TaxTMI 
TaxTMI 
2009 (11) TMI 554
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.... consideration of Rs. 1,90,62,000. The land in question admeasuring 6.86 acres (2,99,345 sq. fl.) was purchased in instalments during the years 1950 to 1980. The assessee admitted long-term capital gains in the subsequent assessment years upto asst. yr. 2004-05 in respect of the remaining area. The AO found that there was a survey under s. 133A in the business premises of M/s Ceedceyes Housing & Finance Ltd., Chennai - 600 020 and it was found that the assessee had entered into a sale agreement on 25th May, 2001 for sale of its entire land of 6.86 acres to the above company for a consideration of Rs. 14 crores and the possession of the property was given on the same date to the purchaser who had started construction activities from 4th June, 2001 onwards. As per paras 6 and 8 of the sale agreement, the entire sale consideration of Rs. 14 crores was 1.0 be paid to the assessee before the end of the financial year relevant for this assessment year as below: (i) Rs. 12 lakhs already paid by pay order dl. 10th March, 2001; (ii) Rs. 2 crores paid on the date of agreement on 25th May, 2001; (iii) Rs. 5 crores to be paid by 30th Nov., 2001; (iv) Rs. 6.88 crores to be paid by 3....
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....rther submitted that the assessee allowed the builder to enter and do their part of work and business and simultaneously the assessee was also in possession and occupation of the property which was evident and clear from the fact that the property was used as a storage house for magazine until 31st March, 2002 as per explosive licence granted to them. It was contended that the assessee reserved with themselves every right of ownership and possession and executed the sale deeds and therefore, provisions of s. 53A of the Transfer of Property Act were not applicable. 4. The AO did not accept the reply of the assessee and held that as per para 10 of the sale agreement, M/s Ceedeeyes Housing & Finance Ltd. was given possession of the land immediately after the date of execution of the sale agreement and this fact was confirmed by their letter dt. 5th March, 2005. He also held that the assessee did not produce any evidence to show that the magazine was actually used for business purposes. He also found that the purchaser M/s Ceedeeyes Housing & Finance Ltd. had confirmed that the possession of the property was handed over to them on 25th May, 2001 as per the letter dt. 17th Oct., 2001....
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....ess even though the stock registers were forming part of the books of accounts maintained by the assessee. 6. The learned CIT(A) while considering the submissions of the learned Authorised Representative of the assessee and going through the relevant documents, the case was remanded back to the AO for verification after allowing the opportunity of cross-examination of Shri C. Devadoss Sundaram. He was also directed to examine the stock register of the assessee-company to find out whether the magazines were actually used for storehouse purposes till the end of the financial year. 7. The AO submitted his remand report dt. 6th Oct., 2006 and learned CIT(A), while considering such remand report, other material and details on record and discussing the case in detail, has concluded to direct the AO to accept the returned long-term capital gain by accepting the plea of the assessee as per paras 4.8, 4.9 and 4.10 of his order which read as under: "4.8 Sec. 2(47)(v) and (vi) reads as under: '(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in s. 53A of the Tr....
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....r consideration as per agreement to sell. Therefore, in terms of provisions as contained in s. 2 (47)(v) there is a complete transfer. Therefore, the AO has correctly proceeded to tax the entire capital gain transaction in the year under consideration. Hence, the learned CIT(A) is neither legally nor factually correct to accept the plea of the assessee to direct the AO to accept the returned long-term capital gain only. It was thus urged to set aside the impugned order and restore the order of AO. 9. The learned counsel for the assessee while relying on the reasoning and basis as given by the learned CIT(A) has pleaded for the confirmation of the impugned order. It was further submitted that each and every detail has been appropriately considered by the learned CIT(A) who has passed a very reasoned order while distinguishing the case law relied upon by the AO. Moreover, it is a case where the entire transaction has been offered for taxation during the subsequent years and for all the years, tax rate is 20 per cent. Therefore, there is no loss of revenue at all even if it is held, though not admitting, that year of taxability is the year under consideration. Since there is no los....
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.... of letter available in file). The exact narration of the said letter is reproduced as under: 'We are not storing any fireworks for the past six months in the above storehouse since the safety distances are not upto the required limit. Now since we have decided to surrender the licence, we request you to kindly cancel the licence. The original licence is lying at the Chief Controller's Office at Chennai.' From the above, it is clear that the assessee has abandoned his business activities on this land during this assessment year period. 2.6 Vide para 12 of the sale agreement, the following conditions were brought in the sale agreement: 'The vendor shall execute deeds of the sale in favour of the purchaser abovenamed or their nominee or nominees either in divided shares or undivided shares after the payment of the entire sale consideration. For this purpose, vendors may appoint an attorney duly constituted under a deed of general power of attorney to execute such sale deeds whenever the purchasers requests therefore to avoid any delay.' Hence, the stand taken by the assessee is not tenable in the light of the decision of the Madras High Court in the case of D. Kasturi ....
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....n the AO is entitled to take the date of the contract as the dale of transfer in view of s. 2(47)(v). There is no merit in the argument of the assessee that the Courts should go only by the date of actual possession. If the contract, read as a whole, indicates passing of or transferring of complete control over the property in favour of the developer, then the dale of the contract would be relevant to decide the year of chargeability.' 2.7 The purchaser M/s Ceedeeyes Housing & Finance Ltd. has more than once confirmed the possession of the property-first to Dy. Director of IT (Inv.) Unit-II-I, Chennai by their letter dt. 17th Oct., 2001 and again now by its letter dt. 5th March, 2005 in response to this office summons under s. 131, dt. 25th Feb., 2005. In spite of a copy of this office letter dt. 5th March, 2005 was forwarded to the assessee, there is silence on the part of the assessee regarding the admission of the purchaser about the possession of the land. Above all, as per paras 6 and 8 of the sale agreement, the entire proceeds of Rs. 14 crores has to be paid to the assessee during the financial year relevant for the asst. yr. 2002-03. Coupled with the fact that the ass....
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....restore that of the AO. So far as the plea of the assessee that tax rate is same for all the years on capital gain and the assessee has in subsequent years paid the tax, so the plea of the learned counsel for the assessee is found to be not tenable in view of the fact that tax could only be levied in the relevant year as rightly contended by the learned Departmental Representative. Therefore the plea of the assessee in this regard is rejected. As regards direction for subsequent years in alternative plea of the assessee's counsel is concerned, as rightly objected by the learned Departmental Representative, such plea cannot be accepted because, Tribunal has no jurisdiction to give direction with regard to the proceedings of the earlier year or to include deleted amount in other year's assessment as held by the Hon'ble Supreme Court in the case of ITO vs. Murlidhar Bhagwan Das (1964) 52 ITR 335 (SC) and on the same analogy, direction cannot be issued for subsequent years. As such, plea in this regard is rejected. 11. As regards the second issue, same is contained in ground Nos. 6 and 7 of the memorandum of appeals and relates to exclusion of excise duty of Rs. 4,70,13,935 from the....
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....year only. The learned JM has rejected this submission of the assessee on the basis of the decision of Hon'ble apex Court in the case of ITO vs. Murlidhar Bhagwan Das. No doubt, in that case it was held that jurisdiction of appellate authority was strictly confined to the assessment order of the particular year under appeal. In that case, the facts were that certain interest income of Rs. 88,737 was brought to tax for asst. yr. 1949-50. The assessee appealed and AAC held that income was received in the previous accounting year and directed that the amount should be deleted from the asst. yr. 1949-50 and included in the assessment for the year 1948-49. Pursuant to this direction, the ITO initiated reassessment proceedings under s. 34(3) of the IT Act, 1922, in respect of the year 1948-49 and served a notice on the assessee on 5th Dec., 1957. The question was whether the second proviso to s. 34(3) applied and saved the notice which was served beyond the time prescribed by s. 34(1). In this background, the Court held that limitation could not be enlarged by giving a finding or direction by the appellate authority. In fact, the following observations at pp. 342 and 343 of the Court are....
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....of authorities by giving a finding and the answer was 'No'. However, at the same time, one of the cardinal principles of taxation is that same income cannot be taxed twice. In the case before us, assessee sold certain lands and it was claimed that since only an agreement to sell was entered in the year before us and the sale deeds were executed in piecemeal, therefore, capital gain tax arose from asst. yrs. 2002-03 to 2005-06. However, the AO took the view that since assessee has already given possession of the land and has also entered into an agreement, therefore, in view of s. 2(47) r/w s. 53A of Transfer of Property Act, the transfer took place in the asst. yr. 2002-03 and the same was chargeable to tax in this year only. This view has been confirmed by the learned JM and I agree with him. 2. However, in that case, the taxes already paid should have been credited by the AO in this year itself which has not been done. If this alternative plea is not allowed then assessee would be subjected to the same item of income from capital gain twice which is against the fundamental principles of taxation. Therefore, in my view, the alternative submission of the learned counsel for the ....
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....tate of Kerala vs. Vijaya Stores (1979) 116 ITR 15 (SC), to give direction to the AO to exclude capital gain offered by the assessee in the subsequent assessment years than the year under appeal, the same could be rejected by applying analogy as laid down in ITO vs. Murlidhar Bhagwan Das (1964) 52 ITR 335 (SC) or direction could be issued to adjust the taxes paid by the assessee in subsequent assessment years on capital gain in the year under appeals." 2. The facts leading to the above point of difference have been brought out in detail by the learned JM in his proposed order. There is no dispute over the facts and hence the same arc not repeated here. The question before the Tribunal was the year of taxability of the capital gains earned by the assessee. The assessee spread the capital gains over asst. yrs. 2002-03 to 2004-05 on the basis of the sale deeds executed by it in favour of the nominees of the flats constructed by Ceedeeyes Housing & Finance Ltd. (CHFL). The AO was of the view that the entire capital gain was taxable in asst. yr. 2002-03. On the other hand, the CIT(A) accepted the contention of the assessee to spread the capital gains over three assessment years. The ....
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....in the regular books of account. The Sales Tax Officer (STO) made an addition to the extent of 10 per cent of the turnover. The addition amounted to Rs. 45,654. The AAC reduced the addition to Rs. 22,823. The assessee challenged this addition before the Tribunal. The Tribunal was of the view that the STO and the AAC had no reason to make addition at any figure less than Rs. 80,218 and accordingly directed to make the said addition. The assessee approached the High Court contending that the Tribunal had no jurisdiction or power to enhance the assessment in the absence of any appeal or cross-objection by the Department. The Kerala High Court accepted the contention of the assessee. The State of Kerala approached the Supreme Court against the judgment of the High Court contending that the Tribunal has the power to enhance the assessment in the absence of any appeal or cross-objection by the Department. The Supreme Court upheld the judgment of the Kerala High Court by holding that s. 39(4) of the Kerala General Sales-tax Act, 1963, was in pari materia with s. 33(4) of the IT Act, 1922. Accordingly, it quoted with approval the observation of the Bombay High Court in The Motor Union Insu....
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....essee was only against enhancement which the High Court allowed. Thus, the learned JM has relied on the decision in the case of Vijaya Stores by making a very general observation rather than going into the nitty-gritty of the law. This very principle is adopted by the Tribunal in r. 27 of the ITAT Rules. Coming to the facts of the present case, by making the alternative plea, the assessee is not pleading that the capital gains are not taxable. Also, he is not pleading that they should not be taxed in a single year. His only plea is, and which is a legal plea, that due tax on the income so assessed be levied and the taxes already paid be given credit of. I do not see any legal infirmity in this plea of the assessee. In fact, it is one of the canons of taxation that no income can be taxed twice. It is not a question of giving any direction in respect of either the earlier years or subsequent years. The only plea is that taxes which are already paid on this very income be given credit of in this year. In this connection, we usefully can derive support from the observations of the Supreme Court in the case of Rajinder Nath vs. CIT (1979) 12 CTR (SC) 201 : (1979) 120 ITR 14 (SC). At pp.....
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.... From the above observations it is clear that the direction to be given in the present case that credit of taxes already paid should be given is a direction necessary for the disposal of the appeal. The fact that the taxes already paid are paid in subsequent financial years is merely an incidental finding. Sec. 153(3)(ii) deals with the aspect of limitation and it is not a provision enlarging the jurisdiction of the authority or Court. In the present case, the question is of levying taxes in accordance with law and it has nothing to do with enlarging the jurisdiction of any authority or Court. Therefore, the question of applying the judgment in the case of Murlidhar Bhagwan Das does not arise. 5. In view of the foregoing discussions I am in agreement with the view taken by the learned AM that the AO should give credit for taxes paid in later years in respect of capital gains. 6. The matter may now be posted before the regular Bench for the disposal of the appeal in accordance with the opinion of the majority. U.B.S. BEDI, J.M.: 20th No....