COMMISSIONER OF INCOME TAX Vs. RANBAXY HOLDINGS COMPANY

JUDGEMENT

(1.) The order dated 15.05.2009 passed by the Income Tax Appellate Tribunal in ITA 2062/Del/2002 relating to the assessment year 1998-1999 is assailed by the revenue before us by way of this appeal.

(2.) The facts of the case are that the assessee had filed a return of income wherein it was shown that in the year in question the assessee company had disposed of 75,600 equity shares of Ranbaxy Laboratories Limited (RLL). The actual cost of the shares sold was Rs. 1,10,57,400/- and this figure was used for the purposes of computing capital gains under Section 48 of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act'). However, in the books of accounts, the assessee company followed. Accounting Standard-13 and took the average cost of Rs. 40,78,693/- as the cost price of these shares. The Assessing Officer issued a notice under Section 154 proposing to rectify the purported mistake in the intimation issued under Section 143(1)(a) of the said Act. The so-called mistake, which was sought to be rectified, was that as per the balance sheet, the value of the shares was shown at Rs. 40,78,693/- whereas the cost price of the shares of RLL was taken at Rs. 1,10,57,400/- for the purposes of computation of capital gains. According to the Assessing Officer, the value of the shares was overstated in the balance sheet by Rs. 69,78,707/- and the Assessing Officer required the assessee to indicate as to why the said amount should not be added to the returned income. Thereafter, in the order passed under Section 154/143(1)(a) of the said Act, the Assessing Officer made the aforesaid addition which was confirmed by the Commissioner of Income Tax (Appeals).

(3.) The question before the Tribunal was whether the adjustment made by the Assessing Officer in the returned income was a debatable issue relating to the computation of capital gains and cost of the shares sold by the assessee as indicated in the return of the income filed by the assessee. The Tribunal came to the following conclusion with regard to the question of rectification of the intimation under Section 143(1)(a):