TMI Blog1996 (11) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation appended below sub-section (4A) of section 80HHC. He has further pointed out that the expression total turnover has been defined in clause (ba), which reads as under :- total turnover shall not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962) : Provided that in relation to any assessment year commencing on or after the 1st day of April, 1991, the expression total turnover shall have effect as if it also excluded any sum referred to in clauses (iiia), (iiib) and (iiic ) of section 29. 32. The learned counsel has also referred to the decision of the Tribunal in Chloride India Ltd. v. Dy. CIT [1995] 53 ITD 180 (Cal.) wherein, while dealing with section 80HHC, the Tribunal has observed that the numerator and the denominator in a particular formula should be of the same category or should comprise of the same ingredients. Otherwise, there would be no uniformity or harmony. The Tribunal went on to observe that the interpretation suggested by the department with regard to the expression total turnover as including even octroi, sales tax and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) Co. Ltd. v. CIT [1983] 143 ITR 590 (MP); (3) CIT v. Boots Co. (India) Ltd. [1995] 214 ITR 175/ 81 Taxman 175 (Bom.); (4) CIT v. Lokmat News Papers (P.) Ltd. [1995] 216 ITR 199/ 80 Taxman 629 (Bom.); and (5) M.H. Daryani v. CIT [1993] 202 ITR 731 (Bom.). 34. Having considered the rival submissions, we find considerable force in what has been contended on behalf of the revenue. The assessment year involved is 1992-93. The expression total turnover has been defined in the Act. Applying the ratio of the decision cited on behalf of the revenue and taking into consideration the definition of the term turnover , which is not ambiguous, we have no hesitation in holding that the amount of excise duty and sales tax has been rightly included by the revenue authorities in the figure of total turnover. 35. [This para is not reproduced here as it involve minor issue.] 36. The last ground relates to the receipt of ₹ 1,70,50,000 treated as short-term capital gains. Briefly stated, on 18th April, 1981, the assessee had agreed to purchase an immovable property from Kothari Medical Centre ( KMC in short) and an agreement was executed. The assessee was delivered p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all pay to the assessee-company a sum of ₹ 1,70,50,000 being the mutually agreed compensation for cancellation of the Agreement dated 18th April, 1981. In the Agreement of 30th March, 1991, it was further provided that the assessee-company would be entitled to continue in possession of the said premises for a period up to 31st March, 1992, or earlier, as the case may be, on payment of the agreed monthly compensation. The assessee-company handed over vacant possession of the premises to KMC and KMC against receipt of such vacant possession made payment to the assessee-company of the agreed compensation of ₹ 1,70,50,000 as acknowledged and recorded in the third agreement. 37. During the assessment proceedings, it was claimed that the compensation received by the assessee does not attract capital gains. In the alternative, it was contended that the entire amount of compensation received by the assessee has been invested in IDBI capital bonds on 31st March, 1992 and as such, no capital gains is chargeable by virtue of section 54E(i)(a ) of the Income-tax Act. The submissions of the assessee did not find favour with the Assessing Officer. He rejected the stand of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Vania Silk Mills (P.) Ltd. v. CIT [1991] 191 ITR 647/ 59 Taxman 3 (SC); and (2) CIT v. Rasiklal Maneklal (HUF) [1989] 177 ITR 198/ 43 Taxman 259 (SC). 39. In the alternative, it was argued that agreement to purchase is a capital asset. In that connection, reference was made to the undernoted decisions:- (1) CIT v. Tata Services Ltd. [1980] 122 ITR 594 (Bom.); (2) CIT v. Sterling Investment Corpn. Ltd. [1980] 123 ITR 441 (Bom.); and (3) CIT v. Vijay Flexible Containers [1990] 186 ITR 693/ 48 Taxman 86 (Bom.). 40. Referring to the three agreements in question, copies of which have been placed on record, it was argued that the right to purchase the property was acquired by the assessee on 18th April, 1981 and that right was given up vide agreement dated 30th March, 1991 and, thus, the asset was held by the assessee for more than three years and as such, the capital gain has to be treated as long-term capital gain and the revenue authorities have erred in treating the gain as short-term capital gain. He has highlighted the point that in the return of income the receipt was shown as long-term capital gain and exemption under section 54E was claimed because the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43. The stand of the revenue that the amount received by the assessee includes the consideration for surrender of tenancy rights or vacation of the premises is not acceptable. In fact, no tenancy was ever created in assessee s favour. The agreement dated 18th April, 1981 specifically provides that the assessee was put into possession of the property in part performance of the agreement. The right to purchase the property was given up by agreement dated 30th March, 1991. Since the right to purchase the property was given up by the assessee, it was under an obligation to deliver possession of the property to the seller. The assessee was allowed time to vacate the premises by 31st March, 1992 and for the period of occupation, the assessee had agreed to pay compensation for use and occupation to the seller at an agreed rate. The continuance of possession up to 31st March, 1992 and payment of compensation for such use and occupation does not amount to creation of tenancy in favour of the assessee. Besides this, the agreement dated 30th March, 1991 categori-cally states that the sum of ₹ 1,70,50,000 was paid to the assessee in lieu of giving up of the rights under the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
