Principal Commissioner Of Incometax, Kolkata-2 v. M/S. Khaitan Consultants Limited

IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE Special Jurisdiction (Income Tax) PRINCIPAL COMMISSIONER OF INCOMETAX, KOLKATA-2 -Versus- M/S. KHAITAN CONSULTANTS LIMITED Appearance:Mr. P. K. Bhowmick, Adv....for the appellant. Mr. J. P. Khaitan, Sr. Adv.Mr. Akhilesh Kumar Gupta, Adv.Mr. Asim Chaudhury, Adv.Ms. Aesa Dey, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA[[th]] Date : 16[[th]] November, 2021. The Court : This appeal of revenue filed under Section260A of the Income Tax Act (the ‘Act’ in brevity) is directedagainst the order dated 8[th] July, 2016 passed by the Income TaxAppellate Tribunal, B-Bench, Kolkata (the ‘Tribunal’) in ITANo.2796/Kol/2013 for the assessment year 2010-11. The revenue has raised the following substantial questions of law for consideration : “(a) Whether on the facts and in thecircumstances of the case, the Learned Income Tax Appellate Tribunal, “B” Bench erred in law in holding thatthe total consideration for sale of shares wasRs.10,40,09,705/- only, ignoring the fact that it wasspecifically and clearly mentioned in the agreement forsale entered into by the assessee that the lump sum saleconsideration for the 99.97% of the share capital held bythe assessee in KCCL was a sum of Rs.15,37,35,633/- ?(b) Whether on the facts and in the circumstancesof the case, the Learned Income Tax Appellate Tribunal,“B” Bench erred in law in holding brokerage charges asexpenditure of the assessee on account of sale of shares,ignoring the fact that the brokerage was in essence raisedon sale of property not in name of the assessee but in thename of the subsidiary company and was not raised on saleof shares ?” The short question involved in this appeal by the revenueis whether the assessee had received a sum of Rs.15,97,25,928/- assale consideration for sale of the shares in question or whetherthe assessee received only Rs.10,40,09,705/- as saleconsideration. This issue arose before the assessing officer whocalled upon the assessee to explain as to why only in the Returnof income they had reflected the sale consideration for the saleof shares only as Rs.10,40,09,705/- and not as Rs.15,37,35,633/-as mentioned in the share purchase agreement dated 29[th] January,2010. The assessee’s explanation was that Rs.4,97,25,928/- wastowards repayment of a loan and the said amount was not receivedby the assessee towards sale consideration for sale of shares and the sum received by them was only Rs.10,40,09,705/-. Thisexplanation was found to be not acceptable by the assessingofficer who completed the assessment by order dated 14[th] March,2013. The assessee challenged the same by filing an appeal beforethe Commissioner of Income Tax (Appeals) IV, Kolkata (CIT(A) inbrevity). The CIT(A) considered the facts of the case and moreparticularly, clause 2 of the agreement in its entirety whichconsists of various sub-clauses namely Clauses 2.1, 2.2, 2.2.1,2.2.2, 2.2.3 and 2.2.4. After noting the facts, the CIT(A)recorded a finding that the assessee had received only a sum ofRs.10,40,09,705/- as sale consideration for sale of shares. TheCIT(A) referred to the decision of the Hon’ble Supreme Court inthe case of Commissioner of Income Tax vs. Hooghly Mills CompanyLimited (287 ITR 333). The revenue carried the matter in appealto the Tribunal. The Tribunal re-appreciated the facts, moreparticularly clause 2 of the agreement in its entirety and heldthat the purchasers of shares took over the liability of theassessee and acknowledged the purchasers as creditors in so far asthe sum of Rs.4,97,25,928/- is concerned. Further, the Tribunalstated that there is nothing available on record to show that thesaid amount was received by the assessee as sale considerationtowards the sale of shares and, therefore, the same cannot beattributed to consideration for sale of the shares. We note that the CIT(A) as well as the Tribunal rightlyappreciated the agreement between the parties by considering theclause 2 in its entirety wherein under clause 2.2.3, the sumpayable towards the loan has been specifically mentioned.However, the assessing officer failed to read the agreement as awhole and proceeded to reject the case of the assessee,particularly by referring to clause 2.1 of the agreement. Thus,we find that the approach of the CIT(A) and the Tribunal wasproper and the ultimate decision arrived at by the CIT(A) and theTribunal does not call for any interference.Thus, we find that there is no question of law as well assubstantial question of law arising for consideration in thisappeal. Accordingly, the appeal is dismissed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) A/s./SN.