JCIT (OSD), CHENNAI V. Shri Vimala devi Koneru, CHENNAI

ITA 434/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61316 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 29-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB IRS
• Assessee Lawyers: N DEVANATHAN; B S PURUSHOTHAM
• Keywords: Capital asset; Revision of order; Share purchase agreement
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER SL.NO. ITA NO. A.Y. ASSESSEE RESPONDENT 1. 43/MDS/2011 2008-09 M/S. TRIMEX ORES PVT. LTD., C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AACCT1264G THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 2. 44/MDS/2011 2008-09 M/S. SPHERA INVESTMENTS PVT. LTD., C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AAGCS0799H THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 3. 45/MDS/2011 2008-09 PRADEEP KONERU, C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AGCPK6832A THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. - - ITA 43 TO 48/11 E TC. 2 4. 46/MDS/2011 2008-09 VIMALADEVI KONERU, C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN ABTPV7239E THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 5. 47/MDS/2011 2008-09 PRASHANT KONERU, C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AAKPK9513E THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 6. 48/MDS/2011 2008-09 MADHU KONERU, C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN- AFDPM4138H THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. AND SL.NO. ITA NO. A.Y. ASSESSEE RESPONDENT 1. 433/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME-TAX (OSD), CENTRAL CIRCLE- IV(3) CHENNAI. MADHU KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI. - - ITA 43 TO 48/11 E TC. 3 2. 434/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. VIMALADEVI KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI-28. 3. 435/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. PRASHANT KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI-28. 4. 436/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. M/S. TRIMEX ORES PVT. LTD., NO.8-2- 293/82/A/105/F- 1, ROAD NO.45, JUBILEE HILLS, HYDERABAD- 500 033. 5. 437/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. M/S. SPHERA INVESTMENTS PVT. LTD., NO.1, SUBBARAO AVENUE, C.P.RAMASAMY ROAD, ALWARPET, CHENNAI-18. 6. 438/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. SHRI PRADEEP KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI-28. ASSESSEES BY : SHRI N.DEVAN ATHAN, ADVOCATE AND SHRI B.S.PURUSHOTHAM, FCA DEPARTMENT BY : SHRI SHAJI P. JACOB , IRS, ADDL. CIT. DATE OF HEARING : 18 TH JULY, 2012 DATE OF PRONOUNCEMENT : 24 TH JULY, 2012 - - ITA 43 TO 48/11 E TC. 4 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THIS IS A BUNCH OF 12 APPEALS. THE ASSESSEES HAV E FILED SIX APPEALS AND THE REVENUE HAS FILED ANOTHER SIX A PPEALS. 2. ALL THE SIX APPEALS FILED BY THE ASSESSEES RELAT E TO THE SAME ASSESSMENT YEAR 2008-09. THESE APPEALS ARE DI RECTED AGAINST THE REVISION ORDERS PASSED BY THE COMMISSIO NER OF INCOME-TAX, CENTRAL-I AT CHENNAI. THE REVISION ORD ERS HAVE BEEN PASSED UNDER SEC.263 OF THE INCOME-TAX ACT, 1961 TH ROUGH HIS PROCEEDINGS DATED 21.12.2010 AND 22.12.2010. THE R EVISION ORDERS HAVE BEEN PASSED IN THE CONTEXT OF ASSESSMEN T ORDERS DATED 31.12.2009 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 3. THE NEXT SET OF SIX APPEALS FILED BY THE REVEN UE RELATE TO THE ASSESSMENT YEAR 2007-08. THE APPEALS ARE DI RECTED AGAINST THE ORDERS PASSED BY THE COMMISSIONER OF IN COME- TAX(APPEALS) I AT CHENNAI ON 2.12.2011. THE APPEA LS ARISE OUT OF THE RESPECTIVE ASSESSMENTS COMPLETED UNDER SEC.1 43(3) READ WITH SEC.153A OF THE INCOME-TAX ACT, 1961. - - ITA 43 TO 48/11 E TC. 5 4. FIRST WE WILL CONSIDER THE APPEALS FILED BY THE REVENUE. THE ASSESSEES ARE THE PROMOTER SHAREHOLDERS OF M/S. CYBER HILLS DEVELOPERS(CHD). THEY BELONG TO M/S. EMMAR M GF OF KONERU GROUP OF CONCERNS. 5. THE PROMOTER SHAREHOLDERS (ASSEESSEES IN THESE CASES) OF CHD ENTERED INTO AN AGREEMENT ON 24.4.2006 FOR T RANSFER OF ALL SHARE HOLDINGS TO M/S. WINSOME ENTERTAINMENT AN D TOURISM PVT. LTD. (WET). THE CONSIDERATION WAS STATED AT ` 32,99,31,547/-. CHD RECEIVED AN AMOUNT OF ` 27,99,31,547/- FROM THE ABOVE SAID CONSIDERATION IN THE PREVIOUS Y EAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR 2007-08. 6. AS PER THE AGREEMENT, 50% OF THE SHAREHOLDINGS H AD TO BE TRANSFERRED TO WET IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 ITSELF. ACCORDINGLY, THE P ROMOTER ASSESSEES HAVE TRANSFERRED 50% OF THE SHARE HOLDING S TO WET IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER APPEAL. THE PROPORTIONATE BALANCE AMOUNT WAS TREATED BY THE ASSESSEES AS ADVANCE RECEIVED FROM WET. AS ALREADY STATED, T HE PROMOTER ASSESSEES HAVE RECEIVED ONLY ` 27,99,31,547/- IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR, THE BALANCE OF - - ITA 43 TO 48/11 E TC. 6 ` 5 CRORES TO BE PAID BY WET TO THE PROMOTER ASSESSE ES ON FULFILLING CERTAIN CONDITIONS STATED IN THE AGREEME NT AND WHEN THE BALANCE 50% OF THE SHARES ARE TRANSFERRED. THE CON DITIONS ARE THAT THE PROMOTER ASSESSEES SHOULD OBTAIN THE APPRO VAL FOR THE BUILDING PLANS AND OTHER CONNECTED STRUCTURES AND T HE PROMOTERS SHOULD MAKE ARRANGEMENT WITH LARSON & TOUBRO (L&T) FOR UNDERTAKING THE CONSTRUCTION AND DEVELOPMENT OF THE PROPOSED HOTELS AND ALSO THE PROMOTERS SHOULD SEE THAT THE C ONVEYANCE DEEDS RELATING TO ALL RIGHTS, TITLE AND INTEREST IN THE LAND AND BUILDINGS OF CHD ARE EXECUTED. 7. IN THE ABOVE BACKGROUND OF FACTS, THERE WAS A SE ARCH UNDER SEC.132 ON 12.9.2007. IN THE COURSE OF SEARC H ACTION, CERTAIN STATEMENTS, SHARE PURCHASE AGREEMENTS ETC. RELATING TO THE ABOVE SAID TRANSFER OF SHARES WERE FOUND AND SE IZED BY THE OFFICERS. IN THE COURSE OF SEARCH, WHEN THESE MATT ERS WERE PLACED BEFORE THE PROMOTER ASSESSEES, THEY AGREED T O OFFER CAPITAL GAINS ARISING ON TRANSFER OF SHARES FOR TAX ATION IN TWO ASSESSMENT YEARS. THEY AGREED TO OFFER LONG TERM CAPITAL GAINS FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. IT W AS ALWAYS THE ARGUMENT OF THE ASSESSEES THAT ONLY 50% OF THE SAID CONSIDERATION RELATED TO TRANSFER OF SHARES MADE IN THE PREVIOUS - - ITA 43 TO 48/11 E TC. 7 YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 AND TH EREFORE, CAPITAL GAINS NEEDS TO BE COMPUTED ONLY WITH REFERE NCE TO THAT 50% OF THE SALE CONSIDERATION AND THE BALANCE AMOUN T HAD TO BE TREATED AS ADVANCE. ACCORDING TO THE ASSESSEES, FI NAL PERFORMANCE OF THE AGREEMENT WAS MADE IN THE PREVIO US YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10 AND, THEREF ORE, TILL THEN THE BALANCE AMOUNT SHOULD HAVE BEEN TREATED AS ADVA NCE RECEIVED. BUT IN SPITE OF SUCH FACTUAL ARGUMENT, I N THE COURSE OF SEARCH PROCEEDINGS, THE ASSESSEES AGREED THAT THEY WILL OFFER THE CAPITAL GAINS FOR TAXATION FOR THE TWO ASSESSMENT Y EARS 2007-08 AND 2008-09. 8. IN THE RETURNS FILED BY THE ASSESSEES, THEY STOO D BY THE ADMISSION MADE AT THE TIME OF SEARCH AND OFFERED TH E CAPITAL GAINS ARISING OUT OF THE TRANSFER OF SHARES OF CHD IN TWO ASSESSMENT YEARS 2007-08 AND 2008-09. 9. BUT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT THE ENTIRE CAPITAL GAIN S ARISING OUT OF THE SALE AND TRANSFER OF THE SHARES OF CHD MUST BE TAXED IN THE ASSESSMENT YEAR 2007-08 ITSELF AND THE ASSESSEES AR E NOT JUSTIFIED IN DIVIDING THE LONG TERM CAPITAL GAINS B ETWEEN TWO - - ITA 43 TO 48/11 E TC. 8 ASSESSMENT YEARS 2007-08 AND 2008-09. THE ASSESSIN G OFFICER HELD THAT THE TRANSFER OF SHARES IN FACT REPRESENTE D SALE AND TRANSFER OF LAND SITUATED IN HYDERABAD. THE CAPITA L ASSET TRANSFERRED BY THE ASSESSEES WAS THE LAND AND THE S HARES WERE ONLY REPRESENTING THAT CAPITAL ASSET IN THE NATURE OF LAND. THE ASSESSING OFFICER HELD THAT THE LAND IS QUALIFIED A S IMMOVABLE PROPERTY WITHIN THE MEANING OF SEC.269UA. THE ASSE SSING OFFICER HELD THAT THE TRANSFER WAS COMPLETE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 IN VIEW OF THE PROVISIONS OF SEC.53A OF THE TRANSFER OF PROPERTY A CT. THE POSSESSION OF THE IMMOVABLE PROPERTY HAS BEEN TRANS FERRED TO WET AND LION SHARE OF THE CONSIDERATION WAS ALREADY PAID AND THEREFORE, WET HAS BECOME THE DE FACTO OWNER OF THE PROPERTY AND BUT FOR THE TECHNICALITY OF THE REGISTRATION AN D CONVEYANCE, AS SUCH, THE ENTIRE SALE WAS CONCLUDED IN THE IMPUG NED PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 ITSELF AND CONSEQUENTLY THE ENTIRE CAPITAL GAINS SHOULD BE TAX ED IN THE IMPUGNED ASSESSMENT YEAR 2007-08. THE ASSESSING OF FICER PROCEEDED ACCORDINGLY AND TAXED THE ENTIRE LONG TER M CAPITAL GAINS IN THIS IMPUGNED ASSESSMENT YEAR. THIS WAS T AKEN IN FIRST APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX(APPEAL S). THE - - ITA 43 TO 48/11 E TC. 9 COMMISSIONER OF INCOME-TAX(APPEALS) AFTER GOING THR OUGH THE TERMS AND CONDITIONS OF THE AGREEMENT AND OTHER SUR ROUNDING FACTS OF THE CASES, CAME TO THE CONCLUSION THAT THE LAND AND PROPERTY WAS NEITHER TRANSFERRED NOR POSSESSION WAS GIVEN BY CHD TO WET IN THE PREVIOUS YEAR ESPECIALLY, IN VIEW OF THE FACT THAT CHD ITSELF WAS NOT IN POSSESSION OF THE LAND A ND NO REGISTERED SALE DEED WAS EXECUTED BY L & T IN FAVOU R OF CHD. THE SEQUENCE OF THE ARRANGEMENT WAS THAT ANDHRA PRA DESH INDUSTRIAL INFRASTRUCTURE CORPORATION LTD. WOULD AL LOT THE LAND TO L&T AND THEREAFTER L&T WOULD TRANSFER THE PROPERTY TO CHD AND THE PROPERTY AND RIGHTS SHALL THEREAFTER PASS ON TO THE HANDS OF WET AS A CONSEQUENCE OF TRANSFER OF SHARES OF CHD B Y ITS PROMOTER ASSESSEES. THE FACT WAS THAT THE LAND AND PROPERTY WAS NOT CONVEYED BY ANDHRA PRADESH INDUSTRIAL INFRA STRUCTURE CORPORATION LTD. TO L&T AND NATURALLY L&T HAS NOT EXECUTED ANY SALE DEED IN FAVOUR OF CHD AND AS SUCH, THERE CANNO T BE A CASE THAT WET WAS IN POSSESSION OF THE LAND. IN THE LIG HT OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSION ER OF INCOME-TAX(APPEALS) HELD THAT WHAT WAS SOLD BY THE ASSESSEES WERE ONLY SHARES AND NOT IMMOVABLE PROPERTY. HE HE LD THAT THE ASSUMPTION OF THE ASSESSING OFFICER THAT UNDERLYING ASSET IS AN - - ITA 43 TO 48/11 E TC. 10 IMMOVABLE PROPERTY AND THE PART PERFORMANCE OF THE CONTRACT AMOUNTS TO TRANSFER UNDER SEC.2(47) IS NOT VALID BE CAUSE CHD WAS TO GET THE LAND FROM L&T INFOCITY FOR THE PURPO SE OF CREATING INFRASTRUCTURE AND THE LAND WAS YET TO BE CONVEYED TO CHD. HE OBSERVED THAT SEC.53A OF TRANSFER OF PROPERTY ACT A PPLIES IN A CASE WHERE THE IMMOVABLE PROPERTY IS OWNED BY THE T RANSFEROR AND POSSESSION IS HANDED OVER TO THE TRANSFEREE. I N THE PRESENT CASE, CHD WAS NOT IN POSSESSION OF THE LAND AND THE Y WERE EXERCISING ONLY TECHNICAL POSSESSION FOR THE PURPOS E OF DEVELOPING THE PROPERTY AND IN SUCH CIRCUMSTANCES, THERE CANNOT BE A CASE THAT THE POSSESSION HAS BEEN GIVEN TO WET . HE HELD ACCORDINGLY, THAT THE CAPITAL GAINS NEED TO BE CONS IDERED IN PROPORTION TO THE SALE OF SHARES MADE BY THE PROMOT ER ASSESSEEES. HE FOUND THAT ONLY 50% SHARES WERE SOL D IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. ACCORDINGLY, HE DELETED THE EXCESS CAPITAL GAINS CO NSIDERED BY THE ASSESSING AUTHORITY IN THE HANDS OF THE ASSESSE ES. HE CONFIRMED THAT THE ASSESSEES WERE RIGHT IN OFFERING CAPITAL GAINS WITH REFERENCE TO THE SALE OF 50% OF SHARE HOLDINGS IN CHD. 10. REVENUE IS AGGRIEVED AND, THEREFORE, THESE APPE ALS BEFORE US. OBVIOUSLY, GROUNDS RAISED IN ALL THESE APPEALS ARE - - ITA 43 TO 48/11 E TC. 11 COMMON. THE GROUND IS THAT THE COMMISSIONER OF INC OME- TAX(APPEALS) HAS FAILED TO NOTE THAT THE TRANSACTIO NS RELATING TO SALE OF SHARES WERE LINKED WITH TRANSFER OF IMMOVAB LE PROPERTY HELD BY THE COMPANY AND HENCE SEC.2(47) IS RELEVANT IN THESE CASES. IT IS ALSO THE CASE OF THE REVENUE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS FAILED TO NOTE THAT THE ASSESSEES HAD RECEIVED NEARLY 90% OF SALE CONSIDERATION IN THIS A SSESSMENT YEAR ITSELF AND THERE IS NO CASE FOR TREATING SOME PORTION OF THE AMOUNT AS ADVANCE AND, THEREFORE, THE ASSESSING OFF ICER WAS JUSTIFIED IN TREATING THE ENTIRE AMOUNT OF CAPITAL GAINS TAXABLE FOR THE IMPUGNED ASSESSMENT YEAR 2007-08. 11. WE HEARD SHRI SHAJI P. JACOB, THE LEARNED COMMI SSIONER APPEARING FOR THE REVENUE AND SHRI N. DEVANATHAN, T HE LEARNED COUNSEL ALONG WITH B.S.PURUSHOTHAM, THE LEARNED CHA RTERED ACCOUNTANT APPEARING FOR THE ASSESSEES. 12. THE LEARNED COMMISSIONER APPEARING FOR THE REVE NUE, IN ADDITION TO VARIOUS CASE LAWS RELIED ON BY HIM, ALS O MADE REFERENCE TO THE AMENDMENTS IN SEC.2, BROUGHT IN BY THE FINANCE ACT, 2012. THE FINANCE ACT, 2012 HAS INSERTED EXPL ANATION 2 TO SEC.2 WHICH CLARIFIES THAT TRANSFER INCLUDES AND SHALL BE DEEMED TO HAVE ALWAYS INCLUDED DISPOSING OF OR PARTING WIT H AN ASSET OR - - ITA 43 TO 48/11 E TC. 12 ANY INTEREST THEREIN, OR CREATING ANY INTEREST IN A NY ASSET IN ANY MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTE LY OR CONDITIONALLY, VOLUNTARILY OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENTERED INTO IN INDIA OR OUTSIDE INDIA) OR OTHERWISE, NOTWITHSTANDING THAT SUCH TRANSFER OF RIGHTS HAS BE EN CHARACTERIZED AS BEING EFFECTED OR DEPENDENT UPON O R FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPANY REGISTERED OR INCORPORATED OUTSIDE INDIA. 13. THE ABOVE EXPLANATION MAY NOT DIRECTLY APPLY TO THE PRESENT CASES, AS THE COMPANY IS NOT REGISTERED OR INCORPORATED OUTSIDE INDIA. SECONDLY, THE EXPLANATION SWINGS IN TO ACTION IN A SITUATION WHERE IN SPITE OF TRANSFER OF ASSETS THEY TRANSFERRED THE SHARES AND THE PARTIES ARE NOT ACCOUNTING FOR THE C APITAL GAINS ARISING OUT OF THE TRANSFER OF THE ASSETS AND THE P ROPERTIES REPRESENTED BY THE SHARES. BUT THE PRESENT CASE IS DIFFERENT. THE ASSESSEES ARE OFFERING LONG TERM CAPITAL GAINS ARISING IN THEIR HANDS ON TRANSFER OF SHARES. THE ONLY DISPUT E IS WHETHER THE CAPITAL GAINS SHOULD BE TAXED AS A WHOLE IN ONE ASSESSMENT YEAR 2007-08 OR THE CAPITAL GAINS SHOULD BE BIFURCA TED AND ASSESSED TO TAX FOR TWO ASSESSMENT YEARS 2007-08 AN D 2008-09. - - ITA 43 TO 48/11 E TC. 13 THEREFORE, WE ARE OF THE VIEW THAT THE NEWLY BROUGH T IN EXPLANATION IS NOT APPLICABLE TO THE PRESENT CASES IN HAND. 14. NOW COMING BACK TO THE FACTS OF THE CASES, IT I S TO BE SEEN THAT THE PARTIES HAVE ENTERED INTO A COMPREHEN SIVE AGREEMENT. THE SEQUENCE OF EVENTS IS TO BE TAKEN N OTE OF AS A TOTAL PACKAGE FOR TRANSACTIONS. THE ASSESSEES ARE THE PROMOTER SHARE HOLDERS OF CHD AND THE PROPERTY RIGHTS AND OT HER PRIVILEGES ATTACHED TO THE SHARES OF THE CHD. THEY HAVE NOT TAKEN A FINAL SHAPE IN THE RELEVANT YEAR PREVIOUS T O THE ASSESSMENT YEAR 2007-08. THE ASSETS, RIGHTS AND PR IVILEGES OF THE PROPERTY ULTIMATELY BEING TRANSFERRED THROUGH T HE SALE OF SHARES WOULD BE TAKING A FINAL SHAPE ONLY IN THE P REVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10. IT IS IN ANTICIPATION OF THE FULFILLMENT OF ALL THESE EFFORTS THAT THE ASSES SEES HAVE ENTERED INTO AN AGREEMENT WITH WET AS A BUSINESS PROPOSITIO N. THE AGREEMENT IS NOT AN AGREEMENT FOR SALE SIMPLICITOR. IT IS A COMPREHENSIVE BUSINESS DEAL. THE COMPANY, CHD HAD TO BE CONVEYED WITH THE RIGHT OVER THE PROPERTY BY L&T AS AND WHEN L&T GETS THE DOCUMENTS READY TO EXECUTE THE CONVEYA NCE IN FAVOUR OF CHD. IT IS ONLY THEREAFTER CHD COULD HA VE TRANSFERRED THE LAND AND PROPERTY TO WET. AS ALREADY MENTIONED BY THE - - ITA 43 TO 48/11 E TC. 14 COMMISSIONER OF INCOME-TAX(APPEALS) IN HIS ORDER, S O MANY CONDITIONS ARE TO BE FULFILLED BY CHD BEFORE CLOSIN G THE AGREEMENT. THE TECHNICAL POSSESSION ENJOYED BY CHD OVER THE LAND WAS FOR INITIATING PRELIMINARY OPERATIONS FOR CONSTRUCTING THE PROPOSED BUILDINGS AND STRUCTURES. WHEN ALL THESE FACTS AND CIRCUMSTANCES ARE TAKEN INTO CONSIDERATION, IT IS N OT POSSIBLE TO HOLD A VIEW THAT THE ENTIRE LAND AND PROPERTY WAS T RANSFERRED BY CHD TO WET IN THE PREVIOUS YEAR RELEVANT TO THE ASS ESSMENT YEAR 2007-08. AS ALREADY HELD BY THE COMMISSIONER OF INCOME- TAX(APPEALS), ONLY 50% SHARES OF CHD WERE SOLD BY T HE ASSESSEES TO WET. THE CAPITAL GAINS ARISING OUT OF THE TRANSFER OF BALANCE SHARES HAVE ALSO BEEN OFFERED BY THE ASS ESSEES FOR THE FOLLOWING ASSESSMENT YEAR 2008-09. THEREFORE, IN THESE CIRCUMSTANCES IT IS NOT PROPER ON THE PART OF THE A SSESSING OFFICER TO TREAT THAT THE ENTIRE TRANSACTION WAS CO MPLETE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007- 08 ITSELF. TRANSFER OF ENTIRE LAND AND PROPERTY IN FACT, DID T AKE PLACE ONLY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 009-10 WHEN THE ENTIRE SHARES HAVE ALREADY BEEN SOLD TO WET. 15. AS A MATTER OF FACT, IT IS ALWAYS TRUE THAT A S HARE HAVING A STAND IN THE MARKET WILL ALWAYS REPRESENT SOME ASSE TS. IT IS THE - - ITA 43 TO 48/11 E TC. 15 VALUE OF THE ASSETS, RIGHTS AND SUCH OTHER PRIVILEG ES THAT WILL ULTIMATELY DECIDE THE MARKET VALUE OF A SHARE. A D OUBT ARISES ONLY IN CASES WHERE ASSETS AND PROPERTIES ARE TRANS FERRED BY PARTIES IN THE FORM OF SHARE TRANSFER BY TREATING A SSETS AND PROPERTIES DIFFERENT FROM SHARES TO AVOID PAYMENT O F TAXES. EVEN THE EXPLANATION 2 BROUGHT IN BY THE FINANCE ACT, 20 12 IS TO HANDLE SUCH SITUATION. IN SUCH CASES, TRANSFER OF ASSETS ARE COLOURED AS TRANSFER OF SHARES FOR EVADING PAYMENT OF TAX. IN THE PRESENT CASE, THERE IS ATTEMPT TO EVADE PAYMENT OF TAXES, AS THE ASSESSEES HAVE ALREADY OFFERED CAPITAL GAINS FOR TA XATION IN TWO ASSESSMENT YEARS 2007-08 AND 2008-09. 16. IN THE FACTS AND CIRCUMSTANCES OF THE CASES, WE AGREE WITH THE COMMISSIONER OF INCOME-TAX(APPEALS) THAT T HE ASSESSEES HAVE TRANSFERRED ONLY 50% SHARES DURING T HE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR AND, THEREFORE, THAT PROPORTIONATE CAPITAL GAINS ALONE COULD BE BRO UGHT TO TAX FOR THE ASSESSMENT YEAR 2007-08. THE ORDERS OF THE COM MISSIONER OF INCOME-TAX(APPEALS) ARE UPHELD. 17. THE REVENUE FAILS IN THE APPEALS FILED BY THEM. - - ITA 43 TO 48/11 E TC. 16 18. NEXT, WE WILL CONSIDER THE APPEALS FILED BY THE ASSESSEES. AS ALREADY STATED, THE ASSESSEES HAVE FILED THE APP EALS AGAINST THE REVISION ORDERS PASSED BY THE COMMISSIONER OF I NCOME-TAX. ON EXAMINING THE RECORDS OF THE CASE, THE COMMISSIO NER OF INCOME-TAX FOUND THAT THE ENTIRE CAPITAL GAINS WERE BROUGHT TO TAX BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 20 07-08 AND AS SUCH, HE HAS REDUCED THE PROPORTIONATE AMOUNT OF CAPITAL GAINS FOR THE ASSESSMENT YEAR 2008-09. HE WAS OF T HE OPINION THAT THE ASSESSING OFFICER OUGHT TO HAVE MADE PROTE CTIVE ASSESSMENTS IN THE HANDS OF THE ASSESSEES FOR THE A SSESSMENT YEAR 2008-09 FOR THAT REMAINING PART OF LONG TERM C APITAL GAINS. IT IS IN THE ABOVE BACKGROUND THAT HE HAS PASSED THE R EVISION ORDERS. 19. NOW, WHILE CONFIRMING THE ORDERS OF THE COMMISS IONER OF INCOME-TAX(APPEALS) FOR THE ASSESSMENT YEAR 2007-0 8, WE HAVE HELD THAT THE CAPITAL GAINS HAVE TO BE ASSESSED FOR THE TWO ASSESSMENT YEARS 2007-08 AND 2008-09. WHEN THAT IS THE POSITION, THERE IS NO NECESSITY OF MAKING PROTECTIV E ASSESSMENTS ON THAT GROUND FOR THE ASSESSMENT YEAR 2008-09. TH EREFORE, WE FIND THAT THE REVISION ORDERS PASSED BY THE COMMISS IONER OF - - ITA 43 TO 48/11 E TC. 17 INCOME-TAX HAVE BECOME INFRUCTUOUS. THE ORDERS ARE THEREFORE, SET ASIDE. 20. IN RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THE APPEALS FILED BY THE ASSESSEES ARE ALLOWED. ORDERS PRONOUNCED ON TUESDAY, THE 24 TH OF JULY, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 24 TH JULY, 2012. MPO* COPY TO: 1. ASSESSEE 2. DEPARTMENT 3. CIT 4. CIT(A) 5. DR 6. GF. IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER SL.NO. ITA NO. A.Y. ASSESSEE RESPONDENT 1. 43/MDS/2011 2008-09 M/S. TRIMEX ORES PVT. LTD., C/O B.PURUSHOTTAM & CO., 3-D, THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. - - ITA 43 TO 48/11 E TC. 18 MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AACCT1264G 2. 44/MDS/2011 2008-09 M/S. SPHERA INVESTMENTS PVT. LTD., C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AAGCS0799H THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 3. 45/MDS/2011 2008-09 PRADEEP KONERU, C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AGCPK6832A THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 4. 46/MDS/2011 2008-09 VIMALADEVI KONERU, C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN ABTPV7239E THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 5. 47/MDS/2011 2008-09 PRASHANT KONERU, C/O THE ASSISTANT COMMISSIONER - - ITA 43 TO 48/11 E TC. 19 B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN AAKPK9513E OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. 6. 48/MDS/2011 2008-09 MADHU KONERU, C/O B.PURUSHOTTAM & CO., 3-D, MANDIRA APARTMENTS, 23/A, NORTH BOAG ROAD, T.NAGAR, CHENNAI -17. PAN- AFDPM4138H THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- IV(3),CHENNAI. AND SL.NO. ITA NO. A.Y. ASSESSEE RESPONDENT 1. 433/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME-TAX (OSD), CENTRAL CIRCLE- IV(3) CHENNAI. MADHU KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI. 2. 434/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. VIMALADEVI KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI-28. 3. 435/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. PRASHANT KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI-28. - - ITA 43 TO 48/11 E TC. 20 4. 436/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. M/S. TRIMEX ORES PVT. LTD., NO.8-2- 293/82/A/105/F- 1, ROAD NO.45, JUBILEE HILLS, HYDERABAD- 500 033. 5. 437/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. M/S. SPHERA INVESTMENTS PVT. LTD., NO.1, SUBBARAO AVENUE, C.P.RAMASAMY ROAD, ALWARPET, CHENNAI-18. 6. 438/MDS/2012 2007-08 THE JOINT COMMISSIONER OF INCOME- TAX(OSD), CENTRAL CIRCLE- IV(3), CHENNAI. SHRI PRADEEP KONERU, NO.10, CRESENT AVENUE, KESAVAPERUMAL PURAM, CHENNAI-28. CORRIGENDUM THIS CORRIGENDUM IS ISSUED TO SET RIGHT CERTAIN E RRORS REFLECTED IN THE COMMON ORDER PASSED BY THE TRIBUNA L IN THESE APPEALS ON 24 TH JULY, 2012. THE ANOMALY IS SEEN CREPT INTO THE END-PORTION OF THE COMMON ORDER, WHERE THE RESULT O F THE APPEALS ARE DECLARED. 2. IN THESE CASES, THE APPEALS FILED BY THE REVENUE HAVE BEEN DISMISSED BY THE TRIBUNAL. THE ORDERS OF THE - - ITA 43 TO 48/11 E TC. 21 COMMISSIONER OF INCOME-TAX(APPEALS) HAVE BEEN UPHEL D BY THE TRIBUNAL TO CONCLUDE THAT THE CAPITAL GAINS ARE TO BE TAXED IN TWO ASSESSMENT YEARS 2007-08 AND 2008-09. 3. THE APPEALS FILED BY THE ASSESSEES WERE STATED A S ALLOWED IN THE ABOVE STATED COMMON ORDER OF THE TRI BUNAL ON THE GROUND THAT THE REVISION ORDERS PASSED BY THE COMMI SSIONER OF INCOME-TAX HAVE BECOME INFRUCTUOUS. THE COMMISSION ER OF INCOME-TAX HAS PASSED THE REVISION ORDERS TO DIREC T THE ASSESSING OFFICER TO MAKE PROTECTIVE ASSESSMENTS IN THE HANDS OF THE ASSESSEES FOR THE ASSESSMENT YEAR 2008-09 FO R THAT REMAINING PART OF LONG TERM CAPITAL GAINS LIABLE FO R TAXATION AFTER THE CAPITAL GAINS TAXED FOR THE EARLIER ASSESSMENT YEAR 2007-08. IN FACT, THE COMMISSIONER OF INCOME-TAX HAS ALSO TA KEN THE SAME VIEW THAT HAS BEEN TAKEN BY THE COMMISSIONER OF INC OME- TAX(APPEALS) AND UPHELD BY THE TRIBUNAL. THEREFORE , IT IS NOT POSSIBLE TO HOLD THAT THE VIEW TAKEN BY THE COMMISS IONER OF INCOME-TAX IS ERRONEOUS. THEREFORE, TECHNICALLY SP EAKING HIS ORDERS STAND GOOD. IF SO, IT CANNOT BE SAID THAT T HE APPEALS OF THE ASSESSEES ARE ALLOWED. IT IS TRUE THAT THE REVISIO N ORDERS PASSED BY THE COMMISSIONER HAVE ALREADY BEEN MERGED WITH T HE ORDER - - ITA 43 TO 48/11 E TC. 22 OF THE TRIBUNAL. THE TRIBUNAL HAS HELD THAT SUBSTAN TIVE ASSESSMENTS SHOULD BE MADE FOR THE ASSESSMENT YEAR 2008-09. EV EN THOUGH, THE REVISION ORDERS PASSED BY THE COMMISSIONER OF I NCOME-TAX HAVE PRACTICALLY BECOME INFRUCTUOUS, LEGALLY HIS OR DERS HAVE MERGED WITH THE ORDER OF THE TRIBUNAL AND AS SUCH H IS ORDERS SURVIVE THROUGH THE ORDER OF THE TRIBUNAL. THEREFO RE, THE CORRECT RESULT IS THAT THE APPEALS FILED BY THE ASSESSEES A RE ALSO TO BE DISMISSED. 4. IN THESE CIRCUMSTANCES, PARAGRAPH 20 OF THE COMM ON ORDER OF THE TRIBUNAL DATED 24 TH JULY 2012 IS CORRECTED TO READ AS UNDER : IN RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THE APPEALS FILED BY THE ASSESSEES ARE ALSO DISMISSED. 5. INCIDENTALLY, THERE IS AN OMISSION OF THE WORD NO , OCCURRED IN THE LAST SENTENCE OF PARAGRAPH 15 OF TH E ABOVE ORDER. THE SAID LAST SENTENCE READING: IN THE PRESENT CAS E, THERE IS ATTEMPT TO EVADE PAYMENT OF TAXES, AS THE ASSESSEES HAVE - - ITA 43 TO 48/11 E TC. 23 ALREADY OFFERED CAPITAL GAINS FOR TAXATION IN TWO A SSESSMENT YEARS 2007-08 AND 2008-09. , IS SUBSTITUTED AS UN DER : IN THE PRESENT CASE, THERE IS NO ATTEMPT TO EVADE PAYMENT OF TAXES, AS THE ASSESSEES HAVE ALREADY OFFERED CAPITAL GAINS FOR TAXATION IN TWO ASSESSMENT YEARS 2007-08 AND 2008-09. 6. THIS CORRIGENDUM IS ISSUED ACCORDINGLY, ON WEDNE SDAY, THE 5 TH OF SEPTEMBER, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) ( DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 5 TH SEPTEMBER, 2012. MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.