M/S ADDISON & CO LIMITED, vs. THE DEPUTY COMMISSIONER OF

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TCA/716/2016HC Madras01 February 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law framed for consideration. This was due to subsequent developments, specifically the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. The learned counsel for the assessee informed the Court that the assessee had been issued Form-3 under this Act on 06.01.2021 and sought permission to withdraw the appeal. Consequently, the High Court, in view of the assessee's submission, dismissed the Tax Case Appeal as withdrawn. No finding was reached on the merits of the capital gains tax assessment or the interpretation of Section 2(47) and Section 45(1) of the Income Tax Act, 1961. The operative direction was the dismissal of the appeal as withdrawn.

What were the facts?

The assessee, M/s. Addison & Co Limited, filed an appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT's order, dated 04.03.2016, was passed in ITA No. 2198/Mds/2015 for the assessment year 2010-11. The appeal challenged the ITAT's decision regarding the assessment of long-term capital gains arising from a Joint Development Agreement. The dispute centered on which assessment year the gains should be taxed: the year of the agreement and power of attorney execution (2010-11) or the year possession was handed over after developer approvals (2013-14). The High Court was to decide substantial questions of law related to this timing of taxation.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the Tribunal was correct in law in holding that long-term capital gains should be assessed in assessment year 2010-11 based on a Joint Development Agreement, rather than assessment year 2013-14 when possession was handed over after the developer obtained all necessary project approvals? 2. Whether the Tribunal was correct in law in holding that a transfer, as defined under Section 2(47) of the Income Tax Act, 1961, occurred pursuant to the Joint Development Agreement and Power of Attorney, thus making long-term capital gains taxable under Section 45(1) in assessment year 2010-11? 3. Whether capital gains can be considered to have arisen in the subject assessment year (2010-11) under the Joint Development Agreement dated 07.09.2009? Assessee's Contentions: The assessee contended that the capital gains should be taxed in assessment year 2013-14, when possession was handed over after all approvals were obtained by the developer. The assessee's arguments were implicitly based on the interpretation of 'transfer' and the timing of accrual of capital gains. Revenue's Contentions: The revenue's contentions were not explicitly recorded in the judgment, but their stance was that the capital gains were taxable in assessment year 2010-11, as upheld by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 2(47),Section 45(1)

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.716 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 01.02.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V. THAMILSELVI Tax Case Appeal No.716 of 2016 M/s.Addison & Co Limited, 803, Anna Salai, Chennai – 600 002.

... Appellant Vs.

The Deputy Commissioner of Income Tax, Corporate Circle – 1(1), Chennai. ... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras "A" Bench, dated 04.03.2016 passed in I.T.A.No.2198/ Mds/2015. For Appellant : Mr.R.Venkatanarayanan, for M/s.Subbaraya Aiyar For Respondent : Mr.T.Ravi Kumar,

Senior Standing Counsel Page 1/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.716 of 2016 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 04.03.2016 passed by the Income Tax Appellate Tribunal, Madras "A" Bench, ('the Tribunal' for brevity) in I.T.A.No.2198/Mds/2015 for the assessment year 2010-11. The assessee has raised the following Substantial Questions of Law: “1)Whether the Tribunal was right in law in holding that long term capital gains should be assessed in the assessment year 2010-11 based on Joint Development Agreement and not in assessment year r2013-14 in which the possession was handed over, after the Developer has obtained all the necessary approval for the construction of project? 2)Whether the Tribunal was right in law in holding that pursuant the Joint Development Agreement and Power of Attorney there was a transfer within the meaning of Sec.2 (47) of the Act and hence long term capital gains u/s 45(1) shall be assessed in the assessment year 2010-11? 3)Whether under the Joint Development Agreement dated 07.09.2009 capital gains can be said to have arisen in the subject assessment year?” Page 2/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.716 of 2016 2. We have heard Mr.R.Venkatanarayanan, learned counsel for the appellant/assessee and Mr.T.Ravi Kumar, learned Senior Standing Counsel for the respondent/Revenue. 3. It may not be necessary for this Court to decide the Substantial Question of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 4. We are informed by the learned counsel for the appellant/ assessee that the assessee has already been issued with Form – 3 on 06.01.2021 and the learned counsel for the appellant seeks permission of this Court to withdraw the appeal. Page 3/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.716 of 2016 5. In view of the submission made by the learned counsel for the appellant, the Tax Case Appeal stands dismissed as withdrawn. No costs. [M.D., J.] [T.V.T.S., J.] Index : Yes/No 01.02.2021

Internet : Yes

va To 1. Income Tax Appellate Tribunal, Madras "A" Bench 2.The Deputy Commissioner of Income Tax, Corporate Circle – 1(1), Chennai. Page 4/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.716 of 2016 M. DURAISWAMY, J. and T.V. THAMILSELVI, J. va Tax Case Appeal No.716 of 2016

01.02.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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