DCIT (OSD), Dehradun V. Shri. Dinesh Jain, Dehradun

ITA 3762/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58866 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Assessee Lawyers: SM MATHUR
• Keywords: Capital asset; Capital receipt; Set aside

Judgement Text

ITA 3762/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B NEW DELHI BEFORE SHRI K.G. BANSAL, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3762/DEL/2011 ASSESSMENT YEAR : 2006-07 DY.COMMISSIONER OF INCOME TAX VS DINESH JAIN, (OSD), RANGE-1, 59, GANDHI ROAD, DEHRADUN. DEHRADUN. (PAN ADIPJ4841P) (APPELLANT) (RESPONDENT) APPELLANT BY : MS RENUKA JAIN GUPTA, SR. DR RESPONDENT BY : SHRI S.M. MATHUR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, DEHRADUN DATED 04.04.2011 PERTAINING TO A SSESSMENT YEAR 2006- 07. 2. THE GROUNDS OF APPEAL RAISED ARE REPRODUCED AS U NDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS O F THE CASE BY HOLDING THAT THE AMOUNT RECEIVED BY THE ASS ESSEE IN PURSUANCE OF AN OUT OF COURT COMPROMISE DEED EXECUTED WITH THE BUYER OF THE PROPERTY SOLD BY HIS FATHER WAS INHERITANCE WITHOUT ASCERTAINING THAT THE LIABI LITY TO PAY CAPITAL GAIN TAX ON TRANSFER OF PROPERTY WAS DISCHARGED BY HIS FATHER. ITA 3762/DEL/2011 2 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FAC TS OF THE CASE BY HOLDING THAT AMOUNT RECEIVED BY THE ASSESSEE WAS INHERITANCE WITHOUT ASCERTAINING ASSESSEES LIABILITY TO PAY CAPITAL GAIN TAX ON TRA NSFER OF PROPERTY BY HIS FATHER IN HIS CAPACITY AS LEGAL HEIR OF HIS FATHER 3. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND T HAT OF THE A.O. BE RESTORED. 3. THE ABOVE MENTIONED BOTH MAIN GROUNDS ARE INDICA TING TOWARDS A SINGLE ALLEGATION THAT THE LD. CIT(A)-I ERRED IN HO LDING THAT THE ASSESSEE RECEIVED A PART OF SALE CONSIDERATION OF THE PIECE OF LAND SOLD BY HIS LATE FATHER AND, THEREFORE, THE RECEIPT OF RS.25,00,000/ - WAS OF THE NATURE OF INHERITANCE IN HIS HANDS WHICH IS NOT TAXABLE AS IN COME AND DELETION OF SAME ADDITION WAS WRONG. THE RESPONDENT/ASSESSEE REPLIE D THAT FIRSTLY, HE DID NOT SELL ANY PROPERTY, HE SIMPLY RECEIVED PART OF D ISPUTED SALE CONSIDERATION IN INHERITANCE AFTER DEATH OF HIS FATHER. SECONDLY , FOR THE SAKE OF ARGUMENT, IF THIS AMOUNT IS CONSIDERED AS A CAPITAL RECEIPT I N HIS HAND ON CALCULATION AS SHOWN ON PAGE NO. 35 OF PAPER BOOK, THE NET RESULT OF SALE IS LOSS OF RS.48849/- LONG TERM CAPITAL GAIN. THEREFORE, THIS APPEAL IS BASELESS AND DESERVES TO BE DISMISSED. 4. WE HAVE PERUSED THE RECORD AND PAPER BOOK IN THE LIGHT OF RIVAL ARGUMENTS FROM BOTH THE PARTIES. PAGE NO. 1 TO 14 OF ASSESSEES PAPER BOOK SUGGEST THAT LATE SHRI N.K. JAIN AND HIS SISTER MRS . VEENA SARKAR PURCHASED ITA 3762/DEL/2011 3 THE PROPERTY THROUGH REGISTERED SALE DEED DATED 17. 9.90 AND THEY SOLD IT TO THE INSTITUTE OF MANAGEMENT THROUGH SHRI NAVEEN KUM AR AGARWAL AND SHRI AMIT AGARWAL ON 3.8.1998 FOR A TOTAL SALE CONSIDERA TION OF RS. 40,00,000/- RECEIVED THROUGH CHEQUES. THREE CHEQUES OF RS. 25, 00,000/- WERE DISHONORED AND A PRIVATE COMPLAINT U/S 138 OF THE N EGOTIABLE INSTRUMENT ACT, 1881 WAS FILED AGAINST THE ABOVE PURCHASERS. DURING PENDENCY OF ABOVE CRIMINAL CASE, ON 29.1.2001, SHRI N.K. JAIN D IED. THE ASSESSEE WAS PUT ON RECORD AS SHRI N.K. JAINS LEGAL HEIR AND RE PRESENTED THE CASE TILL THE CASE RESULTED IN COMPROMISE ON 4.1.2005 AND THE ASS ESSEE RECEIVED RS.25,00,000/- AS COMPROMISE SETTLEMENT AMOUNT. 