Ganjikunta Kishore Babu (HUF) Hyd, Chennai V. ITO, Ward (1), Anantapur, Anantapur

MA 85/HYD/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5412 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 04-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: J PRABHAKAR
• Keywords: Capital asset; Gift; Rectification of order
• Section: 2(14); 56(2); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER M.A. NO. 85/HYD/2016 (IN ITA NO. 839/HYD/2015 ASSESSMENT YEAR: 2011-12) GANJIKUNTA KISHORE BABU (HUF), DHARMAVARAM. PAN AAFHG 7199 R VS. INCOME-TAX OFFICER, WARD I, ANANTAPUR. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI J. PRABHAKAR REVENUE BY : SMT. SUMAN MALIK DATE OF HEARING 03-02-2017 DATE OF PRONOUNCEMENT 28-02-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THE ASSESSEE HAS FILED THIS M.A. SEEKING RECTIFICATION OF MISTAKE CREPT INTO THE ORDER OF THE TRIBUNAL PASSED IN ITA NO. 839/HYD/2016 DATED 24/08/2016. 2. IN THE M.A., THE ASSESSEE STATED AS FOLLOWS: 1. THE HON'BLE ITAT VIDE ITS ORDER CITED ABOVE, AT PARA 12.1 SUSTAINED THE ADDITION MADE IN THE SUM OF RS.15,79, 809/- BEING TRANSFER OF MACHINERY BY THE INDIVIDUAL TO HIS HUF APPELLANT, ALLEGEDLY ASSESSABLE UNDER SECTION 56 (2) OF THE AC T. 2. THE HON'BLE ITAT ADUMBRATED THE ARGUMENTS PLACED ON BEHALF OF THE APPELLANT, TRACING THE HISTORY OF THE LEGISL ATIONS SEEKING TO TAX TRANSFERS BETWEEN NON-RELATIVES UNDER SECTION 5 6(2)(VII) AND 2 M.A. NO. 85/H/16 GANJIKUNTA KISHORE BABU (HUF) VERBATIM REPRODUCED, INTER-ALIA, THE MOST SALIENT P ROVISO TO THE SAID SECTION AT PAGE 6, PARA 5 AS UNDER:- PROVIDED FURTHER THAT THIS CLAUSE SHALL NOT APPLY T O SUM OF MONEY OR ANY PROPERTY RECEIVED- (EMPHASIS MINE) (A) FROM ANY RELATIVE, 3. THE HON'BLE ITAT AT PAGE 5, PARA 10.1 CONCLUDED THE ARGUMENTS MADE ON BEHALF OF THE APPELLANT AS UNDER - IN ANY EVENT, THE TRANSACTION IS EXEMPT AS TRANSFER TO A 'RELATIVE' AS THE HUF RECEIVED THE SAME FROM A MEMBER THEREOF (INDIVIDUAL). HOWEVER, THE HON'BLE IT AT VIDE PARA 12.1 OF ITS OR DER ATTEMPTED TO INTERPRET THE NARROW COMPASS OF THE DEFINITION O F 'PROPERTY' UNDER EXPLANATION TO SECTION 56(2)(VII) PRO-TANTO B EING ALIGNED WITH DEFINITION OF CAPITAL ASSETS U/S 2(14) AND H ELD THAT IN THE ABSENCE OF SPECIFIC CLAUSE STATING THAT MACHINERY BEING INCLUDED AS PART OF THE DEFINITION, THE TRANSFER OF MACHINERY TO THE ASSESSEE BY THE INDIVIDUAL IS TO BE TAXED U/S 56(2) (VII) OF THE ACT. THE CONCLUSION ARRIVED AT AFORESAID IS BASED ON MISUNDERSTANDING THE PURPORT OF THE ARGUMENTS PLACE D FOR CANVASSING THE CASE OF THE APPELLANT, WITHOUT UNDER STANDING THE LARGER PICTURE IN THE GROUNDS OF APPEAL CANVASSED V IDE GROUND NO.3, THAT THE TRANSFER BETWEEN ASSESSEE AND THE IN DIVIDUAL ARE PER-SE EXEMPT BY VIRTUE OF THE DEFINITION OF 'RELAT IVE' UNDER SUB- CLAUSE (II) OF CLAUSE (E) OF EXPLANATION TO SECTION 56(2)(VII) AND THAT THE TRANSFER BY AN INDIVIDUAL TO AN HUF, BEING A MEMBER THEREUNDER IS COVERED BY THAT SECTION ITSELF. MOREOVER, THE HON'BLE ITAT HAVING REPRODUCED VERBAT IM THE CLAUSE WHICH EXCLUDES TRANSFER BETWEEN RELATIVES AT PAGE 6 PARA 5, FAILED TO TAKE INTO CONSIDERATION THE LEGAL EFFE CT OF THE SAID 3 M.A. NO. 85/H/16 GANJIKUNTA KISHORE BABU (HUF) CLAUSE (A) WHILE SUSTAINING THE ADDITIONS ON ACCOUN T OF RECEIPT OF MACHINERY BY THE ASSESSEE FROM THE 'INDIVIDUAL' STA TUS. 4. THE HON'BLE ITAT ALSO FAILED TO CONSIDER THE ARG UMENT RAISED BY THE APPELLANT THAT, DESPITE THE MISUNDERSTANDING OF THE PROVISIONS OF SECTION 56(2) BY THE CIT (A), RELATIN G TO MOVABLE V S IMMOVABLE PROPERTIES, THE TRANSACTION IS STILL EX EMPT UNDER SECTION 56(2)(VII), AS IT WAS STILL NOT ASSESSABLE BY VIRTUE OF TRANSACTIONS BETWEEN RELATIVES (PLEASE SEE PARA 10. 1 AT LAST 3 LINES OF IT AT ORDER BEGINNING WITH THE WORDS 'IN A NY EVENT.. '). 5. IN ADDITION THE HON 'BLE IT AT OMITTED TO ADUMBR ATE ON THE ARGUMENT ADVANCED BY THE APPELLANT, THAT IN THE ABS ENCE OF THE TERM 'MACHINERY' UNDER THE DEFINITION OF PROPERTY, THERE IS NO MANDATE TO TAX THE SAME IN TERMS OF SECTION 56 (2) (VII) - (PLEASE SEE PARA 10.1, LINE NOS. 5 TO 10). 6. THE HON'BLE ITAT HAS OMITTED TO CONSIDER AND GIV E A FINDING IN RESPECT OF GROUND NO 3 RAISED IN THE APPEAL AS UND ER: THE LD. CIT(A) FAILED TO CONSTRUE THE TERM RELATIVE IN EXPLANATION TO SECTION 56(VII)(C) UNDER SUB-CLAUSE (II) TO EXPLANATION (E) THEREUNDER WHICH STATES THAT THE MEMBER OF A HUF IS A RELATIVE TO WHOM, GIFTS MADE ARE EXEMPT. 7. IN VIEW OF THE ABOVE, THERE IS A PATENT MISTAKE IN THE ORDER OF THE HON'BLE IT AT WITH REGARD TO SUSTAININ G THE ADDITION ON ACCOUNT OF TRANSFER OF MACHINERY TO THE APPELLAN T BY THE INDIVIDUAL, SINCE THE APPLICABILITY OF SECTION 56 ( 2) (VII) IN ITSELF IS AN ERROR BY VIRTUE OF THE NATURE OF TRANSFER INTER- SE BETWEEN RELATED PERSONS. 8. THE HON'BLE ITAT MAY KINDLY RECALL ITS ORDER IN ITA NO.839/HYD/2015 TO BE ARGUE DE-NOVO ON THE ISSUES R AISED IN THE APPEAL BUT NOT CONSIDERED IN PROPER PERSPECTIVE BY THE HON'BLE ITAT. 4 M.A. NO. 85/H/16 GANJIKUNTA KISHORE BABU (HUF) 3. REFERRING TO THE ABOVE FACTUAL BACKGROUND, THE L D. AR REQUESTED THE BENCH TO RECALL THE SAID ORDER TO ARGUE DE-NOVO ON THE ISSUES RAISED IN THE APPEAL BUT NOT CONSIDERED IN PROPER P ERSPECTIVE BY THE HONBLE ITAT. 4. THE LD. DR, ON THE OTHER HAND SUBMITTED THAT THE RE IS NO NEED TO RECALL THE ORDER PASSED BY THE ITAT. 5. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. CONSIDERING THE SUBMISSIONS OF THE LD. A R, WE ARE OF THE OPINION THAT IT LEADS TO REVIEW OF OUR ORDER, WHICH IS NOT PERMITTED U/S 254(2) OF THE ACT. WE HAVE ALREADY CONSIDERED THE I SSUE ON MERITS AND ADJUDICATED. THERE IS NO MISTAKE APPARENT ON TH E RECORD. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. SUMAN TEA AND PLYWOOD INDUSTRIES (P) LTD., 226 ITR 34 HELD THAT BY SECTION 254(4) OF THE IT ACT, AN ORDER WHICH HAS BEEN PASSED BY TH E TRIBUNAL REACHES FINALITY THE MOMENT THE SAME IS PASSED: IT CANNOT BE TOUCHED THEREAFTER. BY SECTION 254(2) OF THE ACT, T HE TRIBUNAL, HOWEVER, HAS BEEN AUTHORIZED TO RECTIFY MISTAKES IN ITS ORDERS, WHICH ARE APPARENT ON THE FACE OF THE RECORDS. THE EXPRESSION MISTAKE APPARENT ON THE RECORD MEANS A MISTAKE EI THER CLERICAL OR GRAMMATICAL OR ARITHMETICAL OR OF LIKE NATURE, W HICH CAN BE DETECTED WITHOUT THERE BEING ANY NECESSITY TO REARG UE THE MATTER OR TO REAPPRAISE THE FACTS AS APPEARING FROM THE RE CORDS. 5.1 FROM THE ABOVE DECISION, IT IS CLEAR THAT SECTI ON 254(2) CANNOT BE APPLIED TO SEEK REVIEW OF THE ITAT ORDER. ONCE I T IS PRONOUNCED, IT BECOMES FINAL AND CAN RECTIFY ONLY THE MISTAKES APP ARENT ON THE RECORD. HENCE, THE M.A. FILED BY THE ASSESSEE IS DI SMISSED. 5 M.A. NO. 85/H/16 GANJIKUNTA KISHORE BABU (HUF) 6. IN THE RESULT, M.A. FILED BY THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 28 TH FEBRUARY, 2017. KV COPY TO:- 1) GANJIKUNTA KISHORE BABU (HUF), C/O J PRABHAKAR, CA., RESIDENCY APARTMENTS, 245, TTK ROAD, ALWARPET, CHENNAI. 2) ITO, WARD 1, ANANTAPUR. 3) CIT(A), KURNOOL 4) CIT, KURNOOL 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.