ACIT, New Delhi V. M/s Ritu Investment P. Ltd., New Delhi

ITA 2797/DEL/2011

• Counselvise Citation: 279720114 RSA 2011
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 31-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRISEILLA SINGEIT
• Assessee Lawyers: P D MITTAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F NEW DELHI BEFORE SHRI RP TOLANI, JM AND SHRI J.SUDHAKAR REDDY, AM ITA NO. 2797/DEL/2011 ASSESSMENT YEAR : 2003-04 ACIT, CIRCLE 15(1) VS. M/S RITU INVESTMENT P.LTD. I.P.ESTATE, NEW DELHI C 26, WEST END COLONY NEW DELHI 21 PAN: AAACR 0585L (APPELLANT) (RESPONDENT) APPELLANT BY:- MS.PRISEILLA SINGEIT, SR.D.R. RESPONDENT BY:- SH.P.D.MITTAL, C.A. O R D E R PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE CIT(A)-XVIII, NEW DELHI DT. 11.3.2011 PERTAINI NG TO THE ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS. 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.1 6,36,492/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C ) OF T HE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FR ESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL . 2. FACTS IN BRIEF:- THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF INVESTMENTS AND SECURITIES AND ALSO SAL E AND PURCHASE OF SHARES. IT RECEIVED A SUM OF RS.44,53,040/- AS PER THE ORDER OF SEBI UNDER REGULATION 44(J). THE ASSESSEE WAS A SHAREHO LDER OF M/S CASTROL 2 LTD., CASTRO LTD. MADE AN OFFER TO PURCHASE SHARES FROM ITS EXISTING SHAREHOLDERS ON ACCOUNT OF CHANGE IN MANAGEMENT AT RS.350.02 PER SHARE. THE PUBLIC ANNOUNCEMENT WAS MADE ON 11.12.2 000 BY CASTRO INDIA LTD. AND THE SPECIFIED DATE WAS 23.8.2001. OFFER LETTERS ARE TO BE DISPATCHED BY 21.9.2001. THE OFFER WAS TO OPEN ON 25.9.2001. THE OFFEROR WAS TO RECEIVE CONSIDERATION BY 23.11.2001. THE ASSESSEE OFFERED TO TAX THE SALE PRICE OF ITS SHARES AS PER THE LETT ER OF OFFER. AS THERE WAS A DELAY OF A PERIOD OF ABOUT 9 MONTHS, SEBI DIRECTED PAYMENT OF INTEREST AT 15% P.A. FROM 8.8,2000 TO 23.11.2001. THE ASSES SEES CLAIMS THAT NO AMOUNT WAS DUE TO IT ON OR BEFORE 21.9.2001 AND AS THE INTEREST WAS CALCULATED FROM 8.8.2000 TO 23.11.2001 IT WAS IN TH E NATURE OF COMPENSATION FOR MAKING A DELAYED OFFER. IT IS THE ASSESSEES CASE THAT THE AMOUNT WAS NOT IN THE NATURE OF INTEREST AS NO AMOUNT BECAME DUE TO THE ASSESSEE ON 8.8.2000. ANOTHER IMPORTANT FAC T IS THAT CASTROL INDIA LTD. DEDUCTED TAX AT SOURCE OF RS.9,35,139/- ON THI S PAYMENT, BY CONSIDERING THE PAYMENT IN QUESTION AS INTEREST. T HE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS HAS TAXED THIS AMOUNT UNDER THE HEAD INCOME FROM OTHER SOURCES. ON APPEAL THE FIRST A PPELLATE AUTHORITY AGREED WITH THE ASSESSEE THAT THE AMOUNT IN QUESTIO N CANNOT BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. HE HEL D THAT SINCE NO SALE OF THE SHARES TOOK PLACE IN THE INSTANT YEAR, THE A SSESSING OFFICER WAS DIRECTED TO DELETE THE ADDITION. HE FURTHER DIRECT ED THE ASSESSING OFFICER TO RECOMPUTED THE CAPITAL GAINS IN THE PRECEDING A YS BY INCLUDING A SUM 3 OF RS.44,53,040/- AS PART OF SALE CONSIDERATION REC EIVED ON SALE OF SHARES BY THE ASSESSEE COMPANY. THE REVENUE CARRIED THE M ATTER IN APPEAL. 3. THE F DELHI BENCH OF THE TRIBUNAL IN ITA 3616/ DEL/2007 VIDE ORDER DT. 13 TH AUGUST,2009 HELD THAT THE PAYMENT IN THIS CASE WAS IN THE NATURE OF INTEREST DUE TO LATE PAYMENT OF PURCHASE CONSIDERATION. IT HELD THAT THIS IS AKIN TO THE PAYMENT OF INTEREST UNDER SECTION 34 OF THE LAND ACQUISITION ACT, PAYABLE WHEN THE COMPENSATION HAS BEEN FIXED BUT ITS PAYMENT HAS BEEN DELAYED. IT UPHELD THE ORDER OF T HE ASSESSING OFFICER. THEREAFTER THE ASSESSING OFFICER LEVIED PENALTY UND ER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 ON 19.5.2001 BY REJECTING THE CONTENTIONS OF THE ASSESSEE. ON APPEAL THE FIRST APPELLATE AUTHOR ITY TOOK A VIEW THAT THE ISSUE IN QUESTION IS DEBATABLE IN NATURE AND TH AT THE VERSION OF THE ASSESSEE WAS BASED ON LEGAL OPINION WHICH WAS ALSO UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THAT THERE IS NO CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD MS.PRISCILLA SINGEIT, SR.DR FOR TH E REVENUE AND MR.PD MITTAL, LD.COUNSEL FOR THE ASSESSEE. 5. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E ISSUE WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE IN CONSEQUENCE TO A N ORDER OF THE SEBI IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS OR UNDER THE HEAD INCOME FROM OTHER SOURCES WAS A DEBATABLE ISSUE. THE ASSESSEE BASED ON LEGAL OPINION, MADE FULL DISCLOSURE IN ITS RETUR N OF INCOME AND MADE 4 THE CLAIM. THE ASSESSING OFFICER REJECTED THIS CLA IM OF THE ASSESSEE. THE CIT(A) AGREED WITH THE CONTENTIONS OF THE ASSESSEE AFTER RELYING ON A NUMBER OF LEGAL PRECEDENTS. THEREAFTER THE TRIBUNA L TOOK A DIFFERENT VIEW AND UPHELD THE ORDER OF THE ASSESSING OFFICER. UND ER THE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THE PROPOSITI ONS LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRO DUCTS LTD. 322 ITR 158 APPLIES. IN VIEW OF THE ABOVE DISCUSSION WE U PHOLD THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMP UGNED ORDER DT. 11.3.2011 AND DISMISS THE APPEAL BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER,2012. SD/- SD/- (R.P.TOLANI) (J.SUDHA KAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 7 TH DECEMBER, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 5 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :