TMI Blog2012 (10) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... and full value of consideration received or accruing in any year as a result of transfer of the capital asset shall be taxed in the year in which transfer takes place – in favour of Revenue. - IT APPEAL NO. 5331 (DELHI) OF 2011 - - - Dated:- 17-2-2012 - R.P. TOLANI, K.G. BANSAL, JJ. Ms. Namita Pandey for the Appellant. Gagan Kumar for the Respondent. ORDER K.G. Bansal, Accountant Member The only ground taken by the revenue in this case is that on the facts and in the circumstances of the case and in law, the ld . CIT (Appeals) erred in deleting the addition of Rs. 26.25 lakh made by the AO on account of long-term capital gain (LTCG), by ignoring the provision contained in section 45 ( 1). It is mentioned that any profit or gain arising from transfer of a capital asset effected in the previous year shall be chargeable to tax under the head "capital gains", and shall be deemed to be the income of the previous year in which the transfer takes place. 2. The facts of the case are that the return declaring total income of Rs. 64,50,782/- was filed on 26.10.2007. The assessment proceedings were initiated by issuing notice u/s 143(2) on 29.09.2008. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this year. He has also mentioned that the tax rate in this year and succeeding three years levied on capital gains is same. Therefore, no loss occurs to the revenue even if the capital gain is taxed as shown by the assessee. 4. Before us, the ld. senior DR refers to the agreement on pages 30 and 31. This is schedule-3 of the agreement regarding "payment of consideration". The initial consideration has been fixed at Rs. 1,72,50,000/-in respect of all the shares sold under the share-purchase agreement. The balance minimum consideration of Rs. 6,27,50,000/- is payable as under:- ( i ) Rs. 2,09,16,666.66 on 31.03.2006, ( ii ) Rs. 2,09,16,666.66 on a date not later than 30 days from 31.03.2007, and ( iii ) Rs. 2,09,16,666.66 on a date not later than 30 days from 31.03.2008. 4.1 The schedule also contemplates additional purchase consideration subject to fulfilment of certain conditions as overleaf:- ( i ) Rs. 1,16,66,666 (first trenche) on 15.03.2006, provided that the company achieves projected revenue target of Rs. 20.00 crore for financial year ending 31.03.3006, ( ii ) Rs. 1,16,66,666 (second trenche) on a date not later than 30 days from 31.03.2007 subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, it is urged that the order of the ld. CIT(Appeals) may be upheld. 6. We have considered the facts of the case and submissions made before us. The facts of the case in so far as the assessee is concerned are that he transferred 1500 shares of Orion Dialog to Essar Investments Ltd. The overall consideration was Rs. 86.25 lakh. However, in this year a sum of Rs. 60.00 lakh only was received. The balance was to be received in three succeeding years subject to fulfillment of certain conditions by Orion Dialog. In the course of hearing, it has been ascertained that the whole of the cost has been claimed by the assessee while computing capital gains by taking the sale consideration at Rs. 60.00 lakh. The question is - whether, the whole of the sale proceeds of Rs. 86.25 lakh or only a sum of Rs. 60.00 lakh is liable to be considered for the purpose of levy of capital gains? 6.1 We may at the first instance examine the statutory provisions contained in sections 45 and 48 in so far as they concern us. Section 45(1) provides that the profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to income-tax under the head "c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the sum of Rs. 44,47,482/- representing additional claim under COPE scheme (realized by the assessee during the relevant previous year by way of adjustment and never refunded to the Government) did not accrue to the assessee during the previous year relevant to assessment year 1975-76? At page no. 500 of the report, it is mentioned that the claim made by the assessee for the additional sum of Rs. 44,47,482/- is a mere claim and the said claim apparently was not in accordance with the clear directive of the Ministry of Petroleum, hence, the said amount cannot be said to have ripened into an income accruing to the assessee during the relevant year. The assessee maintains its account on mercantile basis. The said sum cannot be treated as assessee's income because during the relevant year the assessee had not acquired any legal right to receive the same. The amount can accrue or arise to the assessee if it acquires a legal right to receive the amount or conversely said amount has become legally due to the assessee from the debtor. Mere raising of a claim or bill does not create any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years in the following terms: Having regard to the fact that these amounts, contingent on the existence of the EBITDA, namely earnings before interest-tax depreciation allowance, can be determined only when the EBITDA as per clause (1) of the said share purchase agreement dated April 15, 2003 relating to the three contingent payments as defined in clause (1) therein is computed. By whom paid and Nature of payment Year in which to be paid Where defined Payer and provider first year contingent payment For year ended 31.3.2004 Exhibit A Payer and provider second year contingent payment For year ended 31.3.2005 Exhibit A Payer and provider third year contingent payment For year ended 31.3.2006 Exhibit A ( iii ) If the gains arising from transfer of shares aforesaid are not to be charged as capital gains, either wholly or in part, under what head of Income the contingent payments made to/received by the applicant towards the transfer of shares covered by the aforesaid share purchase agreement dated April 15, 2003, read with exhibit attached thereto are tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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