M/S APEX TRANSWORLD PRIVATE LIMITED,CHENNAI vs. DCIT CC-1(1), CHENNAI

आदेश / O R D E R

PER G. MANJUNATHA, ACCOUNTANT MEMBER:

2.1 The learned DR, on the other hand, fairly agreed that delay may be condoned in the interest of justice.

2.2 Having heard both sides and considered reasons given by the learned AR, we find that the Hon’ble Supreme Court in Miscellaneous Petition No.21 of 2022 in Suo Motu Writ Petition (C) No.3 of 2020, has extended limitation applicable to all proceedings in respect of Courts and Tribunals across the country on account of spread of Covid-19 infections w.e.f. 15.03.2020, till further orders and said general exemption has been extended from time to time. We further noted that delay noticed by the Registry pertains to the period of general exemption provided by the Hon'ble Supreme Court extending limitation period applicable for all proceedings before Courts and Tribunals and thus, considering facts and circumstances of the case and also in the interest of natural justice, we condone delay in filing appeal filed by the assessee.

3. The assessee has raised the following grounds of appeal:

2. The learned appellate authority, has erred in considering the claim which is mistake apparent from the return filed and ought to be addressed even the claim is not made the appellant.

4. Appellate authority erred in not considering building as long term capital asset which is held for more than three years and depreciation has not been claimed, only because the claim has been made during 148 proceedings.

5. Appellate authority erred in considering case laws " Taxman 442(SC) Commissioner of income tax vs sun engineering works (p) ltd " in Supreme court and "Satyamangalam Agriculture Cooperative Marketing Society Ltd vs Income tax officer" in Madras High Court is against facts of the present case, in both the cases there are claims being made, and in this present case, the mistake has to be rectified.

8. For the above reasons, the order of the learned assessing officer has to directed to modify accordingly.

relying upon the decision of the Hon’ble Supreme Court in the case of CIT v. M/s.Sun Engineering Workings (P.) reported in [1992] Supp. 1 SCR 732 a. The relevant findings of the AO are as under:

5. Disallowance of Excess claimed cost of acquisition:

5.1. The assessee company purchased 3rd floor and 4 floor of capital tower, 180 Kodambakkam High Road, Nungambakkam, Chennai-34 from FLSMIDTH Private Limited during the year 2006 and the assessee company also acquired cubicles, workstation and electrical and electronic items from the same company.

5.2. The assessee company sold the above properties as under:

Third floor (Building and undivided share of land) to M/s.Venkatabalaji Automobile Private Limited, Chennai for a consideration of 7, 00, 98,000 / -(Rupees seven crore ninety eight thousand only)

Fourth floor (Building and undivided share of land) to M/s.Keyam Properties, Chennai for a consideration of Rs.6, 30,00, 000/-(Rupees six crore thirty lakh only).

5.3. While offering the same as income for the Assessment year 2011-12 under capital gain, the assessee company made the following:

Particulars Amount(Rs.) Amount (Rs.) Amount (Rs.) sales consideration of land 3rd floor 3,68,00,000 - - Less: Indexed cost of acquisition 2,25,09,323 1,42,90,677 - Sales consideration of land 4th floor 3,63,45,000 - - Less: Indexed cost of acquisition 2,22,38,007 1,41,06,993 - Total long term capital gain - - 2,83,97,670 Sales consideration of building 3rd 3,32,98,000 - - floor Less: Cost of acquisition 4,64,47,318 - - Short term capital loss - -1,31,49,318 - Sales consideration of building 4th 2,66,55,000 - - floor Less: Cost of acquisition 4,31,77,658 - - Short term capital loss - -1,65,22,658 - Total short term capital loss - - -2,96,71,976 Net short term capital loss - - -12,74,306

5.4. While doing so the assessee company has considered the cost of acquisition in respect of building erroneously @ Rs.4,64,47,318/- in respect of third floor and @ Rs.4,31,77,658/- in respect of fourth floor by including the cost of cubicles workstations, furniture, electrical and electronic items twice since the same was already considering in fixing the cost of building at the time of acquisition. The original cost of acquisition; building was only Rs.4,15,53,578/- in respect of third floor and Rs.38280179/- in respect of fourth floor and thereby claimed excess cost of acquisition to the extent of Rs.48,93,740/- for third floor and Rs.48,97,479/- for fourth floor.

5.5. As per the above discussion, the excess claimed cost of acquisition amounting to Rs.97,91,219/- (Rupees ninety-seven lakh ninety one thousand two hundred and nineteen only) is hereby disallowed and the income under capital gain for the assessment year 2011- 12 is recomputed as under:

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Particulars Amount (Rs.) Amount (Rs.) Amount (Rs.) sales consideration of land 3rd 3,68,00,000 - - floor Less: Indexed cost of 2,25,09,323 1,42,90,677 - acquisition Sales consideration of land 4th 3,63,45,000 - - floor Less: Indexed cost of 2,22,38,007 1,41,06,993 - acquisition Total long term capital gain - - 2,83,97,670 Sales consideration of building 3,32,98,000 - - 3rd floor Less: Cost of acquisition 4,15,53,578 - - Short term capital loss - -82,55,578 - Sales consideration of building 2,66,55,000 - - 4th floor Less: Cost of acquisition 3,82,80,179 - - Short term capital loss - -1,15,25,179 - Total short term capital loss - - -1,98,80,757 Taxable long term capital gain - - 85,16,913

5.6 The assessee's fresh claim of long term capital gain on buildings against the short term capital gain originally is not considered in this order in view of the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-Tax vs M/S. Sun Engineering Works (P.) 1992 Supp 1 SCR 732 a, dated 17 September, 1992 in which the Hon'ble Apex Court has held as under:

"Therefore our answer to the question formulated by the High Court and noticed in the earlier part of this judgment is that m the reassessment proceedings it is not open to an assessee to seek a review of the concluded item, unconnected with the escapement of income, for the purpose of computation of the escaped income."

5. Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has reiterated its arguments and submitted that when the assessee has made a fresh claim by correcting certain mistakes in filing original return of income, then the same needs to be entertained by the AO to determine correct tax payable for the relevant assessment year. The assessee had also taken support from the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT reported in [1998] 229 ITR 383 (SC). The Ld.CIT(A) after considering relevant submissions of the assessee and also taken into certain judicial precedents, including the :: 6 ::

decision of the Hon’ble Supreme Court in the case of M/s.Sun Engineering Workings (P.) (supra) held that re-assessment proceedings u/s.147 of the Act, is for the benefit of Revenue and not for assessee and further said proceedings are aimed at gathering escarpment of assessment and same cannot be allowed/converted as revisional or review proceedings. Thus, the Ld.CIT(A) rejected the arguments of the assessee and sustained the findings of the AO in rejecting fresh claim made by the assessee. The relevant findings of the Ld.CIT(A) are as under:

6.1 Assessee filed the original return of income for the AY 2011-12 on 30/09/2011 admitting NIL income and declaring short term capital loss from the sale of the property and claiming current year loss of Rs.42,42,155/-. Assessing Officer passed order u/s 143(3) on 18.03.2014 assessing the total loss at Rs.31,42,155/-.

Assessing Officer issued notice u/s 148 on 27/03/2018. In response to the said notice, the appellant company filed its return of income for the AY 2011-12 on 17/04/2018 admitting NIL Income and declaring short term capital loss from the sale of the property and claiming current year loss of Rs.42,42,155/-,

During the reopened assessment proceedings, the assessee claimed that the property sold was a long term capital asset. Assessing Officer did not consider the claim in view of the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs M/s.Sun Engineering Works (P.) 1992 Supp 1 SCR 732 dated 17 September, 1992.

6.2 In the grounds of appeal, the appellant contested that the Learned Assessing Officer had not appreciated that building was held for more than three years and in spite of request made, the capital asset was not considered as long term which is against the law,

6.3 In the written submission, the A.R stated that when the A.O has the power to disallow or modify a claim of the assessee on the basis of enquiry u/s.142 before assessment, the assessee will also have a right to make a fresh claim or to modify a claim before the completion of assessment.

6.4.1 In [1992] 64 Taxman 442 (SC) In Commissioner of Income-tax vs Sun Engineering Works (P.) Ltd, Hon'ble Supreme Court of India held -Proceedings under section 147 are for benefit of revenue and not an assessee and are aimed at gathering 'escaped income’ of an assessee, and same cannot be allowed to be converted as 'revisional’ or 'review' proceedings. Claims which have been disallowed in original assessment proceeding cannot be permitted to be reagitated on assessment being reopened for bringing to tax certain income which had escaped assessment,

6.4.2 In [2013] 40 taxmann.com 45 (Madras) Satyamangalam Agricultural Producer's Co- operative Marketing Society Ltd vs Income-tax Officer- Assessee, a co-operative society, claimed exemption under section SOP from sale of consumer goods and on sale of liquor.

Noticing exemptions claimed by assessee were not eligible, Assessing Officer reopened assessment after issuing notice to assessee under section 148. In response to said notice, assessee filed adjusted statement claiming deduction under section 80P(2)(d) on interest income on investment from a Co-operative Bank and on reserve fund interest received from above bank. These fresh claims made by assessee were rejected by Assessing Officer - Hon'ble High Court of Madras held - Since claim made by assessee with regard to interest income on investment was not made in original return and only a fresh claim was made for first time in return filed in pursuance of notice under section 148, such fresh claims could not be allowed as proceedings under section 147 were for benefit of revenue, 6.5 Respectfully following above stated decisions of the Hon'ble Supreme Court and Hon'ble High Court of Madras, not considering the fresh claim of the assessee in the reassessment proceedings is upheld.

6. The Ld.AR for the assessee submitted that the Ld.CIT(A) is erred in appreciating the fact that the assessee can correct mistakes in reporting certain incomes in the return of income filed u/s.139(1) of the Act, when such mistakes have been noticed even during re-assessment proceedings.

Since, the AO is required to compute legitimate tax payable by the assessee for any assessment year, he ought to have admitted fresh claim made by the assessee by correcting computation of long term capital gains and determined correct amount of tax payable by the assessee. However, the AO as well as the Ld.CIT(A) rejected the fresh claim made by the assessee without assigning proper reasons. In this regard, he relied upon the decision of the Hon’ble Supreme Court in the case of M/s.National Thermal Power Co. Ltd. (supra).

7. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the re-assessment proceedings are for the benefit of the Department to assess escapement of income for tax. However, same cannot be allowed as beneficial provision for the assessee to make a fresh claim. The AO as well as the Ld.CIT(A) after considering relevant facts has rightly rejected the claim of the assessee and their orders should be upheld.

The AO rejected the fresh claim made by the assessee by following the decision of the Hon’ble Supreme Court in the case of M/s.Sun Engineering Workings (P.) (supra), wherein, it has been clearly held that re-assessment is for the benefit of the Department and the assessee cannot make any fresh claim which is against the interest of the Department. Now, the Ld.Counsel for the assessee argued that even if assessee makes a wrong claim, it is the duty of the AO to determine correct amount of tax payable by the assessee in accordance with law. Therefore, when the assessee has corrected mistakes in computing tax payable for the relevant assessment year, the AO ought to have admitted fresh claim and determined correct tax payable for the relevant assessment year. We find that the assessment has been re-opened to assess income escaped from tax on account of excess claim of cost of acquisition of asset. The assessee has made a fresh claim with regard to the issues which are not part of re-assessment proceedings and further which had attained finality at the time of original assessment proceedings itself. Therefore, in our considered view there is no scope for the assessee to make a fresh claim which is not beneficial to the interest of the Revenue has held by the Hon’ble Supreme Court in the case of M/s.Sun Engineering Workings (P.). (supra). Further, the Hon’ble jurisdictional Madras High Court in the case of Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd. v. ITO [2013] 40 taxmann.com 45 (Madras), has considered an identical issue and held that fresh claims which are detrimental to the interest of the Revenue, could not be allowed in proceedings u/s.147 of the Act, because said proceedings are for the benefit of the Revenue. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to reject the arguments of the assessee and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee.

Order pronounced on the 11th day of January, 2023, in Chennai.