The ITO 1 (1), V. M/s Sagar Maize Products Ltd,

ITA 518/IND/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47796 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-04-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 26-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DARSHAN SINGH
• Assessee Lawyers: S S DESH
• Section: 45(5); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 518/IND/2008 A.Y.2003-04 INCOME TAX OFFICER 1(3), INDORE APPELLANT VS M/S SAGAR MAIZE PRODUCTS LIMITED UJJAIN RESPONDENT APPELLANT BY : SHRI DARSHAN SINGH, CIT DR RESPONDENT BY : SHRI S.S. DESHPANDE O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE HAS PREFERRED THE PRESENT APPEAL ON TH E FOLLOWING GROUND :- WHETHER IN VIEW OF PROVISIONS OF SECTION 45(5)(B), SECTION 45(5)(C) AND IN VIEW OF THE ITAT, DELHI JUDGMENT IN THE CASE OF ITO VS. ROOPSINGH REPORTED IN 18 SOT 252, WHETHE R THE LD. CIT(A) WAS CORRECT IN LAW IN HOLDING THAT AMOUN T SHOULD BE TAXED ONLY WHEN FINAL ORDER IS PASSED BY THE HIG H COURT AND NOT WHEN CONSIDERATION IS ACTUALLY RECEIVED BY THE ASSESSEE? 2 2. DURING HEARING OF THIS APPEAL, AT THE OUTSET, IT WAS CONTENDED BY THE LEARNED CIT DR THAT THE IMPUGNED I SSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. GHANSHYAM (HUF); 315 ITR 1. THIS ASSERTION OF THE REVENUE WAS NOT CONTROVERT ED BY THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSES SEE FILED RETURN OF INCOME AT LOSS OF RS. 25,799/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. HOWEVER, THE ASSESSING OFFI CER ISSUED NOTICE U/S 148 OF THE ACT FINDING THAT A PIECE OF LAND BELONGING TO THE ASSESSEE WAS ACQUIRED BY THE RAILWAYS FOR WH ICH THE ASSESSEE WAS PAID COMPENSATION AS AWARDED BY THE LA ND REVENUE OFFICER, SHAJAPUR. THE ASSESSEE FILED AN A PPEAL BEFORE THE ADJ COURT, SHAJAPUR, STATING THAT THE CO MPENSATION AWARDED BY THE LAND REVENUE OFFICER, SHAJAPUR, WAS INADEQUATE. LATER ON, THE ADJ COURT, SHAJAPUR, DEC IDED THE AMOUNT OF COMPENSATION AT RS. 3,53,31,798/- AGAINST WHICH THE 3 INDIAN RAILWAYS MOVED A PETITION BEFORE THE HONBLE HIGH COURT OF MADHYA PRADESH, INDORE BENCH. THE HONBLE HIGH COURT GRANTED STAY IN THE MATTER AND ALSO GRANTED INTERIM COMPENSATION OF RS. 2,18,00,451/- SUBJECT TO THE CO NDITION THAT THE ASSESSEE SHALL PRODUCE FULL BANK GUARANTEE FOR THIS AMOUNT .ACCORDINGLY, THE RAILWAYS PAID THE SAID AMOUNT WHI CH THE ASSESSEE INVESTED IN FDRS WHICH WERE PLACED IN THE BANK AS A SECURITY. THE ASSESSING OFFICER MADE THE ADDITION BY HOLDING THAT IN VIEW OF THE PROVISIONS OF SECTION 45(5), TH E ASSESSEE HAS RECEIVED THE COMPENSATION ON WHICH CAPITAL GAIN IS LIABLE TO BE ASSESSED. THE ASSESSEE OBJECTED TO THE SAME ON THE GROUND THAT THE COMPENSATION RECEIVED BY THE ASSESSEE IS C ONDITIONAL TO GIVING BANK GUARANTEE OF THE SAME AMOUNT AND AS SUCH SINCE IT WAS NOT THE FINAL COMPENSATION, NO CAPITAL GAINS TAX COULD BE LEVIED. THE ASSESSEE IN SUPPORT OF ITS CLA IM RELIED UPON VARIOUS JUDGMENTS. HOWEVER, THE ASSESSING OFFI CER DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND ADDE D RS. 2,17,0-6,330/- AS CAPITAL GAINS. 4 4. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS AND VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE AMOUNT RECEIVED WITH A CONDITION TO FURNISH BANK GUARANTEE IS NOT DE FACTO RECEIPT OF THE SAME. AS SUCH, IT CANNOT BE S UBJECTED TO CAPITAL GAINS. IN THIS VIEW OF THE MATTER, THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION MADE BY THE ASSESSING OFFICER. WE AGREE WITH THE SU BMISSION OF THE LEARNED CIT DR THAT THE PRESENT ISSUE IS COV ERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CI T V. GHANSHYAM (HUF) (SUPRA) IN WHICH IT WAS CLEARLY HEL D THAT EVEN IN CASES WHERE PENDING APPEAL, THE COURT/TRIBUNAL/AUTHORITY BEFORE WHICH THE APPEAL IS PENDING, PERMITS THE CLAIMANT TO WITHDRAW AGAINST SECURITY O R OTHERWISE THE ENHANCED COMPENSATION (WHICH IS IN DISPUTE), TH E SAME IS LIABLE TO BE TAXED U/S 45(5) OF THE ACT IN THE YEAR OF RECEIPT. EVEN BEFORE THE INSERTION OF SECTION 45(5)(C) AND S ECTION 155(16) WITH EFFECT FROM APRIL 1, 2004, THE RECEIPT OF ENHANCED COMPENSATION UNDER SECTION 45(5)(B) WAS TAXABLE IN THE YEAR OF 5 RECEIPT AND THIS IS REINFORCED BY INSERTION OF CLAU SE (C). WE, THEREFORE, FOLLOWING THE AFORESAID DECISION OF THE HON'BLE SUPREME COURT, DECIDE THE APPEAL OF THE REVENUE IN ITS FAVOUR BY HOLDING THAT THE AMOUNT OF COMPENSATION RECEIVED IS LIABLE TO CAPITAL GAINS TAX IN THE YEAR OF ITS RECEIPT. FINALLY, THE APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30 TH APRIL, 2011. (R.C.SHARMA) (JOGIND ER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH APRIL, 2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE DN/-