KILIM PYDI REDDY (INDL),SRIKAKULAM vs. THE ITO, SRIKAKULAM

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ITA 495/VIZ/2016Status: DisposedITAT Visakhapatnam28 February 2018AY 2008-20096 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the AO to allow credit for advance taxes paid in HUF status to the assessee in their individual capacity, considering the original dates of payment. This was done to provide relief and meet the ends of justice, as the assessment was ultimately made in individual hands.

What were the facts?

The assessee initially filed a return of income in the capacity of a HUF, admitting capital gains from property sale. The Assessing Officer (AO) reopened the assessment, treating the property as belonging to the assessee in individual capacity and reassessed the capital gains under Section 50C. The Commissioner of Income Tax (Appeals) upheld the AO's assessment in individual capacity but directed credit for taxes paid in HUF status.

What were the issues?

Whether the capital gains from property sale should be assessed in the hands of HUF or individual, and whether credit for taxes paid in HUF status should be allowed in the individual assessment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 50C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI V. DURGA RAO & SHRI D.S. SUNDER SINGH

For Appellant: Shri G.V.N. Hari, AR, Shri P.S. Murthy, DR
Hearing: 21.02.2018

आदेश / O R D E R

PER D.S. SUNDER SINGH, Accountant Member:

This appeal filed by the assessee is directed against order of the

Commissioner of Income Tax (Appeals)-2, Visakhapatnam vide ITA

No.38 & 39/2015-16/CIT(A)/2/W-2/SKLM/2016-17 dated 1.9.2016 for

the assessment year 2008-09.

ITA No.495/Vizag/2016 Kilim Pydireddy (Indl), Srikakulam 2. The assessee has raised following grounds of appeal:

1.

The order of the learned Commissioner of Income Tax (Appeals)-2, Visakhapatnam is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) ought to have held that the assessment done is beyond the scope of S.147 of the Income Tax Act, 1961. 3. Without prejudice to the above, a. The learned Commissioner of Income Tax (Appeals) erred in denying the existence of HUF and in upholding the assessment of capital gains in the individual status of the appellant. b. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the action of the assessing officer in computing the capital gains under the provisions of S.50C of the Act at Rs 28,71,214/- as against Rs.22,55,114/admitted by the appellant in HUF status. 4. Any other ground that may be urged at the time of appeal hearing.

3.

Ground Nos.1 & 4 are general in nature, which does not require

specific adjudication.

4.

Ground No.2 is related to the validity to reopening of assessment

which is not pressed by the assessee, hence this ground is dismissed as

not pressed.

5.

Ground No.3 is related to the assessment of HUF income in

individual status and taxing the capital gains by invoking the provisions

u/s 50C of the Act. In this case, the assessee filed return of income in

the capacity of HUF admitting capital gains of ` 22,55,114/- on

31.7.2008. During the relevant assessment year, the assessee had sold

a property consisting of vacant house site admeasuring 444.44 Sq.yds. 2

ITA No.495/Vizag/2016 Kilim Pydireddy (Indl), Srikakulam with survey No.2 of Maddilapalem and Survey No.7 of Resapuvanipalem

vide registered document Nos.3413/07, 3414/07 & 3415/07 dated

30.4.2007 for a total consideration of ` 62,67,000/- and the market

value of the same was ` 66,69,000/- in HUF status. Since the assessee

has not filed the return of income in the individual status, the assessing

officer reopened the assessment u/s 147 of the Act by issuing notice u/s

148 of the Act and held that the impugned property was belonging to

the assessee in individual capacity and the property was not acquired by

the HUF, hence, held that the admission of income by the assessee in

HUF status is incorrect. The AO was of the view that the income

resulting in sale of immovable property should have been admitted as

capital gains in the hands of the assessee in individual capacity.

Accordingly, the A.O. reopened the assessment and completed the

reassessment by invoking the provisions of section 50C of the Act and

completed the assessment on total income of ` 36,26,725/- in individual

capacity but did not allow the credit for the taxes paid in HUF status.

6.

Assessee went on appeal before the CIT(A) and the Ld. CIT(A)

upheld the assessment made by the A.O. in individual capacity and

directed the A.O. to give credit for the taxes paid in HUF status while

determining tax liability in individual hands. However, while giving

effect to the consequential order, the Ld. A.O. did not allow the credit as

ITA No.495/Vizag/2016 Kilim Pydireddy (Indl), Srikakulam per the dates of payments of the tax in HUF status and the credit was

allowed in the consequential order which resulted in huge tax burden

due to interest in the case of individual. Hence, the assessee is

aggrieved and filed appeal before this Tribunal.

7.

During the appeal hearing, the Ld. A.R. of the assessee supported

the return of income filed in HUF capacity and argued that the

assessment should be made in the hands of the HUF but not in the

hands of individual, since the property was acquired by the father of the

assessee in HUF status. Per contra the Ld. D.R. supported the order of

the lower authorities.

8.

We have considered the arguments of both the parties and

perused the material placed on record and gone through the orders of

the authorities as well as returns filed by the assessee in the capacity of

HUF as well as individual. The assessee has paid the taxes in HUF

capacity on various dates. For a query from the bench, the Ld. A.R.

submitted that the assessee has paid advance taxes in HUF status, if the

same is allowed credit in the hands of the individual while determining

the tax liability he would not press the remaining grounds. We are of the

considered opinion that the prayer of the Ld. A.R is reasonable and meet

the ends of justice. As per law payment of taxes should be given the

credit as per the dates of the payment of tax. In the instant case, the

ITA No.495/Vizag/2016 Kilim Pydireddy (Indl), Srikakulam assessee has paid the advance tax in HUF status. Since the assessment

was made in individual status the credit should be allowed in individual

status as per the original dates of payment. Accordingly, we direct the

A.O. to allow the prepaid taxes as per the dates of payment while

determining the tax liability in the individual hands. Accordingly, the

order of the Ld. CIT(A) is modified and the appeal of the assessee is

partly allowed.

9.

In the result, the appeal filed by the assessee is partly allowed.

The above order was pronounced in the open court on 28th Feb’18.

Sd/- Sd/- (वी. दुगा�राव) ( ड.एस. . . . सु�दर "संह) (V. DURGA RAO) (D.S. SUNDER SINGH) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER #वशाखापटणम /Visakhapatnam: 'दनांक /Dated : 28.02.2018 VG/SPS आदेश क� ��त)ल#प अ*े#षत/Copy of the order forwarded to:- 1. अपीलाथ� / The Appellant – Kilim Pydi Reddy (Indl), D.No.7-10-2/5, Saibulu Thota, Srikakulam-532 001. 2. ��याथ� / The Respondent – The ITO, Ward-2, Srikakulam 3. आयकर आयु+त / The CIT-2, Visakhapatnam 4. आयकर आयु+त (अपील) / The CIT (A)-2, Visakhapatnam 5. #वभागीय ��त�न.ध, आय कर अपील�य अ.धकरण, #वशाखापटणम / DR, ITAT, Visakhapatnam 6. गाड� फ़ाईल / Guard file आदेशानुसार / BY ORDER // True Copy // Sr. Private Secretary ITAT, VISAKHAPATNAM

ITA No.495/Vizag/2016 Kilim Pydireddy (Indl), Srikakulam

Sl. Description Date Initials No. 1. Date of dictation by the Author 22.02.2018 Sr.PS 2. Draft placed before the Dictating Member 23.02.2018 Sr.PS 3. Draft placed before the Second Member Sr. PS 4. Draft approved by the Second Member Sr. PS 5. Date of approved order comes to the Sr. PS Sr. PS 6. Date of pronouncement of order Sr. PS 7. Date of file sent to the Bench Clerk Sr. PS 8. Date on which file goes to the Head Clerk Hd. Clk 9. Date of dispatch of order Sr. PS

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