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Tax Publishers Vision Habitate & Services (P) Ltd. v. Pr. CIT [ITA No. 214/Ctk/2019, dt. 31-8-2020] : 2020 TaxPub(DT) 3537 (Cuttack-Tribunal) Revision by PCIT under section 263 pending appeal with Commissioner (Appeals)-- Section 56(2)(viib) *Facts:* Assessee had collected share premium thru issue of shares with share valuation done thru a Chartered Accountant for Rs. 1349 per share. This valuation was questioned by assessing officer in a scrutiny assessment where in it was held at Rs. 739 per share and resultant additions made under section 56(2)(viib). An appeal was filed by assessee against this assessing officer order to Commissioner (Appeals). Pending this appeal the PCIT invoked revision powers under section 263 and further held the share value to be as Rs. 708 per share and subjected the resultant difference also under section 56(2)(viib). Aggrieved assessee went in appeal to ITAT against the order of PCIT -- Held in favour of the assessee that the invocation of section 263 by PCIT was incorrect when an appeal was pending already on the same topic before Commissioner (Appeals). Section 263(1) Explanation (c) applied -- Section 263. (1) Explanation (c) : (c) where any order referred to in this sub-section and passed by the assessing officer had been the subject matter of any appeal filed on or before or after the 1-6-1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. The revisional jurisdiction cannot be exercised which would result in depriving the appellate authority of the power to examine the correctness of the order under appeal, when an appeal has, in fact, been filed in respect of the same matter and was pending before the appellate authority. This has been so held by the Hon'ble Madras High Court in the case of CWT v. Sampathmal Chordia, Executor of Late Neni Kavur Bai (2002) 256 ITR 440 (Mad.) : 2002 TaxPub(DT) 0855 (Mad-HC) where the revision has been held to be invalid as the subject-matter of the revision was the same as that of the pending appeal. *Editorial Note:* Bereft the above; the action of PCIT was only based on a change of opinion thus squarely hit by decisions of CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) and Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC). As to whether section 56(2)(viib) be read as an omnibus section to tax all share premium as being excessive under income from other sources or only as an anti-evasionary clause - the stand of the revenue appears to be one being read as an omnibus provision while the intent of the legislation itself points it to be an anti-evasion provision whereby genuine cases should not fit into it.

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Vision Habitate & Services (P) Ltd. v. Pr. CIT [ITA No. 214/Ctk/2019, dt. 31-8-2020] : 2020 TaxPub(DT) 3537 (Cuttack-Tribunal)

Revision by PCIT under section 263 pending appeal with Commissioner (Appeals)-- Section 56(2)(viib)

Facts:

Assessee had collected share premium thru issue of shares with share valuation done thru a Chartered Accountant for Rs. 1349 per share. This valuation was questioned by assessing officer in a scrutiny assessment where in it was held at Rs. 739 per share and resultant additions made under section 56(2)(viib). An appeal was filed by assessee against this assessing officer order to Commissioner (Appeals). Pending this appeal the PCIT invoked revision powers under section 263 and further held the share value to be as Rs. 708 per share and subjected the resultant difference also under section 56(2)(viib). Aggrieved assessee went in appeal to ITAT against the order of PCIT --

Held in favour of the assessee that the invocation of section 263 by PCIT was incorrect when an appeal was pending already on the same topic before Commissioner (Appeals). Section 263(1) Explanation (c) applied --

Section 263. (1) Explanation (c) :

(c) where any order referred to in this sub-section and passed by the assessing officer had been the subject matter of any appeal filed on or before or after the 1-6-1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.

The revisional jurisdiction cannot be exercised which would result in depriving the appellate authority of the power to examine the correctness of the order under appeal, when an appeal has, in fact, been filed in respect of the same matter and was pending before the appellate authority. This has been so held by the Hon'ble Madras High Court in the case of CWT v. Sampathmal Chordia, Executor of Late Neni Kavur Bai (2002) 256 ITR 440 (Mad.) : 2002 TaxPub(DT) 0855 (Mad-HC) where the revision has been held to be invalid as the subject-matter of the revision was the same as that of the pending appeal.

Editorial Note: Bereft the above; the action of PCIT was only based on a change of opinion thus squarely hit by decisions of CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) and Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).

As to whether section 56(2)(viib) be read as an omnibus section to tax all share premium as being excessive under income from other sources or only as an anti-evasionary clause - the stand of the revenue appears to be one being read as an omnibus provision while the intent of the legislation itself points it to be an anti-evasion provision whereby genuine cases should not fit into it.