ACIT 6(1), MUMBAI V. ASHOK M KURIEN, MUMBAI

ITA 398/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70937 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 11-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: RAJA B SINGH
• Keywords: Revised return
• Section: 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL I II I BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . . . ! ! ! ! , ' ' ' ' #$ #$ #$ #$ BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA, AM , AM , AM , AM ./ I.T I.TI.T I.T.A. NO. .A. NO. .A. NO. .A. NO. 398/MUM/2011 398/MUM/2011 398/MUM/2011 398/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR :2006-07) ACIT, CIR. 6(1) R. NO. 506, 5 TH FLOOR, AAYKAR BHAVAN, M. K. ROAD MUMBAI-400020 / VS. SHRI ASHOK M KURIEN 14, ASHUTOSH, 38-A, NAPEAN SEA ROAD, MUMBAI-400036 $' ' ./ ( ./ PAN/GIR NO. : AADPK4942J ( ') / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ') ') ') ') , , , , / APPELLANT BY : SHRI O. P. SINGH *+') *+') *+') *+') - -- - , , , , /RESPONDENT BY : SHRI RAJA B. SINGH - -- - .' .' .' .' / DATE OF HEARING : 28 TH AUGUST 2013 /0& /0& /0& /0& - -- -.' .' .' .' /DATE OF PRONOUNCEMENT: 4 TH SEPTEMBER 2013 #1 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 4.10.2010 OF COMMISSIONER OF INCOME TAX(APPEALS) FO R THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO CONSIDER CAPITAL GAINS (LOSS) OF RS. 22,67,562/- SU FFERED DURING THE PREVIOUS YEAR ON EXTINGUISHMENT OF RIGHT S IN RESPECT OF 24767 SHARES HELD BY HIM IN A DEFUNCT CO MPANY, NARANJA TECH LTD. ON ITS DISSOLUTION AND STRIKING O F ITS NAME, U/S 560(3) OF THE COMPANIES ACT EVEN WHEN THE RELIE F SO SOUGHT BY THE ASSESSEE WAS NOT VERIFIED DURING THE COURSE OF SCRUTINY PROCEEDINGS IN ABSENCE OF REVISED RETURN O F INCOME. ITA NO. 398/M/2011 ASHOK M KURIEN 2 RELIANCE IS PLACED IN THE CASE OF GOETZE INDIA LTD. VS. CIT 284 ITR. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO ALLOW EXEMPTION U/S 54F TO 7,33,82,992/- AGAINST THE CLAI M MADE IN RETURN OF INCOME AT RS. 6,59,44,053/- EVEN WHEN THE RELIEF SO SOUGHT BY THE ASSESSEE WAS NOT VERIFIED DURING T HE COURSE OF SCRUTINY PROCEEDINGS IN ABSENCE OF REVISED RETUR N OF INCOME. RELIANCE IS PLACED IN THE CASE OF GOETZE IN DIA LTD. VS. CIT 284 ITR. 3. THE ASSESSEE DERIVED INCOME FROM HOUSE PROPERTY, SALARY, LONG TERM CAPITAL GAIN, SHORT TERM CAPITAL GAIN AND INCO ME FROM OTHER SOURCES. DURING THE ASSESSMENT PROCEEDINGS THE ASSE SSEE SUBMITTED THAT IN THE RETURN OF INCOME THE ASSESSEE FAILED TO CONSIDER LONG TERM CAPITAL LOSS OF ` 22,67,562/- SUFFERED DUE TO EXTIN GUISHMENT OF RIGHTS IN RESPECT OF 24767 SHARES OF NARANJA TECH LTD. A DEFU NCT COMPANY. SINCE THIS HAS NOT BEEN CLAIMED IN THE RETURN OF INCOME T HE AO HAS NOT CONSIDERED THIS CLAIM. SIMILARLY, DURING THE ASSESS MENT PROCEEDINGS THE ASSESSEE ALSO CLAIMED THAT A MISTAKE HAS CREPT IN COMPUTATION OF CAPITAL GAINS IN THE RETURN OF INCOME REGARDING THE CLAIM OF EXEMPTION U/S 54F. THE AO AGAIN DID NOT CONSIDER THIS ENHANCE CLAIM OF THE ASSESSEE U/S 54F AS IT WAS NOT CLAIMED IN THE RETUR N OF INCOME. ON APPEAL, THE CIT(A) HAS ALLOWED BOTH THESE CLAIMS I. E. LOSS DUE TO EXTINGUISHMENT OF CLAIM OF RIGHTS IN SHARES OF DEFU NCT COMPANY AS WELL AS AN ENHANCEMENT CLAIM U/S 54F. 4. BEFORE US THE LD. DR HAS SUBMITTED THAT SINCE TH ESE CLAIMS WERE NOT PART OF THE RETURN OF INCOME AND THE AO HAD NO OCCASION TO ITA NO. 398/M/2011 ASHOK M KURIEN 3 EXAMINE THE SAME, THEREFORE, THE CIT(A) IS NOT JUST IFIED IN ALLOWING THE CLAIM OF THE ASSESSEE WITHOUT GIVING AN OPPORTUNITY TO THE AO TO VERIFY THE CORRECTNESS OF THE CLAIM. THE LD. DR HAS FURTHE R SUBMITTED THAT THE CLAIMS IN RESPECT OF LOSS ON ACCOUNT OF EXTINGUISHM ENT OF RIGHTS AS WELL AS MISTAKE IN AMOUNT OF EXEMPTION CLAIMED U/S 54F N EEDS INVESTIGATION OF FACTS AND WITHOUT SUCH INQUIRY THE SAME CANNOT BE ALLOWED. THUS, THE LD. DR HAS PLEADED THAT THE MATT ER REQUIRES A PROPER EXAMINATION AT LEVEL OF THE AO AND ACCORDING LY THE SAME MAY BE RESTORED TO THE RECORD OF THE AO. 5. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE VE HEMENTLY OBJECTED TO THE SUBMISSIONS OF THE LD. DR AND SUBMI TTED THAT THE CIT(A) HAS EXAMINED ALL THE FACTS AND RECORD RELEVA NT TO THE CLAIM OF THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE ASS ESSEE PRODUCED ALL RELEVANT RECORD BEFORE THE ASSESSING OFFICER AND TH E CIT(A) HAS GIVEN FINDING AFTER EXAMINATION OF THE RECORD AND AS SUCH THERE IS NO REQUIREMENT OF FURTHER INQUIRY OR EXAMINATION. HE H AS SUPPORTED THE ORDER OF THE CIT(A). THE LD. AR HAS ALSO RELIED UPO N THE DECISION OF HONBLE JURISDICTION HIGH COURT IN CASE OF CIT VS P RUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. 349 ITR 336 AS WELL AS DECIS ION OF THIS TRIBUNAL IN CASE OF GIVAUDAN FLAVOURS (INDIA) PVT. LTD. VS D CIT 56 SOT 105 AND SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS COVERED BY THE DECISIONS OF HONBLE JURISDICTION HIGH COURT AS WELL AS THIS TRI BUNAL. ITA NO. 398/M/2011 ASHOK M KURIEN 4 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CARE FULLY PERUSAL OF THE RECORD WE NOTE THAT UNDISPUTEDLY THE ASSESSEE D ID NOT CLAIM THE LOSS ON ACCOUNT OF EXTINGUISHMENT OF RIGHTS IN RESP ECT OF THE SHARES OF A DEFUNCT COMPANY NAMELY NARANJA TECH LTD. AS WELL AS THE CLAIM U/S 54F IN RESPECT OF CAPITAL GAIN ON SALE OF SHARES OF AMB IENCE PUBLICIS ADVERTISING PVT. LTD. THE CIT(A) HAS RECORDED THAT THE ASSESSEE MADE BOTH THESE CLAIMS DURING THE ASSESSMENT PROCEEDINGS HOWEVER THE AO HAS NOT CONSIDERED THE SAME. WE FIND THAT THE AO HA D THE REASON FOR NOT CONSIDERING THE CLAIM WHICH WERE NOT PART OF TH E RETURN OF INCOME OR REVISE RETURN OF INCOME BECAUSE THE JURISDICTION OF AO IS RESTRICTED TO CONSIDER THE INCOME AND CLAIMS AS PER THE RETURN OF INCOME OR REVISE RETURN OF INCOME. THERE IS NO QUARREL ON THE POINT THAT THE APPELLATE AUTHORITY CAN ENTERTAIN A FRESH CLAIM SO FAR AS IT DOES NOT REQUIRES ANY FRESH INVESTIGATION OF FACTS. THE CIT(A) HAS ALLOWE D THE CLAIM OF THE ASSESSEE BY ACCEPTING THE SUBMISSIONS. FROM THE FIN DINGS OF THE CIT(A), IT DOES NOT INDICATE THAT ANY INQUIRY REGAR DING THE CORRECTNESS OF THE CLAIM HAS BEEN CARRIED OUT. EVEN OTHERWISE W HEN THE ASSESSING OFFICER HAD NO OCCASION TO EXAMINE THE CLAIM OF THE ASSESSEE THEN BEFORE DECIDING THE CLAIM OF THE ASSESSEE, THE CIT( A) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE AO TO COMMENTS OR COUNT ER THE CLAIM OF THE ASSESSEE BY PRODUCING THE EVIDENCE OR OTHERWISE . 7. THERE IS NO FINDING BY THE CIT(A) WHETHER THE AM OUNT OF LOSS CLAIMED BY THE ASSESSEE ON ACCOUNT OF EXTINGUISHMEN T OF RIGHTS IN ITA NO. 398/M/2011 ASHOK M KURIEN 5 RESPECT OF THE SHARES OF A DEFUNCT COMPANY IS FACTU ALLY CORRECT. SIMILARLY WITH RESPECT TO THE EXEMPTION U/S 54F ON ACCOUNT OF THE CAPITAL GAIN ON SALE OF SHARES OF AMBIENCE PUBLICIS ADVERTISING PVT. LTD. INVESTED IN THE NEW ASSET, THE CIT(A) HAS AGAIN ALL OWED THE CLAIM OF THE ASSESSEE WITHOUT EXAMINATION OF THE CORRECTNESS OF THE CLAIM. THERE IS NO QUARREL AS FAR AS THE LEGAL ASPECT OF THE CLAIMS ARE CONCERNED BUT BEFORE ALLOWING THE CLAIM THE FACTUAL CORRECTNESS O F CLAIM HAS TO BE ASCERTAINED. IT IS APPARENT FROM THE FINDINGS OF TH E CIT(A) THAT WHILE ALLOWING THE CLAIM U/S 54F THE AMOUNT OF CAPITAL GA IN AND INVEST IN PURCHASE OF RESIDENTIAL HOUSE HAS BEEN TAKEN INTO C ONSIDERATION WITHOUT CONSIDERING THE TOTAL SALE CONSIDERATION AN D PROPORTION OF THE SALE CONSIDERATION INVESTED IN THE HOUSE PROPERTY. THE EXEMPTION U/S 54F IS AVAILABLE IN RESPECT OF CAPITAL GAIN IN PROP ORTION OF THE COST OF NEW ASSET BEARS TO THE NET CONSIDERATION OF TRANSFE R/SALE OF ASSET GIVING RISE TO THE CAPITAL GAIN. IT IS CLEAR FROM THE DETA ILS RECORDED BY THE CIT(A) THAT EVEN ONLY A PART OF CAPITAL GAIN HAS BE EN INVESTED IN THE NEW ASSET WHICH HAS BEEN FULLY ALLOW WITHOUT CONSID ERING THE PROPORTION OF THE NET CONSIDERATION/SALE PROCEED TO THE INVESTMENT IN THE NEW ASSET. THEREFORE, IN THE FACTS AND CIRCUMST ANCES OF THE CASE WE ARE OF THE VIEW THAT THE CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM WITHOUT GIVING AN OPPORTUNITY TO THE AO TO EXAMINE THE CORRECTNESS OF THE CLAIMS. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE MATTER TO THE RECORD OF THE ASSESSING OF FICER TO CONSIDER ITA NO. 398/M/2011 ASHOK M KURIEN 6 AND DECIDE BOTH FRESH CLAIMS OF THE ASSESSEE AS PER LAW. NEEDLESS TO SAY THE ASSESSEE BE GIVE AN APPROPRIATE OPPORTUNITY OF HEARING. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF SEPTEMBER 2013 SD/- SD/- ( . . ! ) ' #$ (N. K. BILLAIYA) ACCOUNTANT MEMBER ( ) % #$ (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 4 TH SEPTEMBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI