The Commissioner Of Income-Tax)City-12, Mumbai v. Hemendra M. Kothari

-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY+ ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 620 OF 2004 The Commissioner of Income-Tax)City-12, Mumbai).. Appellant Versus Hemendra M. Kothari ).. Respondent ALONG WITH INCOME TAX APPEAL NO. 659 OF 2007 The Commissioner of Income-TaxMumbai City-IV, Mumbai ) ).. Appellant Versus Hemendra M. Kothari ).. Respondent Mr Vimal Gupta i/b Mr Pankaj Kapoor for the Appellant. Mr Soli Dastur i/b Kanga & Co. for the Respondent. CORAM:SWATANTER KUMAR, C. J. & A. P. DESHPANDE, J.DATE:8TH JULY 2008. P.C. Both these Appeals are directed against the orders of the Income Tax Appellate Tribunal dated 9[th] September 2003 and 9[th] April2003. Though the Appeals relate to different asseseess, but thequestion considered by the Tribunal is common. Income Tax AppealNo. 659 of 2007 was decided first by the Tribunal and the decision andreasoning given therein was followed in Income Tax Appeal No. 620 of2004 giving rise to both these Appeals. 2.Having heard the learned Counsel appearing for the parties,we are of the considered view that no question of law much less asubstantial question of law arises in the present Appeals. Whiledistinguishing the judgment of the Kerala High Court in the case ofRajagiri Rubber & Produce Co. Ltd,the Tribunal held that the delivery ofshares was for the purposes of custody to an escrow agent and no titlehad transferred in the year 1997-98 and rejecting the Appeal held thatthis would be assessable in the year 1998-1999. Referring to the factsand circumstances of the present case, the Tribunal noticed that thehanding over of shares was subject to many terms and conditions like,exercising option, obtaining approval from various Governmentstatutory authorities and the view taken by the assessing authority wasnot based on any sound reasoning. Upon appreciation of facts based on evidence on record of the case, the Tribunal held as under :- “... In the case of the assessee and with regard to thetransfer of the 20,00,000 shares, the legal formalitieswere initiated and completed in the months of Januaryand February 1998. There is hardly any basis forholding that the actual transfer has taken place prior tothat. The cases cited on behalf of the assesee supportthis view. Therefore, after carefully considering all therelevant facts, we hold that the transfer of 20,00,000shares took place only in the previous year relevant tothe AY 98-99 and therefore no income as a result ofsuch transfer has arisen in the previous year relevantto the AY under appeal. Accordingly, on that basis theaddition made by the AO is directed to be deleted. 13.The ground No. 4 pertains to AO's findingthat the income on transfer of shares is in thenature ofbusiness income and not capital gain. In view of ourfinding given above, this ground is only of academicinterest and, therefore in our view, is not required to bedealt with. 14. The ground No. 5 pertaining to charging ofinterest u/s. 234 B is only consequential in nature andtherefore, the AO is directed to re-calculate the interestchargeable, if any u/s. 234 B of the IT Act, while givingeffect to this order. 15. The last ground is only repetitive and is notrequired to be dealt with.” 3.It may also be noticed as a matter of fact, that it was recorded that only 31.4% of the sale consideration was paid which was paid by way of advance, but the entire sale consideration admittedly was noteven determined. 4.We find no infirmity with the orders impugned in the presentAppeals. In the circumstances, both the Appeals are accordinglydismissed. No order as to costs. CHIEF JUSTICE A.P. DESHPANDE, J.