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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 1, Coimbatore, dated 09.12.2014 and pertains to assessment year 2009-10.
Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the assessee-company was demerged by the order of the High Court. The assessee entered into a Memorandum of Association with M/s Globus Realtors Pvt. Ltd. offering 5.075 acres of land as security for the amount advanced by M/s Globus Realtors Pvt. Ltd. to M/s Essorpe Holdings Pvt. Ltd., a sister concern of the assessee. The assessee has also executed a power of attorney in the name of Shri V. Sivakumar, Managing Director of M/s Globus Realtors Pvt. Ltd. in respect of 5.075 acres of land. The said Shri V.
Sivakumar sold 5.075 acres of land to M/s Rasi Seeds (P) Ltd. and M/s Globus Realtors Pvt. Ltd. in the guise of enforcing the security for repayment of loan borrowed by the assessee’s sister concern.
The Assessing Officer found that there was transfer of property.
Accordingly, the capital gain was assessed substantively in the hands of the assessee-company. A protective assessment was also made in the hands of sister concern, namely M/s Essorpe
3. The Ld. counsel for the assessee further submitted that the Assessing Officer levied penalty under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act') in the hands of the assessee-company on the ground that the capital gain arising out of the transfer of property was not disclosed to the Department. When the quantum appeal came before this Tribunal in I.T.A.
No.391/Mds/2015, this Tribunal, vide order dated 05.02.2016, found that the assessee-company has not realized any amount and suffered a loss in giving security to the sister concern. This Tribunal further found that the loss suffered by the assessee has to be assessed as business loss and the capital gain computed on the transfer of land has to be set off against the business loss computed on sale of such land. Accordingly, the quantum addition made by the Assessing Officer was deleted. Since the quantum addition was deleted, according to the Ld. counsel, there is no concealment of income and the penalty levied by the Assessing Officer as also confirmed by the CIT(Appeals) is not justified.
We have heard Shri Jasdeep Singh, the Ld. Departmental Representative also. The Ld. D.R. very fairly submitted that the quantum addition made by the Assessing Officer was deleted by this Tribunal by order dated 05.02.2016. Therefore, according to the Ld. D.R., it cannot be construed as concealment of income at this stage.
We have considered the rival submissions on either side and perused the relevant material available on record. As rightly submitted by the Ld.counsel for the assessee, the quantum addition made by the Assessing Officer was deleted by this Tribunal. Therefore, loss suffered by the assessee on sale of the land has to be treated as business loss. The capital gain has to be set off. Therefore, there will be revenue neutral. Since the quantum addition made by the Assessing Officer on transfer of land was deleted by this Tribunal, there cannot be any concealment as rightly submitted by the Ld.counsel for the assessee. Therefore, this Tribunal is of the considered opinion that there is no justification for levy of penalty. Accordingly, the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act is deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced on 1st June, 2016 at Chennai.