Appeal details
Counselvise Citation
[2012] 140 COUNSELVISE.COM (IT) 61481 (ITAT-COCHIN)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 1 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-04-2012
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
26-03-2012
Assessment Year
2002-2003
Appeal Filed On
13-03-2009
Judgement Text
1 ITA NO.130/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 130/COCH/2009 (ASSESSMENT YEAR 2002-03) ITO, WD.2(4) VS SHRI P SASIKUMAR ALIAS BHASI TRICHUR PANIKKATH HOUSE, PO VELAPPAYA THRISSUR DISTRICT PAN : AEZPB8768B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.J. VINCENT RESPONDENT BY : SHRI R LOKANATHAN DATE OF HEARING : 26-03-2012 DATE OF PRONOUNCEMENT : 27-04-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCHI DATED 25-11-2008 FOR THE ASSESSMENT YEAR 2002-03. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS COMPU TATION OF CAPITAL GAIN ON TRANSFER OF PETROL PUMP. 3. SHRI T.J. VINCENT, THE LD.DR SUBMITTED THAT THE ASSESSEE JOINED AS PARTNER OF M/S JANAKIRAM ENTERPRISES ON 24-06-1999. ACCORDING TO THE LD.DR, M/S JANAKIRAM ENTERPRISES IS A PARTNERSHIP FIRM DEALING IN PETROL , DIESEL, GREASE, LUBRICANT AND OTHER PETRO PRODUCTS. ORIGINALLY, THE PARTNERSHIP FIRM W AS CONSTITUTED BY DR. K.K. MOHANDAS AND MRS. K.P. SAMYUKHTA. ACCORDING TO THE LD.DR, T HE ASSESSEE HAS INVESTED RS.30 LAKHS 2 ITA NO.130/COCH/2009 INITIALLY. AFTER HOLDING THE ASSET FOR 28 MONTHS, THE ASSESSEE UNDER THE GUISE OF RETIRING FROM THE PARTNERSHIP HAS TRANSFERRED THE PETROL PUM P ON 30-10-2001 BY INTRODUCING NEW PARTNERS TO THE PARTNERSHIP FIRM. ACCORDING TO THE LD.DR, SHRI N.K. BALAN AND SHRI N.K. UNNIKRISHNAN WERE INTRODUCED AS NEW PARTNERS A ND THE ASSESSEE RETIRED FROM THE PARTNERSHIP FIRM. THE LD.DR FURTHER SUBMITTED THAT THE ASSESSEE, IN FACT, HAS RECEIVED RS.50 LAKHS AS SALE CONSIDERATION OF THE PETROL PUM P. THE ORIGINAL INVESTMENT WAS ONLY RS.30 LAKHS AND SALE PRICE WAS RS.50 LAKHS. THEREF ORE, THE ASSESSING OFFICER TREATING THE SAME AS CAPITAL GAIN LEVIED CAPITAL GAIN TAX. HOWE VER, ON APPEAL BY THE ASSESSEE, THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THOUGH THE SALE CONSIDERATION WAS ONLY RS.50 LAKHS AND OUT OF THE SAME RS.20 LAKHS WAS USED FOR DISCHARGING LIABILITY TO LORD KRISHNA BANK LTD. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE ASSESSEE IS ENTITLED TO REDUCE THE LIABILITY FROM THE SALE CONSIDERATION. THE LD.DR SUBMITTED THAT THE TOTAL INVESTMENT BY THE ASSESSEE IS RS.50 LAKHS SINCE THE ASSESSEE CLAIMED THAT RS.20 LAKHS WAS SUBSEQUENTLY INVESTED AFTER BORROWING FROM THE BANK. 3.1 REFERRING TO THE REMAND REPORT FILED BY THE ASS ESSING OFFICER, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER NOW CONFIRMS THAT THE TO TAL INVESTMENT IS RS.30 LAKHS AND SALE CONSIDERATION WAS RS.50 LAKHS. AFTER REDUCING THE LIABILITY TO LORD KRISHA BANK LTD, THE NET AMOUNT RECEIVED BY THE ASSESSEE IS RS.32,63,920 . 4. ON THE CONTRARY, SHRI R LOKANATHAN, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE BECAME PARTNER OF THE F IRM BY INVESTING RS.9,50,000. SUBSEQUENTLY, THE OTHER PARTNERS, DR K.K. MOHANDAS AND MRS. K.P. SAMYUKHTA RETIRED FROM THE FIRM. THE FIRM WAS RUN BY THE ASSESSEE AL ONGWITH ONE SHRI MADHU. SUBSEQUENTLY, THE ASSESSEE RETIRED FROM THE FIRM AN D THE FIRM WAS RUN BY OTHER PARTNERS. THE ONLY CONTROVERSY IS WHETHER THE ASSE SSEE HAS INVESTED RS.30 LAKHS OR RS.50 LAKHS. THE ASSESSING OFFICER NOW CONFIRMS TH AT WHAT WAS INVESTED BY THE ASSESSEE IS RS.30 LAKHS. AFTER REDUCING THE LIABILITY TO BA NK, THE NET AMOUNT RECEIVED IS ONLY 3 ITA NO.130/COCH/2009 RS.32,63,920. THIS IS WHAT EXACTLY THE COMMISSIONE R OF INCOME-TAX(A) HAS DIRECTED THE ASSESSING OFFICER TO DO WHILE COMPUTING THE CAPITAL GAIN. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS IS THE SECOND R OUND OF LITIGATION BEFORE THIS TRIBUNAL. IN THE FIRST ROUND OF LITIGATION IN ITA NO.63(COCH) /2006 DAED17-01-2007 THIS TRIBUNAL REMANDED BACK THE MATTER FOR RE-EXAMINATION. IN T HE SECOND ROUND OF LITIGATION, THE COMMISSIONER OF INCOME-TAX(A) DIRECTED THE ASSESSIN G OFFICER TO COMPUTE THE CAPITAL GAIN AFTER TAKING INTO CONSIDERATION THE LIABILITY TO LORD KRISHNA BANK. SINCE THERE WAS CONFUSION WITH REGARD TO INVESTMENT MADE BY THE ASS ESSEE IN THE PARTNERSHIP FIRM A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFF ICER BY THIS TRIBUNAL BY AN ORDER DATED 19-10-2011. THE ASSESSING OFFICER, THROUGH T HE ADMINISTRATIVE COMMISSIONER HAS FILED HIS REMAND REPORT. IN THE REMAND REPORT, THE ASSESSING OFFICER REPORTS AS FOLLOWS: 2. THE ASSESSEE CLAIM TO HAVE INVESTED RS.30 LAKHS IN THE FIRM. THE ASSESSING OFFICER HAS ACCEPTED THE INVESTMENT OF RS .30 LAKHS AS PER THE ORIGINAL ASSESSMENT U/S 143(3) DATED 23-3-2005. IN ADDITION TO RS.10 LAKHS SAID TO HAVE RECEIVED BY DR. MOHANDAS, THE AS SESSEE HAS INCURRED EXPENSES FOR SETTING THE DUES OF THE FIRM LIKE WAGE S, CREDITOR, ETC. AND TOWADS THE COST OF ASSETS. THIS INVESTMENT WAS FRO M KURI RECEIPTS AND IN INSTALMENTS. THE BANK STATEMENT OF OD A/C NO.CC 1195 OF THE FIR M IN LORD KRISHNA BANK, THRISSUR HAS BEEN PRODUCED AND VERIFI ED. THE ACCOUNT WAS OPENED ON 19-9-1999, AFTER THE ADMISSION OF THE ASS ESSEE INTO THE FIRM. THE LIABILITY TO LORD KRISHNA BANK CAME INTO EXISTE NCE DURING THE PERIOD OF SRI SASIKUMAR. THE ASSESSEE HAS NOT CLAIMED THAT H E BORROWED RS.20 LAKHS TO FIRM. THE OD A/C WAS CLOSED AFTER PAYMENT OF THE SUM RS.10,22.442/-. HENCE, INVESTMENT BY THE ASSESSEE IN THE FIRM IS R.30 LAKHS. 3. THE PAYMENTS TO SRI SASIKUM,AR ON HIS RETIREMENT FROM THE FIRM WERE MADE FROM THE NRE ACCOUNT OF SRI N. K. BALAN, MAINTAINED IN STATE BANK OF TRAVANCORE, EDAMUTTOM BRANCH. AS PER THE B ANKS CERTIFICATE DATED 5-12-2007 (COPY ENCLOSED), THE PAYMENT TO LOR D KRISHNA BANK HAS BEEN MADE DIRECTLY FROM THE BANK AND NOT THROUGH SR I SASIKUMAR. 4 ITA NO.130/COCH/2009 AMOUNT PAID TO SRI SASIKUMAR I.E. RS.39,77,558 INCL UDES RS.3,13,638/- / FOR SETTLING THE LIABILITIES LIKE WAGES, CREDITORS AND BROKERAGE AND / RS.4 LAKHS PAID TO WORKERS AS RETRENCHMENT COMPENSATION. THIS IS EVIDENT FROM THE AFFIDAVIT DATED 22-9-2010 FILED BY SRI BAL AN. NET AMOUNT RECEIVED BY SRI SASIKUMAR WORKS OUT TO RS.32,63,920 /-. 6. IN VIEW OF THE ABOVE, WHAT WAS INVESTED BY THE A SSESSEE IS ONLY RS.30 LAKHS AND THE SALE CONSIDERATION WAS RS.50 LAKHS. THE LIABIL ITY TO LORD KRISHNA BANK LTD TO THE EXTENT OF RS.19,22,442 WAS PAID DIRECTLY TO LORD KR ISHNA BANK. THEREFORE, NET CONSIDERATION WAS ONLY R.32,63,920. THE CAPITAL GA IN IF ANY HAS TO BE COMPUTED ONLY ON THE NET AMOUNT RECEIVED BY THE ASSESSEE. THIS IS W HAT EXACTLY THE COMMISSIONER OF INCOME-TAX(A) HAS DIRECTED THE ASSESSING OFFICER TO DO. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LOWER AUTHORITY. ACCORDI NGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF APRIL, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 27 TH APRIL, 2012 PK/- COPY TO: 1. ITOP, WD.2(4), TRICHUR 2. SHRI P SASIKUMAR ALIAS BHASI, PANIKKATH HOUSE, P.O. VELAPPAYA, THRISSUR DISTRICT 3. THE COMMISSIONER OF INCOME-TAX(A)-V, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH
