ITO,Ward-11(2), Kolkata, Kolkata V. M/s Sur Enamel & Stamping Works Pvt. Ltd., Kolkata

ITA 771/KOL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4940 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 24-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 14-05-2012
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Capital asset

Judgement Text

1 ITA NO.771/KOL/2012-M/S. SUR ENAMEL & STAMPING WORK S PVT.LTD-A.Y.200708 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NO.771/KOL/2012 ASSESSMENT YEAR : 2007-08 I.T.O., WARD-11(2) -VERSUS- M/S. SUR ENAMEL & ST AMPING KOLKATA WORKS PVT.LTD., KOLKATA (PAN:AAJCS3931Q) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SMT. RANU BISWAS, JCIT, SR.D R FOR THE RESPONDENT: NONE DATE OF HEARING : 04.02.2016. DATE OF PRONOUNCEMENT : 02.03.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 07.02.2012 OF CIT(A)- XII, KOLKATA RELATING TO A.Y.2007-08. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS :- 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN COMING TO CONCLUSION THAT THE CAPITAL GAIN SHOULD B E ASSESSED IN THE YEAR OF TAKING ADVANCE IN F.YR.-2005-06 AND NOT IN THE YEAR IN WHI CH THE POSSESSION OF THE PROPERTY WAS HANDED OVER AND THE DEED OF CONVEYANCE WAS REGI STERED. 2) LD. CIT(A) ALSO ERRED IN ALLOWING RELIEF WITHOUT CONSIDERING THE FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE THE NECESSARY DOCUMENTS IN SUPPORT OF INVESTMENT IN SPECIFIED BONDS FOR CLAIMING EXEMPTION U/S 54EC. 3) THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTE R, MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ENAMEL WARE, ENAMEL FRIT INCIDENTAL TO ENAMEL INDUS TRY. THE ASSESSEES MANUFACTURING ACTIVITIES WERE SUSPENDED AND THE FACTORY WAS CLOSE D AS EARLY AS 23.10.1991. THIS WAS DUE TO NON PAYMENT OF DUES BY THE ASSESSEE TO UNITE D BANK OF INDIA AND OTHER 2 ITA NO.771/KOL/2012-M/S. SUR ENAMEL & STAMPING WORK S PVT.LTD-A.Y.200708 CREDITORS. A SUIT WAS FILED BY THE BANK AND OTHER C REDITORS. THE HONBLE CALCUTTA HIGH COURT DIRECTED THE SALE OF THE LAND BELONGING TO TH E ASSESSEE. ORDER FOR SALE OF THE LAND OF THE ASSESSEE WAS PASSED BY THE HONBLE CALCUTTA HIGH COURT WAS PASSED ON 07.10.2005. IT IS NOT IN DISPUTE THAT PURSUANT TO T HE ORDER OF THE SALE, POSSESSION OF THE PROPERTY WAS ALSO HANDED OVER TO THE PURCHASER M/S. AGW REALTORS PVT. LTD. THE CONSIDERATION REALISED ON THE SALE WAS RS.9.11 CROR ES. 4. IN THE RETURN OF INCOME FILED FOR A.Y.2007-08 T HE ASSESSEE DECLARED LONG TERM CAPITAL GAIN ON SALE OF THE LAND AT RS.2,11,09,250/ - AND CLAIMED EXEMPTION U/S 54EC OF THE ACT. SINCE NO EVIDENCE FOR HAVING MADE INVESTME NTS IN SPECIFIC ASSETS REFERRED TO SECTION 54EC OF THE INCOME TAX ACT, 1961 (ACT), THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 54EC OF THE ACT AND BROU GHT TO TAX LONG TERM CAPITAL GAIN OF RS.2,11,09,250/-. 5. BEFORE CIT(A) THE ASSESSEE CONTENDED THAT THERE WAS NO TRANSFER OF ANY CAPITAL ASSET DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2007 -08. THE ASSESSEE POINTED OUT THAT THE SALE OF THE LAND TOOK PLACE PURSUANT TO AN ORDE R BY THE HONBLE CALCUTTA HIGH COURT DATED 07.10.2005 AND THEREAFTER DURING THE PR EVIOUS YEAR RELEVANT TO A.Y.2006- 07 POSSESSION WAS HANDED OVER TO THE PURCHASER AND TRANSFER IN TERMS OF SECTION 2(47)(V) OF THE ACT HAD TAKEN PLACE DURING A.Y.2006 -07. THE ASSESSEE POINTED OUT THAT IT HAD ERRONEOUSLY DECLARED LONG TERM CAPITAL GAIN IN ITS RETURN FOR A.Y.2006-07. THE ASSESSEE POINTED OUT THAT IN TERMS OF CIRCULAR NO.1 4 OF 1955 DATED 11.04.1955 THE OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGES OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS AND HAVE TO ASSIST THE TAX PAYER IN EVER Y REASONABLE WAY. 6. TAKING THE ABOVE SUBMISSIONS INTO CONSIDERATION THE CIT(A) HELD THAT TRANSFER IN TERMS OF SECTION 2(47)(V) OF THE ACT HAD TAKEN PLAC E ONLY IN A.Y.2006-07 AND THAT WAS THE APPROPRIATE YEAR IN WHICH LONG TERM CAPITAL GAI N HAS TO BE BROUGHT TO TAX. CIT(A) GAVE LIBERTY TO THE AO TO TAKE APPROPRIATE ACTION F OR A.Y.2006-07 AND HELD THAT ACTION OF AO IN BRINGING TO TAX IN RESPECT OF LONG TERM CA PITAL GAIN FOR A.Y.2007-08 WAS NOT PROPER. 3 ITA NO.771/KOL/2012-M/S. SUR ENAMEL & STAMPING WORK S PVT.LTD-A.Y.200708 7. AGGRIEVED BY ORDER OF CIT(A) REVENUE HAS PREFERR ED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. DESPITE SERVICE OF NOTICE THROUGH THE DR NONE AP PEARED ON BEHALF OF THE ASSESSEE. WE HAVE HEARD THE SUBMISSIONS OF THE LEA RNED DR, WHO RELIED ON THE ORDER OF AO. HE REITERATED THE STAND OF THE REVENUE AS RE FLECTED IN GROUND NO.1 RAISED BY THE REVENUE BEFORE THE TRIBUNAL. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED DR AND ARE OF THE VIEW THAT THE SAME IS WITHOUT ANY ME RIT. . SEC.2(47) OF THE ACT DEFINES TRANSFER FOR THE PURPOSE OF THE ACT. IT READS TH US: SEC.2 (47) 'TRANSFER', IN RELATION TO A CAPITAL AS SET, INCLUDES, (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASS ET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT ; OR (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON B OND; OR (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CO NTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 ( 4 OF 1882) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATIO N OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. EXPLANATION [1]: FOR THE PURPOSES OF SUB-CLAUSES (V ) AND (VI), 'IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SEC TION 269UA; 9. IT CAN BE SEEN FROM THE PROVISIONS OF CLAUSE (V) OF SEC.2(47) OF THE ACT THAT ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERT Y TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), WOULD ALSO BE TRANS FER AND REGISTERED CONVEYANCE IS NOT A CONDITION PRECEDENT FOR CONSIDERING A TRANSAC TION AS RESULTING IN TRANSFER. THIS IS A DEPARTURE UNDER THE ACT AS AGAINST THE NORMAL RUL E THAT UNLESS THERE IS A REGISTERED DEED OF CONVEYANCE THERE CAN BE NO PASSING OF TITLE BY TRANSFER. IN THE PRESENT CASE, THE REVENUE DOES NOT DISPUTE THE FACT THAT THERE WA S AGREEMENT FOR SALE CONSEQUENT TO THE ORDER OF HONBLE CALCUTTA HIGH COURT WITH THE P URCHASER OF THE PROPERTY AND 4 ITA NO.771/KOL/2012-M/S. SUR ENAMEL & STAMPING WORK S PVT.LTD-A.Y.200708 PURCHASER WAS PUT IN POSSESSION OF THE PROPERTY PUR SUANT TO THE AFORESAID AGREEMENT IN PART PERFORMANCE OF THE AGREEMENT FOR SALE. THE REV ENUE DOES NOT DISPUTE THAT SUCH PART PERFORMANCE WAS IN THE NATURE REFERRED TO U/S 53A OF TRANSFER OF PROPERTY ACT 1982. THE REVENUE ALSO DOES NOT DISPUTE THAT THE AG REEMENT AND HANDING OVER OF POSSESSION TOOK PLACE DURING THE PREVIOUS YEAR RELE VANT TO A.Y.2006-07. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE WAS A T RANSFER THAT TOOK PLACE DURING THE PREVIOUS YEA RELEVANT TO A.Y.2006-07 WITHIN THE MEA NING OF SECTION 2(47)(V) OF THE ACT. THEREFORE THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THERE WAS NO LONG TERM CAPITAL GAIN THAT COULD BE BROUGHT TO TAX IN A.Y.2007-08. W E DO NOT FIND ANY GROUND TO INTERFERE WITH THE ORDER OF CIT(A). GROUND NO.2 IS PURELY CONSEQUENTIAL AND REQUIRES NO SPECIFIC ADJUDICATION. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. O RDER PRONOUNCED IN THE COURT ON 02.03.2016. SD/- SD/- [WASEEM AHMED ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02.03.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. SUR ENAMEL & STAMPING WORKS PVT. LTD., 24, D R.L.M.BHATTACHARJEE ROAD, ENTALLY, KOLKATA-700014. 2.I.T.O., WARD-11(2), KOLKATA 3. CIT(A)-XII, KOLKATA 4. CIT-IV, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, I TAT, KOLKATA BENCHES 5 ITA NO.771/KOL/2012-M/S. SUR ENAMEL & STAMPING WORK S PVT.LTD-A.Y.200708