Kailash Chand Agarwal, Kanpur V. Astt. Commissioner of Income Tax-II, Kanpur

ITA 195/LKW/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4421 (ITAT-LUCKNOW)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GARG SHRI AMIT NI
• Keywords: Revised return
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCHA, LUCKNOW BEFORE SHRI. P. K. BANSAL, ACCOUNTANT MEMBER AND SHRI ABY T VARKEY, JUDICIAL MEMBER ITA NO.195/LKW/2016 ASSESSMENT YEAR:2012-13 KAILASH CHAND AGARWAL G-27, PANKI SITE 3 INDUS, ESTATE 1 KAN P UR V. ACIT-II KANPUR T AN / PAN:ACF P A9424M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RES P ONDENT B Y : SHRI AMIT NI G AM, D.R. DATE OF HEARIN G : 26 05 2016 DATE OF P RONOUNCEMENT: 08 06 2016 O R D E R PER P.K. BANSAL, A.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-I, KANPUR, DATED 9.2.2016. 2. GROUNDS NO.1, 2 & 8, AS CONTE NDED BY THE LD. COUNSEL FOR THE ASSESSEE, ARE GENERAL IN NATURE A ND DO NOT REQUIRE ANY ADJUDICATION. 3. GROUNDS NO.3 TO 7 RELATE TO THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 10/38 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED IN SHORT 'THE ACT') ON THE LONG TERM CAPITAL GA INS AMOUNTING TO RS.3,35,060/- WHICH HAS NO T BEEN ACCEPTED BY TH E ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). :-2-: 4. THE FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN LONG TERM CA PITAL GAINS AND CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE ACT. THUS THE CAPITAL GAINS HAS ARISEN ON THE SALE OF HDFC MIP A ND RELIGARE MONTHLY INCOME PLAN. THE ASSESSING OFFICER FOUND TH AT THE INVESTMENT PATTERN OF HDFC MIP IS 75% FOR DEBT INSTRUMENTS & MONEY MARKET INSTRUMENTS AND 25% IS INVESTED IN EQUITY RELATED INSTRUMENTS. SIMI LARLY THE ASSESSING OFFICER FOUND IN RESPECT OF RELIGARE MONTHLY INCOME PLAN INVESTMENT PATTERN IS 75% TO 100% IN DEBT INSTRUMENTS & MONEY MA RKET INSTRUMENTS AND 0 TO 25% IN EQUITY RELATED INSTRUMENTS. THE AS SESSING OFFICER, THEREFORE, IN VIEW OF PROVISIONS OF SECTION 10(38) OF TH E ACT, TOOK A VIEW THAT ONLY INCOME ARISING FROM TRANSFER OF LONG TERM CAPI TAL ASSET, BEING AN EQUITY SHARE IN A COMPANY OR A UNIT OF AN EQUITY OR IENTED FUND OR A UN IT OF A BUSINESS TRUST WHERE SUCH EQUITY SH ARE OR UNIT IS ENTERED INTO OR AFTER THE DATE ON WHICH CHAPTER VII OF THE FINANCE (NO. 2) ACT, 2004 COMES INTO FORCE; AND SUCH TRANSACTION IS CHARGEABLE TO SECURITIES TRANSACTION TAX UNDER THAT CHAPTER, IS EXEMPT FROM INCOME TAX. HE REFERRED TO EXPLANATION TO SECTION 10 SUB-SECTION (38) OF THE ACT WHICH DEFINES EQUITY ORIENTED FUNDS TO MEAN WHERE INVESTIBLE FUNDS ARE INVESTED BY WAY OF EQUITY SHARES IN DOMESTIC COMPANIES TO TH E EXTENT OF MORE THAN 65% OF THE TOTAL PROCEEDS OF SUCH FUNDS; AND WHICH HAS BEEN SET UP UNDER A SCHEME OF A MUTUAL FUND SPECIFIED U NDER CLAUSE (23D). SINCE IN THE CASE OF THE ASSESSEE THE INVESTIBLE FUNDS ARE INVESTED IN THAT FUNDS MORE THAN 65% AND IN EQUITY FUNDS UPTO 25%, THE ASSESSING OFFICER DENIED EXEMPTION UNDER SECTION 10(38) OF THE ACT. 5. THE ASSESSEE WENT IN APPEAL BE FORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SECTION 10(38) OF TH E ACT. THE ASSE SSEE HAS TAKEN AN ALTERNATIVE PLEA BEFORE THE LD. CIT(A) THAT IN CASE CAPITAL GAIN IS NOT :-3-: ALLOWED TO EXEMPTION UNDER SECTION 10 (38) OF THE ACT, INDEXATION FOR LONG TERM CAPITAL GAIN SHOULD BE GIVEN BY THE ASSESSING OFFICER AND INDEXATION FOR APPLICATION OF GROWTH FUND FOR LONG TERM CAPITAL GAIN. THE LD. CIT(A) DID NOT ACCEPT THE ALTERNATIV E PLEA IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT, 284 ITR 323 (SC), IN WHICH IT WAS HELD THAT THE ASSESSING OFFICER CANNOT ENTERTAIN A CLAIM FOR DEDUCTION OTHERWIS E THAN BY FILING A REVISED RETURN. SINCE THE ASSESSEE HAS NOT FILED TH E REVISED RETURN, THEREFORE, THE ASSESSEE WAS NOT ALLOWED THE ALTERN ATIVE PLEA. ON THE BASIS OF INDEXATION, THERE WAS A LONG TERM CA PITAL LOSS OF RS .59,525/- AND SINCE THE CLAIM WAS NOT MADE IN RETURN FILED UNDER SECT ION 139(1) OF THE ACT, THEREFORE, THE LD. CIT(A) DISALLOWED THE CLAIM. 6. WE HAVE HEARD THE RIVAL SUBM ISSIONS AND GONE THROUGH THE ORDERS OF THE TAX AUTHORIT IES BELOW. WE ARE OF THE VIEW THAT THE ISSUE INVOLVED OF MAKING ALTERNATIVE CLAIM WI THOUT FILING REVISED RETURN IS DULY COVERED BY THE DECISION OF THE HON'BL E JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. RAJ RANI GULATI VS. CI T IN I.T. APPEAL NO.54 OF 2007, IN WHICH THE HON'BLE ALLAHABAD HIGH CO URT OF LUCKNOW BENCH HAS TAKEN A VIEW THAT THE ASSESSEE IS ENTITLED TO RAISE LEGAL ISSUE BEFORE THE FIRST APPELLATE AUTHORITY WHO POSSESS CO -TERMINUS POWERS SIMILAR TO THE ASSESSING OFFICER AS PER RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF IN DIA LTD. VS. CIT, 1991 SUPP (2) SCC 744. WE NOTED THAT WHEN A SIMI LAR ISSUE HAS ARISEN, THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS P. LTD., 349 ITR 336, AF TER ANALYZING THE DECISION OF THE GOETZE (INDIA) LTD. VS. CIT (SUPRA), TOOK A VIEW THAT THE ASSESSEE CAN MAKE A CLAIM FOR DEDUCTION OTHER THAN BY FILING A REVISED RETURN BEFORE THE APPELLATE AUTHORITY AND ULTIMATE LY IN PARA 23 HELD AS UNDER:- :-4-: 23. IT IS CLEAR TO US THAT THE SUPREME CO URT DID NOT HOLD ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENTS TO THE EFFECT THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSING OFFICER, IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTH ORITIES TO ENTERT AIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPR EME COURT IN THIS JUDGMENT. IN FACT, THE SUPREME COURT MADE IT CL EAR THAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE ON TH E POWER OF THE TRIBUNAL UNDER SECTION 254. 7. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HON'BLE BOMBAY HIGH COURT AND THAT OF THE HON'BLE JU RISDICTIONAL HIGH COURT, WE ARE OF THE VIEW THAT THE APPELLATE AUTHOR ITY IS BOUND TO ADMIT ALTERNATIVE GROUND OF THE ASSESSEE EVEN IF IT HAS NOT BEEN TAKEN BEFORE THE ASSESSING OFFICER. IN VI EW OF THIS FACT, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION THAT THE LD. CIT(A) SHALL RE-ADJUDICATE THE CLAIM OF THE ASSESSEE ON MERIT IN RESPECT OF RE-COM PUTATION OF THE LONG TERM CAPITAL GAIN/LONG TERM CAPITAL LOSS AFTER GIVI NG PROPER AND SUFFIC IENT OPPORTUNITY TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN TH E OPEN COURT ON 8.6.2016. SD/- SD/- [ABY T VARKEY] [P. K. BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH JUNE, 2016 JJ:0306 :-5-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR