UTSAV COLD STORAGE P LTD., JODHPUR V. ITO, Jaipur

MA 122/JPR/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6790 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Capital asset; Gift; Retrospective amendment; Cost of acquisition
• Section: 143(3); 234B; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ; KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ MA NO.122/JP/2016 (ARISING OUT OF ITA NO. 428/JP/201 3) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S UTSAV COLD STORAGE PVT. LTD., D-155, DURGA MARG, BANI PARK, JAIPUR CUKE VS. THE INCOME TAX OFFICER, WARD 3(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACU 9306 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C.KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/05/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 11/06/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY TH E ASSESSEE AGAINST THE ORDER PASSED BY THE CO-ORDINATE BENCH I N ITA NO. 428/JP/2013 DATED 27.05.2016 FOR AY 2009-10. 2. IN ITS APPLICATION, THE ASSESSEE HAS SUBMITTED T HAT IN THE AFORESAID DECISION PASSED BY THE COORDINATE BENCH, IT HAS NOTICED CERTAIN APPARENT, GLARING AND PATENT ERRORS OF LAW, RESULTING IN ALTOGETHER A CONTRARY DECISION WHICH DECISION, IF T HESE MISTAKES DID NOT OCCUR, WOULD NOT HAVE BEEN THE SAME: M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 2 1 ST MISTAKE: AT BOTTOM OF PAGE 10 OF THE ORDER FROM TH E LAST LINE ENTERING TO PAGE NO. 11, FOLLOWING ERRONEOUS POSITION OF LAW WAS RECORDED AND CONSIDERED. 'SECTION 49(1)(III)(E) WAS INTRODUCED BY THE FINANC E ACT, 2012 WITH EFFECT FROM 1.4.1999. THE SAID DECISION, IN OUR VIE W, IS ONLY CLARIFICATORY IN NATURE AND HAS SPECIFICALLY PROVIDED THE COST OF ACQUISITION IN CASE OF SUCCESSION OF FIRM TO THE COMPANY.' THE ABOVE QUOTED POSITION OF LAW BY THE COORDINATE BENCH IS ALTOGETHER CONTRARY TO THE ACTUAL EXISTING STATUTORY POSITION OF LAW. AS A MATTER OF FACT, SECTION 49(1)(III)(E) WAS IN EXISTENCE SINCE THE DATE WHEN INCOME TAX ACT ITSELF CAME INTO EXISTENCE IN 1962. THIS CL AUSE HAD BEEN A CONSTANT SUBJECT MATTER OF AMENDMENTS FROM TIME TO TIME BY WAY OF VARIOUS INSERTIONS THEREIN. THEREFORE, A WRONG AND ERRONEOUS FACT RELATING TO E XISTENCE OF LAW, INCLUDING THE AMENDMENT VIDE FINANCE ACT 2012, W.E. F. 01-04-1999 WAS CONSIDERED, LEADING THE COORDINATE BENCH TO ARR IVE AT A WRONG CONCLUSION IN RENDERING THE DECISION. CLAUSE (XIII) OF SECTION 47 WAS ONLY INSERTED ALONG WITH CLAUSE (XIIIB) THEREOF IN CLAUSE (E) OF SECTION 49(1) (III) VIDE FINANCE ACT 2012, WITH RETROSPECTI VE EFFECT FROM 01- 04-1999. ALSO THEREFORE, THE COORDINATE BENCH COMMITTED A PA TENT AND OBVIOUS ERROR IN RENDERING THE DECISION. HAD THE INSERTION IN LAW VIS-A-VIS APPELLANT'S SUBMISSIONS, BEEN UNDERSTOOD IN CONSONA NCE WITH EXISTING STATUTORY POSITION OF THE PREVIOUS YEAR RE LATING TO ASST. YR. 2009-10, I.E. PRIOR TO INSERTION OF CLAUSE (XIII) O F SECTION 47, IN CLAUSE (E) OF SEC. 49, VIDE FINANCE ACT, 2012 WITH RETROSP ECTIVE EFFECT FROM 01-04-1999 AND THEREAFTER, THEN THE CONCLUSION AND DECISION WOULD M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 3 HAVE BEEN NOT THE SAME BUT A CORRECT DECISION WOULD HAVE BEEN RENDERED BY THE BENCH. THERE WOULD HAVE BEEN ALSO N O OCCASION TO BASE THE DECISION ON CLAUSE (III)(A) WHICH DEALS W ITH THE TRANSFER UNDER OR BY WAY OF SUCCESSION, INHERITANCE OR DEVOL UTION, IN A GENERAL WAY ONLY AS PER THE HINDU LAW OF SUCCESSION, INHERITANCE OR DEVOLUTION AND NOT THE SPECIFIC TRANSFER UNDER CLAU SE (XIII) OF SECTION 47 SPECIFICALLY INCLUDED IN CLAUSE (E) OF SECTION 4 9(1) (III). THE CLAUSE (E) COVERS VARIED NATURE OF TRANSFERS SPECIFIED IN SECTION 47, WHICH ARE THOUGH TRANSFERS IN NORMAL PARLANCE, BUT FOR THE PU RPOSES OF SECTION 45 ARE NOT TO BE TREATED AS TRANSFER. HENCE, THE AD OPTING OF COST OF ACQUISITION OF THE PREVIOUS OWNER OF THE PROPERTY W AS NOT IN FORCE TILL THE CLAUSE (XIII) OF SECTION 47 WAS INSERTED IN SEC TION 49(III) (E) THOUGH WITH RETROSPECTIVE EFFECT VIDE F. A. 2012. HENCE, A PATENT AND GLARING MISTAKE OF LAW TOOK PLACE. 