M/s.Brook Fields & Resorts Pvt., Ltd., Hyderabad V. Income Tax Officer, Hyderabad

ITA 1195/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74685 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M CHANDRAMOULESWARA RAO
• Keywords: Sale consideration of property below Jantri Value; Charitable institution; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 1195/HYD/2013 ASSESSMENT YEAR: 2009-10 M/S BROOK FIELDS & RESORTS PVT. LTD., APPE LLANT HYDERABAD. (PAN AAACB7150P) VS. INCOME-TAX OFFICER, RESPONDENT WARD 1(1), HYDERABAD. APPELLANT BY : SHRI M. CHANDRAMOULESWARA RAO RESPONDENT BY : SMT. K. HARITHA DATE OF HEARING : 10/03/2014 DATE OF PRONOUNCEMENT : 10/03/2 014 ORDER PER P. MADHAVI DEVI, J.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, HYDERABAD DATED 09/ 05/2013 FOR AY 2009-10. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED 5 GROUND S OF APPEAL, THE ESSENCE OF WHICH IS AGAINST THE ACTION OF THE CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U /S 271(1)(C) OF THE ACT, BY HOLDING THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME NECESSARY FOR COMP UTATION OF ITS INCOME. ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 2 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A COMPANY ENGAGED IN THE BUSINESS OF ESTABLISHING BEA CH RESORTS, HOTELS, AMUSEMENT PARKS ETC. FOR THE RELEV ANT AY, IT FILED ITS RETURN OF INCOME ADMITTING NIL INCOME S INCE COMMERCIAL ACTIVITY OF THE ASSESSEE HAD NOT COMMENC ED DURING THE RELEVANT PREVIOUS YEAR. THE AO, HOWEVER, RECEIVED AIR INFORMATION THAT THE ASSESSEE HAD RECEIVED THE SALE OF CONSIDERATION OF RS. 1,48,65,000/- FOR THE SALE OF LAND. THE AO, THEREFORE, CALLED FOR THE ASSESSEES EXPLANATIO N. THE ASSESSEE SUBMITTED THE INFORMATION STATING THAT ON 24/11/2008, IT HAD TRANSFERRED LAND ADMEASURING 9 A CRES AND 91 CENTS SITUATED AT YARADA, TO SRI SRI DAKSHIN KED AAR MAHASAMSTHAN TRUST FOR A REGISTERED CONSIDERATION O F RS. 14,58,000/-, BUT, FOR THE PURPOSES OF STAMP DUTY, T HE VALUE WAS ADOPTED AT RS. 1,48,65,000/-. THE AO OBSERVED T HAT SINCE THE ASSESSEE HAD SHOWN THE SALE CONSIDERATION WHICH WAS LESS THAN THE REGISTERED SALE CONSIDERATION, PR OVISIONS OF SECTION 50C ARE ATTRACTED. ACCORDINGLY, THE ASSESSE E WAS ASKED TO SHOW CAUSE AS TO WHY THE SALE CONSIDERATIO N SHOULD NOT BE ADOPTED AT RS. 1,48,65,000/- AS PER THE PROV ISIONS OF SECTION 50C AND LONG TERM CAPITAL GAINS BE COMPUTED ACCORDINGLY. THE ASSESSEE EXPLAINED THAT THE PURCHA SER WAS A REGISTERED CHARITABLE TRUST AND PART OF THE ASSESSE ES GROUP AND THE TRANSFER WAS MADE NOT WITH THE COMMERCIAL M OTIVE BUT WITH THE INTENTION OF THE DEVELOPING A TEMPLE A T YARADA WHICH WOULD ALSO PROMOTE THE BUSINESS OF THE ASSESS EE. IT WAS ALSO STATED THAT THOUGH THE SALE DEED WAS EXECU TED BY THE ASSESSEE FOR 9.91 ACRES, ONLY 1.58 ACRES BELONG ED TO THE ASSESSEE AND BALANCE LAND HAD ALREADY BEEN TRANSFER RED TO ASSESSEES HOLDING COMPANY IN THE EARLIER YEARS, WH ICH WAS ALSO REFLECTED IN THE BOOKS OF ACCOUNT. THE ASSESS EE ALSO RAISED OBJECTION TO ADOPTION OF THE STAMP DUTY VALU E FOR THE ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 3 PURPOSE OF COMPUTING THE LONG TERM CAPITAL GAIN. TH E AO, THEREFORE, THOUGHT IT FIT TO REFER THE MATTER TO TH E DVO AS THE ASSESSEE HAS RAISED AN OBJECTION TO THE ADOPTION OF THE STAMP DUTY VALUE. THE DVO AFTER CONSIDERING THE OBJECTION S OF THE ASSESSEE, FURNISHED HIS REPORT DATED 27/12/2011 DET ERMINING THE FAIR MARKET VALUE OF THE PROPERTY AT RS. 1,18,9 2,000/-. THE ASSESSEE WAS ALSO FURNISHED A COPY OF THE VALUA TION REPORT. THE ASSESSEE FILED ITS OBJECTIONS TO THE SA ID VALUATION AND AFTER CONSIDERING THE ASSESSEES OBJECTIONS, TH E AO ADOPTED THE VALUE OF THE SALE CONSIDERATION AT RS. 1,18,92,000/- FOR THE PURPOSES OF COMPUTATION OF L ONG TERM CAPITAL GAINS. HE ACCORDINGLY, COMPUTED THE LONG TE RM CAPITAL GAINS AFTER ALLOWING THE INDEXED COST OF ACQUISITIO N AND BROUGHT THE CAPITAL GAINS TO TAX. THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE ASSESSMENT COMPLETED BY THE AO. 4. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. IN SPITE OF THE ISSUE OF NOTI CES BY THE AO, THE ASSESSEE APPEARED ONLY ONCE AND DID NOT FIL E ANY EXPLANATION BEFORE THE AO. IN VIEW OF THE NON-COMPL IANCE BY THE ASSESSEE, THE AO HELD THAT THE LONG TERM CAPITA L GAINS OF RS. 1,18,92,000/- REPRESENTS INCOME OF THE ASSESSEE , IN RESPECT OF WHICH, PARTICULARS HAVE BEEN CONCEALED/F URNISHED INACCURATE PARTICULARS OF INCOME AND, THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. HE AC CORDINGLY LEVIED A MINIMUM PENALTY OF RS. 22,20,217/- U/S 271 (1)(C) OF THE ACT, WHICH IS 100% OF THE TAX SOUGHT TO BE EVAD ED. 5. AGGRIEVED BY THE ORDER OF THE AO, LEVYING THE PE NALTY U/S 271(1)(C), THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A). ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 4 6. BEFORE THE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE AO. IT WAS ALSO STAT ED THAT OUT OF THE EXTENT OF 9.91 ACRES OF LAND, THE ASSESS EE WAS OWNER OF THE LAND ONLY TO THE EXTENT OF 1.58 ACRES AND THE BALANCE WAS OWNED BY ITS HOLDING COMPANY. THE CIT(A ) WAS NOT SATISFIED WITH THE ASSESSEES CONTENTIONS AND C ONFIRMED THE PENALTY LEVIED BY THE AO BY HOLDING THAT THE AS SESSEE IS GUILTY OF CONCEALMENT OF PARTICULARS OF ITS INCOME. 7. STILL AGGRIEVED, THE ASSESSEE IS IN SECOND APPEA L BEFORE US. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI. M. CHANDRAMOULESWARA RAO, WHILE REITERATING THE SUBMIS SIONS MADE BEFORE THE REVENUE AUTHORITIES, HAS SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS BEFORE T HE AO AND HAS NOT OFFERED ANY LONG TERM CAPITAL GAINS TO TAX AS THE LAND WAS SOLD AT COST AND THERE WAS NO CAPITAL GAINS TO OFFER. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTE NTION TO PAGES 58 TO 78 OF THE PAPER BOOK FILED BY THE ASSES SEE, WHICH ARE THE COPIES OF ANNUAL ACCOUNTS OF THE ASSESSEE F OR THE FY 2008-09. THE AUDITORS REPORT IS PLACED AT PAGE 64 W HEREIN AT PARA 4(V)(A), IT IS MENTIONED BY THE AUDITORS THAT THE ACCOUNTS GIVE THE INFORMATION REQUIRED BY THE COMPA NIES ACT, 1956, IN THE MANNER SO REQUIRED SUBJECT TO NOTE 7 T O SCHEDULE 9 TO THE BALANCE SHEET REGARDING NON CONSI DERATION OF CAPITAL GAINS TAX LIABILITY IN THE BOOKS OF ACCO UNT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO PAGE 75 OF THE PAPER BOOK, WHICH CONTAINS NOTE 7 TO SCHEDULE 9 OF THE BALANCE SHEET, WHEREIN IT IS MENT IONED THAT DURING THE CURRENT YEAR, THE ASSESSEE COMPANY HAS S OLD LAND MEASURING 1.58 ACRES AT COST FOR RS. 12,27,310/- TO SRI SRI ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 5 DAKSHIN KEDAR MAHA SAMSTHAN TRUST, A REGISTERED CHA RITABLE TRUST, THE MANAGING TRUSTEE OF WHICH IS THE CHAIRMA N OF THE HOLDING COMPANY AGRI GOLD ESTATES & ENTERTAINMENTS (P) LTD. IT HAS ALSO BEEN MENTIONED THAT THE LIABILITY TO CA PITAL GAINS TAX ON THE SALE OF LAND IF ANY HAS NOT BEEN CONSIDE RED IN ACCOUNTS WHILE COMPUTING THE TAX LIABILITY, AS THE MANAGEMENT CONSIDERS THE SALE AT COST IS THE STRATE GIC DECISION AND IS HAVING THE SYNERGY IN MARKETING THE PROPOSED TOURISM PROJECT. THUS, ACCORDING TO THE LEARNED COU NSEL FOR THE ASSESSEE, THE ASSESSEE HAS DISCLOSED ALL THE MA TERIAL FACTS WHICH ARE NECESSARY FOR COMPUTATION OF INCOME OF TH E ASSESSEE FOR THE RELEVANT AY, BEFORE THE AO AND HAS EVEN EXPLAINED THE NATURE OF TRANSACTION BEFORE THE AO A ND, THEREFORE, THERE WAS NO CONCEALMENT OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSE E. 8.1 AS REGARDS THE QUANTIFICATION OF TAXABLE INCOME AND THE PENALTY THEREON, THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE QUANTIFICATION OF THE CAPITAL GA INS HAS BEEN DONE BY THE AO BY REFERRING THE MATTER TO THE DVO B Y APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT A ND ADOPTED THE VALUE DETERMINED BY THE DVO. HE SUBMITTED THAT THE PROVISIONS OF SECTION 50C ARE DEEMING PROVISIONS AN D, THEREFORE, PENALTY ON THE INCOME DETERMINED BY APPL ICATION OF SUCH DEEMING PROVISIONS IS NOT LEVIABLE. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. MADAN TEATRES LTD. VIDE GA NO. 684 OF 2013/ITA NO. 62 OF 2013, JUDGMENT DATED 14 TH MAY, 2013, A COPY OF WHICH IS PLACED BEFORE US. ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 6 9. THE LEARNED DR, SMT. K. HARITHA, ON THE OTHER HA ND, STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHOR ITIES BELOW AND SUBMITTED THAT PENALTY U/S 271(1)(C) HAS BEEN APPLIED DUE TO CONCEALMENT OF PARTICULARS OF INCOME IN RESPECT OF LONG TERM CAPITAL GAINS ARISING OUT OF SALE OF L AND. SHE SUBMITTED THAT IF THE DEPARTMENT HAD NOT RECEIVED T HE AIR INFORMATION ABOUT THE SALE CONSIDERATION RECEIVED B Y THE ASSESSEE, THE ASSESSEE WOULD NOT HAVE FURNISHED THE RELEVANT INFORMATION BEFORE THE AO AND, THEREFORE, IT IS A C LEAR CASE OF CONCEALMENT OF PARTICULARS OF INCOME. FURTHER, SHE SUBMITTED THAT THOUGH THE ASSESSEE WAS THE OWNER OF 9.91 ACRE S OF LAND. THE TOTAL OF WHICH HAS BEEN TRANSFERRED BY A REGI STERED SALE DEED IN FAVOUR OF SRI SRI DAKSHIN KEDAR MAHA SAMSTH AN TRUST, IT HAS CLAIMED THAT IT IS THE OWNER OF 1.58 ACRES O F LAND ONLY, WHICH IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. SHE SUBMITTED THAT THE ASSESSEE HAS ALSO ACCEPTED THE COMPUTATION OF LONG TERM CAPITAL GAINS FOR THE TOTA L EXTENT OF 9.91 ACRES AND, THEREFORE, THE ASSESSEES STATEMENT THAT IT HAS ALREADY REVEALED OR FURNISHED INFORMATION ABOUT THE SALE OF LAND OF 8.33 ACRES IS INADEQUATE AND AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDING TO H ER, THE DECISION RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE A SSESSEE. 10. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED RIVAL SUBMISSIONS AS WELL AS MATERIAL ON RECORD, WE FIND THAT PENALTY IS LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME AND ON THE QUANTUM OF THE LONG TERM CAPITAL GAINS COMPU TED ON THE BASIS OF DVOS REPORT. THE FIRST QUESTION TO BE CONSIDERED IS WHETHER THERE IS ANY CONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSEE RELEVANT TO THE COMPUTATION OF INCO ME OF THE ASSESSEE FOR THE RELEVANT FY. AS DEMONSTRATED BY TH E LEARNED ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 7 COUNSEL FOR THE ASSESSEE, ASSESSEE HAS STATED IN IT S ACCOUNTS AS PART OF THE BALANCE SHEET THAT THERE SALE OF LAN D DURING THE RELEVANT FY AND THAT IT HAS NOT OFFERED ANY LONG TE RM CAPITAL GAINS AS IT WAS SOLD AT COST. THEREFORE, AS FAR AS 1.58 ACRES IS CONCERNED, THERE IS A CLEAR DISCLOSURE OF FACTS BEF ORE THE AO. AS REGARDS THE BALANCE LAND OF 8.33 ACRES, THE ASSE SSEES CONTENTION WAS THAT IT HAS ALREADY BEEN SOLD TO ITS HOLDING COMPANY IN THE EARLIER YEARS AND THAT THE SAME IS R EFLECTED IN ITS BOOKS OF ACCOUNT. THIS CONTENTION HAS BEEN PUT- FORTH BY THE ASSESSEE BEFORE THE AO AS WELL AS BEFORE THE CI T(A) IN THE PENALTY PROCEEDINGS. NONE OF THEM HAVE VERIFIED THIS CONTENTION AND ALSO NO MATERIAL HAS BEEN BROUGHT ON RECORD TO CONTROVERT THE CONTENTION OF THE ASSESSEE. MEREL Y BECAUSE THE ASSESSEE HAS ACCEPTED THE ADDITION OF LONG TERM CAPITAL GAINS MADE FOR THE ENTIRE 9.91 ACRES OF LAND, IT CA NNOT BE HELD OR CONSIDERED THAT THE ASSESSEE HAS CONCEALED ITS I NCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME WITH REG ARD TO 8.33 ACRES OF LAND. AS HELD BY THE HONBLE HIGH COURTS A ND HONBLE SUPREME COURT IN CATENA OF CASES EVERY ADDITION WIL L NOT AUTOMATICALLY ATTRACT PENALTY. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS, 322 ITR 158 (SC ) HAS HELD THAT MERE MAKING OF THE CLAIM, WHICH IS NOT S USTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INA CCURATE CLAIM OR FURNISHING OF INACCURATE PARTICULARS REGARDING T HE INCOME OF THE ASSESSEE. IT HAS FURTHER BEEN HELD THAT FOR HOL DING THAT AN ASSESSEE HAS FURNISHED INACCURATE PARTICULARS, I NFORMATION GIVEN IN THE RETURN SHOULD BE FOUND TO BE INCORRECT OR INACCURATE. THE HONBLE SUPREME COURT IN THE CASE OF BRIJMOHAN VS. CIT, 120 ITR 1 (SC) HAS HELD THAT THE CONCEALMENT TAKES PLACE ON THE DATE WHEN THE RETURN IS FILED WITHOUT DISCLOSING THE PARTICULARS OF INCOME OF THA T YEAR. THUS, FOR LEVYING PENALTY U/S 271(1)(C) THERE HAS T O BE A ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 8 FINDING BY THE AO OR THE CIT(A) THAT THE EXPLANATIO N OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE OR THAT THE SAME HAS NOT BEEN SUBSTANTIATED BY THE ASSESSEE. THERE IS NO SUC H FINDING BY THE AO OR THE CIT(A) ON THE ABOVE CONTENTION OF THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THAT THE RE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF ITS INCOME. 10. AS REGARDS, THE QUANTIFICATION OF THE LONG TERM CAPITAL GAINS AND THE PENALTY LEVIABLE THEREON, WE ARE OF T HE OPINION THAT THE DECISION OF THE HONBLE CALCUTTA HIGH COUR T IN THE CASE OF MADAN THEATRES (SUPRA) IS SQUARELY APPLICAB LE TO THE FACTS OF THE CASE BEFORE US. IN THE CASE BEFORE US, QUANTIFICATION OR COMPUTATION OF LONG TERM CAPITAL GAIN WAS DONE BY APPLYING THE PROVISIONS OF SECTION 50C OF T HE IT ACT, WHICH IS A DEEMING PROVISION AND AS HELD BY THE HON BLE CALCUTTA HIGH COURT IN THE SAID CASE, PENALTY CANNO T BE LEVIED ON THE BASIS OF COMPUTATION OF INCOME BY APPLYING T HE DEEMING PROVISIONS. THEREFORE, ON BOTH THE COUNTS, THE ASSESSEE SUCCEEDS AND, HENCE, THE PENALTY LEVIED BY THE AO U/S 271(1)(C) AND CONFIRMED BY THE CIT(A) IS HEREBY DELETED. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 10/03/2014. SD/- SD/- (CHANDRA POOJARI) (P. MADHAV I DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 10/03/2014 KV ITA NO. 1195/HYD/13 M/S BROOK FIELDS & RESORTS PVT. LTD. 9 COPY TO:- 1) M/S BROOK FIELDS & RESORTS PVT. LTD., C/O M. CHANDRAMOULESWARA RAO, CA, C-3, SKYLAR K APARTMENTS, BASHEERBAG, HYDERABAD 29. 2) ITO 1(1), AAYAKAR BHAVAN, HYDERABAD. 3) CIT(A)-IV, HYDERABAD 4) THE CIT-I, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A. T., HYDERABAD.