TaxTMI 
TaxTMI 
2017 (11) TMI 383
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....individual. As observed by the Assessing Officer, the assessee was the co-owner of Arthur and Jenkins Salt Works. For the assessment year under consideration, the assessee filed his return of income on 23rd November 2010, declaring total income at Rs. 1,67,26,51,378. During the assessment proceedings, the Assessing Officer found that the assessee had invested an amount of Rs. 5 crore in ICICI Prudential PMS. However, in the computation of income, the assessee has neither shown any gain nor loss from the said investment. He, therefore, called for necessary information regarding the investment from ICICI Prudential Assets Management Co. Ltd. From the information obtained, it was found that as per the income and expenditure statement, there was a deficit of Rs. 3,58,789 during the year. Further, it was found that the assessee has derived a net gain of Rs. 14,41,964 on sale of securities. When this fact was confronted to the assessee, it was submitted by the assessee that the transaction relating to investment made in ICIC Prudential PMS being in the nature of business, the loss suffered by the assessee amounting to Rs. 4,15,973 should be treated as business loss and set-off against in....
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.... in the stock exchange to maximize the gain to the assessee. Thus, from the aforesaid fact, it is evident that the intention of the assessee was for the purpose of investment and not trading. That being the case, the Assessing Officer was justified in assessing the gain derived from sale of securities as short term capital gain. Merely because the assessee has invested a huge sum of Rs. 5 crore it cannot be treated as a business activity of the assessee. As far as allowability of PMS cost and other expenditure, the learned Counsel appearing for the assessee fairly submitted that the issue has been decided against the assessee by virtue of decision of the Tribunal, Mumbai Bench, in Capt. Animesh Chandra Batra (supra). In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground no.2 raised by the assessee. 9. In ground no.3, the assessee has challenged the addition of an amount of Rs. 50 crore while computing long term capital gain on sale of Salt Pan Land. 10. Brief facts are, during the assessment proceedings, the Assessing Officer noticed that the assessee has offered an amount of Rs. 162,73,59,506 as short term capital gain o....
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....oceeded to compute capital gain on the sale of consideration of Rs. 521 crore. the assessee challenged the aforesaid decision of the Assessing Officer in an appeal preferred before the learned Commissioner (Appeals). 11. The learned Commissioner (Appeals) after considering the submissions of the assessee, however, agreed with the Assessing Officer that the capital gain has to be computed on the total sale consideration of Rs. 521 crore. The learned Commissioner (Appeals) referring to clause 2.1 of the sale agreement observed that for transfer of development right of the total sale area, the assessee is to receive sale consideration of Rs. 521 crore in four stages. He observed, the payment of Rs. 50 crore at the fourth stage is to be made on pro-rata basis according to the area realized for development. He observed, however, as per the agreement the mutually agreed total consideration is Rs. 521 crore. Hence, capital gain has to be computed on the total sale of consideration of Rs. 521 crore. 12. The learned Authorised Representative submitted, though, the total sale consideration as per sale agreement is Rs. 521 crore, however, as per clause-3.4 of the said agreement, an amou....
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....ore on sale of development rights of the land. However, relying upon a specific clause of the sale agreement between the assessee and the developer which speaks of total sale consideration payable to the assessee, the Departmental Authorities have concluded that long term capital gain has to be computed on the total sale consideration of Rs. 521 crore irrespective of the fact whether the assessee has received the amount of Rs. 50 crore out of such sale consideration. In this context, it is necessary to examine the sale agreement dated 13th August 2009, between the assessee and M/s. Shapoorji Pallonji And Company Ltd., the developer. As per the sale deed, the assessee agreed to sell development right of about 500 acres of Salt Pan Land to the developer. As per clause K of the agreement, certain areas out of the property sold are governed by the CRZ regulation. As per clause 2.1 of the sale agreement, the developer shall pay to the lessees (assessee) total sum of Rs. 521 crore for the entire land admeasuring 500 acres including the FSI available to the said property. As per clause 2.3 of the agreement, the sale consideration shall be payable by the developer to the assessee as under:....
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....ed in clause 2.1 of the agreement irrespective of the fact whether the assessee has actually received Rs. 50 crore or not. It is well settled principle of law that assessment has to be made on the basis of real income received by the assessee. In the facts of the present case, it is an admitted factual position that the assessee has not received the amount of Rs. 50 crore. There is also no certainty that the assessee would at all may receive the amount of Rs. 50 crore even in future. Therefore, the assessee cannot be subjected to capital gain on the amount of Rs. 50 crore, though, it may be a part of the total sale consideration mentioned in the agreement, considering the fact that the assessee was supposed to receive the said amount on fulfillment of certain conditions and as per the facts on record, the assessee has not received the said amount, since, the conditions have not been fulfilled. 16. The observations of the Departmental Authorities that capital gain has to be computed on the total sale consideration, whether or not the assessee has received the amount of Rs. 50 crore, in our view, is legally untenable. In this context, we may refer to the relevant statutory provisi....
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....eed have not been fulfilled. Therefore, the assessee does not have any legally enforceable right under the agreement to receive the amount of Rs. 50 crore. In these circumstances, computation of capital gain on the amount of Rs. 50 crore, in our view, is not only improper but against the scheme of the Act. The entire purpose of the Income Tax Act, 1961 is to assess the real income of the assessee. Therefore, the Departmental Authorities cannot assess any hypothetical or notional income to tax. Having held so, we feel it appropriate to refer to the decision of the Hon'ble Jurisdictional High Court in Mrs. Hemal Raju Shette (supra). The facts of the case are, by virtue of an agreement the assessee transferred its share holding in a particular company. As per the terms of agreement, initial consideration of Rs. 2.70 crore was to be received immediately and deferred consideration of Rs. 20 crore was to be received over a period of four years based on a formula. As per the working of the formula a situation may arise where no amount on account of deferred consideration could be receivable by the assessee. It so happened, the assessee could not receive part of the deferred considerat....
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.... [1954] 26 ITR 27 "It is clear therefore that income may accrue to an assesee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody. There must be as is otherwise expressed debitum in presenti, solvendum in futuro .... .... ....". In this case all the co-owners of the shares of M/s. Unisol have no right in the subject assessment year to receive Rs. 20 crores but that is the maximum which could be received by them. This amount which could be received as deferred consideration is dependent/contingent upon certain uncertain events, therefore, it cannot be said to have accrued to the respondent-assessee. The Tribunal in the impugned order has correctly held that what has to be taxed is the amount received or accrued and not any notional or hypothetical income. As observed by the Apex Court in CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 "Income-tax is a levy on income. No doubt, the Income-tax Act takes into acco....
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....gistered valuer has adopted the cost of asset as on 1st April 1981 at Rs. 29.77 crore, The Assessing Officer found that major part of the lease hold rights was acquired by the assessee only in November 1986 for Rs. 6.20 crore which has not been taken note of by the registered valuer. He also observed that rate adopted by the registered valuer is based on ready reckor, hence, not approved by the Government. Therefore, he was of the view that the valuation done by the registered valuer cannot be accepted. Accordingly, he made a reference to the District Valuation Office (DVO) under section 55A(a) of the Act for determining fair market value of the capital asset as on 1st April 1981. The DVO in his report dated 25th February 2013, determined the value of capital asset at Rs. 23,14,33,000. The Assessing Officer adopting the value determined by the DVO computed the capital gain. The assessee challenged the decision of the DVO before the learned Commissioner (Appeals). 23. The learned Commissioner (Appeals) following the decision of the Hon'ble Jurisdictional High Court in CIT v/s Pooja Prints, [2014] 360 ITR 697, decided the issue in favour of the assessee by holding that as per ....