Hero Motocorp Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi held that when shares are held as investments, there will be no business income and accordingly provisions of section 28(iv) of the Income Tax Act cannot be invoked.
Facts- The appellant filed its return of income u/s. 139(1) of the Act declaring income of Rs.4,36,35,186, which was selected for scrutiny. In the meantime, before the completion of assessment, HIPL/ assessee got amalgamated with HHML w.e.f. 01.01.2013 [now known as Hero Moto Corp Ltd. (HMCL)], pursuant to the scheme of amalgamation. Assessment was completed u/s. 143(3) of the Act at income of Rs.6,11,79,857 after making the adjustments on account of – (i) treating profit on sale of investment and interest income as business income-Rs.7,50,07,419; and (ii) disallowance under section 14A- Rs.1,01,82,707. The said assessed total income was subsequently rectified to Rs.6,02,96,513 vide order dated 08.04.2015 passed u/s. 154/ 143(3) of the Act. The aforesaid assessment order was challenged in further appeal before the CIT(A)-Ludhiana, which was disposed off vide order dated 30.10.2018, in favor of the appellant.
Subsequently, a survey u/s. 133A of the Act was conducted by the revenue authorities. This was followed by a reassessment proceedings u/s. 147 of the Act, initiated vide notice dated 31.03.2018 issued u/s. 148 of the Act. The reassessment proceedings were concluded at total income of Rs.3650,88,16,576, after making addition of Rs.3644,85,20,063 u/s. 28(iv) of the Act, alleging the same to be “benefit” accrued to the appellant on acquisition of 26% stake in HHML from Honda, at discount.
