ITO 3(3)-4, MUMBAI v. VISUAL GRAPHICS P. LTD, MUMBAI

ITA 1691/MUM/2010 | 2006-2007
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 169119914 RSA 2010
Assessee PAN AABCV0617N
Bench Mumbai
Appeal Number ITA 1691/MUM/2010
Duration Of Justice 10 month(s) 3 day(s)
Appellant ITO 3(3)-4, MUMBAI
Respondent VISUAL GRAPHICS P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 07-01-2011
Assessment Year 2006-2007
Appeal Filed On 04-03-2010
Judgment Text
1 ITA 1691/MUM/10 M/S VISUAL GRAPHICS P. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI P.M. JA GTAP A.M. ITA NO. 1691/MUM/2010 ASSESSMENT YEAR 2006-07 ITO 3(3)(4) ROOM NO. 672 6 TH FLOOR AAYAKAR BHAWAN MUMBAI 400 020. VS. M/S VISUAL GRAPHICS P. LTD. 121-A JOLLY MAKER NO. 1 95/97 CUFFE PARADE COLABA MUMBAI . 05 PAN AABCV0617N APPELLANT RESPONDENT APPELLANT BY SHRI SUMEET KUMAR RESPONDENT BY SHRI K. SHIVRAM SHRI PARAS SAVLA ORDER PER P.M. JAGTAP A.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. CIT(A) 7 MUMBAI DATED 23.12.09 AND IN THE SOLITARY GROUND RAISED TH EREIN THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN GRANTING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54EC IN RESPECT OF CAPITAL GAIN ARISING FROM SALE OF LONG T ERM CAPITAL ASSET WHICH WAS TREATED AS SHORT TERM CAPITAL GAIN U/S 50. 2. THE ASSESSEE IN THE PRESENT CASE IS A CO MPANY WHICH IS MAINLY ENGAGED IN THE BUSINESS OF PROVIDING SERVICES IN RELATION TO ART W ORK AND DESIGNING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31.03.2007 DECLARING A LOSS OF ` 2 49 667/-. DURING THE YEAR UNDER CONSIDERATION TH E ASSESSEE HAD SOLD ITS IMMOVABLE PROPERTY AT 55 MAKER TOWER -F CUFFEE PARADE MUMB AI AND THE PROFIT ARISING FROM THE SAID SALE AMOUNTING TO ` 70 23 667/- WAS DECLARED AS SHORT TERM CAPITAL GAI N. FROM THE 2 ITA 1691/MUM/10 M/S VISUAL GRAPHICS P. LTD. SAID AMOUNT EXEMPTION U/S 54EC WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF INVESTMENT MADE IN RAC BONDS AMOUNTING TO ` 70 LACS AND BALANCE AMOUNT OF ` 23 667/- WAS OFFERED TO TAX AS SHORT TERM CAPITAL GAIN. IN SUPP ORT OF THE SAID CLAIM FOR EXEMPTION U/S 54EC RELIANCE WAS PLACED ON BEHALF OF THE ASSESSEE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ACE BUILDERS PVT. LTD. 281 ITR 210. ACCORDING TO THE A.O. THE SAID DECISION OF HONBLE BOMBAY HIGH COUR T WAS NOT ACCEPTED BY THE DEPARTMENT AND THE SAME THEREFORE COULD NOT BE TAKE N AS A PRECEDENT FOR ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54EC. HE H ELD THAT THE SAID EXEMPTION WAS AVAILABLE ONLY IN RESPECT OF LONG TERM CAPITAL GAIN AND THE ASSESSEE THUS WAS NOT ENTITLED FOR THE SAME IN RESPECT OF SHORT TERM CAPITAL GAIN DECLARED U/S 50. ACCORDINGLY THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54EC WAS DISALLOW ED BY THE A.O. IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 19.12.08. 3. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO ALLOWED THE CLAI M OF THE ASSESSEE FOR EXEMPTION U/S 54EC FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ACE BUILDERS PVT. LTD. (SUPRA) HOLDING THAT THE SAME WA S SQUARELY APPLICABLE TO THE ISSUE INVOLVED IN THE CASE OF ASSESSEE. AGGRIEVED BY THIS RELIEF GIVEN BY THE LD. CIT(A) TO THE ASSESSEE THE REVENUE HAS PREFERRED THIS APPEAL BEF ORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SI DES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF ACE BUILDERS PVT. LTD. (SUPRA) WHEREIN THE CLAIM MADE BY THE ASSESSE E FOR EXEMPTION U/S 54EC IN THE SIMILAR FACTS AND CIRCUMSTANCES HAS BEEN ALLOWED BY THE HONBLE JURISDICTIONAL HIGH COURT HOLDING THAT SECTION 50 MAKES IT EXCLUSIVELY CLEAR THAT THE DEEMED FICTION CREATED IN SUB SECTION (1) AND (2) OF SECTION 50 IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CAPITAL GAINS CONTAINED IN SECTION 48 & 49 AND THE SAME DOES NOT APPLY TO OTHER 3 ITA 1691/MUM/10 M/S VISUAL GRAPHICS P. LTD. PROVISIONS. IT WAS HELD THAT THE RESTRICTION IMPOS ED IN SECTION 50 THUS IS LIMITED TO THE COMPUTATION OF CAPITAL GAINS AND NOT TO THE EXEMPTI ON PROVISIONS. IT WAS HELD THAT THE BENEFIT U/S 54-EC THUS WILL BE AVAILABLE TO THE ASS ESSEE IRRESPECTIVE OF THE FACT THAT THE COMPUTATION OF CAPITAL GAIN IS MADE EITHER U/S 48 A ND 49 OR U/S 50. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF ACE BUILDERS PVT. LTD. (SUPRA) WE UPHOLD THE IMPUGNED ORDER OF THE L D. CIT(A) GRANTING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54EC IN RESPECT OF CAPI TAL GAIN ARISING FROM SALE OF DEPRECIABLE LONG TERM CAPITAL ASSET. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON 7 TH JANUARY 2011. SD/- SD/- (R.V. EASWAR) (P.M. JAGTAP) PRESIDENT A CCOUNTANT MEMBER MUMBAI DATED 7 TH JANUARY 2011. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 7 - MUMBAI 4. THE CIT- 3 MUMBAI 5. THE DR BENCH F 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI 4 ITA 1691/MUM/10 M/S VISUAL GRAPHICS P. LTD. DATE INITIALS 1 DRAFT DICTATED ON 3.1.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 4.1.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER