Palaniappan Sockalingam , Chikmagalur V. Assistant Commissioner of Income Tax Circle-1 , Hassan

ITA 612/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0288 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-12-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 28-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KANNAN NARAYAN
• Assessee Lawyers: S. RAMSUBRAMANIAN
• Keywords: Gift; Capital Gains
• Section: 90; 101

Judgement Text

ITA NO.612/BANG/2019 PALANIAPPAN SOCKALINGAM, CHIKMAGALUR IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.612/BANG/2019 ASSESSMENT YEAR: 2015-16 PALANIAPPAN SOCKALINGAM SONA ESTATE, ATHIGUNDI POST CHIKMAGALUR TALUK CHIKMAGALUR-577 101 PAN NO : ACRPS1785K VS. ACIT CIRCLE-1 HASSAN APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMSUBRAMANIAN, A.R. RESPONDENT BY : SHRI KANNAN NARAYAN, D.R. DATE OF H EARING : 28.12.2020 DATE OF PRONOUNCEMENT : 28.12.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 31-01-2019 PASSED BY LD CIT(A), MYSURU AND IT RELAT ES TO THE ASSESSMENT YEAR 2015-16. 2. IN THE ORIGINAL GROUNDS OF APPEAL, THE ASSESS EE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE REJECTI ON OF FOREIGN TAX CREDIT CLAIMED BY THE ASSESSEE U/S 90 OF THE INCOME -TAX ACT,1961 ['THE ACT' FOR SHORT]. 3. THE ASSESSEE HAS ALSO RAISED FOLLOWING TWO A DDITIONAL GROUNDS:- ITA NO.612/BANG/2019 PALANIAPPAN SOCKALINGAM, CHIKMAGALUR PAGE 2 OF 4 4. THAT THE LEARNED LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN ASSESSING THE CAPITAL GAINS OF RS.1,53,46,827/- FRO M SALE OF AGRICULTURAL LAND IN MALAYSIA ON PROTECTIVE BASIS E VEN THOUGH THE AGRICULTURAL LAND DOES NOT BELONG TO THE APPELLANT. 5. THAT THE LEARNED LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN NOT PROVIDING THE BENEFIT OF SET OFF OF BROUGHT FORWARD SHORT TERM CAPITAL LOSS OF RS.44,48,910/- AGAINST THE LONG TER M CAPITAL GAINS DECLARED IN THE RETURN OF INCOME. THE ASSESSEE HAS FILED A PETITION PRAYING FOR ADMIS SION OF THE ABOVE SAID ADDITIONAL GROUNDS. IT IS STATED THAT A LL THE FACTS AND MATERIALS RELATING TO THE ABOVE SAID ADDITIONAL GRO UNDS ARE AVAILABLE ON RECORD. ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. NAT IONAL THERMAL POWER CORPORATION (229 ITR 383) AND JUTE CORPORATIO N OF INDIA LTD VS. CIT (187 ITR 688), THE ASSESSEE PRAYS FOR ADMIS SION OF THE ABOVE SAID ADDITIONAL GROUNDS. 4. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS RAISED A LEGAL ISSUE IN FIRST ADDITION AL GROUND (NUMBERED AS GROUND NO.4). IN THE SECOND ADDITIONAL GROUND ( NUMBERED AS GROUND NO.5), THE ASSESSEE SEEKS TO CLAIM SET OFF O F BROUGHT FORWARD LOSSES AS PER THE PROVISIONS OF THE ACT. ADMITTEDL Y, THE FACTS RELATING TO BOTH THESE ISSUES ARE AVAILABLE ON RECORD. ACCO RDINGLY, WE ADMIT BOTH THE ADDITIONAL GROUNDS URGED BY THE ASSESSEE. 5. WE SHALL FIRST TAKE UP THE ORIGINAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE. THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED FOREIGN TAX CREDIT OF RS.24,76,283/- U/S 90 OF THE ACT. TH E AO NOTICED THAT THE ASSESSEES FATHER HAD SOLD CERTAIN AGRICULTURAL LANDS HELD BY HIM MALAYSIA AND HAS PAID INCOME TAX IN MALAYSIA. THE ASSESSEE, IN HIS RETURN OF INCOME, HAS OFFERED THE CAPITAL GAINS ARI SING ON SALE OF AGRICULTURAL LANDS AND ACCORDINGLY CLAIMED CREDIT F OR TAXES PAID IN ITA NO.612/BANG/2019 PALANIAPPAN SOCKALINGAM, CHIKMAGALUR PAGE 3 OF 4 MALAYSIA. IT WAS DONE SO ON THE REASONING THAT ENT IRE SALE PROCEEDS WERE GIFTED TO THE ASSESSEE BY HIS FATHER. HOWEVER , SINCE THE INCOME TAX WAS PAID IN MALAYSIA BY FATHER OF THE ASSESSEE AND NOT BY THE ASSESSEE, THE AO REJECTED THE CLAIM PUT FORTH BY TH E ASSESSEE FOR FOREIGN TAX CREDIT. IT IS ALSO PERTINENT TO NOTE T HAT THE AO HAS ASSESSED THE CAPITAL GAIN ARISING ON SALE OF AGRICU LTURAL LANDS HELD BY FATHER OF THE ASSESSEE IN MALAYSIA ON PROTECTIVE B ASIS IN THE HANDS OF THE ASSESSEE. THE LD CIT(A) ALSO CONFIRMED THE R EJECTION OF CLAIM FOR FOREIGN TAX CREDIT. 6. WE HEARD THE PARTIES ON THIS ISSUE AND PERUS ED THE RECORD. WE NOTICE THAT THE LD CIT(A) HAS REJECTED THE CLAIM FO R FOREIGN TAX CREDIT WITH THE FOLLOWING OBSERVATIONS:- 4.2 IN RESPECT OF CAPITAL GAINS ON SALE OF AGRICULT URE LAND IN MALASIA THE APPELLANT HAS SUBMITTED THAT HI S FATHER SOLD AN AGRICULTURAL LAND OWNED BY HIM IN MALASIA AFTER DUL Y REMITTING THE CAPITAL GAINS TAXES TO MALAYSIAN GOVERNMENT. THE P OST-TAX SALE PROCEEDS WAS GIFTED TO THE ASSESSEE WHICH IS EXEMPT UNDER THE ACT. AS THE ASSESSEES FATHER FAILED TO FILE THE RETURN OF INCOME FOR AY 2015-16, THE CAPITAL GAINS ON SALE OF THE AGRICULTU RAL LAND IN MALAYSIA IS INCLUDED IN ASSESSEES RETURN OF INCOME ON A PROTECTIVE BASIS. THE ASSESSEE HAS CLAIMED RELIEF U/S 90 AGAI NST THE CAPITAL GAIN TAX PAID BY HIS FATHER IN MALAYSIA. THE OFFIC ER HAS DEMANDED RS.45,76,024/- TAX ON PROTECTIVE BASIS ALONG WITH I NTEREST ON LONG TERM CAPITAL GAINS AS THE CLAIM U/S 90 IS WITHHELD PENDING FOR VERIFICATION IN THE HANDS OF SRI PALANIAPPA CHETTIA R. DURING THE APPELLATE PROCEEDINGS THE APPELLANT THOUGH HAS BROU GHT THE PROOF FOR FILING THE RETURNS OF INCOME IN MALAYSIA IN THE HANDS OF THE FATHER, THE CREDIT FOR PAYMENT OF TAXES IN THE HAND S OF FATHER CANNOT BE TREATED AS PERTAINS TO THE APPELLANTS AND THERE FORE CANNOT BE GIVEN CREDIT OF THE SAME. FURTHER THE APPELLANT HI MSELF DECLARED THE CAPITAL GAINS AND CLAIMING THE CREDIT OF TAXES PAID IN MALAYSIA BY HIS FATHER IS NEITHER TENABLE NOR ACCEPTABLE. THER EFORE, THIS GROUND IS NOT ALLOWED. WE NOTICE THAT THE LD CIT(A) HAS GIVEN PROPER REASO NING FOR REJECTING THE CLAIM OF THE ASSESSEE. BEFORE US, THE ASSESSEE COULD NOT CONTROVERT THE DECISION RENDERED BY LD CIT(A). A CCORDINGLY, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS LEGALLY JUSTIFIE D IN REJECTING THE ITA NO.612/BANG/2019 PALANIAPPAN SOCKALINGAM, CHIKMAGALUR PAGE 4 OF 4 CLAIM FOR FOREIGN TAX CREDIT PUT FORTH BY THE ASSES SEE. ACCORDINGLY, WE CONFIRM THE ORDER PASSED BY LD CIT(A) ON THIS IS SUE. 7. WE SHALL NOW TAKE UP THE ADDITIONAL GROUNDS URGED BY THE ASSESSEE. WE HAVE NOTICED EARLIER THAT THESE GROUN DS ARE BEING TAKEN UP FOR THE FIRST TIME BEFORE US BY THE ASSESSEE. A CCORDINGLY, THE BENCH FELT THAT BOTH THESE ADDITIONAL GROUNDS REQUIRE EXA MINATION AT THE END OF THE AO. BOTH THE PARTIES AGREED WITH THE SA ID VIEW. ACCORDINGLY, WE RESTORE BOTH THE ADDITIONAL GROUNDS URGED BY THE ASSESSEE TO THE FILE OF AO FOR EXAMINING THEM IN AC CORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DEC, 2020 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 28 TH DEC, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE