SURAKSHA DEVELOPERS LTD, MUMBAI V. ITO 7(2)(4), MUMBAI

ITA 2238/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3551 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 04-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Capital asset; Capital receipt
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 2238/MUM/2014 (ASSESSMENT YEAR : 2009-10) M/S. SURAKSHA DEVELOPERS LTD., 301,MANEK BHUVAN, PLOT NO.68, HINDU COLONY, DADAR (E), MUMBAI 400 014 PAN:AAICS 4530L ... APPELLANT VS. THE COMMISSIONER OF INCOME TAX -7, AAYKAR BAWAN, MK ROAD, MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI A NUJ KISNADWALA RESPONDENT BY : SHRI MANJU NATHA SWAMY DATE OF HEARING : 06/01/2016 DATE OF PRONOUNCEMENT : 13/01/2016 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX-7, MUMBAI ( IN SHORT C IT) DATED 21/2/2014 LEVYING PENALTY OF RS.10,30,76,604/- UNDE R SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) F OR THE ASSESSMENT YEAR 2009-10. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2 ITA NO. 2238/MUM/2014 (ASSESSMENT YEAR : 2009-10) 2.1 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 29/09/2009 DECLARING NIL INCOME. T HE ASSESSEE WAS A PARTNER IN M/S. FINE DEVELOPERS WITH 12.5% CAPITAL CONTRIBUTION AND 10% OF SHARE ON PROFIT. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS PASSED UNDER SECTION 143(3) OF THE A CT VIDE ORDER DATED 26/12/2011 ACCEPTING THE INCOME AS RETURNED A T NIL. THE CIT-7, MUMBAI ON EXAMINATION OF THE RECORDS OF ASSESSMENT FOR ASSESSMENT YEAR 2009-10 OBSERVED THAT IN THE RELEVANT PERIOD, A NEW PARTNER M/S. HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. JOINED TH E PARTNERSHIP FIRM M/S. FINE DEVELOPERS WHICH PURCHASED A PLOT OF LAND FROM BHANDARY METALLURGICAL CORPORATION LTD., FOR A CONSIDERATIO N OF RS.28 CORES. THE SAID PLOT OF LAND WAS REVALUED AT RS.268 CRORES AND THE ASSESSEE RECEIVED AN AMOUNT OF RS.22,90,59,118/- AS COMPENSA TION ON RETIREMENT FROM THE PARTNERSHIP FIRM. THE SAID REC EIPTS WERE TREATED AS CAPITAL RECEIPTS AND CREDITED TO THE ASSESSEES BALANCE SHEET UNDER CAPITAL RESERVE. THE LD. CIT WAS OF THE OPINION THAT SINCE THE ASSESSEE HAD TRANSFERRED ITS RIGHTS IN THE CAPITAL ASSETS O F THE FIRM, THE RECEIPT OF RS. 22,90,59,118/- WAS LIABLE TO BE TAXED UNDER TH E HEAD CAPITAL GAINS AND, THEREFORE, THE ORDER OF THE ASSESSMENT FOR ASS ESSMENT YEAR 2009- 10 DATED 26/12/2011 WAS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE. IN CONSEQUENCE, THEREOF, AN ORDER U/S . 263 OF THE ACT WAS PASSED ON 21/05/2013, WHEREIN THE SUM OF RS.22,90,5 9,118/- RECEIVED BY THE ASSESSEE AS RETIREMENT COMPENSATION WAS TAX ED AS SHORT TERM CAPITAL GAINS AND THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.22,90,59,120/-. PENALTY PROCEEDINGS UNDER SECTI ON 271(1)(C) OF THE ACT WERE ALSO SIMULTANEOUSLY INITIATED BY ISSUE OF REQUISITE NOTICES. 3 ITA NO. 2238/MUM/2014 (ASSESSMENT YEAR : 2009-10) AFTER TAKING INTO ACCOUNT THE ASSESSEES OBJECTIONS AND SUBMISSIONS IN THIS REGARD, THE LD. CIT REJECTED THEM AND VIDE TH E IMPUGNED ORDER DATED 21/02/2014 PROCEEDED TO LEVY PENALTY OF RS.10 ,30,76,604/- U/S. 271(1)(C) OF THE ACT ON THE ASSESSEE, BEING 150% OF THE TAX SOUGHT TO BE EVADED. 2.2 AGGRIEVED BY THE ORDER PASSED U/S. 263 OF THE A CT DATED 21/5/2013 FOR ASSESSMENT YEAR 2009-10, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL. AT THE OUTSET OF THE H EARING, IT WAS BROUGHT TO THE NOTICE OF BENCH THAT A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES CASE IN ITA NO.5831/MUM/2013 DATED 18/12 /2014, QUASHED THE ORDER PASSED UNDER SECTION 263 OF THE ACT PASSE D BY THE LD. CIT FOR ASSESSMENT YEAR 2009-10. A COPY OF THIS ORDER WAS PLACED BEFORE US BY THE LD. REPRESENTATIVE FOR THE ASSESSEE. 2.3 WE HAVE HEARD BOTH PARTIES IN THE MATTER. WE FIND THAT CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES O WN CASE IN ITS ORDER IN ITA NO.583/MUM/2013 DATED 18/12/2014 HAS QUASHED TH E ORDER PASSED U/S. 263 OF THE ACT PASSED BY THE LD. CIT-7, MUMBAI AS PER ITS FINDING RENDERED AT PARA 21 THEREOF. IN VIEW OF THE FACT THAT THE ORDER U/S.263 OF THE ACT DATED 24/5/2013 FOR ASSESSMENT Y EAR 2009-10 HAS BEEN QUASHED, CONSEQUENTLY, THE PENALTY OF RS.10,3 0,76,604/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT VIDE THE IMPUGNE D ORDER OF THE CIT-7, MUMBAI DATED 21/02/2014 DOES NOT NOW SURVIVE FOR CO NSIDERATION. IN THIS VIEW OF THE MATTER, WE CANCEL THE PENALTY OF R S.10,30,76,604/- LEVIED U/S. 271(1)(C) OF THE ACT VIDE ORDER DATED 2 1/02/2014 FOR ASSESSMENT YEAR 2009-10 PASSED BY THE LD.CIT-7,MUM BAI. 4 ITA NO. 2238/MUM/2014 (ASSESSMENT YEAR : 2009-10) CONSEQUENTLY, THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL DO NOT REQUIRE ADJUDICATION. 3. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSM ENT YEAR 2009-10 IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13/01/2016 SD/- SD/- (RAM LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 13/01/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS 5 ITA NO. 2238/MUM/2014 (ASSESSMENT YEAR : 2009-10) DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 07/01/2016 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 08/01/2016 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER