Microsen Control Devices P Ltd., Coimbatore V. ACIT, Coimbatore

ITA 982/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90665 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2015
• Court: TRIBUNAL
• Department Lawyers: S BALASUBRAMANIAN
• Assessee Lawyers: K RAGHU
• Keywords: Capital asset
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C' BENCH : CHENNAI . . . , ! , ' #$ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO.982/MDS/2015 / ASSESSMENT YEAR : 2010-11 M/S MIKROSEN CONTROL DEVICES P. LTD 6, SASTRI NAGAR, AERODROME POST AVANASHI ROAD COIMBATORE 641 014 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I COIMBATORE [PAN AABCM 2243 F ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI K. RAGHU, CA /RESPONDENT BY : SHRI S. BALASUBRAMANIAN, CIT / DATE OF HEARING : 14-07-2015 / DATE OF PRONOUNCEMENT : 17-07-2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX-I, COIMBAT ORE, DATED 9.3.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. SHRI K. RAGHU, LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE-COMPANY PURCHASED A LAND MEASURIN G 1.25 ACRES IN ITA NO.982/15 :- 2 -: SARAVANAMPATTY FOR A TOTAL CONSIDERATION OF ` 40,84,000/-. SUBSEQUENTLY, A SALE AGREEMENT WAS ENTERED INTO BY THE ASSESSEE WITH M/S MIDAS HOMES LTD. ON 8.2.2007 FOR SALE OF T HE ABOVE SAID LAND FOR ` 1.25 CRORES AND THE ASSESSEE HAS ALSO RECEIVED AN ADVANCE OF ` 90 LAKHS ON 18.2.2007. THE ASSESSEE RECEIVED ANOT HER SUM OF ` 20 LAKHS ON 28.2.2007 AND THE BALANCE OF ` 12.50 LAKHS WAS RECEIVED ON 5.4.2007. FOR THE ASSESSMENT YEAR 2008-09, THE AS SESSEE HAS OFFERED THE PROFIT ON SALE OF THE ABOVE SAID PROPERTY AS SH ORT TERM CAPITAL GAINS TO THE EXTENT OF ` 54,77,220/- FOR TAXATION. THE ASSESSEE EXECUTED A GENERAL POWER OF ATTORNEY ON 5.4.2007 AFTER RECEIVI NG THE ENTIRE SALE CONSIDERATION IN FAVOUR OF DR. SASIDHARAN AS REQUES TED BY M/S MIDAS HOMES LTD. ACCORDING TO THE LD. REPRESENTATIVE, TH E PURCHASER M/S MIDAS HOMES LTD. SUBSEQUENTLY SOLD THE PROPERTY ON 1.4.2009 TO M/S KARPAGAM STEELS. THE PRINCIPAL CIT FOUND THAT OFFE RING OF THE SHORT TERM CAPITAL GAINS FOR TAXATION FOR THE ASSESSMENT YEAR 2008-09 IS NOT CORRECT. ACCORDING TO THE PRINCIPAL CIT, THE CAPIT AL GAINS OUGHT TO HAVE BEEN OFFERED FOR TAXATION IN ASSESSMENT YEAR 2010-1 1. SINCE THE ASSESSING OFFICER HAS NOT PASSED A SPEAKING ORDER, HE FOUND THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. ACCORDINGLY, THE PRINCIPAL CIT DIRECTED T HE ASSESSING OFFICER TO ASSESS THE CAPITAL GAINS FOR ASSESSMENT YEAR 201 0-11. ACCORDING TO THE LD. REPRESENTATIVE, THE ENTIRE TRANSFER OF PROP ERTY TOOK PLACE IN ITA NO.982/15 :- 3 -: ASSESSMENT YEAR 2008-09, THEREFORE, THERE CANNOT BE ANY ASSESSMENT OF CAPITAL GAINS IN ASSESSMENT YEAR 2010-11. 2. ON THE CONTRARY, SHRI S. BALASUBRAMANIAN, LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT THE PROPERTY WAS SOLD TO M/S KARPAGAM STEELS ON 1.4.2009 FOR A TOTAL SALE CONSIDERATION OF ` 2 CRORES. BUT THE LAND SOLD BY SALE DEED DATED 1.4.2009 IS ONLY ONE A CRE OUT OF THE TOTAL EXTENT OF 1.25 ACRES. THEREFORE, THE DIFFERENCE BE TWEEN THE SALE CONSIDERATION ADMITTED BY THE ASSESSEE AND THE LAN D ACTUALLY SOLD TO M/S KARPAGAM STEELS HAS TO BE ASSESSED AS CAPITAL GAINS DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO THE LD. DR, THE PRINCIPAL CIT HAS RIGHTLY REVISED THE ORDER OF THE ASSESSING OFFI CER BY PLACING ON THE JUDGMENT OF THE HON'BLE APEX COURT IN SURAJ LAMP & INDUSTRIES (P) LTD VS STATE OF HARYANA [2011] 14 TAXMANN.COM 103. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. UND ER THE COMMON LAW, TRANSFER OF PROPERTY HAS TO BE MADE ONLY BY EXECUTI NG A REGISTERED SALE DEED. HOWEVER, INCOME-TAX ACT, 1961 PROVIDES FOR T RANSFER OF PROPERTY OTHERWISE THAN A REGISTERED SALE DEED. IN FACT, SEC. 2(47) OF THE ACT DEFINES THE TRANSFER WHICH DOES NOT REQUI RE ANY REGISTRATION AS REQUIRED UNDER THE COMMON LAW. INCOME-TAX ACT, BEI NG A SPECIAL ENACTMENT FOR THE PURPOSE OF ASSESSING THE TAXABLE INCOME AND LEVY OF ITA NO.982/15 :- 4 -: TAX THEREON, THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE DEFINITION FOUND IN SEC. 2(47)OF THE ACT HAS TO PR EVAIL OVER THE DEFINITION PROVIDED IN SEC. 54 OF THE TRANSFER OF P ROPERTY ACT. THEREFORE, THE REGISTERED SALE DEED MAY NOT BE RELE VANT FACTOR FOR TRANSFER OF PROPERTY UNDER THE INCOME-TAX ACT. FOR THE LIMITED PURPOSE OF ASSESSING THE CAPITAL GAINS, THE TRANSFER OF PRO PERTY HAS TO BE EXAMINED AS PER THE PROVISIONS IN SEC. 2(47) OF THE ACT. 4. LET US NOW EXAMINE WHETHER THERE WAS ANY TRANSFER O F PROPERTY AS PER THE AGREEMENT DATED 18.2.2007 ENTER ED INTO BETWEEN THE ASSESSEE AND M/S MIDAS HOMES LTD., THE COPY O F WHICH IS FILED BY THE ASSESSEE. CLAUSE (6) OF THE AGREEMENT SAYS TH AT THE ASSESSEE HAS TO DELIVER THE VACANT POSSESSION OF THE LAND TO THE PURCHASER ON RECEIPT OF THE BALANCE SALE CONSIDERATION. THERE I S AN ENDORSEMENT IN THE DOCUMENT WHICH SHOWS THAT THE ASSESSEE HAS REC EIVED THE BALANCE SALE CONSIDERATION ON 5.4.2007 AND THE PHYS ICAL POSSESSION OF THE LANDED PROPERTY WAS HANDED OVER TO THE PURCHASE R. WHEN THE PHYSICAL POSSESSION OF THE LAND WAS HANDED OVER TO THE PURCHASER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE RE WAS A TRANSFER OF PROPERTY FOR THE LIMITED PURPOSE OF INCOME-TAX ACT, 1961 U/S 2(47)(V) OF THE ACT. THIS ENDORSEMENT MADE IN THE AGREEMEN T WAS NOT EXAMINED EITHER BY THE ASSESSING OFFICER OR BY THE PRINCIPAL CIT. SUBSEQUENTLY, THE ASSESSEE EXECUTED A GENERAL POWE R OF ATTORNEY IN ITA NO.982/15 :- 5 -: FAVOUR OF DR. SASIDHARAN, CHAIRMAN OF M/S MIDAS HOM ES LTD. ON THE BASIS OF THE SAID POWER OF ATTORNEY, DR. SASIDHARAN SOLD THE PROPERTY TO M/S KARPAGAM STEELS. THEREFORE, THE SALE BETWEE N THE ASSESSEE AND M/S MIDAS HOMES LTD. IS A SEPARATE ONE AND THE SALE BETWEEN M/S MIDAS HOMES LTD. REPRESENTED BY DR. SASIDHARAN AN D M/S KARPAGAM STEELS IS ANOTHER SALE. THE PRINCIPAL CIT APPEARS TO HAVE TREATED THE ENTIRE TRANSACTION AS A SINGLE AND COMPOSITE ONE AN D INTENDED TO TAX THE CAPITAL GAINS AT THE HANDS OF THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF THE DEFINITION I N SEC. 2(47) OF THE ACT, THERE WAS A SALE BETWEEN THE ASSESSEE AND M/S MIDAS HOMES LTD. ON 5.4.2007 WHEN THE PHYSICAL POSSESSION OF TH E PROPERTY WAS SAID TO BE HANDED OVER. SINCE THIS FACT WAS NOT EX AMINED EITHER BY THE ASSESSING OFFICER OR BY THE PRINCIPAL COMMISSIO NER, THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER HAS TO EXAMINE THE MATTER INDEPENDENTLY WITHOUT BEING INFL UENCED BY ANY OF THE OBSERVATION MADE BY THE PRINCIPAL COMMISSIONER. IN OTHER WORDS, THE ASSESSING OFFICER SHALL EXAMINE THE AGREEMENT S AID TO BE ENTERED INTO BY THE ASSESSEE AND M/S MIDAS HOMES LTD. AND ALSO EXAMINE THE ENDORSEMENT SAID TO BE MADE IN THE AGREEMENT REGARD ING HANDING OVER OF VACANT POSSESSION OF THE LAND AND PAYMENT O F THE BALANCE SALE CONSIDERATION AND THEREAFTER HAS TO DECIDE THE MATT ER AFRESH IN ITA NO.982/15 :- 6 -: ACCORDANCE WITH LAW. IT IS MADE CLEAR THAT THE ASS ESSING OFFICER SHALL INDEPENDENTLY EXAMINE THE MATTER AND DECIDE THE SAM E IN ACCORDANCE WITH LAW WITHOUT BEING INFLUENCED BY ANY OF THE OBS ERVATION MADE BY THE PRINCIPAL CIT IN THE IMPUGNED ORDER OR THIS TRI BUNAL IN THIS ORDER AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSES SEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OF JULY, 2015, AT CHENNAI. SD/- SD/- ( ! ) (CHANDRA POOJARI) ' / ACCOUNTANT MEMBER ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 17 TH JULY, 2015 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF