2015 (9) TMI 557 - HC - Income Tax

High Court grants Assessee's plea on capital gains tax, emphasizes new claim consideration.

The Commissioner of Income Tax – 1 Versus M/s. BFIL Finance Ltd.

The High Court allowed the Assessee to present additional evidence and an alternative plea regarding the taxability of short-term capital gains. The Court ... Income on account of short term capital gains on sale of property - selection of assessment year for taxation - Tribunal accepting the additional evidences setting aside the entire issue of Short Term Capital Gain - Held that:- Even where an assessee has offered tax in the subject assessment year, it was open to the assessee before the Appellate Authority to raise additional grounds to the effect that same should not be included in the total income for the purposes of taxation. The entire issue is with regard to the year of taxability has been restored to the Assessing Officer for fresh consideration. Therefore, the issue raised herein would also be a subject of consideration of the Assessing Officer while passing the order on remand. In fact, the chargeability to tax as shortterm capital gain is not in dispute, only the year of taxability is to be examined. The Assessee itself has offered the above amount to tax as short-term capital gain - No substantial questions of law. - Decided against revenue. Depreciation on leased assets - Tribunal restoring the issue - Held that:- CIT(A) while following the order for the Assessment Year 1995-96 has not followed the same in its entirety. The CIT(A) after holding that the assessee is not entitled to its claim for depreciation as the lease transactions under reference, were not genuine did not consider the alternative submission made with regard to Finance Transaction. Besides, the order passed by the CIT(A) for the Assessment Year 1995-96, had not dealt with the genuineness of the lease transaction. Nevertheless, for the subject Assessment Year, he holds, it is not genuine without giving any notice to the Respondent-Assessee. Therefore, by the impugned order, the Tribunal held that CIT(A) has decided on the issue of the lease transaction not being genuine without having given a hearing to the RespondentAssesee. The CIT(A) ought to have given Respondent-Assessee an opportunity to meet the same.It is in the above view that the impugned order of the Tribunal has restored the issue as raised in Question No.3 to the Assessing Officer for fresh consideration - No substantial questions of law. - Decided against revenue. Issues:1. Acceptance of additional evidences and alternative plea regarding Short Term Capital Gain taxability.2. Setting aside the issue of Short Term Capital Gain taxability and treatment of forfeited advance.3. Restoration of the issue of disallowance of depreciation on leased assets.Analysis:Issue 1: Acceptance of additional evidences and alternative plea regarding Short Term Capital Gain taxability:The High Court considered whether the Assessee could change its stance on the taxability of short-term capital gains after initially declaring it in the Return of Income. The Revenue argued that the Assessee cannot contradict its initial claim. However, the Court referred to precedents and held that the Appellate Authority has the power to consider additional claims not made in the Return. The Court emphasized that the issue was limited to the assessing authority's power and did not affect the Tribunal's jurisdiction. Ultimately, the Court found that the Assessee's plea was valid, and the issue was restored to the Assessing Officer for fresh consideration.Issue 2: Setting aside the issue of Short Term Capital Gain taxability and treatment of forfeited advance:The Court noted that the entire issue of Short Term Capital Gain taxability was sent back to the Assessing Officer for reevaluation, focusing on the year of taxability. The Assessee had offered the amount in question for tax as short-term capital gain, but the specific year of taxability needed clarification. The Court concluded that the questions raised did not present substantial legal issues and thus were not entertained.Issue 3: Restoration of the issue of disallowance of depreciation on leased assets:Regarding the disallowance of depreciation on leased assets, the Assessee had claimed depreciation, which was denied by the Assessing Officer. The Court observed that the CIT(A) had accepted the alternate submission of the Assessee for a previous assessment year. However, for the current assessment year, the CIT(A) did not provide an opportunity for the Assessee to address the issue of lease transaction genuineness. Consequently, the Tribunal restored the issue to the Assessing Officer for fresh consideration. The Court found no substantial legal question in this matter and upheld the Tribunal's decision.In conclusion, the High Court dismissed the appeal, stating that no substantial questions of law were raised in the case, and no costs were awarded.