DAI ICHI KARKARIA LTD, MUMBAI V. DCIT RG 1(1), MUMBAI

ITA 5405/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92812 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 11-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-08-2013
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: H P MAHAJANI; PRASAD BAPAT
• Keywords: Question of law; Capital receipt
• Section: 32; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA N O. 540 5 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 6 - 07 ) DAI ICHI KARKARIA LIMITED, 3 RD FLOOR, LIBERTY BUILDING, MARINE LINES, MUMBAI - 400020 VS. DCIT, RANGE - 1(1), MUMBAI ./ ./ PAN/GIR NO. : A A A C D 0548 F ( / APPELLANT ) . . ( / RESPONDENT ) /ASSESSEE BY : SHRI H.P.MAHAJANI & SHRI PRASAD BAPAT /REVENUE BY : SHRI LOVE KUMAR / DATE OF HEARING : 0 7 /0 5 / 2015 / DATE OF PRONOUNCEMENT 10/06 /2015 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - I , MUMBAI , DATED 8 - 4 - 2013 FOR THE ASSESSMENT YEAR 200 6 - 07 IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE I.T.ACT AMOUNTING TO RS. 35,87,442/ - . 2. LD. AR PLACED ON RECORD THE ORDER OF HONBLE BOMBAY HIGH COURT WHEREIN IT WAS HELD THAT WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT THE A DDITION IS CERTAINLY DEBATABLE, UN DER SUCH CIRCUMSTANCES, THE PENALTY CANNOT BE LEVIED ITA NO. 5405 /1 3 2 U/S.271(1)(C) OF THE ACT. THE DECISION OF COORDINATE BENCH IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS DATED 18 - 3 - 2011 WAS ALSO PLACED ON RECORD, WHEREIN THE PENALTY WAS DELETED ON THE PLEA THAT SUBSTAN TIAL QUESTION OF LAW HAS BEEN ACCEPTED BY THE HONBLE HIGH COURT . THIS ORDER OF THE TRIBUNAL WAS UPHELD BY THE HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 8 - 7 - 2014. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. PART OF THE CAPITAL GAINS SHOWN IN THE FORM OF INTEREST WAS TREATED BY THE AO AS INCOME FROM OTHER SOURCES IN PLACE OF CAPITAL GAINS . THUS, I T IS A CASE OF MERE CHANGE OF HEAD OF INCOME FROM CAPITAL GAINS TO INCOME FROM OTHER SOURCES. THE TRIBUNAL HAS UPHELD THE ADDITION AGAINST WHICH ASSE SSEE APPROACHED TO THE HIGH COURT AND THE HIGH COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW VIDE ORDER DATED 15 - 3 - 2013. FOLLOWING SUBSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED BY THE HONBLE HIGH COURT: - 1. HEARD. ADMIT ON THE FOLLOWING SUBSTANTIAL QUES TIONS OF LAW: - (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE IMPUGNED INTEREST RS.1,06,57,881/ - IS NOT PART OF SALES CONSIDERATION AND HENCE ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES? (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN REJECTING THE ADDITIONAL GROUND ADVANCING THE ARGUMENT THAT THE IMPUGNED INTEREST RS.1,0 6,57,881/ - IS A CAPITAL RECEIPT NOT EXIGIBLE TO T AX UNDER THE ACT? (M.S.SANKLECHA,J.) (J.P.DEVADHAR,J) ITA NO. 5405 /1 3 3 4. IN THIS CASE, ASSESSEE HAS RECEIVED AGGREGATE CONSIDERATION OF RS. 333.09 CRORES ON BUY BACK OF 71,233 SHARES BY THE ACQUIRER COMPRISING OF RS.226.52 CRORES BEING THE PRINCIPAL SALE CONSIDERATIO N AND INTEREST OF RS.1.06 CRORES. THE CAPITAL GAINS OFFERED BY THE ASSESSEE WAS NOT ACCEPTED AND THE AO TAXED RS.1.06 CRORES AS INCOME FROM OTHER SOURCES WHICH WAS CONFIRMED BY THE TRIBUNAL. FOR SUCH CHANGE OF HEAD OF INCOME, THE AO ALSO LEVIED PENALTY U/S .271(1)(C). 5. RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS, HONBLE DELHI HIGH COURT IN THE CASE OF LIQUID INVESTMENT AND TRADING CO. LTD. ITA NO.240/2009 AND DECISION OF HONBLE B OMBAY TRIBUNAL IN THE CASE OF M/S SCHRADER DUNCAN LTD., ITA 8223/M/2010 AND VIDYA VIHAR CONTAINER LTD., ITA NO.5541&5544/ MUM/ 2013 , WE HOLD THAT WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT ADDITION IS DEBA TABLE. IN SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S.271(1)(C). FURTHERMORE , THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BENNETT COLEMAN & CO. LTD., ITA NO.2117/2012, DTD 26 - 2 - 2013 AND THE HONBLE DELHI HIGH COURT IN THE CASE OF BHARTESH JAIN, ITA NO .363/2010, DATED 6 - 4 - 2010 AND IN THE CASE OF AURIC INVESTMENT AND SECURITIES LTD., ITA NO.763/2006, DATED 13 - 7 - 2007, HAS BEEN HELD THAT NO PENALTY IS LEVIABLE WHERE THERE IS ONLY A CHANGE OF HEAD OF INCOME. 6. I N THE INSTANT CASE, THERE IS MERELY CHANGE O F HEAD OF INCOME FROM CAPITAL GAINS TO INCOME FROM OTHER SOURCES AGAINST WHICH SUBSTANTIAL ITA NO. 5405 /1 3 4 QUESTION OF LAW HAS BEEN ADMITTED BY HONBLE BOMBAY HIGH COURT, UNDER THESE CIRCUMSTANCES, PENALTY CANNOT BE IMPOSED U/S. 271(1)(C) OF THE ACT. 7 . IN THE RESULT, APP EAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10/06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10/06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT( A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//