Calcutta High Court
Deputy Commissioner Of Income Tax vs General Electric Co. Plc. on 30 March, 2001
Equivalent citations: (2001)71TTJ(CAL)973
ORDER
Pramod Kumar, A.M. :
These three appeals, filed by the revenue, are directed against three separate but identical orders dated 24-6-1994, passed by learned Commissioner (Appeals), Calcutta VI in the matter of assessment orders under section 143(3) of the Income Tax Act (hereinafter referred to as the Act) for the assessment year 1991-92, in the cases of General Electric Company Plc. UK, English Electric Company Ltd., UK and Associated Electrical Industries Ltd., UK. The issue in all these appeals relates to one common transaction, material facts in respect of these appeals are identical, common submissions were made at the assessment and appellate stages, and, therefore, for the sake of convenience, all these appeals are being disposed of by way of this consolidated order. Respondent-assessees have also filed cross-objections in all the cases and these cross-objections are also being taken up together with the appeals.
2. The revenue has raised as many as six grounds of appeal but the only grievance of the revenue is against Commissioner (Appeals)s deleting the addition, made by the assessing officer, on account of capital gains on transfer of certain shares held by the assessee-companies, details of which are set out in the subsequent paragraph of this order. We, therefore, deem it expedient to take up all these grounds together for disposal.
3. Briefly stated, undisputed material facts of the case are that the General Electric Company plc UK (hereinafter referred to as GEC plc) is a holding company of the Associated Electric Industries Ltd., UK (hereinafter referred to as AM Ltd.) and the English Electric Company Limited, UK (hereinafter referred to as EEC Ltd.). The shareholdings of three companies inter alia included holdings of equity shares in certain Indian companies as under :
Sl.
No. Name of foreign company No of equity shares Name of Indian company % of capital held by the foreign company
1.
GEC plc, UK 75,00,000 General Electric Company of India Ltd. (GEC) India 52.08%
2. GEC plc, UK 1,53,000 GEC Power Engg Services of India Ltd. (GEP India 51.00%
3. AM Ltd., UK 21,00,000 General Electric Company of India Ltd. (GEC India) 14.58%
4. EEC Ltd., UK 66,00,000 English Electric Company of India Ltd. (EEC India) 66.66%
4. On 29-12-1990, all the above shareholdings were transferred by the companies holding these shares (namely GEC, AM and EEC-collectively referred to as GE plc Group) to another company said to have been formed in the Netherlands and known as GEC Alsthom N.V. It appears that when the assessee-companies sought the permission of Reserve bank of India to make transfer of these shares to the GEC Alsthom NV, the matter was also taken up with the assessing officer for grant of no-objection certificate (NOC) which was issued, pursuant to administrative instructions issued by the Chief Commissioner on 21-12-1990, upon GE Groups furnishing bank guarantee to the tune of Rs. 10 crores. It may be mentioned that GE group did not disclose precise consideration for which the shares were transferred to GEC Alsthom NV but furnished the details of valuation of these shares as on 1-4-1989. On this basis, tentative capital gains tax liability was also computed by GE plc Group itself at Rs. 10.76 crores. This sum was of Rs. 10.76 crores was paid by the GE plc Group as advance tax, in the month of March, 1991 and, consequently, the bank guarantee was released by the revenue authorities. GE plc Group also claims that the computation of tax liability is said to have been made by their counsel but the same was got certified from the then Deputy Commissioner, Spl. Range 7, Calcutta.
5. During the course of assessment proceedings under section 143(3) of the Act learned assessing officer noticed that even though the assessee-companies had paid the advance tax of Rs. 10.76 crores, their income-tax returns did not reflect any capital gains but, on the contrary, claimed refund of taxes already paid. On assessing officers questioning, the assessee clarified that there is no capital gains tax liability, under section 48 of the Act, on transfer of shares of Indian companies held by them and, in support of this stand, a reference was made to section 45(3) of the Act. It was submitted that the GEC plc had entered into an agreement, said to be dated 22-3-1989, with the Compagnie Generale d Electricite (hereinafter referred to as CGE), a France based multinational corporation, to merge the businesses that were formerly being managed by GEC Power Systems Ltd., with those of CGE-managed through its subsidiary Alsthom (We find that although reference to an agreement was made but, despite specific requisition by the assessing officer, the assessee avoided submitting a copy of the agreement on the ground that the same is voluminous). It was further stated that this agreement was effective 1-4-1989, and, pursuant to this agreement, a new company by the name of GEC Alsthom NV was formed on 29-6-1989 in which GEC plc Group, as well as CGE Group, were to hold equal shares at all times. In the background of these submissions, the assessee placed reliance on judgments of Honble Karnataka High Court in the case of CIT v. Master Raghuvir Trust , of Honble Supreme Court in the case of Sunil Siddarthbhai v. CIT , and of Honble Madras High Court in the case of Secretary, Board of revenue v. Madura Mills Co. Ltd. AIR 1937 Mad 259 (FB) in support of the submission that transfer of shares by GEC Group to GEC Alsthom NV does not result in a transaction liable to capital gains tax. The assessee-companies also took the plea that section 45(3) indirectly exempts transfers by way of capital contribution to a company or a co-operative society. It was further pleaded that in view of art. 13 of the Double Taxation Avoidance Agreement (DTAA) between India and Netherlands, capital gains arising on account of said transfer were exempt from taxation in India for the reason that the appellant group was operating in the Netherlands through a number of subsidiaries and associated companies and these were liable to tax in the Netherlands and was accordingly resident in the Netherlands according to the convention. It was also pleaded that once the assessing officer has issued an NOC and calculated the capital gains tax at Rs, 10.76 crores, he is not entitled to increase the capital gains liability since the NOC was issued under section 162(2) of the Income Tax Act. The assessee further submitted that transfer of India shares to GEC Alsthom NV did not come in purview of section 47(v) and (vi), because GEC. Alsthom NV was not an Indian company. The learned assessing officer was not impressed with any of these arguments and he was of the view that the transfer of shares by GE Group to GEC Alsthom NV comes within the ambit of section 45 read with section 2(47) of the Income Tax Act and that since the assessee-companies have not furnished any details about the consideration for transfer of these shares, the sale consideration is to be taken at quoted value of these shares as on the date of transfer of these shares, or nearest date thereto for which stock market quotations were available. Regarding purported agreement, between the GEC and CGE, and assessing officer observed that the assessee has avoided producing a copy of this agreement on the ground that the same is voluminous. The assessing officer further observed that it is not clear as to what are the terms and conditions of the said agreement and that the assessee did not produce the details of shares allotted to the GE Group, by the GEC Alsthom NV, in spite of several requests made. The assessing officer also observed that since actual transfer of shares admittedly took place on 29-12-1990, the date of 1-4-1989 (i.e. the date on which merger is said to have taken place vide agreement between GEC plc and CGE France) has no relevance for the purpose of computation of capital gains. Coming to the case laws cited by the assessee, the assessing officer observed that facts of Master Raghuvir Trusts case (supra) were not in pan materia with the facts of these cases. It was also stated that the ratio of Sunil Siddarthbhais case (supra) in no longer good law, in view of the specific amendments in the statute by introducing section 45(3) of the Act. Similarly, judgments in the case of Madura Mills Co. Ltd. (supra) and Gopal Jain & Co.s (supra) were found to be not relevant since these cases pertained to certain expressions in the Stamps Act and Companies Act, respectively. The learned assessing officer also observed that section 45(3) is only one segment of the charging section and admittedly not applicable in this case. By implication, he held that merely because a transaction is not covered by section 45(3) of the Act, it cannot be construed as outside the ambit of section taxable capital gains under section 45 as a whole. In substance, the assessing officer held that transfer of shares by assessee-companies to G.E. Alsthom NV has given rise to a transaction resulting in capital gains under the scheme of the Act. As regards quantification of capital gains, the assessing officer admittedly did not have any information about the precise consideration for-which these shares were transferred to GE Alsthom NV. The assessing officer estimated consideration on the basis of Calcutta Stock Exchange quotations dated 3-1-1991 (Calcutta Stock Exchange being closed from 29-12-1990, to 2-1-1991, next working day for which quotations were available was only 3-1-1991) in respect of shares of General Electric Corportion of India Limited and English Electric Company of India Limited. It appears that shares of GE Power Engineering Services of India Limited were not listed in the stock exchange and, therefore, the assessing officer had, to be content by adopting value of these shares, as per valuation figures, as on 1-4-1989, as supplied by the assessee. These were the circumstances leading to assessing officers making additions of Rs. 32,79,25,669 in the hands of GEC Group companies by computing taxable capital gains in the hands of GEC plc at Rs, 10,17,69,669, in the hands of EEC at Rs. 19,88,21,000 and in the hands of AEI at Rs. 2,73,35,000.
6. Aggrieved, the assessee-companies carried the matter in appeal before the Commissioner (Appeals). Basically, submissions before the assessing officer were reiterated in appeal also and it was further submitted that the merger date was 1-4-1989, and even if actual transfer was delayed for some reasons, it would not affect the transfer consideration which was to be determined as on 1-4-1989 only. A reference was then made to the doctrine of estoppel, said to have been upheld by the Supreme Court in a catena of case, in support of assessees submission that in any event capital gains tax liability of GEC plc Group companies could not exceed Rs. 10.76 crores. The assessee had also taken some additional grounds of appeal, mentioned elsewhere in this order, which were not disposed of by the first appellate authority. On the strength of all these submissions, the assessee prayed that the additions made by the assessing officer be deleted or be at least restricted to the amount of Rs. 10.76 crores already paid by the company. Learned Commissioner (Appeals), after extensively reproducing from written submissions filed by the learned counsel, concluded that he is at one with the submissions of the learned authorised representative by which he (the learned authorised representative) has expressed his views to the effect that (i) the law is settled that there is no tax liability where shares have been subscribed in moneys worth, as in the present case,-(ii) object behind the whole exercise of transfer of shares was merger of an entire division of the multinational corporation of two groups and, therefore, there is no price received in such a case in commercial sense, as held by Supreme Court in CIT v. Mugnee Ram Bangur Co. , Syndicate bank Ltd. v. CIT and Sunil Siddarth Bhai v. CIT (supra); (iii) in view of art. 13 of the DTAA between India and Netherlands, capital gains arising on account of said transfer were exempt from taxation in India as appellant group was operating in the Netherlands through a number of subsidiaries and associated companies and these companies were liable to tax in the Netherlands and the GEC plc UK was accordingly resident in the Netherlands according to the convention; and (iv) since, as per CBDT , in case of conflict between Income Tax Act and the provisions of DTAA, the effect is to be given to the DTAA, the assessing officer should have given relief to the assessee in terms of art. 13 of the Indo-Dutch DTAA. The learned Commissioner (Appeals) also observed that contribution was to GEC Alsthom NV, of which only the appellant group and French group were promoters. The appellant group, according to the learned Commissioner (Appeals), was a trustee to the new company for having shares in Indian companies transferred to it and it as in discharge of this irrevocatble trust that the transfer of shares was effected in December, 1990. On this basis, the learned Commissioner (Appeals) concluded, the capital gains are also exempt under sub-clause (iii) of section 47 and sub-clause (3) of section 45. In effect, additions aggregating to Rs. 32,79,25,669, as made by the assessing officer in the cases of these three companies, were deleted. The learned Commissioner (Appeals) also observed that three additional grounds of appeal, taken by the assessee, are not required to be adjudicated upon as the assessee has succeeded on the main ground, although they stand on a strong footing. Aggrieved by these orders of the learned Commissioner (Appeals), the revenue is in appeal before us.
7. Shri A.K. Das, Departmental Representative, placed his strong reliance on the assessment order and took us through the order to demonstrate the merits of assessing officers stand. It was submitted that since the capital asset was situated in India, the capital gains arising from transfer of the said asset is liable to be taxed in India and that it is not in dispute that the shareholdings of the assessee-companies were transferred within meaning of section 2(47) of the Income Tax Act, but the case of the assessee is that such a transfer does not give rise to taxable capital gains. However, the assessee has not been able to substantiate the claim that these capital gains are exempt from tax under any specific statutory provisions though the assessee has referred to certain judicial precedents which are entirely distinguishable on facts. It was pointed out that although the assessee has made some references to an agreement said to have been entered into between the GE Group and CGE Group, a copy of this agreement was never produced before the lower authorities and, therefore, assessees bland statements about purported contents of the agreement do not carry any weight. It was further submitted that despite several requisitions from the assessing officer, the assessee has not given any details about consideration for transfer of the shares in questions, or about the details of shares said to have been allotted by the GEC Alsthom NV. Under these circumstances, the assessing officer had no option but to take the stock exchange quoted rates as on the date of transfer. It was further stated that even this value is bound to be less than market value of shares because when transfer of controlling holdings takes place, the share prices invariably shoot up. The relevant date for the stock exchange quotation, according to the learned Departmental Representative, is the date on which the transfer takes place and, therefore, no fault can be found with the assessing officers taking the quoted value at the time of actual transfer of shares. The learned authorised representative further submitted that the provisions of Indo-Netherlands DTAA are not applicable in the present case and, therefore, the provisions of the Income Tax Act will prevail, Coming to the no-objection certificate issued by the assessing officer, it was pointed out that such a certificate cannot substitute assessment order and issuance of certificate is an administrative exercise to safeguard the interests of revenue. In any case, the assessees statement that the certificate was issued under section 162(2) was mischievous and entirely incorrect on facts. Therefore, issuance of this non-statutory certificate cannot fetter the rights of the assessing officer. Referring to learned Commissioner (Appeals)s holding that the transfer of shares is exempt under section 45(3), our attention was invited to the wordings of section 45(3) of the Income Tax Act which and it was submitted that this provision is expressly not applicable in cases involving transfer of a capital asset to companies and co-operative societies whereas, in the case before us, both the parties are companies. It was submitted that merely because certain transfers are not covered by section 45(3), such transfers cannot be held to be outside the ambit of section 45(1) which is applicable to this case. The learned Departmental Representative then made elaborate submissions on the cases relied upon by the assessee before the lower authorities to support his submission that ratio of these cases have no application to the facts before us and also that these cases are clearly distinguishable on facts. It was further submitted that judgments in the contexts of statutes like Stamps Act and Companies Act cannot have any bearing on connotations of certain expressions under the Income Tax Act. Shri Das concluded by submitting that, under these circumstances, interference of the learned Commissioner (Appeals) was totally uncalled for, inappropriate to facts of the case and contrary to applicable law. On the strength of these submissions, we were urged to set aside the order of the learned Commissioner (Appeals) and restore the order passed by the distinguished assessing officer.
8. Dr. Debi Pal, learned senior advocate for the assessee, submitted that GEC Alsthom NV was formed as GEC plc and CGE, in December, 1988, agreed to combine their respective worldwide activities in energy and transport businesses and, as a result of this decision, a formal agreement was signed on 22-3-1989, and the new company was formed in the Netherlands on 29-6-1989. This new company, according to the learned counsel, was owned on 50 : 50 basis by the two companies, and the shares were allotted to two groups in equal proportion immediately on incorporation for all the assets transferred, and accepted to be transferred, as per composite arrangement. According to the learned counsel, the key question that arises for determination is whether the allotment of shares of the new company, i.e., GEC Alsthom NV, to GE Group constitutes transfer of shares and whether by such allotment of shares it can be said that any consideration has passed from GEC Alsthom NV to GE Group. It was then suggested that by allotment, there is no appropriation of the capital of the company and the question of any consideration flowing from the GEC Alsthom NV does not arise as this aspect of the matter needs to be considered in the background of merger of two companies. Dr. Pal strongly relied upon reported judgments in the cases of Secretary, Board of revenue v. Madura Mills Co. Ltd. (supra) and Shri Gopal Jalan & Co. v. Calcutta Stock Exchange 1964 AIR 250 SC : 33 Comp Cases 862 in support of the propositions that (i) issue of shares by allotment cannot amount to transfer of property,-and that (ii) allotment of shares implies the creation of shares by appropriation, out of unappropriated share capital, to a particular person. It was thus submitted that since GEC Alsthom NV allotted new shares to GEC plc, such an issuance of shares cannot be treated as transfer and, therefore, there is no question of any capital gain. Our attention was invited to the assessees claim that the transfer of shares will not result in the capital gain as the same is in respect of a world-wide merger as a result of which the shares of Indian companies were transferred to the GEC Alsthom NV in consideration of allotment of shares to the new company. Therefore, the shares of the subsidiary companies which were held by the two group of companies covering 400 companies all over the world were held by the GEC plc and GEC as trustees. The learned counsel submitted that, under such a situation i.e. shares being held as trustees, the transfer will be protected under section 47(iii) of the Act. The learned counsel strongly relied on Honble Karnataka High Courts judgment in the case of CIT v. Raghuvir Trust (supra) in support of his submission that the allotment of shares in the company created on amalgamation, in lieu of shares in the amalgamating company, cannot give rise to taxable capital gains. It was further submitted that in arriving at the aforesaid conclusion, Honble Karnataka High Court had relied upon Honble Bombay High Courts judgment CIT v. Rasiklal Manek Lal (HUF) has been affirmed by the Honble Supreme Court in judgment CIT v. Rasiklal Maneklal (HUF) . Our attention was also invited to the fact that the SLP against Honble Karnataka High Courts aforesaid judgment was dismissed, as report in 187 ITR (St) 45. The learned counsel also invited our attention to the judgment of Honble jurisdictional High Court in the case of CIT v. B.S. Atwal (1982) 32 CTR (Cal) 3 : (1982) 140 ITR 928 (Cal) wherein it is observed that capital gain being an artificial income created by the provisions of the Income Tax Act, these provisions should be strictly construed and in case of doubt, the assessee would be entitled to the benefit of doubt. Turning to the provisions of Indo-Netherlands, DTAA, it was submitted that in view of provisions of Art. 13(5) of DTAA, dated 13-7-1988, which came into effect on 21-1-1989, capital gain on alienation of any property will only be taxable in the country in which alienator is resident. Gains from alienation on shares issued by a company resident in the other state will remain taxable only in the state in which alienator is resident, if such gains are realized in the course of corporate reorganization and the transferor or the transferee owns at least 10 per cent of the capital of the other. The learned counsel canvassed the view that the aforesaid provision is also applicable to the persons who are not physically residents of Netherlands or India, and pointed out that transfer of shares of Indian company was completed in Netherlands when GEC Alsthom NV executed the instrument of transfer and received the share certificates. It is further submitted that the DTAA with the Netherlands defines a resident of Netherlands as including a legal person which is liable to tax under the laws of Netherlands by reason of its place of management or other criterion of similar nature. Our attention is then invited to the fact that GEC plc has been carrying on business in the Netherlands through a number of subsidiaries and is being taxed in the Netherlands on the dividend income. On the strength of these submissions, it was submitted that for the purpose of this DTAA, GEC plc is to be treated as a resident of Netherlands and will be entitled to benefit of art. 13(5) of the Indo-Netherlands DTAA. In support of the proposition that DTAAs must prevail over the Income Tax Act in case there is any inconsistency or repugnance between the DTAA and the Income Tax Act, the learned counsel then referred to judgments of Honble Calcutta High Court in CIT v. Davy Ashmore India Ltd. judgment of Honble Andhra Pradesh High Court in CIT v. Vishakhapatnam Port Trust and judgment of Honble Madras High Court in CIT v. VR. S.R.M. Firm & Ors. . On the strength of these submissions, as also relying upon the submissions made by the assessee before the authorities below, learned counsel supported the conclusions arrived at by the learned Commissioner (Appeals) and submitted that the additions on account of capital gains made by the assessing officer, being devoid of any merits, have been rightly deleted by the learned Commissioner (Appeals). We were thus urged to reject the revenue s appeal.
9. We may now refer to the grounds taken by the assessee respondent in his cross-objection. The assessees grievance is that the Commissioner (Appeals) erred in not adjudicating on his following additional grounds which were agitated before the Commissioner (Appeals), as the assessee had formally raised these additional grounds at the time of hearing of first appeal :
"1. The assessment order has been posted at Esplanade Post Office, Calcutta only on 4-4-1994, which is beyond time.
2. Notice under section 143(2) having been issued and complied with in April, May, September and October, 1992, the assessment made on 31-12-1992, although called an intimation under section 143(1)(a) is a regular assessment. There can be no further assessment in 1994.
3. The assessment order has determined the previous year as calendar year 1991 as against the previous year ended 31-3-1991, declared by the assessee. The assessment for 1991-92 is, therefore, illegal."
10. We may also place on record the fact that no submissions were made in support of these cross-objections but in response to our question, the learned counsel stated that he has nothing to add and prayed that the grounds may be adjudicated on the merits. The learned Departmental Representative at the outset prayed that since no arguments have been advanced in support of the cross-objections, they do not call for any adjudication and may be dismissed summarily. On merits, learned Departmental Representative placed his reliance on the order and action of the assessing officer, and thus, left the matter to us.
11. We have carefully considered the rival contentions, perused orders of the authorities below, deliberated upon the judicial precedents cited at the bar, analyzed the provisions in relevant DTAAs, and taken into account the note filed by the learned counsel, at the time of concluding his submissions, before us.
12. We find that under section 9(1)(i) of the Income Tax Act, 1961, any income accruing or arising, whether directly or indirectly, inter alia, through the transfer of a capital asset situated in India, shall be deemed to accrue or arise in India. In our view, therefore, it is clear that when a capital asset is situated in India, regardless of the residential status of the transferor or the transferee, capital gains arising on its transfer would be deemed to be income arising or accruing in India and would, therefore, be taxable in India. With regard to this fundamental proposition regarding taxability in India per se, the assessees contention is that in view of the provisions of Art. 13(5) of the Indo-Netherlands DTAA, the capital gains, even if any, arising on transfer of shares in question, are solely taxable in the Netherlands and that, for the purpose of aforesaid treaty provision, the assessee-companies are tax residents of the Netherlands.
13. We will first take up the provisions of the Indo-UK DTAA. It is not in dispute that the assessee-companies are incorporated in United Kingdom and that the country in which their effective management is situated is also United Kingdom. We may, therefore, firstly examine the related provisions of Indo-UK DTAA dated 23-11-1981, as in force at the relevant point of time, which is reproduced below :
"Art. 4-Fiscal domicile
1. For the purpose of this Convention, the term resident of a Contracting State means any person who, under the laws of that State, is liable to taxation therein by reasons of his domicile, residence, place of management or any other criterion of a similar nature.
2. (Not relevant in the present context)
3. Where by reason of the provisions of para 1 of this Article, a person other than an individual is a resident of both the Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated."
The above Indo-UK DTAA provisions, in our opinion, make it amply clear that fiscal domicile of the assessee-companies, by the virtue of assessee-companies having been incorporated in United Kingdom and by the virtue their effective management also being situated there, was in United Kingdom. Accordingly, for the purposes of Indo-UK DTAA, the assessee-companies were required to be treated as residents of United Kingdom.
14. We have further noticed that art. 14 of the aforesaid DTAA provides that, 11 except as provided in art. 8 (Air Transport) and art. 9 (Shipping) of this Convention, each contracting state may tax capital gain in accordance with the provisions of the domestic law. In other words, the taxation of capital gains was not protected by the DTAA provisions and, even under the express provisions of this DTAA, capital gains are to be taxed as per domestic law i.e. Indian Income Tax Act, 1961 in the present case. Therefore, Indo-UK DTAA only supports the case of the assessing officer to the extent that as far as taxability of impugned capital gains in India is concerned, taxability per se in India is not in doubt at all.
15. We may now turn to the provisions of DTAA dated 30-7-1988, entered into between India and the Netherlands. This Indo-Dutch DTAA, which has been heavily relied upon by the assessee, contains provisions about fiscal domicile which are exactly the same, in all material respects, as in the abovementioned Indo-UK DTAA. We may, however, reproduce the following extracts from Commissioner (Appeals)s order to highlight case of the assessee regarding coverage by the Indo-Netherlands DTAA :
"....... GEC plc has been carrying on business in the Netherlands through a number of subsidiaries and is being taxed in the Netherlands on dividend income. Accordingly, for the purpose of Convention, GEC plc is to be treated as a resident of the Netherlands and will be entitled to the benefit of art. 13 of the Convention with Netherlands."
The learned counsel has also highlighted this claim in the written note filed by him. It would, therefore, appear that the claim of the assessee-companies is that merely because these companies are paying taxes on some dormant incomes from Netherlands these companies are entitled to, be treated as 11 residents of Netherlands and accordingly, their capital gains cannot be subject to Indian tax laws in view of art. 13 of the Indo-Dutch DTAA.
16. Art. 4(1) of the Indo-Dutch DTAA clearly provides that "for the purpose of this Convention, the term resident of one of the states means any person who, under the laws of that state, is liable to taxation therein by reasons of his domicile, residence, place of management or any other criterion of a similar nature". The requirements for fiscal domicile cannot be satisfied by mere liability to tax in that country, but as clearly provided by art. 4(1) of the Indo-Dutch DTAA, such a liability to taxation has to be on account of domicile, residence, place of management or any other criterion of a similar nature. The question, then, is as to what are the connotations of these terms and whether source taxability of dividend income per se can generate treaty entitlements of the country in which such taxes on dividends have been paid. The wordings of art. 4(1) leave no doubt about the fact that merely because a person is taxpayer in one of the countries which are party to the Indo-Dutch DTAA, i.e. in India or in Netherlands, such a person cannot be treated as resident of one of the states for the purposes of the DTAA. Coming to specific tests laid down in the DTAA, as far as domicile test is concerned, in common law, domicile has a somewhat restricted meaning, denoting a fixed and lasting attachment to a country or state with its own separate legal system-one only in each case which initially is acquired by birth (domicile by origin), and capable of being altered later by a personal decision (domicile by choice). In the case before us, the assessee-companies were incorporated in United Kingdom and there is nothing on record to even remotely suggest that the assessee-company was domiciled in the Netherlands. Since there can only be one country of domicile and since the assessee-companies are already domiciled in United Kingdom by the virtue of its incorporation in that country, the assessee-companies cannot be said to be domiciled in the Netherlands. Coming to the residence test, it is admittedly not the assessees case that the assessee-companies are residents of Netherlands. Similarly, it is also not in dispute that place of effective management is United Kingdom and the case of the assessee-companies cannot even be covered by this criterion. That leaves us only with any other criterion of similar nature. It may be useful to first refer to the principle of ejusdem generis in interpretation of statutes. Simply stated, the principle of ejusdem generis is that where there are general words following particular and specific words, the general words will have restricted meaning which will be confined to the things of the same kind as specified. In other words, the general expression is to be read as comprehending only things of the same kind as that designated by preceding particular expressions, unless there is something to show that wider sense was intended. In the case before us, the principle of ejusdem generis have been incorporated in the text of the treaty provision itself, any other criterion referred to in the treaty has to be restricted to the genus of three earlier expressions i.e. domicile, residence and place of effective management. The key question, therefore, is whether earning of dividends earned from the Netherlands can be said to belong to the same genus to which domicile, residence and place of effective management belong ? No. doubt, as observed by Dr. Klaus Vogel in his Commentary to the Double Taxation Conventions, the term other criterion of similar nature makes clear that the enumerated criterion of domestic law which attracts tax liability are no more than examples for the rule, but Dr. Vogel has further stated that, "The term should be understood to mean any locality-related attachment that attracts residence-type taxation." (Klaus Vogel on Double Taxation Conventions; page 233 (1997) English Edition published by Kluwer Law International, The Netherlands)). An illustration given in this commentary refers to "statutory seat which, under German law, serves as an alternative point of attachment in the absence of a place of management within the domestic territory. "We are in considered agreement with Dr. Vogels observation that I any other criterion of similar nature should be understood to mean any locality related attachment that attracts residence type taxation. In the light of these discussions, it is clear that only locality related attachment (locality related being the genus to which expressions domicile residence and place of effective management belong) can be covered by the scope of expressions any other criterion of similar nature in terms of art. 4(1) of the Indo-Netherlands DTAA. We are also of the considered view that cases before us clearly fail on this test. By no stretch of logic, source taxability of dividends received from a foreign country can be said to be a locality related attachment with such foreign country. We must, therefore, conclude that cases of the assessee-companies are not covered by the provisions of art. 4(1) of the Indo-Netherlands DTAA, and, accordingly, their payment of taxes on dividend income, even if any, cannot earn treaty entitlements under the treaty. We have already held that in terms of the Indo-UK DTAA, the capital gains income of the assessee was not treaty protected. We, therefore, reject the contentions of the learned counsel and hold that the assessee-companies were liable to capital gains tax, as provided for under the Indian Income Tax Act, and that they were not eligible for any concessions under DTAAs entered into by India with the Netherlands.
17. We now take up other contentions in support of the proposition that since transfer of shares has taken place under a scheme of merger of companies, and since fresh equity in GEC Alsthom NV is issued to the assessee-companies, in lieu of shares transferred, this transaction does not give rise to any taxable capital gains.
18. Before proceeding further to examine assessee-companies taxability in accordance with the provisions of the Act, we may place it on record that that the assessee did not, at any stage, produce any documents in support of facts embedded in the proposition. It is a matter of record that before the assessing officer, assessee-companies avoided producing a copy of the agreement on the ground that the same is voluminous, and that the assessee-companies had nothing to say when assessing officer asked questions about the exact number of shares said to have been allotted to the assessee-companies, by the GE Alsthom NV, in lieu of the shares transferred to this new company. We have also noticed that this case was fixed for hearing before the Tribunal on more than half a dozen occasions, and costs were also imposed on the assessee for repeatedly seeking adjournments, and yet the assessee did not deem it necessary to file any paper, barring extracts from Indo-Dutch DTAA, in support of facts claimed by them. It is also not in dispute that assessee-companies did not even produce copy of agreement or details of shares issued by GE Alsthom NV, before the Commissioner (Appeals) as well. We see no rationale in Commissioner (Appeals)s accepting the bland statements made by the assessee and without even bothering to seek elementary information in support of facts claimed by the assessee. On merits also, and even assuming that the facts claimed by the assessee actually existed, we see little support for the legal proposition advanced by the distinguished senior counsel.
19. We find that the merger, as claimed, is a merger without liquidation. It consisted of full control of the companies being taken away, by another company, by exchange of shares. According to the settled accountancy principles, such an exercise is, properly speaking, formation of a holding company, and not a merger. In any event, expression amalgamation which, in India, is used interchangeable with expression merger (Financial Management by Prasanna Chandra1998 reprint-p 750; published by Tata McGraw Hill Publishing Co. Ltd.), is now a neatly defined expression under section 2(1B) of the Act, and this definition does not recognise the concept of partial merger or the concept of merger without liquidation. On the facts of the case, it is clear that there is no amalgamation or merger in legal or accounting sense of the term. When there is no amalgamation or merger in the cases before us, learned counsels reliance on judicial precedent in the case Raghuvir Trust cannot be of any help to the assessee. In Raghuvir Trusts case, Honble Karnataka High Court has held that when a shareholder receives money or other assets representing his share in distribution of net assets of the company in liquidation he receives that money or assets in satisfaction of the right which belonged to him by the virtue of his holding the shares and not by operation of any transaction which amounts to-sale, exchange, relinquishment of the asset or extinguishment of any rights in the capital assets. We have all respect for this legal proposition enunciated by the Honble Karnataka High Court, but as there is no liquidation of amalgamating companies and, as, strictly speaking there is no merger or amalgamation at all, the ratio of Raghuvir Trusts case have no application in the case before us.
20. According to learned senior counsel, as we have noted earlier, the key question that arises for our adjudication is whether allotment of shares of the new company i.e. GE Alsthom NV, to GE plc Group companies constitutes transfer of shares and whether by such allotment of shares, it can be said that any consideration has passed from GE Alsthom NV to GE plc Group companies. The learned counsel has thus supported Commissioner (Appeals)s stand, in the impugned order, that the law is settled that there is no tax liability where shares have been subscribed in moneys worth, as in the present case. In our view, first part of this question is clearly fallacious as it is only axiomatic that it is capital asset of the assessee that is subject-matter of assessment and that the transfer of such capital asset should give rise to gains accruing or arising to the assessee. The capital asset belonging to the assessee-companies, in these cases, consisted of the shares held in Indian companies which have been, beyond dispute, transferred to GE Alsthom NV, and, because in consideration thereof, shares have been allotted to the assessee-companies by the GE Alsthom NV, gains have also accrued and arisen to the assessee-companies. It is, therefore, clear that transfer of capital assets of the assessee-companies, i.e. shares held in certain Indian companies, has taken place and that, in consideration of transfer of these shares, assessee-companies have also been issued the shares in GE Alsthom NV. It is also clear that the consideration has clearly passed from GE Alsthom NV to GE plc Group companies. In this view of the matter, we are unable to agree with Dr. Pal that it is necessary to examine whether or not issuance of fresh shares by GE Alsthom NV constitutes transfer under section 2(47) of the Act. As far as shares issued by GE Alsthom NV are concerned, these shares constitute consideration for transfer of capital assets in question, and, accordingly, excess of value of consideration over the value of cost of acquisition, subject to adjustments under the scheme of the Act, constitutes capital gain chargeable to tax. It is an altogether a different matter that since assessee-companies never parted with any information about quantum of this consideration, assessing officer had to compute the capital gains on the basis of certain estimates. We are, therefore, not even impressed with this set of arguments by the assessee. These arguments in fact proceed on the fallacy that the consideration received by the assessee must also pass on the test of transfer under section 2(47) of the Act.
21. Honble Bombay High Court, in the case of CIT v. Tata Iron & Steel Co. Ltd. where in seisin of a somewhat identical situation. The assessee in that case (TISCO) was holding 16.36 per cent equity capital or Sankey Electrical Stampings Ltd. (SES) which, in turn, was a subsidiary of Guest Keen Williams Ltd. (GKW)-GKW holding balance 83.64 per cent of SES equity. GKW wanted to acquire 16.36 per cent shares in SES which were held by TISCO, so as to make SES a 100 per cent subsidiary and then merge SES with itself. In this backdrop of facts, TISCO transferred its entire 16.36 per cent SEE shareholdings to GKW, and, in consideration thereof, GKW allotted share capital in GKW itself on the basis of 1.38 face value capital in GKW for 1.00 face value capital in SES. The shares thus allotted to TISCO were out of newly issued capital, as evident from AGM resolution dated 31-5-1963, reproduced in the judgment. In other words, TISCO subscribed to GKW in moneys worth i.e. by way of transferring in 16.36 per cent SES equity capital to GM. On these facts, Honble Bombay High Court held that, the transaction clearly falls within the definition of "transfer" contained in section 2(47) of the Act, and, consequently, the assessee would be liable to capital gains tax as provided in section 45 of the Act." Rejection assessees reliance on reported judgments specifically in the case of Secretary, Bombay of revenue v. Madura Mills Co. Ltd. (supra) and Shri Gopal Jalan & Co. v. Calcutta Stock Exchange (supra), Honble court observed that, "it is not necessary to discuss certain reported decisions cited on behalf of the assessee, more so, when in the reported decisions, the statutes concerned are quite different from the provisions of the Act with which we are concerned in this reference". Honble court went on to observe that, "it is pertinent to note that in the reported decisions, which are cited on behalf of the assessee, the Courts were not concerned with the interpretation of the definition of the expression transfer contained in section 2(47) of the Act which has a very wide meaning and cannot be narrowed down by referring to the provisions of other statutes which are quite different and are applicable in different contexts. "
22. Respectfully following the above discussed esteemed views of Honble Bombay High Court, as articulated through Justice U.T. Shah (as he then was), we hold that the learned Commissioner (Appeals) erred in law in holding that there is no capital gains tax liability when shares are subscribed in moneys worth, and that the learned Commissioner (Appeals)s reliance, on reported judgments in the cases of Secretary Board of revenue v. Madura Mills Co. Ltd. and Shri Gopal Jalan & Co. v. Calcutta Stock Exchange, was wholly misplaced.
23. We may also mention that in the aforementioned case of CIT v. Tata Iron & Steel Co. Ltd. (supra), Hon'ble Bombay High Court has referred to assessees claim that taking the entire developments as a whole, the shares of GKW were received by the assessee on amalgamation of SES with GKW. It is relevant that Honble Bombay High Court were dealing with the assessment year 1963-64 whereas section 2(1B), defining the expression amalgamation, was introduced with effect from 1-4-1967. In the case before us, however, this aspect of the matter is not at all relevant since admittedly amalgamation has not taken place and amalgamated companies continue to have legal existence.
24. We next take up Commissioner (Appeals)s stand that since object behind whole exercise of transfer of shares was partial merger of two multinational corporation groups, there is no price in commercial sense, as held in the cases of Mugnee Ram Bangur & Co. (supra), Syndicate Bank (supra) and Sunil Siddathbhai (supra).
25. As far as Mugnee Ram Bangurs case is concerned, the material facts are that a firm was sold, on a going concern basis, to a company promoted by partners of the said firm. The computation of sales price, which was annexed to sale agreement, indicated goodwill of Rs. 2,50,000 and this entire sale price was paid by way of issue of fresh equity in the company. On these facts, revenue s case was that the sum of Rs. 2,50,000, although shown as goodwill was really excess value of the land over and above book price reflected in the sale agreement. Honble Supreme Court rejected this plea to hold that, the sale was the sale of a whole concern and no part of the price was attributable to the cost of land and no part of the price was taxable. In the case of Syndicate bank Ltd. (supra) also, Honble Karnataka High Court has merely followed Mugnee Rams case to reiterate that a business undertaking as a whole, would constitute I capital asset and that price of an undertaking cannot be apportioned amongst individual assets. We do not see any assistance to assessees cause by the ratio of these judgments.
26. Coming to Sunil Siddarthbhais case (supra), which is also known as Kartikeyan V. Sarabhai v. CIT it dealt with introduction of capital asset by partner, and the firm crediting market price of the asset to partners capital account. On these facts, Honble Supreme Court had held that such a transaction does amount to transfer as exclusive interest of the partner in that particular capital asset is reduced, on asset being introduced in the firm, to a share interest. However, Honble Supreme Court further observed that corresponding credit entry in partners capital account is made merely for the purpose of adjusting the rights of partners inter se when partnership is dissolved or a partner retires, and that the aforesaid credit entry does not evidence any debt due by the firm to the partner. It was in this background that Honble Supreme Court came to the conclusion that, in such circumstances, it cannot be said that any income or gains accrues to the assessee in true commercial sense which a businessman would understand as real income or gain. Honble Supreme Court finally came to a conclusion that since de facto there is no consideration in this case, such a transaction does not give rise to taxable capital gain.
27. We have noticed that the aforementioned judgment relates to the case of a firm which is qualitatively distinct from the case of a company; a partners capital account is, in our considered view, not at all comparable with a shareholders capital in the company. Unlike a partnership firm, a company is entity distinct from its members. In the case of a firm, as held by the Honble Supreme Court in Sunil Siddarthbahis case (supra), no consideration can be said to have passed from the firm to the partner, merely by way of crediting partners capital account, proximately because such an entry is essentially for adjusting the rights of partners inter se when partnership is dissolved or when a partner retires. Issuance of share, on the other hand, cannot be said to be with a view to merely provide for adjustment between rights of the shareholders inter se at the time of dissolution of the company. These shares constitute valuable consideration in commercial sense of the term and the property in these shares is inherently capable of being transferred further. On almost identical facts, Honble Bombay High Court has, in the case to Tata Iron & Steel Co. Ltd. (supra), upheld the taxability of capital gains and, by implications, held that issuance of fresh capital constitutes consideration. When material fact lack any similarity, we see no reasons to be persuaded by the ratio of Sunil Siddarthbahis case. In any event, introduction of section 45(3) of the Act has nullified the impact of the aforesaid judgment. To understand true ratio of the aforesaid judgment, we find it useful to recall that, at the time of introduction of section 45(3) vide Finance Act 1987, CBDT Circular No. 495, dt, 22-9-1987, (published at (1987) 67 CTR (St) 11 observed as follows :
"..........
24. 1. One of the devices used by the assessees to evade tax on capital gains is to convert an asset individually into the asset held individually into an asset of the firm in which the individual, is a partner. The decision of the Supreme Court in Kartikeyan V Sarabhai v. CIT , has set at rest the controversy as to whether such a conversion amounts to transfer. The court held that such a conversion is outside the scope of capital gains taxation, The rationale advanced by the court is, that the consideration for transfer of the personal assets is indeterminate, being the right which arises or accrues to the partner during the subsistence of partnership to get his share of the profits from time to time and, on dissolution of the partnership, to get the value of his share from the net partnership assets."
(Emphasis, italicised in print, supplied by us by underlining) The CBDT has then explained that with a view to blocking this escape route for avoiding capital gains tax, the Finance Act, 1987 has inserted new sub-section (3) in section. In view of the aforesaid exposition of the ratio of Sunil Siddarthbhais case, with which we are in complete agreement, we are of the view that ratio of this case has no application to the cases before us. In our considered view, proximate and material reason of Honble Supreme Courts coming to the conclusion that such a transaction is outside the ambit of taxable capital gain (i.e. an entry to the credit of partner, for bringing in any person capital asset, is merely for adjusting the rights of partners inter-se when partnership is dissolved or when a partner retires) is absent in the facts of the case before us. We, therefore, decline to approve Commissioner (Appeals)s reliance on the cases of Mugnee Ram Bangur & Co. (supra), Syndicate Bank (supra), and Sunil Siddarthbhai (supra), in treating the transaction in question as outside the ambit of taxable capital gains.
28. We next come to assessees claim that in view of the provisions of section 45(3), any transfer by a person to a company or a co-operative society of which that person is a member, cannot result in capital gains exigible to tax. Section45(3) does not provide for any exemption but it is a charging section which lays down that gains arising from the transfer of capital asset by a person to a firm or a body of individuals (not being a company or co-operative society), of which he is partner or member, shall be chargeable to tax. For the present purposes, it is immaterial as to whether or not transfer of capital assets as capital contributions are taxable under section 45(3) or not, because as far as the cases before us are concerned, they seem to be squarely covered by provisions of section 45(1) of the Act. The simple facts are that the shares held by the assessee-companies have been transferred to another foreign company for an undisclosed consideration. The transfer has admittedly taken place and since the assessing officer did not have precise information about the actual consideration, he has estimated the sales consideration on the basis of stock market quotations of the related shares. On these facts, the cases before us are clearly covered by section 45(1) of the Act. We, therefore, see no need to refer to section 45(3) of the Act. We are of the view that merely because a transaction is not covered by section 45(3), it would not mean that the transaction is outside the ambit of taxable capital gains altogether.
29. The learned counsel has emphatically argued that the legislatures omission in not including contributions by shareholders to the company, in section 45(3), makes it abundantly clear that the legislature did not intend to treat the same within the scope of a transaction leading to taxable capital gains. In other words, the omission to specifically provide for the exemption of such a transaction from the taxable capital gains is, at worse, an inadvertent omission or a drafting error. We are unable to be persuaded by this reasoning because it is well settled in law that a casus omissus will not be created by interpretation save where it is inevitable. In any case, it is also clear from the CBDT Circular No. 495, referred to above, that section 45(3) was introduced with a view to blocking this escape route created by the virtue of Honble Supreme Courts judgment in the case of Sunil Siddarthbhai. As rightly observed in the aforesaid CBDT circular, the effect of this amendment is that profit and gains arising from the transfer of a capital asset by a partner to the firm shall be chargeable as the partners income of the previous year in which the transfer took place. Keeping in view all these facts, we are unable to uphold the contentions of the learned counsel.
30. The next plea of the assessee is coverage by section 47(iii) which-provides that nothing contained in section 45 will apply to the transfer of any capital asset, under a gift, or will, or an irrevocable trust. There is nothing before us to establish that the shares held by the assessee-companies were transferred under an irrevocable trust. It is fairly well settled in law that once it is clear that a receipt is taxable in nature but the claim of the assessee is that the receipt in question is covered by the exception clauses, onus is on the assessee to prove that the receipt is covered by the exception clause. Honble Supreme Court has, in the case of Dr. K. George Thomas v. CIT observed that the burden is on the revenue that the receipt is of a taxable nature, though once a receipt is found to be of taxable nature, whether if comes under exemption or not, it is for the assessee to establish. In the case before us, therefore, the onus is on the assessee to establish that the transfer of shares must be considered to have been held under an irrevocable trust is not supported by any evidence at all. We have carefully examined facts of the case and we are of the considered view that, by no stretch of imagination, transfer in question can be said to be transfer under an irrevocable trust" but it is clearly a case of unqualified transfer of property vested in the shares held by the assessee-companies. In any case, exemptions cannot be inferred; an exemption should be supported by admitted facts on record and plain provisions of law. We also find that the assessee-companies have failed to discharge the onus of proving that their case is covered by a transfer under trust and, in effect, entitled to exemption under clause (iii) of section 47 of the Act. We, therefore, reject the contention of the assessee that the transfers in questions are covered by section 47(iii) of the Act.
31. We may also refer to doctrine of estoppel referred to by the learned counsel in the light of which, in any event, the tax liability of these companies cannot exceed the amount of Rs. 10.76 crores which was worked out at the time of issuance of the no-objection certificate by the revenue authorities. It is fairly well settled that notwithstanding the rule of estoppel, where public duties cast by the statute are involved, private parties cannot prevent performance by invoking the rule of estoppel. Assessing Officer is principal functionary in the scheme of the Income Tax Act and he has to determine, each year, assessable income in accordance with the statutory provisions of the Act. Such, statutory provisions cannot be set at naught by invoking the rule of estoppel. In other words, estoppel cannot operate against the statute. In the case before us, it is not in dispute that the no objection certificate was issued at the instance of the Chief Commissioner and the assessing officer did not even have the liberty of applying his independent mind to the taxability of capital gains arising from the transfer of shares in question. Such an issuance of NOC cannot fetter assessing officers exclusive domain of powers of framing the assessment order; there is no scope for any administrative interference in assessing officers quasi-judicial powers to assess the income of the assessee. NOC is not a substitute to the assessment order but it only serves to safeguard the interests of revenue in an inherently limited manner. In our considered view nothing more needs to be read into this non-statutory document and, therefore, issuance of NOC upon furnishing of a bank guarantee to the tune of Rs. 10 crores should not be construed as an implied restriction on the quantum of tax liability that can be worked on the transactions in respect of which the NOC was issued.
32. We have also noticed that the no objection certificate issued by the revenue authorities have nothing to do with section 162(2) of the Act which only applies to the cases of representative assessees vicarious liability. The NOC in question was admittedly issued at the instance of the assessee itself and, accordingly, assessees reliance on section 162(2) is devoid of any legally sustainable basis.
33. We have noticed that the assessee-companies have been evasive about complete details of transaction and have not given any information at all about the quantum of consideration received on transfer of shares in question. It is under these circumstances that the learned assessing officer had to adopt stock exchange quotations as the basis of estimating the consideration. Even during the course of hearing before us, the assessee-companies have not been forthcoming about further details either about the number of shares issued by GEC Alsthom NV or about any other details about consideration received by them. Keeping in view all these factors, we confirm the action of the assessing officer in estimating consideration on transfer of shares on the basis of Calcutta Stock Exchange quotations for the shares which were subject-matter of transfer by the assessee-companies. We also see no infirmity in adopting the stock exchange quotations with reference to the date of actual transfer. We may also mention that assessees reliance on the purported contents of agreement dated 22-3-1989, is totally devoid of any substance since, in any event, a copy of such an agreement was not filed before any of the authorities.
34. In view of the above elaborate discussions, we are of the considered view that the orders of the learned Commissioner (Appeals) are unsustainable in law and that the assessing officer was justified in making additions on account of capital gains arising on transfer of shares, held by the assessee-companies, to GE Alsthom NV. We, therefore, cancel the orders of the Commissioner (Appeals) and restore the orders passed by the assessing officer.
35. In the result, revenue s appeals are allowed.
36. We now turn to assessees cross-objection. The first ground of the cross-objection is that the orders passed by the learned assessing officer are time-barred as the assessment orders were passed on 4-4-1994 from the Esplanade Office. We see-little substance in this ground of cross-objection because the assessment orders were admittedly passed on 25-3-1994 being well within the time-limit laid down under section 153(1) which was available upto 31-3-1994, in these cases. It is true that the assessment orders were mailed on a later date but this was within reasonable time of passing the order and, in any event, it is settled law that time-limit under section 153(1) is for passing the order which may be communicated later within a reasonable time. It is not the case of the assessee-companies that mailing of these orders on 4-4-1994, does not constitute mailing the orders within reasonable time. We, therefore, reject the first ground of cross-objection.
37. The second ground of cross-objection is that since intimation under section 143(1Aa) is passed after compliance to notices under section 143(2), the intimation itself is to be treated as a regular assessment order under section 143(3) and there cannot be any further assessment order under section 143(3) of the Income Tax Act. We find little substance in assessees stand, As has been held by the Hon11e Calcutta High Court in the case of Modern Fibotex Ltd. v. Deputy CIT , notices under section 143(2) having been once issued, the assessing officer is indeed denuded of the powers to issue intimation under section 143(1)(a) of the Act and, consequently, the intimation issued under section 143(1)(a) is a legal nullity. When the intimation itself is a legal nullity, it cannot substitute the regular assessment order. In any event and leaving aside this judicial pronouncements, one thing further to be noticed is that intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). As observed by Honble Delhi High Court in the case of Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT , though technically the intimation issued was deemed to be a demand notice under section 156 that did not per se preclude the right of the assessing officer to proceed under section 143 (2) . Honble Delhi High Court has opined that this right to proceed under section 143(2) is preserved and is not taken away merely because an intimation under section 143(1)(a) is issued by the assessing officer. It has been categorically held by the Honble High Court that the intimation under section 143(1)(a) cannot be treated as order of assessment. Respectfully following the esteemed views of Honble Delhi High Court, we reject second ground of cross-objections filed by the assessee-companies.
38. We now come to third and last ground of cross-objection of the assessee. According to this ground of cross-objection, the order passed by the learned assessing officer is illegal because the assessment order has determined the previous year as calendar year 1991 as against the previous year ended 31-3-1991, declared by the assessee. We find that against column No 6 of ITNS 65, i.e., format for the assessment order, which is titled "Accounting period (to be shown separately for each source of income)", the assessing officer has mentioned "31-12-1991". Except for this mention of 31-12-1991, there is no mention anywhere of the previous year as year ended on 31-12-1991. In fact, in view of the provisions of section 3 and on the facts of this case, the assessing officer could only have taken the financial year immediately preceding the assessment year, as assessees previous year. It is, therefore, clear that the mention of 31-12-1991, in the place of 31-3-1992, was only an inadvertent typing mistake in the office of the assessing officer. As to what can be the consequence of such a mistake, section 292B provides as follows :
"No return of income, assessment, notice, summons or other proceedings, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by the reason of any mistake, defect or omission in such return of income, assessment, notice, summons, or other proceedings if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act."
In view of the above clear provisions of the statute, merely because 31-12-1991, is mentioned against column No 6, whereas the correct expression should have been ended 31-3-1992, the assessment cannot be deemed to be invalid on this count alone. We, accordingly, see no merits even in this ground of cross-objection.
39. In view of the above discussions, we are of the considered opinion that the cross-objections filed by the assessee-companies are devoid of any legally sustainable basis. In any event, cross-objections only contain grounds in support of the Commissioner (Appeals)s order.
40. In the result, cross-objections filed by the assessee-companies are dismissed.
41. To sum up, while the appeals filed by the revenue are allowed, cross-objections filed by the assessee-companies are dismissed.