COMMISSIONER OF INCOME TAX Vs. PIVET FINANCE LTD

JUDGEMENT

(1.) Revenue has invoked Section 260A of the Income-tax Act, 1961 (for brevity 'the Act') by filing four appeals namely ITA Nos. 719 to 722 of 2009 against the same assessee in respect of assessment years 2003-04 and 2004-05. The orders passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity 'the Tribunal') in contents and substance are the same. The Revenue has claimed various questions of law. However, an all pervasive question which has been raised is whether the assessee-respondent has been consistently resorting to colourable device with the object of reducing the tax liability by transferring shares to another group of companies with a view to reduce the taxable income. The Tribunal has recorded categorical finding concerning genuineness of the transaction inasmuch as the transaction was at the then prevailing market rate. The Assessing Officer did not dispute the amount of consideration of sale received by the assessee-respondent from the buyer. Therefore, it has been concluded that there was no reason to accept that the shares were sold only for the purpose of reducing the tax liability. The Tribunal has placed reliance on the judgment of Hon'ble the Supreme Court rendered in the case of Union of India v. Ajadi Bachao Andolan, 2003 263 ITR 706 which has explained in detail its earlier judgment in the case of McDowell & Co. Ltd. v. CTO, 1985 154 ITR 148. The aforementioned issue was considered by a Division Bench of this Court in the case of Porrits & Spencer (Asia) Ltd. v. CIT, 2010 190 Taxman 174 and it was concluded that once the transaction has been found to be genuine by the Tribunal then it cannot be dubbed as colourable device. It was further held that if the transaction was otherwise valid in law and a part of tax planning then merely because it has resulted in reduction of tax it cannot be ignored on the ground that the underlying motive of entering into such a transaction by the assessee was to reduce its tax liability to the State. The evasion of tax is substantially different than the planning concerning tax. Accordingly, a taxpayer will be within his right to resort to a device to divert the income before it arrives to him and effectiveness of such a device would not depend upon consideration of morality. Keeping in view the reasoning given in the decision of this Court in Porrits & Spencer (Asia) Ltd. 's case (supra), we are not inclined to admit these appeals as no question of law would arise for determination of this Court. The other questions claimed by the revenue are consequential.

(2.) Accordingly, all these appeals fail and the same are dismissed.