The ACIT, Circle-6, Surat V. Shri Abdul Kader Dawoodbhai Lakhani, Surat

ITA 1539/AHD/2012

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50868 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 12-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTAN T MEMBER I.T.A. NO.1539/AHD/2012 A.Y.2003-04 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-6 AHMEDABAD APPELLANT VS. SHRI ABDUL KADER DAWOODBHAI LAKHANI, YUSUF TIMOLS COMPOUND AT-UCHCHHAI, SURAT PAN-AAQPL9357H RESPONDENT DEPARTMENT BY : SHRI VIVEK ANAND OJHA, SR. D.R. ASSESSEE BY : NONE DATE OF HEARING : 07.11.2012 DATE OF PRONOUNCEMENT : 07.11.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD. C IT(A)-IV, SURAT DATED 26.03.2012. 2. DESPITE THE FACT THAT NOTICE WAS ISSUED, NONE AP PEARED ON BEHALF OF THE ASSESSEE. HENCE, WE PROCEEDED WITH THE MATTER AFTE R HEARING LD. D.R. 3. REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, LD. CIT(A) HAS ERRED IN CANCELING THE ORDER PASSED U/S 154 BY THE A.O. BECAUSE OF THE CAPITAL GAINS ARISED FROM THE SALE O F INHERITED SHARES MADE CHARGEABLE TO TAX @ 20% INSTEAD OF 10% APPLIED BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONAL DEMAND OF RS.64,070/- I.T.A. NO.1539/AHD/2012 A.Y.2003-04 2 RAISED ON ACCOUNT OF ORDER PASSED U/S 154 OF THE I. T. ACT FOR CHARGING CAPITAL GAINS @ 20% AS AGAINST 10%. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) HAS ERRED IN INTERPRETING THE SECTION 112(1) (A) APPLIED BY THE A.O. IN THE CASE OF ASSESSEE FOR CHARGING THE RATE @ 20% AS AGAINST 10% TAKEN BY THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT U/S 143(3) WAS MADE ON 30.11.2006. ASSESSED INCOME INCLUDED LONG TERM CAP ITAL GAINS ON SALE OF BONUS SHARES. LONG TERM CAPITAL GAINS TAX ON SALE OF THESE BONUS SHARES WAS COMPUTED AT 10% GIVING BENEFIT OF FIRST PROVISO TO SECTION 112(1) (A). SUBSEQUENTLY, THE A.O. ISSUED NOTICE U/S 154 SEEKIN G TO RECTIFY THE ORDER AS ACCORDING TO HIM THE BENEFICIAL PROVISIONS OF FIRST PROVISO TO SECTION 112(1)(A) IS NOT APPLICABLE TO CAPITAL GAINS ARISING FROM TRA NSFER/SALE OF BONUS SHARES AS THE COST OF ACQUISITION OF BONUS SHARES WAS NIL. T HE A.O. PROPOSED TO TAX THE LONG TERM CAPITAL GAINS ARISING ON THE SALE OF BONU S SHARES @ 20%. IN RESPONSE, IT WAS SUBMITTED THAT THE ISSUE IS DEBATA BLE AND NOT A MISTAKE APPARENT FROM RECORD AND THAT THE THEN A.O. HAD MAD E THE ASSESSMENT AFTER CONSCIOUSLY APPLYING HIS MIND TO THE ISSUE. THE A. O. HELD THAT IT WAS A FIT CASE FOR RECTIFICATION AS THERE HAD BEEN ERRONEOUS APPLI CATION OF LAW AND THIS WAS PERMITTED TO BE RECTIFIED. HE THEREFORE, SUBJECTED THE LONG TERM CAPITAL GAINS ARISING FROM SALE OF INHERITED SHARES @ 20%. 5. AGGRIEVED BY THIS ACTION OF THE A.O. ASSESSEE WE NT IN APPEAL BEFORE LD. CIT(A) WHO AFTER TAKING INTO CONSIDERATION THE SUBM ISSIONS OF THE ASSESSEE I.T.A. NO.1539/AHD/2012 A.Y.2003-04 3 ALLOWED THE APPEAL OF THE ASSESSEE. NOW AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 6. AFTER HEARING LD. D.R. AND GOING THROUGH THE REC ORD, WE FIND THAT LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OB SERVING AS UNDER:- I HAVE GONE THROUGH THE FACTS OF THE CASE. I FIND THAT THE PROVISO TO SECTION 112(1)(D) [WRONGLY MENTIONED BY THE A.O. AS 112(1)(A) IS APPLICABLE TO LONG TERM CAPITAL ASSETS IN THE NATUR E OF LISTED SECURITIES, UNITS AND ZERO COUPON BONDS IRRESPECTIV E OF THEIR COST AND NATURE OF ACQUISITION. THEREFORE, THE PREMISE OF T HE A.O. IS NOT CORRECT. EVEN OTHERWISE, RECTIFICATION AS SOUGHT T O BE MADE BY THE A.O. IS NOT A MATTER APPARENT FROM RECORD. IT REQU IRES AN INTERPRETATION OF THE STATUTE AND MORE THAN ONE VIE W IS POSSIBLE. SUCH RECTIFICATIONS ARE NOT PERMITTED U/S 154. IN MY OPINION, THERE WAS NO MISTAKE IN THE ORDER PASSED U/S 143(3) AND E VEN IF IT IS TO BE HELD THAT THERE WAS MISTAKE AS MENTIONED BY THE A.O ., IT COULD NOT HAVE BEEN RECTIFIED U/S 154. THE ADDITIONAL TAX DEM ANDED VIDE ORDER U/S 154 IS NOT AS PER LAW. THE A.O. IS DIRECTED TO WITHDRAW THE ADDITIONAL DEMAND RAISED. 7. NOTHING SUBSTANTIAL WAS ARGUED BEFORE US TO DEVI ATE US FROM THE FINDING OF LD. CIT(A) AND THEREFORE, THE ORDER PASSED BY HI M IS HEREBY CONFIRMED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 07 .11.2012 SD/- SD/- (A.MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD