CHETAN H DAIYA, MUMBAI V. ITO 16(1)(2), MUMBAI

ITA 4376/MUM/2014

AI Insights

The case involves multiple appeals by Shri Chetan H Daiya, the legal heir of Shri Hariram Daiya and Late Smt. Velabai Daiya, against the orders of the Commissioner of Income-tax (Appeals) concerning the assessment years 1993-94 and 1998-99. The appeals were related to the taxability of income received from the liquidation of two companies, M/s Mulji V Narsi Pvt Ltd and Hercules Engg. Works Pvt Ltd, under section 46(2) of the Income-tax Act. The Tribunal heard the appeals ex parte as the assessee did not attend the hearings. The main legal issue was whether the income received from the liquidation of the companies should be treated as capital gains and taxed accordingly. The CIT(A) had previously upheld the taxability of this income, a decision which was contested by the assessee but ultimately upheld by the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 112612 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-04-2023
• Assessment Year: 1998-1999
• Appeal Filed On: 19-06-2014
• Other Referred Cases: CIT vs. R.M. Amin, D.M. Murarilqal Budhia vs. Patna High Court
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RESPONDENT K.C. SELVAMANI
• Keywords: Liquidation
• Section: 263; 143(3)

Judgement Text

1 ITA No.4375 /Mum/2014 ITA No.4556/Mum/2010 ITA No.4557/Mum/2010 ITA 4376/Mum/2014 Shri Chetan H Daiya IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C”, MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND OM PRAKASH KANT (ACCOUNTANT MEMBER) I.T.A No.4375 /Mum/2014 - A.Y. 1993-94 I.T.A No.4556 /Mum/2010 - A.Y. 1993-94 I.T.A No.4557 /Mum/2010 - A.Y. 1998-99 I.T.A No.4376 /Mum/2014 - A.Y. 1998-99 Shri Chetan H Daiya 15, Khushnuma Apartment, 29A, Carmichel Road, Mumbai- 400 026 PAN : AAAPD5792J vs Income-tax Officer-16(1)(2), Matru Mandir, Mumbai APPELLANT RESPONDENT Present for Appellant None Present for Respondent Shri K.C. Selvamani, CIT DR Date of hearing 05/04/2023 Date of pronouncement 18/04/2023 ORDER PER : OM PRAKASH KANT These appeals by the assessee are directed against the separate orders passed by the Ld.Commissioner of Income-tax (Appeals)-27, 2 ITA No.4375 /Mum/2014 ITA No.4556/Mum/2010 ITA No.4557/Mum/2010 ITA 4376/Mum/2014 Shri Chetan H Daiya Mumbai [in short, the Ld.CIT(A)] for Assessment Years1993-94 & 1998- 99, respectively. 2. Common issues are involved in these appeals, therefore, the same were heard together and disposed off by way of this consolidated order for convenience. 3. At the outset, it is mentioned that despite notifying for the hearing, neither any one attended on behalf of the assessee nor any adjournment was sought. On the past few occasions, i.e. on 20 th February, 2023; 30 th November, 2021; 10 th October, 2022; 11 th October, 2021, etc. also none attended on behalf of the assessee. In the circumstances, we were of the opinion that the assessee is not interested in prosecuting the appeal and, therefore, same were heard exparte qua the assessee after hearing the ld.departmental representative. 4. In the appeal in ITA No.4375/Mum/2014 for A.Y. 1993-94, the assessee is aggrieved that the income arising from capital gain / money received on liquidation of the company, M/s Mulji V Narsi Pvt Ltd and Hercules Engg. Works Pvt Ltd which has been assessed under section 46(2) of the Act. The Assessing Officer has passed the impugned assessment order in compliance to the direction of the Ld.Commissioner of Income-tax-16, Mumbai vide order dated 30 th March, 2020 passed under section 263 of the Income-tax Act, 1961 (in short, ‘the Act’). 3 ITA No.4375 /Mum/2014 ITA No.4556/Mum/2010 ITA No.4557/Mum/2010 ITA 4376/Mum/2014 Shri Chetan H Daiya 5. The assessee is legal heir of Shri Hariram Daiya and Late Smt. Velabai Daiya who were shareholders in the private limited company, i.e. M/s Mulji V Narsi Pvt Ltd and M/s Hercules Engg.Works Pvt Ltd. Due to liquidation of the concerned companies, the money was distributed in the previous year relevant to A.Ys.1993-94 & 1998-99. Though the assessee offered the money distributed on liquidation in the return of income filed and computed capital gain under section 46(2) of the Act; however, he contested the taxability to the assessment proceedings and matter was carried to the ITAT. The ITAT set aside the matter to the Assessing Officer. The assessment order passed by the Assessing Officer under section 143(3) read with section 254 was subjected to revision proceedings by the CIT-16, Mumbai, who set aside the assessment order with the direction to treat the money received on liquidation of the companies as taxable under section 46(2) of the Act as the word “registered shareholder” was not used in the section and, therefore, capital gain shall be charged in the hands of the assessee. The Assessing Officer accordingly assessed the relevant income in the hands of the assessee. On further appeal, Ld.CIT(A) in a detailed finding after discussing decisions of the various Hon’ble High Courts and Hon’ble Supreme Court in paras 2.4.10 to 2.4.33, dismissed the appeal of the assessee by observing as under:- “2.4.34 Keeping in view the above factual and legal analysis and in view of the decision of Patna High Court in the case of D.M. Murarilqal Budhia 139 ITR 410 (Pat), the issue has to be decided against the appellant. A similar view was taken by the Hon’ble Supreme Court in the case of CIT vs. R.M. Amin 106 ITR 68 (SC) where it was held that but for 4 ITA No.4375 /Mum/2014 ITA No.4556/Mum/2010 ITA No.4557/Mum/2010 ITA 4376/Mum/2014 Shri Chetan H Daiya section 46(2), it would not have been possible to charge tax under the head ‘capital gains’ on the money or other assets of the company received by its shareholder on its liquidation. Accordingly, grounds raised are dismissed.” 6. Before us, no submission has been filed by the assessee to rebut the finding of the Ld.CIT(A). In facts and circumstances of the case we do not find any infirmity in the finding of the Ld.CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds raised by the assessee are accordingly dismissed. 7. The identical question of taxability of capital gain under section 46(2) has been raised in other appeals and, therefore, to have consistency in our finding for A.Y 1993-94 in ITA No.4375/Mum/2014, the grounds raised in other appeals are also dismissed. 8. In the result, all the appeals of the assessee are dismissed. Order pronounced in the open court on 18/04/2023. Sd/- sd/- (ABY T VARKEY) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dt : 18/04/2023 Pavanan Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai