Case Law Details
Sindya Securities & Investments Pvt. Ltd Vs ACIT (ITAT Chennai)
ITAT Chennai held that the termination of the call option merely relinquishes the right of to buy shares, however, there is no element of non-compete obligation inherent in the agreement and hence provisions of Section 28(va) of the Income Tax Act cannot be triggered.
Facts- Vide the present appeal, the appellants assails the invocation of revisionary jurisdiction u/s. 263 by Ld. Pr. Commissioner of Income Tax, Chennai in the matter of an assessment framed by AO u/s. 143(3) of the Income Tax Act.
Department contended that AO did not verify the genuineness of the investment activity of the assessee company since the financial statements would show that the assessee was merely acting as conduit for making investments for Kalpataru group in order to exploit 2G license of Aircel Ltd. There was no other activity carried out by the assessee. The activity of the assessee, as per Ld. CIT-DR, was not in accordance with the activity of investment company as defined in Rule 1A(g) of Wealth tax Act, 1957. The assessee was mainly incorporated for the indirect sale and purchase of 2G license.
Conclusion- The consideration was not received for not carrying out of any activity in relation to any business or profession. Neither there was a bar on the assessee to purchase further shares of Aircel Ltd. Therefore, the provisions of Section 28(va) would not apply. The termination of the call option merely relinquishes the right of the assessee company to buy shares of Aircel Ltd. There is no element of non-compete obligation inherent in the agreement which would trigger the provisions of Section 28(va) of the Income Tax Act as alleged in the impugned order.
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