Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (3) TMI 202 - AT - Income TaxCapital gain u/s 45 - capital gain on surrender of leasehold right - Transfer u/s 2(47) or not? - transactions involved between the assessee and Government of Gujarat, wherein the assessee surrendered leasehold rights of the lands voluntarily in favour of the Government and the assessee has not received any compensation from the Government in lieu thereof - as argued mere fact that the assessee has declared the underlying sum as income under the capital gains cannot be a ground to treat the underlying sum as capital gains when, as a matter of fact, such sum is a 'capital receipt' - Another transaction is the assessee entered into a MOU with M/s. CGPL, however not transferred the lands to M/s. CGPL but received a sum from M/s. CGPL HELD THAT:- The claim of the assessee that its surrender of lease hold rights to Government of Gujarat is independent of its receipt of money from M/s. CGPL is negated by the copy of proposal for lease rights surrender of Balaji Salt Works and copy of MoU submission in paper book dated 23-01-2024. A conjoint reading of the documents suggests that the act of surrender of lease hold land by the assessees and M/s.CGPL application to Government of Gujarat was a planned action. Further MoU speaks of receipt of 80% of total consideration to both Radhaswamy Salt Works/Balaji Salt Works upon their making an application of surrender to Government of Gujarat. The act of these assessees in not disclosing the actual intent and purpose of surrender of lease deed to Government authority and withholding material information regarding their proposal/MOU with CGPL does not make their act of surrender voluntary and thus the lower authorities is correct in charging Capital Gains on the above transaction, which does not require any interference and assessee appeal is liable to be rejected. No doubt, the above surrender of leasehold rights amounts to “transfer” as per Section 2(47) of the Act, as it amounts to extinguishment of the rights of the assessees, which is a “capital asset” as per Section 2(14) of the Act. Though the consideration is received from M/s. CGPL, a third party, not from Government of Gujarat on account of surrender of leasehold rights, the same is assessable to tax as capital gains, since Section 45(1) of the Act does not stipulate as to the person from whom consideration is to be received. Further perusal of the MOU entered between the parties, it is a clear cut case that the assessees were compensated by a sum of Rs. 8.55 lakhs per acres of lands surrendered to Government of Gujarat and a week thereafter the above compensation payment is payable to the assessees by M/s. CGPL. On an identical transaction where compensation received from third party was held to be a “transfer” within the meaning of Section 2(47) r.w.s. 45(1) of the Act, by Hon’ble Calcutta High Court in the case of A Gasper Vs. CIT [1978 (3) TMI 4 - CALCUTTA HIGH COURT] which was approved by Hon’ble Supreme Court reported in [1991 (8) TMI 7 - SUPREME COURT]. Thus we do not find any legal force in the submissions made by the assessee. Decided against revenue. Charging of interest u/s. 234B - appellant is entitled to adjustment of seized cash/FDRs against the self-assessment tax liability from the said date i.e. 15.09.2010 on which the period of 120 days is over in terms of section 132B of the I.T. Act - HELD THAT:- Coming to the main section 132B(1) of the Act, which prescribes that the assets seized u/s. 132 can be adjusted against any “existing liability” as per IT, WT or the amount of liability determined on the completion of regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment. As per this sub-section, the Ld AO ought to have adjusted against the tax liability while framing the regular assessment as against the FDRs seized from M/s. Balaji Salt Works and M/s. Radhaswamy Salt Works respectively. In that event also, the assessee is entitled for refund of surplus FDRs seized by the Department as per section 132B [3] of the Act and therefore there is no question of levy of interest under section 234 B and C of the Act. Thus AO miserably failed to adhere to the provisions of section 132B[1] of the Act and the Ld CIT [A] is not justified in confirming the interest charged u/s. 234B of the Act for the period up to 15-09- 2010. Therefore we direct the Ld AO to rework the computation in accordance with the provisions of law after providing proper opportunity of hearing to the assessees.
|