ACIT, Circle-48(1), V. P.C. Lahiri,

ITA 1081/DEL/2005

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0107 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 24-11-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 04-03-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: V MOHAN; VED JAIN FCA MS RANO JAIN
• Keywords: Fair market value
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 1081/DEL/05 ASSTT. YR: 2000-01 ACIT, CIR. 48(1), VS. P.C. LAHIRI, NEW DELHI. I-1764, CHITRANJAN PARK, NEW DELHI. PAN/ GIR NO. . ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI N.K. CHAND SR. DR RESPONDENT BY : SHRI VED JAIN FCA, MS. RANO JAIN CA & SH. V. MOHAN CA O R D E R PER R.P. TOLANI, J.M: : THIS IS REVENUES APPEAL AGAINST THE ORDER OF CIT(A ) DATED 24-9-2004 RELATING TO A.Y. 2000-01. FOLLOWING GROUNDS ARE RAI SED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THIS C ASE, AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF RS. 64,13,750/- WITHOUT APPRECIATING THE FACT THAT THE ADDITION HAS BEEN MADE CORRECTLY ON ACCOUNT OF PERQUISITE IN THE HANDS OF THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PER QUISITE ON ACCOUNT OF STOCK OPTION AROSE TO THE ASSESSEE ON 01-02-99 FALLING IN ASSESSMENT YEAR 99-2000 I.E. THE DATE OF OFFER AND NOT ON 30-4-99 FALLING IN AY 2000-01 WHEN THE ASSESSEE ACTUALLY EXERCISED THE OPTION. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE OPTION WAS EXERCISED ON 1.2.99 BUT THE PERQUISITE VALUE WOULD NOT BE TAXABLE IN AY 2000-01 AS IN THE RETURN FILED BY THE ASSESSEE FOR 2 THE A.Y. 99-2000 THE INCOME ON TRANSITION HAD BEEN OFFERED FOR TAX. 2. LEARNED DR RELIED ON THE ORDER OF AO AND CONTEND S THAT THE ISSUE IN QUESTION IS SETTLED BY THE ORDER OF THE ITAT DELHI BENCH G DATED 29-8- 2008 IN THE CASE OF DCIT VS. VIJAY GOPAL JINDAL (20 09) 27 SOT 175 (DEL.). IN THE CASE IN HAND ALSO THE ASSESSEE WAS AN EMPLO YEE OF ZEE TELEFILMS LTD. AND ESOPS WERE GRANTED TO ASSESSEE IN LIKE MANNER A S IN THE CASE OF MR. VIJAY GOPAL JINDAL. THE ITAT THEREIN HAS CLEARLY H ELD THAT PERQUISITES ARE TAXABLE IN AY 2000-01AS UNDER, THEREFORE, THE REVEN UES GROUNDS MAY BE ALLOWED: WHEN SPECIFIC PROVISION IS MADE IN THE ACT TO BRIN G TO CHARGE THE PERQUISITE IN THE FORM OF VALUE OF SPECIFIED SE CURITY ALLOWED AT A CONCESSIONAL RATE, THE SAME SHALL APPLY WITH F ULL FORCE AND NOT AT THE DISCRETION OF THE ASSESSEE TO BE TAXED I N EARLIER YEAR. IT IS WELL SETTLED THAT UNDER THE ACT, THE ASSESSING O FFICER MUST TAX THE RIGHT PERSON AND RIGHT PERSON ALONE. BY RI GHT PERSON IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED, ACCORDI NG TO LAW, WITH RESPECT TO A PARTICULAR INCOME. THE EXPRESSION WRONG PERSON IS OBVIOUSLY USED AS THE OPPOSITE OF EXPRES SION RIGHT PERSON. MERELY BECAUSE A WRONG PERSON IS TAXED WIT H RESPECT TO A PARTICULAR INCOME, THE ASSESSING OFFICER IS NOT P RECLUDED FROM TAXING THE RIGHT PERSON WITH RESPECT TO THAT INCOME . EXTENDING THIS ANALOGY IT CAN BE SAID THAT WHEN RIGHT PERSON IS TO BE TAXED, THE ASSESSMENT SHOULD ALSO BE IN THE RIGHT YEAR AND NOT FOR ANY OTHER YEAR AT THE OPTION OF THE ASSESSEE. THUS, EVE N IF THE ASSESSEE VOLUNTARILY OFFERED THE PERQUISITE VALUE O F SHARE WARRANTS FOR THE ASSESSMENT YEAR 1999-2000, THE ASS ESSING OFFICER WAS NOT PRECLUDED FROM TAXING THE INCOME IN VIEW OF SPECIFIC PROVISION OF SECTION 17(2)(IIIA). SINCE TH E CORRECT ASSESSMENT YEAR TO BE TAXED WAS 2000-01, IT MIGHT B E A GROUND TO REDUCE THE INCOME FROM ASSESSMENT OF THE ASSESSM ENT YEAR 1999-2000, BUT REVERSE WAS NOT TRUE IN VIEW OF SPEC IFIC PROVISION OF SECTION 17(2)(IIIA) APPLICABLE TO THE YEAR UNDER APPEAL. SINE THE ASSESSEE EXERCISED OPTION IN RESPE CT OF 3 ALLOTMENT OF SHARES BY LETTER DATED 15-4-1999, THOU GH WITHOUT PAYMENT OF REQUISITE SUM BUT WHICH WAS ACCEPTED BY THE EMPLOYER ON 30-4-1999 WAIVING THE AMOUNT PAYABLE FO R ALLOTMENT OF SHARES, THE PERQUISITE AROSE IN TERMS OF SECTION 17(2)(IIIA) ON 30-4-1999. SINCE THERE WAS NO DISPUT E AS REGARDS FAIR MARKET VALUE OF SHARES AS ON 30-4-1999, THE AS SESSING OFFICER WAS JUSTIFIED IN BRINGING TO TAX THE SUM IN THE FINANCIAL YEAR 1999-2000 RELEVANT TO THE ASSESSMENT YEAR 2000 -01. THEREFORE, THE ORDER OF THE COMMISSIONER (APPEALS) WAS TO BE REVERSED AND THAT OF THE ASSESSING OFFICER WAS TO B E RESTORED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED A SO CALLED APPLICATION UNDER RULE 27 OF ITAT RULES, IN SUPPORT OF THE ORDE R OF CIT(A) AND CONTENDS THAT BEFORE CIT(A), ASSESSEE HAD RAISED GROUND NO. , WHICH READS AS UNDER: THAT THE INTEREST U/S 234B, C MAY PLEASE BE DELETE D. 3.1. SINCE THE CIT(A) ALLOWED THE ASSESSEES APPEAL AND TAX LIABILITY REMAINED THE SAME, NO INTEREST WAS CHARGEABLE U/S 2 34B AND THERE WAS NO OCCASION FOR HIM TO CONSIDER GROUND NO. 5 ABOUT CH ARGEABLITY OF INTEREST U/S 234B & C. THEREFORE, THIS GROUND NO. 5 WAS NOT ADJU DICATED BY THE CIT(A). SINCE NOW REVENUES APPEAL IS BEING ALLOWED, RELYIN G ON THE JUDGMENT IN THE CASE OF MR. VIJAY GOPAL JINDAL AND TAX LIABILITY IS BEING RESTORED, THIS GROUND ABOUT DELETION OF INTEREST U/S 234B & C WILL GO UND ECIDED. IT IS PLEADED THAT ALTERNATIVELY THE ASSESSEES APPLICATION MAY BE TR EATED AS CROSS-OBJECTION AND THE IMPLIED DELAY MAY BE CONDONED OR GROUND NO. 5 RAISED BEFORE CIT(A) REMAINING UNADJUDICATED, MAY BE SET ASIDE AN D RESTORED BACK TO THE FILE OF CIT(A) TO DECIDE THE SAME AFRESH. IT IS PLE ADED THAT THE ASSESSEES APPEAL WAS REFIXED IN THE WAKE OF HEARING OF APPEAL OF MR. VIJAY GOPAL JINDAL. THE FACTS OF ASSESSEES CASE AND THAT OF MR . VIJAY GOPAL JINDAL HAVING BEEN ADMITTED TO BE THE SAME, THE VERY SAME TREATMENT IS TO BE GIVEN TO ASSESSEES CASE. 4 3.2. LEARNED COUNSEL PLACED RELIANCE ON THE RATIO O F DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PUSHPA GODHWANI VS. CIT (2003) 260 ITR 582 (DEL.) FOR THE PROPOSITION THAT IF THE GROUND I S RAISED BEFORE CIT(A) AND NO FINDINGS ARE GIVEN, THE ITAT SHOULD NOT DECLINE TO CONSIDER THE UNDECIDED ISSUE BY FOLLOWING OBSERVATIONS:- HELD, THAT THOUGH IN THE ORIGINAL GROUNDS OF APPEA L FILED BY THE ASSESSEE BEFORE THE TRIBUNAL THERE WAS NO PRECISE A ND CLEAR GROUND ON THE ISSUE EXCEPT A FACTUAL AVERMENT THAT THE OWNERSHIP OF THE PROPERTY WAS IN DISPUTE, IN THE RE VISED GROUNDS, FILED AS PER THE DIRECTIONS OF THE TRIBUNA L A SPECIFIC AND PRECISE GROUND ON THE ISSUE WAS RAISED. ONCE TH E TRIBUNAL ENTERTAINED THE REVISED GROUNDS OF APPEAL, IT WAS I NCUMBENT UPON IT TO TAKE INTO CONSIDERATION ALL THE GROUNDS URGED IN THE APPEAL MEMO. SIMILARLY, FROM A BARE READING OF THE ORDER OF THE COMMISSIONER (APPEALS) IT WAS CLEAR THAT THE ISSUE OF INCLUSION OF THE ASSET IN HER NET WEALTH WAS SPECIFICALLY RAI SED BEFORE THE COMMISSIONER, BUT HE FAILED TO RETURN ANY FINDING O N THE SAME. THE TRIBUNAL WAS NOT CORRECT IN LAW IN DECLINING TO CONSIDER THE AFORE NOTED ISSUE RAISED BY THE ASSESSEE. [MATTER R EMANDED TO ASSESSING OFFICER TO CONSIDER THE OBJECTIONS OF THE ASSESSEE. 4. LEARNED DR VEHEMENTLY ARGUES THAT THE APPLICATIO N OF THE ASSESSEE IS NOT MAINTAINABLE BECAUSE OF THE FOLLOWING REASONS: (1) SINCE THE CIT(A) HAS NOT DECIDED THE ISSUE OF INTER EST IN ANY MANNER, THE ASSESSEE CANNOT SUPPORT THE ORDER OF CIT(A) UND ER RULE 27 AS IN THE ABSENCE OF ADJUDICATION, THE ORDER OF CIT(A) CA NNOT BE SUPPORTED ON THAT ISSUE. (2) ASSESSEE HA NOT FILED ANY CROSS-OBJECTION IN PRESCR IBED FORM BESIDES E ABSENCE OF SERVICE OF MEMO OF CROSS-OBJECTION, IT C AN NEITHER BE DEEMED AS CROSS-OBJECTION NOR ADJUDICATED ACCORDING LY, WITHOUT A DEFENCE BY DEPARTMENT. 5 (3) IN THE ABSENCE OF PURSUANCE OF ANY SPECIFIC REMEDY PROVIDED BY LAW, ASSESSEE CANNOT BE ALLOWED TO GET BENEFIT OF IT. 5. LEARNED COUNSEL, IN COUNTER, CONTENDS THAT THE D UTY OF THE TRIBUNAL IS TO SEE THAT A FAIR AND PROPER ASSESSMENT IS MADE, W HICH WILL INCLUDE LEVY OF PROPER QUENTIAL INTEREST PAYABLE THEREON. THE GROUN D IN QUESTION WAS TAKEN BEFORE CIT(A) SPECIFICALLY WHICH REMAINED UNDECIDED NOT BECAUSE OF ASSESSEES CHOICE BUT BECAUSE CIT(A) ALLOWED ENTIR E RELIEF, WHICH RAISED NO FURTHER DEMAND. THEREFORE, THERE WAS NO OCCASION FO R DECISION OF THE GROUND NO. 5 TAKEN BY ASSESSEE. WHEN THE ORDER OF CIT(A) I S BEING REVERSED BY ITAT, THE ASSESSEES GROUND NO. 5 ABOUT DELETION OF INTEREST U/S 234B & C REMAINS A LIVE AND UNDECIDED ISSUE WHICH IS A NECE SSARY CONSEQUENCE OF THIS DECISION. THE ASSESSEE IS NOT TRYING TO GET ANY UND UE BENEFIT AND WANTS THE GROUND RAISED BY IT TO BE ASSESSED IN ACCORDANCE WI TH LAW. ASSESSEE HAS DENIED THE LIABILITY TOWARDS INTEREST AS THE PERQUI SITES ARE LIABLE TO TDS IN THE HANDS OF THE EMPLOYER AND NOT TO BE INCLUDED WHILE PAYING ADVANCE TAX. RELIANCE IS PLACED ON THE RATIO OF DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF DIT V. JACABS CIVIL INCORPORATED & ORS 235 CTR 123 (DEL.) 6. WE HAVE HEARD RIVAL CONTENTIONS AND HAVE GONE TH ROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENT OF LEARNED DR. AS THE APPLICATION FILED BY THE ASSESSEE DOES NOT R EFER TO ANY SPECIFIC REMEDY, LIKE CROSS-OBJECTION, APPLICATION U/S 27 ET C., THEREFORE, THE APPLICATION OF THE ASSESSEE CANNOT BE ENTERTAINED. HOWEVER, WE FIND MERIT IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSE E THAT GROUND NO. 5 TAKEN BEFORE CIT(A) REMAINS UNADJUDICATED AS THE COMPLETE RELIEF WAS GIVEN BY CIT(A). IN THE EVENTUALITY OF REVERSION OF THE ORDE R OF CIT(A), IT WILL BE IMPERATIVE ON OUR PART TO SEND THE UNDECIDED ISSUE RAISED IN GROUND NO. 5 BY THE ASSESSEE IN APPEAL BEFORE THE CIT(A) TO DECIDE THE SAME IN ACCORDANCE 6 WITH LAW. IN VIEW THEREOF, ON MERITS ABOUT PERQUISI TES, RESPECTFULLY FOLLOWING THE ITAT JUDGMENT ON THE SAME FACTS AND CIRCUMSTANC ES IN THE CASE OF VIJAY GOPAL JINDAL (SUPRA), THE ISSUE IS DECIDED IN FAVOU R OF THE REVENUE, HOWEVER, FOR ADJUDICATION OF GROUND NO. 5, ISSUE NEEDS TO BE SENT TO CIT(A) QUA DELETION OF INTEREST U/S 234B & C. CONSEQUENTLY, W E RESTORE THE ISSUE BACK TO THE FILE OF CIT(A) TO DECIDE THE SAME APPROPRI ATELY IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 7. SUBJECT TO ABOVE RIDER, REVENUES APPEAL IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 18-3-2011. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18-03-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 7