P. SUKUMAR vs. THE INCOME TAX OFFICER

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TCA/571/2017HC Madras11 November 2021Bench: Hon`ble Mr Justice R. MAHADEVAN6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that during the pendency of the appeal, the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed the requisite forms, which were accepted by the Income Tax Department, and Form 5 was issued. The learned standing counsel for the revenue fairly conceded to this development. In light of this, the High Court found it unnecessary to decide the substantial questions of law raised in the appeal. The appeal was disposed of based on the submissions made by both sides, recording that the assessee had successfully utilized the beneficial legislation for dispute resolution. The department was directed to process the application under the Vivad Se Vishwas Act at the earliest and communicate the decision to the assessee. No costs were awarded.

What were the facts?

The appellant, Shri P. Sukumar, filed a Tax Case Appeal before the High Court of Judicature at Madras challenging an order dated March 17, 2017, passed by the Income Tax Appellate Tribunal (ITAT), Chennai 'D' Bench. The appeal pertains to the assessment year 2009-10. The core of the dispute involved the computation of long-term capital gains arising from the sale of a property. During the pendency of the appeal before the High Court, the assessee filed Forms 1 and 2 under the Direct Tax Vivad Se Vishwas Act, 2020. These forms were accepted by the Income Tax Department, and Form 5 was issued to the assessee on March 25, 2021. The assessee filed a memo to this effect on October 21, 2021.

What were the issues?

The High Court was to decide three substantial questions of law: 1. Whether the ITAT erred in ignoring the return of income for AY 2009-10 and applying the principles of diversion of income by overriding title, considering the property was sold directly by the bank to appropriate sale proceeds against a liability of a company in which the appellant was a substantial stakeholder. 2. Whether the ITAT erred in not considering the scope of Section 48 of the Income Tax Act, 1961, in determining the quantum of sale consideration for computing long-term capital gains, and in not considering the alternative claim for allowing the appropriated amount as expenses incurred in connection with the transfer by assigning a wider meaning to terms in Section 48. 3. Whether the ITAT erred in not considering the second alternate scenario where the appellant incurred a loss in the capital field consequent to the sale of the capital asset directly by the bank, which loss should be set off against the computed long-term capital gains. The assessee argued that the property sale proceeds were appropriated by the bank against liabilities, impacting the capital gains calculation. The revenue's contentions are not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 48,Section 260A

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.571 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11.11.2021 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal No.571 of 2017 Shri P.Sukumar ... Appellant Vs. The Income Tax Officer, Ward-1(1) Salem

... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai "D" Bench, dated 17.03.2017 passed in I.T.A.No.442/Mds/2013. For Appellant : Mr.S.Sridhar For Respondent : Mrs.V.Pushpa,

Standing Counsel Page 1/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.571 of 2017 J U D G M E N T (Judgment was delivered by R. MAHADEVAN,J.) This Tax Case Appeal has been filed by the appellant / Assessee challenging the order dated 17.03.2017 passed by the Income Tax Appellate Tribunal, Bench 'D', Chennai ('the Tribunal', for brevity) in I.T.A.No.442/Mds/2013 for the assessment year 2009-10 raising the following substantial questions of law : "1.Whether the Appellate Tribunal is correct in ignoring the return of income filed for the Assessment Year 2009-10 applying the principles of diversion of income by overriding title in reporting the sale of the property/capital asset directly by the bank in appropriating the sale proceeds against the liability created by the company in which the appellant was the substantial stake holder? 2. Whether the Appellate Tribunal is correct in not considering the scope of section 48 of the Act in the context of determining the quantum of sale consideration for the purpose computing Long Term Capital Gains on the facts of the case while further not considering the alternative claim for allowing the appropriated amount as expenses incurred in connection with the transfer by assigning wider meaning to the statutorily incorporated terms in the said section 48 of the Act? Page 2/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.571 of 2017 3. Whether the Appellate Tribunal is correct in not considering the second alternate scenario of the appellant incurring loss in the capital field consequent to the sale of the capital asset directly by the bank which loss in any event should be set off against the computed Long Term Capital Gains independently by the Respondent/ Assessing Officer?” 2.When the matter was taken up for consideration, the learned counsel appearing for the appellant / assessee submitted that during the pendency of this tax case appeal, the assessee has filed the requisite Forms 1 and 2 under Section 4 of the Direct Tax Vivad Se Vishwas Act, 2020, which were accepted and Form 5 was issued to the assessee on 25.3.2021 by the Income Tax Department. The learned counsel has also filed memo, dated 21.10.2021 to that effect. 3.The aforesaid submission made by the learned counsel for the appellant/assessee has also been fairly conceded by the learned standing counsel appearing for the respondent/ Revenue. 4.This court heard the submissions made by the learned counsel on Page 3/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.571 of 2017 either side, as per which, the assessee has already availed the benefit conferred under the beneficial legislation viz., the Direct Tax Vivad Se Vishwas Act, 2020, enacted for resolution of disputed tax and for matters connected therewith or incidental thereto, which came into force with effect from 17.03.2020; and the declarations submitted by assessee were also accepted and Form 5 was also issued to them by the Income Tax Department. In view of such development, it is unnecessary for this court to decide the substantial question of law arisen in this tax case appeal.

5.Therefore, recording the submissions so made by the learned counsel on either side, this appeal stands disposed of, directing the department to process the application at the earliest in accordance with the Act and communicate the decision to the assessee at the earliest. No costs. (R.M.D.,J.) (M.S.Q.,J.) 11.11.2021

msr

Internet : Yes

Index : Yes / No To Page 4/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.571 of 2017 1. Income Tax Appellate Tribunal, Chennai "D" Bench 2.The Income Tax Officer, Ward-1(1) Salem Page 5/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.571 of 2017 R. MAHADEVAN, J & MOHAMMED SHAFFIQ, J. msr Tax Case Appeal No.571 of 2017

11.11.2021 Page 6/6 https://www.mhc.tn.gov.in/judis

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