: "The submission made by the respondent Revenue, namely accrual of some unquantified higher consideration (in place of the declared/ actual consideration) is based purely on conjectures and surmises and not backed by any relevant material / evidence on record. The Revenue could not point out the precise consideration, which according to the Revenue had "accrued" to the appellant so as to be taken as "full value of consideration" in terms of section 48 of the Act. The entire attempt of the Revenue seems to be to embark on a fishing/roving expedition to somehow discard the actual / declared consideration, which actually changed hands between the parties, which was disclosed and approved by FIPB, and substitute the same with 'some' unquantified notional / hypothetical consideration, which according to the Revenue could have "accrued" to the appellant." In view of the above, it would be appreciated that it was never the stand of the Revenue before the Hon'ble Tribunal that FMV of Rs. 136.76 per share be taken as the basis for calculating capital gains; otherwise there would have been no occasion for the applicant to make the aforesaid submission. An affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved, the assessee preferred a writ petition before the Hon'ble Jurisdictional High court. The Hon'ble Jurisdictional High Court disposed of the Writ Petition vide WP (C ) 3121/2018 dated 18.09.2023 by observing as under:- 4. The record shows that the petitioner/assessee approached this court to assail the order dated 19.03.2018 passed vis-а-vis its Miscellaneous Application i.e., M.A. No.742/Del/2017 by the Income Tax Appellate Tribunal [in short, "the Tribunal"]. 5. The central issue around which the dispute veers is the price at which the shares of Scorpio Beverages Pvt. Ltd. were sold by the petitioner/assessee, i.e., Mr Analjit Singh and his wife, Ms Neelu Analjit Singh. 6. The petitioner had valued the shares at Rs. 63.65 per share, while the Tribunal arrived at the valuation of Rs. 131.86 per share. 7. Via the miscellaneous application, the petitioner had attempted to point out the defects in the valuation. 8. The Tribunal, however, via the impugned order dated 19.03.2018, took the view that entertaining the aforementioned miscellaneous application would amount to review and therefore, rejected the application. 9. In the early hearing application, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion were recorded at the end of Para 63 in a 'blocked space' which reads as under. - "AO had taken the value at Rs. 142.7 per share in the assessment order. But after taking the correct share of the assessee on SBPL as directed by us, the value will come to Rs. 131.86 per share by taking the 3.6512% share of assessee in VIL." 3. This finding was based on the fact that the value of consideration of transferred shares had to be taken with reference to the value of Vodafone India Ltd. ("VIL"). Both the A.O. and the Hon'ble ITAT took the proportionate value of VIL shares. The only relief given to the Assessee was with regard to the indirect holding of the Assessee in VIL. No rules of valuation formed the basis of this relief. This relief was totally based on the Framework Agreements of 2006 and 2007 and on the working of the value which the Hon'ble Bench got prepared by the AO / Addl. Commissioner (only for the purposes of assistance) by following the specific guidelines issued by the Hon'ble Bench. The entire discussion with regard to Rule 11UA of the Income Tax Rules, 1961 ("Rule 11UA") in Para 61 to 63 was made as an obiter to dispel the valuation of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer," A bare reading of the said provision makes it apparent that there is no limitation of time either on the Assessee or Revenue in bringing to the notice of the Hon'ble ITAT any mistake apparent from record and seeking rectification of the same. The limitation of time of "six months" is on the Hon'ble ITAT. The time available to the contesting parties to bring to notice of the Hon'ble ITAT any apparent mistake is co-terminus with the period of time available with the Hon'ble ITAT to rectify the mistake. 10. Accordingly, the effect of the order of the Hon'ble High Court dated 18.09.2023 is that since the M.A. is restored to its original position and number, the Hon'ble ITAT gets further time to exercise its power under Section 254(2) of the Act. 11. It is well-settled that the Hon'ble ITAT is mandated to rectify apparent mistakes of fact or law as pointed out by the Assessee or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to be traced to any provision of the Act but inheres in every quasi judicial authority. This has been so held by the Supreme Court in Grindlays Bank Ltd. v. Central Government Industrial Tribunal AIR 1981 SC 606. Therefore, the aforesaid principle of law should have been adopted by the Tribunal. It is expected from the Tribunal to adopt a justice oriented approach and not defeat the legitimate rights on the altar of procedures and technicalities. This is particularly so when there is no specific bar in the Act to correct an order passed on rectification. 13. It is fundamental principle of law that no party should be prejudiced on account of any mistake in the order of the Tribunal. Though not necessary for the disposal of this Petition, the stand taken in the impugned order cannot be accepted that section 254(2) are meant only for rectifying the mistakes of the Tribunal and not of the parties. The Tribunal and the parties are not adversarial to each other. In fact, the Tribunal and the parties normally represented by Advocates/Chartered Accountants are comrades in arms to achieve justice. Therefore, a mistake from any source be it the parties or the Tribunal so long as it be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was to be quashed and the matter was to be remitted to the Tribunal for a fresh decision in the matter as to whether it should exercise its power under section 254(2) or not, in accordance with law without any further delay." 17. The Revenue would urge the Hon'ble ITAT to invoke its inherent power to modify the Impugned Order which raise apparent mistakes of law as pointed out in the petition. B. Mistakes apparent in the Impugned Order. 18. It is submitted that the Impugned Order of the Hon'ble ITAT makes reference to Rule 11UA of the Rules in the following manner: - a. Para 61/Page 112 of the Impugned Order- 61. This value of VIL has not been disturbed by the AO even though in the year 2007, the value of HEL was indicated at US$ 25 billion which was then more than Rs. 1 lakh crores. Since, the AO has accepted this valuation; therefore, we are not opining anything on this point. In the valuation report while determining the share value of SBPL, the valuer has adopted hybrid method Le., DCF method for VIL and net asset value method (NAV) for intermediary companies which does not finds any support under Rule 11UA of the Act. The said disclaimer of Kotak M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vohra is concerned, we are in complete agreement with him that firstly, the term "Full Value of Consideration" cannot be reckoned as a fair market value and secondly, such deeming fiction of taxing the difference on the basis of fair market value on transfer of the capital asset in the hands of the transferee / transferor have been brought by specific provisions as discussed above'. Ostensibly, for A.Y. 2014-15 neither the provisions of Section 50CA nor Section 56(2)(x) are applicable in this case, therefore, by invoking these provisions, additions cannot be made in the hands of transferors i.e., the Assessee'. 21. Having reached this finding in Para 56 and having held that Fair Market Value was not relevant for purpose of Section 48, it was an apparent mistake for the Hon'ble Bench to refer to Rule 11UA for accepting or rejecting the contentions of either parties in this regard. 22. The Hon'ble ITAT did not, in fact, apply Rule 11UA to arrive at the value of shares of SBPL at Rs. 131.86 per share. The assertions made by the Assessee to the contrary in their MA are not correct for the reason that: - c. It was nobody's case [Assessee or Revenue's] that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les for computing FMV of the shares of Scorpio and capital gains in the hands of Appellant. The Tribunal completely failed to appreciate that Rule 11UA at the relevant time had limited application to compute 'income from other sources' arising in the hands of transferee on receipt of shares by way of gift or at value lower than the FMV under Section 56(2) of the Act. The said Rule has no application for computing capital gains arising in the hands of transferor under section 45 read with section 48 of the Act." However, this question was not admitted by the Hon'ble High Court as this question did not arise from the order of the Hon'ble ITAT. 23. It may be noted that the jurisdictional High Court has admitted the following question of law in the case of PCIT-7 v. Neelu Analjit Singh, ITA 5/2021 Revenue's appeal in Neelu Analjit Singh's case]. "With consent of parties, the following questions of law are framed: - "A. Whether on the facts and circumstances of the case and also on the prevailing law, did the ITAT fall into error in characterising the receipts of consideration on sale of shares of Scorpio Beverages Pvt. Ltd. ('SBPL') as Long-Term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oo an apparent mistake of law. xiv. The mistakes apparent from record include mistakes of law. With the law being so categorical and emphatic that Rule 11UA apply only to Section 56, its application to any other provision is simply an apparent mistake of law, liable to be rectified. Hence the need for this request PRAYER In view of the points urged and submissions made, it is respectfully prayed that this Hon'ble ITAT may be pleased to hold in clear terms that : - a) Rule 11UA was not applied by the Hon'ble ITAT in reaching a final conclusion with regard to the value of consideration received or accruing to the Assessee, and b) The legally erroneous observations made in Paras 61, 62 and 63 as pointed out above with reference to Rule 11UA need to be dropped/removed as the final finding of the Hon'ble ITAT is not based on Rule 11UA but on the Assessee's proportionate share in the value of VIL as determined by the valuer and as adopted by the A.O. 5. The revenue filed another written submissions dated 23.7.2024 before us which is reproduced hereunder:- "GIST OF SUBMISSIONS ON BEHALF OF THE REVENUE 1. The MA under consideration was dismissed by the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of his wife had been accepted by the Tribunal and the Revenue. The fact of the matter is that the Coordinate Bench gave the specific directions to the A.O. of Mrs. Neelu Analjit Singh which were followed by him. After giving effect to the direction of the Hon'ble ITAT, the A.O. filed appeal against such erroneous directions and the subsequent question as extracted above is pending before the Hon'ble High Court. 6. This vital omission led to a situation before the Hon'ble High Court where one could believe that the dispute on this aspect of the matter was no longer extant. This further led the Proxy Counsel for the Revenue to agree to the proposal of the Applicant for the re-examination of the merits of the MA. The Hon'ble High Court under these circumstances set aside the order of dismissal of MA dated 19.03.2018. The MA was restored to its "original number and position", with a direction to the Hon'ble Tribunal to pass a fresh order after hearing counsels for the parties. PRAYER OF THE ASSESSEE APPLICANT IN THE MISCELLANEOUS APPLICATION 7. The Applicant makes the following prayer in his MA: - a. The direction given vide Para 64-65 to adopt Rs. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the Hon'ble ITAT under Rule 11UA of the Rules. This inference is fundamentally flawed as neither Rule 11UA could be applied for determination of "full value of consideration received or accruing" for the purposes of Section 48, nor the said Rule was, in fact, applied by the Hon'ble ITAT in the facts of the case of the Applicant. WHETHER THE HON'BLE TRIBUNAL AT ALL INVOKED RULE 11UA OF THE RULES? 10. As stated above, the assertion of the Applicant that the Hon'ble Tribunal has premised its findings on Rule 11UA and consequently determined the per share value of transferred shares at Rs. 131.86 per share, is based on illogical hypothesis, half-truth and incorrect reading of the order. 11. While making such a fallacious assertion viz. application of Rule 11UA by the Hon'ble Tribunal to determine the per share price, the Applicant has disregarded the fact that the case of Revenue was neither based on such application of Rule 11UA nor the Revenue at any stage sought to urge that the value as given in the working sheet is the correct value of consideration accruing to the Applicant. The working by the Revenue [at Para 63] was only given on the instructions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is figure, albeit he has challenged the entire valuation set out herein on the ground that the actual consideration received has to be accepted, which we have discussed in detail that is not tenable. Accordingly, we hold that the value of shares for which the sale consideration said to have been accrued to the assessee has to be worked out at Rs. 131.86 per share. Thus, the AO is directed to compute the capital gain by taking the sale consideration by adopting the per share value of SBPL at Rs. 131.86. 65. In view of the finding given above, following conclusions are drawn on the issues/questions we have framed for the purpose of our adjudication:- * Firstly, the sale value of SBPL as shown by the assessee is not in consonance with the contractual obligations entered by the parties under various Framework Agreements wherein it has been repeatedly envisaged that the value of SBPL was linked with the FMV of HEL/VIL and therefore, the share value as determined accordingly would get enhanced accordingly. * Secondly, the sale consideration received by the assessee as per the Sale Purchase agreement of 12.03.2014 cannot be reckoned as "accrued" to the assessee in terms of section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application / nonapplication of Rule 11UA was raised by the Applicant. That, while the CIT(A) affirmed the finding of the A.O. by making reference to Section 50D, it is quite clear that Rule 11UA was never adverted to. 17. Upon appeal to the Hon'ble Tribunal, the Applicant raised no ground on Rule 11UA. In fact, no grievance was expressed by either the Applicant or the Revenue on application/non-application/misapplication of Rule 11UA. In the hearing before the Hon'ble Tribunal, the counsel for Applicant raised no contention regarding the applicability of Rule 11UA. No suggestion of this kind was made by the counsel for the Revenue, as well. 18. The Hon'ble Tribunal while making certain observations with regard to valuation report of Kotak Mahindra and while rejecting methodology contained therein, took support from the provisions contained in Rule 11UA, however, it never reached a finding that full value of consideration needs to be worked out by resorting to the provisions contained in Rule 11UA. There is no sentence in the order of the Hon'ble ITAT which even remotely makes that suggestion. An obiter dicta or certain observations to support or repel certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, assets etc. are being taken or not taken into account. By no stretch of imagination can it be inferred that there was any kind of error in working out the liabilities. It is submitted that the working sheet prepared by the Revenue was in harmony with the guidelines laid down by the Hon'ble Bench. 23. Accordingly, there is nothing to suggest that Rule 11UA was taken into account to arrive at the figure of Rs. 131.86 per share. WHETHER RULE 11UA COULD AT ALL BE APPLIED? 24. It is humbly submitted that Rule 11UA is designed to determine the Fair Market Value of unquoted shares and that too for limited purposes of Section 56(2)(x). Pertinently there was no occasion to determine the Fair Market Value of any of the intermediary companies. A perusal of terms of contractual arrangements is necessary to demonstrate as to how Rule 11UA or any other rule of valuation for determining Fair Market Value of an unquoted share was totally irrelevant in the facts of this case. The capital gains are worked out by making certain deductions from full value of consideration received or accruing to assessee. 25. The case of the Applicant is thar it received certain consideration as declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and. 30. On the other hand, an identical question was raised by Revenue before the Hon'ble High Court in the case of Ms. Neelu Analjit Singh, since the Hon'ble ITAT gave directions to the A.O. to compute the value in terms of Rule 11UA. In that case, the Hon'ble Hugh Court admitted the Question of Law and that too with the consent of the Parties since the question arose directly from the order of the Hon'ble ITAT. The question so admitted has already been extracted in Para 4 of these submissions. 31. While filing the appeal before the Hon'ble High Court under Section 260A, even after getting the necessary relief, Ms. Neelu Analjit Singh has categorically taken the position that in the given facts, the provisions of Rule 11UA are not applicable. Again, in the application filed for admission of additional evidence, a definite stand is taken that though in law Rule 11UA is not applicable, yet the claim was being advanced on "without prejudice" basis. 32. This raises a peculiar situation where the Assessees (both husband and wife) and the Revenue contend that Rule 11UA cannot be applied in law in these situations yet, a prayer is being made in the MA that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olesome reading of the judgement in its entirety clearly shows that Hon'ble ITAT did not apply Rule 11UA on facts of the case before them, realising fully, the inapplicability of such a Rule in the context of Section 48. Certain stray observations and references to the said Rule in certain paras were made to raise arguments against Kotak Mahindra's valuation. These cannot form the basis to hold that Rule 11UA was applicable by Hon'ble ITAT IS THE DECISION IN THE CASE OF MS. NEELU ANALJIT SINGH A BINDING PRECEDENT? 36. It is true that the Coordinate Bench in the case of Ms. Neelu Analjit Singh has made a conscious departure from the case of the Appellant. After extracting the entire judgement in the case of the Appellant in Para 40, the Coordinate Bench records its disagreement with the last finding. The Hon'ble Bench doesn't follow the value of consideration of Rs. 131.86 per share determined in the case of the Appellant, but foes on to analyse its correctness under Rule 11UA (showing as if the value of Rs. 131.86 per share was determined by the AO- who had only assisted the Hon'ble Bench based on their guidelines). The determination of Rs. 131.86 per sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there are conflicting decisions as pointed out hereinabove on the applicability of Rule 11UA for determining value of consideration under Section 48. The issue has large ramifications and is likely to affect a large number of cases in future as well. WHETHER A MISTAKE INFERRED BY A PROCESS OF REASONING AND WHERE TWO VIEWS ARE POSSIBLE, CAN BE CONSIDERED TO BE A MISTAKE APPARENT FROM RECORD? 43. It is settled law that scope of Section 254(2) of the Act does not extent to debatable issues or where the conclusions are sought to be drawn after a long-drawn process of reasoning. 44. The admission of the Hon'ble High Court of a substantial question of law itself suggests that the applicability of Rule 11UA is a debatable issue. 45. The question of whether or not the Hon'ble Bench applied Rule 11UA in reaching the value of consideration at Rs. 131.86 is not arising from the findings of the Hon'ble Bench but the Appellant is seeking to draw this inference from a process of reasoning based on a hypothetical assumption. Such assumption cannot be regarded as mistake apparent from record within the scope of Section 254(2) of the Act. Reliance is placed on the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Although, the computation sheet was submitted while following the instructions of the Bench, the same contained factual errors which have a direct bearing on the valuation of SBPL shares and it is these errors which are sought to be corrected by way of the present application. 3. At the time of hearing, it was pointed out on behalf of the Assessee that if Annexure appended with the present Miscellaneous Application (on page 12 of the application) is perused, the same would reveal that the correct valuation of shares of SBPL would be INR 70.59 per share. This valuation was arrived at by plotting the correct figures for assets and liabilities of SBPL and all the intermediary companies through which the shares of HEL/VIL were held. It would be appropriate to re-iterate that the fair market value of VIL was not a subject matter of dispute as the same already stood accepted by the Department. At this juncture, it would also be relevant to bring to the attention of the Hon'ble Bench that while adjudicating on the issue, as regards the valuation aspect, the Bench had directed the Revenue to conduct such valuation in terms of the methodology provided under Rule 11UA of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the Revenue to furnish the valuation sheet as per the methodology prescribed under Rule 11UA of the Rules. 7. During the course of the hearing of the Miscellaneous Application, the Hon'ble Bench had enquired whether the Bench hearing the appeal on merits had made any order sheet entry while directing the Revenue to submit such valuation and whether the Department had given any covering letter to the Hon'ble Bench whilst submitting the same. As had been admitted by both sides during the hearing that none of the above process was followed, as there was no order sheet entry nor was there a covering letter filed by the Revenue. 8. Be that as it may, whether the Hon'ble Bench had directed the Revenue to prepare and submit the valuation sheet as per Rule 11UA or not, in the absence of any other contemporaneous material on record, is evident from a perusal of the order dated 01.12.2017 passed by this Hon'ble Tribunal in the main appeal. A bare perusal of the following paragraph would evidence that there arose no element of any doubt in the mind of the Revenue as regards the direction of the Hon'ble Bench to compute the valuation as per Rule 11UA. The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the said submission. Copy of the submission dated 06.11.2017 filed by the Revenue Department before this Hon'ble Tribunal is being annexed herewith as Annexure- 1. Thus, to state during the hearing of the present Miscellaneous Application that it was never the direction of the Hon'ble Bench to compute the valuation as per the methodology contained in Rule 11UA is patently false, irresponsible and incorrect. 10. Your Honours attention is also drawn to the table attached as Annexure 4 to the submission dated 06.11.2017 (Please refer page no. 53 of the present submission) and the table as reproduced in the main appeal order dated 01.12.2017 passed in ITA No. 4737/Del/2017 (Please refer page 116 to 118 of Paper Book Volume 2). What would be apparent is that the table including the figures therein are identical in both the Annexure 4 as well as the table relied upon by the Tribunal to determine the per share price and hence, this would prove bevond any doubt that the valuation of INR 131.86 as submitted by the Department was done in terms of the methodology prescribed under Rule 11UA of the Rules ONLY. 11. In view of the above, it is clear that it was the Ld. Special C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2018 is being attached herewith as Annexure-2 15. Further Para 13 of the order dated 19.03.2017, as reproduced in para 14 above, (please refer page no. 67 to 69 of the present written submission) also alludes to the fact that the Rule 11UA valuation was determined at INR 136.76, which value was corrected to INR 131.86 and it is this precise computation/valuation which was submitted by the Ld. Special Counsel as Annexure 4 to his submission dated 06.11.2017 (please refer page no. 53 of the present submission). 16. Thus, it would be appreciated by the Hon'ble Bench that the submissions being made on behalf of the Revenue while ascribing to the intention of the Hon'ble Bench at the time of the hearing of the appeal on merits, is wholly without merit, false to the core and completely irresponsible and can be seen as taking undue advantage by relying on the fact that the Special Counsel in the appeal and this Miscellaneous Application were common and his recollection would serve as best to determine the intention of the Hon'ble Bench. Having perused the observations of the Hon'ble Bench in the order dated 19.03.2018, the entire case of the Revenue is false and is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2020 of the Assessing Officer in Mrs. Singh's case (Please refer page 300 to 324 of Paper Book Volume 2) where after independently applying his mind and by plotting the correct numbers from the audited balance sheets, the correct valuation has been determined at INR 70.59 per share (which was the case of the Assessee from dav 1 as is evidenced in the present Miscellaneous Application, please refer page 12). It is this error which is sought to be corrected in the present Miscellaneous Application. 21. As regards the contention of the Revenue that whether the order of the coordinate bench of the Tribunal in Mrs. Singh's case can be a binding precedent, not only is the argument immature, but also does not merit any consideration. While taking this objection, the Revenue has completely missed the point that: a) their averments have been proven to be completely false as is evidenced from the record; b) the Tribunal in the main appeal had specifically directed the determination of valuation of shares adopting the methodology as prescribed under Rule 11UA (being the only methodology prescribed under the statute for valuation of unquoted shares) and c) it was never the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o mislead. Whether the methodology contained in Rule 11UA could have been applied or not, is not a subject matter of the present Miscellaneous Application and beyond the powers vested in the Tribunal under Section 254(2) of the Act. The Miscellaneous Application is confined only to the rectification of the errors in the computation sheet and no more. 26. At this juncture, what would also be relevant to highlight is that the present miscellaneous application was filed back in December, 2017 i.e. prior to the order passed by this Hon'ble Tribunal in Mrs. Neelu Analjit Singh's case and the order dated 12.02.2020 passed by the Assessing Officer giving effect to such order of the Tribunal. Since the Hon'ble High Court whilst remanding the matter back to this Hon'ble Tribunal has restored the Miscellaneous Application to its original number and position, filing a fresh application or amending the averments made therein, was not possible and if such an effort was made by the Applicant, then the Revenue would object that the same tantamounts to a fresh application, being barred by limitation. Be that as it may, nothing impeaches on the powers of the Tribunal under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal, the workings of fair market value of shares as per Rule 11UA of the Rules, wherein, FMV was arrived at Rs. 70.59 by the assessee. Even in the prayer of the assessee in his miscellaneous application which is reproduced supra, we find that the assessee is only seeking to include the fact that the workings were sought to be asked by the Tribunal in accordance with Rule 11UA of the Rules for determination of fair market value while computing capital gains on sale of SBPL shares to understand the intention of this Tribunal as to whether the workings of fair market value of share were called for as per Rule 11UA of the Rules or not. For this purpose, the observations made by this Tribunal in the original MA order in MA No. 742/Del/2017 dated 19.03.2018 becomes relevant which are as under:- "12. We have carefully considered the rival submissions and also the points and issues which have been brought to our notice in the impugned miscellaneous application. The Tribunal in the impugned order after detailed discussion has held that:- * Firstly, the accrued price consideration of the transfer of Scorpio shares has to be determined on the basis of Fair Market Value of VIL w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee is trying to canvass before us a new proposition that the working submitted by the Department suffers from certain infirmities to the extent that; firstly, incorrect or rather incomplete figures as per the audited balance sheet(s) of intermediate companies as on 31.03.2013 have been adopted; secondly, the outstanding amount of liability towards preference share capital has not been reduced; and lastly, arrears of dividend in respect of cumulative preference shares have not been reduced, in terms of clausė (vi) of Rule 11UA of the Rules. In support, the assessee has filed audited annual reports of various intermediaries and chain of companies for the financial year 2012-13 and based on that the figures of total assets and liabilities including preference capital dividend and DDT liability, etc. has been given in a separate sheet. From the aforesaid figures, various working of the valuation of the shares has been given in separate annexure, whereby now it has been tried to be demonstrated before us that, if the entire figures of liabilities is taken into consideration, then NAV/FMV of SBPL shares would range between Rs. 106.25 to Rs. 70.59 per share. This working has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y merit in the contention raised in the miscellaneous application and hence same is rejected." 8. From the above observations made by this Tribunal in the miscellaneous application proceedings dated 19.03.2018, it is crystal clear that this Tribunal had sought the workings for FMV of shares from the Department in accordance with Rule 11UA of the Rules only. We are conscious of the fact that the miscellaneous application proceedings in MA No. 742/Del/2017 dated 19.03.2018 had been set aside by the Hon'ble High Court back to this Tribunal and hence the finding recorded in the said MA order may not be construed as an order in the eyes of law. But we are placing reliance on the said MA order dated 19.03.2018 only for the limited purpose of understanding the intention of the Tribunal at the time of original appellate proceedings as to whether the workings of FMV of shares sought to be given by the Department were in accordance with Rule 11UA of the Rules or not. This aspect of the issue is also discussed at later part of this order hereinbelow. We have perused the original appellate order dated 01.12.2017 and we find that the Tribunal had made observations for rejecting the valuation r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act dated 12.02.2020 in the case of Mrs. Neelu Analjit Singh, wherein, for the very same shares, the AO by adopting Rule 11UA of the Rules had determined fair market value of SBPL share at Rs. 70.59 per share. 10. The assessee in its miscellaneous application is only trying to substitute the value of FMV which was arrived at Rs. 131.86 per share by the Tribunal, which contain certain basic fallacies ad admitted by the Tribunal in the case of Mrs. Neelu Analjit Singh vide order dated 19.12.2019 if Rule 11UA of the Rules is adopted. Hence, it purely becomes arithmetical exercise. Accordingly, we have no hesitation to conclude that miscellaneous application of the assessee is only to rectify the arithmetical mistake that had crept in the original Tribunal order dated 01.12.2017. In other words, the Tribunal had adopted Rs. 131.86 per share as the fair market value in accordance with Rule 11UA of the Rules, whereas the correct value as per Rule 11UA of the Rules would be Rs. 70.59 per share. The adoption of Rs. 70.59 per share to be a ultimate value as per Rule 11UA of the Rules is not disputed by both the parties before us i.e. to say, there is no dispute on the manner in which FM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t do constitute mistake apparent from record warranting rectification u/s 254(2) of the Act. 11. Against the original Tribunal order passed on 01.12.2017 in the case of the assessee, the assessee had preferred an appeal before the Hon'ble High Court and the same is admitted. Against the order passed by this Tribunal in the case of Neelu Analjit Singh dated 19.12.2019, the revenue as well as assessee had preferred respective appeals before Hon'ble High Court and the same are already admitted. It was always the case of all the parties before us i.e. Mr. Analjit Singh, Mrs. Neelu Analjit Singh and the Income Tax Department, that Rule 11UA of the Rules cannot be applied for the purpose of section 48 of the Act while computing the capital gains. But Tribunal directed the Department to adopt FMV as per Rule 11UA of the Rules after dismissing the preliminary plea of the assessee that actual consideration received should be considered for computing the capital gains. This preliminary plea is already subject matter of challenge before the Hon'ble High Court. As far as the Tribunal is concerned, since it had adopted two different values as fair market value, the same is sought to be rectifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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