ACIT, CHENNAI V. XS Real properties Pvt. Limited, CHENNAI

ITA 1546/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96584 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-11-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Period of limitation
• Section: 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1546/MDS/2014 ( )( / ASSESSMENT YEAR : 2002-03 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(3), CHENNAI - 600 034. V. M/S XS REAL PROPERTIES PVT. LTD., NO.10, SOUTH MADA STREET, SRINAGAR COLONY, SAIDAPET, CHENNAI - 600 015. PAN : AAACX 0030 G (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI A.B. KOLI, JCIT -.+, / 0 / RESPONDENT BY : SH. A.S. SRIRAMAN, ADVOCATE 1 / 2% / DATE OF HEARING : 18.11.2015 3') / 2% / DATE OF PRONOUNCEMENT : 09.12.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENN AI, DATED 28.03.2014 AND PERTAINS TO ASSESSMENT YEAR 2002-03. 2. SHRI A.B. KOLI, THE LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT SHARE APPLICATION MONEY TO THE EXTEN T OF ` 22,17,875/- 2 I.T.A. NO.1546/MDS/14 WAS OUTSTANDING FOR MORE THAN THREE YEARS AND SHARE S WERE ALSO NOT ALLOTTED. REFERRING TO SECTION 28(IV) OF THE INCOM E-TAX ACT, 1961 (IN SHORT 'THE ACT'), THE LD. D.R. SUBMITTED THAT IT IS A BENEFIT ACCRUED TO THE ASSESSEE IN THE FORM OF BUSINESS. THEREFORE, I T IS TAXABLE IN THE HANDS OF THE ASSESSEE. ACCORDING TO THE LD. D.R., THE ASSESSEE RETAINED THE SHARE APPLICATION MONEY FOR MORE THAN THREE YEARS. THEREFORE, THE SHARE APPLICANTS CANNOT GET BACK THE MONEY BY WAY OF LEGAL PROCESS. THEREFORE, THE CIT(APPEALS) IS N OT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. REFERRING TO T HE ORDER OF THE CIT(APPEALS), THE LD. D.R. SUBMITTED THAT AFTER EXP IRY OF THREE YEARS PERIOD OF LIMITATION, ACCORDING TO THE LD. D.R., TH E SHARE APPLICANTS CANNOT CLAIM MONEY BEFORE THE COURT OF LAW. THEREF ORE, IT IS A BENEFIT ACCRUED TO THE ASSESSEE IN THE COURSE OF IT S BUSINESS ACTIVITY. HENCE, IT HAS TO BE TREATED AS INCOME UND ER SECTION 28(IV) OF THE ACT. 3. ON THE CONTRARY, SH. A.S. SRIRAMAN, THE LD.COUNS EL FOR THE ASSESSEE, SUBMITTED THAT WHAT WAS RECEIVED BY THE A SSESSEE IS SHARE APPLICATIONS. FOR VARIOUS REASONS, THE ASSES SEE COULD NOT ALLOT THE SHARES TO THE APPLICANTS. HOWEVER, IT WA S SHOWN AS LIABILITY IN THE BALANCE SHEET. ONCE THE LIABILITY IS ACCEPT ED IN THE BALANCE 3 I.T.A. NO.1546/MDS/14 SHEET, ACCORDING TO THE LD.COUNSEL, THE PERIOD OF L IMITATION WOULD GET EXTENDED FOR INITIATING LEGAL PROCESS TO RECOVER TH E MONEY BY THE RESPECTIVE APPLICANTS. THEREFORE, THE MONEY WHICH WAS RECEIVED BY THE ASSESSEE TOWARDS SHARE APPLICATIONS CANNOT BE T REATED AS INCOME OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 28 (IV) OF THE ACT. NO DOUBT, ANY BENEFIT WHICH IS ACCRUED TO THE ASSESSEE IN THE COURSE OF ITS BUSINESS ACTIVITY HAS TO BE TREATED AS INCOME. NOW THE QUESTION IS WHEN THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FOR ALLOTMENT OF SHARES AND MERELY BECAUSE THE SHARES C ANNOT BE ALLOTTED, WHETHER SUCH MONEY CAN BE TREATED AS INCO ME OF THE ASSESSEE? IT IS AN ADMITTED FACT THAT LIMITATION A CT PROVIDES A PERIOD OF THREE YEARS FOR FILING SUIT TO RECOVER TH E MONEY. THEREFORE, WHEN THE THREE YEARS PERIOD EXPIRED, THE APPLICANT WOULD NOT HAVE LEGAL RIGHT TO RECOVER THE MONEY THROUGH A COURT OF LAW. HOWEVER, THE LAW DOES NOT PROHIBIT RECOVERY OF THE MONEY THR OUGH OTHER MODES. IN OTHER WORDS, WHENEVER THE ASSESSEES MON EY CAME IN POSSESSION OF THE SHARE APPLICANTS, THEY CAN, AS A MATTER OF RIGHT, 4 I.T.A. NO.1546/MDS/14 ADJUST THE OUTSTANDING AGAINST THE SHARE APPLICATIO N MONEY. THEREFORE, AT NO STRETCH OF IMAGINATION WE CAN SAY THAT RECOVERY OF THE SHARE MONEY IS BARRED BY LIMITATION. WHAT WAS BARRED BY LIMITATION AFTER EXPIRY OF THREE YEARS PERIOD IS FI LING OF A SUIT FOR RECOVERY OF MONEY BEFORE A COURT OF LAW. APART FRO M THAT, WHEN THE ASSESSEE ACKNOWLEDGES THE LIABILITY IN THE BALANCE SHEET OR IN THE RETURN OF INCOME, SUCH ADMISSION OF LIABILITY EXTEN DS THE PERIOD OF LIMITATION PROVIDED IN THE LIMITATION ACT. IN THIS CASE, ADMITTEDLY, ASSESSEE SHOWED AS LIABILITY IN RESPECT OF THE SHAR E APPLICATION MONEY TO THE EXTENT OF ` 22,17,875/-. THEREFORE, THE PERIOD OF LIMITATION FOR FILING SUIT GETS EXTENDED. HENCE, T HE SHARE APPLICANTS HAVE RIGHT TO FILE CIVIL SUIT TO RECOVER MONEY FROM THE ASSESSEE. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE SHARE APPLICATION MONEY TO THE EXTENT OF ` 22,17,875/- CANNOT BE TREATED AS INCOME OF THE ASSESSEE AT ANY STRETCH OF IMAGINATION. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THIS TRIBUNAL FINDS NO R EASON TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS) AND ACCORDINGLY, THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 5 I.T.A. NO.1546/MDS/14 ORDER PRONOUNCED ON 9 TH DECEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 9 TH DECEMBER, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-III, CHENNAI-34 4. 1 92 /CIT, CHENNAI-III, CHENNAI-34 5. 7: -2 /DR 6. ;( < /GF.