Essorpe Mills Ltd., CHENNAI V. ACIT, Coimbatore

ITA 244/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9117 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital asset

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.244/MDS/2015 ( )( / ASSESSMENT YEAR : 2009-10 M/S ESSORPE MILLS LTD., 37/54, 7 TH CROSS, BHARATHI PARK ROAD, COIMBATORE 641 043. PAN : AAACE 4783 D V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), COIMBATORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. JASDEEP SINGH, CIT 1 / 2% / DATE OF HEARING : 15.03.2016 3') / 2% / DATE OF PRONOUNCEMENT : 01.06.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, COIMB ATORE, DATED 09.12.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSEE-COMPANY WAS DEMERGED BY THE ORDER 2 I.T.A. NO.244/MDS/15 OF THE HIGH COURT. THE ASSESSEE ENTERED INTO A MEM ORANDUM OF ASSOCIATION WITH M/S GLOBUS REALTORS PVT. LTD. OFFE RING 5.075 ACRES OF LAND AS SECURITY FOR THE AMOUNT ADVANCED BY M/S GLOBUS REALTORS PVT. LTD. TO M/S ESSORPE HOLDINGS PVT. LTD., A SIST ER CONCERN OF THE ASSESSEE. THE ASSESSEE HAS ALSO EXECUTED A POWER O F ATTORNEY IN THE NAME OF SHRI V. SIVAKUMAR, MANAGING DIRECTOR OF M/S GLOBUS REALTORS PVT. LTD. IN RESPECT OF 5.075 ACRES OF LAN D. THE SAID SHRI V. SIVAKUMAR SOLD 5.075 ACRES OF LAND TO M/S RASI SEED S (P) LTD. AND M/S GLOBUS REALTORS PVT. LTD. IN THE GUISE OF ENFOR CING THE SECURITY FOR REPAYMENT OF LOAN BORROWED BY THE ASSESSEES SI STER CONCERN. THE ASSESSING OFFICER FOUND THAT THERE WAS TRANSFER OF PROPERTY. ACCORDINGLY, THE CAPITAL GAIN WAS ASSESSED SUBSTANT IVELY IN THE HANDS OF THE ASSESSEE-COMPANY. A PROTECTIVE ASSESS MENT WAS ALSO MADE IN THE HANDS OF SISTER CONCERN, NAMELY M/ S ESSORPE HOLDINGS PVT. LTD. 3. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271( 1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN THE HA NDS OF THE ASSESSEE-COMPANY ON THE GROUND THAT THE CAPITAL GAI N ARISING OUT OF THE TRANSFER OF PROPERTY WAS NOT DISCLOSED TO THE D EPARTMENT. WHEN 3 I.T.A. NO.244/MDS/15 THE QUANTUM APPEAL CAME BEFORE THIS TRIBUNAL IN I.T .A. NO.391/MDS/2015, THIS TRIBUNAL, VIDE ORDER DATED 05 .02.2016, FOUND THAT THE ASSESSEE-COMPANY HAS NOT REALIZED ANY AMOU NT AND SUFFERED A LOSS IN GIVING SECURITY TO THE SISTER CO NCERN. THIS TRIBUNAL FURTHER FOUND THAT THE LOSS SUFFERED BY THE ASSESSE E HAS TO BE ASSESSED AS BUSINESS LOSS AND THE CAPITAL GAIN COMP UTED ON THE TRANSFER OF LAND HAS TO BE SET OFF AGAINST THE BUSI NESS LOSS COMPUTED ON SALE OF SUCH LAND. ACCORDINGLY, THE QUANTUM ADD ITION MADE BY THE ASSESSING OFFICER WAS DELETED. SINCE THE QUANT UM ADDITION WAS DELETED, ACCORDING TO THE LD. COUNSEL, THERE IS NO CONCEALMENT OF INCOME AND THE PENALTY LEVIED BY THE ASSESSING OFFI CER AS ALSO CONFIRMED BY THE CIT(APPEALS) IS NOT JUSTIFIED. 3. WE HAVE HEARD SHRI JASDEEP SINGH, THE LD. DEPART MENTAL REPRESENTATIVE ALSO. THE LD. D.R. VERY FAIRLY SUBM ITTED THAT THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED BY THIS TRIBUNAL BY ORDER DATED 05.02.2016. THEREFORE , ACCORDING TO THE LD. D.R., IT CANNOT BE CONSTRUED AS CONCEALMENT OF INCOME AT THIS STAGE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY 4 I.T.A. NO.244/MDS/15 SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, THE Q UANTUM ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED BY THIS T RIBUNAL. THEREFORE, LOSS SUFFERED BY THE ASSESSEE ON SALE OF THE LAND HAS TO BE TREATED AS BUSINESS LOSS. THE CAPITAL GAIN HAS TO BE SET OFF. THEREFORE, THERE WILL BE REVENUE NEUTRAL. SINCE TH E QUANTUM ADDITION MADE BY THE ASSESSING OFFICER ON TRANSFER OF LAND WAS DELETED BY THIS TRIBUNAL, THERE CANNOT BE ANY CONCE ALMENT AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE. THER EFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NO JUSTIFICATION FOR LEVY OF PENALTY. ACCORDINGLY, THE PENALTY LEVIED B Y THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT IS DELET ED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 1 ST JUNE, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 1 ST JUNE, 2016. KRI. 5 I.T.A. NO.244/MDS/15 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-1, COIMBATORE 4. 1 92 /CIT-1, COIMBATORE 5. 7: -2 /DR 6. ( ; /GF.