Jaiprakash Associates Ltd., Noida V. DCIT, CIRCLE- 1, Noida

ITA 3877/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2873 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA UPMANYU
• Assessee Lawyers: N O N E
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Fair market value; Bad and doubtful debts; Condonation of delay; Capital expenditure
• Section: 50C; 201; 48

Judgement Text

PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH C: NEW DELHI ] BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA. NOS. 3876, 3877 & 3878/DEL/2018 (ASSESSMENT YEARS : 2010-11, 2011-12 & 2012-13) M/S. JAIPRAKASH ASSOCIATES LTD., SECTOR 128, NOIDA, UTTAR PRADESH 201 304. PAN: AABCB1562A VS. D CIT, CIRCLE : 1, NOIDA. (APPELLANT) (RESPONDENT) ASSESSEE BY : N O N E; DEPARTMENT BY : MS. VASUNDHARA UPMANYU, [CIT] DR DATE OF HEARING : 2 1 / 1 0/2021 DATE OF PRONOUNCEMENT : 21 / 1 0/2021 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THESE APPEALS ARE FILED BY THE ASSESSEE COMPANY AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)I, NOIDA, DATED 28.02.2018, FOR ASSESSMENT YEARS 2010-11, 2011-12 AND 2012-13. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF, FOR THE SAKE OF CONVENIENCE, BY THIS COMMON ORDER. 2. IN ITA. NO. 3876/DEL/2018 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- DISALLOWANCE OF BAD DEBTS WRITTEN OFF 1. THAT ON THE FACTS AND LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] ERRED IN UPHOLDING THE DISALLOWANCE OF RS.4,09,29,605/- ON ACCOUNT OF IRRECOVERABLE DEBTS/ADVANCES WRITTEN OFF DURING THE YEAR, ON THE GROUND THAT IRRECOVERABILITY OF THE DEBTS HAS NOT BEEN PROVED. 2. THAT THE DISALLOWANCE OF RS.4,09,29,,605/- FOR BAD DEBTS ACTUALLY WRITTEN OFF DURING THE YEAR IS CONTRARY TO FACTS AND LAW AND IS BASED ON IGNORING OR NOT APPRECIATING THE FACTS, SUBMISSIONS, MATERIAL ON RECORD, CASE LAWS IN PAGE | 2 FAVOUR OF THE APPELLANT AND THE CIRCULAR OF THE CENTRAL BOARD OF DIRECT TAXES, NO.12/2016 DATED 30.05.2016 PLACED BEFORE HIM ON THE ISSUE INVOLVED. 3. THAT IN ANY CASE AND WITHOUT PREJUDICE TO OTHER GROUND THE DEDUCTION WAS LIABLE TO BE ALLOWED AS BUSINESS LOSS/EXPENSE U/S 28/37 OF THE I.T. ACT. THE DISALLOWANCE AS MADE AND AS SUSTAINED BY THE LD. CIT(A) IS LIABLE TO BE DELETED IN TOTO. DISALLOWANCE OF PRIOR PERIOD EXPENSES : 4. THAT THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF PRIOR PERIOD EXPENSES OF RS.69,72,728/-, WITHOUT CONSIDERING/APPRECIATING THAT THESE EXPENSES THOUGH PERTAINING TO THE PRECEDING YEAR THE LIABILITY TO PAY THE SAME CRYSTALLIZED IN THE CURRENT YEAR AND HENCE, THESE WERE ALLOWABLE IN THE PRESENT YEAR AS PER THE MERCANTILE SYSTEM OF ACCOUNTING REGULARLY FOLLOWED BY THE APPELLANT COMPANY. THE PROVISION OF SECTION 35D, ARE NOT AT ALL APPLICABLE IN THIS CASE. THE DISALLOWANCE IS LIABLE TO BE DELETED. DISALLOWAQNCE OF DEPRECIATION ON CERTAIN ASSETS RS.13.90.122/- 5. (I) THAT THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN NOT DECIDING THE ISSUE OF DEPRECIATION ALLOWABLE ON CERTAIN ASSETS ALREADY PUT TO USE BY WRONGLY STATING THAT THE CLAIM IS NO LONGER PRESSED BY THE APPELLANT. (II) THAT THE LD. CIT(A) SHOULD HAVE DECIDED AND ADJUDICATED UPON THE ISSUE ON THE FACTS AND LAW RELATING TO THE ISSUE. THERE WAS NO ISSUE OF COMMENCEMENT OF BUSINESS AS THE ASSESSEE IS IN THE THE BUSINESS OF MANUFACTURING AND SALE OF CEMENT FOR MANY YEARS. 6. THAT THE ORDER OF THE LD. CIT (A) IS AGAINST THE LAW AND FACTS OF THE CASE INVOLVED. 7. THAT THE GROUNDS OF APPEAL AS HEREIN ARE WITHOUT PREJUDICE TO EACH OTHER. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR FOREGO ANY GROUND BEFORE OR AT THE TIME OF HEARING. 3. IN ITA. NO. 3877/DEL/2018 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- DISALLOWANCE OF DEBENTURE REDEMPTION PREMIUM 1. THAT ON THE FACTS AND LAW THE LEARNED CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 16,92,59,920 ON ACCOUNT 'DEBENTURE REDEMPTION PREMIUM' WRONGLY TREATING THE SAME AS CAPITAL EXPENDITURE ON ISSUE OF PREFERENTIAL SHARE CAPITAL. 2. THE DISALLOWANCE AS AFORESAID IS CONTRARY TO FACTS AND LAW AND IS BASED ON IGNORING OR NOT APPRECIATING INTER-ALIA THE FOLLOWING: (I) THE APPELLANT RAISED WORKING CAPITAL LOAN OF RS.1000 CR. FOR PURPOSES OF PAGE | 3 ITS EXISTING BUSINESS BY ISSUING NON CONVERTIBLE DEBENTURES ('NCDS') REDEEMABLE IN TRANCHES AT A TOTAL PREMIUM OF RS.317 CR. AND NOT BY ISSUE OF ANY PREFERENCE SHARE CAPITAL. (II) THE PRO RATA REDEMPTION-PREMIUM FOR THE ASSESSMENT YEAR WORKED OUT TO RS.16,92,59,920/- WHICH WAS CLAIMED AS DEDUCTION IN COMPUTING THE TOTAL INCOME AND LIABLE TO BE ALLOWED AS SUCH AS PER THE APEX COURT DECISION IN MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD V. CIT 225 ITR 802 (S.C.) WHICH IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT. (III) THE REDEMPTION-PREMIUM REFERABLE TO THE SUBSEQUENT YEARS HAS BEEN ALLOWED BY THE ASSESSING OFFICER HIMSELF IN THOSE YEARS WITHOUT ANY DISALLOWANCE. (IV) THAT THE DISALLOWANCE OF THE AFORESAID DEBENTURE REDEMPTION PREMIUM IS CONTRARY TO THE FACTS AND LAW AND IS BASED ON IGNORING OR NOT APPRECIATING THE FACTS AND SUBMISSIONS ON RECORD AND CASE LAWS IN APPELLANT'S FAVOUR. THE ADDITION AS MADE AND AS SUSTAINED BY THE LD. CIT(A) IS LIABLE TO BE DELETED IN TOTO. DISALLOWANCE OF EXPENDITURE ON SALE OF SHARES IN COMPUTING THE CAPITAL GAIN 3. THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.34 42,43.579/- BEING EXPENDITURE INCURRED FOR THE SALE OF SHARES (OF THE SUBSIDIARY COMPANY JAYPEE INFRATECH LTD) (JIL) IN COMPUTING THE CAPITR 1 GAIN THEREFROM. 4. THE DISALLOWANCES AS AFORESAID IS CONTRARY TO FACTS AND LAW AND IS BASED ON IGNORING OR NOT APPRECIATING INTER-ALIA THE FOLLOWING FACTS BY THE LD. CIT(A). (I) THE SUBSIDIARY COMPANY MADE A PUBLIC ISSUE (IPO) OF 22.29 CR. SHARES OF WHICH 16.29 CR. WERE FRESH SHARES AND 6 CR. SHARES WERE OFFERED FOR SALE BY THE APPELLANT-HOLDING COMPANY UNDER 'OFFER FOR SALE SCHEME'. (II) AS PER THE RED HERRING PROSPECTUS THE PUBLIC ISSUE EXPENSES WERE TO BE SHARED BETWEEN THE SUBSIDIARY AND THE APPELLANT-HOLDING COMPANY IN PROPORTION TO THE NUMBER OF SHARES SOLD BY THEM RESPECTIVELY. (III) THE TOTAL PUBLIC-ISSUE EXPENDITURE OF RS.127.91 CRORES CAME TO RS. 5.74 PER SHARE AGAINST A SALE PRICE OF RS.102 PER SHARE. THE PRO RATA EXPENDITURE ALLOCABLE TO 6 CR. SHARES OF THE APPELLANT-HOLDING COMPANY CAME TO RS.34,42,43,579/- WHICH WAS CLAIMED BY THE APPELLANT AS DEDUCTION FROM THE GROSS SALE PRICE OF OVER RS. 600 CR. (IV) THE PRO RATA SHARING OF EXPENDITURE WAS A WRITTEN TERM OF THE RED HERRING PROSPECTUS AND WAS APPROVED BY THE BOARDS OF THE TWO COMPANIES. IT WAS ALSO DULY NOTIFIED TO THE SHAREHOLDERS, THE PUBLIC AND THE SEBI. 5. THE DISALLOWANCE OF EXPENDITURE IS CONTRARY TO FACTS AND LAW. THE EXPENDITURE INCURRED WAS WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH SALE AND LIABLE TO BE DEDUCTED FROM THE FULL VALUE OF CONSIDERATION ACCRUING AS A RESULT OF THE TRANSFER OF CAPITAL ASSET UNDER THE PROVISIONS OF SECTION 48 OF THE I.T. ACT FOR COMPUTING CAPITAL GAIN. PAGE | 4 ADDITION OF SHORT TERM CAPITAL GAIN ON ALLEGED TRANSFER OF LAND AS PART OF SLUMP SALE OF UNDERTAKING 6. THAT ON FACTS AND LAW, THE LD. CIT (APPEALS) ERRED IN DIRECTING AN ADDITION OF RS.4,62,50,000/- BY WAY OF SHORT TERM CAPITAL GAIN ON TRANSFER OF LAND UNDER THE SOYA PROCESSING UNIT, WHICH WAS SOLD AS 'SLUMP SALE'. 7. THE LD CIT(A) HAS FAILED TO APPRECIATE THAT NO SEPARATE CAPITAL GAIN ON THE TRANSFER OF LAND IN THIS CASE COULD BE SEPARATELY COMPUTED AS PER PROVISIONS OF SECTION 50B OF THE I.T. ACT. THE ADDITION AS MADE BY ENHANCEMENT OF ASSESSMENT U/S 251(2) OF THE I.T. ACT, IS ERRONEOUS AND UNSUSTAINABLE. 8. THE LD. CIT(A) WRONGLY APPLIED THE PROVISIONS OF SECTION 50C IN MAKING THE AFORESAID ADDITION OF RS.4,62,50,000/- AS NO L?ND OR BUILDING WAS SEPARATELY SOLD/TRANSFERRED IN THE PRESENT CASE AND THE LD. CIT(A) HAS HIMSELF NOT CONSIDERED THE STAMP DUTY VALUE OF THE LAND IN QUESTION BUT ARBITRARILY ESTIMATED THE FAIR MARKET VALUE OF THE SAME FOR MAKING THE ADDITION AS AFORESAID. 9. THE AFORESAID ESTIMATED ADDITION OF RS.4,62,50,000/- IS ARBITRARY, CONTRARY TO FACTS AND LAW, THE LEGAL PROVISION AND IS BASED ON INCORRECT AND ABSOLUTELY IRRELEVANT CONSIDERATIONS TO THE EXCLUSION OF FACTS, MATERIAL, EVIDENCE AND SUBMISSION ON RECORD AND IN ANY CASE HIGHLY EXCESSIVE. DISALLOWAQNCE OF DEPRECIATION ON CERTAIN ASSETS OF RS.83.61.727/- 10 (I) THAT THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN NOT DECIDING THE ISSUE OF DEPRECIATION ALLOWABLE ON CERTAIN ASSETS ALREADY PUT TO USE BY WRONGLY STATING THAT THE CLAIM IS NO LONGER PRESSED BY THE APPELLANT. (II) THAT THE LD. CIT(A) SHOULD HAVE DECIDED AND ADJUDICATED UPON THE ISSUE ON THE FACTS AND LAW RELATING TO THE ISSUE. THERE WAS NO ISSUE OF COMMENCEMENT OF BUSINESS AS THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND SALE OF CEMENT FOR MANY YEARS. 11. THAT THE ORDER OF THE LD. CIT (A) IS AGAINST THE LAW AND FACTS OF THE CASE INVOLVED. 12. THAT THE GROUNDS OF APPEAL AS HEREIN ARE WITHOUT PREJUDICE TO EACH OTHER. 13. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR FOREGO ANY GROUND BEFORE OR AT THE TIME OF HEARING. 4. IN ITA. NO. 3878/DEL/2018 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- DISALLOWAQNCE OF DEPRECIATION ON CERTAIN ASSETS RS.1.57.84.267/- 1. THAT THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN NOT DECIDING THE ISSUE OF DEPRECIATION ALLOWABLE ON CERTAIN ASSETS ALREADY PUT TO USE BY WRONGLY STATING THAT THE CLAIM IS NO LONGER PRESSED BY THE APPELLANT. PAGE | 5 2. THAT THE LD. CIT (A) SHOULD HAVE DECIDED AND ADJUDICATED UPON THE ISSUE ON THE FACTS AND LAW RELATING TO THE ISSUE. THERE WAS NO ISSUE OF COMMENCEMENT OF BUSINESS AS THE ASSESSEE IS IN THE THE BUSINESS OF MANUFACTURING AND SALE OF CEMENT FOR MANY YEARS. 3. THAT THE ORDER OF THE LD. CIT (A) IS AGAINST THE LAW AND FACTS OF THE CASE INVOLVED. 4. THAT THE GROUNDS OF APPEAL AS HEREIN ARE WITHOUT PREJUDICE TO EACH OTHER. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR FOREGO ANY GROUND BEFORE OR AT THE TIME OF HEARING. 5. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT ON THE GROUND THAT PAPER BOOK ARE TO BE FILED. ON EARLIER OCCASION ALSO ON 24 TH AUGUST, 2021 AT THE WRITTEN REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE THE CASE WAS ADJOURNED TO 21 ST OCTOBER, 2021 ON THE GROUND OF PREPARATION OF PAPER BOOK. 6. THE LD. [CIT] DR SUBMITTED THAT ABOVE COMPANY HAS BEEN REFERRED TO THE INSOLVENCY & BANKRUPTCY CODE, 2016. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 7. ON CAREFUL CONSIDERATION IT IS FOUND THAT THE ABOVE COMPANY HAS BEEN REFERRED FOR INITIATION OF CORPORATE INSOLVENCY PROCESS IN TERMS OF SECTION 14 OF THE INSOLVENCY & BANKRUPTCY CODE, 2016. THE NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI HAS REFERRED THIS COMPANY FOR INSOLVENCY PROCEEDINGS. THE PRESENT APPEALS ARE FOUND TO BE FILED BY SHRI SUNIL KUMAR SHARMA IN THE CAPACITY OF EXECUTIVE VICE CHAIRMAN OF THE APPELLANTS COMPANY. THE MOMENT IRP IS APPOINTED, THE BOARD OF THE COMPANY IS SUPER-CEDED. THEREFORE, THESE THREE APPEALS FILED BY THE EXECUTIVE VICE CHAIRMAN ARE NOT MAINTAINABLE. IN VIEW OF THIS, WE DISMISS ALL THE APPEALS FILED BY THE ASSESSEE COMPANY WITH A LIBERTY THAT AS SOON AS THE COMMITTEE OF CREDITORS IS BEING DECIDED TO PURSUE THESE MATTERS THEN THE IRP SHOULD FILE THESE APPEALS. IF IT IS SO DECIDED, THEN WE GIVE LIBERTY TO THE IRP EITHER TO MAKE AN APPLICATION FOR RECALL OF THIS COMMON ORDER BY FILING CORRECTED FORM NO. 36 OR TO FILE THE FRESH APPEALS WITH THE CONDONATION OF DELAY REQUEST. ACCORDINGLY, ALL THE THREE APPEALS FILED ARE DISMISSED. PAGE | 6 ORDER PRONOUNCED IN THE OPEN COURT ON : 21/10/2021. SD/- SD/- ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21/10/2021. *MEHTA* COPY FORWARDED TO 1. APPELLANT; 2. RESPONDENT 3. CIT 4. CIT (APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI D ATE OF DICTATION 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 1 . 1 0 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER