2023 (2) TMI 1010 - AT - Income Tax

Appeal granted for reduced tax rate on capital gains amidst tax law changes and taxpayer rights

Bridgestone Corporation, C/o Bridgestone India Pvt. Ltd. Versus ACIT (Int. Taxation-2), Ahmedabad

The Tribunal allowed the appeal of the assessee, recognizing their eligibility to be taxed at a reduced rate of 10% on capital gains. The decision ... Taxation of capital gain - claim was not made in the return of income - eligibility of being taxed @10% on such sale of capital gains or 20% - eligibility of the assessee of being taxed at the lower rate of 10% in absence of the assessee filing the claim by way of revised return of income - AO rejecting claim of appellant on ground that appellant has opted to pay tax as per provisions of section 112(l)(c)(ii) in return and such change of claim is admissible only by filing revised return of income - HELD THAT:- As in Circular Number 14 (XL-35) of 1955 dated 11-04-1955 Department has taken a view that the officers of the department must not take advantage of ignorance of the assessee about his rights and it is their duty to assist the tax payer in every reasonable way particularly in the matter of claiming and securing reliefs. Further, in the case of B. G. Shirke Construction Technology (P.) Ltd. [2017 (3) TMI 879 - BOMBAY HIGH COURT] the High Court has held that an assessee is entitled to make a claim before Tribunal which was not raised before Assessing Officer at time of filing return of income or by filing a revised return of income. Again, in the case of Karnataka State Co-operative Federation Ltd [2021 (3) TMI 694 - KARNATAKA HIGH COURT] the Karnataka High Court held that assessee's fresh claim before appellate authority is entertainable even when same is not claimed in original return of income nor assessee has filed revised return of income to make such claim. In the case of Abhinitha Foundation (P.) Ltd [2017 (6) TMI 604 - MADRAS HIGH COURT] the Madras High Court held that even if a claim made by assessee-company does not form part of original return or even revised return, it can still be considered by Assessing Officer as well as appellate authorities in case relevant material is available on record. In the case of Sesa Goa Ltd [2020 (3) TMI 793 - BOMBAY HIGH COURT] held that where assessee inadvertently omitted to make claim for deduction under section 10B in respect of two 100 per cent Export Oriented Undertakings, however, all necessary facts for claiming deduction under section 10B were already on record, Commissioner (Appeals) in exercise of his plenary/co-terminus powers, as well as Tribunal, ought to have entertained claim. Accordingly, in our considered view, the assessee is eligible to be taxed at the reduced rate of 10% in respect of the aforesaid capital gains, even if such claim was not made in the return of income. Appeal of the assessee is allowed. Issues involved:1. Interpretation of provisions of section 112(1)(c)(iii) of the Income Tax Act.2. Eligibility of the assessee to be taxed at a reduced rate of 10% on capital gains.3. Requirement of filing a revised return of income for making fresh claims during assessment proceedings.4. Applicability of retrospective amendments in tax laws.5. Authority of appellate authorities to entertain claims not raised in original or revised returns.Issue 1: Interpretation of provisions of section 112(1)(c)(iii) of the Income Tax Act:The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the taxation of long-term capital gains on the sale of shares. The appellant argued that ambiguity in the law led to a conservative application of tax provisions, and subsequent clarifications allowed for a lower tax rate. The appellant contended that the change in claim did not require a revised return and should be entertained by the authorities.Issue 2: Eligibility of the assessee to be taxed at a reduced rate of 10% on capital gains:The AO rejected the assessee's claim based on various grounds, including the timing of the claim and the applicability of retrospective amendments. The CIT(A) also denied the claim, citing the absence of specific mechanisms or instructions for granting the benefit of the reduced tax rate. However, the Tribunal acknowledged the eligibility of the assessee to be taxed at 10% on capital gains, considering the retrospective amendment and the lack of denial of the claim under the Act.Issue 3: Requirement of filing a revised return of income for making fresh claims during assessment proceedings:The AO and CIT(A) emphasized the need for filing a revised return to make fresh claims during assessment proceedings. However, the Tribunal referred to legal precedents and highlighted the duty of tax authorities to assist taxpayers in claiming reliefs. The Tribunal allowed the claim of the assessee despite the absence of a revised return, citing relevant case law and principles.Issue 4: Applicability of retrospective amendments in tax laws:The case involved retrospective amendments in tax laws, specifically related to the taxation of long-term capital gains on the sale of shares. The Finance Act 2017 clarified the applicability of the reduced tax rate retrospectively from assessment year 2013-14. The Tribunal considered the impact of these amendments on the assessment proceedings and upheld the eligibility of the assessee for the reduced tax rate.Issue 5: Authority of appellate authorities to entertain claims not raised in original or revised returns:The Tribunal analyzed the authority of appellate authorities to entertain claims that were not raised in the original or revised returns of income. Citing legal precedents, the Tribunal emphasized the right of the assessee to make claims before the Tribunal, even if not raised before the Assessing Officer or through revised returns. The Tribunal allowed the appeal of the assessee based on these considerations.This detailed analysis of the judgment covers the interpretation of tax provisions, eligibility for reduced tax rates, filing requirements for claims, applicability of retrospective amendments, and the authority of appellate authorities to entertain claims not raised in original or revised returns.