DCIT, Bangalore V. M/s S.P. chemicals Pvt. Ltd., Bangalore

ITA 1064/BANG/2011

• Counselvise Citation: 106421114 RSA 2011
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Assessee Lawyers: H GURUSWAMY ITP
• Keywords: Capital asset
• Section: 143(3); 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N BARATHVAJA SANKAR, VICE RESIDENT AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1064/BA NG/2011 (ASST. YEAR - 2008-09) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-12(3), BANGALORE. . APPELLANT VS. M/S S.P CHEMICALS PVT. LTD., NO.770, I CROSS, I MAIN, KENGERI SATELLITE TOWN, BANGALORE-560 060. . RESPONDENT PAN : AADCS6242A. APPELLANT BY : SHRI S.K AMBASTHA, CIT RESPONDENT BY : SHRI H GURUSWAMY, ITP DATE OF HEARING : 18-09-2012 DATE OF PRONOUNCEMENT : 28-09-2012 O R D E R SMT. P MADHAVI DEVI, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE REVENUE. THE RELEVANT A SSESSMENT YEAR IS 2008-09. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX - (APPEALS) III AT BAN GALORE DATED ITA NO.1064/B/11 2 25.08.2011. THE APPEAL ARISES OUT OF THE ASSESSMEN T COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEAL IS THAT THE CIT(A) HAS ERRED IN LAW HOLDING THAT THE LAND SOLD IS A LONG TERM ASSET BY OBSERVING THAT THE DATE OF LEASE-CUM-SALE AGREEM ENT WITH KIADB SHOULD BE THE STARTING POINT FOR RECKONING PERIOD O F HOLDING OF THE LAND INSTEAD OF SALE DEED DATE. IN SUPPORT OF ITS CONTE NTION, THE REVENUE HAS RELIED UPON THE DECISION OF THE HONBLE HIGH CO URT OF KARNATAKA IN THE CASE OF DR. V.V MODI IN 218 ITR 1. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY FILED ITS RETURN OF INCOME ON 18.3.2009 DECLARING BUSINES S LOSS OF RS.1,47,753/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS U/S 143(3) OF THE INCOME-TAX ACT, THE AO OBSERVED THAT THE ASSESSEE HAS ADMITTED PROFIT ON SALE OF LAND AS LONG TERM CAPITA L GAINS. THE RELEVANT DETAILS WERE CALLED FOR. THE ASSESEES SUBM ITTED THE DETAILS AND ON EXAMINATION OF THE SAME, THE AO OBSERVED THAT TH E ASSESSEE HAS SOLD IMMOVABLE PROPERTY SITUATED AT KUMBALAGUD IND USTRIAL AREA II PHASE, SITUATED AT SURVEY NO.97 OF KUMBALAGUDU VILL AGE, KENGERI HOBLI, BANGALORE SOUTH TALUK FOR A SALE CONSIDERATI ON OF ITA NO.1064/B/11 3 RS.2,77,94,000/- VIDE SALE DEED DATED 27.2.2008. H E FURTHER OBSERVED THAT THE K.I.A.D.B HAS GIVEN THE POSSESSION OF THE ABOVE LAND TO ONE SHRI M.R SOMESHEKAR BY ISSUING A POSSESSION CERTIF ICATE ON 5.3.84 AS THE POSSESSION WAS TAKEN BY THE ALLOTTEE ON 20.2.1 984. THE LEASE HOLDING RIGHTS ENJOYED BY SHRI SOMESHEKAR IN RESPEC T OF SUBJECT PROPERTY WAS TRANSFERRED TO THE ASSESSEE BY K.I.A.D .B VIDE ITS TRANSFER OF LEASE HOLD RIGHTS ORDER DATED 25.9.1998 AND K.I. A.D.B EXECUTED A SALE DEED ON 19.4.2006 TRANSFERRING ALL THE RIGHTS BY WAY OF ABSOLUTE SALE IN FAVOUR OF THE ASSESSEE. THE AO FURTHER OBS ERVED THAT THE ASSESSEE EXECUTED A SALE DEED ON 27.2.2008 TRANSFER RING THE RIGHT BY WAY OF ABSOLUTE SALE IN FAVOUR OF SHRI JETTLY SIVAR AM PRASAD AND ANOTHER. TAKING INTO CONSIDERATION THE FACT THAT T HE K.I.A.D.B HAS EXECUTED SALE DEED ON 19.4.2006, THE AO ISSUED A SH OW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN AS TO WHY THE CAPITAL GA INS SHOULD NOT BE TREATED AS SHORT TERM CAPITAL GAINS, AS THE PROPE RTY WAS HELD FOR THE PERIOD OF LESS THAN 3 YEARS. THE ASSESSEE FIELD IT S SUBMISSIONS DATED 24.12.2010 STATING THAT AS PER THE PROVISION OF SE C. 2(14) AND 2(47) OF THE INCOME-TAX ACT AND SEC. 53A OF THE TRANSFER OF PROPERTY ACT, THE PROPERTY HAS BEEN TRANSFERRED IN FAVOUR OF THE ASSE SSEE BY VIRTUE OF TRANSFER OF LEASE HOLD RIGHTS DATED 25.9.1998 AND, THEREFORE, CAPITAL GAIN ARISING OUT OF TRANSFER OF CAPITAL ASSET BY T HE ASSESSEE IS LONG ITA NO.1064/B/11 4 TERM CAPITAL GAIN. HOWEVER, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS BECOME THE ABSOLUTE OWNER OF THE PROPE RTY ALONG WITH THE RIGHT OF ALIENATION ONLY WHEN THE ABSOLUTE OWNERSHI P WAS VESTED IN HIM I.E ON THE SALE DEED BEING EXECUTED BY K.I.A.D. B IN ITS FAVOUR ON 19.4.2006. HE, THEREFORE, HELD THAT THE ASSESSEE H AS SOLD THE PROPERTY WITHIN THE PERIOD OF THREE YEARS FROM THE DATE OF S ALE DEED DATED 19.4.2006 AND, THEREFORE, HE TREATED THE GAINS FROM THE SAID TRANSACTION AS SHORT TERM CAPITAL GAINS. HE COMPUTED THE INC OME OF THE ASSESSEE ACCORDINGLY. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) REITERATING THE FACTS STATED BEFORE THE AO. ON CON SIDERATION OF THE SAME, THE CIT(A) HELD THAT THE ASSESSEE COMPANY WAS GRANTED THE LEASE HOLD RIGHTS OF INDUSTRIAL PLOT BY LEASE CUM S ALE AGREEMENT DATED 24.9.98 BY VIRTUE OF WHICH, THE ASSESSEE COMPANY WA S ALSO PUT IN POSSESSION AND ENJOYMENT OF THE PROPERTY AND, THERE FORE, THE CAPITAL GAINS ARISING OUT OF THE SALE OF THE PROPERTY BY TH E ASSESSEE IS TO BE ASSESSED AS LONG TERM CAPITAL GAINS ONLY. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. ITA NO.1064/B/11 5 6. DURING THE COURSE OF HEARING, THE LEARNED DR WHI LE SUPPORTING THE ORDER OF THE AO, STATED THAT THE ASSESSEE HAD N OT FILED THE DOCUMENTS SUCH AS THE TRANSFER OF LEASE HOLDING RIG HTS BY K.I.A.D.B IN FAVOUR OF THE ASSESSEE AND ALSO THE OTHER RELEVANT DOCUMENTS EITHER BEFORE THE AO OR THE CIT(A). THE ASSESSEE HAS FILE D THE COPIES OF THE SAID DOCUMENTS BEFORE US. IT IS SEEN FROM THE WRIT TEN SUBMISSIONS AS WELL AS THE DOCUMENTS FILED BEFORE US THAT THESE DO CUMENTS WERE NOT FILED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF R.K PALSHIKAR (HUF) VS. CIT REPORTED IN 172 ITR 311 AND ALSO IN THE CASE OF A.R KRISHNAMURTHY VS. CIT R EPORTED IN 176 ITR 417, WHEREIN IT HAS BEEN HELD THAT THE PERIOD O F HOLDING IS TO BE CONSIDERED FROM THE DATE OF GRANT OF LEASE. AS THE RELEVANT DOCUMENTS HAVE NOT BEEN FILED BEFORE THE AUTHORITIES BELOW AN D THE REVENUE AUTHORITIES HAVE NOT HAD ANY OPPORTUNITY OF VERIFYI NG THE SAME, WE DEEM IT FIT AND PROPER TO REMIT THE ISSUE BACK TO T HE FILE OF THE AO TO CONSIDER DOCUMENTS FILED BY THE ASSESSEE AND TO DEC IDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER CONSIDERING THE JUDICIAL PRECEDENTS ON THE ISSUE. IN VIEW OF THE SAME, THIS APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.1064/B/11 6 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH SEPT, 2012. SD/- SD/- (N BARAT HVAJA SANKAR) (P MADHAVI DEVI) VICE PRESIDENT JUDICIAL MEMBER VMS. BANGALORE DATED : 28/09/2012 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETA RY, ITAT, BANGALORE.