DCIT, New Delhi V. Anand Persad Jaiswal, New Delhi

ITA 4961/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6742 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: D C GARG
• Keywords: Capital asset

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 DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI KULDIP SINGH SHRI KULDIP SINGH SHRI KULDIP SINGH SHRI KULDIP SINGH, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 4961/DEL/2014 4961/DEL/2014 4961/DEL/2014 4961/DEL/2014 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2010 2010 2010 2010 - -- - 11 1111 11 DEPUTY DIRECTOR OF INCOME DEPUTY DIRECTOR OF INCOME DEPUTY DIRECTOR OF INCOME DEPUTY DIRECTOR OF INCOME TAX,CIRCLE TAX,CIRCLE TAX,CIRCLE TAX,CIRCLE- -- -3(1), 3(1), 3(1), 3(1), INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL TAXATION, TAXATION, TAXATION, TAXATION, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI ANAND PERSAD JAISWAL, SHRI ANAND PERSAD JAISWAL, SHRI ANAND PERSAD JAISWAL, SHRI ANAND PERSAD JAISWAL, 54, RING ROAD, 54, RING ROAD, 54, RING ROAD, 54, RING ROAD, LAJPAT NAGAR LAJPAT NAGAR LAJPAT NAGAR LAJPAT NAGAR- -- -III, III,III, III, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : ADRPJ2549M. PAN : ADRPJ2549M. PAN : ADRPJ2549M. PAN : ADRPJ2549M. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. JAIN, DR. RESPONDENT BY : SHRI D.C. GARG, CA. DATE OF HEARING : 09.02.2017 09.02.2017 09.02.2017 09.02.2017 DATE OF PRONOUNCEMENT : 10.02.2017 10.02.2017 10.02.2017 10.02.2017 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXIX, NEW DELHI DATED 9 TH JUNE, 2014. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES AND OF THE CASE AND LAW, THE LD. CIT(A) HAS ERRED IN HOLDING T HE ASSESSEE ENTITLED TO THE BENEFIT OF PROVISO TO SECT ION 112(1) OF THE ACT ON SALE OF EQUITY SHARES OF M/S JAGATJIT INDUSTRIES LTD., A LISTED COMPANY. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED THE MATERIAL PLACED BEFORE US. THE FACTS OF THE CASE A RE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD THE SHARES OF M/S JAGATJIT INDUSTRIES LTD. (HEREINAFTER REFERRED TO A S JIL). THE ASSESSEE ITA-4961/DEL/2014 2 IS ADMITTEDLY A NON-RESIDENT. JIL IS ADMITTEDLY A LISTED COMPANY. THE ASSESSING OFFICER, WHILE COMPUTING THE CAPITAL GAIN FROM THE SALE OF SHARES OF JIL, COMPUTED THE CAPITAL GAIN WITHOUT AL LOWING THE BENEFIT OF INDEXATION WHILE CONSIDERING THE COST OF ACQUISITIO N AND CHARGED CAPITAL GAINS TAX AT THE RATE OF 20%. ON APPEAL, L EARNED CIT(A) ISSUED FOLLOWING DIRECTIONS :- 16.2 I FIND FORCE IN CONTENTION OF THE APPELLANT THAT IN RESPECT OF LONG TERM CAPITAL GAINS ARISING FROM TRANSFER OF SHARES ACQUIRED BY UTILIZING INR, OF JAGATJIT IN DUSTRIES LTD., A COMPANY LISTED ON BOMBAY STOCK EXCHANGE, TAXATION SHALL BE AS PER PROVISO TO SECTION 112(1) WHICH SAYS THAT IF TAX EXCEEDS 10% OF CAPITAL GAINS BEFOR E GIVING BENEFIT OF INDEXATION UNDER 2 ND PROVISO TO SECTION 48, THEN SUCH EXCESS SHALL BE IGNORED. HOWEVER, AT THE SAME TIME, THE APPELLANT HAS ALSO SOUGHT BENEFIT OF INDEXATION VIDE GROUND OF APPEAL NO.3(B) SUPRA WHICH HAS BEEN PARTL Y ALLOWED AS PER PARA 10.2 SUPRA. THE AO IS DIRECTED TO WORK OUT TAX PAYABLE AS PER PROVISO TO SECTION 112(1) BE FORE ALLOWING INDEXATION AND IF IT COMES OUT TO BE LOWER THAN TAX PAYABLE @ 20% AFTER ALLOWING INDEXATION, THEN LOWER TAX SHALL APPLY. IN THAT SITUATION, GROUND OF APPEAL N O. 3(B) SHALL BECOME INFRUCTUOUS. THE GROUND NO.5(A) IS DI SPOSED OFF ACCORDINGLY. 4. AFTER CONSIDERING THE FACTS OF THE CASE AND MATE RIAL PLACED BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE ABOV E DIRECTION OF LEARNED CIT(A). SECTION 112 AND PROVISO THEREOF READ AS UN DER :- 112. TAX ON LONG 112. TAX ON LONG 112. TAX ON LONG 112. TAX ON LONG - -- - TERM CAPITAL GAINS. TERM CAPITAL GAINS. TERM CAPITAL GAINS. TERM CAPITAL GAINS. - -- - (1) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME, ARISING FROM THE TRANSFER OF A LONG-TERM CAPITAL AS SET, WHICH IS CHARGEABLE UNDER THE HEAD CAPITAL GAINS, THE TAX PAYABLE BY THE ASSESSEE ON THE TOTAL INCOME SHA LL BE THE AGGREGATE OF, (A) IN THE CASE OF AN INDIVIDUAL OR A HINDU UNDIVID ED FAMILY, BEING A RESIDENT, (I) THE AMOUNT OF INCOME-TAX PAYABLE ON THE TOTAL INCOME AS REDUCED BY THE AMOUNT OF SUCH LONG-TERM CAPITAL GAINS, HAD THE TOTAL INCOME AS SO REDUCED B EEN ITA-4961/DEL/2014 3 HIS TOTAL INCOME ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT : PROVIDED THAT WHERE THE TOTAL INCOME AS REDUCED BY SUCH LONG-TERM CAPITAL GAINS IS BELOW THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, THEN, SUCH LONG-TERM CAPITAL GAINS SHALL BE REDUCED BY TH E AMOUNT BY WHICH THE TOTAL INCOME AS SO REDUCED FALL S SHORT OF THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX AND THE TAX ON THE BALANCE OF SUCH LO NG- TERM CAPITAL GAINS SHALL BE COMPUTED AT THE RATE OF TWENTY PER CENT ; (B) IN THE CASE OF A DOMESTIC COMPANY, (I) THE AMOUNT OF INCOME-TAX PAYABLE ON THE TOTAL INCOME AS REDUCED BY THE AMOUNT OF SUCH LONG-TERM CAPITAL GAINS, HAD THE TOTAL INCOME AS SO REDUCED B EEN ITS TOTAL INCOME ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT : (C) IN THE CASE OF A NON-RESIDENT (NOT BEING A COMP ANY) OR A FOREIGN COMPANY, (I) THE AMOUNT OF INCOME-TAX PAYABLE ON THE TOTAL INCOME AS REDUCED BY THE AMOUNT OF SUCH LONG-TERM CAPITAL GAINS, HAD THE TOTAL INCOME AS SO REDUCED B EEN ITS TOTAL INCOME ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS [EXCEPT WHERE SUCH GAIN ARISES F ROM TRANSFER OF CAPITAL ASSET REFERRED TO IN SUB-CLAUSE (III)] AT THE RATE OF TWENTY PER CENT ; AND (III) THE AMOUNT OF INCOME-TAX ON LONG-TERM CAPITAL GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET, BEING UNLISTED SECURITIES [OR SUBSTANTIALLY INTERESTED], CALCULATED AT THE RATE OF TEN PER CENT ON THE CAPIT AL GAINS IN RESPECT OF SUCH ASSET AS COMPUTED WITHOUT GIVING EFFECT TO THE FIRST AND SECOND PROVISO TO SE CTION 48;]] (D)] IN ANY OTHER CASE OF A RESIDENT, ITA-4961/DEL/2014 4 (I) THE AMOUNT OF INCOME - TAX PAYABLE ON THE TOTAL INCOME AS REDUCED BY THE AMOUNT OF LONG-TERM CAPITA L GAINS, HAD THE TOTAL INCOME AS SO REDUCED BEEN ITS TOTAL INCOME ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT. EXPLANATION. PROVIDED THAT WHERE THE TAX PAYABLE IN RESPECT OF A NY INCOME ARISING FROM THE TRANSFER OF A LONG-TERM CAP ITAL ASSET, BEING LISTED SECURITIES OR UNIT OR ZERO COUP ON BOND, EXCEEDS TEN PER CENT OF THE AMOUNT OF CAPITAL GAINS BEFORE GIVING EFFECT TO THE PROVISIONS OF THE SECOND PROVISO TO SECTION 48, THEN, SUCH EXCESS SHA LL BE IGNORED FOR THE PURPOSE OF COMPUTING THE TAX PAYABLE BY THE ASSESSEE. 5. FROM THE PROVISO, IT IS EVIDENT THAT WHERE THE T AX PAYABLE IN RESPECT OF THE TRANSFER OF A LONG TERM CAPITAL ASSE T IN THE CASE OF A LISTED COMPANY EXCEEDS 10% OF THE AMOUNT OF THE CAP ITAL GAIN BEFORE GIVING EFFECT TO THE PROVISIONS OF SECOND PROVISO T O SECTION 48, THEN SUCH EXCESS SHALL BE IGNORED FOR THE PURPOSE OF COM PUTING THE TAX PAYABLE BY THE ASSESSEE. IN THE CASE UNDER APPEAL BEFORE US, ADMITTEDLY, THE ASSESSEE IS A NON-RESIDENT AND JIL IS A LISTED COMPANY. THEREFORE, PROVISO TO SECTION 112(1) WAS SQUARELY A PPLICABLE AND LEARNED CIT(A) RIGHTLY DIRECTED TO ASSESSING OFFICE R TO GIVE BENEFIT OF PROVISO TO SECTION 112(1). WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF LEARNED CIT(A). THE SAME IS SUSTAINED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 10.02.2017 . SD/- SD/- (KULDIP SINGH (KULDIP SINGH (KULDIP SINGH (KULDIP SINGH ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. ITA-4961/DEL/2014 5 COPY FORWARDED TO: - 1. APPELLANT : DEPUTY DIRECTOR OF INCOME TAX,CI RCLE DEPUTY DIRECTOR OF INCOME TAX,CIRCLE DEPUTY DIRECTOR OF INCOME TAX,CIRCLE DEPUTY DIRECTOR OF INCOME TAX,CIRCLE- -- -3(1), 3(1), 3(1), 3(1), INTERNATIONAL TAXATION, NEW DELHI. INTERNATIONAL TAXATION, NEW DELHI. INTERNATIONAL TAXATION, NEW DELHI. INTERNATIONAL TAXATION, NEW DELHI. 2. RESPONDENT : SHRI ANAND PERSAD JAISWAL, SHRI ANAND PERSAD JAISWAL, SHRI ANAND PERSAD JAISWAL, SHRI ANAND PERSAD JAISWAL, 54, RING ROAD, LAJPAT NAGAR 54, RING ROAD, LAJPAT NAGAR 54, RING ROAD, LAJPAT NAGAR 54, RING ROAD, LAJPAT NAGAR- -- -III, NEW DELHI. III, NEW DELHI. III, NEW DELHI. III, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR