Nirman Discretionery Family Trust, Ahmedabad v. The ACIT., Cent.Circle-1(1),, Ahmedabad

ITA 1257/AHD/2006 | 2002-2003
Pronouncement Date: 18-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 125720514 RSA 2006
Assessee PAN AAATN1192J
Bench Ahmedabad
Appeal Number ITA 1257/AHD/2006
Duration Of Justice 3 year(s) 9 month(s) 1 day(s)
Appellant Nirman Discretionery Family Trust, Ahmedabad
Respondent The ACIT., Cent.Circle-1(1),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 18-02-2010
Date Of Final Hearing 11-01-2010
Next Hearing Date 11-01-2010
Assessment Year 2002-2003
Appeal Filed On 17-05-2006
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD. BEFORE: HON'BLE SHRI T.K. SHARMA JUDICIA L MEMBER AND HON'BLE SHRI N.S. SAINI ACCOUNTANT MEMBER ITA NO. 1257/AHD/2006 ASSESSMENT YEAR : 2002-2003 NIRMAN DISCRETIONARY FAMILY TRUST AHMEDABAD PAN : AAATN 1192 J VERSUS ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(1) AHMEDABAD (APPELLANT) (RESPONDENT) FOR THE APPELLANT : S/SHRI S.N. SOPARKAR & HI MANSHU SHAH C.A. FOR THE RESPONDENT : SHRI RAJEEV AGARWAL CIT (D .R.) ORDER PER T K SHARMA JUDICIAL MEMBER :- THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 09.03.2006 OF LD. COMMISSIONER OF INCOM E TAX(APPEALS)-I AHMEDABAD FOR THE ASSESSMENT YEAR 2002-03 ON THE FOLLOWING GR OUNDS :- (1) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN POINTS OF LAW AND ON FACTS. (2) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GROSSLY ERRED IN NOT DECIDING INSTEAD HAS SET ASID E THE ISSUE TO THE LD. ASSESSING OFFICER ON THE STATUS OF THE APPELLANT WHEN THE LD. ASSESSING OFFICER HAS ERRED IN CHANGIN G STATUS OF THE ASSESSEE FROM INDIVIDUAL TO TRUST WITHOUT G IVING ANY REASON FOR MAKING SUCH CHANGE IN STATUS. (3) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELL ANTS CASE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICE R IN CONSIDERING THE LONG-TERM CAPITAL GAIN OF RS.61 80 000/- ON SALE OF 280 DEEP DISCOUNT BONDS OF NIRMA LIMITED AS SHORT TERM CAPITAL GAIN. (4) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE THE LD. LEARNED COMMISSIONER OF INCOME TAX(AP PEALS) HAS GROSSLY ERRED IN CONFIRMING THE ASSESSING OFFIC ERS LEVYING INTEREST OF RS.5 46 670/- U/S. 234B OF THE I.T. ACT. (5) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN NOT INTERFERING ON THE GROUND RELATING TO INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF I.T. ACT. 2. GROUND NO. 1 OF THIS APPEAL IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION BY US. 2 ITA NO. 1257/AHD/2006 3. WITH REGARD TO THE GROUND NO. 2 OF THIS APPEAL WE HAVE HEARD BOTH THE SIDES. AT THE TIME OF HEARING SHRI S.N. SOPARKAR APPEARING ON BEHALF OF THE ASSESSEE CONTENDED THAT VARIOUS GROUNDS RAISED ARE ALMOST ID ENTICAL WITH THAT RAISED IN THE CASE OF RAKESHBHAI K. PATEL VS.- ACIT CIRCLE-5 AHMEDA BAD IN ITA NO. 1855/AHD/2007. THE LD. COUNSEL OF THE ASSESSEE FURT HER SUBMITTED THAT ON PAGE 1 OF THE ASSESSMENT ORDER AGAINST COLUM NO. 5 THE STAT US OF THE ASSESSEE IS MENTIONED AS TRUST. HE SUBMITTED THAT THE STATUS OF THE TRUST SHOULD BE TAKEN AS INDIVIDUAL IN VIEW OF THE DECISION OF THE HON'BLE GUJARAT HIGH CO URT IN THE CASE OF DEEPAK FAMILY TRUST (211 ITR 575) (GUJ.) AS WELL AS IN THE CASE O F HARSIDDH SPECIFIC FAMILY TRUST [258 ITR 785] (GUJ.). HE FURTHER SUBMITTED THAT SLP FILED BY THE DEPARTMENT AGAINST THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IS R EJECTED BY THE HON'BLE APEX COURT. ON THE OTHER HAND SHRI RAJEEV AGARWAL CIT (D.R.) APPEARING ON BEHALF OF THE DEPARTMENT COULD NOT CONTROVERT THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. WE THEREFORE FOLLOWING THE JUDGMENT OF THE HON'BL E JURISDICTIONAL HIGH COURT IN TWO CASES CITED BY THE LD. COUNSEL OF THE ASSESSEE DIR ECT THE A.O. TO ADOPT THE STATUS OF THE ASSESSEE AS INDIVIDUAL. THIS GROUND OF APPEAL IS AL LOWED. 4. THE FACTS RELATING TO CONTROVERSY INVOLVED IN GR OUND NO. 3 ARE THAT THE ASSESSEE HAD DECLARED LONG-TERM CAPITAL GAIN ACCRUA L OF RS.61 80 000/- ON SALE OF 280 DEEP DISCOUNT BONDS SERIES A OF NIRMA LIMITED AS S HORT-TERM CAPITAL GAINS. THE A.O. TREATED THE LONG-TERM CAPITAL GAIN OF RS.61 80 000/- AS SHORT-TERM CAPITAL GAIN. IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) CONFIRMED THE ACTION OF A.O. FOR THE REASONS GIVEN HEREUNDER :- (A) FURTHER THE LD. C.I.T.(A) HAS UPHELD THE LD. A SSESSING OFFICERS ACTION WHILE CHANGING THE HEAD OF INCOME IN RESPECT OF RS.61 80 000/- FROM LONG TERM CAPITAL GAIN TO SH ORT TERM CAPITAL GAINS RELYING ON CIRCULAR NO. 2 OF 2002 OF CBDT DATED 15.02.02 AND IGNORING THE PRESS NOTE DATED 20.03.02 ISSUED IN THIS REGARD BY CBDT. (B) FURTHER THE LD. C.I.T.(A) HAS UPHELD THE ASSES SING OFFICERS ACTION WHILE CHANGING THE HEAD OF INCOME IN RESPEC T OF RS.61 80 000/- FROM LONG-TERM CAPITAL GAIN TO SHORT -TERM CAPITAL GAINS MAKING THE AFOREMENTIONED CIRCULAR APPLICABL E WITH RETROSPECTIVE EFFECT WHICH IS ILLEGAL AND AGAINST THE INTEREST OF THE APPELLANT. 3 ITA NO. 1257/AHD/2006 (C)FURTHER THE LD. C.I.T.(A) HAS UPHOLDING THE ASS ESSING OFFICERS ACTION WHILE CHANGING THE HEAD OF INCOME IN RESPECT OF RS.61 80 000/- FROM LONG TERM CAPITAL GAIN ARGU ING ALTERNATIVELY THE SAME TO BE A SHORT-TERM CAPITAL GAIN BY HOLDING THAT THE LETTER OF ALLOTMENT OF DEBENTURES AND DEBENTURE CERTIFICATE WERE TWO SEPARATE INVESTMENTS THEREBY CREATING AN ARTIFICIAL SPLIT OF ONE AND THE SAME CA PITAL ASSET. (D) FURTHER THE LD. C.I.T.(A) HAS FURTHER UPHELD T HE ASSESSING OFFICERS ACTION WHILE RECKONING THE HEAD OF INCOM E IN RESPECT OF RS.61 80 000/- FOR DETERMINING THE RATE OF TAX T O BE APPLIED ARGUING ALTERNATIVELY THE SAME TO BE SHORT TERM C APITAL GAIN BY NOT APPRECIATING THAT THE CAPITAL ASSET WAS LISTED ON THE DATE OF TRANSFER THE LESSER PERIOD OF HOLDING OF 12 MONTHS REQUIRED FOR SUCH ASSET NEED TO BE RECKONED FROM THE DATE OF HOL DING THE ASSET AND NOT ONLY THE DATE COMMENCING FROM THE DAT E OF LISTING. (E) FURTHER THE LD. C.I.T.(A) HAS FURTHER UPHELD T HE ASSESSING OFFICERS ACTION WHILE CHANGING THE HEAD OF INCOME IN RESPECT OF RS.61 80 000/- FROM LONG-TERM CAPITAL GAIN ARGU ING ALTERNATIVELY THE SAME TO BE SHORT TERM CAPITAL GA IN BY HOLDING THAT THERE WAS NO ASSET EXISTENT UNTIL THE ISSUANC E OF DEBENTURE CERTIFICATE AND THAT THE DEBENTURE CERTIFICATE PRI OR TO LISTING AND AFTER LISTING WERE DIFFERENT FINANCIAL ASSETS FURT HER THE TRANSFERABLE LETTER OF ALLOTMENT IN LIEU OF DEBENTU RE HELD BY THE APPELLANT WAS ALSO A DIFFERENT FINANCIAL ASSET; AN D HENCE THE HOLDING PERIODS OF THESE COULD NOT BE COMBINED FOR THE PURPOSE OF DETERMINING THE PERIOD OF HOLDING FOR LONG TERM CAPITAL GAINS. 5. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE IS IN APPEAL BEFORE US. 6. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT INVESTMENT IN DDBS OF NIRMA LIMITED (SERIES A) WAS MADE ON 23.09.2000. THESE WERE SOLD ON 25.03.2002. SIMILAR ADDITION WAS MADE BY THE A.O. I N THE CASE OF KARSANBHAI KHODIDAS PATEL HUF. THIS WAS DELETED BY THE TRIBUNA L VIDE ORDER DATED 09.10.2009 IN ITA NO. 1042/AHD/2006 FOR THE ASSESSMENT YEAR 2002- 03. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT SIMILAR ADDITION WA S ALSO DELETED BY THE TRIBUNAL IN THE CASE OF KISAN DISCRETIONARY FAMILY TRUST VIDE ITA N O. 1850/AHD/2007DATED 02.11.2007 FOR THE ASSESSMENT YEAR 2003-04. 4 ITA NO. 1257/AHD/2006 7. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CO NTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE . 8. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AS WELL AS THE MATERIAL AVAILABLE ON RECORD. THE CONTROVERSY INVOLVED IN GROUND NO. 3 IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF KARSANBHAI KHODIDAS PATEL HUF FOR THE ASSESSMENT YEAR 2002-03 (SUPRA) AS WELL AS KISAN DI SCRETIONARY FAMILY TRUST FOR THE ASSESSMENT YEAR 2003-04 (SUPRA). WE THEREFORE RES PECTFULLY FOLLOWING THE SAME DIRECT THE A.O. TO TAX RS.61 80 000/- AS LONG-TERM CAPITAL GAIN AND ALLOW THE DEDUCTION CLAIMED UNDER SECTION 54EC OF THE INCOME TAX ACT 1 961 ON SALE OF DDBS OF NIRMA LIMITED (SERIES A). RESULTANTLY GROUND NO. 3 OF TH E APPEAL IS ALLOWED. 9. GROUND NO. 4 RELATES TO LEVYING INTEREST OF RS.5 46 670/- UNDER SECTION 234B OF THE INCOME TAX ACT 1961 WHICH IS CONSEQUENTIAL IN NATURE. THE A.O. WILL RE- CALCULATE THE INTEREST UNDER SECTION 234B OF THE AC T. 10. NO APPEAL LIES AGAINST INITIATION OF PENALTY UN DER SECTION 271(1)(C) OF THE ACT. THEREFORE GROUND NO. 5 OF THIS APPEAL IS REJECTED. 11. IN THE RESULT FOR STATISTICAL PURPOSES THE AP PEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 18 TH FEBRUARY 2010. SD/- SD/- SS (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 18/02/2010 COPY OF THE ORDER IS FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED (4) THE CIT (5) THE DR AH MEDABAD BENCH 6. THE GUARD FILE. BY ORDER // TRUE COPY // ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. LAHA/SR. P.S.