DCIT 24(3), MUMBAI V. UNITED PAPER INDUSTRIES, MUMBAI

ITA 5755/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8849 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 17-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 12-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DWIWEDY
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 5755/MUM/2011(A.Y. 2008-09) THE DCIT - 24(3), ROOM NO.701, C-11, 7 TH FLOOR, B.K.C, BANDRA (E), MUMBAI - 51 (APPELLANT) VS. M/S. UNITED PAPER INDUSTRIES, 913, UDYOG NAGAR INDL. ESTATE, S.V.ROAD, GOREGAON (W), MUMBAI - 400 090. PAN:AABFU1725F (RESPONDENT) APPELLANT BY : SHRI RAJARSHI DWIWEDY RESPONDENT BY : SHRI PRAKASH JHUNJHUNW ALA DATE OF HEARING : 17/09/2012 DATE OF PRONOUNCEMENT : 2 6/09/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER DATED 22/6/2011 PASSED BY LD. CIT(A),,, MUMBAI FOR ASSESSMENT YEAR 2008- 09. THE GROUND OF APPEAL READS AS UNDER: 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING THE EXEMPTION U/S. 54EC TO THE AS SESSEE WITHOUT CONSIDERING THE FACT THAT AS PER SECTION 50 OF THE ACT, THE PERIOD OF HOLDING OF ASSETS IS IRRELEVANT AND ALL THE ASSETS ON WHICH DE PRECIATION HAS BEEN CLAIMED SHALL BE TREATED AS SHORT TERM CAPITAL ASSE TS ONLY AND PROVISIONS OF SECTION 54EC IS ALLOWABLE ONLY ON TRANSFER OF LONG TERM CAPITAL ASSETS . 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING OF CORRUGATED BOXES, LINERS, PARTITIONS AND SHEETS. DURING THE YEAR THE ITA NO. 5755/MUM/2011(A.Y. 2008-09) 2 ASSESSEE SOLD ITS FACTORY SHED (GALA LOCATED AT GOR EGAON WEST) AND DISCLOSED PROFIT ON SALE OF SUCH SHED UNDER SECTION 50 OF INC OME TAX ACT,1961 (THE ACT) OF RS.1,31,77,949/-. THE PROCEEDS WERE REINVESTE D IN LONG TERM SPECIFIED ASSET VIZ. BOND OF NATIONAL HIGHWAY AUTHORITY OF IN DIA AND DEDUCTION UNDER SECTION 54EC OF THE ACT WAS CLAIMED AT RS. 50.00 LA CS. THE AO DID NOT ALLOW BENEFIT OF DEDUCTION UNDER SECTION 54EC AND IN THIS MANNER THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.1,30,29,890/- AGAIN ST THE RETURNED INCOME OF RS.80,29,890/-. 3. THE LD.CIT(A) HAS GRANTED THIS BENEFIT TO THE A SSESSEE. THE DEPARTMENT IS AGGRIEVED, HENCE, IN APPEAL BEFORE TH E TRIBUNAL. 4. LD. D.R RELIED UPON THE ORDER OF AO. ON THE OT HER HAND, LD. A.R SUBMITTED THAT THIS ISSUE IS NOW COVERED BY THE DEC ISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ACE BUILDERS PVT. LTD., 281 ITR 210(BOM) WHEREIN IT HAS BEEN HELD THAT THERE WAS NOTHING IN SECTION 50 TO SUGGEST THAT THE FICTION CREATED IN SECTION 50 IS NOT ONLY APPLICABLE TO SECTION 48 & 49 BUT ALSO APPLIES TO OTHER PROVISIONS. ON THE C ONTRARY, THIS SECTION MAKES IT EXPLICITLY CLEAR THAT THE DEEMING FICTION CREAT ED IN SUB-SECTION (1) AND (2) IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CA PITAL GAINS AS SHORT TERM CAPITAL GAIN AND NOT TO DEEM THE ASSET AS SHORT TE RM CAPITAL ASSET. SECTION 50 DID NOT CONVERT A LONG TERM CAPITAL ASSET INTO SHORT TERM CAPITAL ASSET. THOUGH, SECTION 50 WAS ENACTED WITH THE OBJECT OF D ENYING MULTIPLE BENEFITS TO OWNERS ON DEPRECIABLE ASSET YET THAT RESTRICTION WAS LIMITED TO THE COMPUTATION OF CAPITAL GAIN AND NOT THE EXEMPTION P ROVISIONS. THUS IT WAS HELD THAT EXEMPTION UNDER SECTION 54E COULD NOT BE DENIED TO THE ASSESSEE ON ACCOUNT OF FICTION CREATED IN SECTION 50. IT WA S SUBMITTED BY LD. AR THAT SIMILAR VIEW HAS BEEN TAKEN BY HONBLE DELHI HIGH C OURT IN THE CASE OF CIT VS. RAJIV SHUKLA, 334 ITR 138(DEL), WHEREIN THEIR LORDSHIPS OF DELHI HIGH ITA NO. 5755/MUM/2011(A.Y. 2008-09) 3 COURT HAVE FOLLOWED THE AFOREMENTIONED DECISION OF CIT VS. ACE BUILDERS (SUPRA), WHICH WAS AGAIN FOLLOWED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF DELITE TIN INDUSTRIES ( ORDER DATED 26/9/2008) I N I.T APPEAL NO.1118 OF 2008 AND IT WAS FOUND THAT THE HONBLE SUPREME COU RT HAS DISMISSED THE SPECIAL LEAVE PETITION OF THE DEPARTMENT VIDE THEI R ORDER DATED 21/8/2009 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. WE FIND THAT THE ISSUE IS LEGAL ONE AND IS COVERED BY THE AFOREMENTIONED DECISIONS OF HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF ACE.BUILDERS (SUPRA) AND CIT VS. DELITE T IN INDUSTRIES (SUPRA). IT IS ALSO SEEN THAT THE SLP FILED BY THE DEPARTMENT HAS BEEN DISMISSED BY HONBLE SUPREME COURT. THEREFORE, WE FIND NO INFIR MITY IN THE ORDER PASSED BY LD. CIT(A), WHICH IS IN CONFORMITY WITH THE LAW LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT. ACCORDINGLY, DEPARTMENT AL APPEAL IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 26 TH DAY OF SEPT. 2012 SD/- SD/- (B.RAMAKOTAIAH ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 26 TH SEPT. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R F BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO. 5755/MUM/2011(A.Y. 2008-09) 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 17/09/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18 /09/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DR AFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER