ADIT, CHENNAI V. Shri Nataraj Ramaiah, CHENNAI

ITA 1240/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61373 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K E B RENGARAJAN JR
• Keywords: Valuation report; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL M EMBER ITA NO.1240/MDS/2010 & C.O. NO.96/MDS/2010 (ASSESSMENT YEAR: 2006-07) ASSISTANT DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, CHENNAI-34. VS. SHRI NATARAJ RAMAIAH, A-2, ALANKAR APARTMENTS, 12, RAMAN STREET, T.NAGAR, CHENNAI-600 017. PAN:AAAPR5280R (APPELLANT) (CROSS OBJECTOR / RESPONDENT) APPELLANT BY : MR. K.E.B .RENGARAJAN, JR.STANDING COUNSEL REVENUE BY : NONE DATE OF HEARING : 23 RD JULY, 2012 DATE OF PRONOUNCEMENT : 23 RD JULY, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGNING THE ORDER OF THE CIT(A)-IV, CHENNAI DATED 15.04.20 10. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN THE APPE AL. 2. THE CROSS OBJECTION HAS BEEN FILED WITH A DELAY OF 4 DAYS. AN APPLICATION FOR CONDONATION OF DELAY HAS B EEN FILED BY THE ASSESSEE/RESPONDENT FOR THE DELAY IN FILING OF CROSS OBJECTION CITING REASONS FOR DELAY. WE HAVE PERUSED THE PETITION AND ARE SATISFIED WITH THE REASONS CAUSIN G DELAY IN ITA NO.1240/MDS/2010 & CO NO.96/MDS/2010 2 FILING OF THE CROSS OBJECTION. THUS, THE DELAY OF 4 DAYS IN FILING OF THE CROSS OBJECTION IS CONDONED AND THE CROSS OBJECTION IS ADMITTED FOR DISPOSAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A NON-RESIDENT. THE ASSESSEE OWNED 75% SHARE IN THE PARTNERSHIP FIRM M/S. LANDMARK. THE REMAINING 25% S HARE WAS HELD BY MRS. HEMALATHA RAMAIAH, SISTER OF THE A SSESSEE. THE ASSESSEE ALSO OWNED 25% SHARE IN M/S. WESTLAND BOOKS PVT. LTD., 25% SHARE IN M/S. EMAMI LANDMARK S TORE (P) LTD. AND 45% SHARE IN REGENT MANAGEMENT (P)LTD. THE ASSESSEE ENTERED INTO MOU ON 30.08.2005 WITH M/S. T RENT LIMITED & OTHERS. AS PER THE TERMS OF THE MOU, THE ASSESSEE TRANSFERRED HIS ENTIRE 75% SHARE IN M/S. LANDMARK AND HIS SHAREHOLDING IN THE AFOREMENTIONED THREE COMPANIES TO M/.S TRENT LIMITED & OTHERS FOR SALE CONSIDERATION OF ` 84,68,69,000/-. THE TOTAL INCOME OF THE ASSESSEE R ELEVANT TO THE ASSESSMENT YEAR COMPRISED OF INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. THE RETURN OF INCOME SHOWS ACCRUAL OF LONG TERM CAPITAL GAIN AMOUNTING T O ITA NO.1240/MDS/2010 & CO NO.96/MDS/2010 3 ` 81,39,76,100/- BUT THE SAME WAS CLAIMED AS EXEMPT A FTER DEDUCTION OF EXPENSES AND INVESTMENT IN ELIGIBLE B ONDS ETC. THE ASSESSEE CLAIMED THE ENTIRE AMOUNT STANDING TO HIS CREDIT IN THE CAPITAL ACCOUNT OF M/S. LANDMARK AMOU NTING TO ` 63,00,000/- ON THE DATE OF TRANSFER AS PART OF THE COST OF ASSET TRANSFERRED WHILE COMPUTING LONG TERM CAPITAL GAINS FOR THE ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 31.12.2008 DISALLOWED THE ASSESSEES CLAIM ON THE GROUND THAT SINCE THE ASSET TRANSFERRED IS RIGHT TO CARRY ON BUSINESS, ITS CO ST HAS TO BE TAKEN AS NIL IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 55(2)(A) OF THE ACT. THE ASSESSING OFFICER RECOMPU TED THE INCOME FROM LONG TERM CAPITAL GAINS AND RAISED A DE MAND OF ` 3,04,098/- AFTER INCLUDING INTEREST UNDER SECTION 2 34A, B & C. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) V IDE ORDER DATED 15.04.2010 ALLOWED THE APPEAL OF THE ASSESSEE . THE CIT(A) WHILE ALLOWING THE APPEAL HAS HELD AS UNDER: - ITA NO.1240/MDS/2010 & CO NO.96/MDS/2010 4 4. I HAVE GONE THROUGH THE DEED OF RECONSTITUTION OF THE PARTNERSHIP FIRM M/S. LANDMARK DATED 30.08.2005. AS PER PARA 7 ON PAGE 7, THE ENTIRE CAPITAL AMOUNT BALANCE OF THE APPELLANT AS ON 30.08.2005 SHALL STAND TRANSFERRED TO TRENT LIMITED IN PURSUANCE OF MOU DATED 30.08.2005 REFERRED TO IN PARA 3.1 OF THE IMPUGNED ASSESSMENT ORDER. SO IN MY OPINION THERE IS NO DOUBT THAT CONSIDERATION OF ` 84,68,69,000/- WAS NOT ONLY FOR ACQUISITION OF RIGHT TO SHARE 75% OF PROFI T OF THE FIRM BUT ALSO TOWARDS ACQUISITION OF CAPITAL BALANCE OF THE APPELLANT IN THE FIRM OF M/S. TRENT LIMITED. THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION OF ` 63,00,000/- TOWARDS CAPITAL IN M/S. LANDMARK FROM THE SALE CONSIDERATION OF ` 84,68,69,000/- WHILE COMPUTING LONG TERM CAPITAL GAINS. 4. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESP ITE NOTICE. A PERUSAL OF THE RECORD SHOWS THAT ONE MR. DEEPAK JOHN HAD PUT IN APPEARANCE ON BEHALF OF THE ASSESSE E ON 24.1.2012. ON THE SAID DATE, THE CASE WAS ADJOURNED TO 23.4.2012. ON 23.4.12 THE BENCH DID NOT FUNCTION. CONSEQUENTLY, THE CASE WAS ADJOURNED TO 23.07.2012. NOTICE/INTIMATION REGARDING THE DATE OF HEARING WAS SENT TO THE ASSESSEE VIDE RPAD, WHICH HAS BEEN RETURNED BAC K UNSERVED WITH THE REMARKS UNCLAIMED. THUS THE NOT ICE IS ITA NO.1240/MDS/2010 & CO NO.96/MDS/2010 5 DEEMED TO BE SERVED ON THE ASSESSEE. THEREFORE, WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE D.R. 5. WE HAVE PERUSED THE ORDER OF THE CIT(A). WE FIND THAT NO COGENT REASON HAS BEEN GIVEN BY THE CIT(A) IN AL LOWING THE APPEAL OF THE ASSESSEE. DURING THE PENDENCY OF APPEAL, THE TRIBUNAL VIDE ORDER DATED 24 TH JANUARY, 2012 HAD DIRECTED THE ASSESSEE TO PRODUCE BALANCE SHEET, INCOME & EXPENDITURE ACCOUNT OF THE ASSESSEE AS WELL AS M/S. LANDMARK BEFORE AND AFTER THE TRANSFER, COPY OF THE MOU, COPY OF THE DUE DILIGENCE REPORT. THE TRIBUNAL VID E ORDER DATED 8 TH NOVEMBER, 2011 HAD DIRECTED THE A.R. OF THE ASSESSEE TO PRODUCE VALUATION REPORT OF THE ASSETS . THE ASSESSEE HAS NOT FILED ANY OF THE AFOREMENTIONED D OCUMENTS TILL DATE. IN THE INTEREST OF JUSTICE, WE REMIT THE MATTER BA CK TO THE ASSESSING OFFICER AND DIRECT THE ASSESSEE/RESPONDEN T TO PRODUCE ALL THE AFOREMENTIONED DOCUMENTS BEFORE THE ASSESSING OFFICER. WE THEREFORE, SET ASIDE THE ORD ER OF THE CIT(A) DATED 15.04.2010 AND REMIT THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE I SSUE AFRESH, ITA NO.1240/MDS/2010 & CO NO.96/MDS/2010 6 AFTER TAKING INTO CONSIDERATION THE AFOREMENTIONED DOCUMENTS AND AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. THE APPEAL OF THE REVENUE IS ALLOWED FOR STATIST ICAL PURPOSES. CONSEQUENTLY, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND ACCORDINGLY WE DISMISS THE SAME. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 23 RD DAY OF JULY, 2012 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) ( VIKAS AWASTHY ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 23 RD JULY, 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .