M/s. Intercontinental India, Ahmedabad V. The Dy.CIT., Circle-10, Ahmedabad

CO 201/AHD/2007

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5205 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-09-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-07-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Business expenditure; Opportunity of being heard; Commercial expediency; Revised return
• Section: 80HHC; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) C. O. NO.201/ AHD/2007 AND 61/AHD/2009 (IN ITA NO. 2033/AHD/2007 AND 600/AHD/2009 FOR A.Y. 2003-004 AND 2004-05) M/S. INTERCONTINENTAL (INDIA), 8 TH FLOOR, SHIKHAR, NR. MITHAKALI CIRCLE, NAVRANGPURA, AHMEDABAD VS THE D. C. I. T, CIRCLE-10, NARAYAN CHAMBER, ASHRAM ROAD, AHMEDABAD PA NO. -- (CROSS OBJECTOR) (RESPONDENT) CROSS OBJECTOR BY SHRI S. N. SOPARKAR AND SMT. URVASHI SHODHAN, AR RESPONDENT BY SHRI ANIL KUMAR, DR O R D E R PER BHAVNESH SAINI: BOTH THE CROSS OBJECTIONS BY THE ASSESSEE ARE FILED ON FILING OF DEPARTMENTAL APPEALS AND ARE DIRECTED AGAINST DIFFERENT ORDERS OF LEARNED CIT(A) XVI DATED 19-01- 2007 FOR ASSESSMENT YEAR 2003-04 AND DATED 17-12-2008 FOR ASSESSMENT YE AR 2004-05. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH T HE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND T HE MATERIALS AVAILABLE ON RECORD. CO NO.201/AHD/2007 A. Y. 2003-04 3. THE ASSESSEE FILED CONCISE GROUNDS OF C. O. HOWE VER, GROUNDS NO.1, 3, 4 AND 5 OF THE CROSS OBJECTION ARE NOT PRESSED. SAME ARE DISMISSED AS WITHDRAWN. GROUND NO.8 OF THE CROSS OBJECTION IS RE GARDING CHARGING OF INTEREST WHICH IS CONSEQUENTIAL AND IS NOR PRESSED. THE SAME IS ALSO DISMISSED BEING NOT PRESSED. C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 2 4. ON GROUND NO.2 OF THE CROSS OBJECTION THE ASSESS EE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN UPHOLDING THE DISALL OWANCE OF DEDUCTION FOR RS.11 LACS PAID BY THE ASSESSEE TO SOLA GRAM PACHAY AT. ON THIS ISSUE AS DISCUSSED IN PARA 11 OF THE ASSESSMENT ORDER, THE A SSESSEE HAD EXPLAINED BEFORE THE AO THAT THE AMOUNT WAS PAID FO R POSSESSION OF CERTAIN LANDS. AS THE INCOME ARISING FROM SALE OF D EVELOPMENT CHARGES HAS BEEN OFFERED FOR TAXATION, IT IS ADMISSIBLE BUS INESS EXPENDITURE. THIS EXPLANATION IS NOT ACCEPTED BY THE AO. HE HAS OBSER VED THAT THE AMOUNT AS PAID LOKFALA FOR CHARITY. HE HAS CONSIDERED IT AS DONATION TO PUBLIC AT LARGE FOR CHARITY. HENCE, IT WAS NOT ALLOWABLE A S BUSINESS EXPENDITURE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT ABO VE AMOUNT WAS GIVEN TO SOLA GRAM PANCHAYAT DURING THE COURSE OF BUSINES S FOR PURCHASE/SALE OF DEVELOPMENT RIGHTS. THE SAME HAS NOT BEEN GIVEN AS CHARITY OR DONATION AS STATED BY THE AO. AS THE INCOME ARISING SALE OF DEVELOPMENT RIGHTS FOR RS.21.27 CRORES HAS BEEN OFFERED FOR TAX ATION DURING THE YEAR AND EXPENDITURE INCURRED BY THE ASSESSEE HAS DIRECT NEXUS WITH THE BUSINESS INCOME EARNED DURING THE YEAR, THE AMOUNT IS ALLOWABLE AS BUSINESS EXPENDITURE. THE LEARNED CIT(A) HOWEVER, D ID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DID NOT FIND MERIT F OR ALLOWING DEDUCTION. THIS GROUND WAS ACCORDINGLY DISMISSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED UPON T HE ORDER OF ITAT, AHMEDABAD B BENCH IN THE CASE OF DCIT VS GUJARAT FLUROCHEMICALS LTD. IN ITA NO.3841/AHD/1996 DATED 11-01-2002 IN WH ICH THE LEARNED CIT(A) DELETED THE DISALLOWANCE OF VILLAGE DEVELOPM ENT EXPENSES AND ALLOWED THE SAME U/S 37 (1) OF THE IT ACT. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F IN THE CASE OF SRI VENKATA SATYANARAYANA RICE MILL CONTRACTORS CO. VS CIT 223 ITR 101. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E ORDER OF THE C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 3 TRIBUNAL IN THE CASE OF GUJARAT FLUROCHEMICALS LTD. (SUPRA) IS NOT APPLICABLE TO THIS CASE BECAUSE THE EXPENSES IN THE CASE OF THE ASSESSEE ARE NOT CONNECTED WITH THE BUSINESS ACTIVITY OF THE ASSESSEE. THE ASSESSEE HAS NOT EXPLAINED ANY SPECIFIC PURPOSE OF BUSINESS FOR WHICH EXPENDITURE WAS CLAIMED AS DEDUCTION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. THE HONBLE SUPREME COURT IN T HE CASE OF SRI VENKATA SATYANARAYANA RICE MILLS CO. VS CIT (SUPRA) HELD AS UNDER: HELD, REVERSING THE DECISION OF THE HIGH COURT, THAT THIS WAS NOT A CASE WHERE THE ASSESSEE WAS PAY ING A BRIBE TO ANY PERSON NOR A CASE WHERE THE MONEY WA S BEING CONTRIBUTED TO ANY PRIVATE FUND OR FOR THE BE NEFIT OF ANY INDIVIDUAL WHICH COULD BE REGARDED AS A FORM OF ILLEGAL GRATIFICATION. BY A VOLUNTARY SCHEME, WITH WHICH THE DISTRICT COLLECTOR WAS ASSOCIATED, THE DISTRICT WELFARE FUND HAD BEEN ESTABLISHED FOR THE BENEFIT O F GENERAL PUBLIC. THE PAYMENT TO SUCH A FUND WHICH WA S OPENLY MADE BY ALL THE MILLERS AND WHICH FUND WAS BEING USED FOR PUBLIC BENEFIT COULD NOT BE REGARDED AS BEING OPPOSED TO PUBLIC POLICY. REQUIRING PAYMENT T O BE MADE FOR A JUST CAUSE WHICH WOULD ENTITLE A BUSINESSMAN TO OBTAIN A LICENCE OR PERMIT COULD NOT BE REGARDED AS BEING AGAINST PUBLIC POLICY. THE EXPENDITURE HAD BEEN MOTIVATED PURELY BY COMMERCIAL CONSIDERATION AND WAS ALLOWABLE AS A DEDUCTION UNDE R SECTION 37(1) OF THE INCOME-TAX ACT, 1961. WHAT IS TO BE SEEN IS NOT WHETHER IT WAS COMPULSORY FOR THE ASSESSEE TO MAKE THE PAYMENT OR NOT BUT WHETHER IT WAS EXPENDED OUT OF CONSIDERATIONS O F COMMERCIAL EXPEDIENCY. AS LONG AS THE PAYMENT IS MA DE FOR THE PURPOSES OF THE BUSINESS, AND THE PAYMENT M ADE IS NOT BY WAY OF PENALTY FOR INFRACTION OF ANY LAW, THE SAME WOULD BE ALLOWABLE AS A DEDUCTION. IN THE CASE OF DCIT VS GUJARAT FLUROCHEMICALS LTD. (SUPRA), THE ASSESSEE CLAIMED DEDUCTION OF THE EXPENDITURE ON ACCOUNT OF VILLAGE DEVELOPMENT C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 4 EXPENSES. THE LEARNED CIT(A) ALLOWED THE CLAIM OF T HE ASSESSEE. IT WAS PLEADED BEFORE THE TRIBUNAL THAT THE FACTORY OF THE ASSESSEE IS SITUATED NEAR THE VILLAGE AND THE EXPENDITURE WAS SPENT FROM BUSINESS POINT OF VIEW OF THE ASSESSEE. THE SAME DECISION OF THE HON BLE SUPREME COURT ABOVE WAS REFERRED TO AND IT WAS EXPLAINED THAT CON TRIBUTION WAS THOUGH MADE FOR GENERAL PUBLIC UTILITY BUT IT WAS DIRECTLY CONNECTED WITH THE CARRYING ON OF BUSINESS ACTIVITY OF THE ASSESSEE AN D DEDUCTION IS ALLOWABLE U/S 37 (1) OF THE IT ACT. THE TRIBUNAL AL SO ACCEPTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE AMOUNT IN QUESTION APPEARS TO HAVE BEEN LAID OUT OR EXPENDED WHOLLY OR EXCLUSI VELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. ACCORDINGLY, DEPARTMENTAL APPEAL WAS DISMISSED ON THIS GROUND. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISION, IT IS CLEAR THAT THE ASSESSEE H AS INCURRED THE ABOVE EXPENSES WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESSEE EXPLAINED THAT THE AMOUNT WAS PAID FOR POS SESSION OF CERTAIN LANDS AND WHEN INCOME ARISES FROM SALE OF DEVELOPME NT RIGHTS OUT OF THE SAME LANDS, THE SAME WAS OFFERED FOR TAXATION. IT W AS ALSO EXPLAINED THAT SINCE THE AMOUNT WAS PAID TO GRAM PANCHAYAT DURING THE COURSE OF ITS BUSINESS FOR PURCHASE/SALE OF DEVELOPMENT RIGHTS, T HEREFORE, THE AMOUNT IS PAID FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE . THE ABOVE DECISIONS ARE, THEREFORE, CLEARLY APPLICABLE TO THE CASE OF T HE ASSESSEE BECAUSE THE AMOUNT SPENT APPEARS TO HAVE BEEN PAID WHOLLY AND E XCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE FOR TAKING POSS ESSION OF THE LANDS FOR THE PURPOSE OF BUSINESS. SUCH EXPENDITURE, THEREFOR E, ARE ALLOWABLE DEDUCTION AS PER SECTION 37 OF THE IT ACT. WE ACCOR DINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDI TION. 7. IN THE RESULT, GROUND NO.2 OF THE CROSS OBJECTIO N OF THE ASSESSEE IS ALLOWED. C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 5 8. ON GROUND NO.6 OF THE CROSS OBJECTION, THE ASSES SEE CHALLENGED THE ORDER OF THE LEARNED CIT(A) UN UPHOLDING THE ASSESS MENT OF RS.9,17,38,128/- AS LONG TERM CAPITAL GAIN ON SALE OF SHARES OF GUJARAT ADANI PORT LTD. THE ASSESSEE HAS ITSELF OFFERED TH IS CAPITAL GAIN IN THE RETURN OF INCOME. HOWEVER, IN THE COURSE OF ASSESSM ENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT THIS AMOUNT IS NOT TAXABLE IN THE YEAR UNDER CONSIDERATION AS ACTUALLY TRANSFERRED AND TRANSACTI ON HAD TAKEN PLACE IN THE NEXT YEAR. THE ASSESSEES CLAIM IS REPRODUCED O N PAGES 17 AND 18 OF THE ASSESSMENT ORDER. THE CLAIM HAS BEEN REJECTED A S PER DISCUSSION IN PARA 8.5 OF THE ASSESSMENT ORDER. IT IS OBSERVED BY THE AO THAT ACCORDING TO SECTION 2 (47) OF THE IT ACT, TRANSFER IN RELATI ON TO CAPITAL ASSET INCLUDES SALE, EXCHANGE, RELINQUISHMENT OF ASSET OR ASSIGNMENT OF ANY RIGHTS THEREOF. IT IS STATED THAT THE ASSESSEE HAD RAISED DEBIT NOTE FOR RS.1,12,40,000/- AND NECESSARY ENTRY WAS PASSED IN RESPECT OF ACCOUNTS. THE ACCRUAL OF INCOME DOES NOT DEPEND UPON CONSISTE NCY. IT IS STATED THAT FOR ACCRUAL OF INCOME UNCONDITIONAL LIABILITY SHOULD BE CREATED IN FAVOUR OF THE ASSESSEE. POSTPONEMENT OF THE DATE OF PAYMENT DOES NOT POSTPONE THE ACCRUAL OF INCOME. THE INCOME WAS ACCR UED ON THE DATE DEBIT NOTE WAS RAISED BY THE ASSESSEE. BESIDES, RET URN OF INCOME HAS NOT BEEN REVISED TILL DATE. IN VIEW OF THIS THE ASSESSE ES CLAIM THAT THIS INCOME SHOULD NOT BE TAXED IN THE YEAR UNDER CONSIDERATION WAS NOT ACCEPTABLE. THE ADDITION WAS CHALLENGED BY THE LEARNED CIT(A) A ND IT WAS SUBMITTED THAT IT HAD RAISED DEBIT NOTE FOR SALE OF SHARES OF GAPL TO ADANI IMPEX LTD. AND ADANI PROPERTIES LTD. ON 31-03-2003. HOWEV ER, THE ASSESSEE HAS BEEN HOLDING THE SHARES OF GAPL IN D-MATE ACCOUNT. THE SAID SHARES WERE TRANSFERRED TO THE AFORESAID PARTIES FROM D-MA TE ACCOUNT OF THE ASSESSEE ON 19-07-2003 AND 21-07-2003 RESPECTIVELY I.E. IN THE NEXT ASSESSMENT YEAR. THE AMOUNT RECEIVABLE AGAINST SALE OF SUCH SHARES HAS BEEN RECEIVED IN THE ASSESSMENT YEAR 2004-05. IT WA S FURTHER STATED THAT ACCORDING TO SECTION 2 (47) (I) OF THE IT ACT, TRAN SFER INCLUDES SALE. A SALE C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 6 MAY BE DEFINED AS A CONTRACT FOUNDED ON MONEY CONSI DERATION BY THE ABSOLUTE OR GENERAL PROPERTY IN THE SUBJECT OF SALE AS TRANSFERRED FROM THE SELLER TO THE BUYER. THE ESSENTIAL OF THE SALE ARE MUTUAL AGREEMENT, BOUND PARTIES, MONEY CONSIDERATION AND TRANSFER OF ABSOLUTE OR GENERAL PROPERTY FROM SELLER TO BUYER. IF ONE OF THE ABOVE INGREDIENTS BE WANTING, THERE IS NO SALE TRANSACTION. IN THE CASE OF THE AS SESSEE ONE OF THE MAIN INGREDIENTS IS TRANSFER OF PROPERTY (SHARES) IS NOT PRESENT IN THE ASSESSMENT YEAR 2003-04 UNDER APPEAL. THEREFORE, IT COULD NOT BE TREATED AS TRANSACTION IN THE ASSESSMENT YEAR UNDER APPEAL. IT WAS FURTHER STATED THAT THE AFORESAID SHARES HAD NOT BEEN TRANSFERRED DURING THE ASSESSMENT YEAR UNDER APPEAL, ALL THE RIGHTS OF EQU ITY SHAREHOLDERS OF SHARES OF GAPL BELONGED TO THE ASSESSEE AS ON 31-03 -2003 AND UP TO THE DATE OF TRANSFER. NO SUCH RIGHTS LIKE ENTITLEMENT O F DIVIDEND ENTITLEMENT OF BONUS ETC. BELONGING TO THE PURCHASER OF SHARES TIL L THE DATE OF TRANSFER OF SHARES. THEREFORE, IT WAS STATED THAT TILL THE DATE OF ACTUAL TRANSFER OF SHARES NO SALE HAS TAKEN PLACE IN THE CASE OF THE A SSESSEE. THE ASSESSEE ALSO RELIED UPON THE PROVISIONS OF SECTION 45 (2) ( A) OF THE IT ACT ACCORDING TO WHICH TAX WOULD BE CHARGED OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. IT WAS FURTHER SUBMITTED THAT SINCE TRA NSFER TOOK PLACE IN THE ASSESSMENT YEAR 2004-05, THEREFORE, LONG TERM CAPIT AL GAIN ARISING OUT OF SALE OF SUCH TRANSACTIONS CAN BE TAXED IN THE NEXT ASSESSMENT YEAR 2004- 05 AND NOT IN THE CURRENT YEAR. 9. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE AND MATERIAL ON RECORD NOTED THAT THE ASSESSEE HAS OFFERED CAPITAL GAIN IN THE RETURN ITSELF BUT CLAIM IS MADE DURING THE COUR SE OF ASSESSMENT THAT THERE IS NO ACTUAL TRANSFER TAKEN PLACE IN THE ASSE SSMENT YEAR UNDER APPEAL AND THE TRANSFER HAS TAKEN PLACE IN THE NEXT ASSESSMENT YEAR. THE CONTENTION OF THE ASSESSEE WAS REJECTED BY FOLLOWIN G THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) 284 ITR 323 IN C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 7 WHICH IT WAS HELD THAT THE AO HAS NO POWER OF ENTER TAIN CLAIM MADE OTHER WISE THAN BY WAY OF REVISED RETURN. THE LEARN ED CIT(A), THEREFORE, NOTED THAT SINCE NO CLAIM IS MADE IN THE REVISED RE TURN AND THE ASSESSEE ITSELF OFFERED FOR CAPITAL GAIN, THEREFORE, THIS GR OUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 10. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED UPON T HE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS JAI PARABOLIC SPRINGS LTD. 306 ITR 42 IN WHICH THE HONBLE HIGH COURT CONSIDE RING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (IN DIA) LTD. (SUPRA) HELD THAT THERE WERE NO PROHIBITION ON THE POWER OF THE TRIBUNAL TO ENTERTAIN ADDITIONAL GROUND WHICH ACCORDING TO THE TRIBUNAL A ROSE IN THE MATTER AND FOR THE JUST DECISION IN THE CASE. THERE WAS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESS EE ALSO RELIED UPON THE ORDER OF THE ITAT AHMEDABAD BENCH IN THE CASE O F MISSIONPHARMA LOGISTICS (INDIA) PVT. LTD. VS DCIT IN ITA NO.2410/ AHD/2007 DATED 29-05-2009 IN WHICH ON THE IDENTICAL ISSUE IT WAS H ELD AS UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE SHORT ISSUE TO BE DECIDED BY US IS THAT WHETHER CLA IM OF DEDUCTION U/S. 80 HHC OF THE INCOME TAX ACT, 1961 W AS ALLOWABLE TO THE ASSESSEE, WHERE SUCH CLAIM WAS NOT MADE IN THE RETURN OF INCOME FILED, BUT WAS MADE BE FORE THE ASSESSING OFFICER WHEN THE CLAIM FOR DEDUCTION U/S. 10A OF THE INCOME TAX ACT, 1961 WAS DENIED TO THE ASSESSEE. THE ASSESSING OFFICER AS WELL AS THE LD. CIT(APPEALS) HAS DISALLOWED THE CLAIM OF DEDUCTION TO THE ASSESSEE ON THE GROUND THAT THE SAME WAS NOT CLAIMED IN THE RETURN OF INCOME FILED NOR ANY REVIS ED RETURN WAS FILED, FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. WE FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF JA I PARABOLIC SPRINGS LTD. (SUPRA) AND THE JAIPUR BENCH IN C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 8 THE CASE OF WORLD WIDE STONES (SUPRA) HAS HELD THAT T4HE TRIBUNAL HAD POWER TO ALLOW DEDUCTION FOR EXPENDITURE TO THE ASSESSEE TO WHICH IT WAS OTHERWI SE ENTITLED TO EVENTHOUGH NO CLAIM WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME. MOREOVER, IN THE INSTANT CASE IT IS OBSERVED THAT THE ASSESSEE PREFE RRED CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT. ON LY WHEN THE ASSESSEE WAS INFORMED THAT HIS CLAIM UNDER SECTION 10A IS NOT ALLOWABLE OCCASION FOR CLAIMING DEDUCTION UNDER SECTION 80 HHC AROSE. THE ASSESSEE COULD NOT HAVE CLAIMED DEDUCTION UNDER SECTION 10A AND UNDER SECTION 80HHC SIMULTANEOUSLY IN THE SAME COMPUTATION. THE ASSESSEE SUBMITTED BEFORE US THAT IT DULY DISCLOSED IN THE RETURN BY WAY OF A NOTE THAT IN CASE DEDUCTION UNDER SECTION 10A IS NOT ALLOWED THE N DEDUCTION UNDER SECTION 80 HHC MAY BE ALLOWED. THE ABOVE SUBMISSION OF THE ASSESSEE WAS NOT DISPUTED B Y THE LD. DEPARTMENTAL REPRESENTATIVE. IT IS NOT IN DISPUTE THAT THE AUDIT REPORT REQUIRED FOR CLAIMING DEDUCTION UNDER SECTION 80 HHC WAS FILED BEFORE COMPLETION OF THE ASSESSMENT. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN NOT ENTERTAINING THE BONAFIDE CLAIM OF THE ASSESSEE BY EXERCISING APPELL ATE POWER CONFERRED UPON HIM THUS IN OUR OPINION THE ASSESSEE WAS ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80 HHC AND THE DEDUCTION IN ACCORDANCE WITH THE LAW OUGHT TO HAVE BEEN ALLOWED TO THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORI TIES ON THIS ISSUE HOWEVER, AS THE MATTER REQUIRES VERIFICATION, WHETHER THE ASSESSEE HAS FULFILLED AL L THE CONDITIONS LAID DOWN IN SECTION 80-HHC OF THE INCOM E TAX ACT, 1961 TO BE ELIGIBLE FOR DEDUCTION, THEREFO RE, THE MATTER NEEDS TO BE RESTORED BACK TO T4HE FILE OF TH E ASSESSING OFFICER FOR ADJUDICATING THE SAME IN ACCORDANCE WITH LAW, AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. WE O RDER ACCORDINGLY. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SU BMITTED THAT SINCE THE LEARNED CIT(A) HAS NOT DECIDED THE ISSUE ON MERIT, THEREFORE, THE LEARNED CIT(A) MAY BE DIRECTED TO DECIDE THE ISSUE ON MERIT . THE LEARNED DR DID C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 9 NOT OPPOSE THE REQUEST TO REMAND THE MATTER TO THE LEARNED CIT(A) TO DECIDE THE SAME AFRESH. 11. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE LEARNED CIT(A). THE ASSESSEE SPECIFICALLY PLEADED BEFORE THE LEARNED CI T(A) THAT THE CAPITAL GAIN ARISES IN THE SUBSEQUENT ASSESSMENT YEAR 2004- 05 BECAUSE NO TRANSFER OF SHARES HAD TAKEN PLACE IN THE ASSESSMEN T YEAR IN QUESTION. THE SUBMISSIONS OF THE ASSESSEE WAS BASED UPON THE FACTS AVAILABLE ON RECORD AS WELL AS SUPPORTED BY THE PROVISIONS OF LA W. THE LEARNED CIT(A) INSTEAD OF DECIDING THE ISSUE ON MERIT MERELY REJEC TED THE CLAIM OF THE ASSESSEE ON THE REASONS THAT THE AO HAS NO POWER TO ENTERTAIN THE CLAIM MADE OTHER WISE THAN BY WAY OF REVISED RETURN. THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS JAI PARABOLIC SPRINGS LTD. AND THE ORDER OF THE ITAT IN THE CASE OF MISSIONPH ARMA LOGISTICS (INDIA) PVT. LTD. VS DCIT (SUPRA) SQUARELY APPLY TO THE FA CTS OF THE CASE AND, THEREFORE, THE ORDER OF THE LEARNED CIT(A) CANNOT B E SUSTAINED IN LAW. THE CLAIM OF THE ASSESSEE WAS RAISED IN ACCORDANCE WITH LAW AND THERE WAS NO PROHIBITION FOR THE LEARNED CIT(A) FOR DECIDING THE ISSUE ON MERIT. WE ACCORDINGLY, BY FOLLOWING THE DECISION OF THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT VS JAI PARABOLIC SPRINGS LTD. (SUP RA) AND THE ORDER OF THE TRIBUNAL IN THE CASE OF MISSIONPHARMA LOGISTICS (IN DIA) PVT. LTD. VS DCIT (SUPRA) SET ASIDE THE ORDER OF THE LEARNED CIT(A) A ND RESTORE THIS ISSUE TO THE FILE OF THE LEARNED CIT(A) WITH DIRECTION TO DE CIDE THE ISSUE ON MERITS CONSIDERING THE MATERIAL ON RECORD BY GIVING REASON ABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12. IN THE RESULT, GROUND NO.6 OF THE CROSS OBJECTI ON OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 10 13. ON GROUND NO.7 OF THE CROSS OBJECTION, THE ASSE SSEE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN UPHOLDING THE ASSESS MENT OF RS.21,26,65,607/- ON ACCOUNT OF INCOME FROM ASSIGNM ENT OF DEVELOPMENT RIGHTS BY THE ASSESSEE TO M/S. SIDDHI C ORPORATION. THE LEARNED CIT(A) NOTED THAT THIS ISSUE IS DISCUSSED I N PARA 9 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS OBTAINED DEVELOP MENT RIGHTS BY WAY OF DEVELOPMENT AGREEMENT DATED 09-07-1999 FROM BALK RISHNA COOPERATIVE HOUSING SOCIETY LTD. FOR 27098 SQ.YDS. AS PER AUDA DATED 09-07-1999 MODI NAGAR COOPERATIVE HOUSING SOCIETY LTD. 38146 SQ. YDS. AND ON 25-05-2000 SASHI PROPERTIES DEVELOPE R PVT. LT. 25,000 SQ. YDS. THE ASSESSEE HAD ENTERED INTO MOU WITH SID DHI CORPORATION TO ASSIGN THE ABOVE DEVELOPMENT RIGHTS AND IN RESPECT THEREOF SHOWN INCOME OF RS.21,26,65,607/- IN THE RETURN OF INCOME . HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS CLAIMED THAT SOME INCOME IS NOT TAXABLE IN THE ASSESSMENT YEAR UNDER APPEAL I.E . 2003-04, BUT IT MAY BE TAXABLE IN THE SUBSEQUENT ASSESSMENT YEAR WHEN S UCH DEVELOPMENT RIGHTS ARE ACTUALLY TRANSFERRED. THE CLAIM OF THE A SSESSEE WAS REJECTED ON THE SAME REASONING ON WHICH GROUND NO.6 OF THE CROS S OBJECTION IS RAISED. THE ASSESSEE REITERATED THE SUBMISSIONS OF THE LEARNED CIT(A) AND ALSO REFERRED TO MAJOR CONDITIONS OF THE MOU THAT S IDDHI CORPORATION TO SHOW THAT NO REAL INCOME HAS ARISEN IN THE ASSESSME NT YEAR UNDER APPEAL. THE ASSESSEE ALSO RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GODHRA ELECTRICITY COM PANY 225 ITR 746 AND ALSO REFERRED TO OTHER DECISIONS TO SHOW THAT O NLY REAL INCOME HAS TO BE TAXED. THE ASSESSEE EXPLAINED THAT SINCE THERE W AS NO TRANSFER DURING ASSESSMENT YEAR UNDER APPEAL, THEREFORE, NO ADDITIO N COULD BE MADE IN THE ASSESSMENT YEAR UNDER APPEAL. THE LEARNED CIT(A ) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE SAME REASONING AS GIVEN ON GROUND NO.6 OF THE CROSS OBJECTION AND ALSO BRIEFLY NOTED THAT SINCE NO REVISED RETURN IS FILED, THEREFORE, CLAIM OF THE ASSESSEE C OULD NOT BE MADE BEFORE C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 11 THE AO AT THE ASSESSMENT STAGE AND BY RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GODHRA ELECTRI CITY COMPANY (SUPRA) THE CLAIM OF THE ASSESSEE WAS REJECTED. 14. THE LEARNED REPRESENTATIVE OF BOTH THE PARTIES ADMITTED THAT THE ISSUE IS SAME AS IS ARGUED ON GROUND NO.6 OF THE CR OSS OBJECTION AND BOTH OF THEM PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR DECIDING THE SAME ON MERIT IN AC CORDANCE WITH LAW. 15. ON CONSIDERATION OF THE SUBMISSIONS OF THE PART IES AND THE ISSUE INVOLVED, WE ARE OF THE VIEW THAT THE ISSUE IS SAME AS IS CONSIDERED ON GROUNDNO.6 OF THE CROSS OBJECTION. BY FOLLOWING THE REASONS FOR DECISION ON THE SAME GROUND, WE SET ASIDE THE ORDER OF THE L EARNED CIT(A) AND RESTORE THIS ISSUE TO HIS FILE WITH DIRECTION TO RE -DECIDE THIS GROUND ON MERIT, BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 16. IN THE RESULT, GROUND NO. 7 OF THE CROSS OBJECT ION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 17. NO OTHER GROUND IS ARGUED OR PRESSED. 18. AS A RESULT, THE CROSS OBJECTION OF THE ASSESSE E IN CO NO.201/AHD/2007 IS ALLOWED PARTLY AS INDICATED ABOV E. C.O. NO.61/AHD/2009 (IN ITA NO. 600/AHD/2009 A. Y. 2004-05) 19. THE ASSESSEE IN THE CROSS OBJECTION RAISED THE FOLLOWING ADDITIONAL GROUND: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, WITHOUT PREJUDICE TO THE CLAIM MADE IN THE A. Y. 20 03-04 TO C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 12 DELETE THE LONG TERM CAPITAL GAIN OF RS.9,71,38,128 /- ON SALE OF SHARES OF GUJARAT ADANI PORT LTD. INADVERTENTLY OFFERED IN A. Y. 2003-04 HAVING BEEN REJECTED BY THE ASSESSING OF FICER AND CONFIRMED BY THE CIT(A) AMOUNTS TO DOUBLE TAXATION OF TH4E SAID CAPITAL GAIN INCLUDED IN THIS ASSESSMENT YEAR I.E. A. Y. 2004-05 AS CAPITAL GAIN OF RS.14,89,43,746/- DECLAR ED BY THE ASSESSEE IN THE COMPUTATION PART OF TOTAL INCOME AS ASSESSED BY THE ASSESSING OFFICER. 20. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACTS ARE AVAILABLE ON RECORD AND THE AMOUNT OF CAPITAL GAIN WAS WRONGLY OFFERED FOR TAXATION IN THE ASSESSMENT YEAR 2003-04 ON WHIC H GROUND NO.6 OF THE CROSS OBJECTION OF THE ASSESSEE IN CO NO.201/AHD/20 07 IS RAISED. HE HAS SUBMITTED THAT ADDITIONAL GROUND HAS ARISEN OUT OF THE RECORDS OF THE AUTHORITIES BELOW AND APART FROM CHALLENGING THE AD DITION ON MERIT, IF ADDITION IS MADE IN THE ASSESSMENT YEAR 2003-04, IT WOULD BE DOUBLE TAXATION IF SIMILAR ADDITION IS OFFERED IN THE ASSE SSMENT YEAR 2004-05. HE HAS SUBMITTED THAT ADDITIONAL GROUND MAY BE ADMITTE D FOR HEARING. 21. ON THE OTHER HAND, THE LEARNED DR OBJECTED TO A DMISSION OF THE ADDITIONAL GROUND AND SUBMITTED THAT THE ASSESSEE H AS NOT EXPLAINED WHY IT WAS NOT RAISED IN THE MAIN GROUND OF THE CROSS OBJE CTION. 22. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT ADDITIONAL GROUND SHALL HAVE TO BE ADMITTED FOR DEC ISION ON MERIT. HONBLE SUPREME COURT IN THE CASE OF NTPC 229 ITR 3 83 HELD THAT IF LEGAL PLEASE ARE RAISED, SHOULD BE ADMITTED BY WAY OF ADDITIONAL GROUND. POWER OF THE TRIBUNAL IS WIDE. IT MAY PASS ANY ORDER TO ASSESS THE TAXABLE CORRECT INCOME. IF FACTS SHOW THOUGH NO LEGAL PLEA TAKEN BEFORE THE AUTHORITIES BELOW, IT CAN BE ADMITTED AND DECIDED BY THE TRIBUNAL. THE HONBLE GAUHATI HIGH COURT IN THE CASE OF ASSAM COMPANY (INDIA) LTD. 256 ITR 423 CONSIDERI NG THE POWER OF THE TRIBUNAL HELD THAT TRIBUNAL MAY CONSIDER ANY NEW GROUND IF FACTS C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 13 ARE AVAILABLE ON RECORD. IN THE PRESENT CASE, FACTS ARE AVAILABLE ON RECORD BECAUSE THE AO AND THE LEARNED CIT(A) HAVE D ISCUSSED THE ISSUE ON LONG TERM CAPITAL GAIN IN A SUM OF RS.9,71,38,12 8/- IN THE IMPUGNED ORDERS. ADDITION WAS MADE ON TECHNICAL GROUND FOR A SSESSMENT YEAR 2003-04 THOUGH ASSESSEE CLAIMED THAT NO TRANSFER TO OK PLACE IN ASSESSMENT YEAR 2003-04. THE ASSESSEE IN THE ADDITI ONAL GROUND OF CROSS OBJECTION CLAIMED THAT SINCE IT WAS OFFERED FOR TAX ATION IN THE ASSESSMENT YEAR 2004-05, IT WOULD AMOUNT TO DOUBLE TAXATION BY MAKING LUMP SUM ADDITION IN ASSESSMENT YEAR 2003-04. IT IS SETTLED LAW THAT INCOME CANNOT BE TAXED TWICE. SIMILAR MATTER IS RESTORED TO THE F ILE OF THE LEARNED CIT(A) FOR ADJUDICATION ON MERIT IN ASSESSMENT YEAR 2003-0 4 AS ABOVE NOTED IN THIS ORDER. THEREFORE, IT WOULD BE REASONABLE AND F AIR TO BOTH THE PARTIES THAT SIMILAR ISSUE MAY BE RECONSIDERED BY THE LEARN ED CIT(A) IN ASSESSMENT YEAR 2004-05 ALSO. NO TIME LIMIT IS PROV IDED UNDER THE LAW TO RAISE ADDITIONAL GROUND. ADDITIONAL GROUND MAY BE R AISED AT ANY TIME BEFORE DISPOSAL OF THE APPEAL OR CROSS OBJECTION. S INCE THIS ISSUE ARISES OUT OF THE IMPUGNED ORDERS, THEREFORE, WE DEEM IT F IT AND PROPER TO ADMIT THIS GROUND OF CROSS OBJECTION FOR CONSIDERATION. S INCE THE IDENTICAL MATER IS RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR A DJUDICATION ON MERIT. THEREFORE, THIS ADDITIONAL GROUND IS ALSO RESTORED TO THE FILE OF THE LEARNED CIT(A) WITH DIRECTION TO RE-DECIDE THIS ISSUE SIMUL TANEOUSLY IN ASSESSMENT YEAR 2003-04 AND 2004-05 RESPECTIVELY AN D TAKE A VIEW WHICH MAY AVOID DOUBLE TAXATION OF THE SIMILAR INCO ME. THE LEARNED CIT(A) SHALL GIVE REASONABLE, SUFFICIENT OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. WE MAKE IT CLEAR THAT THE ASSESSEE IS AT LIBERTY TO CHALLENGE ADDITION ON MERIT BEFORE THE LEARNED CIT(A) IN ACCO RDANCE WITH LAW IF SO ADVISED. WITH THE ABOVE OBSERVATION, ADDITIONAL GRO UND OF THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSE. C. O. NO.201/AHD/2007 AND 16/AHD/2009 (IN ITA NO.2033/AHD/2007 AND 600 /AHD/2007) M/S. INTERCONTINENTAL (INDIA) VS DCIT, CIR-10, AHME DABAD 14 23. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PR ESS GROUND NO.1, 2 3 AND 4 OF THE CROSS OBJECTION FOR SMALLER AMOUNT O N ACCOUNT OF DISALLOWANCE OF EXPENSES AS INVOLVED. WE ACCORDINGL Y, DISMISS THESE GROUNDS OF CROSS OBJECTIONS AS WITHDRAWN. 24. IN THE RESULT, THE CROSS OBJECTION NO.61/AHD/20 09 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 25. IN THE RESULT, THE BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13-10-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-10-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD