ACIT, CHENNAI V. M/s. TVS Investments Limited, CHENNAI

ITA 926/CHNY/2011

• Counselvise Citation: 92621714 RSA 2011
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-10-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 19-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital asset; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO. 926/MDS/2011 (ASSESSMENT YEAR : 2000-01 ) THE ACIT COMPANY CIRCLE III(2) CHENNAI VS M/S TVS INVESTMENTS LTD JAYALAKSHMI ESTATES 29(OLD NO.8), HADDOWS ROAD CHENNAI [PAN AAACT 1154H ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B RENGARAJAN, JR. STANDING COUNSEL RESPONDENT BY : SHRI R.VIJAYARAGHAVAN, ADVOCATE DATE OF HEARING : 4-10-2011 DATE OF PRONOUNCEMENT : 4-10-2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE, FOR ASSESSMENT YE AR 2000-01, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) III, CHENNAI, DATED 25.2.2011. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT (APPEALS) HAS ERRED IN HOLDI NG THAT ONCE KISAN VIKAS PATRAS ARE TREATED AS INVESTMENTS BY THE ASSESSEE COMPANY, THEN THE SAME HAVE TO BE ITA 926/11 :- 2 -: TREATED AS CAPITAL ASSET AND ALL OTHER CONSEQUENCES WOULD FOLLOW. 2.1 IT IS SUBMITTED THAT KISAN VIKAS PATRAS ARE NOT LISTED BONDS OR SECURITIES. AS PER THIRD PROVISO TO SECTIO N 48, INDEXATION BENEFIT IS NOT AVAILABLE IN THE CASE OF TRANSFER OF A LONG TERM CAPITAL ASSET BEING BOND OR DEBENTUR E OTHER THAN CAPITAL INDEXED BONDS ISSUED BY THE GOVERNMENT. 2.2 IT IS FURTHER SUBMITTED THAT THE TREATMENT O F KISAN VIKAS PATRAS AS CAPITAL ASSET UNDER THE CAPTION 'INVESTMENTS' IN THE BALANCE SHEET BY THE ASSESSEE IS ONLY AN ACCOUNTING TREATMENT AND CANNOT SUPERSEDE T HE PROVISIONS OF THE ACT. 2.3 IT IS SUBMITTED THAT THE DECISION OF THE HON 'BLE ITAT, 'C' BENCH IN ITA NOS.2310 & 2311/MDS/200S DT.30-01- 2009 RELIED ON BY THE LEARNED CIT(A) HAS NOT BECOME FINAL AND THE DEPARTMENT HAS PREFERRED APPEAL TO HI GH COURT U/S.260A. 2.4 IT IS FURTHER SUBMITTED THAT THE LEARNED CIT (A) ORDER IN ITA NO.535/2004-0S DT.12-07-2005 FOR THE A.Y 199 9- 00 IN THE CASE OF M/S.TVS FINANCE & SERVICES LTD. H AS NOT BECOME FINAL AND APPEAL HAS BEEN PREFERRED BEFO RE THE HON'BLE ITAT. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUC ED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS REGARDING ASSESSEES CLAIM FOR SUBSTITUTION OF INDEXED COST O F LONG TERM CAPITAL ASSET, VIZ. KISAN VIKAS PATRAS (KVPS). THE ASSESSE E HAS ADMITTED A SHORT TERM CAPITAL GAIN OF ` 1,93,20,473/- ON THE SALE OF PLANT AND MACHINERY AND HAS ALSO CLAIMED LONG TERM CAPITAL LO SS ON SALE OF KVPS FOR ` 25,09,653/- AGAINST THE SHORT TERM CAPITAL GAIN OF ` 1,93,20,473/- ITA 926/11 :- 3 -: AND RESULTANTLY, HAS SHOWN CAPITAL GAIN OF ` 1,68,10,820/- IN THE STATEMENT OF INCOME. THE ASSESSEE HAS CLAIMED INDE XATION BENEFIT ON REDEMPTION OF KVPS. THE ASSESSING OFFICER HAS TREA TED THE KVPS EQUIVALENT TO BONDS AND SINCE THEY ARE NOT LISTED B ONDS OR SECURITIES, HE HAS NOT FOUND THE KVPS ELIGIBLE FOR INDEXATION A ND HENCE, HAS DISALLOWED THE SAME. BUT ON THE CONTRARY, THE LD. CIT(A) HAS ALLOWED THIS CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISIO N OF ITAT, CHENNAI, C BENCH IN I.T.A.NOS.2310 AND 2311/MDS/2005, DATE D 30.1.2009 PASSED IN THE CASE OF ASSESSEES GROUP COMPANY, NAM ELY, M/S TVS FINANCE AND SERVICES LTD FOR ASSESSMENT YEARS 199 9-2000 AND 2000- 01. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE RECORDS. AS IS EVIDENT FROM GROUND NOS.2.3 AND 2.4 WHICH CLEARLY EXHIBIT THAT THE ISSUE INVOLVED I N THIS APPEAL STANDS SQUARELY COVERED BY THE AFOREMENTIONED TRIBUNAL ORD ER, BUT IN VIEW OF THE DEPARTMENT THIS DECISION HAS NOT BECOME FINAL A ND APPEAL HAS BEEN PREFERRED AGAINST THE SAME. THE LD.AR INVI TED OUR ATTENTION TO PAGE 7 OF TRIBUNAL ORDER RELIED ON BY THE LD. CIT(A ). WE HAVE ALSO GONE THROUGH THAT BUT THIS FACT IS CLEARLY EVIDENT FORM THE GROUNDS ITSELF AND THE LD.DR HAS NOT DISPUTED THE SAME. TH EREFORE, BY ITA 926/11 :- 4 -: RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER (SUPRA) I N WHICH THE MAIN ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE, W E CANNOT ALLOW THIS APPEAL OF THE REVENUE. ACCORDINGLY, WE CONFIRM TH E IMPUGNED ORDER AND DISMISS THE REVENUES APPEAL. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAN DS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 4.10.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 4 TH OCTOBER, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR