KHYATI REALTORS P.LTD, MUMBAI V. DCIT CIR 6(3)2, MUMBAI

MA 512/MUM/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2002 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 06-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMA
• Keywords: Depreciation; Audi alteram partem
• Section: 254(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH, J M MA NO.512/MUM/2019 (ARISING OUT OF ITA NO. 2356 /MUM/201 7 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. KHYATI REALTORS P. LTD 301/68, MANEK BHAVAN 1 S T HINDU COLONY DADAR (E) MUMBAI 400 014 VS. DCIT CIR 6(3)(2) 19 TH FLOOR, R.NO.522 5 TH FLOOR, AAYAKAR BHAVAN M.K.ROAD MUMBAI 400 020 PAN/GIR NO. AACCM6461E (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA & SHRI ANUJ KISNADWALA REVENUE BY SHRI KUMAR PADMAPANI BORA DATE OF HEARING 29 / 11 /2019 DATE OF PRONOUNCEMENT 29 / 11 /2019 / O R D E R PER M. BALAGANESH (A.M) : THE ASSESSEE HAS FILED MISCELLANEOUS APPLICATION FOR THE A.Y.2012 - 13 SEEKING TO RECALL THE ORDER PASSED BY THIS TRIBUNAL IN ITA NO.2356/MUM/2017 DATED 26/07/2019. THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS REPRODUCED HEREUN DER FOR THE SAKE OF CONVENIENCE. APPLICATION UNDER S. 254(2) OF THE INCOME TAX ACT, 1961 1 . THE HON'BLE TRIBUNAL HAS PASSED AN ORDE R U/S. 254(1) OF THE ACT IN THE ABOVE MATTER DATED 26.07.2019, A COPY OF WHICH IS ENCLOSED. MA NO.512/MUM/2019 M/S. KHYATI REALTORS PVT.LTD. 2 2. THE APPLICANT MOST HUMBLY SUBMITS THAT THERE ARE CERTAIN MISTAKES IN PARAS 8.4, 8.4.1 AND 8.4.2 OF THE ORDER WHICH MAY KINDLY BE RECTIFIED SUITABLY BY THE H ON'BLE TRIBUNAL. THE ABOVE HAS BEEN DESCRIBED HEREINBELOW. 3. THE ID. DR HAS FILED WRITTEN SUBMISSIONS BEFORE THE HON'BLE TRIBUNAL AFTER THE CONCLUSION OF HEARING. THIS HAS BEEN DONE WITHOUT ANY KNOWLEDGE OF THE ASSESSEE AND BEHIND THE BACK OF THE ASS ESSEE . RESULTANTLY THE CELEBRATED PRINCIPLES OF AUDI ALTERAM PARTEM, WHICH HAS BEEN INVARIABLY FOLLOWED BY THIS HON'BLE TRIBUNAL, HAS BEEN VIOLATED CAUSING MISCARRIAGE OF JUSTICE. 4. THE ID. DR, IN THE SAID WRITTEN SUBMISSIONS, HAS RAISED AN ISSUE OF LIFTING OF CORPORATE VEIL WHICH ISSUE CAME TO BE ADJUDICATED BY THE HON'BLE TRIBUNAL IN PARA 8.4.1 WITHOUT HAVING BENEFIT OF ANY COMMENTS BY THE ASSESSEE. NEEDLESS TO SAY THAT THE SAID ISSUE WAS NOT RAISED BY ANY AUTHORITIES BELOW EARLIER OR DURING THE CO URSE OF HEARING. IN FACT THE ENTIRE DISCUSSION IN THE ABOVE REFERRED PARAS 8.2 TO 8.4.2 STARTS WITH THE FOLLOWING PREFACE IN PARA 8.2. 'WE FIND THAT THE SUBMISSIONS OF THE ID. DR ON THE ASPECT OF COLOURABLE DEVICE AND TREATING THE TRANSACTION AS SHAM BY L IFTING THE CORPORATE VEIL HAD BEEN ADDRESSED BY US HEREINBELOW SEPARATELY'. 5. THE HON'BLE TRIBUNAL HAS ALSO ADJUDICATED AN ISSUE OF 'COLOURABLE DEVICE EMPLOYED BY THE ASSESSEE FOR THE BENEFIT OF M/S. ALFA INFRAPROP PVT. LTD. (I) ALTHOUGH/ THE ASSESSING OFFICER HAD REFERRED TO THE ISSUE OF COLOURABLE DEVICE/ THE SAME WAS WITH RESPECT TO THE AMOUNT RECEIVED BY THE ASSESSEE FROM M/S. ALFA INFRAPROP PVT. LTD. AND NOT WITH RESPECT TO ANY BENEFIT DERIVED BY M/S ALFA INFRAPROP PVT. LTD . (II) FURTHER/ WHILE HOLDING THAT THE BENEFIT HAS BEEN DERIVED BY M/S. ALFA INFRAPROP PVT. LTD./ THE HON'BLE TRIBUNAL HAS OBSERVED THAT 'M/S. ALFA INFRAPROP PVT. LTD. WOULD BE OBVIOUSLY CLAIMING DEPRECIATION ON THE TOTAL CAPITALIZED COST IN THE YEAR O F COMPLETION OF THEIR PROJECT'. THE ABOVE CONCLUSION OF THE TRIBUNAL IS NOT SUPPORTED BY ANY MATERIAL AND IS MERELY BASED ON PRESUMPTION. (III) IN ANY CASE/ ANY SUCH FINDING CAN BE GIVEN BY ANY AUTHORITY (A) IN THE CASE OF M/S. ALFA INFRAPROP PVT. LTD. AND (B) AFTER HEARING M/S. ALFA INFRAPROP PVT. LTD. 6. IN PARA 8.4.1 THE HON'BLE TRIBUNAL HAS LISTED FOLLOWING TWO BENEFITS TO M/S. ALFA INFRAPROP PVT. LTD. MA NO.512/MUM/2019 M/S. KHYATI REALTORS PVT.LTD. 3 (I) HEFTY PRICE TO PROMOTERS; (II) CLAIM OF DEPRECIATION ON INTANGIBLE BY M /S. ALFA INFRAPROP PVT LTD. 7. IN THIS REGARD, IT IS SUBMITTED THAT IN A CASE WHERE ALL THE SHARES OF THE COMPANY HAVE SIMILAR RIGHTS, THE FACT THAT THE RIGHTS ARE ATTACHED OR NOT, WOULD NOT MAKE ANY DIFFERENCE IN THEIR PRICE. IN THE PRESENT CASE, ALL THE SHARES ARE HAVING SIMILAR ATTACHED RIGHTS. AS REGARDS THE CLAIM OF DEPRECIATION, THE HON'BLE TRIBUNAL HAS ALREADY OBSERVED THAT NO DEPRECIATION HAS BEEN CLAIMED BY M/S. ALFA INFRAPROP PVT. LTD. 8. IN LIGHT OF THE ABOVE, IT IS SUBMITTED THAT THE F INDINGS OF THE HON'BLE TRIBUNAL IN PARA 8.4, 8.4.1 AND 8.4.2 AND THE CONSEQUENTIAL FINDING IN PARA 8.5 MAY KINDLY BE EXPUNGED/MODIFIED SUITABLY. THIS HON'BLE TRIBUNAL MAY BE PLEASED TO PASS ANY OTHER ORDER OR DIRECTIONS AS MAY BE DEEMED FIT AND PROPER IN T HE FACTS AND CIRCUMSTANCES OF THE CASE. 9. AND FOR THIS ACT OF KINDNESS, THE APPLICANT SHALL, AS IN DUTY BOUND, EVER PRAY. 2. WE FIND THAT THE CRUCIAL POINT IN MISCELLANEOUS APPLICATION WOULD BE THAT CERTAIN OBSERVATIONS MADE BY THIS TRIBUNAL IN PAR A 8.3, 8.4, 8.4.1. 8.4.2. AND 8.5. ON THE ASPECT OF ASSESSEE ACTING AS A CONDUIT AND THE CIRCULAR TRANSACTION ENTERED BY THE ASSESSEE WOULD CAUSE PREJUDICE TO M/S. ALFA INFRAPROP PVT. LTD . THE ENTIRE FACTS OF THE CASE HAVE ALREADY BEEN ELABORATELY DEALT I N THE ORDER PASSED BY THIS TRIBUNAL DATED 26/07/2019 WHICH ARE NOT REITERATED HEREIN FOR THE SAKE OF BREVITY. WE FIND THAT CERTAIN OBSERVATIONS WERE MADE BY THIS TRIBUNAL IN CONNECTION WITH FUTURE INCOME TAX BEHAVIOR OF M/S. ALFA INFRAPROP PVT. LTD . WHICH MAY OR MAY NOT HAPPEN. MOREOVER, WHETHER M/S. ALFA INFRAPROP PVT. LTD . HAD OBTAINED ANY BENEFIT / TAX ADVANTAGE OUT OF THE CIRCULAR TRANSACTION CARRIED OUT WITH THE HELP OF THE ASSESSEE IN FUTURE ASSESSMENT YEARS IS NOT MA NO.512/MUM/2019 M/S. KHYATI REALTORS PVT.LTD. 4 KNOWN TO US AS ON DATE. BOTH THE PA RTIES BEFORE US AT THE TIME OF HEARING COULD NOT PRODUCE ANY MATERIAL TO SUBSTANTIATE THOSE OBSERVATIONS MADE IN THE TRIBUNAL ORDER. HENCE, IN THESE CIRCUMSTANCES, IT WOULD BE JUST AND PROPER THAT OUR OBSERVATIONS MADE IN THE ORDER DATED 26/07/2019 IN THE ABOVE PARAGRAPHS 8.2 TO 8.5 ON THE ASPECT OF ASSESSEE ACTING AS A CONDUIT IN THE CIRCULAR TRANSACTIONS AND ON THE ASPECT OF COLOURABLE DEVISE WOULD BECOME RELEVANT FOR CONSIDERATION BY THE ASSESSING OFFICER OF M/S. ALFA INFRPROP P LTD . ONLY , IF IT IS FOUND THAT M/S. ALFA INFRPROP P LTD . HAD CLAIMED ANY DEPRECIATION ON THE RIGHTS. MOREOVER, WE ALSO FIND THAT IT WAS NEVER THE CASE OF THE REVENUE THAT THE ORIGINAL PROMOTERS OF ALFA INFRPROP P LTD WERE BENEFITTED BY THIS CIRCULAR TRANSACTION AND HENCE THE OBSER VATION MADE BY THIS TRIBUNAL VIS A VIS THE ORIGINAL PROMOTERS OF ALFA INFRPROP P LTD IN PARAS 8.4. TO 8.4.2 OF THE ORDER WOULD NOT BE RELEVANT FOR CONSIDERATION. HENCE, WE DEEM IT FIT TO MODIFY OUR ORDER WITH THE ABOVE DIRECTIONS. THESE MODIFICATIONS WOUL D , IN OUR CONSIDERED OPINION , PROTECT THE INTEREST OF THE ASSESSEE HEREIN BEFORE US, M/S. ALFA INFRPROP P LTD AND ALSO PROTECT THE INTEREST OF THE REVENUE , AS THE DOORS OF ALL THE PARTIES WOULD BE LEFT OPEN. BY THIS PROCESS, THE REVENUE WOULD BE AT LIBERT Y TO PROCEED AGAINST ALFA INFRPROP P LTD IN THE EVENT OF ALFA INFRPROP P LTD TRYING TO TAKE BENEFIT BY WAY OF CLAIMING DEPRECIATION ON RIGHTS IN FUTURE . THIS MODIFIED ORDER SHOULD BE READ TOGETHER WITH THE ORIGINAL ORDER DATED 26/07/2019. WE HOLD THAT THIS MODIFICATION WOULD ADDRESS MA NO.512/MUM/2019 M/S. KHYATI REALTORS PVT.LTD. 5 OVERALL GRIEVANCE OF THE ASSESSEE IN THE MISCELLANEOUS APPLICATION AND HENCE, THE ADJUDICATION OF OTHER GROUNDS RAISED BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION WOULD BECOME ACADEMIC IN NATURE. 3. IN THE RESULT, THE M ISC ELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED TO THE LIMITED EXTENT OF MODIFICATIONS MENTIONED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 / 11 /201 9 ( AMARJIT SINGH ) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 29 / 11 / 2019 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//