Karnataka High Court
Commissioner Of Income Tax-Iii vs Mr Mohd V Shaffiulla on 22 February, 2012
Bench: N.Kumar, Ravi Malimath
BETWEEN: IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 22"" DAY OF FEBRUARY PRESENT % THE HON'BLE MR.JUSTI_CmE N.KL!~fviA--.Fi:~.. 'C «A AND V . " THE HON'5LE MR.JUV'S_T1.CE R'A\/I' MVALIvlVi.'AeT:H_V.V :2 R ITA.No.405'eL:oE 2010 C/W ITA.NO.406 O"F~.._2010"C/W"ITA..NO.404~OF 2010 C/W ITA'.N0.403V 052010 ITA.NO.4 2. 1 : % ' V A 1. Commil' ' C. R_.eBeu iidni h--gé:.;;.,V Queens - Road, Ba'ngaI'ore. 5- Q'01.'.* 2. AsRs~Es't'a.ntV Income Tax, circle-_7(1),'= ' A' 0 VBangalcr¢"_ ...APPELLANTS V' ., E.~I,.Sanxm a't--i~,« Advocate) Nrr.M0vl1d,\!".'$haffiu||a No.80',a.Zareena Manzil, --. _ Nagavarapalya, C.V.Raman Nagar, V Bangalore -- 560 093. ...RESPONDENT VT (By Sri S.Parthasarathi & Sri P.Dinesh & Sri Mallaha Rao, Advocates) _ ***** E * This ITA filed under section 260-A of I_..T.Actf,')--1_9tf;1'*_ arising out of order dated 24.S.2010"~«._pass,ed l ITA.No.1134/Bang/2009, for the Assessmei'ut--.:ye>ar.,2006- ' 07, praying to formulate the substantiial questions offslawy stated therein, set aside the '»,ap_pel,!1ate_ or'der"V:"d_at.ed 24.05.2010 passed by the ITAT, '"'B'"B_ench,'_--.Bangalo._re.,in._ appeal proceedings ITA.No.3'13.4}/Bang/2O09E,'V:as; sought for_*. in this appeal. ITA.NQ.4Q6[2Q1Q: . BETWEEN: 1. Commissioner of Income'~Tax«--'IeII",'._ --- C.R.Buildi§ng's., Queens, Roiad-,., 2 f Bangal.o.re,4-- _ ii.' 2. Assistant.Cotnmisseionler ofiinccéme Tax, CifClé*7<.iI). Bavvngal-ore;--".,-~.__» ' ' ...APPELLANTS (By Sri ,1_'.Sanrnat'i,' Ad"\,«g"ca.te) N ' ..lVir....Roh'i't Sal'ar.i_a No.1 2./' "\/e'rs,ova Layout, "C.'v".Ram;ajn Hagar, Ba._ngavl'or_ejl=-- 560 093. ...RESPONDENT _ (By ..Sr.i':'S.Parthasarathi & Sri P.Dinesh & Sri Mallaha Rao, 0 ~ V Advocates) *>l<*** 1/// This ITA filed under section 260--A of I.T.Act, 1961 arising out of order dated 24.5.2010 passed-.. in ITA.No.1138/Bang/2009, for the Assessment"-._ye_ar 2006-O7, praying to formulate the substantial q,u_esti"on's of law stated therein, set aside the appellate .0f_rd'e'r5_'jd..a'te,d'_ 24.05.2010 passed by the ITAT, 'B' Bench, 'B_an.g_alo're in this appeal. appeal proceedings ITA.No.1138/Bang/2009,"asf_so'u.ght for 'v ITA.NQ.4Q4[2Q1Q: BETWEEN: 1. Commissioner of Income Ta__>i<?I:I_I,--.._» C.R.Buildings, Queens Road, ' 1 Bangalore -- 560 00.1.." _ ' 2. Assistant Commiss.ionverfof 'Income Circle-7(1u)','«..__'g'_'~ Bangalore...' ~. _ jg-V ...APPELLANTS (By SriE.I.'Sa:riii2_aVtiV," V AND§a_ A Mr.Mohd";'S'.'Samad"h' . No.80, Zareena. ,M--an;:_il,"*' Na.gava.rapalya,_,C.V.Raman Nagar, " .. B'a._n:ga_l-0re. 5 560' 09-3; ...RESPONDENT esiri._S.l5a.rti'i.asarathi & Sri P.Dinesh & Sri Mallaha Rao, >l<***>l< " _'This ITA filed under section 260--A of I.T.Act, 1961 *arising' out of order dated 24.5.2010 passed in _uITA;.No.1133/Bang/2009, for the Assessment year 2006-07, praying to formulate the substantial questions of ?law stated therein, set aside the appellate order dated h/0 24.05.2010 passed by the ITAT, 'B' Bench, Bangalore in appeal proceedings ITA.No.1133/Bang/2009, as sought for in this appeal. I ITA.N .4 2 10: BETWEEN: 1. Commissioner of Income Tax-111,0 C.R.Buildings, Queens Road, Bangalore -- 560 001. 2. Assistant Commissioner of"vI..ri'comeV.TaX/<.ch'; Circle--7(1), ' Bangalore. . ' jg .../XPPELLANTS (By Sri E.I.Sanmati, Adyocatef)-» AND: Mr.Suresh1Sai;ari_a . _ ._ N o. 1 2./--1~,~~\lersovai::;Lay*out, C.V.R.aman N5a_gaVr',g _ _ - Banga'l.or'e -- v56'o.jB9.3».. _ ~ _ 1 ...RESPONDENT (By Sri 'Su".iP.a%rithaVsarathiaét'Sri P.Dinesh & Sri Mallaha Rao, Advocagtes) - ' ' '- ~fi. ' ***** -vThis'«.I«TA_ filed under section 260-A of I.T.Act, 1961 'Var_ising'jgvout"-_.of order dated 24.5.2010 passed in 'ITA.No.1'1j39;'Bang/2009, for the Assessment year 2006--__07,,p'raying to formulate the substantial questions of law ..stated therein, set aside the appellate order dated .24.05...2"010 passed by the ITAT, 'B' Bench, Bangalore in 'appeal proceedings ITA.No.1139/Bang/2009, as sought for A' this appeal. llZ/ These ITAs coming on for admission this day, N.KUMAR J., delivered the following:-- JUDGMENT
As in all these four appeals, the point tliat consideration is the same and hence"vve_ have _tal<_en 'then:
up for consideration together and disposed-.'.'Aoff common order.
2. In ITA 405/2010, the assessee claimed', Rs.9G,t:)..O:,'0d'.)/E; each:':".as'V"laison charges. Whereas 406/2010, the assessee, :__ i:?Rs.1,16,00,000/- and charges respectively. lhough the Trlibuglgnalyvl four separate orders, the reasoning is 'identical'.
3 e. These four assessees' jointly agreed to provide 2,27,000 sq. ft. of land to M/s.Purvankara Projects Ltd. Originally, the price agreed upon was it .Rei;*,22,00,00,000/-. However, as there were some _'?huts/slums on those lands, the purchaser was not V prepared to take the land and get it registered with those slum dwellers and insisted for their removal. The arose between the parties. The dispute was.§'_:re'fer'r;e.:d':
arbitration. An agreement of arbitral award to be r passed on 23.02.2006 enhancinglicéheitotalconsicl-elrationvto Rs.32.20 crores and additicina-l_Vdey'e!..opmer:t'a'lgchyargeslyof,"v Rs.50/-- Iakhs for removal award dated 03.03.2006. fouruassessees received the to them. They categorized. l short--term capital gains.____I_n capital gains, the amount representinlgl't'h,e.._same..3_«wva__s--invested in REC bonds. In so far as'Qt'in,:e: gains are concerned, they claiijmyed the Vafolresaid amount as Iaison charges i.e., the .cost .i,m«-provement such as hut clearing expenses, 0'~_te-nanCy')-.c_om'pensation, Iaison charges, etc. The Iaison amount was paid by way of account payee cheque to one B..J.Ko'shy, who has acknowledged the said amount and fla'lso confirmed the same by a letter dated 27.03.2008. V The assessee claimed deduction of the said laison charges towards expenses in respect of short--term capit_alVV_igain_s. The Assessing Authority asked the assessee§s'.'"why.j:__tl-ee"_ Iaison charges were claimed against sh.ort*---ter.rn"V.capital it gains only and not against llongjterifn«*»c'aipil:a'l":g.airs;s,' particularly when the long--teVrrn_Vcapital'galns'v:'i'sA..;c!a_ViVmed exemption from tax _i.e., the investment in REC ;n.llr~e.s;»§.~.se, the assessee submitted that 'asV'per:tl~*ie:.b;i'll they are claiming the Officer was not convinvcedlgvvitl. the He was of the opinion that the ._sameTVha:sto'«v..be.--._apportioned between the short- term '«cap'i'tavl' long-term capital gains. Accfordiingly,Vheglldisaiilowed the Iaison charges, which is the long-term capital gains. Aggrieved by ~_tVhe_«AsVaid"_~_..ord:e'r; the assessee preferred an appeal to the Commviissioner of Income Tax (Appeals). The Appellate A * Authority set aside the order of the Assessing Authority on flthe: ground that absolutely there is no basis for such l/ apportionment and deleted the disallowance. Aggrieved by the said order, the revenue preferred an appeal before:°t.he Tribunal, which has confirmed the said order. _ those two orders, the revenue is in ,appeal.;'''''v--..i].. » '
4. The learned Counsel for reye_nu'e. assa'iiing._VV the impugned order contendssfifhat the,aswse:3sVee""h'as not' produced any material~..,_to the" sites which resulted in short--term§capital'§V"'€iVain§,. slum dwellers were there. xnot accessible in respect oft" ':gair.s, the assessee has dwellers were there in in short--term capital gains.
Therefore,'~ the,V',-.As::_ess'ilVng Authority was justified in app'or%loniv,ng thleiaison charges in respect of those sites, "'wi'h'i'ch:"'h;asi'not:..been properly appreciated by the appellate 'au'tihori_t,ies--;_ri:; We do not see any substance in the said contention. QZ
5. The total extent of land sold by the assessees is not in dispute. The total consideration received.tVis,,'_'a.|.,so not in dispute. It is also not in dispute that _ to the dates on which the sites were"'*ac:q»ui'réid'«_th:e long--term capital gains and short:4ter_rn..capita~l.'g-alinsr-.,.we:reé arrived at. The amount rea-!.i_zed wayfilot;vlQ_Vngf'terrn.:'7 capital gains is invested in the benefit under Section 54EC " ' V
6. _ capital gains, the assessees cihalrges to the extent set out a:'btov.e.A AVVThe~:Vf_actttha't»..the sites, which were the subject matterofthe'salAe,:'.were-Etiinthe occupation of slum dwellers is_n'o'tzin dis'p-ute. The dispute is whether they were in .' :oc'cup>atio.n:'«-.of all the sites or only those sites, which ~.res,ulted"_'v_in th'e'.short--term capital gains. The assessee has paid tVhe"money by way of account payee cheque to one " it-'sl.r4_.B.v'G.Koshy to clear the slum dwellers, which amount been acknowledged by him. According to the l/ _10_ assessees, the slum dwellers were in possession oftthge land, which resulted in short--term capital gains. no material on record to show that the said contention"
the assessee is wrong, misleading"or'"delib,erate,ly._mva'de with an intention to evade tax. Th:e.__A'ss.essin'gv_iAAut!~1or=ity,yV"
proceeds on the assumption enhtireVylaisianxcfihlalrges is to be appropriated i,n'...r_espec"t' al'i=,the'si'tes'"on the assumption that these slurnldw-ellers__:/,:w«é.i.f€'W'._§here in each and every State.s}.:§vh.ich v:TH'hjeVv'Vsites' numbers are mentioned bill, which he has raised. l\i'ot 'set out in the bill, the departmVe"ntJan.y other material. 'In the absence ofVV'thbe'v n1:af._teiri,_a'|',..--"':it is highly inappropriate to
-"i.cVonsi,_dé.r ,t,he.__contenvt.io.n' of the revenue. Based on the .7docurneAn't.a:r'y_'wTevidence, of B.G.Koshy, who has acki1oV'v'ledgeci'j_the entire amount for the aforesaid purpose, the two. appellate authorities on proper consideration of vthe:sa'me, has held that the laison charges refers to only '"'~-____"1short--term capital gains. We have no reason to disagree l/ -11- with the same. No substantial question of law is involved in these appeals that merits admission. Accordingjl~y:';i._all the appeals are dismissed.
Prs*