Manoj Kumar Mulasi, Chennai V. DCIT, Corporate Circle-1(1), Chennai

ITA 378/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2017 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KUMUDHA
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.378/CHNY/2018 ( )( / ASSESSMENT YEAR : 2013-14 SHRI MANOJ KUMAR MULASI, 2102 PLATINA APARTMENT, MOUNT POONAMALLEE ROAD, NEAR SARAVANA STORE, PORUR, CHENNAI - 600 116. PAN : AKUPM 9361 J V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. B. RAMAKRISHNAN, FCA -.+, / 0 / RESPONDENT BY : MS. D. KUMUDHA, JCIT 1 / 2% / DATE OF HEARING : 30.10.2018 3') / 2% / DATE OF PRONOUNCEMENT : 16.11.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -4, CHENNA I, DATED 30.11.2017 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2 I.T.A. NO.378/CHNY/18 2. SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE INITIALLY FIL ED THE RETURN OF INCOME DISCLOSING LONG TERM CAPITAL GAINS OF 2,15,77,952/- AND PAID THE TAXES ALSO. SUBSEQUENTLY, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE FILED REVISED RETURN WITHDRAWING THE E NTIRE LONG TERM CAPITAL GAINS AND CLAIMED REFUND. REFERRING TO THE SHARE TRANSFER AGREEMENT DATED 28.01.2013, A COPY OF WHICH IS AVAI LABLE AT PAGE 1 OF THE PAPER-BOOK, THE LD. REPRESENTATIVE SUBMITTED THAT AS PER CLAUSE 3B, AT THE TIME OF PAYMENT, THE SELLER SHALL ABSOLUTELY AND UNCONDITIONALLY TRANSFERS THE SHARES TO THE BUYER. REFERRING TO THE COPIES OF THE CERTIFICATE ISSUED BY AXIS BANK, DR. RADHAKRISHNAN SALAI, MYLAPORE, THE LD. REPRESENTATIVE SUBMITTED T HAT THE ASSESSEE RECEIVED THE MONEY ON 31.12.2014. THEREFORE, ACCOR DING TO THE LD. REPRESENTATIVE, THE DATE OF RECEIPT OF MONEY, I.E. 31.12.2014 FALLS IN THE FINANCIAL YEAR 2014-15 WHICH IS RELEVANT TO THE ASSESSMENT YEAR 2015-16. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2015-16, THE ASSESSEE HAS ALREADY F ILED THE RETURN OF INCOME DISCLOSING THE VERY SAME CAPITAL GAIN AND PAID THE TAXES ALSO. THEREFORE, ACCORDING TO THE LD. REPRESENTATI VE, THE CIT(APPEALS) IS NOT CORRECT IN CONCLUDING THAT CAPI TAL GAIN ACCRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . IN FACT, 3 I.T.A. NO.378/CHNY/18 ACCORDING TO THE LD. REPRESENTATIVE, CAPITAL GAIN A CCRUED TO THE ASSESSEE ONLY DURING THE ASSESSMENT YEAR 2015-16 AN D NOT DURING THE YEAR UNDER CONSIDERATION. 3. ON THE CONTRARY, MS. D. KUMUDHA, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT AS PER THE SHARE TRA NSFER AGREEMENT, THE AGGREGATE PRICE FOR THE SHARES IS US $ 400404. THE ASSESSEE, IN FACT, SOLD 123 SHARES OF M/S ATLAS SYS TEMS INC., A NEW JERSEY CORPORATION. ACCORDING TO THE LD. D.R., AS PER THE AGREEMENT DATED 28.01.2013, THE SHARES WERE TRANSFE RRED DURING THE FINANCIAL YEAR 2012-13 RELEVANT TO THE ASSESSME NT YEAR 2013-14. ACCORDING TO THE LD. D.R., ON THE DATE OF AGREEMENT , I.E. ON 28.01.2013, THE TRANSFER OF SHARES TOOK PLACE, THER EFORE, THE CAPITAL GAIN HAS TO BE ASSESSED ONLY FOR THE YEAR UNDER CON SIDERATION. ACCORDING TO THE LD. D.R., THE ASSESSEE INITIALLY F ILED RETURN OF INCOME DISCLOSING THE CAPITAL GAIN, HOWEVER, HE WIT HDREW THE SAME BY FILING THE REVISED RETURN, THEREFORE, THE ASSESS ING OFFICER ASSESSED THE LONG TERM CAPITAL GAINS DURING THE YEA R UNDER CONSIDERATION. HENCE, ACCORDING TO THE LD. D.R., T HE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OF FICER. 4 I.T.A. NO.378/CHNY/18 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE SHARE TRANSFER AGREEMENT DATED 28.01.2013. THE CERTIFICATE OF FOREIGN INWARD REMI TTANCE ISSUED BY AXIS BANK, DR. RADHAKRISHNAN SALAI, MYLAPORE IS AVA ILABLE AT PAGES 9 TO 12 OF THE PAPER-BOOK. AS PER THIS FOREIGN INW ARD REMITTANCE, THE SHARE PRICE WAS CREDITED TO THE ACCOUNT OF THE ASSESSEE ON 14.12.2012, 16.12.2013, 15.12.2014 AND 31.12.2014. THEREFORE, OBVIOUSLY THE FINAL SETTLEMENT BY MAKING ENTIRE PAY MENT WAS MADE ONLY ON 31.12.2014. FROM THE ABOVE, IT IS OBVIOUS THAT THE ACTUAL PAYMENT WAS RECEIVED BY THE ASSESSEE ONLY DURING TH E FINANCIAL YEAR 2014-15, WHICH IS RELEVANT TO THE ASSESSMENT Y EAR 2015-16. CLAUSE 3 OF SHARE TRANSFER AGREEMENT DATED 28.01.20 13 READS AS FOLLOWS:- 3. PURCHASE AND SALE. SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, ON 28 TH JANUARY 2013 (THE CLOSING DATE ): A. BUYER SHALL DELIVER TO SELLER THE PURCHASE PRICE. B. AT THE TIME OF SUCH PAYMENT, SELLER SHALL ABSOLUTELY AND UNCONDITIONALLY SELL, CONVEY, TRANSF ER, ASSIGN AND DELIVER THE SHARES TO BUYER, FREE AND CLEAR OF ALL C LAIMS, LIENS, RESTRICTIONS AND ENCUMBRANCES. SELLER WILL DELIVER : (I) SELLERS SHARES, FULLY ENDORSED, AND SUCH INSTRUMENTS OF CON VEYANCE OF 5 I.T.A. NO.378/CHNY/18 THE SHARES AS ARE REASONABLY REQUIRED; (II) THE CER TIFICATE OF SELLER REPRESENTING AND WARRANTING TO BUYER THAT EAC H OF SELLERS REPRESENTATIONS AND WARRANTIES IN THIS AGR EEMENT WAS ACCURATE IN ALL RESPECTS AS OF THE DATE OF THIS AGR EEMENT AND IS ACCURATE IN ALL RESPECTS AS OF SUCH DATE AS IF M ADE ON SUCH DATE; AND (III) SUCH OTHER DOCUMENTS AS ARE REASONA BLY REQUIRED TO EFFECT THE PROVISIONS OF THIS AGREEMENT AND THE CONTEMPLATED TRANSACTION. C. SELLER SHALL BE SOLELY RESPONSIBLE FOR THE PAYME NT OF ALL TAXES, IN EVERY JURISDICTION, WHICH MAY BE DU E ON ACCOUNT OF HIS SALE OF THE SHARES AND RECEIPT OF THE PURCHA SE PRICE. 5. FROM THE ABOVE IT IS OBVIOUS THAT AT THE TIME OF PAYMENT, THE ASSESSEE BEING THE SELLER, SHALL TRANSFER AND DELIV ER THE SHARE TO THE BUYER. IN VIEW OF ABOVE, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE ACTUAL TRANSFER OF SHARES TOOK PLACE ON 31 .12.2014 WHICH FALLS IN THE FINANCIAL YEAR 2014-15 RELEVANT TO THE ASSESSMENT YEAR 2015-16. THEREFORE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE CAPITAL GAIN IS NOT ASSESSABLE DURING THE YEAR UNDER CONSIDERATION. 6. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF M ADRAS HIGH COURT IN T.V. SUNDARAM IYENGAR & SONS LTD. V. CIT (1959) 37 ITR 26 REFERRED BY THE LD. D.R. IN THE CASE BEFORE MADRAS HIGH COURT, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF P URCHASE AND SALE OF MOTOR CARS, SPARES AND ACCESSORIES. THE VE HICLE AND ROUTE 6 I.T.A. NO.378/CHNY/18 RIGHTS IN THE CASE OF BUSES BELONGED TO THE ASSESSE E WHICH WAS TRANSFERRED TO S WHICH WAS AN ENTIRELY DIFFERENT LEGAL ENTITY. THE PROFIT THAT AROSE ON TRANSFER WAS TO BE ASCERTAINED BY REDUCING THE BOOK VALUE OF SALE PRICE. THE PRICE OR THE SALE CO NSIDERATION BECAME PAYABLE FORTHWITH DURING THE RELEVANT ACCOUN TING YEAR. THEREFORE, THE MADRAS HIGH COURT FOUND THAT THE ASS ESSEE OBTAINED THE RIGHT TO RECEIVE THE PRICE IN THAT YEAR. THERE FORE, THE PROFIT HAS TO BE ASSESSED IN THAT YEAR. IN THE CASE ON OUR HAND, THE FACTS ARE ENTIRELY DIFFERENT. AS PER THE AGREEMENT, THE ASSE SSEE WILL DELIVER AND TRANSFER THE SHARES ONLY ON THE DATE OF PAYMENT . THE FINAL PAYMENT WAS ADMITTEDLY SETTLED ON 31.12.2014. THER EFORE, THIS JUDGMENT OF MADRAS HIGH COURT MAY NOT BE OF ANY ASS ISTANCE TO THE REVENUE. 7. IN VIEW OF THE ABOVE DISCUSSION, WE ARE UNABLE T O UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITION MA DE TOWARDS LONG TERM CAPITAL GAINS FOR TRANSFER OF SHARE OF M/S ATL AS SYSTEMS INC. A NEW JERSEY CORPORATION IS NOT ASSESSABLE DURING THE YEAR UNDER CONSIDERATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7 I.T.A. NO.378/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 16 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 16 TH NOVEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A) -4, CHENNAI-34 4. PRINCIPAL CIT, CHENNAI- 1, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.