Commissioner Of Income Tax v. M/S Pivet Finance Ltd

ITA Nos. 719 to 722 of 2009 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Date of decision 23 .4.2010 ITA No.719 of 2009 Commissioner of Income Tax ... Appellant Versus M/s Pivet Finance Ltd.... Respondent ITA No.720 of 2009 Commissioner of Income Tax ... Appellant Versus M/s Pivet Finance Ltd.... Respondent ITA No.721 of 2009 Commissioner of Income Tax ... Appellant Versus M/s Pivet Finance Ltd.... Respondent ITA No.722 of 2009 Commissioner of Income Tax ... Appellant Versus M/s Pivet Finance Ltd.... Respondent CORAM:HON'BLE MR. JUSTICE M.M. KUMARHON'BLE MR. JUSTICE JITENDRA CHAUHAN Present:Mr.Vivek Sethi ,Advocate for the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. Revenue has invoked Section 260A of the Income Tax Act, 1961 (for brevity 'the Act') by filing four appeals namely ITA Nos. 719 to ITA Nos. 719 to 722 of 2009 722 of 2009 against the same assessee in respect of assessment years 2003-04 and 2004-05. The orders passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar (for brevity ' the Tribunal') in contents andsubstance are the same. The Revenue has claimed various questions of law.However, an all pervasive question which has been raised is whether theassessee- respondent has been consistently resorting to colourable devicewith the object of reducing the tax liability by transferring shares to anothergroup of companies with a view to reduce the taxable income. The Tribunalhas recorded categorical finding concerning genuineness of the transactionin as much as the transaction was at the then prevailing market rate. TheAssessing Officer did not dispute the amount of consideration of salereceived by the assessee- respondent from the buyer. Therefore, it has beenconcluded that there was no reason to accept that the shares were sold onlyfor the purpose of reducing the tax liability. The Tribunal has placedreliance on the judgement of Hon'ble the Supreme Court rendered in thecase of Union of India v. Ajadi Bachao Andolan(2003) 263 ITR 706 whichhas explained in detail its earlier judgement in the case of McDowell &Company Ltd. v. CTO(1985) 154 ITR 148. The aforementioned issue wasconsidered by a Division Bench of this Court in the case of M/s Porrits &Spencer (Asia )Ltd v. The Commissioner of Income Tax, Faridabad (ITANo.10 of 2004 decided on 31.3.2010) and it was concluded that once thetransaction has been found to be genuine by the Tribunal then it cannot bedubbed as colourable device. It was further held that if the transaction wasotherwise valid in law and a part of tax planning then merely because it hasresulted in reduction of tax it cannot be ignored on the ground that theunderlying motive of entering into such a transaction by the assessee was ITA Nos. 719 to 722 of 2009 to reduce its tax liability to the State. The evasion of tax is substantiallydifferent than the planning concerning tax. Accordingly a tax payer will bewithin his right to resort to a device to divert the income before it arrives tohim and effectiveness of such a device would not depend uponconsideration of morality. Keeping in view the reasoning given in thedecision of this Court in M/s Porrits & Spencer (Asia) Ltd.'s case (supra),we are not inclined to admit these appeals as no question of law would arisefor determination of this Court. The other questions claimed by the revenueare consequential. Accordingly, all these appeals fail and the same are dismissed.A copy of this order be placed on the file of connected appeals. (M.M.Kumar) Judge 23.4.2010okg (Jitendra Chauhan)Judge