M/s. Sandeep Kumar Jain HUF, Delhi V. ACIT, New Delhi

ITA 1455/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7123 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 08-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 234B; 13

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A.NO.1455/DEL/2016 A.Y. : 2009-10 SANDEEP KUMAR JAIN, HUF 20/7, RAJPUR ROAD, DELHI-54 (PAN: AAAHS3375L) VS. ACIT, CIRCLE 35(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. K. SAMPATH, ADV. DEPARTMENT BY : SH. ANIL KUMAR SHARMA, SR. DR ORDER THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 15/1/2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, NEW DELHI ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ACTION OF AO FOR TREATING THE IN COME ARISING ON REDEMPTION OF ICICI MONEY MULTIPLIER BON DS AS INCOME FROM OTHER SOURCES AS AGAINST LONG TER M CAPITAL GAIN DECLARED BY THE ASSESSEE IN HIS RETUR N. 2. THAT THE LD. CIT(A) HAS FURTHER FAILED TO APPRECIAT E THAT A CIRCULAR CANNOT MAKE A PROVISION WHICH CAN PUT AN ASSESSEE IN A DISADVANTAGEOUS POSITION THAT WHAT TH E LAW PROVIDES. WHILE DOING SO THE LD. CIT(A) HAS OVERLOOKED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE. 3. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AS WELL A S ON FACTS IN SUSTAINING THE CHARGE OF INTEREST UNDER SE CTION 234B OF THE INCOME TAX ACT, 1961. 2 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MODIFY, OR WITHDRAW ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL AT ANY TIME ON OR BEFORE THE HEARING AS MAY BE ADVISED. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT IN DISPUTE, HENCE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF BREV ITY. 3. DURING THE HEARING, LD. COUNSEL OF THE ASSESSEE FILED A PAPER BOOK CONTAINING PAGES 1 TO 80 HAVING THE COPY OF THE VAR IOUS ORDERS OF THE ITAT AND THE HIGHER COURTS INCLUDING THE ITAT, MUMBAI DECISION DATED 3 RD JULY, 2008 IN THE CASE OF CS GOSALIA VS. ITO, REPORTED AT (2008) 15 DTR (MUMBAI) (TRIB) 271 AND STATED THAT THE FACTS OF THE PRE SENT CASE ARE IDENTICAL TO THE CASE OF CS GOSALIA VS. ITO (SUPRA), THEREFORE, THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE AFORESAID DECISION WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE IN DISPUTE IN FAVOR OF THE ASSES SEE. HENCE, HE REQUESTED THAT APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED. 4. AT THE TIME OF HEARING LD. DR RELIED UPON THE OR DERS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE BOTH PARTIES AND PERUSED AN D CONSIDERED THE RELEVANT RECORD AVAILABLE WITH US ESPECIALLY THE IM PUGNED ORDERS PASSED BY THE REVENUE AUTHORITIES AND THE COPY OF THE ORDER DATED 03.7.2008 OF THE MUMBAI TRIBUNAL PASSED IN THE CASE OF M/S CS GOSAL IA VS. ITO IN ITA NO. 1373/MUM/2006 AY 2002-03, REPORTED IN (2008) 15 DTR (MUMBAI) (TRIB) 271 WHEREIN, THE TRIBUNAL HAS ADJUDICATED THE MATTE R VIDE PARA 10 TO 13 AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH SIDES, MATERIAL ON RECORD AND ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, THE SAID CIRCULAR HAS BEEN ISSUED ON 15 TH FEB, 2002 AND THE ASSESSEE HAS PURCHASED THE SAID DEEP DISCOUNT BONDS MUCH BEFORE THAT. IT WAS ALSO NOTED THAT THESE DEEP DISCOUNT BONDS HAVE BEEN REDEEMED 3 PREMATURELY BY IDBI ON 31 ST MARCH, 2002 ON ITS OWN. IT IS ALSO NOTED THAT ASSESSEE HAS NOT OFFERED ANY INCOME THEREON IN THE YEARS OF HOLDING AND SUCH BONDS HAVE BEEN HELD AS INVESTMENTS. IT IS FURTHER NOTED THAT THE C BDT ISSUED THE SAID CIRCULAR FOR THE REASON THAT VARI OUS DISPUTES AROSE REGARDING THE TAX TREATMENT OF INCOM E ARISING FROM THESE DEEP DISCOUNT BONDS. IT IS FURT HER NOTED THAT PRIOR TO THE ISSUE OF SUCH CIRCULAR, THE PROFI T ON TRANSFER OF BONDS BEFORE MATURITY WAS TO BE TAXED AS INCOME FROM CAPITAL GAINS WHERE BONDS WERE HELD AS INVESTMENTS. AS PER CL. 3 OF THE SAID CIRCULAR, IT HAS BEEN STATED THAT THIS CIRCULAR WAS ISSUED TO RESOLVE SUCH DISPUTE AND INC OME FROM SUCH BONDS HAD TO BE TREATED UNIFORMALLY, THER EAFTER, IN THE MANNER AS PRESCRIBED THEREIN. IN OUR VIEW, T HIS CIRCULAR IS TO BE TREATED AS HAVING PROSPECTIVE EFF ECT BECAUSE IT RESULTS INTO AN ADDITIONAL CIVIL LIABILI TY AND ALSO IN VIEW OF THE FACT THAT IT IS TREATED OF RETROSPEC TIVE NATURE, IT MAY RESULT INTO SITUATIONS WHERE ONE PERSON CANN OT COMPLY ITS REQUIREMENTS FOR HIS PAST ACTIONS OR OMI SSIONS. WE ARE FURTHER OF THE VIEW THAT THESE DEEP DISCOUNT BONDS ARE CAPITAL ASSETS, HENCE, PROFIT ARISING ON REDEMP TION THEREOF IS TO BE TREATED AS CAPITAL GAIN. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN LAW. ACCORDINGLY, WE REVERSE THE SAME AN D DIRECT THE AOI TO ACCEPT THE CLAIM AS MADE BY THE ASSESSEE . THUS, THIS GROUND OF THE ASSESSEE IS ACCEPTED. 8. IN GROUND NO. 2, THE ASSESSEE IS AGGRIEVED BY T HE DECISION OF LD. CIT(A) IN CONFIRMING THE AOS DECISION FOR C HARGING INTEREST UNDER SS. 234B AND 234C OF THE ACT. THIS G ROUND IS CONSEQUENTIAL TO GROUND NO. 1 AND IN VIEW OF OUR DE CISION IN RESPECT THEREOF, THE ASSESSEE IS NOT LIABLE TO PAY ANY 4 INTEREST UNDER SS. 234B AND 234C OF THE ACT. THUS, THIS GROUND IS DISMISSED AS INFRUCTUOUS. 6. RESPECTFULLY FOLLOWING THE PRECEDENT, AS AFORES AID, WE ALLOW THE GROUNDS IN DISPUTE RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/01/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 03/01/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES