PRINCIPAL COMMISSIONER vs. LEGAL HEIR OF DR. B SIVANTHI

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TCA/873/2017HC Madras23 September 2020Bench: Hon`ble Dr Justice VINEET KOTHARI5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the appeal as infructuous. The Revenue's counsel submitted that following the ITAT's remand order dated April 19, 2017, the Assessing Officer passed fresh orders on October 17, 2017, for Assessment Year 2007-2008. Consequently, the present appeal filed by the Revenue had become infructuous. The Court accepted this submission. The High Court explicitly stated that the substantial questions of law were left open. It also left it open to the Assessee to pursue their recourse against the order dated October 17, 2017, as permitted by law. No decision was made on the merits of the substantial questions of law raised by the Revenue. The appeal was disposed of with these observations.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax (PCIT), filed a Tax Case Appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chennai Bench, dated April 19, 2017. The appeal pertains to Assessment Year 2007-2008 and concerns the legal heir of Dr. B. Sivanthi Adityan as the assessee. The ITAT had passed a remand order. During the pendency of the appeal before the High Court, the Assessing Officer passed fresh orders on October 17, 2017, pursuant to the ITAT's remand direction. The Revenue's counsel submitted that this rendered the present appeal infructuous.

What were the issues?

The Tribunal had to decide the following substantial questions of law raised by the Revenue: 1. Whether the Tribunal was justified in directing the Assessing Officer to follow Section 50C(2) of the Income Tax Act for AY 2007-08, given that Section 50C was amended to include the word 'assessable' only from October 1, 2009, and the Joint Development Agreement and Power of Attorney were unregistered. 2. Whether the Tribunal was justified in directing the AO to apply Section 50C(2) when this provision applies when the assessee objects to the guideline value under Section 50C(1), whereas in this case, the assessee sought the adoption of the guideline value. 3. Whether the Tribunal was justified in not following the jurisdictional High Court's decision in CIT vs. R. Sugantha Ravindran (352 ITR 488), which held Section 50C inapplicable prior to October 1, 2009, under similar circumstances. 4. Whether the Tribunal ought to have directed the AO to adopt the cost of construction incurred by the builder as the full value of consideration by following CIT vs. National Cooperative Federation of India Ltd (Del). The Revenue argued that Section 50C was not applicable for AY 2007-08 due to the amendment date and unregistered agreements, and that the ITAT's direction to apply Section 50C(2) was contrary to the Act's provisions and binding precedents. The Assessee did not present any arguments as none appeared on their behalf.

Which sections of the Income-tax Act were involved?

Section 260A,Section 50C

AI-generated summary — verify with the full judgment below

Judgt. dt. 23.9.2020 in T.C.(A) 873/2017 PCIT V. Legal Heir of Dr.B.Sivanthi Adityan 1/5 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.9.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY Tax Case (Appeal) No.873 of 2017 Principal Commissioner of Income Tax, No.121, Nungambakkam High Road Chennai 600 034. Appellant Vs. Legal Heir of Dr.B.Sivanthi Adityan, 6, E.V.K.Sampath Road, Vepery, Chennai 600 007. Respondent Tax Case (Appeal) filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'A' Bench, Chennai, dated 19.4.2017 made in ITA No.2545/Mds/2016. For Appellant : Mr.J.Narayanasamy Senior Standing Counsel JUDGMENT (Delivered by DR.VINEET KOTHARI,J) The Revenue has filed this Tax Case under Section 260-A of the Income Tax Act by raising the following purported substantial questions of law arising from the order passed by the Income Tax http://www.judis.nic.in Judgt. dt. 23.9.2020 in T.C.(A) 873/2017 PCIT V. Legal Heir of Dr.B.Sivanthi Adityan 2/5 Appellate Tribunal on 19.4.2017, for the Assessment Year 2007- 2008:- "(i) Whether the Tribunal is justified in directing the Assessing Officer to follow the provisions contained in section 50C(2) of the Income Tax Act when provisions of section 50C are not applicable for the Asst. Year 2007-08 since the Joint Development Agreement as well as Power of Attorney were not registered and the word “assessable” was inserted in section 50C only w.e.f. 01.10.2009? (ii) Whether on the facts and circumstances of the case and in law, ITAT was justified in directing the AO to apply provisions of sec.50C(2) when that provisions is applicable, where the assessee objects to the adoption of guideline value as per sec.50C(1), whereas in the case present case the assessee wants adoption of guideline value by applying sec.50C(1) and thus the decision of ITAT is contrary to the provisions of IT Act? (iii) Whether on the facts and circumstances of the case and in law, ITAT was justified in not following http://www.judis.nic.in Judgt. dt. 23.9.2020 in T.C.(A) 873/2017 PCIT V. Legal Heir of Dr.B.Sivanthi Adityan 3/5 the binding decision of Jurisdictional HC in CIT Vs R. Sugantha Ravindran (352 ITR 488) wherein it was held that provisions of section 50C are not applicable prior to 01.10.2009 under similar situation? (iv) On the similar set facts of the case and in law, ITAT ought to have directed AO to adopt the cost of construction incurred by the Builder M/s.RMZ Infotech Pvt Ltd as full value of consideration by following the ratio laid down in CIT Vs National Cooperative Federation of India Ltd (Del) 221 Taxman (Mag) 157?" 2. The learned Senior Standing Counsel for the Appellant/Revenue Mr.J.Narayanasamy fairly submits that in pursuance of the remand order passed by the learned Tribunal on 19.4.2017 for the Assessment Year 2007-2008, vide para 8.1 of the impugned order, the present Appeal has been filed by the Revenue, the Assessing Authority has passed fresh orders on 17.10.2017 for the Assessment Year 2007-2008 and therefore, the present Appeal has become infructuous. 3. None has appeared on behalf of the Respondent/Assessee. http://www.judis.nic.in Judgt. dt. 23.9.2020 in T.C.(A) 873/2017 PCIT V. Legal Heir of Dr.B.Sivanthi Adityan 4/5 4. In view of the aforesaid submission of the learned Senior Standing Counsel appearing for the Appellant/Revenue, we dispose of the Appeal having been rendered infructuous, leaving the questions of law open and leaving it open to the Assessee to take his recourse against the order dated 17.10.2017 as permitted in law. With this observation, the Appeal is disposed of. No costs. (V.K.,J.) (K.R.,J.) 23.9.2020 Index : Yes/No Internet : Yes/No ssk. To 1. Income Tax Appellate Tribunal, 'A' Bench, Chennai. 2. Principal Commissioner of Income Tax, No.121, Nungambakkam High Road Chennai 600 034. 3. The Deputy Commissioner of Income Tax, Corporate Circle, Chennai 600 034. http://www.judis.nic.in Judgt. dt. 23.9.2020 in T.C.(A) 873/2017 PCIT V. Legal Heir of Dr.B.Sivanthi Adityan 5/5 DR.VINEET KOTHARI, J. and KRISHNAN RAMASAMY, J. ssk. T.C.(A) No.873 of 2017 23.9.2020 http://www.judis.nic.in

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