MIRYALA EXPORTS AND IMPORTS P LTD,HYDERABAD vs. INCOME TAX OFFICER, WARD-16(3), HYDERABAD

At the outset it is seen that there is a delay of 35 delays in filing of this appeal by the assessee before the Tribunal. The learned Counsel for the assessee submitted that the delay caused in filing of this appeal before the Tribunal is due to medical conditions of the assessee. After considering the submission made by the assessee and after discussing with the learned DR, the delay in filing of this appeal is hereby condoned and the appeal is admitted for adjudication.

Facts of the case are that the assessee company has not filed its return of income for the A.Y 2011-12. The assessment has been subsequently reopened u/s 147 of the I.T Act and the assessment has been completed u/s 144 r.w.s. 147 of the I.T. Act, 1961 on 29.12.2018 and determined the total income at Rs.7,14,286/- towards the capital gain derived from transfer of property. The assessee has challenged the additions made by the Assessing Officer before the first appellate authority but could not succeed. The assessee has preferred an appeal before the Tribunal and the Coordinate Bench of the Hyderabad Bench of the Tribunal vide dated 25.11.2020 has remitted the issue to the file of the Assessing Officer with a direction to reconsider the issue denovo in accordance with law. In pursuant to the directions of the ITAT, the Assessing Officer has called upon the assessee to file various evidences but the assessee neither appeared nor filed any details. Therefore, the Assessing Officer by taking note of relevant facts available in the assessment record opined that the assessee has sold a property for a consideration of Rs.5.00 lakhs vide document No.3879 of 2010 and the stamp duty valuation of the property is Rs.50.00 lakhs as per the stamp duty. Therefore, by taking into account the stamp duty value of the property as per provisions of section 50C of the I.T. Act, 1961 considered assessee’s share at 1/7th of the total consideration and computed the Long-Term Capital Gain of Rs.7,14,286/-.

The assessee carried the matter in appeal before the learned CIT (A) but could not succeed. The learned CIT (A) for the reasons stated in the appellate order dated 16/01/2024 rejected the explanation of the assessee and sustained the addition made towards computation of Long-Term Capital Gain.

The learned Counsel for the assessee at the time of hearing submitted that this issue is squarely covered by the decision of the ITAT, Hyderabad Bench in the case of M/s. Suvishal Power Gen Ltd in vide order dated 19.10.2022 where under identical set of facts, the issue has been set aside to the file of the Assessing Officer to reconsider the issue in the light of the decision of the Hon'ble jurisdictional High Court in the case referred to in Writ Petition Nos.11032, 11034 and 11037 of 2018. The learned Counsel for the assessee further submitted that the Assessing Officer of the above assessee company in consequential assessement proceedings after considering the relevant facts has passed the assessment order on 22.02.2024 and has observed that in view of the order of the Hon'ble Supreme Court in C.S No.14/1958 wherein the transfer of capital asset itself has been annulled and thus, the charging of capital gain in the hands of the assessee becomes non-est in the eyes of law. Therefore, he submitted that this appeal also relates to the litigation referred to in the appeal decided by the Tribunal and also considered by the Assessing Officer in consequential order, and thus the matter may be set aside to the file of the Assessing Officer to decide the issue in the light of the above legal disputes and in accordance with law.

The learned DR, on the other hand, fairly agreed that the matter may be set aside to the file of the Assessing Officer with a direction to examine the case of the assessee in the light of litigation and also the order passed by the Hon'ble jurisdictional High Court of Andhra Pradesh and also the decision of the Hon'ble Supreme Court (Supra).

I have heard both the parties, perused the material available on record and gone through the orders of the authorities below. I find that identical issue of computation of capital gain on transfer of property u/s 50C of the Act has been considered by the ITAT, Hyderabad Bench in the case of M/s. Suvishal Power Gen Ltd in ITA No.389/Hyd/2021. The Tribunal after considering the relevant facts and also by noticing the decision of the Hon'ble jurisdictional High Court in the case referred to in W.P Nos. 11032, 11034 and 11037 of 2018 dated 16.8.2018, has set aside the issue to the file of the Assessing Officer to redo the assessment by taking note of the order passed by the Hon'ble High Court. The relevant findings of the Tribunal are as under:

I further note that in consequential assessement proceedings in the case of M/s. Suvishal Power Gen Ltd, the Assessing Officer Central Circle 3(2) Hyderabad has passed an order dated 22.02.2024 u/s 153C r.w.s. 254 and assessed ‘Nil’ income in respect of capital gain computed by the Assessing Officer on transfer of property. We further note that the learned Assessing Officer in his assessment order at para 6 has categorically observed that in view of the judgment of the Hon'ble Supreme Court in C.S No.14/1958 the transfer of capital asset itself has been annulled and thus, charging capital gain in the hands of the assessee has become non-est in the eyes of law.

In the result, appeal filed by the assessee is allowed for statistical purposes.