Chandana Constructions Private Limited, Hyderabad V. Income Tax Officer, Ward-1(4), Hyderabad

ITA 377/Hyd/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7042 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 03-08-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 23-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: WASEEMURREHMANDR
• Assessee Lawyers: N O N E
• Keywords: Sale consideration of property below Jantri Value; Business income; Capital Gains
• Section: 50C; 72; 147; 154; 15

Judgement Text

ITA NO 377 OF 2018 CHANDANA CONSTRUCTIONS P LTD H YDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.377/HYD/2018 ASSESSMENT YEAR: 2009-10 M/S. CHANDANA CONSTRUCTIONS (P) LTD, D.NO.1-1-23-/11/2 VIVEK NAGAR, CHIKKADAPALLI HYDERABAD 500020 PAN:AAACC8227A VS. INCOME TAX OFFICER WARD 1(4) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: N O N E REVENUE BY : SRI WASEEM-UR-REHMAN,DR DATE OF HEARING: 03/08/2021 DATE OF PRONOUNCEMENT: 30/08/2021 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10 AGAIN ST THE ORDER OF THE CIT (A)-1, HYDERABAD, DATED 24.11. 2017. 2. THIS APPEAL HAS BEEN COMING UP FOR HEARING FROM 18.5.2018 ONWARDS AND THE ASSESSEE IS REPRESENTED B Y HIS COUNSEL MR.P.S.S. KAILASH NATH, WHO APPEARED ON SOM E OCCASIONS. THE LAST APPEARANCE WAS ON 2.12.2020. TH EREAFTER, THE BENCH DID NOT FUNCTION AND ON 8.3.2021, SINCE NONE APPEARED FOR THE ASSESSEE, A NOTICE WAS SENT TO THE ASSESSEE THR OUGH RPAD. FURTHER, NOTICES WERE ALSO SENT TO THE ASSESSEE BY RPAD AND FINAL NOTICE FOR HEARING TODAY I.E. 3.8.2021 HAS ALSO BEE N SERVED ON THE ASSESSEE. HOWEVER, NONE APPEARED FOR THE ASSESSEE E VEN TODAY I.E. 3.8.2021 WHEN THE CASE CAME UP FOR HEARING. THEREFO RE, IT IS PRESUMED THAT THE ASSESSEE IS NOT INTERESTED TO PUR SUE THE APPEAL ITA NO 377 OF 2018 CHANDANA CONSTRUCTIONS P LTD H YDERABAD PAGE 2 OF 4 AND IS THEREFORE, ACCORDINGLY DISMISSED. HOWEVER, L IBERTY IS GIVEN TO THE ASSESSEE TO SEEK RECALL OF THIS ORDER BY SHO WING SUFFICIENT REASONS WITHIN THE SPECIFIED PERIOD UNDER THE ACT. 3. EVEN ON MERITS OF THE ISSUE, I FIND THAT THE ASS ESSING OFFICER HAD APPLIED THE PROVISIONS OF SECTION 50C O N SALE OF AN ASSET AND THEREAFTER ALLOWED SET OFF OF BUSINESS LO SS FROM THE SHORT TERM CAPITAL GAIN ARISING THEREFROM. SUBSEQUE NTLY, HE OBSERVED THAT THE BUSINESS LOSS WAS WRONGLY SET OFF FROM SHORT TERM CAPITAL GAIN EVEN THOUGH THE SAME WAS NOT ALLO WABLE U/S 72 OF THE ACT. THEREFORE, HE ISSUED NOTICE U/S 154 OF THE ACT FOR RECTIFICATION OF THE MISTAKE. AND AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, THE ASSESSING OFFICER BROUGHT TO TAX T HE BROUGHT FORWARD BUSINESS LOSS WHICH WAS REDUCED FROM STCG. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A), WHO CO NFIRMED THE ORDER OF THE ASSESSING OFFICER U/S 154 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISIN G THE FOLLOWING GROUNDS OF APPEAL: 1) THE ISSUE OF SET OFF OF BROUGHT FORWARD BUSINES S LOSS AGAINST TECHNICAL SHORT TERM CAPITAL GAINS ARISING OUT OF THE SALE OF DEPRECIABLE BUSINESS ASSETS, WHICH WAS LOOKED INTO IN DEPTH AND ALLOWED IN THE RE-ASSESSMENT U/S. 147 OF THE IT ACT, SHOULD NOT HAVE BEEN TREATED AS A 'M ISTAKE APPARENT FROM THE RECORD' U/S.154 OF THE IT ACT AND THE ISSUE DOES NOT COME UNDER THE PURVIEW OF SECTION 15 4 OF THE IT ACT AND THE ASSESSMENT IS LIABLE TO BE SET A SIDE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES AND THE LA W, THE LEARNED CIT HAS GROSSLY ERRED IN UPHOLDING ORDER OF THE ITO IN DISALLOWING THE SET OFF OF BROUGHT FORWARD B USINESS LOSS OF RS.10,63,449 AGAINST THE SHORT TERM CAPITAL GAINS(STCG) ARISING OUT OF DEPRECIABLE BUSINESS ASS ETS, WHICH IS INCORRECT AND UNTENABLE IN LAW AND ON FACT S. 3) THE LEARNED CIT HAS NOT APPRECIATED THE FACT THA T STCG WAS NOT ON ACCOUNT OF ANY SALE OF 'FIXED ASSETS', B UT ONLY ON ACCOUNT OF 'DEPRECIABLE BUSINESS ASSETS' FORMING PART OF 'BLOCK OF ASSETS' . ITA NO 377 OF 2018 CHANDANA CONSTRUCTIONS P LTD H YDERABAD PAGE 3 OF 4 4) THE LEARNED CIT HAS NOT APPRECIATED THE FACT THA T THE BLOCK OF ASSETS ITSELF GOT EXHAUSTED AND ACCORDINGL Y IT RESULTED IN THE TECHNICAL STCG. 5) THE LEARNED CIT HAS NOT APPRECIATED THE FACT THA T STCG AROUSE OUT OF EXCESS OF SALE CONSIDERATION RECEIVED OVER AND ABOVE THE NET BLOCK OF THE DEPRECIABLE ASSETS T OTALLY GOT EXHAUSTED. THIS RESULTED IN TECHNICAL STCG U/S. 50 OF THE IT ACT, WHICH IN EFFECT AND MEANS A BUSINESS PR OFIT ONLY. 6) THE SETTLED LEGAL POSITION CLEARLY SHOWS THAT PR OFITS ON SALE OF DEPRECIABLE BUSINESS ASSETS, WHERE THE BLOC K ITSELF GOT EXHAUSTED, IS A BUSINESS INCOME ONLY (THOUGH TECHNICALLY SHOWN UNDER STCG IN THE IT RETURN DUE T O THE TECHNICALITIES IN THE ONLINE E-FILING OF ITR6 ) AND IS ELIGIBLE IN ALL ASPECTS FOR SET OFF AGAINST THE BROUGHT FORW ARD BUSINESS LOSSES. 7) THE LEARNED CIT HAS NOT APPRECIATED THE FACT THA T IT IS A WELL SETTLED PROPOSITION OF LAW THAT THE TECHNICAL STCG ARISING OUT OF SALE OF DEPRECIABLE BUSINESS ASSETS U/S.50 OF THE IT ACT CAN ALWAYS BE SET OFF AGAINST THE BUS INESS LOSS, INCLUDING THE BROUGHT FORWARD BUSINESS LOSSES U/S.72 OF THE IT ACT. 8) THE LEARNED CIT HAS NOT TAKEN INTO CONSIDERATION ANY OF THE CASE LAWS SUBMITTED IN SUPPORT OF THE CLAIM TOW ARDS SET OFF OF CARRY FORWARD BUSINESS LOSS AGAINST THE TECHNICAL STCG ARISING OUT OF SALE OF DEPRECIABLE BUSINESS AS SET. 9) THE APPELLANT COMPANY PRAYS THAT THE BROUGHT FOR WARD BUSINESS LOSSES BE DIRECTED TO BE SET OFF AGAINST T HE TECHNICAL STCGS OF THE AY 2009-10 ,WHICH RESULTED F ROM THE SALE OF DEPRECIABLE BUSINESS ASSETS. 10) THE APPELLANT COMPANY CRAVES FOR THE LEAVE TO A MEND, MODIFY, DELETE, ADD, ALTER, SUBSTITUTE, ENLARGE ANY FURTHER GROUNDS OF APPEAL DURING THE COURSE OF THE APPEAL PROCEEDINGS. 4. I FIND THAT THE ASSESSEE ITSELF HAS OFFERED THE INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN AND NOT AS BUSINESS INCOME. THEREFORE, UNDER THE PROVISIONS OF SECTION 72(1), THE BROUGHT FORWARD BUSINESS LOSS CAN BE SET OFF ONLY F ROM BUSINESS INCOME AND CANNOT BE SET OFF FROM STCG. THE ASSESSE E HAS NOT BEN ABLE TO CONTROVERT THIS FIND OF THE LOWER AUTHO RITIES. THEREFORE, THE ASSESSEES APPEAL IS DISMISSED ON MERITS AS WEL L. ITA NO 377 OF 2018 CHANDANA CONSTRUCTIONS P LTD H YDERABAD PAGE 4 OF 4 5. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2021. (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH AUGUST, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 M/S.CHANDANA CONSTRUCTIONS (P) LTD, D.NO.1-1-230/ 11/2, VIVEK NAGAR, CHIKKADAPALLY, HYDERABAD 500020 2 INCOME TAX OFFICER WARD 1(4) IT TOWERS, A C GUARDS, HYDERA BAD 500004 3 CIT (A)-1, HYDERABAD 4 PR. CIT -1, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER