Income Tax Appellate Tribunal - Mumbai
Mandakini Hospitality P.Ltd, Mumbai vs Asst Cit Cir 4(2), Mumbai on 31 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" Bench, Mumbai
Before Shri P K Bansal, Vice President
and Shri Pawan Singh, Judicial Member
ITA No.2538 /Mum/2014
(Assessment Year: 2009-10)
M/s. Mandakini Hospitality P. Ltd. A C I T - 4(2)
Raaj Chamber, S.K.M. Fabrics Aayakar Bhavan
Plot No. 115, 115/IT-03 Vs. M.K. Road
R.K. Pharmahanse Mrg Mumbai 400020
Andheri (E), Mumai 400069
PAN - AAECM3343D
Appellant Respondent
Appellant by: Shri Pradeep Sharma
Respondent by: Shri Suman Kumar
Date of Hearing: 14.09.2017
Date of Pronouncement: 31.10.2017
ORDER
Per P.K. Bansal, Vice President This appeal has been filed by the assessee against the order of the CIT(A)-8, Mumbai dated 03.01.2014 for A.Y. 2009-10.
2. The only issue involved in this appeal is whether the loss incurred by the assessee is a long term capital loss or not?
3. The brief facts of the case are that the AO noted during the course assessment proceedings that the assessee has shown long term capital loss on sale of 26570000 shares of Landmark Leisure Corporation Ltd. through off market transaction amounting to `1,55,97,441/-. These shares are listed on the Stock Exchange. The shares has not been sold by the assessee through Stock Exchange but has been sold off market. The AO issued notices to the buyers of shares i.e. M/s. Invitaqtion Equiffin Pvt. Ltd. and M/s. Coronation Infotech P. Ltd. The AO, on going through the bank account statement of M/s. Invitation Equifin P. Ltd. in IDBI noted that the company has made the payment to the assessee on 25.02.2009 2 ITA No. 2538/Mum/2014 M/s. Mandakini Hospitality P. Ltd.
amounting to `90,91,565/-. Just one day before, i.e. on 24.02.2009 a sum of `91,00,000/- has been received by M/s Invitation Equifin P. Ltd. in this account. When the notice was issued to the Branch Manager of IDBI it was noted that the said fund has come into the bank account of M/s. Invitation Equifin P. Ltd. from the account of another person in Standard & Chartered Bank. The AO noted that similar was the case in the case of M/s Coronation Infotech P. Ltd. which has an account with IDBI in which also an amount has been received from an account from Standard & Chartered Bank. The AO was, therefore, of the opinion that the assessee has circumvent the provisions of Section 10(38) by entering into off market transaction and therefore he relying on the decision of the Hon'ble Supreme Court in the case of Mc Dowell & Co. Ltd. 154 ITR 148 held that the entire transaction is colourable device to circumvent the provisions of Section 10(38) and therefore he disallowed the carry forward of long term capital loss amounting to `1,55,97,911/-. When the matter went before the CIT(A), the CIT(A) confirmed the order of the CIT(A).
4. We heard the rival submissions and gone through the orders of the tax authorities below. We noted that the assessee has purchased shares of M/s. Landmark Leisure Corporation Ltd. @ `1/- and these shares were sold by the assessee @67 paise during the impugned assessment year for a sum of `1,78,01, 565/-. The shares were listed in the Stock Exchange but the assessee has sold the shares off market to M/s. Invitation Equifin P. Ltd. and M/s. Coronation Infotech P. Ltd. 1,30,00,000 equity shares were sold to Coronation Infotech P. Ltd. while 1,35,690,500/- equity shares were sold to M/s Invitation Equifin P. Ltd. The assessee has submitted copies of the bills dated 24.02.2009. The shares were purchased by the assessee in the financial year 2003-04 and have duly been reflected in the Balance Sheet of the assessee. This is not a case that the shares were purchased by the assessee during the impugned assessment year. We noted that the AO did not accept the sale to be non genuine only on the basis that the purchaser before issuing the cheque to assessee got, the payment in its bank account from some party. In our view receiving of 3 ITA No. 2538/Mum/2014 M/s. Mandakini Hospitality P. Ltd.
payment by the purchaser from any party but not from the assessee does not mean that the transaction entered into by the assessee is non genuine. It is not the case of the Revenue that assessee or any of its associate concern have made payment to the purchaser before the assessee received the sale consideration from the purchaser. This is settled law in view of the decision of the Hon'ble Supreme Court in the case of CIT versus Daulat Ram Rawat Mull 87 ITR 349 that apparent is real the onus is on the part who alleges apparent is not real. We find that the Revenue has not brought out any cogent material or evidence on record which may prove that the transaction entered into by the assessee for the sale of shares is non genuine. It is a case where the assessee held the shares for more than five years and subsequently he sold the shares. The assessee has explained the reasons for the sale transaction. Merely the transaction is off market transaction does not mean that the transaction is not a genuine transaction. It is a case where the assessee had duly submitted the statement given by the Stock Holding Corporation and the delivery report to the Stock Holding Corporation for actual sale and delivery of shares executed by the assessee. In our opinion the Revenue has simply alleges and applied the decision of the Mc Dowell & Co. Ltd. 154 ITR 148 without looking into the fact of the case and without discharging its onus to prove that the transaction entered into by the assessee is a sham and colourable transaction. We, therefore, set aside the order of the CIT(A) and direct the AO to accept the transaction entered into by the assessee as genuine transaction and allow the loss incurred by the assessee on sale of shares as long term capital loss.
5. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 31st October, 2017.
Sd/- Sd/-
(Pawan Singh) (P.K. Bansal)
Judicial Member Vice President
Mumbai, Dated: 31st October, 2017
4 ITA No. 2538/Mum/2014
M/s. Mandakini Hospitality P. Ltd.
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) -8, Mumbai
4. The CIT - 4, Mumbai
5. The DR, "B" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.