ITO, Coimbatore V. Shri R.Venkatachalam, Coimbatore

ITA 2024/CHNY/1994

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9455 (ITAT-CHENNAI)
• Duration Of Justice: 21 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 1990-1991
• Appeal Filed On: 16-09-1994
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Capital asset; Proportionate interest; Difference of opinion; Change of opinion
• Section: 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 3171/MDS/1992 ( )( / ASSESSMENT YEAR : 1990-91 & ./ ITA NO.2024/MDS/1994 ( )( / ASSESSMENT YEAR : 1990-91 THE INCOME TAX OFFICER, WARD II (7) / NON-CORP. WARD I(3), RACE COURSE ROAD, COIMBATORE 18. V. SHRI R. VENKATACHALAM, REP. BY L/H SHRI V. GOVINDARAJ, 15/12, MILL ROAD, COIMBATORE, PAN : 49-511-PQ-6690 (+,/ APPELLANT) (-.+,/ RESPONDENT) ./ ITA NO. 1831/MDS/1994 ( )( / ASSESSMENT YEAR : 1990-91 SHRI R. VENKATACHALAM, C/O GURU & VARADAN, NO.8, MAHATMA GANDHI SALAI, 4 TH FLOOR, ROSY TOWERS, CHENNAI - 600 034. V. THE INCOME TAX OFFICER, WARD II(7), RACE COURSE ROAD, COIMBATORE 18. (+,/ APPELLANT) (-.+,/ RESPONDENT) / 0 1 /REVENUE BY : DR. B. NISCHAL, JCIT (23 0 1 /ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE 4 0 3% / DATE OF HEARING : 04.02.2016 5') 0 3% / DATE OF PRONOUNCEMENT : 22.04.2016 2 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THESE APPEALS FILED BY BOTH THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), COIMBATORE, DATED 9.10.1992, FOR ASSESSM ENT YEAR 1990- 91. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOS ING OF THE SAME BY THIS COMMON ORDER. 2. FIRST, LETS TAKE REVENUES APPEAL IN I.T.A. NO.3171/MDS/1992. 3. DR. B. NISCHAL, THE LD. DEPARTMENTAL REPRESENTAT IVE, SUBMITTED THAT THE ASSESSEE DISCOUNTED THE INDUSTRI AL DEVELOPMENT BANK OF INDIA (IDBI) BONDS AND RECEIVED ENTIRE INTE REST OF ` 3,52,500/- DURING THE ASSESSMENT YEAR UNDER CONSIDE RATION. HOWEVER, THE SAME WAS NOT OFFERED FOR TAXATION. TH E ASSESSEE HAS ADMITTED ONLY A SUM OF ` 1,07,708/- BEING THE PROPORTIONATE INTEREST FOR ELEVEN MONTHS. ACCORDING TO THE LD. D.R., SINC E THE ASSESSEE HAS RECEIVED ENTIRE AMOUNT OF ` 3,52,500/- DURING THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER REOPENED THE A SSESSMENT 3 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN S HORT 'THE ACT') AND ASSESSED THE SAME. HOWEVER, THE CIT(APPEALS) D ELETED THE ADDITION ON THE GROUND THAT THE INTEREST WAS RECEIV ED IN ADVANCE ON CAPITAL BONDS ATTRIBUTABLE TO 36 MONTHS. THEREFORE , THE RIGHT TO RECEIVE THE AMOUNT ACCRUED TO THE ASSESSEE ARISES O NLY IN THE NEXT ASSESSMENT YEAR. THE ADVANCE CANNOT BE CONSTRUED A S INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE CIT(APPEALS) HAS ALSO FOUND THAT REOPENING OF ASSES SMENT WAS DUE TO CHANGE OF OPINION, THEREFORE, HE DELETED THE ADD ITION ON THE GROUND THAT THE ASSESSING OFFICER HAS NO JURISDICTI ON TO REOPEN THE ASSESSMENT. ACCORDING TO THE LD. D.R., THE INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT, THEREFORE, THE ASSESSING OF FICER HAS RIGHTLY REOPENED THE ASSESSMENT, HENCE, THE CIT(APP EALS) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSE SSING OFFICER. 4. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT WHAT WAS RECEIVED BY THE A SSESSEE IS NOTHING BUT INTEREST ON IDBI BONDS. HOWEVER, THE A SSESSEE RECEIVED THE SAME IN ADVANCE. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS NO RIGHT TO RECEIVE THE INTEREST IN AD VANCE. MERELY BECAUSE THE ADVANCE WAS RECEIVED ON A DISCOUNTED RA TE, THAT 4 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 CANNOT BE A REASON TO TREAT THE SAME AS INCOME OF T HE ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE INTEREST ON IDBI BONDS HAS TO BE ASSESSED IN THE YEAR IN WHICH THE ASSESSEE HAS RIGH T TO RECEIVE THE MONEY, THEREFORE, THE ASSESSEE HAS RIGHTLY OFFERED THE PROPORTIONATE INTEREST TO THE EXTENT OF ` 1,07,708/-. THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE REOPENING WAS DUE TO CHANGE OF OPINI ON, THEREFORE, HE CANCELLED THE ASSESSMENT ON JURISDICTION ALSO. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE DISCOUNTED THE IDBI BONDS AND RECEIVED A S UM OF ` 3,52,500/- IN THE YEAR UNDER CONSIDERATION. THE IN TEREST ON THE BONDS WAS SPREAD OVER FOR 36 MONTHS. WHAT WAS RECE IVED BY THE ASSESSEE IS THE ENTIRE INTEREST FOR 36 MONTHS IN AD VANCE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ENTI RE MONEY RECEIVED BY THE ASSESSEE CANNOT BE CONSTRUED AS INCOME IN TH E HANDS OF THE ASSESSEE. WHAT WAS TO BE CONSTRUED AS INCOME IS IN RESPECT OF THE MONEY RECEIVED FOR WHICH THE ASSESSEE HAS RIGHT TO RETAIN THE SAME. IN THE CASE BEFORE US, WHAT WAS RECEIVED BY THE ASS ESSEE IS 5 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 ADVANCE MONEY WHICH WOULD HAVE BEEN OTHERWISE PAID FOR 36 MONTHS. THEREFORE, THE ASSESSEE HAS NO RIGHT TO RE TAIN THE SAME. HENCE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON MERIT. SINCE WE HAVE CONFIRME D THE ORDER OF THE CIT(APPEALS) ON MERIT, IT MAY NOT BE NECESSARY TO GO INTO THE QUESTION OF REOPENING OF ASSESSMENT UNDER SECTION 1 47 OF THE ACT. 6. NOW COMING TO THE ASSESSEES APPEAL IN I.T.A. NO.1831/MDS/1994, SHRI S. SRIDHAR, THE LD.COUNSEL F OR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS TRANSFERR ED CAPITAL ASSET TO M/S INDIAN EXPRESS (MADRAS) PVT. LTD. ON 17.04.1 989 FOR A TOTAL CONSIDERATION OF ` 37,79,978/- AND CLAIMED EXEMPTION UNDER SECTION 54E OF THE ACT. THE ASSESSING OFFICER DISALLOWED T HE CLAIM OF THE ASSESSEE. THE ASSESSEE HAD DEPOSITED IN IDBI BONDS ONLY ` 15,00,000/- AND CLAIMED EXEMPTION ON THE ENTIRE AMO UNT OF ` 37,79,978/-. ACCORDINGLY, THE ASSESSING OFFICER PR OPORTIONATELY ALLOWED EXEMPTION UNDER SECTION 54E OF THE ACT. TH E LD.COUNSEL FURTHER SUBMITTED THAT THE CIT(APPEALS) RESTRICTED THE CLAIM UNDER SECTION 48(2) OF THE ACT TO ` 10,34,131/- AS AGAINST THE CLAIM OF ` 17,14,486/-. ACCORDING TO THE LD. COUNSEL, THE AUT HORITIES BELOW 6 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 OUGHT TO HAVE ALLOWED THE ENTIRE CLAIM AS EXEMPTION UNDER SECTION 48(2) AND 54E OF THE ACT. 7. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPART MENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE FILED R EVISION PETITION UNDER SECTION 264 BEFORE THE ADMINISTRATIVE COMMISS IONER. THE ADMINISTRATIVE COMMISSIONER FOUND THAT ANY DEDUCTIO N BEFORE ALLOWING UNDER SECTION 54E OF THE ACT, MORE PARTICU LARLY DEDUCTION UNDER SECTION 48(I)(B) OF THE ACT, HAS TO BE RESTRI CTED ONLY WITH REGARD TO THE AMOUNT INVESTED IN IDBI BONDS. THE L D. D.R. FURTHER SUBMITTED THAT DEDUCTION UNDER SECTION 48(I)(B) OF THE ACT HAS TO BE MADE ONLY TO THE CAPITAL GAIN DETERMINED UNDER SECT ION 48(I)(A) OF THE ACT. REFERRING TO SECTIONS 54E AND 48(I)(B) OF THE ACT, THE LD. D.R. SUBMITTED THAT BOTH THE SECTIONS ARE OPERATING IN TWO DIFFERENT WAYS AND THEREFORE, NO AMBIGUITY IN THE APPLICATION OF SECTION 54E OF THE ACT FOR EXEMPTION ON LONG TERM CAPITAL GAINS IF IT IS INVESTED AS PRESCRIBED THEREIN. THE LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS TRANSFERRED THE CAPITAL ASSET, THE IMM OVABLE PROPERTY FOR A TOTAL CONSIDERATION OF ` 37,79,978/- ON 17.04.1989, AND THE ASSESSEE CLAIMED EXEMPTION OF THE ENTIRE CAPITAL GA IN OF ` 36,68,051/-. THE ASSESSING OFFICER, HOWEVER, FOUND THAT THE 7 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 ASSESSEE HAS DEPOSITED ONLY ` 15,00,000/- IN IDBI BONDS, THEREFORE, HE COMPUTED THE EXEMPTION PROPORTIONATELY AND ALLOW ED EXEMPTION TO THE EXTENT OF ` 14,55,000/- AS AGAINST ` 36,68,051/- CLAIMED BY THE ASSESSEE. ACCORDING TO THE LD. D.R.,THIS WAS RIGHT LY CONFIRMED BY THE CIT(APPEALS). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CAPITAL GAIN COMPUTED BY THE ASSESSEE TO THE EXTENT OF ` 36,68,051/- ON SALE OF 75% OF HIS RIGHT IN THE IMMOVABLE PROPERTY WAS CLAI MED EXEMPTION UNDER SECTION 54E OF THE ACT. THE ASSESSING OFFICE R FOUND THAT WHAT WAS DEPOSITED IN IDBI BONDS IS ONLY ` 15,00,000/-. ACCORDINGLY, HE COMPUTED THE EXEMPTION PROPORTIONAT ELY. IT IS OBVIOUS FROM THE PROVISIONS OF THE ACT THAT THE ASS ESSEE HAS TO NECESSARILY INVEST EITHER IN THE CAPITAL ASSET OR C APITAL GAINS BOND AS PRESCRIBED UNDER SECTION 54E OF THE ACT. FOR CL AIMING EXEMPTION, THE ASSESSEE HAS INVESTED ONLY ` 15,00,000/-. THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION P ROPORTIONATELY. ACCORDINGLY, THE CIT(APPEALS) HAS RIGHTLY ALLOWED T HE EXEMPTION PROPORTIONATELY. THIS TRIBUNAL DO NOT FIND ANY REA SON TO INTERFERE 8 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY THE SAME IS CONFIRMED. 9. THE REVENUE HAS FILED ONE MORE APPEAL AGAINST TH E ORDER OF THE CIT(APPEALS) DATED 16.06.1994. 10. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO COMPUTATION OF CAPITAL GAINS. 11. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THE ASSESSING OFFICER COMPUTED THE EXEMPTION UNDER SECT ION 54E OF THE ACT AT ` 14,55,000/- AS AGAINST THE CLAIM OF ` 36,68,051/-. ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT THE D EDUCTION ADMISSIBLE UNDER SECTION 54E OF THE ACT IS ` 11,33,926/- AND THE CHARGEABLE CAPITAL GAINS WILL BE ` 17,23,552/-. THE CIT(APPEALS) HAS ALSO FOUND THAT FURTHER DEDUCTION OF 60% HAS TO BE ALLOWED UNDER SECTION 48(2) OF THE ACT. ULTIMATELY, THE CI T(APPEALS) FOUND THAT THE EXEMPTION WILL BE TO THE EXTENT OF ` 10,34,131/- AND THE ASSESSABLE CAPITAL GAINS WOULD BE ` 6,89,421/-. ACCORDINGLY, THE CIT(APPEALS) ESTIMATED THE CAPITAL GAIN CHARGEABLE TO TAX AT ` 6,89,421/-. THE LD. D.R. FURTHER SUBMITTED THAT TH E CIT(APPEALS) 9 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 OUGHT TO HAVE ADOPTED THE ORIGINAL COST OF ASSET FO R WHICH THE PROPERTY WAS ACQUIRED UNDER SECTION 49 OF THE ACT. 12. WE HAVE HEARD SHRI S. SRIDHAR, THE LD.COUNSEL F OR THE ASSESSEE ALSO. THIS ISSUE WAS EXAMINED IN THE ASSE SSEES APPEAL IN I.T.A. NO.1831/MDS/1994. THIS TRIBUNAL FOUND TH AT AFTER THE CONSIDERATION RECEIVED BY THE ASSESSEE, WHAT WAS DE POSITED IN IDBI BONDS WITHIN THE PRESCRIBED TIME IS ONLY ` 15,00,000/-. THEREFORE, THE TRIBUNAL UPHOLDS THE ORDER OF THE ASSESSING OFF ICER WHICH PROPORTIONATELY ALLOWED EXEMPTION UNDER SECTION 54E OF THE ACT. IN THIS APPEAL, THE CIT(APPEALS) HAS FURTHER ALLOWED 6 0% UNDER SECTION 48(2) OF THE ACT. THE 60% MIGHT HAVE BEEN ALLOWED FOR IMPROVEMENT, ETC. MADE BY THE ASSESSEE TO THE PROPE RTY. ULTIMATELY, THE CAPITAL GAINS CHARGEABLE TO TAX WAS COMPUTED AT ` 6,89,421/-. THEREFORE, THIS TRIBUNAL DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 13. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE AND THE ASSESSEE ARE DISMISSED. 10 I.T.A. NO.3171/MDS/92 I.T.A. NO.1831/MDS/94 I.T.A. NO.2024/MDS/94 ORDER PRONOUNCED ON 22 ND APRIL, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 22 ND APRIL, 2016. KRI. 0 -389 :9)3 /COPY TO: 1. (23 /ASSESSEE 2. ASSESSING OFFICER 3. 4 ;3 () /CIT(A), COIMBATORE 4. 4 ;3 /CIT, COIMBATORE 5. 9< -3 /DR 6. ( = /GF.