Samtel Glass Ltd., New Delhi V. DCIT, New Delhi

ITA 1174/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 7344 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 30-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAJANAND MEENA
• Assessee Lawyers: D C GARG

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.1174 & 1175/DEL./2010 (ASSESSMENT YEARS : 2003-04 & 2004-05) M/S. SAMTEL GLASS LIMITED, VS. ACIT, CIRCLE 7 (1) , (FORMERLY KNOWN AS SAMCOR GLASS LTD.) NEW DELHI. 6 TH FLOOR, TDI CENTRE, DISTRICT CENTRE JASOLA, NEW DELHI 110 025. (PAN : AAACS2730C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.C. GARG, CA REVENUE BY : SHRI GAJANAND MEENA, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THESE APPEALS FILED BY THE ASSESSEE ARISE OUT OF THE ORDER OF CIT (APPEALS)-X, NEW DELHI DATED 9.2.2010. THE GROUN DS OF APPEAL IN ITA NO.1174/DEL/2010 ARE AS UNDER :- 1.(A) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) X, NEW DELHI HAS GROSSLY ERRED IN LAW, ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.3,61,82,000/- MADE BY ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7 (1), NEW DELHI TOWARDS LEASE R ENT PAID TO TELETUBE ELECTRONICS LIMITED FOR LAND AND BUILDING AND PLANT & MACHINERY UNDER A LEASE RENT AGREEMENT DATED 24.0 2.1994. ITA NOS.1174 & 1175/DEL./2010 2 (B) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) X, NEW DELHI HAS GROSSLY ERRED IN LAW, ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 7 (1), NEW DELHI REJECTING THE LEASE DOCUMENT AND TREATING THE SAID TRANSACTION AS TRANSFER OF ASSETS AGAINST SALE CONSIDERATION. (C) THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) X, NEW DELHI HAS GROSSLY ERRED IN LAW IN NOT FOLLOW ING THE ORDERS OF THE APEX COURT AND JURISDICTIONAL HIGH CO URT ON THE SUBJECT MATTER OF APPEAL. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR VARY FROM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE T HE TIME OF HEARING. THE GROUNDS OF APPEAL IN ITA NO.1175/DEL/2010 ARE A LSO THE SAME EXCEPT THE DIFFERENCE IN AMOUNT. 2. THE ONLY ISSUE INVOLVED IN THE APPEAL IS RELATED TO CONFIRMATION OF ADDITION MADE BY ASSESSING OFFICER TOWARDS LEASE RE NT PAID TO M/S. TELETUBE ELECTRONICS LIMITED FOR LAND & BUILDING AND PLANT & MACHINERY UNDER A LEASE RENT AGREEMENT DATED 24.2.1994. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURE AND SALE OF GLASS SHELLS, FUNNELS AND PANELS USED IN TELEVISION PICTURE TUBES. M/S. TELETUBE ELECTRONICS LIMITED ENTERED INTO A TRANSAC TION OF LEASE IN RESPECT OF MANUFACTURING UNIT AT BHIWADI (RAJASTHAN) WITH ASS ESSEE IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 1994-95. THE ASSETS FO R THE PURPOSE OF LEASE WERE VALUED AT RS.20.729 CRORES. THE AGGREGATE LEASE RE NTALS FOR 10 YEARS WERE FIXED AT RS.33.96 CRORES. IN THE CASE OF TELETUBE ELECTRONICS LIMITED, THE ITA NOS.1174 & 1175/DEL./2010 3 REVENUE TREATED THE TRANSACTION AS THAT OF SALE OF ASSETS AND BROUGHT TO TAX THE DIFFERENCE BETWEEN THE BUSINESS VALUE OF RS.20.729 CRORES AND WRITTEN DOWN VALUE OF DEPRECIABLE ASSETS AS SHORT TERM CAPITAL G AINS. THE ASSESSEE IS CLAIMING THE LEASE RENTALS PAID TO TELETUBE ELECTRO NICS LIMITED AS ALLOWABLE DEDUCTION TREATING THE TRANSACTION AS SIMPLE LEASE. THE ITAT IN ITS ORDER DATED 28.9.2001 IN ITA NO.892/DEL/99 HELD THAT TRAN SACTION WAS NOT THAT OF SALE OF ASSETS BUT OF TRANSFER OF LEASEHOLD RIGHTS. THE CONSIDERATION FOR TRANSFER OF THESE LEASEHOLD RIGHTS WERE TAKEN AT RS .20,.729 CRORES ONLY. AGAINST THIS ORDER OF ITAT DATED 28.9.2001, BOTH RE VENUE AS WELL AS TELETUBE ELECTRONICS LIMITED HAS FILED THE APPEAL BEFORE THE HON'BLE DELHI HIGH COURT AND THESE APPEALS ARE PENDING FOR DISPOSAL. THE TR IBUNAL RESTORED THE ISSUE TO THE FILE OF CIT (A) IN THE CASE OF TELETUBE ELECTRO NICS LIMITED FOR THE ASSESSMENT YEARS 1995-96 & 1996-97 VIDE ORDER DATED 17.1.2005 IN ITA NOS.554 & 555/DEL/2000. 4. AT THE OUTSET OF THE HEARING, LEARNED AR SUBMITT ED THAT THIS ISSUE IS COVERED BY THE DECISION OF ITAT IN THE PAST YEARS. HE HAS ALSO SUBMITTED A COPY OF THE ITAT ORDER IN ASSESSEES OWN CASE IN IT A NOS.3327/DEL/2004 & 1750/DEL/2005 AND WHERE THIS ISSUE HAS BEEN DECIDED BY THE ITAT IN PARAS 4 & 4.1, WHICH IS REPRODUCED BELOW :- 4. IN REGARD TO GROUNDS NOS. 3 & 4 OF I.T.A. NO.3327/DEL/2004, AND GROUNDS NOS. 2 & 3 OF I.T.A. NO.1750/DEL/2005, WHICH IS AGAINST THE ACTION OF LD . CIT(A) IN CONFIRMING THE DISALLOWANCE OF LEASE RENT PAID TO T ELETUBE ITA NOS.1174 & 1175/DEL./2010 4 ELECTRONICS LTD. IT WAS FAIRLY AGREED BY BOTH THE S IDES THAT THE ISSUE WAS COVERED BY THE DECISION OF COORDINATE BEN CH OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESS MENT YEAR 1995-96 TO 1997-98 IN I.T.A. NO.3054 TO 3056/DEL/20 02 DATED 16.01.2007 WHEREIN THE COORDINATE BENCH OF THIS TRI BUNAL HAS HELD AS FOLLOWS: FIRST OF ALL, WE SHALL DEAL WITH I.T.A. NO.3054/D/ 02. ONE COMMON ISSUE IN ALL THE APPEALS ON WHICH THE APPELLANT IS AGITATED IS AS UNDER : 'THAT THE CIT(A) HAS GROSSLY ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AT LAW IN CONFIRMING THE DISALLOWANCE FOR LEASE RENT PAYABLE TO TELETUBE ELECTRONICS LTD. UNDER AN AGREEMENT OF LEASE DATED 24.2.1994.' BRIEF FACTS OF THE CASE ARE THAT IN THE ASSESSMENT YEAR L994-95, M/S. TELETUBE ELECTRONICS LTD. HAD ENTERED INTO A TRANSACTION OF LEASE OF ITS MANUFACTURING UNIT AT B HIWADI WITH THE ASSESSEE. THE ASSETS FOR THE PURPOSES OF THE LEASE WERE VALUED AT RS.20.729 CRORES AND THE LEASE RENTA LS WERE FIXED KEEPING IN MIND THE AFORESAID BUSINESS VALUE DETERMINED BY THE VALUERS. THE AGGREGATE LEASE RENA L OVER THE LEASE PERIOD, WHICH WAS 10 YEARS AMOUNTED TO RS.33.96 CRORES. THE ASSESSING AUTHORITY, HOWEVER, IN THE CASE OF TELETUBE ELECTRONICS LTD. FOR THE RELEVANT ASSESSME NT YEAR, TREATED THE TRANSACTION AS THAT OF SALE OF AS SETS AND BROUGHT TO TAX THE DIFFERENCE BETWEEN THE BUSINESS VALUE OF RS.20.729 CRORES AND WRITTEN DOWN VALUE OF THE DEPRECIABLE ASSETS AS SHORT TERM CAPITAL GAINS. THE TRIBUNAL, HOWEVER, VIDE ITS ORDER IN ITA NO. 892/D/99 DATED 28.9.2001 HELD THAT THE TRANSACTION WAS NOT THAT OF SALE OF ASSETS BUT OF 'TRANSFER OF LEAS E HOLD RIGHTS'. THE CONSIDERATION FOR THE TRANSFER OF LEAS E HOLD RIGHTS WAS CONSIDERED BY THE TRIBUNAL AT RS.20.729 CRORES ONLY AND NOT THE AGGREGATE LEASE RENTALS RECEIVED O VER THE LEAS PERIOD. ITA NOS.1174 & 1175/DEL./2010 5 THE APPELLANT HAD' BEEN CLAIMING THE LEASE RENTALS PAID TO TELETUBE ELECTRONICS LTD., AS ALLOWABLE DEDUCTION O N THE FOOTING THAT THE TRANSACTION IS THAT'S OF SIMPLE LE ASE .. AGAINST THE ORDER DATED 28.9.2001 OF THE TRIBUNAL, BOTH THE REVENUE AND THE TELETUBE ELECTRONICS LTD. HAD F ILED APPEALS TO THE HON'BLE DELHI HIGH COURT. THESE APPE ALS ARE PENDING FOR DISPOSAL. THE TRIBUNAL RESTORED THE ISSUE TO THE FILE OF THE CIT(A) IN THE CASE OF TELETUBE ELECTRONICS LTD. FOR THE ASSESSMENT YEAR 1995-96 AN D 1996-97 ORDER DATED 17 TH JANUARY 2005 IN ITA NO.554 & 555/DEL/2000 AND FOR ASSESSN1ENT YEAR 1997-98 IN I. T.A. NO.2391/D/01 TO BE DECIDED IN ACCORDANCE WITH THE ULTIMATE DECISION RENDERED BY THE HON'BLE DELHI HIG H COURT IN THE MATTER. LD. A.R. REQUESTED FOR RESTORATION OF THIS ISSUE TO THE FILE OF THE CIT(A) AND THE LD. D.R. HAS NOT OBJECTED TO THIS REQUEST OF THE LD. A.R. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE RECORD. WE FIND THAT APPEALS FOR THE ASSESSMENT YEAR 1995-96, 1996-97 AND 1997-98 HAD BEEN RESTORED TO THE FILE OF THE LD. CIT(A) FOR DIS POSAL IN ACCORDANCE WITH THE ULTIMATE DECISION TO BE RENDERE D BY THE HON'BLE DELHI HIGH COURT IN THE MATTER SO AS TO AVOID MULTIPLICITY OF PROCEEDINGS. RESPECTFULLY FOLLOWI NG THE ORDERS OF THE TRIBUNAL IN THE CASE OF APPELLANT FOR THE ASSESSMENT YEAR 1995-96, 1996-97 AND 1997-98, WE RESTORE THE ASSESSEE'S GROUNDS OF APPEAL FOR ALL TH E ASSESSMENT YEARS UNDER APPEAL TO THE FILE OF THE CI T(A) FOR FRESH DECISION IN THE SAME MANNER. 4.1 THE FACTS BEING SIMILAR FOR THIS YEAR ALSO, RES PECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 199 5-96 TO 1997-98 REFERRED TO SUPRA, THE ISSUE IN THESE GROUN DS ARE RESTORED TO THE FILE OF THE LD. CIT (A) FOR FRESH A DJUDICATION IN ACCORDANCE WITH THE ULTIMATE DECISION RENDERED BY T HE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI AGAINST THE DECI SION OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN I.T.A. NO.8 92/DEL/1999 DATED 28.09.2001. ITA NOS.1174 & 1175/DEL./2010 6 5. WE HAVE HEARD BOTH THE PARTIES. RESPECTFULLY FO LLOWING THE DECISION OF COORDINATE BENCH OF THE ITAT, WE RESTORE THE GROUND S TO THE FILE OF THE CIT (A) IN BOTH THE CASES FOR FRESH ADJUDICATION IN ACC ORDANCE WITH ULTIMATE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT OF DE LHI AGAINST THE DECISION OF ITAT IN ITA NO.892/DEL/99 DATED 28.9.2001. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2010 AFTER CONCLUSION OF THE HEARING. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF AUGUST, 2010 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT-X, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.