Case Number: ITA 1007/DEL/2021
Appellant: Pigeon Exports International (P) Ltd., New Delhi
Respondent: Pr. CIT-7, Delhi
Assessment Year: 2014-15
Result: 2014-15
Case Filed on: 2021-08-24
Order Type: Final Tribunal Order
Date of Order: 2022-02-15
Pronounced on: 2022-02-15
This case involves an appeal filed by Pigeon Exports International (P) Ltd. against the order dated 31.03.2021, passed by the Principal Commissioner of Income Tax (PCIT)-7, New Delhi. The dispute pertains to the revisional proceedings under Section 263 of the Income Tax Act, 1961, concerning the assessment year 2014-15.
The pertinent facts relevant to the adjudication of the case are as follows:
The core issue to be adjudicated was whether the action of the PCIT was correct, considering the limited scrutiny guidelines issued by the CBDT.
The plea of the assessee before the PCIT was that the case could not be subjected to proceedings u/s 263 as it was selected on the parameter of “large share premium received during the year,” whereas the issue in the order u/s 263 involved the allowability of the “loss on sale of shares of SRK Indus.” The PCIT held that the limited scrutiny of large share premium received during the year was directly linked to the premium received on the sale of shares of SRK Indus, whose share prices were artificially lifted in the stock exchange.
The Tribunal examined the facts of the case and found that the purchased shares at Rs.343/- per share in September 2013 were sold in March 2014 at Rs.35/- per share, resulting in a loss of Rs.44.78 lacs. The scrutiny guidelines directed the examination of large share premiums received during the year. The balance sheet showed an enhancement in reserves and surplus during the year due to share premium and profit.
The Tribunal noted that the limited scrutiny guidelines directed the scrutiny of the receipt of the premium of Rs.2,62,00,000/-, dealing with capital receipt. Hence, the order of the PCIT dealing with business loss was against the scrutiny guidelines issued.
The Tribunal held that the interpretation given by the Tax Authorities below regarding the application of the provision of Section 36(1)(va) of the Act was not correct. The limited scrutiny guidelines did not justify the proceedings under Section 263 for the issue at hand.
Order: In the result, the appeal of the assessee is allowed.
Order Pronounced in the Open Court on 15/02/2022.
-Sd/- (K. N. Chary, Judicial Member)
-Sd/- (Dr. B. R. R. Kumar, Accountant Member)
Date: 15/02/2022
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Pigeon Exports International vs. Pr. CIT-7 Delhi: Share Premium Scrutiny for AY 2014-15
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