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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आयकर अपीलीय अिधकरण “सी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, CHENNAI माननीय �ी महावीर िसंह, उपा� एवं माननीय �ी मनोज कुमार अ%वाल ,लेखा सद( के सम । BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा)रण वष) / Assessment Year: 2013-14) M/s. Sree Visalakshi Mills (P) Ltd. ITO (in Liquidation) Corporate Ward-3, बनाम O/o.Official Liquidator Madurai. / Vs. 29, Corporate Bhavan, Rajaji Salai, Chennai-600 001. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AACCS-0538-A (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri S. Sridhar (Advocate) - Ld.AR � थ�कीओरसे/Respondent by : Shri R.Clement Ramesh Kumar (CIT)- Ld.DR सुनवाई की तारीख/Date of Hearing : 03-07-2023 घोषणा की तारीख /Date of Pronouncement : 03-07-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. At the time of hearing of captioned appeal, Ld. AR drew our attention to two pages of written submissions dated 16-06-2023. The Ld. AR submitted that the only dispute is qua computation of long term capital gain (LTCG) on sale of properties by the assessee. The Ld. AR submitted that the assessee has undergone liquidation process. The secured assets of the assessee company were sold by the bankers to the highest bidder. As against this, Ld. AO invoked the provisions of Sec.50C to make impugned addition of Rs.375.15 Lacs which is unwarranted and bad in law since the asset was disposed-off in auction by the bankers and the entire money was credited into the bank account. Therefore, the question of invoking the provisions of Sec.50C would not apply. The Ld. AR further submitted that Ld. AO did not consider allowable and eligible expenditure in connection with transfer of properties. The Ld. AR tabulated these expenses on page no.2 of the written submissions wherein the assessee seek deduction of expenditure of Rs.103.16 Crores under the head capital gains. To support the same, Ld. AR has also filed petition under Rule 29 seeking admission of additional evidences.
The Ld. CIT-DR opposed interference in the impugned order on the ground that the claimed expenditure was not debited in the Profit & Loss Account and the application of provisions of Sec.50C was mandatory. The Ld. CIT-DR opposed admission of new evidences at this stage of proceedings.
Having heard rival submissions and upon perusal of case records, our adjudication would be as under.
The assessee being resident corporate assessee has undergone liquidation process. An assessment was framed u/s 143(3) on 29-03- 2016. It transpired that the properties owned by the assessee were sold by Official Liquidator through auction for aggregate consideration of Rs.112.42 Crores. The assessee did not admit any gains from sale of properties and also did not admit interest earned on deposits made out of sale proceeds. The Ld. AO, invoking the provisions of Sec.50C, enhanced the sale consideration by Rs.375.15 Lacs and did not allow any expenditure under the head capital gains. The short term capital gains and interest income was also brought to tax.
The substantive findings of the Ld.CIT(A) are as under:- 7.1. As it can be seen from the assessment order the appellant did not file any details or evidences relating to these expenses claimed by it. Further, no expenses were debited to the two half yearly receipts and payments account and the income and expenditure account. Hence no interference is warranted on these issues and these grounds of appeal
are dismissed.
8. As regards the grounds that the addition of interest income earned on the deposits made out of sale proceeds viz. Rs.3,80,36,243 the Assessing Officer has rightly turned down the appellant's claim that the said interest was part of sale consideration and hence it is a capital receipt, holding that the sale consideration is the price which the buyer pays to the seller but the said sum of Rs.3,80,36,243/- was the interest earned on deposit of the sale proceeds. Just because the sale proceeds were deposited in FD's as per the direction of the Court, interest earned thereon cannot become part of sale consideration and thus constitute capital receipts. In view of these facts the additions made by the Assessing Officer is upheld and these grounds of appeal are dismissed.
9. The Assessing Officer has rightly invoked the provisions of section 50C as the properties involved are lands situated at different areas. No expenses have been debited in the books of accounts / statement of accounts during the relevant year towards expenditure incurred in connection with the transfer of the property and cost of improvement. Further, at the time of hearing the authorised representative has not produced any details or evidences for the expenditure incurred in connection with the transfer of the property and details regarding the cost of acquisition and also the details or evidences for cost of improvement. Similarly, assessment of interest income has also been done in accordance with the I.T.Act provisions as discussed above. Hence, all the grounds of appeal of the assessee are dismissed.”
Accordingly, the assessment was confirmed against which the assessee is in further appeal before us. 6. From the fact, it emerges that the assessee has undergone liquidation process and its properties have been sold under auction. Clearly, the properties owned by the assessee have been sold during this year and therefore, incidence of taxation would arise on the assessee in this year. The plea that no assessment should be made in the hands of the liquidator stand rejected.
Having said so, we find that assessee has failed to file the requisite details and evidences before lower authorities which have resulted into impugned assessment on the assessee. It is the onus of the assessee to substantiate its case. Therefore, keeping in mind the principle of natural justice, we set aside the impugned issue of computation of LTCG and restore the same to the file of Ld. AO with a direction to the assessee to substantiate its case. The Ld. AO, if so required, may refer the matter of valuation to DVO before making any addition u/s 50C. The expenditure as claimed by the assessee against LTCG may be examined by Ld. AO and the allowability of the same may be adjudicated de novo. The interest income has correctly been assessed as ‘Income from other sources’ since the interest has arisen out of bank deposits and could not be treated as part of sale consideration. No other grounds have been urged before us.
The appeal stand partly allowed in terms of our above order.
Order pronounced on 03rd July, 2023.