PRINCIPAL COMMISSIONER OF I vs. M/S SMT.DEEPA VIJAY

TCA.No.420 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 07.12.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.420 of 2020

The Principal Commissioner of Income Tax, Chennai-34. ...Appellant Vs Smt.Deepa Vijay ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai, dated 31.10.2018 made in I.T.A.No.1929/Chny/2018 for the assessment year 2012-13. For Appellant : Mr.Karthik Ranganathan, SC For Respondent : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyer Padmanabhan Judgment was delivered by

T.S.SIVAGNANAM

This appeal has been filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity) challenging the order dated 31.10.2018 made in I.T.A.No.1929/Chny/2018 on the file of the 1/7 http://www.judis.nic.in TCA.No.420 of 2020 Income Tax Appellate Tribunal, Chennai, 'A' Bench ('the Tribunal' for brevity) for the assessment year 2012-13. 2. The Revenue has filed the above appeal by raising the following substantial questions of law: “i. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right and justified in holding that the assessee is eligible for deduction under Section 54F when the capital asset transferred was not long term capital asset in view of Section 2(29A) read with Section 2(42A) of the Act? ii. Whether, on the facts and in the circumstances of the case and in law, the Tribunal erred in treating the asset held by the assessee for less than four months as long term capital gain asset as against stipulation in Section 2(29A) read with Section 2(42A) is holding for more than 36 months? and iii. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right and justified in holding that Explanation 1(b) of Section 2(42A) is applicable and the period of holding of the asset by the previous owner also needs to be considered even though the assessee did not 2/7 http://www.judis.nic.in TCA.No.420 of 2020 receive the assset through gift or will as mentioned in Section 49(1)(ii) but by settlement deed?” 3. We have heard Mr.Karthik Ranganathan, learned Standing Counsel appearing for the appellant/Revenue and Mr.R.Vijayaraghavan, learned counsel appearing on behalf of the respondent/assessee. 4. The assessee, who is an individual, filed the return of income for the assessment year under consideration namely AY 2012-13 on 29.8.2012 by showing income from salaries at Rs.12 lakhs. In fact, the income returned by the assessee included the long term capital gains to the tune of Rs.16,49,71,644/- after claiming deduction of Rs.3,50,28,356/- under Section 54F of the Act. It came to the notice of the Assessing Officer during the course of assessment proceedings that the assessee received a gift of a trademark from one Mrs.Malathi Rangaswamy and one Mr.T.T.Varadarajan through a document titled as settlement deed dated 19.12.2010. 5. The Assessing Officer considered the said capital asset as a short term capital asset as per the definition under Section 2(42A) read with Section 49(1) of the Act since the assessee held the trademark for a period of less than four months. The assessment was accordingly completed under Section 143(3) of the Act by order dated 19.3.2015 disallowing the deduction claimed by the assessee under 3/7 http://www.judis.nic.in TCA.No.420 of 2020 Section 54F of the Act, considered the long term capital asset declared by the assessee to the tune of Rs.16.49 crores as short term capital gains and rejected the claim of Rs.3,50,28,256/- under Section 54F of the Act. 6. As against the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals)-8, Chennai- 34 [for short, the CIT(A)]. The appeal was allowed by order dated 28.3.2018. Questioning the correctness of the same, the Revenue filed an appeal before the Tribunal and it was dismissed by the impugned order. 7. Going by the said document dated 19.12.2010, which was titled as settlement deed, the Assessing Officer held the same to be not a gift. The correctness of this finding was tested by the CIT(A), who, in our opinion, had done an elaborate factual exercise, gone through the covenants and conditions contained in the said document dated 19.12.2010 and held that the said document was only a deed of gift because it was voluntary as there was no consideration passed on and the donee accepted the gift unconditionally. The correctness of the factual finding was tested by the Tribunal, which had also gone through the issue in detail, taken note of the decision of the same Tribunal in the case of other owners namely Shri T.T.Siddharth and Smt.Maya 4/7 http://www.judis.nic.in TCA.No.420 of 2020 Varadarajan [ITA.Nos.2074 and 2075/Mds/ 2015 dated 11.5.2016] and dismissed the appeal filed by the Revenue in this regard. 8. On going through the orders passed by both the CIT(A) as well as the Tribunal, we find that the entire issue deeply revolves around the factual matrix, which, in our considered view, has been thoroughly examined by the CIT(A) and the Tribunal and we also find that no question of law much less substantial question of law arises for consideration in this appeal. 9. The second issue is with regard to the character of the asset purchased by the assessee. It is argued by Mr.Karthik Ranganathan, learned Standing Counsel appearing for the Revenue that one other issue, which was considered by the Assessing Officer is with regard to the property owned by the assessee, which, she claimed to be a commercial property. The Assessing Officer held the same to be a residential property and accordingly rendered a finding. 10. The correctness of this finding was examined by the CIT(A), who found from the sale deed dated 24.3.1995 that the property owned by the assessee at Secundrabad was indeed a commercial property situated in a complex called 'Diamond Towers'. The relevant clauses in the said sale deed had been referred to by the CIT(A) in 5/7 http://www.judis.nic.in TCA.No.420 of 2020 paragraph 7 of the order dated 28.3.2018. This issue was also considered by the Tribunal on the appeal filed by the Revenue and noting the factual position, the Tribunal confirmed the finding of the CIT(A). 11. Though this issue, which is argued by Mr.Karthik Ranganathan, learned Standing Counsel appearing for the Revenue, is not raised as a substantial question of law for consideration, yet we have tested the correctness of the finding and we find that the CIT(A) and the Tribunal are right in concluding that the property was a commercial property as could be seen from the conditions contained in the said sale deed dated 24.3.1995. Therefore, there is no ground made out by the Revenue to interfere with the order passed by the Tribunal and we also hold that no substantial question of law arises for consideration in this appeal. 12. Accordingly, the above tax case appeal is dismissed. No costs. 07.12.2020

RS 6/7 http://www.judis.nic.in TCA.No.420 of 2020 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS To The Income Tax Appellate Tribunal, 'A' Bench, Chennai. T.C.A.No.420 of 2020 07.12.2020 7/7 http://www.judis.nic.in