M/s, Joy Bajaj, Jaipur V. Assistant Commissioner of Income Tax, Ward -4(2), Jaipur

MA 55/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9099 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 02-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Rectification of order
• Section: 56(2)(vii)(b); 22

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH A, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM M.A. NO. 55/JP/2019 ( ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 118/JP/2019) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16. M/S. JOY BAJAJ, 1/567, VIDHYADHAR NAGAR, JAIPUR. CUKE VS. THE DCIT. CIRCLE-7, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AHIPB 7102 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.01.2020. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 07/01/2020. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS MISCELLANEOUS APPLICATION BY THE ASSESSEE IS F OR RECTIFICATION OF MISTAKES IN THE ORDER DATED 22 ND MARCH, 2019 OF THIS TRIBUNAL. 2. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CAREFULLY PERUSED THE CONTENTS OF THE MISCELLANEOUS APPLICATION AS WELL A S THE IMPUGNED ORDER OF THE TRIBUNAL. THE FIRST MISTAKE HAS BEEN POINTED OUT B Y THE ASSESSEE THAT IN PARA 5 AT PAGE 4 OF THE IMPUGNED ORDER THE TRIBUNAL HAS OBSER VED THAT M/S. RADHA SWAMI BUILDCON PVT. LTD. APPEARS TO BE ASSESSEES FAMILY OWNED COMPANY AS FATHER OF THE ASSESSEE WAS DIRECTOR AT THAT POINT OF TIME. HOWEVE R, THE SAID OBSERVATION IS INCORRECT AND NOT BASED ON CORRECT FACTS AS THE FAT HER OF THE ASSESSEE IS ONLY ONE OF 2 MA NO. 55/JP/2019 M/S. JOY BAJAJ, JAIPUR. THE DIRECTORS AND SHAREHOLDER OF THE COMPANY AND, T HEREFORE, THE SAID COMPANY IS NOT OWNED BY THE FAMILY OF THE ASSESSEE. 3. WE FIND THAT THIS OBSERVATION IS BASED ON THE FA CT THAT THE DIRECTOR OF THE ASSESSEE HAS SIGNED THE SALE DEEDS FOR TRANSFER OF THE PROPERTY IN QUESTION BY THE SAID COMPANY IN FAVOUR OF THE ASSESSEE IN THE CAPAC ITY OF DIRECTOR OF THE SAID COMPANY. HOWEVER, WE FIND THAT OTHER THAN THE FATH ER OF THE ASSESSEE, THERE ARE OTHER DIRECTORS AND SHAREHOLDERS OF THE SAID COMPAN Y M/S. RADHA SWAMI BUILDCON PVT. LTD. ACCORDINGLY, THE FOLLOWING OBSERVATION O F THE TRIBUNAL IS MODIFIED :- THE SAID COMPANY APPEARS TO BE THE ASSESSEES FAM ILY OWNED COMPANY AS THE FATHER OF THE ASSESSEE WAS DIRECTOR AT THAT POINT OF TIME. THE SAME MAY BE READ AS UNDER :- THE TRANSACTION BETWEEN THE SAID COMPANY AND THE ASSESSEE IS A TRANSACTION BETWEEN THE RELATED PARTIES AS THE FATHER OF THE ASSESSEE IS A DIRECTOR AND SUBSTANTIAL SHAREHOL DER IN THE SAID COMPANY. 4. THE SECOND MISTAKE POINTED OUT BY THE ASSESSEE I S REGARDING THE OBSERVATION OF THE TRIBUNAL THAT SUBSEQUENTLY THERE WAS A CHANG E IN THE MANAGEMENT OF THE SAID COMPANY AND INITIATED THE RECOVERY PROCEEDINGS AGAI NST THE ASSESSEE IN PARA 5 AT PAGES 4 & 5 OF THE IMPUGNED ORDER. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT THERE WAS NO CHANGE IN THE MANAGEMENT OF THE COMPAN Y AS THE DIRECTORS AND OTHER MANAGEMENT POSITIONS REMAINED THE SAME. 3 MA NO. 55/JP/2019 M/S. JOY BAJAJ, JAIPUR. 5. WE FIND THAT THOUGH THERE IS NO SUBSTANTIAL CHAN GE IN THE MANAGEMENT OF THE COMPANY, HOWEVER, DUE TO THE REASON THAT THE SALE D EEDS WERE EXECUTED BY THE FATHER OF THE ASSESSEE IN THE CAPACITY OF DIRECTOR OF M/S. RADHA SWAMI BUILDCON PVT. LTD. AND SUBSEQUENTLY ANOTHER DIRECTOR OF THE SAID COMPANY HAS INITIATED THE RECOVERY PROCEEDINGS AND CONSEQUENTLY THE TRIBUNAL HAS OBSERVED AS UNDER :- SUBSEQUENTLY, WHEN THERE WAS A CHANGE IN THE MANAG EMENT OF THE SAID COMPANY THEY INITIATED THE RECOVERY PROCEEDING S AGAINST THE ASSESSEE. HOWEVER, SINCE THERE IS NO SUBSTANTIAL CHANGE IN TH E MANAGEMENT, THEREFORE, THE SAID OBSERVATION MAY BE READ AS UNDER :- SUBSEQUENTLY, THE MANAGEMENT OF THE COMPANY INIT IATED THE RECOVERY PROCEEDINGS THROUGH THE ANOTHER DIRECTOR O F THE SAID COMPANY AGAINST THE ASSESSEE. WE MAY MAKE IT CLEAR THAT THE SO CALLED MISTAKE AS POINTED OUT BY THE ASSESSEE IS EVEN NOT RELEVANT FOR DECIDING THE ISSUE. HOWEVER, SINCE IT MAY AFFECT THE FACTS OF THE SAID COMPANY, THEREFORE, WE HAVE MODIFIED THE S AME. 6. THE NEXT MISTAKE/CLARIFICATION SOUGHT BY THE ASS ESSEE IS REGARDING THE DIRECTIONS GIVEN TO THE AO TO COMPUTE THE AMOUNT WH ICH WAS TO BE DETERMINED THE REAL VALUE OF PURCHASE CONSIDERATION BY CONSIDERING THE ACTUAL PAYMENT DATE AND DATE OF PURCHASE BY APPLYING INTEREST FACTOR FOR TH E SAID PERIOD OF DELAY IN MAKING THE PAYMENT. THE RELEVANT FINDING AND DIRECTIONS O F THE TRIBUNAL WHICH SOUGHT TO BE CLARIFIED BY GIVING THE PERCENTAGE OF INTEREST ARE AS UNDER :- 4 MA NO. 55/JP/2019 M/S. JOY BAJAJ, JAIPUR. THE VALUE OF THE PURCHASE CONSIDERATION PAID SUBS EQUENTLY HAS TO BE DETERMINED BY APPLYING THE INTEREST FACTOR FOR THE SAID PERIOD OF DELAY IN MAKING THE PAYMENT. SINCE THE PAYMENT WAS FINALL Y MADE BY THE ASSESSEE AND THIS FACT WAS BROUGHT TO THE NOTICE OF THE AO, THEREFORE, THE ADDITION OF THE ENTIRE AMOUNT IS NOT SUSTAINABL E BUT ONLY TO THE EXTENT OF THE DIFFERENTIAL VALUE OF THE PURCHASE CO NSIDERATION AS ON THE DATE OF PURCHASE NEEDS TO BE DETERMINED FACTORING T HE ELEMENT OF INTEREST FOR SUCH DELAYED PAYMENT AND HENCE THE ADD ITION UNDER SECTION 56(2)(VII)(B) WOULD BE MADE ONLY TO THE EXT ENT OF THAT DIFFERENTIAL VALUE THE ASSESSEE HAS PAID LESSER THA N THE ACTUAL AMOUNT OF CONSIDERATION DUE TO THE DELAY OF PAYMENT WITHOU T ANY INTEREST. THE AO IS DIRECTED TO COMPUTE THE AMOUNT WHICH WAS TO B E DETERMINED THE REAL VALUE OF THE PURCHASE CONSIDERATION BY CONSIDE RING THE ACTUAL PAYMENT DATE AND THE DATE OF PURCHASE. THE BALANCE ADDITION MADE BY THE AO SHALL STAND DELETED. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT SINC E THE TRIBUNAL HAS NOT SPECIFIED THE INTEREST RATE FOR COST FACTOR OF THE DELAYED PA YMENT OF THE PURCHASE CONSIDERATION BY THE ASSESSEE TO THE RELATED PARTY, THEREFORE, THE SAME MAY BE SPECIFIED. 7. WE FIND THAT THOUGH THE AO WAS DIRECTED TO DETER MINE THE ACTUAL COST OF PURCHASE CONSIDERATION AFTER GIVING THE INTEREST FA CTOR EFFECT IN THE AMOUNT OF DELAYED PAYMENT, HOWEVER, THE INTEREST RATE HAS NOT BEEN SPECIFIED BY US. THIS, WE FIND A MISTAKE CREPT IN THE DIRECTION LEAVING THE F INDING WHICH MAY LEAD TO A FURTHER LITIGATION ON ACCOUNT OF INTEREST RATE TO BE APPLIE D BY THE AO. ACCORDINGLY, WE MODIFY THE OBSERVATIONS AND DIRECTIONS AS UNDER :- 5 MA NO. 55/JP/2019 M/S. JOY BAJAJ, JAIPUR. THE AO IS DIRECTED TO COMPUTE THE AMOUNT AFTER GI VING EFFECT THE ELEMENT OF INTEREST @ 12% PER ANNUM FROM THE DA TE OF PURCHASE OF THE PROPERTY TILL THE DATE OF ACTUAL PA YMENT MADE BY THE ASSESSEE OF PURCHASE CONSIDERATION. 8. IN THE RESULT, MISCELLANEOUS APPLICATION IS ALLO WED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 07/01/2 020. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 07/01/2020. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. JOY BAJAJ, JAIPUR, JAIPUR. 2. THE RESPONDENT THE ACIT, WARD 4(2), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (MA NO. 55/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 6 MA NO. 55/JP/2019 M/S. JOY BAJAJ, JAIPUR. 7 MA NO. 55/JP/2019 M/S. JOY BAJAJ, JAIPUR.