ACIT, CHENNAI V. Shanmuga Real Estate and Promoters Pvt Ltd., CHENNAI

ITA 2486/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90411 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-05-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL JCIT ITA NOS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , ! ' , # $% & [BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] ./ I.T.A.NO.2245/MDS/2014 / ASSESSMENT YEAR : 2010-11 M/S SHANMUGA REAL ESTATE AND PROMOTERS PVT. LTD FIRST FLOOR, BLOCK-1, BELICIAA TOWERS DOOR NO.71/11 MRC NAGAR MAIN ROAD RAJA ANNAMALAIPURAM CHENNAI 600 028 VS. THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE VI(2) CHENNAI [PAN AAKCS 0990 C] ( '( / APPELLANT) ( ')'( /RESPONDENT) ./ I.T.A.NO.2486/MDS/2014 / ASSESSMENT YEAR : 2010-11 THE ASST. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE VI(2) CHENNAI VS. M/S SHANMUGA REAL ESTATE AND PROMOTERS PVT. LTD FIRST FLOOR, BLOCK-1, BELICIAA TOWERS DOOR NO.71/11 MRC NAGAR MAIN ROAD RAJA ANNAMALAIPURAM CHENNAI 600 028 ( '( / APPELLANT) ( ')'( /RESPONDENT) ASSESSEE BY : SHRI SRIRAM SESHADRI, ADVOCATE DEPARTMENT BY : DR. B. NISCHAL, JCIT ITA NOS.2245 & 2486/14 :- 2 -: / DATE OF HEARING : 27-05-2015 / DATE OF PRONOUNCEMENT : 29-05-2015 * / O R D E R PER D. KARUNAKARA RAO, ACCOUNTANT MEMBER: THESE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME -TAX(APPEALS)-VI, CHENNAI, DATED 25.6.2014, FOR THE ASSESSMENT YEAR 2 010-11. I.T.A.NO.2245/MDS/2014 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE BRO UGHT OUR ATTENTION TO THE GROUNDS OF APPEAL AND SUBMITTED TH AT GROUND NO.1 IS GENERAL AND THE SAME CAN BE DISMISSED AS GENERAL. REGARDING THE SECOND GROUND, THE LD. COUNSEL SUBMITTED THAT GROUN D NOS. 2.1, 2.2 AND 2.3, CAN BE DISMISSED AS NOT PRESSED. ON HEARI NG BOTH THE PARTIES, WE DISMISS GROUND NO.1 BEING GENERAL AND G ROUND NOS.2.1, 2.2 AND 2.3 ARE DISMISSED AS NOT PRESSED. 3. IN REGARD TO GROUND NO.2.4, THE LIMITED PRAYER OF T HE LD. COUNSEL IS THAT THE SAID GROUND REQUIRES ADJUDICATI ON BY THE ASSESSING OFFICER/CIT(A) AS THE SAME WAS NOT ADJUDICATED DESP ITE THE SPECIFIC GROUND RAISED BEFORE THE CIT(A) (GROUND NO.3.9 OF T HE GROUND NO.3 ATTACHED TO FORM 35 FILED BEFORE THE CIT(A)). ITA NOS.2245 & 2486/14 :- 3 -: 4. ON HEARING BOTH SIDES, WE FIND THAT THE ORDER OF TH E CIT(A) IS INCOMPLETE IN ADJUDICATION OF THE SAID GROUND NO .3.9 RAISED BEFORE HIM. AFTER HEARING THE LD. DR, WHO CONCURRED WITH THE SUBMISSION OF THE LD. COUNSEL, WE FIND MERIT IN HIS SUBMISSIONS A ND REMAND THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR SPECI FIC ADJUDICATION AFTER ENTERTAINING ADDITIONAL PAPERS/DOCUMENTS, IF ANY, L IKELY TO BE FURNISHED BY THE ASSESSEE IN SUPPORT OF THE CLAIM OF EXPENDI TURE BY FOLLOWING THE MATCHING PRINCIPLE. THE ASSESSING OFFICER IS D IRECTED TO ADJUDICATE THIS ISSUE AFRESH CONSIDERING THE FACT THAT THE ISS UE RELATING TO HEAD OF INCOME IS SETTLED. IN THE ASSESSMENT, THE ASSES SEE HAS NOT ACCEPTED THE ASSESSING OFFICERS FINDING RELATING TO THE PRO PER HEAD OF INCOME FOR TAXING THE GAINS EARNED ON SALE OF SHARES. HOW EVER, THE ASSESSEE ACCEPTS THE ASSESSING OFFICERS VIEW ON THIS ISSUE AS GROUND NOS. 2.1 TO 2.3 ARE NOT PRESSED. IN THE REMAND PROCEEDINGS, THE ASSESSING OFFICER SHALL ALLOW REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE. ACCORDINGLY, GROUND NO.2.4 IS ALLOWED FOR STATISTIC AL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO. 2486/MDS/2014 6. REGARDING THE APPEAL OF THE REVENUE I.T.A.NO. 2486/MDS/2014, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ITA NOS.2245 & 2486/14 :- 4 -: THE APPEAL IS AGAINST THE FINDING OF THE CIT(A) THA T THE IMPUGNED TRANSACTIONS ATTRACT THE PROVISIONS OF SECTION 2(22 )(E) OF THE ACT. 7. ON THE OTHER HAND, THE LD. COUNSEL SUBMITTED THAT T HE LOANS AND ADVANCES INVOLVED IN THE TRANSACTIONS ARE ACTUA LLY TRADING TRANSACTIONS FOR WHICH THE PROVISIONS OF 2(22)(E) O F THE ACT ARE NOT APPLICABLE. HE BROUGHT OUR ATTENTION TO PARA 5.5. 2 OF THE IMPUGNED ORDER. THE LD. COUNSEL SUBMITTED THAT THE SAME IS SELF-EXPLANATORY AND THEREFORE, ORDER OF THE CIT(A) SHOULD BE ACCEPTED W ITHOUT ANY MODIFICATION. 8. WE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSE D THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). CO NSIDERING THE IMPORTANCE, WE EXTRACT BELOW PARA 5.5.2 OF THE IMPU GNED ORDER: 5.5.2 . THE APPELLANT HAS PURCHASED SHARE S WORTH OF ` 80,33,88,640/- FROM AAFSL AS ON 1.7.2009 AND THE PAYMENTS FOR THE SAME WERE STARTED FROM 6.7.2009 AND THE CLOSING BALANCE AS ON 1.7.2009 WAS ` 79,78,66,305/-. THE INTEREST WAS CHARGED ON OUTSTANDING BALANCE OR MARG IN BALANCE OF AAFSL WITH J M FINANCIALS LTD WHICHEVER IS LESS. THERE WAS ALSO AN AGREEMENT BETWEEN SHANMUGA REAL ESTATE AND INVESTMENTS (P) LTD WITH J.M FINANCIALS LTD., FOR G RANTING OF LOANS AGAINST PURCHASE OF SHARES. THE EVIDENCES PR ODUCED BEFORE THE UNDERSIGNED CLEARLY SHOW THAT THE NATURE OF INTEREST PAID TO THE AAFSL WAS TOWARDS DELAYED PAYM ENT OF ITA NOS.2245 & 2486/14 :- 5 -: CONSIDERATION FOR PURCHASE OF SHARES. THE NATURE O F TRANSACTION BETWEEN THE APPELLANT AND AAFSL IS NOT IN THE NATURE OF LOAN OR AN ADVANCE BUT DEFINITELY A COMME RCIAL TRANSACTION IN THE NORMAL COURSE OF BUSINESS IN THE PRESENT CASE, THE OUTSTANDING AMOUNTS WERE A GAINST FOR THE PURCHASE OF SHARES. THE NATURE OF INTEREST CHA RGED BY THE AAFSL TO THE APPELLANT COMPANY WAS TOWARDS DELA YED PAYMENT OF THE OUTSTANDING AMOUNTS AGAINST PURCHASE F SHARES. LOOKING TO THE FACTS OF THE CASE IN TOTALI TY AND LEGAL POSITION, I AM OF THE CONSIDERED VIEW THAT THE ADDI TION MADE BY THE AO UNDER SECTION 2(22)(E) OF THE I.T. ACT IS NO T LEGALLY CORRECT. HENCE THE AO IS DIRECTED TO DELETE THE AD DITION OF ` 4,34,54,315/-. 9. THE ABOVE FINDING GIVEN BY THE CIT(A) IS SELF-EXPLA NATORY AND THE TRANSACTIONS INVOLVED RELATE TO PURCHASE O F SHARES AND INTEREST EXPENDITURE INCURRED BY THE ASSESSEE IS TOWARDS DE LAYED PAYMENT OF THE OUTSTANDING BALANCES. THE REVENUE HAS NOT BROU GHT ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE PAYMENTS ARE NOT RELATED TO THE PURCHASE OF SHARES BUT TRADING TRANSACTIONS. THERE FORE, THE ORDER OF THE CIT(A) IS CONFIRMED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ITA NOS.2245 & 2486/14 :- 6 -: 11. TO SUMMARIZE THE RESULT, THE APPEAL OF THE ASSES SEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OF MAY, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHALLA NAGENDRA PRASAD) # / JUDICIAL MEMBER ( . ) (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / CHENNAI / DATED: 29 TH MAY, 2015 RD ! ' #$ %$ / COPY TO: 1 . &' / APPELLANT 4. ( / CIT 2. ')&' / RESPONDENT 5. $*+ ' , / DR 3. ( () / CIT(A) 6. +/ 0 / GF