CIT v Reliance Communication Infrastructure Ltd. [28 taxmann.com 302] –BOMBAY HIGH COURT Background: Assessee filed its return of income for the AY 2004-05 declaring a loss of Rs.277 crores. The AO passed order under Section 143(3) of the Act determining the loss at Rs.276 crores under the normal provisions of the Act and determining the income of Rs.394 crores under the provisions of Section 115 JB of the Act. The Commissioner of Income Tax on review found that the assessment order appeared to be erroneous and prejudicial to the interest of the revenue on following two counts: (i) That 50 crores shares of Reliance Infocomm Ltd. (RIL) were transferred at the rate of Rs.1/- per share (the face value per share) to Mr Mukesh Ambani when the market value of the share was Rs.53.01/- per share. Therefore, a sum of Rs.2635 crores was proposed to be taxed as a short term capital gain being a difference between market value per share of Rs.53.71 and face value per share was Rs.1/-. (ii) Amount of Rs.3037 crores received from Reliance Infocomm Ltd. as fees for grant of Indefeasible Right of Connectivity (IRC) for a period of 20 years was income accrued to the assessee in the assessment year 2004-05 itself.