5. AS IT WAS HELD BY THE HONBLE SUPREME COURT OF I NDIA IN THE CASE OF ANARKALI SARABHAI VS CIT (1997) 224 ITR 422 (S.C.) THAT SECTION 45(1) OF THE INCOME TAX ACT, 1961 BRINGS TO CHARGE CAPITAL G AINS WHEN FOLLOWING CONDITIONS ARE SATISFIED AND THEN ONLY, SUCH PROFIT S SHALL BE DEEMED TO BE INCOME OF SUCH PREVIOUS YEAR AND ATTRACT CHARGE OF TAX UNDER THE HEAD OF CAPITAL GAINS:- (I) THE EXISTENCE OF A CAPITAL ASSET; OWNED BY THE ASSESSEE; (II) A TRANSFER OF SUCH ASSET DURING THE PREVIOUS YEAR; (III) ARISAL OF PROFITS AND GAINS FROM TRANSFER OF SUCH ASSETS; AND (IV) SUCH PROFITS AND GAINS MUST ACCRUE OR ARISE TO THE ASSESSEE. ITA 3762/DEL/2011 4 IN THE CASE IN HAND, WE TESTED ABOVE MENTIONED FOUR CONDITIONS REGARDING THE SAID RECEIPT OF RS. 25 LAKH AS FULL AND FINAL COMPR OMISE SETTLEMENT ACCOUNT IN A CRIMINAL COURT CASE. 6. THE ASSESSING OFFICER IN PARA 6 OF THE ASSESSMEN T ORDER DATED 24.12.2008 HELD THAT THIS AMOUNT HAS BEEN RECEIVED ON ACCOUNT OF SALE OF PROPERTY AND IS REQUIRED TO BE BROUGHT TO TAX AS LO NG TERM CAPITAL GAIN. THIS ADDITION WAS DELETED BY CIT(A)-I, DEHRADUN THROUGH IMPUGNED ORDER DATED 4.4.2011. 7. AFTER CAREFUL CONSIDERATION OF ABOVE FACTS AND C IRCUMSTANCES OF THE CASE, WE FIND THAT NO PROPERTY WAS SOLD BY THE ASSE SSEE. HE MERELY RECEIVED RS. 25,00,000/- AS FULL AND FINAL SETTLEMENT OF COU RT CASE FILED BY HIS LATE FATHER. 8. DURING THE ARGUMENTS, THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE HAS DRAWN OUR ATTENTION TO PAGE NO. 10 AND 11 OF TH E PAPER BOOK WHERE WE SATISFACTORILY FOUND THAT THE POSSESSION OF THE SOL D HOUSE WAS HANDED OVER TO THE PURCHASERS BY LATE SHRI N.K. JAIN WITH EXECUTIO N OF SALE DEED ON 3.8.1998 AND THE SALE OF HOUSE PROPERTY TRANSACTION WAS COMP LETED IN THE FINANCIAL YEAR 1998-99 PERTAINING TO THE ASSESSMENT YEAR 1999 -2000, THIS FACT HAS NOT BEEN DISPUTED BY THE LD. DR BEFORE US. WE ALSO FOUND THAT INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1999-2000 (PAPER BOO K PAGE NO. 31 TO 34) ITA 3762/DEL/2011 5 SHOWS THAT HIS LATE FATHER SHRI N.K. JAIN PAID INCO ME TAX ON LONG TERM CAPITAL GAIN AT RS.150,496 AS ORIGINALLY THE SALE OF PROPER TY TRANSACTION WAS INITIATED ON 3.8.1998. THEREFORE LD. CIT(A)-I RIGHTLY OBSERV ED THIS RECEIVED AMOUNT WAS OF THE NATURE OF THE INHERITANCE IN THE HANDS O F ASSESSEE WHICH IS NOT TAXABLE IN HIS HANDS. 9. EVEN IF WE CONSIDER IT AS CAPITAL RECEIPT IN THE HANDS OF ASSESSEE/APPELLANT, WE HOLD THAT, IN THE ABSENCE OF ANY OBJECTION ON CALCULATION MADE ON AGE 35 OF PAPER BOOK SUBMITTED BY THE ASSESSEE, WE FIND A LONG TERM CAPITAL LOSS AT RS.48,849 TO THE A SSESSEE WHICH APPROVED THE DELETION OF ADDITION MADE BY LD. CIT(A)-DEHRADUN TH ROUGH IMPUGNED ORDER. 10. ACCORDINGLY, ON THE BASIS OF ABOVE DISCUSSIONS AND FINDINGS WE ARRIVED AT THE CONCLUSION THAT THIS APPEAL BY THE R EVENUE IS DEVOID OF MERIT AND DESERVES TO BE DISMISSED. HENCE, THE SAME IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.3.2012. SD/- SD/- (K.G. BANSAL) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 16TH MARCH, 2012 GS ITA 3762/DEL/2011 6 COPY FORWARDED TO:- 1. DCIT (OSD), DEHRADUN 2. SHRI DINESH JAIN, DEHRADUN 3. CIT(A)-I, DEHRADUN 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR