CITI FINANCIAL RETAIL SERVICES (I) LTD.,CHENNAI vs. ACIT, CHENNAI

आदेश /O R D E R

PER BENCH:

These assessee’s appeals for assessment years 1999-

2000 and 2000-2001, arise from a common order of the

Commissioner of Income Tax (Appeals)-II, Chennai, dated

24.01.2014 passed in ITA Nos.380 & 381/13-14 sustaining the

- - 2 I.T.A. Nos.2059 & 2060/Mds/2014 Assessing Officer’s actions adding short term capital gains of `

29,88,022/- and written back sum of `22,80,832/- under Section

41(1) respectively, in proceedings under Section 143(3) r.w.s.

Section 147 of the Income-tax Act, 1961 (in short 'the Act').

appeals are time barred due to delay of 120 days in filing. The

assessee’s Managing Director has filed a condonation affidavit

dated 08.09.2014 attributing this delay to its amalgamation with

another identity and procedural requirements involved therein.

The Revenue fails to controvert these solemn averments.

Therefore, we accept the assessee’s condonation affidavits,

condone delay of 120 days each in both cases and proceed to

deal with the merits.

year 1999-2000 first raising sole substantive issue of short term capital gains of `29,88,022/-. The assessee is a finance

company. It had filed its return on 16.12.1999 admitting income of `90,22,970/- under ‘normal’ computation with book profits of

`3,00,76,566/-. The same was ‘summarily’ processed.

Thereafter, the Assessing Officer took up ‘scrutiny’. He inter alia

- - 3 I.T.A. Nos.2059 & 2060/Mds/2014 noticed a sum of `2,52,38,888/- as opening balance in the land

account of fixed asset schedule. The assessee had put up a

note about the land sold and pending of necessary registration even after receiving full consideration money. The purchase cost of these two chunks of land was `24,35,450/- and `1,96,00,000/-

in financial year 1997-98 added by stamp duty of `32,25,000/-

totalling to `2.5 crores. The Assessing Officer found that the

possession has already been delivered to the vendee concerned

who had raised a building thereupon. He quotes Section 53A of

the Transfer of Property Act and proposed to compute the

impugned short term capital gains.

of land as well as building and its vendee had borne the latter

outgo. It would contend that the Transfer of Property Law at the

time of registration completed on 22.01.2003 had not been considered for determining value of the land including building in

question. The Assessing Officer adverted to contents of sale

deed and found that the assessee had itself acknowledged to have received actual sale price of `2,82,23,910/-. In light

- - 4 I.T.A. Nos.2059 & 2060/Mds/2014 thereof, he rejected the assessee’s explanation and computed impugned short term capital gains of `29,88,022/-.

submission on 28.05.2009 relying on its account books / other

documents and pleaded that sale consideration in question

included cost of building as well (supra). The same were never

filed in the lower appellate proceedings till passing of order under

challenge dated 24.1.1014. The CIT(A) rejected the assessee’s

arguments. Therefore, it has filed the instant appeal.

findings. It is made clear that there is no evidence filed before us

to rebut the CIT(A)’s findings that the sale consideration did not

include value of the building or disputing its acknowledgement in

the sale deed (supra) of having received full sale price. Even the

sale deed in question has not been placed on record. Therefore,

we affirm the CIT(Appeals)’s findings and reject the assessee’s

ground.

I.T.A. No. 2059/Mds/2014 is dismissed.

Year 2000-2001) challenging addition of written back sum of

- - 5 I.T.A. Nos.2059 & 2060/Mds/2014 `22,80,832/- under Section 41(1) of the Act treated as cessation

of liability. The assessee had written back this amount due to

M/s NEPC as no longer payable. It would not treat this sum as taxable income since no corresponding debit had been claimed.

The relevant note in computation stated the sum as unpaid

purchase consideration of capital account treated as capital

income/receipt. The assessee had purchased windmills from M/s NEPC for a sum of `1.02 crores on 26.09.1997. It would

capitalize the entire amount and claim depreciation thereupon. Lateron, it chose not to pay the balance amount of `22,80,832/-

The Assessing Officer invoked Section 41(1) of the Act and

treated this amount as profits arising from cessation of liability.

He observed that the assessee had already claimed entire

expenditure in its Profit & Loss account. This resulted in the

impugned addition. The CIT(A) has also sustained the

Assessing Officer’s action.

record that the assessee had already claimed the entire purchase cost of `1.02 crores (including the impugned sum) in its

profit & loss account and claimed depreciation. The case file

- - 6 I.T.A. Nos.2059 & 2060/Mds/2014 reads that this sum written back has already been forming part of the above said capitalization exercise. In these circumstances, we find no ground to interfere with the lower authorities’ action in invoking Section 41(1) of the Act for treating it as profits arising from cessation of liability. The assessee fails to point out any factual or legal infirmity in the findings under challenge. The CIT(A)’s order is upheld.

I.T.A. No. 2060/Mds/2014 is dismissed. 9. To sum up, assessee’s both the appeals I.T.A. No. 2059/Mds/2014 and I.T.A. No. 2060/Mds/2014 are dismissed.

Order pronounced on Wednesday, the 11th of March, 2015 at Chennai.

sd/- sd/- (A. Mohan Alankamony) (S.S. Godara) (ए. मोहन अलंकामणी) (एस.एस. गोदारा) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member

चे�नई/Chennai, �दनांक/Dated, the 11th March, 2015.

Kri.

- - 7 I.T.A. Nos.2059 & 2060/Mds/2014

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-II, Chennai 4. आयकर आयु�त/CIT, Chennai-I, Chennai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.