Ravish Sood ORDER
1. Aforesaid appeal is a partially recalled matter since cross-appeals for AY 2004-05 were disposed-off vide Tribunal order dated 30/08/2019, a copy of which is on record. However, upon assessee's miscellaneous application, revenue's appeal ITA No. 2343/Mum/2009 was recalled vide MA No. 635/Mum/2019 order dated 16/03/2020 for the limited purpose of re-adjudication of Ground Nos. 3(c) & 3(d). Accordingly, the appeal has come up for hearing before this bench wherein we are required to re-adjudicate the issue whether share application money could be considered as capital asset or not by considering the decision of Jurisdictional High Court in the case of CIT V/s Siemens Nixdorf Information Systems Gmbh. The relevant observation of the bench, while recalling the order was as follows:-
9. Considered the rival submissions and material placed on record. We notice that the Coordinate Bench in its order has set aside the findings of Ld. CIT(A) by observing that the share application money subscribed by the assessee is a receivable amount in case such shares were not allotted and the bench relied on S.R. Thorat Milk Products (P) Ltd. of Pune Bench decision, wherein it held that share application money is not a capital asset or cannot equate with share capital. However, we notice that the Hon'ble Jurisdictional High Court in the case of CIT V/s Siemens Nixdorf Information Systems Gmbh has considered the loan given to it subsidiary, even though a receivable amount. as a capital asset u/s. 2(14) of the Act. Admittedly, the aforesaid decision of Hon'ble Jurisdictional High Court was not cited at the time of hearing of appeal. However, the Hon'ble Supreme Court in the case of ACIT V/s Saurashtra Kutch Stock Exchange Ltd. (supra), has held as under:-
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10. Respectfully following the above decision, we are of the considered view that the issue raised in the appeal has to be decided keeping in view the decision of Hon'ble Jurisdictional High Court. Non consideration of the said decision, therefore constitutes a mistake requiring rectification. Therefore, we are inclined to recall Ground No. 3(c) and 3(d) with the limited purpose for adjudicating on the issue of advance for share application, whether it can be considered as capital asset by considering the decision of Jurisdictional High Court in the case of CIT V/s Siemens Nixdorf Information Systems Gmbh (supra). At this stage, we are not inclined to adjudicate on merits or express our opinion on this issue. Accordingly, we direct the registry to fix the present appeal with limited purpose of adjudication of only ground no. 3(c) and 3(d) before the regular bench and issue notices to both the parties for hearing.
Pursuant to the same, we proceed to re-adjudicate the issue whether share application money could be considered as capital asset or not which are the subject matter of Ground Nos. 3(c) & 3(d) of revenue's appeal.
2. We have carefully heard rival submissions, oral as well as written and carefully perused relevant material on record including orders of lower authorities and the earlier order of the Tribunal dated 30/08/2019. We have deliberated upon various judicial precedents as cited before us during the course of hearing. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs.
3. The relevant facts as noted by the bench in para no 35 of its order dated 30/08/2019 are that as a part of corporate restructuring undertaken by the assessee group, it was decided that shares of certain group entities held by the assessee would be transferred to other group entities, with the assessee-company focusing on real estate business. Accordingly, the assessee transferred its investments held in the shape of equity shares, preference shares and rights to apply for shares i.e. share application money held in M/s. MBL, to an entity MGM Shareholders Benefit Trust. The assessee similarly transferred equity shares in certain entities as well as share application money held in M/s. Morarjee Legler Limited to M/s. MBL. While doing so, the assessee suffered Lon........