Mrs. Vijayalakshmi Ravindran, CHENNAI V. Additional CIT, CHENNAI

ITA 485/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61328 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI IRS
• Assessee Lawyers: PRATAPKARAN PA UL
• 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 ITA NO.484(MDS)/2012 ASSESSMENT YEAR: 2007-08 SHRI M.RAJARATHINAM, 32, POES ROAD, 2 ND STREET, TEYNAMPET, CHENNAI. PIN 600 018. PAN AAFPR4624L. VS. THE ADDITIONAL COMMISSIONER OF INCOME- TAX, MEDIA RANGE, CHENNAI. (APPELLANT) (RESPONDENT) ITA NO.485(MDS)/2012 ASSESSMENT YEAR : 2007-08 MRS.VIJAYALAKSHMI RAVINDRAN, THE ADITIONAL COMMISSIONER 32, POES ROAD, 2 ND STREET, VS. OF INCOME-TAX, TEYNAMPET, CHENNAI-600018. MEDIA RANGE, PAN ABXPV2884R. CHENNAI. (APPELLANT) (RESPONDENT) AND ITA NO.486(MDS)/2012 ASSESSMENT YEAR : 2007-08 SHRI M.RAVINDRAN, THE A SSISTANT COMMISSIONER 32, POES ROAD, 2 ND STREET, VS. OF INCOME-TAX, TEYNAMPET, CHENNAI-600018. MEDIA CIRCLE I I, PAN AAFPR4625M. CHENNAI. (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI PRATAPKARAN PA UL, C.A. RESPONDENT BY : SHRI T.N.BETGERI, IRS, JCIT DATE OF HEARING : 17 TH JULY, 2012 DATE OF PRONOUNCEMENT : 17 TH JULY, 2012 - - ITA 484, 485 & 486 OF 2012 2 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THESE THREE APPEALS ARE FILED BY THE ASSESSEES. THE APPEALS RELATE TO THE ASSESSMENT YEAR 2007-08. THE APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME- TAX(APPEALS)-VI AT CHENNAI, DATED 30-11-2011. THE APPEALS ARISE OUT OF THE RESPECTIVE ASSESSMENTS COMPLETED U NDER SECTION 143(3) OF THE INCOME-TAX ACT,1961. 2. THERE IS A DELAY OF 37 DAYS IN FILING THESE APP EALS BEFORE US. WE HAVE GONE THROUGH THE CONDONATION PE TITIONS FILED BY THE ASSESSEES AND THE CIRCUMSTANCES EXPLAINED IN THE ACCOMPANYING AFFIDAVITS. WE ARE CONVINCED THAT THE DELAY WAS CAUSED ON JUST AND REASONABLE GROUNDS AND, THEREFOR E, THE DELAY NEEDS TO BE CONDONED IN THE INTERESTS OF JUSTICE. ACCORDINGLY, THE DELAY CAUSED IN FILING THESE APPEALS BEFORE THE TRIBUNAL IS CONDONED AND THE APPEALS ARE ADMITTED FOR HEARING A ND DISPOSAL. 3. THE ASSESSEES IN THESE CASES ARE DIRECTORS IN M/S.RAJ TELEVISION NETWORKS LTD. THE ASSESSEES HAV E DISCLOSED - - ITA 484, 485 & 486 OF 2012 3 INCOMES BY WAY OF LONG-TERM CAPITAL GAINS, IN THE R ETURNS FILED FOR THE IMPUGNED ASSESSMENT YEAR. WHILE COMPUTING THE LONG-TERM CAPITAL GAINS IN THEIR HANDS, THEY CLAIMED EXPENDIT URE INCURRED IN CONNECTION WITH THE TRANSFER OF SHARES, WHICH RESUL TED IN GENERATING CAPITAL GAINS IN THE HANDS OF THE ASSESS EES. THIS CLAIM OF EXPENDITURE IN COMPUTING THE COST OF ACQUI SITION WAS NOT ACCEPTED BY THE AUTHORITIES BELOW. THEREFORE THE P RESENT APPEALS BEFORE US. 4. THE COMMON GROUND RAISED IN ALL THE THREE APPEA LS IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF THE EXPENDITURE CLAI MED BY THE ASSESSEES UNDER SECTION 48 OF THE INCOME-TAX ACT, 1 961. IT IS THE CASE OF THE ASSESSEES THAT THE EXPENDITURE WAS INCURRED UNDER A CONTRACTUAL LIABILITY IN FULFILLMENT OF THE TERMS OF AGREEMENT OF SALE AND, THEREFORE, THE EXPENDITURE I NCURRED BY THE ASSESSEES WAS INTRINSICALLY CONNECTED WITH THE TRANSFER AND, THEREFORE, THE EXPENDITURE OUGHT TO HAVE BEEN ALLOW ED UNDER SECTION 48 OF THE ACT. IT IS THE CASE OF THE ASSES SEES THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS FAILED TO A PPRECIATE THAT THE VOLUME OF SHARES SOLD BY THE PROMOTER SHAR EHOLDERS WAS - - ITA 484, 485 & 486 OF 2012 4 MORE THAN 50% OF THE VOLUME OF SHARES OFFERED FOR S UBSCRIPTION. ACCORDING TO THE ASSESSEES THE SHARES WERE TRANSFER RED AT MARKET PRICE THROUGH A BOOK BUILDING ROUTE. 5. IN FACT, THIS ISSUE WAS CONSIDERED BY THE INCOM E-TAX APPELLATE TRIBUNAL, B-BENCH, CHENNAI, WHILE DISPOSI NG OF THE APPEALS FILED BY THE ASSOCIATE PERSONS CONNECTED WI TH M/S.RAJ TELEVISION NETWORKS LIMITED. THE TRIBUNAL IN ITS C OMMON ORDER PASSED ON 10 TH MAY, 2012 IN ITA NOS.493, 494 AND 495(MDS)/2012, HAS CONSIDERED THIS ISSUE AND HELD T HAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN DISALLOWING THE CLAIMS OF EXPENDITURE MADE BY THE ASSESSEES IN TRANSFERRING T HE SHARES. THE TRIBUNAL HAS HELD THAT THE EXPENDITURE WAS INCU RRED UNDER A LEGAL OBLIGATION AND IT SHOULD BE CONSIDERED AS INC URRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE SALE OF SHAR ES. THE TRIBUNAL HELD THAT THE EXPENSES HAVING BEEN INCURRE D FOR THE INITIAL PUBLIC OFFER OF SHARES, THE EXPENSES WERE I N FACT INCURRED IN CONNECTION WITH THE SALE OF SHARES. THE TRIBUNA L HELD THAT THE CLAIM MADE BY THE ASSESSEES WAS LEGITIMATE UNDER SE CTION 48(1) OF THE ACT. THE ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEES. - - ITA 484, 485 & 486 OF 2012 5 6. FOLLOWING THE ABOVE STATED ORDER OF THE TRIBUNA L, WE HOLD THAT THE EXPENDITURE CLAIMED BY THE ASSESSEES UNDER SECTION 48 IS TO BE ALLOWED, AS THE EXPENDITURE WAS INCURRED IN CONNECTION WITH SALE OR TRANSFER OF SHARES. THE AS SESSING AUTHORITY IS DIRECTED TO RECOMPUTE THE LONG-TERM CA PITAL GAINS ACCOUNTABLE IN THE HANDS OF THE ASSESSEES. 7. IN RESULT, THESE THREE APPEALS FILED BY THE ASS ESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 17 TH OF JULY, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 17 TH JULY, 2012. V.A.P. COPY TO: (1) APPELLANT S (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.