Income Tax Appellate Tribunal - Mumbai
Gnanesh V. Lakhia, Mumbai vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "G", MUMBAI
BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI R.K. PANDA (A.M.)
ITA No. 1823/Mum/2010
Assessment Year 2006-07
Mr. Gnanesh V. Lakhia, Addl. Commissioner of Income-
601, Panch Amrut, tax, Range 20(1),
Off Yari Road, Piramal Chambers,
Versova, Vs. Mumbai.
Andheri (W),
Mumbai 400 058.
PAN : AAAPL 2797 D
(Appellant) (Respondent)
Appellant by : Shri Anant N. Pai
Respondent by : Shri A.K. Nayak
ORDER
PER D.K. AGARWAL, J.M.
This appeal preferred by the assessee is directed against the order dated 24.12.2009 passed by the ld. CIT (A) for the A.Y. 2006-07.
2. Briefly stated facts of the case are that the assessee an individual derives income from house property, business income viz. income from derivative, income from speculation in shares, interest and salary from partnership firm and income from other sources & interest, filed return declaring total income of ` 2,21,64,580/-. During the course of assessment proceedings, it was inter alia, observed by the A.O. that the assessee filed re-revised return on 22.12.2008 declaring total income of ` 99,83,119/-. The reason for re-revising return is stated to be that due to an inadvertent mistake, the assessee has claimed in the revised return, the short term capital gain instead of claiming long term capital gain in ITA 1823/M/10 2 Mr. Gnanesh V.Lakhia respect of shares of demerged company namely MRIL. However, the A.O. was of the view the re-revised return is non-est as the same was filed beyond one year time from the end of the relevant assessment year. The A.O. while relying on the decision of Hon'ble Supreme Court in Goetze (India) Ltd. v. CIT reported in 284 ITR 323 (SC), rejected the claim of the assessee and completed the assessment at an income of ` 2,50,18,220/- vide order dated 22.12.2008 passed u/s 143(3) of the Income Tax Act, 1961 (the Act). On appeal, the ld. CIT(A) while agreeing with the findings of the A.O. confirmed the action of the A.O.
3. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us taking the following ground of appeal:-
"On the facts and circumstances of the case the Learned Commissioner of Income-tax (Appeals) erred in confirming the taxing exempted long- term capital gain amounting ` 1,43,69,325/- on sale of shares of de merged company "MRIL" as short term capital gain."
4. At the time of hearing, the ld. counsel for the assessee while reiterating the same submissions as submitted before the A.O. and ld. CIT(A) further submits that original return of income was filed on 31.10.06 at an amount of ` 2,21,64,580/-. The first revised return was filed on 26.10.2007 at ` 2,43,52,450/- and second revised return was filed on 22.12.2008 declaring total income of ` 99,83,119/-. The ld. counsel for the assessee while referring to page No. 1 to 7, 17 to 20, 21 to 29 & 30 of the assessee's paper book submits that the A.O. and the ld. CIT(A) was not justified in not treating the capital gain as long term capital gain as the assessee has filed complete details in respect of sales of share of MRIL. The ld. counsel for the assessee while distinguishing the decision in Goetze (India) Ltd. (supra), relied on the following decisions:-
1. Mahindra Mills vs. ACIT 99 ITR 135,143 (SC) ITA 1823/M/10 3 Mr. Gnanesh V.Lakhia
2. CIT vs. Sun Engineering Works Pvt. Ltd. 198 ITR 297,320 (SC)
3. Good Year India Ltd. vs. State of Haryana 188 ITR 402,428 (SC)
4. CIT vs. Rai Bahadur Bissesswarlal Mitilal Halwasia Trust 195 ITR 825, 832 (Cal.)
5. Murali Export House vs. CIT 238 ITR 257 (Cal)
6. Smt. Prabhavati S. Shah v. CIT 231 ITR 1 (Bom.)
7. A.V. Sreenivasala Naidu vs. CIT 16 ITR 314 (Mad)
8. Dhanukaur vs. State of Rajasthan 120 ITR 158 (Raj.)
9. CIT vs. Aarchana R. Dhanwantay [1982] 136 ITR 355, 360 (Bom.)
10. Board Circular [2007] 15 SOT 252 (Mum.) Chicago Pneumatics India Ltd. Vs. DCIT page Nos. 32-59 of the paper book.
11. L. Hiriday Narain v. ITO [1970] 76 ITR 26,31,32 (SC)
12. CIT vs. Ramco International 180 Taxman 584 (P&H)
13. CIT vs. Archana R. Dhanwantay [1982] 136 ITR 355,360 (Bom.)
14. Jt. CIT vs. Hero Honda Fin Lease Ltd. [2005] 115 TTJ (Del) [TM] 752.
15. Franco-Indian Pharmaceuticals Pvt. Ltd. vs. ITO 3 ITR Trib 754 [Mum]
16. CIT vs. Jai Parabolic Springs Ltd. 306 ITR 42 (Del) He, therefore, submits that the addition made by the A.O. and sustained by the ld. CIT(A) be deleted.
5. On the other hand, the ld. D.R. while relying on the order of the A.O. and ld. CIT(A) further submits that the reliance placed by the assessee Explanation 1 (b) to section 2(42A) is misplaced. He further submits in view of Explanation 1(c) and (d) to Explanation 1 of section 2(42A), the assessee is not entitled to treat the share as long term capital ITA 1823/M/10 4 Mr. Gnanesh V.Lakhia gain and therefore the order passed by the A.O. and confirmed by the ld.
CIT(A) be upheld.
6. We have carefully heard the submissions of the rival parties and perused the material available on record. We find that there is no dispute that the assessee has filed re-revised return claiming the long term capital gain instead of short term capital gain claimed earlier in respect of sale of shares of MRIL which was not considered by the A.O. as the same was filed beyond one year time from the end of the relevant A.Y. therefore the A.O. treated the said re-revised return as non-est. The A.O. in the absence of valid re-revised return disallowed the claim of the assessee in view of the decision of Goetze (India) Ltd. (supra).
7. In Chicago Pneumatic India Ltd. Vs. Dy. CIT (2007) 15 SOT 252 (Mum), it has been observed and held by the Tribunal (page 274):-
"......As far as the decision of the Hon'ble Apex Court in the case of Goetze (India) Ltd. (supra) is concerned, there is no dispute that the same is binding on everybody concerned. In the said decision, the Hon'ble Apex Court has also ruled that Appellate Tribunal may adjudicate the issue if a claim is made by any party subject to satisfaction of prescribed rules, hence, even the Hon'ble Apex Court has not barred the assessee raise it's legal claim before Appellate authorities...."
8. In CIT Vs. Jai Prabolic Springs Ltd. (2008) 306 ITR 42 (Del), their Lordships after considering the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323(SC) have held that there was no prohibition on the powers of the Tribunal to entertain an additional ground which according to the Tribunal arises in the matter and for the just decision of the case. Therefore, there is no infirmity in the order of the Tribunal.
ITA 1823/M/10 5 Mr. Gnanesh V.Lakhia
9. In Nathpa Jhakri Joint Venture Vs. ACIT (2010) 131 TTJ 702/ 37 SOT 160, (Mum), the Tribunal after considering the judgment of Hon'ble Supreme Court in Goetze (India) Ltd. (supra) has observed and held that the Hon'ble Supreme Court has clarified the decision further in para 04 of the judgment which makes it explicitly clear that the mandate of this judgment is limited to the power of the assessing authorities and does not impinge on the power of the Tribunal under section 254 of the Act, held that if an amount is legally deductible, nothing can prevent the Tribunal from accepting such a plea.
10. The CBDT as back as in 1955 issued a circular No. 14(XL-35), dated 11th April, 1955 wherein the Board has recognised the fact that responsibility for claiming refunds and relief rests with the assessee as imposed by law, even then the Board has directed the officers to draw the attention of the assessees in respect of any refunds or reliefs to which they are eligible, which they have not claimed for some reason or other.
11. In National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383(SC) it has been observed by Their Lordships (page 386) :-
"........The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item......."
12. In view of the above settled position of law and in the absence of any other contrary material or distinguishing feature brought on record by the revenue and keeping in view that the assessee has filed the relevant details along with original return and revised return which have not been found by the revenue as not relevant for deciding the issue in ITA 1823/M/10 6 Mr. Gnanesh V.Lakhia accordance with law, we are of the view that merely because the assessee has made claim of short term capital gain as against correct claim of long term capital gain on sale of shares is not sufficient to hold that that the assessee is not entitled to the claim the sale of shares as long term capital gain. Since the A.O. without examining the issue on merits has rejected the claim of the assessee, we are of the view that in the interests of justice, the matter should go back to the file of the Assessing Officer and accordingly we set aside the orders passed by the revenue authorities on this account and send back the matter to the file of the Assessing Officer who shall decide the same afresh and according to law after providing reasonable opportunity of being heard to the assessee. The ground taken by the assessee is therefore partly allowed for statistical purposes.
13. In the result, assessee's appeal stands partly allowed for statistical purpose.
Order pronounced in the open court on 08.04.2011 Sd/- Sd/-
(R.K. PANDA) (D.K. AGARWAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated 8th April, 2011.
RK
Copy to:
1. The Appellant
2. The Respondent
3. Commissioner of Income Tax (Appeals)- 6, Mumbai
4. Commissioner of Income Tax, 2, Mumbai
5. Departmental Representative, Bench 'J', Mumbai //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA 1823/M/10 7 Mr. Gnanesh V.Lakhia 1 Draft dictated on 29.3.11 Sr PS 2 Draft placed before Author on 30.3.11 Sr PS 3 Draft proposed & Place before the JM/AM 2nd member 4 Draft discussed/approved by 2nd JM/AM Member 5 Approved draft comes to the Sr PS Sr.PS 6 Kept for pronouncement on Sr PS 7 File sent to the Bench Clerk Sr PS 8 Date on which file goes to the Head Clerk 9 Date on which file goes to the AR 10 Date of despatch Sr PS