Shares held for exactly 12 months treated as long term as date of transfer included in holding period: ITAT Mumbai

CIT (International Taxation -3) Vs Kuwait Investment Authority (ITAT Mumbai)

ITAT Mumbai held that holding period of the capital goods includes the date on which asset is acquired and also date of sale/ transfer of the same. Accordingly, shares held for exactly 12 months treated as long term.

Facts- AO noticed that the assessee has offered LTCG of Rs.12,19,93,396/- on sale of certain equity shares sold exactly after one year from purchase of such shares. The AO issued a showcause notice asking the assessee to explain as to why the LTCG should not be treated as STCG as the shares were held exactly for a period of 12 months. Post reply, AO completed the assessment by computing the gains as STCG taxable @15% as per Section 111A of the Act. CIT(A) allowed the appeal. Being aggrieved, the present appeal is filed by the department.

Conclusion- Delhi High Court in the case of Bharti Gupta Ramole has held that the clause, therefore, refers to the holding period. It will not be appropriate to exclude or include any day of the holding for computing the said period. The date on which the asset is acquired is not to be excluded because the holding starts from the said date. Neither is the date of sale/transfer to be excluded.

Held that when the facts are considered in the light of the decision of the Hon’ble Delhi High Court in the case of Bharti Gupta Ramola and the CBDT Circulars, we do not find any error or infirmity in the findings of the ld. CIT(A). Thus, this ground is dismissed.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

I.T.A. No. 478/Mum/2024 & I.T.A. No. 476/Mum/2024, are two separate appeals by the revenue preferred against the two separate orders of the ld. CIT(A)-57, Mumbai, even dt. 29/11/2023 pertaining to AYs 2017-18 and 2021-22.

2. Both these appeals were heard together and are disposed off by this common order for the sake of convenience and brevity.

3. We first take up the revenue’s appeal in I.T.A. No. 478/Mum/2024 for AY 2017-18. The grievance of the revenue reads as under:-

“1. Whether on the facts of the case and in circumstances of the case and in law, the Id. CIT (Appeals) has erred in deleting the additions made by the assessing officer, by treating the capital gains under consideration as long term capital gain, not considering the fact that in the assessee’s case, the period of holding of capital assets (ie listed shares) as on the date immediately preceding the date of transfer is exactly 12 months and hence the capital gain arising therefrom is liable to be treated as short term capital gain as per the provisions of section 2(42A) of the I. T. Act, 1961?

2. Whether on the facts of the case and in circumstances of the case and in law, the Id. CIT (Appeals) was right in placing reliance on judgment of non-jurisdictional High Court in the case of Bharti Gupta Ramola vs. CIT (20 com 762(Del)) which has no binding precedence in view of judgment of Hon’ble jurisdictional High Court in the case of CIT Vs Thana Electricity Co Ltd [(1994) 206 ITR 727 (Bom)]?

3. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has erred in treating the assessee as corporate entity instead of ‘Non-corporate entity without appreciating the fact that the PAN of the assessee is obtained as a ‘Trust’ and not a ‘Company’?

4. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee itself has communicated that the assessee is a non-corporate entity due to which it does not hold DSC to file online Form 35?

5. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has erred in not appreciating the fact that incorporation document available on the website of Kuwait Investment Authority does not stipulate that the assessee is a corporate entity?

6. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has failed to appreciate the fact that the assessee itself has obtained the PAN meant for non-corporate entities including ‘Trust’ and the assessee is regularly filing return of income in the form ITR-5 stipulated for the entities other than ‘Company’?

7. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has failed to appreciate that every year is a separate and independent for the purpose of income-tax proceedings and is not bound by doctrine of res-judicata?

8. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has erred in holding that the Assessing Officer was not in consistent with the stand taken in previous years without appreciating the fact that the impugned issue was never deliberated upon in any assessment proceedings and it is the assessee only who highlighted the issue in AY2008-09 by filing appeal before the ITAT pursuant to levy of higher tax due to change in surcharge rate for non-company entities which was higher in comparison to that of the company cases?

9. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has erred in not appreciating the fact that the Assessing Officer has passed rectification order u/s.154 treating the assessee as company merely to comply with the order of Hon’ble ITAT in the assessee’s case on the impugned issue and said decision was not accepted in principle by the Department?

10. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has erred in not appreciating the fact that in context of filing of physical appeal for A.Y.2018-19 the assessee itself has communicated to the CIT(A) vide email dated 26.08.2021 that the assessee does not hold digital signature (DSC) as it is a non-corporate, non-resident taxpayer?

11. Whether on the facts and in the circumstances of case, and in law, the Ld. CIT(A) has erred in holding the status of assessee as non-resident corporate entity in contrary to the assessee’s admission that it is non-corporate, non-resident taxpayer and that too when no cogent documentary evidence was produced by the assessee?

12. The Appellant prays that the order of the ld. CIT(A) on the above ground(s) be set aside and that of Assessing Officer be restored.

13. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”

4. The first grievance relates to the treatment of gains on sale of shares amounting to Rs.12,19,93,396/- as short term capital gain (STCG) instead of long term capital gain (LTCG). The underlying facts qua this issue are that during the course of scrutiny assessment proceedings, the AO noticed that the assessee has offered LTCG of Rs.12,19,93,396/- on sale of certain equity shares sold exactly after one year from purchase of such shares. The AO issued a showcause notice asking the assessee to explain as to why the LTCG should not be treated as STCG as the shares were held exactly for a period of 12 months.

4.1. The assessee filed a detailed reply explaining that Section 2(42A) of the Act is silent on inclusion of date of purchase and date of sale in computing the period of 12 months for the purpose of STCG. Strong reliance was placed upon the CBDT Circular No. 704 dated 28/04/1995 and 768 dated 24/06/1998. Reliance was placed on the decision of the Hon’ble Delhi high Court in the case of Bharti Gupta Ramole vs. CIT reported in [2012] 20 taxmann.com 762 (Delhi) and claimed that the impugned gain is LTCG.

4.1.1. The reply of the assessee, though considered by the AO but did not find any favour, who completed the assessment by computing the gains as STCG taxable @15% as per Section 111A of the Act.

4.2. Before the ld. First Appellate Authority, the assessee reiterated what has been contended before the AO. After considering the facts and submissions and referring to the CBDT Circular No. 704 dated 28/04/1995 and 768 dated 24/06/1998 and drawing support from the decision of the Hon’ble Delhi High Court in the case of Bharti Gupta Ramole (supra), the ld. CIT(A) directed the AO to consider the capital gain from sale of shares as LTCG.

5. Before us, the ld. D/R strongly supported the findings of the AO. Per Contra, the ld. Counsel for the assessee reiterated what has been stated before the lower authorities.

6. We have given a thoughtful consideration to the orders of the authorities below. The entire quarrel revolves around the computation of capital gains which is as under:-

7. The Hon’ble Delhi High Court in the case of Bharti Gupta Ramole (supra), had the occasion to consider the identical grievance relevant to computation of holding period of asset and held as under:-

“A careful examination of section 2(42A) would reveal that the transfer or sale is treated as a cut off point, to apply the test. The expression ‘immediately preceding the date of transfer’ is a cut off point for determining and deciding the period during which the asset was held by an assessee. The said expression does not and should not be interpreted to mean that the date of transfer itself should be added or excluded. [Para 8]

The first part of section 2(42A) stipulates that if an asset is held for 36/12 months, it will be long-term capital asset. The term ‘month’ has not been defined in the Act and, therefore, one can rely upon the word ‘calendar month’ as defined in the General Clauses Act, 1897. Section 3(35) of the said Act defines a ‘month’ to mean a month reckoned according to the British calendar. In normal course, therefore, period of 12 calendar months would begin on the specified day when the asset was transferred and the assessee became the holder of the asset and would end one day before in the relevant calendar month, next year. Thus, if an assessee acquires an asset on 2nd January in a preceding year, the period of 12 months would be complete on 1st January, next year and not on 2nd January. This position is true and will apply to all cases, except when an asset is transferred/purchased on 1st January. In such cases, the period of one year or 12 months would expire and would be complete on 31st December in the same year. The expression used in section 2(42A) is ‘for not more than 12 months’. In other words, to qualify as a short-term capital asset, the capital asset should be held by the assessee for 12 or 36 months, but the moment the said time-limit is crossed or is exceeded and the assessee continues to be the holder/owner of the said asset, the same is to be treated as long-term capital asset. [Para 9]

In the instant case, what is noticeable from the language of the legislation is that the requirement prescribed is that the assessee should not hold the asset for more than 36 or 12 months. The moment an assessee exceeds this period and the holding continues beyond 36/12 months, the asset is treated as a long-term asset and, accordingly, the gains are computed. The clause, therefore, refers to the holding period. It will not be appropriate to exclude or include any day of the holding for computing the said period. The date on which the asset is acquired is not to be excluded because the holding starts from the said date. Neither is the date of sale/transfer to be excluded. The period of 12/36 months accordingly will have to be computed. Thus, if an asset is held for 12 months/36 months and is sold the very next day after the period of 12/36 months is over, the asset would be treated as a long-term capital asset. There is nothing in the said section to show and hold that the time period would not include fraction of a day. The expression ‘not more than’ clearly in this case would refer and include the date on which the asset is first held or acquired. Thus, an asset acquired on 1st of January would complete 12 months at the end of the said year, i.e., on 31st of December and if it is sold next year and if the proviso to section 2(42A) applies, it would be treated as a long-term capital gains. [Para 15]

In view of the aforesaid reasoning, the Tribunal was not right in holding that the assessee had not held the shares/mutual fund instruments for more than 12 months preceding the date of transfer. [Para 16]

8. The CBDT Circular No. 704 dated 28/04/1995, reads as under:-

“22. Instructions regarding determination of the ‘date of transfer’ and holding period for purposes of capital gains qua transactions in securities 1. Under the provisions of clause (42A) of section 2 of the Income-tax Act, 1961, the shares held in a company or any other security listed in a recognised stock exchange in India or units of the Unit Trust of India or units of a mutual fund specified under section 10(23D) shall be regarded as short-term capital assets if they are held by an assessee for not more than 12 months immediately preceding the date of its transfer. Clarifications have been sought as to which date should be regarded as the date of transfer and also about the date from which the holding period of the securities should be reckoned. Clarifications have also been sought as to how the holding periods will be computed for the purposes of capital gains when the securities, purchased in several lots at different points of time and which are taken delivery of in one lot, are subsequently sold in parts and no correlation of the dates of purchase and sale is available.

2. When the securities are transacted through stock exchanges, it is the established procedure that the brokers first enter into contracts for purchase/sale of securities and thereafter, follow it up with delivery of shares, accompanied by transfer deeds duly signed by the registered holders. The seller is entitled to receive the consideration agreed to as on the date of contract. The Board are of the opinion that it is the date of brokers note that should be treated as the date of transfer in cases of sale transactions of securities provided such transactions are followed up by delivery of shares and also the transfer deeds. Similarly, in respect of the purchasers of the securities, the holding period shall be reckoned from the date of the brokers note for purchase on behalf of the investors. In case the transactions take place directly between the parties and not through stock exchanges the date of contract of sale as declared by the parties shall be treated as the date of transfer provided it is followed up by actual delivery of shares and the transfer deeds.

3. As regards the second issue, where securities are acquired in several lots at different points of time, the First-in-first-out (FIFO) method shall be adopted to reckon the period of the holding of the security, in cases where the dates of purchase and sale could not be correlated through specific numbers of the scrips. In other words, the assets acquired last will be taken to be remaining with the assessee while assets acquired first will be treated as sold. Indexation, wherever applicable, for long­term assets will be regulated on the basis of the holding period determined in this manner.

9. The CBDT Circular No. 768 dated 24/06/1998, reads as under:-

“420. Determination of “date of transfer” and the “period of holding of securities” held in dematerialised form under section 45(2A) qua transactions in securities

1. At present trading in securities is done through the physical movement of the scrips. Transactions are settled through the endorsement and delivery of the certificates which are also the proof of ownership of the security mentioned therein. This system is fought with many difficulties caused due to bad deliveries and loss of share certificates. In order to remove these difficulties faced by the investors, a system of holding securities in the electronic mode at the option of an investor has now been introduced in India. The object of this system is to eliminate problems which are normally associated with settlement through physical certificates, like tearing/mutilation of share certificates due to careless handling, loss of certificates by postal authorities or registrars or investors, problems of bad delivery, forgery of certificates, etc. The new system is devised to ensure faster and hasslefree settlement of trade with shorter settlement cycles.

2. Under the new system, the movement of the scrips physically from one person to another is totally done away with by introducing certain intermediaries, chief among them being a Depository and a Participant. In order to implement the system of holding and transferring securities through the electronic media, firstly the Depositories Act, 1996, has been enacted. The object of this Act is to regulate the working of the depositories in securities and matters incidental thereto. A depository is an organisation where the securities of a shareholder are held in the electronic form on the request of the shareholder, through the medium of a Depository Participant. The depository is comparable to a bank where an investor who desires to utilise its services can open an account with it through a Depository Participant. However, a Depository is not merely a custodian but is in fact the registered owner of the security and it is the Depository whose name is entered as such in the register of the issuer. The person actually entitled to the security becomes the beneficial owner, whose name is recorded as such in the books of the Depository.

3. The salient feature of this new system is that it is optional and would operate in inconjunction with the existing system of holding securities in physical form. Where an investor opts to hold a security with a Depository, i.e., not in physical possession of a certificate, the Depository shall be intimated of the details of allotment of securities and, accordingly, the depository shall enter in its records the name of the allottee as the beneficial owner of that security. Under this system, physical share certificates are surrendered to the issuing agency and the account maintained with the depository is the only evidence of the ownership of the securities. This conversion of physical certificates into the electronic holdings at the request is called dematerialisation. Whenever purchase/sale, i.e., any transfer of such securities held in dematerialised form is effected, delivery is given or taken by making adjustments in the accounts maintained with the Depository by the two parties. The significant feature of the dematerialised securities is that they are fungible, i.e., all the holdings of a particular security will be identical and inter-changeable and they will have no unique characteristic such as distinctive number, certificate number, folio number, etc. As the holdings of any securities in dematerialised form is represented only by the account with the depository and all transfers are effected through book entries in the accounts maintained by the depository, under this system it is not possible to link the purchase of a security with its sale by means of its distinctive number, etc. It is for this reason that sub-section (2A) has been inserted in section 45 to provide for the computation of capital gains in respect of securities held in dematerialised form. This sub-section provides that for the purposes of calculating the date of transfer and period of holding in respect of shares held in dematerialised form, the FIFO method would apply. Clarifications have been sought on the manner of application of the FIFO system for the determination of the date of transfer and the period of holding.

4. The primary issue under the Income-tax Act in the case of securities whether held in physical form or in the dematerialised form remains the determination of cost of acquisition and the period of holding. The Board had earlier issued Circular No. 704, dated 28-4-1995, which explains the manner in which the ‘date of transfer’ and ‘period of holding’ may be determined. This primary position as regards the ‘date of transfer’ and ‘period of holding’ does not change even when the securities are held in the dematerialised form. The only problem when securities are held in dematerialised form is that the distinct trail linking every share to a certificate and its unique distinctive number linking it with its subsequent sale is not available.

5. Section 45(2A) stipulates that in the case of securities held in dematerialised form, for determining ‘date of transfer’ and ‘period of holding’, the FIFO method would be applicable. FIFO method is generally used to determine the value of any item moving out of a stock account and those remaining in stock at any point of time. When applied to an account holding dematerialised stock, it implies that, out of the existing holdings, the item that first entered into the account is deemed to be the first to be sold out. However, once a sale is linked with an earlier purchase, for determination of their ‘date of transfer’ and ‘period of holdings’, Board’s Circular No. 704 would be applicable. That is to say that the relevant contract notes as explained in Circular No. 704 will have to be referred to, for ascertaining the cost of the security sold and the date of transfer.

When actually operating an account of dematerialised stock by applying FIFO system, certain other issues can arise. For instance, an investor can hold part of his holdings of a security in physical form and the remaining in dematerialised form. Further, he may hold his dematerialised holdings in more than one account with one or more depositories. In such a situation, there can be doubts whether the FIFO system is to be applied globally on the entire holdings of physical and dematerialised holdings or not. In this connection, it is clarified that :

(a) FIFO method will be applied only in respect of the dematerialised holdings because in case of sale of dematerialised securities, the securities held in physical form cannot be construed to have been sold as they continue to remain in possession of the investor and are identified separately.

(b) In the depository system, the investor can open and hold multiple accounts. In such a case, where an investor has more than one security account, FIFO method will be applied accountwise. This is because in case where a particular account of an investor is debited for sale of securities, the securities lying in his other account cannot be construed to have been sold as they continue to remain in that account.

(c) If in an existing account of dematerialised stock, old physical stock is dematerialised and entered at a later date, under the FIFO method, the basis for determining the movement out of the account is the date of entry into the account. This is illustrated by the following examples :

If say, 2500 shares were sold from out of this account, then the period of holding and the cost of acquisition of the first 2000 shares should be as from 25-5-1997 and the cost thereof, whereas the balance 500 shares will be treated as having been acquired in November 1985, at the relevant cost. This is the effect of the FIFO method.”

10. When the facts are considered in the light of the decision of the Hon’ble Delhi High Court in the case of Bharti Gupta Ramola (supra) and the CBDT Circulars (supra), we do not find any error or infirmity in the findings of the ld. CIT(A). Thus, this ground is dismissed.

11. The second grievance relates to the treatment of the assessee as a corporate entity instead of non-corporate entity. The entire action of the AO is based upon the fact that the PAN of the assessee is obtained as a trust and not a company.

12. The ld. D/R strongly supported the findings of the AO. The ld. Counsel for the assessee on other hand, vehemently stated that in all the earlier assessment years, whenever the assessment was framed u/s 143(3) of the Act, the status of the assessee has been accepted as a corporate entity. So much so that, a similar quarrel in AY 2008-09 travelled up to the Tribunal and the Tribunal in ITA No. 3081/Mum/2011; AY 2008-09, vide order dt. 20/09/2016, has decided the issue in favour of the assessee and against the revenue.

13. We have carefully perused the orders of the authorities below. Assessment for AY 2003-04 was framed u/s 143(3) r.w.s. 147 of the Act and the status of the assessee was non-resident company. Similarly, in AY 2005-06, 2007-08 and 2014-15, the assessments were framed u/s 143 of the Act and the status of the assessee was taken as non-resident company. This Tribunal in ITA No. 3081/Mum/2011; AY 2008-09, has held as under:-

“We have heard the rival submissions and perused the material before us. We find that assessee is registered as FII with the SEBI, that the government of Kuwait had established the entity as a public authority. In the official Gazette, dated 20/06/ 1982, the Ministry of Information of government of Kuwait rectified the establishment of a public authority is an independent judicial person. As per the Article 3 of the Gazette the authority was to be managed by the board of directors consisting of Minister of Finance, Minister of Oil and other members to be appointed by government. This, clearly establishes the fact that assessee was part of the State of Kuwait.

It is also a fact that in the earlier and subsequent years the AO has treated the assessee as a corporate entity. While completing the assessment or deciding the appeal, the AO/FAA has not mentioned as to how the facts of the case under consideration were different from the facts of the earlier assessment years, as far as the status of the assessee was concerned. It is not the case of the Department that in the earlier years the returns filed by the assessee were processed under section 143 (1) of the Act. There is no doubt that principles of the res judicata do not apply to the income tax proceedings. But, it is equally true that principles of consistency are applicable to proceedings carried out under the Act. Without assigning any reason and without distinguishing the facts of the earlier years, the AO/FAA cannot alter the status of an assessee as per their wishes. In the case of Galileo Nederland BV ,(367 ITR 319),the Hon’ble Delhi High Court has held as under:

“Decision on an issue or question taken in earlier years though not binding should be followed and not ignored unless there are good and sufficient reasons to take a different view. Said principle is based upon rules of certainty and that a decision taken after due application of mind should be followed consistently as this lead to certainty, unless there are valid and good reasons for deviating and not accepting earlier decision.

The Hon’ble Bombay High Court in the matter of Aroni Commercials Ltd.(362 ITR 403) has dealt the issue of consistency as follow:

Though the principle of res judicata is not applicable to tax matters as each year is separate and distinct, nevertheless where facts are identical from year to year, there has to be uniformity and in treatment.

Principles of natural justice demands that a reason order has to be passed by the tax authorities. Just mentioning that decision taken about the status of the assessee in the earlier years would not be applicable for the year under consideration is not enough. Such an order is A non-speaking order having no reasoning and therefore, it cannot be endorsed.”

14. It would not be out of place to refer to the Amiri Decree and the tax residency certificate which is as under:-

“Article 1

An independent public authority shall be established with juridical status to be named the “Public Investment Authority” and be attached to the Minister of Finance. The seat of the authority shall be in the State of Kuwait and it may set up offices outside the State of Kuwait.

Article 2

The objective of the Authority is to undertake, in the name and for the account of the Government of Kuwait, the management of the State’s Reserve Fund, the monies allocated for the Future Generations Fund, as well as such other monies that the Minister of Finance may entrust the Authority with its management.

Article 3

The Authority shall be managed by a Board of Directors which shall be composed of the Minister of Finance, as Chairman, the Minister of Oil, the under-Secretary of the Ministry of Finance and the Governor of the Central Bank, as well as five other members from among those Kuwaitis specialized in various fields of investment, to be appointed by an Amiri Decree for a four-year term, who may be re-appointed, provided that at least three of them do not hold any public office. The Board of Directors is the body responsible for the affairs of the Authority and has all powers necessary for attaining its objectives, and in particular, the following:

a. Formulation of the general policy of the Authority and supervision of its implementation, preparation and follow-up of investment programs, and issue of decisions necessary thereto.

b. Adoption of financial and administrative regulations necessary for the authority and supervision of its implementation.

c. Undertaking of various transactions of assets investment whether directly or through other establishments.

d. Approval of the Authority’s draft budget and its annual accounts, before their submission to the competent authorities.

Article 4

The Board of Directors shall be convened upon an invitation by its Chairman, and the meeting shall not be valid unless attended by the majority of members, provided the Chairman of the Board being among them. The resolutions of the Board of Directors shall be passed by an absolute majority of the members present, and in case of a draw, the Chairman shall have the casting vote. The Board of Directors must be invited for meeting at least four times a year, by a notice of at least three days prior to the date set for the meeting.

Article 5

The Chairman of the Board of directors shall submit the draft budget of the Authority to the council of Ministers together with a detailed report on the activities of the Authority and the position of the invested assets, to include an evaluation of its performance on the basis of the established investment programs and in the light of the public policy for long-term development. Article 6

The Chairman of the Board of Directors shall represent the Authority before the judiciary and in its relations with third parties. He will also supervise the management of its business, and in so doing he shall have the powers vested in him in accordance with the regulations of the Authority, and he may delegate some of these powers to the Managing Director of the Authority. Article 7

The Board of directors shall, upon the nomination by the Chairman of the Board appoint a Managing Director for the Authority from among those members of the Board who are not ex-officio members, and shall determine his remunerations and conditions of service. The Managing Director shall be responsible before the Board for the business of the Authority, and he shall supervise the execution of the policy and decisions of the board in accordance with the regulations passed by the Board. The Board of Directors may, upon the nomination by the Chairman of the Board, appoint one or more Kuwaiti mangers to assist the Managing Director, and shall determine their remunerations and conditions of service. The Managing director and the managers shall work full-time for the Authority, and neither of them may, during his term of office, undertake any work, with or without pay, except for the Authority and may not carry on any commercial, industrial or professional work.

Article 8

The Authority shall have the body of personnel, in which the employees are appointed in accordance with the regulations adopted by the Board of Directors, but without prejudice to the provisions of Articles 5 and 38 of Decree Law No. 15 of 1979 Concerning Civil Service. The members of the Board of Directors, the employees of the Authority or any of those participating in any form in its activities, may not disclose data or information about their work or the position of the invested assets, without a written permission from the Chairman of the Board of Directors, and this prohibition remains in force even after cessation of the relation of the person with the business of the Authority.

Article 9

Without prejudice to any heavier punishment whoever divulges any of the secrets of the work of the Authority or data or information of which he became aware, by virtue of his work at the Authority, shall be punished with imprisonment for a period not exceeding three years.

Article 10

The Authority shall have a supplementary budget, the revenues of which shall consist of the sums allocated to it by the State in the Public Budget. The fiscal year of the Authority shall correspond to the fiscal year of the State. However, the first fiscal year shall deemed to run from the effective date of this Law till the end of June of the fiscal year which follows.

Article 11

The Board of directors shall prescribe the annual accountancy rules and procedures. The advance audit regulations stipulated in the referenced Law No. 30 of 1964, Shall not apply to the works of the Authority, but this is without prejudice to the powers of the Audit Bureau to examine the Authority’s account without interference in the conduct of its functions or policy. The Authority shall have one or more auditor who shall be from the certified accountants and the Board of Directors shall appoint him, upon the nomination by the Minister of Finance, and determine his fees, and he is to audit the accounts of the fiscal year for which he is appointed.

Article 12

The Prime Minister and the Ministers shall, each within his capacity, execute the provisions of this Law which shall be published in the Official Gazette, and shall take effect from the date of its publication.

AMIR OF KUWAIT JABER AL-AHMAD

Issued at Al-Seif palace on 21 Sha’ban, 1402 Hijra corresponding to 13 June, 1982 AD

15. Considering the facts in totality in the light of the history of the assessee, we do not find any reason to interfere with the findings of the ld. CIT(A). Thus, this ground is also dismissed.

16. Accordingly, ITA No. 478/Mum/2024 for AY 2017-18, is dismissed.

17. As regards, ITA No. 476/Mum/2024 for AY 2021-22, the sum and substance of the grievance of the revenue is that the ld. CIT(A) erred in treating the assessee as a corporate entity instead of non-corporate entity without appreciating the fact that the PAN of the assessee is obtained as a Trust and not a company. This issue has been elaborately discussed by us in ITA No. 478/Mum/2024. For our detailed discussion therein, this Ground is dismissed.

18. In the result, both the appeals of the revenue are dismissed.

Order pronounced in the Court on 14^th August, 2024 at Mumbai.