TMI Blog2012 (11) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gains arising out of the transfer of balance shares have also been offered by the assessees for the following assessment year 2008-09. Therefore, in these circumstances it is not proper on the part of the Assessing Officer to treat that the entire transaction was complete in the previous year relevant to the assessment year 2007-08 itself. In the present case, there is no attempt to evade payment of taxes, as the assessee have already offered capital gains for taxation in two assessment years 2007-08 and 2008-09.” - there is no necessity of making protective assessments on that ground for the assessment year 2008-09 - revision orders passed by the CIT(A) have become infructuous - orders are therefore, set aside - In result, appeals filed by Revenue are dismissed and appeals filed by assessee is allowed. - ITA 43 to 48/Mds/2011 & 433 to 438/Mds/2012 - - - Dated:- 24-7-2012 - Dr. O.K.NARAYANAN AND SHRI V.DURGA RAO, JJ. Assessees by : Shri N.Devanathan, Advocate and Shri B.S.Purushotham, FCA Department by : Shri Shaji P. Jacob, IRS, Addl. CIT. ORDER PER Dr.O.K.NARAYANAN, VICE PRESIDENT This is a bunch of 12 appeals. The assessees have filed si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Toubro (L T) for undertaking the construction and development of the proposed hotels and also the promoters should see that the conveyance deeds relating to all rights, title and interest in the land and buildings of CHD are executed. 7. In the above background of facts, there was a search under sec.132 on 12.9.2007. In the course of search action, certain statements, share purchase agreements etc. relating to the above said transfer of shares were found and seized by the officers. In the course of search, when these matters were placed before the promoter assessees, they agreed to offer capital gains arising on transfer of shares for taxation in two assessment years. They agreed to offer long term capital gains for the assessment years 2007-08 and 2008-09. It was always the argument of the assessees that only 50% of the said consideration related to transfer of shares made in the previous year relevant to the assessment year 2007-08 and therefore, capital gains needs to be computed only with reference to that 50% of the sale consideration and the balance amount had to be treated as advance. According to the assessees, final performance of the agreement was made in the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us year especially, in view of the fact that CHD itself was not in possession of the land and no registered sale deed was executed by L T in favour of CHD. The sequence of the arrangement was that Andhra Pradesh Industrial Infrastructure Corporation Ltd. would allot the land to L T and thereafter L T would transfer the property to CHD and the property and rights shall thereafter pass on to the hands of WET as a consequence of transfer of shares of CHD by its promoter assessees. The fact was that the land and property was not conveyed by Andhra Pradesh Industrial Infrastructure Corporation Ltd. to L T and naturally L T has not executed any sale deed in favour of CHD and as such, there cannot be a case that WET was in possession of the land. In the light of the above facts and circumstances of the case, the Commissioner of Income-tax(Appeals) held that what was sold by the assessees were only shares and not immovable property. He held that the assumption of the Assessing Officer that underlying asset is an immovable property and the part performance of the contract amounts to transfer under sec.2(47) is not valid because CHD was to get the land from L T Infocity for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India. 13. The above Explanation may not directly apply to the present cases, as the company is not registered or incorporated outside India. Secondly, the Explanation swings into action in a situation where in spite of transfer of assets they transferred the shares and the parties are not accounting for the capital gains arising out of the transfer of the assets and the properties represented by the shares. But the present case is different. The assessees are offering long term capital gains arising in their hands on transfer of shares. The only dispute is whether the capital gains should be taxed as a whole in one assessment year 2007-08 or the capital gains should be bifurcated and assessed to tax for two assessment years 2007-08 and 2008-09. Therefore, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold to WET. 15. As a matter of fact, it is always true that a share having a stand in the market will always represent some assets. It is the value of the assets, rights and such other privileges that will ultimately decide the market value of a share. A doubt arises only in cases where assets and properties are transferred by parties in the form of share transfer by treating assets and properties different from shares to avoid payment of taxes. Even the Explanation 2 brought in by the Finance Act, 2012 is to handle such situation. In such cases, transfer of assets are coloured as transfer of shares for evading payment of tax. In the present case, there is attempt to evade payment of taxes, as the assessees have already offered capital gains for taxation in two assessment years 2007-08 and 2008-09. 16. In the facts and circumstances of the cases, we agree with the Commissioner of Income-tax(Appeals) that the assessees have transferred only 50% shares during the previous year relevant to the impugned assessment year and, therefore, that proportionate capital gains alone could be brought to tax for the assessment year 2007-08. The orders of the Commissioner of Income-tax(Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remaining part of long term capital gains liable for taxation after the capital gains taxed for the earlier assessment year 2007-08. In fact, the Commissioner of Income-tax has also taken the same view that has been taken by the Commissioner of Incometax( Appeals) and upheld by the Tribunal. Therefore, it is not possible to hold that the view taken by the Commissioner of Income-tax is erroneous. Therefore, technically speaking his orders stand good. If so, it cannot be said that the appeals of the assessees are allowed. It is true that the revision orders passed by the Commissioner have already been merged with the order of the Tribunal. The Tribunal has held that substantive assessments should be made for the assessment year 2008-09. Even though, the revision orders passed by the Commissioner of Income-tax have practically become infructuous, legally his orders have merged with the order of the Tribunal and as such his orders survive through the order of the Tribunal. Therefore, the correct result is that the appeals filed by the assessees are also to be dismissed. 4. In these circumstances, paragraph 20 of the common order of the Tribunal dated 24th July 2012 is corrected to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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