DCIT, CIRCLE- 11(1), NEW DELHI V. H & H REAL ESTATE PVT. LTD., NEW DELHI

ITA 388/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7356 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 12-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHARWAN KUMAR GOTRU SENIOR
• Keywords: Capital asset; Cost of acquisition; Set aside
• Section: 48; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.388/DEL./2018 (ASSESSMENT YEAR : 2009-10) DCIT, CIRCLE 11 (1), VS. M/S. H & H REAL ESTATE P VT. LTD., NEW DELHI. 74, HEMKUNT COLONY, DELHI 110 048. (PAN : AABCH6422M) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI SHARWAN KUMAR GOTRU,, SENIOR DR DATE OF HEARING : 18.08.2021 DATE OF ORDER : 18.08.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DCIT, CIRCLE 11 (1), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.10.2017 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-35, NEW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUNDS INTER ALIA T HAT :- WHETHER ON THE FATS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS NOT ERRED IN ALLOWING THE TRANS FER OF LAND AND BUILDING OF M/S. ADVANCED AUTOMATION AND PROCESS CO NTROL PVT. ITA NO.388/DEL./2018 2 LTD. IN THE GARB OF SALE OF SHARES AND TREAT IT AS LONG TERM CAPITAL GAIN. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE COMPANY IS E NGAGED IN THE BUSINESS OF REAL ESTATE. ORIGINAL ASSESSMENT IN TH IS CASE WAS FRAMED UNDER SECTION 143 (3) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AT TOTAL INCOME OF RS.12,98,09,100 /- ON 17.03.2011. THEREAFTER, ASSESSMENT WAS REOPENED U/ S 148 OF THE ACT AND ASSESSMENT WAS FRAMED U/S 147 READ WITH SEC TION 143 (3) OF THE ACT AT THE TOTAL INCOME OF RS.13,14,91,940/- . ASSESSEE COMPANY IS HOLDING 12.5% OF THE TOTAL SHAREHOLDINGS IN M/S. ADVANCED AUTOMATION AND PROCESS CONTROLS PRIVATE LT D. WHEREAS OTHER SHAREHOLDERS OF THE COMPANY ARE ASHOK KUMAR M UNJAL AND M/S. ANGEL INFRASTRUCTURE PVT. LTD. WHO ARE HAVING SHAREHOLDINGS TO THE TUNE OF 37.5% AND 50% RESPECTIVELY. DURING THE YEAR UNDER ASSESSMENT, ASSESSEE HAS TRANSFERRED ITS 12.5% SHAR ES TO A NEW SHAREHOLDER, HOWEVER NO ASSETS HELD BY THE COMPANY WAS TRANSFERRED BY THE ASSESSEE COMPANY. AO TREATED TH E TRANSFER OF SHARES TO BE TAXED AS LONG TERM CAPITAL GAIN HAVING BEEN HELD BY ASSESSEE FOR MORE THAN 2 YEARS U/S 2(42A) OF THE AC T AND THEREBY FRAMED THE ASSESSMENT AT TOTAL INCOME OF RS.13,14,9 1,940/-. ITA NO.388/DEL./2018 3 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS ALLOWED THE CLAIM OF THE ASSESSEE BY TREATING THE TRANSFER OF LAND AND BUILDING OF M/S. ADVANCE AUTOMATION AND PROCESS CONTROL PVT. LTD. AS LONG TE RM CAPITAL GAIN BY ALLOWING THE APPEAL. FEELING AGGRIEVED BY THE OR DER PASSED BY THE LD. CIT (A), THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE AND CONSEQUENTLY, WE PROCEED ED TO DECIDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. S ENIOR DEPARTMENTAL REPRESENTATIVE AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 5. WE HAVE HEARD THE LD. SENIOR DEPARTMENTAL REPRES ENTATIVE FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOC UMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES B ELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. LD. CIT (A) REVERSED THE FINDINGS RETURNED BY TH E AO THAT RECEIPT OF RS.17,82,71,004/- ON SALE OF SHARES OF M /S. ADVANCE AUTOMATION AND PROCESS CONTROL PVT. LTD. IS TAXABLE AS SHORT TERM CAPITAL GAIN BY TAXING THE SAME, BY RETURNING FOLLO WING FINDINGS :- 4.3.3. A PERUSAL OF THE SUBMISSIONS FILED REVEALS THAT THE APPELLANT IS HOLDING 12.5% SHARES OF THE TOTAL SHAR EHOLDINGS ITA NO.388/DEL./2018 4 OF THE COMPANY I.E. M/S. ADVANCE AUTOMATION & PROCE SS CONTROLS P LTD. THE OTHER SHAREHOLDERS ARE SH. ASHO K KUMAR MUNJAL, LUDHIANA (37.5%) AND M/S. ANGEL INFRASTRUCTURE P LTD, NEW DELHI (50%). THE CONTENTI ON OF THE APPELLANT THAT ANY ASSET HELD BY THE COMPANY IS A PROPERTY OF THE COMPANY AND NOT THE SHAREHOLDER/MEM BER IS CORRECT. THE APPELLANT HAD TRANSFERRED ITS 12.5% SH ARES TO A NEW SHAREHOLDER, HOWEVER NO ASSET HELD BY THE COMPA NY WAS TRANSFERRED BY THE APPELLANT COMPANY. THEREFORE THE TRANSFER OF 'SHARES' HELD BY THE APPELLANT BEING A SHAREHOLDER FOR MORE THAN TWO YEARS, BEING TREATED AS LONG TERM CAPITAL GAIN U/S 2( 42A) OF INCOME TAX ACT BY THE APPELLANT IS FOUND TO BE CORRECTLY DONE. THE APPELL ANT HAD NOT EXECUTED ANY TRANSFER DEED FOR LAND & BUILDING NOR ANY SUCH ASSET WAS APPEARING IN ITS AUDITED BALANCE SHE ET. THE TREATMENT OF HOLDING OF ASSETS FOR LONG TERM CAPITA L GAIN IS DIFFERENT FOR SHARES HELD OF A COMPANY AND OTHER AS SETS. THEREFORE, THE OBSERVATION OF THE AO THAT THE CAPIT AL GAIN ARISING IN THE HANDS OF THE TRANSFEROR (M/S H&H REA L ESTATE PRIVATE LIMITED IN THIS CASE) SHOULD BE TREA TED AS SHORT TERM CAPITAL GAIN(STCG) ON SALE OF PROPERTY I NSTEAD OF LONG TERM CAPITAL GAIN (LTCG) ON SALE OF SHARES AND TO BE TAXED AT 300/0, ON SALE OF SUCH UNDERLYING PROPE RTY FOR FULL VALUE OF CONSIDERATION OF RS. 17,82,71,004/- ( AFTER ALLOWING THE DEDUCTIONS U/S 48 OF THE ACT ( COST OF ACQUISITION + EXPENDITURE ON TRANSFER), IS NOT FOUN D TO BE TENABLE. THE APPEAL ON THIS GROUND IS ALLOWED. 7. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER HAS RELIED UPON THE FINDINGS RETURNED BY AO BUT FAILED TO POINT OUT ANY DISCREPANCY IN THE IMPUGNED FINDINGS RETURNED BY TH E LD. CIT (A). 8. WE HAVE PERUSED THE ORDER PASSED BY THE LD. CIT (A). LD. CIT (A) HAS RETURNED FACTUAL FINDINGS THAT SINCE TH E ASSESSEE COMPANY HAS NOT EXECUTED ANY TRANSFER DEED FOR LAND AND BUILDING NOR ANY SUCH ASSETS WAS APPEARING IN ITS AUDITED BA LANCE SHEET, THE ASSESSEE HAS RIGHTLY SHOWN THE SAME AS LONG TERM CA PITAL GAIN. ITA NO.388/DEL./2018 5 EVEN OTHERWISE, ASSETS OF THE COMPANY, NAMELY, M/S. ADVANCE AUTOMATION AND PROCESS CONTROL PVT. LTD. HAS NOT BE EN AFFECTED DUE TO CHANGE OF INDIVIDUAL SHARES. SO, FINDING NO ILLEGALITY OR INFIRMITY IN THE FINDINGS RETURNED BY THE LD. CIT(A ), PRESENT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF AUGUST, 2021 AFTER THE CONCLUSION OF THE HEARING. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 18 TH DAY OF AUGUST, 2021. TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-35, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.