Sun Aero Ltd. Vs PCIT (Delhi High Court)
Material Facts
The assessee claimed to be a wholly owned subsidiary of Sun Air Hotels Ltd., which had development rights for a hotel project. During the pendency of litigation with NDMC, Sun Air transferred its rights to the assessee for nil consideration. In 1995, those rights were transferred back to Sun Air for ₹21 crore. For Assessment Year 1995-96, the assessee claimed exemption from capital gains under Section 47(v) of the Income-tax Act, 1961, which was accepted by the Assessing Officer in an assessment under Section 143(3) dated 09.02.1998.
A search was conducted on 21.11.2000. Thereafter, the Assessing Officer formed the view that the assessee was not a wholly owned subsidiary of Sun Air Hotels Ltd. and passed a block assessment under Section 158BC making an addition of ₹21 crore. The Commissioner of Income Tax (Appeals) set aside the addition, holding that the transaction had already been disclosed and examined during the regular assessment and that the addition was beyond the scope of Chapter XIV-B.
The Revenue’s appeal before the Tribunal was initially rejected. Subsequently, the Delhi High Court remanded the matter to the Tribunal on 01.06.2012. After remand, the Tribunal allowed the Revenue’s appeal by order dated 20.09.2016, refusing to consider the assessee’s legal grounds on the basis that no cross-appeal or additional grounds had been filed. The assessee challenged that order under Section 260A of the Income-tax Act, 1961.
