ACIT, CHENNAI V. Barry Wehmiller Int Resources Pvt. Ltd., CHENNAI

ITA 682/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90309 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-04-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 19-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Section: 147; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.681, 682, 683 & 684/MDS/2014 ' (' / ASSESSMENT YEARS: 2001-02, 2002-03, 2003-04 & 2005-06 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), CHENNAI - 600 034. V. M/S BARRY WEHMILLER INT RESOURCES PVT. LTD., MPL SILICON TOWERS, NO.23-I/B-3, 10 TH FLOOR, VELACHERRY TAMBARAM MAIN ROAD, PALLIKARANAI, CHENNAI - 600 100. PAN : AAACM 4854 B (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH.P. RADHAKRISHNAN, JCIT ,-*+ . / / RESPONDENT BY : SH.VIKRAM VIJAYARAGHAVAN, ADVOCATE 0 . 1$ / DATE OF HEARING : 06.04.2015 2!( . 1$ / DATE OF PRONOUNCEMENT : 17.04.2015 2 I.T.A. NOS.681 TO 684/MDS/14 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE VARIOUS ORDERS OF THE COMMISSIONER OF INCOME TAX (A PPEALS)-II, CHENNAI, DATED 18.10.2013 AND PERTAINS TO ASSESSMEN T YEARS 2001- 02, 2002-03, 2003-04 & 2005-06. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS, THEY ARE HEARD TO GETHER AND DISPOSED OF BY THIS COMMON ORDER. 2. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') TO THE EXTENT OF ` 57,56,826/- FOR EXPORT OF SOFTWARE. THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDINGS, FOUND THAT THE OWNERSHI P AND THE BENEFICIAL INTEREST OF THE ASSESSEE-COMPANY WAS TRA NSFERRED DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSES SEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 10A IN VIEW OF THE PROVISIONS OF SECTION 10A(9) OF THE ACT. HOWEVER, THE CIT(APPEAL S) FOUND THAT THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESS MENT YEAR 2001- 02 IN I.T.A. NO. 554/MDS/2009 DATED 04.06.2010 FOUN D THAT THE BENEFICIAL OWNERSHIP WAS NEVER TRANSFERRED. BY FOL LOWING THE ORDER OF THIS TRIBUNAL, THE CIT(APPEALS) DIRECTED THE ASS ESSING OFFICER TO 3 I.T.A. NOS.681 TO 684/MDS/14 ALLOW DEDUCTION UNDER SECTION 10A OF THE ACT. REFE RRING TO THE ORDER OF THIS TRIBUNAL IN I.T.A. NO.554/MDS/2009, T HE LD. D.R. SUBMITTED THAT THE ISSUE AROSE FOR CONSIDERATION BE FORE THE TRIBUNAL WAS WITH REGARD TO EXERCISE OF REVISIONAL JURISDICT ION UNDER SECTION 263 OF THE ACT. THIS TRIBUNAL FOUND THAT THE ORDER DROPPING THE PROCEEDINGS INITIATED UNDER SECTION 147 IS NOT AN O RDER AT ALL WHICH CAN BE SUBJECTED TO REVISION UNDER SECTION 263 OF T HE ACT. ACCORDINGLY, THE TRIBUNAL FOUND THAT THE COMMISSION ER HAS WRONGLY ASSUMED THE JURISDICTION UNDER SECTION 263 OF THE A CT. THE LD. D.R. FURTHER POINTED OUT THAT THE TRIBUNAL HAD NO OCCASI ON TO EXAMINE THE ISSUE OF DEDUCTION UNDER SECTION 10A OF THE ACT. T HEREFORE, THE DECISION OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2 001-02 CANNOT BE MADE APPLICABLE FOR THE YEAR UNDER CONSIDERATION. 3. ON THE CONTRARY, SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THIS TRIBUNAL IN T HE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02 EXAMINED THE ISSUE ELABORATELY IN A PROCEEDING AROSE OUT OF SECTION 263 OF THE ACT . THIS TRIBUNAL FOUND THAT THE TRANSFER OF SHARES WAS ONLY TO COMPL Y WITH LEGAL REQUIREMENT BUT, THE BENEFICIAL OWNERSHIP WAS NEVER TRANSFERRED. BY TAKING A CLUE FROM THIS OBSERVATION OF THE TRIBU NAL IN ASSESSEE'S OWN CASE, THE CIT(APPEALS) FOUND THAT THE SHARES WE RE NEVER 4 I.T.A. NOS.681 TO 684/MDS/14 TRANSFERRED. THEREFORE THE PROVISIONS OF SECTION 1 0A(9) OF THE ACT ARE NOT APPLICABLE. ACCORDING TO LD. COUNSEL, THE ISSUE IS COVERED BY THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02 IN I.T.A. NO. 554/MDS/2009. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A OF THE ACT WAS REJE CTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE OWNERSHIP OF THE UNDERTAKING WAS TRANSFERRED. THE CIT(APPEALS) ALLO WED THE CLAIM OF THE ASSESSEE BY PLACING RELIANCE ON THE ORDER OF TH IS TRIBUNAL DATED 04.06.2010 IN THE ASSESSEE'S OWN CASE FOR ASSESSMEN T YEAR 2001- 02. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF TH IS TRIBUNAL DATED 04.06.2010. THE ISSUE AROSE BEFORE THE TRIBUNAL FO R CONSIDERATION WAS VALIDITY OF THE PROCEEDINGS INITIATED UNDER SEC TION 263 OF THE ACT. THIS TRIBUNAL, AFTER EXAMINING THE MATERIAL A VAILABLE ON RECORD, FOUND THAT THE ASSESSING OFFICER INITIATED PROCEEDI NGS UNDER SECTION 147 OF THE ACT, HOWEVER, THE SAME WAS SUBSEQUENTLY DROPPED. THE ADMINISTRATIVE COMMISSIONER IN EXERCISING HIS POWER UNDER SECTION 263 OF THE ACT, INITIATED REVISIONAL PROCEEDING AGA INST THE ORDER PASSED UNDER SECTION 147 OF THE ACT. THE TRIBUNAL FOUND THAT THE ORDER DROPPING THE PROCEEDING IS NOT AN ORDER AT AL L WHICH CAN BE 5 I.T.A. NOS.681 TO 684/MDS/14 SUBJECTED TO REVISION UNDER SECTION 263 OF THE ACT. THE TRIBUNAL HAS FOUND THAT THE COMMISSIONER HAD WRONGLY ASSUMED JURISDICTION UNDER SECTION 263 OF THE ACT. THIS TRIBUNAL HAS AL SO OBSERVED THAT THE SHARES WERE TRANSFERRED ONLY TO COMPLY WITH LEG AL REQUIREMENT. HOWEVER, THE BENEFICIAL OWNERSHIP WAS NEVER TRANSFE RRED. THE TRIBUNAL HAS NOT EXAMINED THE CIRCUMSTANCES UNDER W HICH THE SHARES WERE TRANSFERRED. PROBABLY, IT MAY NOT BE R EQUIRED IN THAT CASE SINCE THE TRIBUNAL HAS COME TO A CONCLUSION TH AT THE ASSUMPTION OF JURISDICTION BY THE COMMISSIONER UNDE R SECTION 263 OF THE ACT ITSELF WAS WRONG. THE TRIBUNAL HAS NO O CCASION TO EXAMINE THE ISSUE OF DEDUCTION UNDER SECTION 10A ON MERIT AND THE CIRCUMSTANCES UNDER WHICH THE SHARES WERE TRANSFERR ED. THEREFORE THIS TRIBUNAL IS OF THE OPINION THAT THE DECISION O F THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02, WH ICH AROSE OUT OF THE ORDER OF THE ADMINISTRATIVE COMMISSIONER UND ER SECTION 263, MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. TH E FACT REMAINS THAT THERE WAS TRANSFER OF SHARES. THE ASSESSEE HA S CLAIMED THAT THE BENEFICIAL OWNERSHIP REMAINS WITH THE ASSESSEE AND IT WAS NEVER TRANSFERRED. 5. THE PARLIAMENT ENACTED THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 TO PROHIBIT THE BENAMI TRAN SACTIONS IN THE 6 I.T.A. NOS.681 TO 684/MDS/14 COUNTRY. THEREFORE, NO ONE COULD HOLD ANY BENEFICI AL INTEREST IN RESPECT OF THE PROPERTY WHEN THE LEGAL TITLE REMAIN S WITH OTHER PERSON. THE PROVISIONS OF BENAMI TRANSACTIONS (PRO HIBITION) ACT, 1988 WAS NOT BROUGHT TO THE NOTICE OF THE BENCH OF THE TRIBUNAL WHICH CONSIDERED THE CASE FOR THE ASSESSMENT YEAR 2 001-02. THEREFORE, THIS TRIBUNAL HAD NO OCCASION TO EXAMINE THE IMPLICATIONS OF THE PROVISIONS OF BENAMI TRANSACTIO NS (PROHIBITION) ACT, 1988 WHEN THE LEGAL OWNERSHIP WAS TRANSFERRED BY THE ASSESSEE. THE ASSESSING OFFICER ALSO HAD NO OCCASI ON TO EXAMINE THE CONSEQUENCE OF THE BENAMI TRANSACTIONS (PROHIBI TION) ACT, 1988 CONSEQUENT TO LEGAL TRANSFER OF SHARES. THERE FORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF T HE PROVISIONS OF BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 WITH RE GARD TO THE SO- CALLED TRANSFER OF SHARES. GIVING ONE MORE OPPORTU NITY TO THE ASSESSING OFFICER TO CONSIDER THE CASE IN THE LIGHT OF THE PROVISIONS OF BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 MAY NOT PREJUDICE THE INTEREST OF EITHER PARTY. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT BY GIVING SUCH OPPORTUNITY TO THE DEPA RTMENT AND ASSESSEE WOULD DEFINITELY PROMOTE THE CAUSE OF JUST ICE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ISSUE OF DEDUCTION UNDER SECTION 10A OF THE ACT IS REMITTED BACK TO 7 I.T.A. NOS.681 TO 684/MDS/14 THE FILE OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL EXAMINE THE ISSUE IN THE LIGHT OF THE PROVISIONS OF BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPO RTUNITY TO THE ASSESSEE. 5. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 17 TH OF APRIL, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !' ) ( . . . ) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 17 TH APRIL, 2015. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-II, CHENNAI 4. 0 81 /CIT, CHENNAI-I, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.