ACIT CIR 16(2), MUMBAI V. LAXMI MANI AIYER, MUMBAI

ITA 5950/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71900 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: MAHESH O RAJORA
• Keywords: Capital asset; Cost of acquisition; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NOS.5950&5951/MUM/2012 ( ASSESSMENT YEARS: 2007-08 & 2009-10) ASST. CIT 16(2), MATRU MANDIR, TARDEO ROAD MUMBAI 400 007 VS. SMT. LAXMI MANI AIYER L/1, BREACH CANDY APARTMENTS, BHULABHAI DESAI ROAD, MUMBAI 400 026 ! ' ./PAN/GIR NO. AABPA 7143B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#& / APPELLANT BY : SHRI M. L. PERUMAL $%!#'& / RESPONDENT BY : SHRI MAHESH O. RAJORA ( )*'+, DATE OF HEARING : 27.11.2013 -./'+, / DATE OF PRONOUNCEMENT : 11.12.2013 0 O R D E R PER SANJAY ARORA, A. M.: THESE ARE SET UP TWO APPEALS BY THE REVENUE, I.E., FOR TWO SUCCESSIVE YEARS, BEING ASSESSMENT YEARS 2007-08 & 2009-10 IN THE ASSESSEE S CASE, FOLLOWING THE ACCEPTANCE OF THE ASSESSEES APPEALS BY THE FIRST APPELLATE AUTHO RITY ON THE RELEVANT GROUNDS BY THE ASSESSEE, IN RESPECT OF ITS ASSESSMENT FOR THE RELE VANT YEARS VIDE HIS SEPARATE ORDERS DATED 24.07.2012 AND 25.07.2012 FOR THE SAID TWO YEARS RE SPECTIVELY. 2 ITA NOS.5950&5951/MUM/2012 (A.YS.2007-08 & 2009-10) ASST. CIT VS. SMT. LAXMI MANI AIYER THE ISSUE ARISING BEING COMMON, THE APPEALS WERE PO STED FOR HEARING AND, WERE ACCORDINGLY, HEARD TOGETHER, AND ARE BEING DISPOSED OF VIDE A COMMON, CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY ISSUE ARISING IN THESE APPEALS IS THE V ALIDITY OF THE ASSESSEES CLAIM OF THE AMOUNTS RECEIVED FROM M/S. K.S. AIYAR & CO., A FIRM OF CHARTERED ACCOUNTANTS, IN WHICH HER LATE HUSBAND WAS A SENIOR PARTNER, ON HIS DEMIS E, IN TERMS OF THE PARTNERSHIP DEED, AS BEING A CAPITAL RECEIPT IN HER HANDS AND, THEREFORE , NOT TAXABLE. 3. BEFORE US, THE LEARNED AR WOULD CONTEND OF THE M ATTER AS BEING SQUARELY COVERED IN THE ASSESSEES FAVOUR BY A SERIES OF ORDERS BY T HE TRIBUNAL, PLACING ON RECORD THE ORDERS BY THE TRIBUNAL IN HER CASE FOR A.YS. 2001-02 TO 20 05-06 & 2008-09 (PB PAGES 1-15). THE LD. DR COULD NOT POINT OUT ANY INFIRMITY IN THE SAI D ORDERS OR OF ANY DISTINCTION IN THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE CURRENT YEAR WITH REFERENCE TO THE SAID YEARS. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE LEAD ORDER BY THE TRIBUNAL IS FOR A.Y. 2005-06 (IN ITA NO. 2436/M/2009 DATED 22.05.2011 / PB PAGES 6-12). THE TRIBUNAL, AF TER DISCUSSING THE FACTS, FOUND THE SAME TO BE PARA MATERIA TO THAT IN THE CASE OF CIT VS. JAYA BHASKARAN [1987] 168 ITR 256 (PAT), SO THAT THE SAID DECISION, HOLDING THE P AYMENTS RECEIVED FROM A PARTNERSHIP FIRM BY THE NOMINEE OF A DECEASED PARTNER ON HIS DE MISE WHILE IN HARNESS TO BE A CAPITAL RECEIPT IN HANDS OF THE NOMINEE AND, THUS, NOT TAXA BLE, AS APPLICABLE IN THE FACTS OF THE INSTANT CASE. THE HONBLE COURT IN SO DECIDING FOLL OWED THE DECISION BY THE APEX COURT IN THE CASE OF P.H. DIVECHA VS. CIT [1963] 48 ITR 222 (SC). SUPPORT, IN ARRIVING AT IT S DECISION, WAS ALSO DRAWN BY THE TRIBUNAL FROM THE D ECISION IN THE CASE OF PADMARAJE R. KADAMBANDE VS. CIT [1992] 195 ITR 877 (SC) AS WELL AS FROM THE BOARD CIRCULAR NO. 573, F.NO.200/115/90- ITA-I DATED 21/08/1990. THE SAID DECISION, AS AFORE-NOTED, HAS BEEN FOLLOWED BY THE TRIBUNAL FOR THE PRECEDING AS WELL AS THE SUCCEEDING YEAR/S. NO DECISION TO THE CONTRARY OR OTHERWISE ANY INFIRMITY IN LAW OR ANY CHANGE IN THE FACTS AND 3 ITA NOS.5950&5951/MUM/2012 (A.YS.2007-08 & 2009-10) ASST. CIT VS. SMT. LAXMI MANI AIYER CIRCUMSTANCES OF THE CASE HAVE BEEN BROUGHT TO OUR NOTICE, FOR US NOT TO FOLLOW THE CONSISTENT VIEW OF THE TRIBUNAL IN THE MATTER. THE ONLY DIFFERENCE BEING POINTED OUT BY THE REVENU E, AS WE OBSERVE FROM THE MATERIAL ON RECORD, IS PER ITS GROUND NO.2, EMPHASI ZING THE FACT THAT THE CHARGE IN THE FAVOUR OF THE BENEFICIARY IN THE INSTANT CASE IS ON THE GROSS PROFIT (I.E., @ 10% OF THE GROSS RECEIPT FOR A PERIOD OF 10 YEARS) AND NOT THE NET P ROFIT, AS WAS THE CASE IN THE CITED CASE BEFORE HONBLE PATNA HIGH COURT. THE SAME, IN OUR V IEW, IS TO NO CONSEQUENCE INASMUCH AS THE SAME WOULD ONLY IMPACT THE VALUE OF THE AMOU NT UNDER REFERENCE, I.E., TO BE PAID TO THE NOMINEE OR THE LEGAL HEIR, AND NOT THE CHARACTE R OR THE QUALITY OF THE RECEIPT AND, THEREFORE, HAS NO BEARING ON ITS CHARACTER AS TO BE ING EITHER REVENUE OR CAPITAL, WHICH THE CONTROVERSY INVOLVED ESSENTIALLY IS. IN FACT, AS WE OBSERVE ON GOING THROUGH THE DECISION IN THE CASE OF JAYA BHASKARAN (SUPRA), THE PAYEE IN THAT CASE IS ALSO M/S. K.S. AIYAR & CO., MUMBAI, SO THAT THE FACTS OF THE TWO CASES ARE NEAR IDENTICAL. WE ARE ALSO UNABLE TO APPRECIATE THE REVENUES CASE WITH REFERENCE TO S.55(2)(A)(II) OF THE ACT, AS SOUGHT TO BE MADE OUT PER ITS GD. NO. 3. THE IMPUGNED AMOUNT/S HAS BEEN CONSIDERED AS TAX EXEMPT IN VIEW OF IT BEING A CAPITAL RECEIPT IN THE HANDS OF THE RECIPIENT, AND NOT FOR THE REASON THAT THE COMPUTATION MACHINERY FAILS, FOR THE REVENUE TO ADVERT TO THE SAID PROVISION, ASCRIBING A NIL COST OF ACQUISITION TO THE SPECIFIED CAPITAL ASSETS, AND WHICH DO NOT INCLUDE THE RIGHT OF A DECEASED PARTNER. UNDER THE GIVEN FACTS AND CIRCUMSTANCES, WE FIND N O REASON TO DEPART FROM THE CONSIDERED AND CONSISTENT VIEW BY THE TRIBUNAL IN T HE ASSESSEES CASE; IN FACT, TAKEN BY FOLLOWING THE LEGAL PRECEDENTS. ACCORDINGLY, RESPEC TFULLY FOLLOWING THE SAME, WE CONFIRM THE IMPUGNED ORDER. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 11, 2013 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 1* MUMBAI; 2 DATED : 11.12.2013 4 ITA NOS.5950&5951/MUM/2012 (A.YS.2007-08 & 2009-10) ASST. CIT VS. SMT. LAXMI MANI AIYER 3 . ./A.K.PATEL. PS ! ' #$%& '&$ / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 4+ ( ) / THE CIT(A) 4. ( 4+ / CIT CONCERNED 5. 5)67 $3+389 , , 89/ , ( 1* / DR, ITAT, MUMBAI 6. 7: ;* / GUARD FILE ! ( / BY ORDER, ) / (* + (DY./ASSTT. REGISTRAR) , ( 1* / ITAT, MUMBAI