2 ND MISTAKE: THE UNDISPUTED AND UNCHALLENGED FINDING G IVEN BY THE LD. CIT(A), I.E. WHICH WAS NEITHER DISPUTED BY THE APPE LLANT NOR BY THE REVENUE BY FILING APPEAL OR CROSS-OBJECTION WAS ERR ONEOUSLY DISTURBED BY THE HON'BLE BENCH BY HOLDING THAT THE APPELLANT' S CASE WAS COVERED BY SECTION 49(1)(III)(A) I.E. BY SUCCESSION , INHERITANCE OR DEVOLUTION. THIS HAS RESULTED IN AN APPARENT, PATENT, GLARING A ND OBVIOUS MISTAKE OF LAW AS THE UNDISPUTED FINDING OF THE ID. CIT(A), MADE DISPUTED ONE BY THE COORDINATE BENCH WHICH PUT THE APPELLANT IN AN ADVERSE AND IN DETRIMENTAL POSITION THAN IT W AS PRIOR TO COMING BEFORE THE COORDINATE BENCH ON AN ALTOGETHER DIFFER ENT ISSUE. WE REPRODUCE HEREUNDER THE OBSERVATION AND FINDING AT PG. 10 OF THE ORDER OF LD. CIT(A): M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 4 THE LD. CIT(A) AFTER DEALING WITH HIS CO-TERMINUS P OWERS AS THAT OF THE AO BY QUOTING THE ALLAHABAD BENCH DECISION GAVE HIS FINDING AS UNDER:- 'IN VIEW OF THE ABOVE OBSERVATION OF THE HON'BLE IT AT ALLAHABAD BENCH IT IS HELD THAT THE COST OF THE PROPERTY FOR DETERM INING THE CAPITAL GAINS IN THE HANDS OF THE APPELLANT IS TO BE WORKED OUT A S PER SECTION 49(1)(III)(E).' HENCE, THE COORDINATE BENCH COMMITTED AN APPARENT A ND PATENT ERROR OF LAW. 3RD MISTAKE: GROUND NO. 3 OF APPEAL WAS RELATING TO DEN YING OF ANY LIABILITY OF INTEREST IN ITS TOTALITY. WHILE DECIDI NG THIS GROUND, THE COORDINATE BENCH HAS AGAIN COMMITTED A PATENT ERROR OF LAW IN UNDERSTANDING THE GROUND AS THAT OF A GENERAL NATUR E OF GROUND AGAINST LEVY OF INTEREST WHICH IS GENERALLY AIMED F OR DISPUTING CONSEQUENTIAL LEVY OF INTEREST WHEN ADDITION ETC. I S SUSTAINED. AS A MATTER OF FACT, THE APPELLANT HAD ABSOLUTELY, THROUGH THIS GROUND NO. 3 DENIED ITS LIABILITY FOR CHARGE OF ANY INTERE ST, BECAUSE NO ADVANCE TAX PAYMENT LIABILITY WAS IN EXISTENCE DURING THE P REVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, AS WELL AS ALSO THE SAME WA S NEITHER IN EXISTENCE ON THE DATE WHEN THE RETURN OF INCOME WAS FILED OR THE ASSESSMENT WAS MADE. BECAUSE CLAUSE (XIII) OF SECTI ON 47 WAS NOT IN EXISTENCE IN SECTION 49(1) (III) (E) OF THE ACT DUR ING THE PREVIOUS YEAR RELEVANT TO THE ASST. YR. 2009-10. ANY SUBSEQUENT C HANGE CANNOT BE FORESEEN OR ANTICIPATED WHILE PERFORMING AN ACT IN PRESENT THEREFORE APPELLANT HAD TAKEN THE GROUND DENYING ITS TOTAL LI ABILITY FOR CHARGE OF INTEREST U/S 234B ETC., EVEN IF ALTERNATIVELY ADDIT ION IS SUSTAINED. IN M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 5 SUPPORT OF THIS SUBMISSION, VARIOUS DECISIONS WERE RELIED UPON AND WERE CITED AS WERE AVAILABLE IN BRIEF SUMMARY OF AR GUMENTS ADVANCED. ALL THESE HAD ESCAPED THE ATTENTION OF TH E BENCH, RESULTING IN A PATENT ERROR OF FACT AND LAW, REQUIRED TO BE R ECTIFIED U/S 254(2) OF THE ACT BY RECALLING THE ORDER. 