Primeland Real Estates Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2658/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1534 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Difference of opinion
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F,NEW DELHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.2658/DEL/2017 ASSESSMENT YEAR: 2012-13 M/S. PRIMELAND REAL ESTATE PVT. LTD., 17, POORVI MARG, LOWER GROUND FLOOR, VASANT VIHAR, NEW DELHI VS. DCIT, CIRCLE-20(1), NEW DELHI PAN: AADCP2400P (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SH. SURENDER PAL, SR. DR. DATE OF HEARING: 02.12.2019 DATE OF ORDER : 12.12.2019 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 03/02/2017 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-36, NEW DELHI, (LD. CIT(A)), FOR ASSESSMENT YEAR 2012-13, M/S PRIME LAND REAL ESTATE PRIVATE LIMITED (THE ASSESSEE) PREFERRED THIS APPEAL. 2. BRIEF FACTS OF THE CASE RELEVANT FOR THE DISPOSA L OF THIS APPEAL, AS SUMMARISED BY THE LD. CIT(A) IN A MOST APT WAY, ARE THAT THE ASSESSEE COMPANY CREATED HARMOHAN SHASHI TRUST IN 2007 FOR T HE BENEFIT OF ONE MR.HARMOHAN H SAHNI AND MR.SHASHI MENON WHO ARE THE JOINT 2 ITA NO.2658/DEL/2017 MANAGING DIRECTORS OF G. CORP. PROPERTIES PRIVATE L IMITED. ASSESSEE TRANSFERRED 12,41,400 SHARES WORTH RS.94,09,812/-FR OM ITS INVESTMENT IN G CORP PROPERTIES PRIVATE LIMITED TO HARMOHAN SHASH I TRUST AND THESE ARE SHARES WERE HELD UNDER THE TRUST FOR BENEFIT OF THE BENEFICIARIES TILL 13/08/2011 AND DURING THE YEAR THE SHARES WERE TRAN SFERRED TO THE BENEFICIARIES. WHILE MAKING THE INVESTMENTS, THE AS SESSEE HAD ASSUMED THE EMPLOYEES OF THE SHARES IN G CORP PROPERTIES ON CONDITION OF THE CONTINUANCE OF EMPLOYMENT. THE INCOME LIMIT FOR THE ASSESSMENT YEAR 2012-13 AND A NOMINAL AMOUNT OF EXPENDITURE WAS CLA IMED APART FROM THE LOSS OF TRANSFER OF INVESTMENT CLAIMED AS THE V ENUE LOSS. 3. ASSESSEE FILEDRETURN OF INCOME FOR THE ASSESSMEN T YEAR 2012-13 ON 29/9/2012 DECLARING A LOSS OF RS.95,28,042/-. AS SESSING OFFICER OBSERVED FROM THE P&L ACCOUNT THAT THE ASSESSEE COM PANY HAD DEBITED LOSS ON TRANSFER OF INVESTMENT OF RS.94,09,812/-. O N BEING ASKED ASSESSEE VIDE LETTER DATED 7/11/2015 STATED THAT TH E ASSESSEE COMPANY HAD TRANSFERRED 12,41,400 SHARES FROM ITS INVESTMEN T IN G CORP PRIVATE PROPERTIES LTD. TO HARMOHAN SHASHI TRUST, WHEREIN H ARMOHAN SHASHI AND SHASHI MENON WERE THE JOINT MANAGING DIRECTORS OF T HE COURT TO PROPERTIES PRIVATE LIMITED ARE THE BENEFICIARIES. A SSESSEE FURTHER STATED THAT THE BUSINESS LOSS OF RS.94,09,812/-BE TREATED AS CAPITAL LOSS ON THE GROUND THAT THE LOSSES INCURRED ON ACCOUNT OF TRANS FER OF SHARES AT NIL VALUE. LEARNED ASSESSING OFFICER DISALLOWED THE ABO VE AND ADDED IT BACK TO THE INCOME OF THE ASSESSEE. 4. SIMULTANEOUSLY, LEARNED ASSESSING OFFICER INITIA TED PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND CONCLUDED TH E SAME BY ORDER DATED 28/7/2015 WITH THE LEVY OF PENALTY OF RS.29,1 4,017/-. ASSESSEE 3 ITA NO.2658/DEL/2017 PREFERRED APPEAL BEFORE THE LD. CIT(A) AND ARGUED T HAT THE LOSS ON TRANSFER OF INVESTMENT AMOUNTING TO RS.94,09,812/-W AS DEBITED TO THE P&L ACCOUNT AND RETREATED AS PART OF BUSINESS LOSS, BUT THE LEARNED ASSESSING OFFICER TREATED THE SAME AS CAPITAL LOSS; THAT THE ASSESSMENT OF LOSS TO BE OF REVENUE NATURE OR CAPITAL NATURE WAS PURELY BASED ON A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE COMPANY AND THE LEARNED ASSESSING OFFICER. MOREOVER, NO APPEAL WAS PREFERRE D BY THE ASSESSEE AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E ACT OF THE ACT. IT WAS FURTHER SUBMITTED THAT SINCE THE ASSESSEE COMPA NY HAD ALSO PROVIDED JUSTIFICATION ABOUT THE CLAIM OF THE LOSS ON SALE OF SHARES AS BUSINESS LOSS, AND THE ASSESSEE WAS UNDER THE BONA FIDE VIEW THAT IT HAS INCURRED THE ABOVE EXPENSES ONLY TO SAFEGUARD ITS B USINESS INTEREST AND ACCORDINGLY, CLAIMED THIS EXPENDITURE AS BUSINESS E XPENDITURE, SINCE ALL THE FACTS WERE PLACED ON RECORD NO PENALTY COULD BE LEVIED ON THIS SCORE. 5. LD. CIT(A), HOWEVER, DID NOT AGREE WITH THE SUBM ISSIONS OF THE ASSESSEE AND REJECTED THE SAME ON TWO GROUNDS. LD. CIT(A) RECORDED THAT THE WHOLE TRANSACTION IS COMPLETELY TILTED IN FAVOU R OF THE CONSENT BENEFICIARIES MR.HARMOHAN H SAHNEY AND MR. SHASHI M ENON; THAT THE ASSESSEE HAD TRIED TO GIVE THE TRANSACTION A CORNER OF BUSINESS TRANSACTION WHEREAS NO APPARENT BUSINESS MOTIVE COU LD BE ASSIGNED TO THIS TRANSACTION; THAT IT HAS NOT BEEN CLARIFIED HO W THE ASSESSEE COMPANY HAD TO SAFEGUARD ITS BUSINESS INTEREST BY INVESTING IN A COMPANY AND COMPLETELY TRANSCENDING THE SHARES TO TWO INDIVIDUA LS ON PRECONDITIONS; AND, THEREFORE, THERE HAVE BEEN NO BUSINESS ACTIVIT IES REFLECTED IN THE ASSESSMENT YEAR, 2012-13. THE CIT(A) FURTHER HELD T HAT THE ARGUMENT OF THE ASSESSEE ABOUT THE DIFFERENCE OF OPINION IS ALS O NOT VALID, BECAUSE IN 4 ITA NO.2658/DEL/2017 THIS CASE THERE WAS NO IOTA OF DOUBT THAT THE LOSSE S NOT FOR THE PURPOSE OF BUSINESS AT ALL AND HAS TO BE DISALLOWED AS REVE NUE LOSS, AND ON THE OTHER HAND THE ASSESSEE WAS MERELY A CONDUIT FOR TR ANSFERRING OF THIS USER AMOUNT OF MONEY FROM G CORP PROPERTIES TO THE TWO INDIVIDUALS AND ALONG THE WAY THE ASSESSEE CLAIMS THE LOSS AS R EVENUE LOSS TO BE OBVIOUSLY CARRIED FORWARD. LD. CIT(A) FURTHER OBSER VED THAT THE AGREEMENT OF THE ASSESSEE TO TREAT THIS LOSS AS CAP ITAL LOSS CANNOT BE A GUARANTEED OR A RESIDENCE FOR THE PENALTY PROCEEDIN GS NOT TO BE INITIATED OR IMPOSED AND THE LEARNED ASSESSING OFFICER NOWHER E IN HIS ORDER MENTIONED THAT THERE WAS ANY SUCH RESIDENCE. ON THI S PREMISE, LD. CIT(A) CONFIRMED THE LEVY OF PENALTY AND DISMISSED THE APPEAL.AGGRIEVED BY THE IMPUGNED ORDER, ASSESSEE PREFERRED THIS APPE AL. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE. NOTICE WAS ISSUED TO THE ADDRESS GIVEN IN FORM-36 AND THE POSTAL ENVELOP E WAS RETURNED WITH THE ASSESSMENT OF THE POSTAL SERVANT STATING THAT T HE ASSESSEE IS LEFT. IF THE ASSESSEE IS AVAILABLE IN SUCH ADDRESS, SUCH NOT ICE SHOULD HAVE BEEN SERVED ON THE ASSESSEE. IF FOR ANY REASON, THE ASSE SSEE IS NOT AVAILABLE THERE, IT IS FOR THE ASSESSEE TO MAKE ARRANGEMENTS WITH THE POSTAL DEPARTMENT FOR SERVICE OF SUCH NOTICE BY FURNISHING THE NEW TEMPORARY ADDRESS WHERE THE ASSESSEE WOULD BE AVAILABLE, OR T O DELIVER IT TO SOME AUTHORISED PERSON, OR BY MAKING REQUEST TO THE POST AL DEPARTMENT TO DETAIN THE MAIL TILL THE ASSESSEE CLAIMS THE SAME. SINCE THE ASSESSEE DOES NOT SEEM TO HAVE ADOPTED ANY OF THESE METHODS, WE A RE OF THE CONSIDERED OPINION THAT NO USEFUL PURPOSE WOULD BE SERVED BY SENDING NOTICE TO THE ADDRESS WHERE THE ASSESSEE CANNOT BE FOUND. IN THE 5 ITA NO.2658/DEL/2017 CIRCUMSTANCES, BASING ON THE RECORD, WE PROCEED TO HEAR THE LD. DR AND DECIDE THE MATTER ON MERITS. 7. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. THOUGH THE ASSESSEE PLEADED BE FORE THE LD. CIT(A) THAT THE DIFFERENCE OF OPINION AS TO THE NATURE OF EXPENDITURE, WHETHER IT IS REVENUE IN NATURE OR CAPITAL IN NATURE, THE RECO RD DOES NOT REVEAL THAT THE ASSESSEE CLARIFIED AS TO WHETHER THERE IS ANY E LEMENT OF BUSINESS MOTIVE IN THE TRANSACTION. THERE IS NO REBUTTAL TO THE OBSERVATIONS OF THE LD. CIT(A) THAT THE WHOLE TRANSACTION IS COMPLETELY TILTED IN FAVOUR OF THE CONCERNED BENEFICIARIES MR HARMOHAN H SHAW AND MR S HASHI MENON AND THE ASSESSEE HAD TRIED TO GIVE THE TRANSACTION A COLOUR OF BUSINESS TRANSACTION; WHEREAS NO APPARENT BUSINESS MOTIVE CO ULD BE ASSIGNED TO THE TRANSACTION. SO ALSO THERE IS NO REASON FOR US TO BRUSH ASIDE THE FACTUAL FINDING OF THE LD. CIT(A) THAT THERE IS NO CLARIFICATION FROM THE SIDE OF THE ASSESSEE AS TO HOW THE ASSESSEE COMPANY HAS SAFEGUARDED ITS BUSINESS INTEREST BY INVESTING IN A COMPANY AND COM PLETELY TRANSCENDING THE SHARES TO TWO INDIVIDUALS ON PRECONDITIONS. THI S SUSPICION ENTERTAINED BY THE AUTHORITIES BELOW IS CORROBORATE D BY THE FACT THAT THERE HAS NOT BEEN ANY BUSINESS ACTIVITY REFLECTED IN THE ASSESSMENT YEAR 2012-13 EVEN AS PER THE SUBMISSIONS OF THE ASSESSEE . 8. AS RIGHTLY OBSERVED BY THE LD. CIT(A), IN THE AB SENCE OF ANY MATERIAL SUPPORTING THE CONTENTIONS OF THE ASSESSEE , THERE WAS NO IOTA OF DOUBT THAT THE LOSS WAS NOT FOR THE PURPOSE OF B USINESS AT ALL SO THAT IT COULD BE ALLOWED AS A REVENUE LOSS. WE FIND IT DIFF ICULT TO DISAGREE WITH THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE WA S MERELY A CONDUIT FOR TRANSFER OF THE USER AMOUNT FROM G CORP PROPERTIES TO THE TWO 6 ITA NO.2658/DEL/2017 INDIVIDUALS AND BASING ON THIS TRANSACTION THE ASSE SSEE CLAIMED THE LOSS AS REVENUE LOSS OBVIOUSLY WITH AN INTENTION TO CARR Y FORWARD THE SAME. 9. ON THE FACE OF THE FACTUAL FINDINGS RETURNED BY THE LD. CIT(A) AND IN THE ABSENCE OF ANY MATERIAL BEFORE US TO REBUT T HE SAME WE ARE OF THE CONSIDERED OPINION THAT WE CANNOT INTERFERE WITH TH E IMPUGNED ORDER. WE, ACCORDINGLY, DO NOT FIND ANY MERITS IN THIS APP EAL AND HOLD THAT THE APPEAL IS LIABLE TO BE DISMISSED. WE, THEREFORE, DI SMISS THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED PRONOUNCED IN OPEN COURT ON 12 TH DECEMBER, 2019. SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 12/12/2019 RK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI