Amazer Investment & Finance Ltd. v. The Assistant Commissioner of Income-tax, Circle-1(1), New Delhi
[Citation -2016-LL-0921-129]

Citation 2016-LL-0921-129
Appellant Name Amazer Investment & Finance Ltd.
Respondent Name The Assistant Commissioner of Income-tax, Circle-1(1), New Delhi
Court ITAT-Delhi
Relevant Act Income-tax
Date of Order 21/09/2016
Assessment Year 2003-04
Judgment View Judgment
Keyword Tags concealment of income • sale consideration • date of conversion • debatable issue • stock-in-trade • capital asset • capital gain
Bot Summary: Counsel for the assessee has candidly admitted that the impugned issue in this appeal is squarely covered by the judgment of the Hon ble jurisdictional High Court in the case of Splendor Constructions Pvt. Ltd. v. ITO in ITA No.662/2009 dated 16.09.2009 in which the Hon ble High Court has held that the asset in ITA Nos.2478/DEL/2007 4242/DEL/2009 Page 3 of 6 question as capital asset only from the date it is converted into capital asset i.e., 1.4.2002 as it is only on that the said asset ceased to be stock in trade and was treated as capital asset. Accordingly, the question was answered in favour of the revenue and against the assessee and the appeal of the assessee was dismissed. Copy of judgment of Hon ble High Court is placed on record and following the same, we decide the impugned issue against the assessee and confirm the order of CIT(Appeals). Counsel for the assessee has invited our attention to the order of Tribunal in the case of Splendor Constructions Pvt. Ltd. v. ITO in ITA No.268/Del/2010 dated 17.03.2010, with the submission that in identical circumstances, penalty levied u/s. Facts in brief are that during the year, the assessee company had declared long term capital gain on sale of land owned by it. In the assessment order, the period of holding the asset was reckoned from the date when it was converted as investment from stock in trade and since it was less than three years, the gain was treated as short term capital gain and taxed as such. Against the order of CIT(A), the assessee is in further appeal before us.


IN INCOME TAX APPELLATE TRIBUNAL NEW DELHI BENCH : NEW DELHI BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA Nos.2478/DEL/2007 & 4242/DEL/2009 Assessment year : 2003-04 Amazer Investment & Finance Ltd., Vs. Assistant Commissioner 107, Bharat Chamber, of Income Tax, 70, Scindia House, Circle 1(1), New Delhi 110 001. New Delhi. PAN: AAACA 5424A APPELLANT RESPONDENT Appellant by : S/Shri Anoop Sharma & Sahil Sharma, Advocates Respondent by : Shri S.K. Jain, DR Date of hearing : 20.09.2016 Date of Pronouncement : 21.09.2016 ORDER Per Sunil Kumar Yadav, Judicial Member These are appeals preferred by assessee against respective orders of CIT(Appeals). Since appeals were heard together, these are being disposed of by this consolidated order. We, however, prefer to adjudicate them one after other. ITA No.2478/Del/2007 2. This appeal is preferred by assessee against order dated 25.01.2007 of CIT(Appeals)-IV, New Delhi inter alia on following grounds:- ITA Nos.2478/DEL/2007 & 4242/DEL/2009 Page 2 of 6 1. That learned CIT(A) has erred both on facts and law in treating profit arising from sale of shares of Apollo Tyres Ltd. (out of its investments) as business profits thereby rejecting assessee s treatment of said income as long term capital gains. 1.1 That learned CIT(A) has erred both on facts and in law in upholding views of assessing officer that conversion of stock in trade into investment by assessee was patently wrong and carried out with malafied intention of evading tax. 1.2 That learned CIT(A) has erred in upholding assessing officer s decision that conversion of shares from stock- in-trade to investments should have been made at Fair Market Value and not on book value as done by appellant. 1.3 That learned CIT(A) has erred in confirming decision of assessing officer that for purpose of determining whether capital asset is long term or short term capital asset, period of holding of capital asset should be calculated from date of conversion of shares from stock-in-trade to investment and not from date of acquisition. 2. That appellant craves leave to amend, alter, add or to withdraw any of above grounds of appeal before or at time of hearing of appeal. 3. During course of hearing, ld. Counsel for assessee has candidly admitted that impugned issue in this appeal is squarely covered by judgment of Hon ble jurisdictional High Court in case of Splendor Constructions Pvt. Ltd. v. ITO in ITA No.662/2009 dated 16.09.2009 in which Hon ble High Court has held that asset in ITA Nos.2478/DEL/2007 & 4242/DEL/2009 Page 3 of 6 question as capital asset only from date it is converted into capital asset i.e., 1.4.2002 as it is only on that said asset ceased to be stock in trade and was treated as capital asset. Accordingly, question was answered in favour of revenue and against assessee and appeal of assessee was dismissed. Copy of judgment of Hon ble High Court is placed on record and following same, we decide impugned issue against assessee and confirm order of CIT(Appeals). ITA 4242/Del/2009 4. This appeal is preferred by assessee against order dated 17.08.2009 of CIT(Appeals)-IV, New Delhi inter alia on following grounds:- 1. That learned CIT(A) erred in upholding penalty u/s 271(1)(c) of Income tax Act, 1961, levied by assessing officer vide his order dated 31.3.2008, without considering facts and provisions of section 271(1)(c) and judicial pronouncements thereof in their proper perspective. 2. That appellant craves leave to amend, alter, add or to withdraw any of above grounds of appeal before or at time of hearing of appeal. 5. During course of hearing, ld. Counsel for assessee has invited our attention to order of Tribunal in case of Splendor Constructions Pvt. Ltd. v. ITO in ITA No.268/Del/2010 dated 17.03.2010, with submission that in identical circumstances, penalty levied u/s. ITA Nos.2478/DEL/2007 & 4242/DEL/2009 Page 4 of 6 271(1)(c) of Act in that case was deleted by Tribunal. Copy of order of Tribunal is placed on record. 6. ld. DR placed reliance upon order of CIT(Appeals). 7. Having carefully examined orders of lower authorities in light of rival submissions, we find that in case of Splendor Constructions Pvt. Ltd. (supra) in identical circumstances where penalty was levied by Assessing Officer was deleted by Tribunal. relevant observations of Tribunal are extracted hereunder for sake of reference:- 2. Rival contentions have been heard and record perused. Facts in brief are that during year, assessee company had declared long term capital gain on sale of land owned by it. From details furnished by assessee during course of assessment proceedings, it was discovered that company purchased this land in financial year 1998-99 and some improvements were made on it. In balance sheets filed in consecutive years land was shown as stock in trade and its value/cost as on 31.3.2002 was reflected at Rs.3,46,63,069/-. In balance sheet as on 31.3.2003 filed with return of income, no stock-in-trade was declared. assessee company claimed that during financial year under consideration it had converted its stock-in-trade comprising of impugned land into investment and sold same on 12.12.2002 to another company i.e. M/s Premier Tyres Ltd. for Rs.6,00,00,000/-. difference in sale consideration and cost of purchase which came to Rs.2,53,36,931/- was declared as long term capital gains. income from long term capital gain was declared at Rs.1,66,09,750/- after claiming benefit of indexed cost of acquisition. In assessment order, period of holding asset was reckoned from date when it was converted as investment from stock in trade and since it was less than three years, gain was treated as short term capital gain and taxed as such. In respect of addition made, AO levied penalty u/s ITA Nos.2478/DEL/2007 & 4242/DEL/2009 Page 5 of 6 271(1)(c) and same was confirmed by CIT(A). Against order of CIT(A), assessee is in further appeal before us. 3. It was contended by learned AR that whether asset as long term capital asset or short term capital asset was debatable issue and in respect of addition so made, substantial question of law was admitted by Hon ble High Court. He further contended that in view of decision of ITAT Ahmedabad Bench in case of Roopam Mercantile 91 ITD 273 for concealment of income, where plea or claim which is held by High Court to have given rise to substantial question of law, cannot be treated to be frivolous or mala-fide as to attract levy of penalty u/s 271(1)(c). In view of order of Hon'ble Delhi High Court dated 16.9.2009, wherein substantial question of law had been admitted by Hon ble High Court. Applying proposition of law laid down by ITAT Ahmedabad Bench, he contended that penalty is not leviable u/s 271(1)(c). 4. Respectfully following proposition of law laid down by Coordinate Bench as discussed hereinabove, where plea or claim which is held by High Court to have given rise to substantial question of law, cannot be treated to be frivolous or mala-fide so as to attract levy of penalty u/s 271(1)(c). Accordingly, we hold that it is not fit case for levy of penalty. 8. Since Tribunal has taken particular view on similar set of facts and circumstances of case, we find no justification in taking contrary view in this appeal. Accordingly, we set aside order of CIT(Appeals) and delete addition. ITA Nos.2478/DEL/2007 & 4242/DEL/2009 Page 6 of 6 9. In result, appeals of assessee viz., ITA No.2478/Del/2007 is dismissed, whereas ITA No.4242/Del/2009 is allowed. Pronounced in open court on this 21st day of September 2016. Sd/- Sd/- ( L.P. SAHU ) (SUNIL KUMAR YADAV ) Accountant Member Judicial Member New Delhi, Dated, 21st September, 2016. /D S/ Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi. Assistant Registrar, ITAT, New Delhi. Amazer Investment & Finance Ltd. v. Assistant Commissioner of Income-tax, Circle-1(1), New Delhi
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