4 TH MISTAKE: IT WAS SPECIFICALLY SUBMITTED BEFORE THE HON'BLE ITAT THAT THE PROVISIONS CONTAINED U/S 49(1)(III)(E) IS A SPE CIAL PROVISION AS AGAINST SEC.49(1)(A) WHICH IS A MERELY GENERAL PROV ISION OF LAW AND THE LAW IS WELL SETTLED THAT SPECIAL LAW ALWAYS TAK ES PREFERENCE OVER THE GENERAL LAW. ON THIS ASPECT, IT WAS SUBMITTED B EFORE THE ID. CIT(A) (PAGE 5 PARA C) THAT . FURTHER IT CAN ALSO BE SAID THAT HE FAILED IN APPRECIATING THE MAXIM LAW 'PRINCIPLE OF INTERPRETATION OF STATUTORY PROVISION THAT SPECIAL PROVISION OVERTAKES THE GENERAL PROVISION'. THE CLAUSE (E) OF SECTION 49(1)(III) WAS A SPECIAL PROVISION OVERRIDI NG THE CLAUSE (A) OF SECTION 49(1)(III), WHICH WAS ONLY REFERRING TO THE 'SUCCESSION, INHERITANCE OR DEVOLUTION' IN TERMS OF PERSONAL LAW S OF INHERITANCE.. FROM THE SUBJECTED ITAT ORDER, IT IS EVIDENTLY CLEA R THAT THE HON'BLE ITAT DID NOT AT ALL DEAL WITH THE ABOVE CONTENTION. 5 TH MISTAKE: IT WAS FURTHER SUBMITTED [KINDLY REFER OR DER OF CIT(A) AT PAGE 6 PARA (E)] THAT ..VALIDITY OF ACTION TAKEN, OR CONCLUSION ARRIVE D AT HAS TO BE JUDGED IN THE LIGHT OF REASON/MATERIAL/EVIDENCE AVA ILABLE AT THE TIME OF TAKING THE ACTION. ANY SUBSEQUENT REASON/MATERIA L/EVIDENCE M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 6 CANNOT BE USED IN FURTHERANCE OF ACTION OR IN ITS S UPPORT.(RELIANCE (1) AIR 1978 (SC) 851 MOHINDERSING GILL VS. CHIEF ELECTION COMM. (2) (1981) 131 ITR 429 (KER) RAMRAJ (M.S VS. COMM O F AGR. IT); (3) (1980) 126 ITR 270 (MAD)- ASA JOHN DEVINATHAN VS. A DDL. CIT AND (4) (1988) 174 ITR 714 (CAL) EQUITABLE INVESTMENT CO. (P) LTD. VS. ITO. APPELLANT ACCORDINGLY PRAYS THAT ITS SPECIFIC GROUN D NO. 1 TO 5 MAY KINDLY BE ALLOWED IN VIEW OF THE SUBMISSIONS MADE A BOVE. HOWEVER, IT APPEARS THAT THE ABOVE SUBMISSIONS ALSO ESCAPED THE KIND ATTENTION OF THE HONBLE ITAT AND HAS NOT BEEN DEALT WITH. ALL THE ABOVE MISTAKES ARE APPARENT, GLARING AND PA TENT AND HENCE, REQUIRE A SUITABLE RECTIFICATION U/S 254(2) OF THE ACT. SINCE THESE MISTAKE GO TO THE ROOT OF THE MATTER AND HENCE, IT IS PRAYED THAT THE ENTIRE ORDER MAY KINDLY BE RECALLED AND THE APPEAL MAY KINDLY BE HEARD AFRESH IN THE LIGHT OF THE POSITION OF THE LA W IN EXISTENCE AS ON THE DATE WHEN THE RETURN OF INCOME FILED AND ASSESS MENT WAS MADE. 3. THE LD DR OBJECTED TO THE MISC. APPLICATION AND SUBMITTED THAT THE DECISION OF THE COORDINATE BENCH IS A WELL-REAS ONED ORDER TAKING INTO CONSIDERATION RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW APPLICABLE, HENCE, THE SUBJECT MISC. APPLICATIO N SHOULD BE REJECTED. IT WAS FURTHER SUBMITTED THAT WHAT THE LD AR HAS SU BMITTED WILL LEAD TO A REVIEW OF THE DECISION TAKEN BY THE COORDINATE BE NCH AND THE SAME IS NOT PERMISSIBLE UNDER SECTION 254(2) OF THE ACT. I T WAS SUBMITTED THAT WHERE THE DECISION OF THE COORDINATE BENCH IS NOT A CCEPTABLE TO THE ASSESSEE, THE LAW HAS PROVIDED FOR AN APPROPRIATE R EMEDY BY WAY OF FURTHER APPEAL BEFORE THE HONBLE HIGH COURT. M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 7 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. 5. FIRSTLY, WE REFER TO GROUNDS OF APPEAL WHICH WE RE THE SUBJECT MATTER OF ADJUDICATION BEFORE THE COORDINATE BENCH AND THE SAME READS AS UNDER:- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE SETTLED LEGAL POSITION THE LD. CIT(A) HAS ERRED IN LAW IN HOLDING THAT THE AMENDMENT IN SECTION 49(III)(E) INSERTING CLAUSE (X III) OF SECTION 47 WAS OF CLARIFICATORY NATURE. THAT SUCH HOLDING RESULTED IN A WRONG FINDING IN LAW AND CONSEQUENTLY UPHOLDING THE ACTION OF AO IN ASSESSING THE INCOME OF THE APPELLANT AT RS. 1,57,88,459/- IS ERR ONEOUS AND WRONG IN THE EYE OF LAW, WHICH DESERVES TO BE CANCELLED. 2. THE IMPUGNED ORDER IS UNSUSTAINABLE IN THE EYE O F LAW ON THE ISSUE OF CONVERTING THE SHORT TERM CAPITAL LOSS INT O LONG TERM CAPITAL GAIN AND TAXING THE SAME BECAUSE THE SETTLED POSITI ON OF LAW IS THAT THE VALIDITY OF AN ORDER OF A STATUTORY FUNCTIONARY HAS TO BE JUDGED ON THE BASIS OF MATERIAL AVAILABLE AND LEGAL POSITION PREV AILING AT THE TIME WHEN SUCH AN ACTION WAS TAKEN OR AN ORDER IS FRAMED BECA USE SUBSEQUENT HAPPENINGS IF ARE PUT INTO USE AND CONSIDERED, IT M AY VALIDATE AN ORDER WHICH WAS OTHERWISE AN ILLEGAL ORDER IN LAW WHEN WA S MADE. THIS IS IMPERMISSIBLE IN THE EYE OF LAW. HENCE THE ACTION O F LD. AO WAS ERRONEOUS AND WHICH WAS LIABLE TO BE CANCELLED, BY DELETING THE ADDITION BY THE LD. CIT(A), WHICH WAS NOT DONE. HENCE SHE ER RED. THE ADDITION MAY KINDLY BE DELETED. 3. THAT WITHOUT PREJUDICE TO THE GROUND NO. 1 AND 2 ABOVE, THE LD. CIT (A) GROSSLY ERRED IN LAW AND IN FACTS IN UPHOLD ING LEVY OF INTEREST U/S M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 8 234B OF THE ACT IGNORING THE SUBMISSIONS AND LEGAL POSITION PARTICULARLY WHEN THE AMENDMENT IN STATUTE WAS A RETROSPECTIVE C HARGING AMENDMENT AND THE ASSESSEE HAS BEEN DENYING COMPLET ELY ITS LIABILITY FOR SUCH A CHARGE OF INTEREST EVEN IF ACTION OF CON VERTING THE SHORT TERM CAPITAL LOSS INTO LONG TERM CAPITAL GAIN IS UPHELD. 6. IF WE LOOK AT THE ORDER OF THE LD CIT(A), WE FIN D THAT THE ABOVE TWO GROUNDS OF APPEAL HAVE BEEN RAISED IN THE CONTE XT OF FOLLOWING FINDINGS OF THE LD. CIT(A) WHICH HAS BEEN TAKEN NOT E OF BY THE COORDINATE BENCH AT PARA 3 OF ITS ORDER AND WHICH R EADS AS UNDER:- GIVEN THE FACT THAT THE LAW WAS CLARIFIED AND THIS CLARIFICATION WAS MADE WITH RETROSPECTIVE EFFECT FROM 01.04.1999 BY THE FI NANCE ACT, 2012, THESE PROVISIONS ARE CLEARLY APPLICABLE TO THE FACT S OF THE CASE OF THE APPELLANT BECAUSE THIS AMENDMENT WITH RETROSPECTIVE EFFECT WAS CLARIFICATORY AND NOT SUBSTANTIVE IN NATURE. THE AR OF THE APPELLANT HAS SUBMITTED THAT THE COST COULD NOT HAVE BEEN DETERMINED U/S 49(1)(III)(A) WHICH HAS BEEN DO NE BY THE AO BUT SHOULD HAVE BEEN DONE U/S 49(1)(III)(E). FIRST OF A LL, IT IS A PRESUMPTION THAT THE COST WORKED OUT BY THE AO IS U/S 49(1)(III )(A) AND NOT U/S 49(1)(III)(E) BECAUSE THE ASSESSMENT ORDER IS COMPL ETELY SILENT REGARDING THE SECTION UNDER WHICH THE COST OF THE P ROPERTY HAS BEEN WORKED OUT. THEREFORE, THE AR OF THE APPELLANT IS M AKING A PRESUMPTION THAT THE COST OF THE PROPERTY HAS BEEN WORKED OUT U /S 49(1)(III)(A). IN VIEW OF THE ABOVE OBSERVATION OF THE HONBLE ITA T ALLAHABAD BENCH, IT IS HELD THAT THE COST OF THE PROPERTY FOR DETERM INING THE CAPITAL GAINS IN THE HANDS OF THE APPELLANT IS TO BE WORKED OUT A S PER SECTION 49(1)(III)(E) OF THE ACT. M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 9 7. IN THE CONTEXT OF THE ABOVE TWO GROUNDS OF APPEA L AND THE FINDINGS OF THE LD CIT(A), THE COORDINATE BENCH HAS THEN RECORDED THE CONTENTIONS OF THE LD. AR IN ITS ORDER WHICH ARE RE PRODUCED AS UNDER:- 4.1 ..IT WAS SUBMITTED BEFORE US THAT SECTION 49 (III)(E) WAS INTRODUCED WITH EFFECT FROM 1.4.1999 BY THE FINANCE ACT, 2012 AND, THEREFORE, THE LD. CIT (A) WAS LONG(WRONG) IN APPLY ING THE PROVISIONS OF SECTION 49(1)(III)(E) TO THE CASE IN HAND AS THE LA W WAS AMENDED WITH EFFECT FROM 1.4.1999. THE LD. COUNSEL HAS ALSO TAKEN US TO THE EXPLANATION TO THE AMENDED PROVISION TO SHOW THAT T HE AMENDMENT WILL TAKE RETROSPECTIVE EFFECT FROM 01.04.1999 AND ACCOR DINGLY APPLY IN RELATION TO THE A.Y. 1999-2000 AND SUBSEQUENT ASSES SMENT YEARS. IT WAS SUBMITTED THAT SECTION 49(1)(III)(E) IS A CHARG ING PROVISION AND BEING A CHARGING PROVISION, THE SAME CANNOT BE RETR OSPECTIVELY APPLY TO THE TRANSACTION WHICH HAS TAKEN PLACE IN THE ASSESS MENT YEAR 2009-10. IT WAS SUBMITTED THAT ADDITION/LEVY ON THE BASIS OF RETROSPECTIVE AMENDMENT IS NOT PERMISSIBLE IN VIEW OF VARIOUS PRO NOUNCEMENTS OF THE HONBLE SUPREME COURT, PARTICULARLY, CIT VS. HINDUS TAN ELECTRO GRAPHITES LTD., 109 TAXMAN 342 AND SEDCO FOREX INTE RNATIONAL DRILL VS.CIT, 279 ITR 310 (SC). 8. FURTHER CONTENTIONS OF THE LD. AR WHICH ARE TAKE N NOTE OF BY THE COORDINATE BENCH ARE CONTAINED AT PARA 4.3 OF ITS O RDER WHICH ARE REPRODUCED AS UNDER:- 4.3. IT WAS THEREAFTER CONTENDED BY THE LD. A/R FO R THE ASSESSEE THAT THE SPECIFIC PROVISIONS OF SECTION 47(XIII) WHICH P REVAIL OVER THE GENERAL PROVISIONS I.E. SECTION 49(1)(III)(A) OF THE ACT AN D ON THE BASIS OF THE ABOVE SAID SUBMISSION, IT WAS SUBMITTED THAT THE AO WAS WRONG IN APPLYING THE PROVISIONS OF SEC. 49(1)(III)(A) TO DE TERMINE THE COST OF M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 10 ACQUISITION. IT WAS FURTHER SUBMITTED THAT EVEN TH E LD. CIT (A) WAS WRONG IN APPLYING THE PROVISIONS OF SECTION 49(1)(I II)(E) AS THE SAID PROVISION WAS NOT IN EXISTENCE AT THE TIME OF TRANS ACTION OR DURING THE ASSESSMENT PROCEEDINGS AS THE SAID PROVISION WAS IN SERTED BY THE FINANCE ACT,2012. ON THE BASIS OF THE ABOVE SAID CO NTENTION, THE LD. A/R HAS SUBMITTED THAT THE ADDITION MADE BY THE AUTHORI TIES BELOW ON THE BASIS OF TRANSFER OF LAND WAS WRONG. IN FACT, THE ASSESSEE HAS SUFFERED SHORT TERM CAPITAL LOSS ON ACCOUNT OF SALE OF THE A SSETS AND THERE IS NO SHORT TERM CAPITAL GAIN TO THE ASSESSEE. IN THE AL TERNATIVE, IT WAS SUBMITTED THAT PROVISIONS OF SECTION 234B & 234C SH OULD NOT BE APPLIED FOR PAYMENT OF INTEREST ON THE BASIS OF RETROSPECTI VE AMENDMENT ON ACCOUNT OF NON-PAYMENT OF ADVANCE TAX. 9. THEREAFTER, THE COORDINATE BENCH HAS RECORDED IT S FINDING AT PARA 4.5 AND 5 OF ITS ORDER WHICH ARE REPRODUCED AS UNDE R:- 4.5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. BEFORE WE DEAL WITH THE FACTU AL ASPECTS OF THE MATTER, IT IS NECESSARY TO REPRODUCE SECTION 47(XII I) AND 49 FOR THE PURPOSE OF CLARITY AND REFERENCE. SECTION 47 : TRANSACTIONS NOT REGARDED AS TRANSFER NOTHING CONTAINED IN SECTION 45 SHALL APPLY TO THE FOLLOWING TRANSFERS :- (XIII) ANY TRANSFER OF A CAPITA ASSET OR INTANGIBL E ASSET BY A FIRM TO A COMPANY AS A RESULT OF SUCCESSION OF THE FIRM BY A COMPANY IN THE BUSINESS CARRIED ON BY THE FIRM, OR ANY TRANSFER OR A CAPITAL ASSET TO A COMPANY IN THE COU RSE OF DEMUTUALIZATION OR CORPORATIZATION OF A RECOGNIZED STOCK M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 11 EXCHANGE IN INDIA AS A RESULT OF WHICH AN ASSOCIATI ON OF PERSONS OR BODY OF INDIVIDUALS IS SUCCEEDED BY SUCH COMPANY : PROVIDED THAT (A) ALL THE ASSETS AND LIABILITIES OF THE FIRM OR OF TH E ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS RELAT ING TO THE BUSINESS IMMEDIATELY BEFORE THE SUCCESSION BECO ME THE ASSETS AND LIABILITIES OF THE COMPANY; (B) ALL THE PARTNERS OF THE FIRM IMMEDIATELY BEFORE THE SUCCESSION BECOME THE SHAREHOLDERS OF THE COMPANY I N THE SAME PROPORTION IN WHICH THEIR CAPITAL ACCOUNTS STOOD IN THE BOOKS OF THE FIRM ON THE DATE OF THE SUCCESSION; (C) THE PARTNERS OF THE FIRM DO NOT RECEIVE ANY CONSIDERATION OR BENEFIT, DIRECTLY OR INDIRECTLY, I N ANY FORM OR MANNER, OTHER THAN BY WAY OF ALLOTMENT OF SHARES IN THE COMPANY; AND (D) THE AGGREGATE OF THE SHAREHOLDING IN THE COMPANY OF THE PARTNERS OF THE FIRM IS NOT LESS THAN FIFTY PER CENT OF THE TOTAL VOTING POWER IN THE COMPANY AND THEIR SHAREHOLDING CONTINUES TO BE AS SUCH FOR A PERIOD O F FIVE YEARS FROM THE DATE OF THE SUCCESSION; (E) THE DEMUTUALIZATION OR CORPORATIZATION OF A RECOGNI ZED STOCK EXCHANGE IN INDIA IS CARRIED OUT IN ACCORDANC E WITH A SCHEME FOR DEMUTUALIZATION OR CORPORATIZATIO N M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 12 WHICH IS APPROVED BY THE SECURITIES AND EXCHANGE BO ARD OF INDIA ESTABLISHED UNDER SECTION 3 OF THE SECURIT IES AND EXCHANGE BOARD OF INDIA ACT, 1992 (15 TO 1992). SECTION 49 : COST WITH REFERENCE TO CERTAIN MODES O F ACQUISITION. (1) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE (I) ON ANY DISTRIBUTION OF ASSETS ON THE TOTAL OR PARTI AL PARTITION OF A HINDU UNDIVIDED FAMILY; (II) UNDER A GIFT OR WILL; (III) (A) BY SUCCESSION, INHERITANCE OR DEVOLUTION, OR (B) ON ANY DISTRIBUTION OF ASSETS ON THE DISSOLUTIO N OF A FIRM, BODY OF INDIVIDUALS, OR OTHER ASSOCIATION O F PERSONS, WHERE SUCH DISSOLUTION HAD TAKEN PLACE AT ANY TIME BEFORE THE 1 ST DAY OF APRIL, 1987, OR (C) ON ANY DISTRIBUTION OF ASSETS ON THE LIQUIDATIO N OF A COMPANY, OR (D) UNDER A TRANSFER TO A REVOCABLE OR AN IRREVOCAB LE TRUST, OR (E) UNDER ANY SUCH TRANSFER AS IS REFERRED TO IN CL AUSE (VIA) OR CLAUSE (V) OR CLAUSE (VI) OR CLAUSE (VIA) OR CLAUSE (VIAA) OR CLAUSE (VICA) OR CLAUSE (VICB) OR CLAUSE XIIIB) OF SECTION 47; (IV) SUCH ASSESSEE BEING A HINDU UNDIVIDED FAMILY, BY THE MODE REFERRED TO IN SUB-SECTION (2) OF SECTION 64 A T ANY TIME AFTER THE 31 ST DAY OF DECEMBER, 1969, M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 13 THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEME D TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPER TY ACQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROV EMENT OF THE ASSETS INCURRED OR BORNE BY THE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. FROM THE BARE READING OF BOTH THE PROVISIONS I.E. S ECTION 47 AND SECTION 49 OF THE ACT, IT IS CLEAR THAT SECTION 47 DEALS WI TH THE TRANSACTION NOT REGARDED AS TRANSFER WHEREAS SECTION 49 DEALS WITH THE COST WITH REFERENCE TO CERTAIN MODE OF ACQUISITION. BOTH THE SECTIONS, IN OUR UNDERSTANDING, OPERATE AND WORK IN DIFFERENT FORUM AND THERE IS NO OVER-LAPPING OF THE SECTION. UNDER SECTION 47(XIII ), IF A FIRM BY WAY OF SUCCESSION BECAME THE COMPANY, THEN THE TRANSACTION I.E. MIGRATION OF THE FIRM TO THE COMPANY WOULD NOT BE TREATED AS TRA NSFER. HOWEVER, THIS SECTION DO NOT PROVIDE THE CALCULATION OF COST OF ACQUISITION BY WAY OF SUCCESSION FROM FIRM TO THE COMPANY. SECTION 49 , SPECIFICALLY PROVIDES THE MANNER IN WHICH THE COST OF ACQUISITIO N THROUGH VARIOUS CONDITIONS IS REQUIRED TO BE CALCULATED. IF WE LOOK INTO SECTION 49(1)(III), IT IS SPECIFICALLY PROVIDE TRANSFER BY WAY OF SUCC ESSION, INHERITANCE/DEVALUATION. THE FIRM IS SUCCEEDED BY T HE COMPANY, THEREFORE, THE COST OF ACQUISITION OF THE COMPANY W OULD BE AS THAT OF ACQUISITION OF THE FIRM. THE VALUATION OF LAND AND ASSETS OF FIRM THOUGH VALUED BY THE VALUER WILL NOT CHANGE OR ALTER THE C OST OF ACQUISITION OF THE FIRM DESPITE VALUATION OF ASSETS OF THE FIRM AN D WOULD REMAIN THE SAME, AND THEREFORE THE COST OF ACQUISITION OF THE COMPANY WOULD BE COST OF ACQUISITION OF THE FIRM. THE FIRM IS BEING SUCCEEDED BY THE COMPANY AND THE COMPANY IS NOT BUYING OR PURCHASING THE ASSETS OF THE FIRM. THE ELEMENT OF SALE AND PURCHASE OF THE ASSET S OF THE FIRM WERE NOT INVOLVED IN THE CASE OF SUCCESSION OF THE FIRM TO THE COMPANY. IN M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 14 VIEW THEREOF, WE DECIDE THE ISSUE AGAINST THE ASSES SEE AND HELD THAT THE COST OF ACQUISITION OF THE COMPANY (ASSESSEE) W OULD BE THE COST OF ACQUISITION OF THE FIRM (M/S. SARJU COLD STORAGE). THEREFORE, THE ASSESSEE WOULD ONLY BE ENTITLED TO THE INDEXATION O N THE COST OF ACQUISITION OF THE FIRM ON THE AMOUNT OF RS. 2,50,0 00/-. THE ARGUMENT OF THE ASSESSEE THAT THE AO HAS WRONGLY CALCULATED THE COST OF ACQUISITION OF THE ASSESSEE U/S 49(1)(III)(A), IN O UR VIEW, IS NOT CORRECT AS BOTH THE AO AND LD. CIT (A) HAVE APPLIED THE COS T OF ACQUISITION ON THE BASIS OF PRINCIPLES STATED HEREIN ABOVE I.E. CO ST OF ACQUISITION OF THE FIRM. THE ASSESSEE, IN OUR VIEW, HAS WRONGLY GOT C ONFUSED WITH THE PRINCIPLES LAID DOWN UNDER SECTION 47 WHICH TALKS A BOUT THE TRANSACTION WHICH ARE NOT REGARDED AS TRANSFER, WITH THAT OF PR INCIPLES FOR DETERMINING OF COST OF ACQUISITION UNDER SECTION 49 . SECTION 49(1)(III)(E) WAS INTRODUCED BY THE FINANCE ACT, 2012 WITH EFFEC T FROM 1.4.1999. THE SAID SECTION, IN OUR VIEW, IS ONLY CLARIFICATOR Y IN NATURE AND HAS SPECIFICALLY PROVIDED THE COST OF ACQUISITION IN CA SE OF SUCCESSION OF FIRM TO THE COMPANY. HOWEVER, THE SAID COST OF ACQUISIT ION WAS ALREADY IN EXISTENCE UNDER SECTION 49(1)(III)(A) OF THE IT ACT . THEREFORE, IN OUR VIEW NO FRESH CHARGE HAS BEEN CREATED ON ACCOUNT OF SUCCESSION OF A FIRM TO THE COMPANY. IT HAS ONLY CLARIFIED THE EXI STING BASIS OF CALCULATING THE COST OF ACQUISITION IN CASE OF SUCC ESSION OF THE FIRM TO THE COMPANY. THEREFORE, THE ARGUMENT OF LD. A/R FOR THE ASSESSEE IS DEVOID OF ANY MERIT AND IS ALSO DISMISSED. 5. GROUND NO. 3 RELATES TO LEVY OF INTEREST UNDER S ECTION 234B. SINCE WE HAVE DISMISSED THE GROUND OF THE ASSESSEE RELATI NG TO COST OF ACQUISITION ON THE BASIS OF PRINCIPLES STATED HEREI N ABOVE I.E. COST OF ACQUISITION OF THE FIRM, THEREFORE, LEVY OF INTERES T U/S 234B IS RIGHTLY M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 15 CONFIRMED BY THE LD. CIT (A). WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT (A). THE SAME IS HEREBY UPHELD. 10. THE COORDINATE BENCH HAS REFERRED TO THE PROVI SIONS OF SECTION 47(XIII) AND SECTION 49 OF THE ACT AND HAS HELD THA T BOTH THE SECTIONS OPERATE AND WORK IN DIFFERENT FORUM AND THERE IS NO OVER-LAPPING OF THE SECTION. IT HELD THAT SECTION 47(XIII) PROVIDES TH AT THE SUCCESSION OR MIGRATION OF A FIRM TO A COMPANY IS NOT TREATED AS TRANSFER AND THE SAID SECTION DOESNT PROVIDE FOR COST OF ACQUISITION IN THE HANDS OF THE COMPANY WHERE A FIRM IS SUCCEEDED BY A COMPANY. TH E SAID FINDINGS OF THE COORDINATE BENCH THUS TAKES INTO ACCOUNT THE GE NERAL POSITION OF LAW REGARDING SPECIFIC NATURE OF TRANSFER WHERE A F IRM IS SUCCEEDED BY A COMPANY AND NOT REGARDED AS TRANSFER FOR THE PURPOS ES OF CHARGEABILITY OF CAPITAL GAINS TAX AND ALSO THE GENERAL POSITION OF LAW GOVERNING THE COST OF ACQUISITION IN SUCH SITUATIONS AS SO DEFINE D IN SECTION 49 OF THE ACT. 11. IN THE INSTANT CASE, IN RESPECT OF COST OF ACQU ISITION IN THE HANDS OF THE COMPANY, THE COORDINATE BENCH FURTHER HAS HE LD THAT SECTION 49(1)(III) SPECIFICALLY PROVIDES FOR SUCH TRANSFER BY WAY OF SUCCESSION, INHERITANCE/DEVALUATION. IT WAS HELD BY THE COORDI NATE BENCH THAT WHERE THE FIRM IS SUCCEEDED BY A COMPANY, THE COST OF ACQUISITION OF THE COMPANY WOULD BE AS THAT OF ACQUISITION OF THE FIRM. IT WAS FURTHER HELD BY THE COORDINATE BENCH THAT THE ARGUMENT OF T HE ASSESSEE THAT THE AO HAS WRONGLY CALCULATED THE COST OF ACQUISITI ON OF THE ASSESSEE U/S 49(1)(III)(A), IN OUR VIEW, IS NOT CORRECT AS B OTH THE AO AND LD. CIT (A) HAVE APPLIED THE COST OF ACQUISITION ON THE BAS IS OF PRINCIPLES STATED HEREIN ABOVE I.E. COST OF ACQUISITION OF THE FIRM. THE COORDINATE BENCH HAS FURTHER HELD THAT THE ASSESSEE, IN OUR VIEW, H AS WRONGLY GOT M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 16 CONFUSED WITH THE PRINCIPLES LAID DOWN UNDER SECTIO N 47 WHICH TALKS ABOUT THE TRANSACTION WHICH ARE NOT REGARDED AS TRA NSFER, WITH THAT OF PRINCIPLES FOR DETERMINING OF COST OF ACQUISITION U NDER SECTION 49. SECTION 49(1)(III)(E) WAS INTRODUCED BY THE FINANC E ACT, 2012 WITH EFFECT FROM 1.4.1999. THE SAID SECTION, IN OUR VIEW , IS ONLY CLARIFICATORY IN NATURE AND HAS SPECIFICALLY PROVIDED THE COST OF ACQUISITION IN CASE OF SUCCESSION OF FIRM TO THE COMPANY. HOWEVER, THE SA ID COST OF ACQUISITION WAS ALREADY IN EXISTENCE UNDER SECTION 49(1)(III)(A) OF THE IT ACT. THEREFORE, IN OUR VIEW NO FRESH CHARGE HAS BE EN CREATED ON ACCOUNT OF SUCCESSION OF A FIRM TO THE COMPANY. IT HAS ONLY CLARIFIED THE EXISTING BASIS OF CALCULATING THE COST OF ACQUISITI ON IN CASE OF SUCCESSION OF THE FIRM TO THE COMPANY. 12. WE FIND THAT THE ABOVE FINDINGS OF THE COORDIN ATE BENCH HAVE BEEN RENDERED IN THE CONTEXT OF THE PROVISIONS OF S ECTION 49(1)(III)(A) AND NOT SECTION 49(1)(III)(E) AS AMENDED BY THE FIN ANCE ACT, 2012 WHERE CLAUSE (XIII) OF SECTION 47 WAS INSERTED W.R. E.F 1.4.1999. FURTHER, THE CONTENTIONS OF THE ASSESSEE HAVE ALSO BEEN UNDE RSTOOD IN CONTEXT OF TRANSFER AS PER CLAUSE (XIII) OF SECTION 47 AS EVIDENT FROM THE FINDING THAT THE ASSESSEE, IN OUR VIEW, HAS WRONGLY GOT CONFUSE D WITH THE PRINCIPLES LAID DOWN UNDER SECTION 47 WHICH TALKS A BOUT THE TRANSACTION WHICH ARE NOT REGARDED AS TRANSFER, WITH THAT OF PR INCIPLES FOR DETERMINING OF COST OF ACQUISITION UNDER SECTION 49 INSTEAD OF CORRESPONDING CLAUSE RELATING TO COST OF ACQUISITIO N RELATING TO TRANSFER AS CONTEMPLATED UNDER SECTION 47(XIII) AS INTRODUCE D IN SECTION 49(1)(III)(E) OF THE ACT. HOWEVER, IF WE LOOK AT T HE FIRST TWO GROUNDS OF APPEAL, THESE GROUNDS OF APPEAL WERE RAISED BY THE ASSESSEE SPECIFICALLY IN THE CONTEXT OF SECTION 49(1)(III)(E) AS AMENDED BY THE FINANCE ACT, 2012 WHICH WERE BROUGHT ON THE STATUTE SUBSEQUENT T O PASSING OF THE M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 17 ASSESSMENT ORDER U/S 143(3) OF THE ACT AND WHICH WE RE INVOKED BY THE LD CIT(A). IN THESE GROUNDS OF APPEAL, THE ASSESSE E HAS CHALLENGED THE FINDINGS OF THE LD CIT(A) IN HOLDING THAT AMENDMENT TO SECTION 49(1)(III)(E) INSERTING CLAUSE (XIII) OF SECTION 47 WAS CLARIFICATORY IN NATURE. THE SAID FINDINGS OF THE LD CIT(A), AS WE HAVE NOTED ABOVE, WERE RENDERED IN THE CONTEXT OF AMENDMENT BEING RET ROSPECTIVE AND HENCE CLARIFICATORY IN NATURE. HOWEVER, THE WAY TH E SAME HAS BEEN APPARENTLY UNDERSTOOD BY THE COORDINATE BENCH WAS T HAT THE PROVISIONS GOVERNING COST OF ACQUISITION IN CASE OF SUCCESSION , INHERITANCE ARE ALREADY IN EXISTENCE UNDER SECTION 49(1)(III)(A), T HE SUBSEQUENT AMENDMENT IN SECTION 49(1)(III)(E), WHEREIN CORRESP ONDING PROVISIONS GOVERNING COST OF ACQUISITION IN CASE OF A TRANSFER AS DEFINED IN SECTION 47(XIII) WERE PROVIDED BY THE FINANCE ACT, 2012, WA S CLARIFICATORY IN NATURE. 13. WE FURTHER NOTE THAT CONTENTIONS OF THE ASSESSE E REGARDING NON- LEVY OF INTEREST U/S 234B DUE TO RETROSPECTIVE AMEN DMENT, THOUGH NOTED BY THE COORDINATE BENCH, HAS APPARENTLY MISSE D ITS ATTENTION AND THE GROUND OF APPEAL HAS BEEN DISMISSED HOLDING IT AS CONSEQUENTIAL IN NATURE IN VIEW OF DELETION OF GROUND RELATING TO CO ST OF ACQUISITION. 14. IN LIGHT OF ABOVE DISCUSSIONS, WE CONSIDER IT APPROPRIATE THAT THE DECISION RENDERED BY THE COORDINATE BENCH BE RECALL ED IN ITS ENTIRETY AND THE MATTER BE HEARD AFRESH. WE ACCORDINGLY REC ALL THE ORDER PASSED BY THE COORDINATE BENCH IN ITA NO. 428/JP/2013. THE REGISTRY IS DIRECTED TO FIX THE MATTER FOR HEARING IN DUE COURS E. THE MISC. APPLICATION SO FILED BEFORE US IS HEREBY DISPOSED OFF IN LIGHT OF ABOVE DIRECTIONS. M.A. NO. 122/JP/2016 M/S UTSAV COLD STORAGE PVT. LTD., JAIPUR VS. ITO, J AIPUR 18 ORDER PRONOUNCED IN THE OPEN COURT ON 11/06/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/06/2018. * GANESH KR VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S UTSAV COLD STORAGE PVT. LTD., JA IPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD 3(2), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { M.A. NO. 122/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR