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M/s Emgeeyar Pictures P. Ltd. Versus The Deputy Commissioner of Income Tax

Reopening of assessment - determination of loss - Held that:- The Third Member found that the notice issued by the Assessing Officer u/s 148 r.w.s 150(1) of the Act cannot be said to be based on any finding or direction of the Tribunal

The Third Member also held that the notice issued by the Assessing Officer u/s 148 of the Act is barred by limitation. In view of the majority opinion, the orders of the lower authorities are quashed and the appeal of the assessee is allowed. - ITA No.9 .....

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filed the return of income for the assessment year 2001-02 on 25.04.2005 in response to notice issued under Section 148 of the Act, disclosing the total loss of ₹ 56,758/-. The Assessing Officer completed the assessment under Section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short 'the Act') by an order dated 30.03.2006 determining the total loss at ₹ 2,442/-. Subsequently, the Assessing Officer issued another notice purported to be under Section 147 r.w.s. 150 of th .....

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04-05, this Tribunal found that the transfer took place in the year 2000. Therefore, the capital gain cannot be taxed for the assessment years 2003-04 and 2004-05. There is neither a finding that the capital gain has to be taxed in the assessment year 2001-02 nor any direction to assess the same in the assessment year 2001-02. Therefore, according to the Ld. counsel, the Assessing Officer cannot take the benefit of Section 150(1) of the Act for reopening the completed assessment after expiry of .....

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appeal by the assessee before this Tribunal for the assessment years 2003-04 and 2004-05 in I.T.A. Nos.327 & 328/Mds/2010 and there is no finding or direction by this Tribunal to assess the capital gain arising out of transfer of the property in the assessment year 2001-02. 4. Shri D. Anand, the Ld.counsel for the assessee, invited our attention to the order of this Tribunal dated 31.05.2010 and submitted that Section 150(1) of the Act should not be applied in a case where the assessment or .....

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at the best, the assessment order can be passed on or before 31.03.2005. The Assessing Officer passed the initial assessment order, after reopening under Section 147 of the Act, on 30.03.2006. The assessment was reopened for the second time under Section 150 of the Act, consequent to the order of this Tribunal for assessment years 2003-04 and 2004-05 dated 30.05.2010. Referring to the judgment of the Apex Court in CIT v. Green World Corporation (2009) 314 ITR 81, the Ld.counsel submitted that n .....

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ee further submitted that Section 150(2) of the Act clearly says that if the time limit expired at the time of the order which was subject matter of appeal, then provisions of Section 150(1) of the Act is not applicable. In this case, according to the Ld. counsel, the order of the Tribunal was passed on 31.05.2010. The limitation period had already expired, therefore, no order can be passed under Section 150(1) of the Act in the guise of reopening under Section 147 of the Act. The Ld.counsel has .....

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1.05.2010, observed that there was an inference that the finding of the ITAT is that the capital gain is to be taxed in assessment year 2001-02. According to the Ld. counsel, on the basis of the inference there cannot be any assessment under Section 150(1) of the Act. The language used by the Parliament is finding or direction of any authority under the provisions of the Income-tax Act. In his case there was no finding or direction by the ITAT. Therefore, there cannot be any inference that the T .....

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that on appeal by the assessee for assessment years 2003-04 and 2004-05, this Tribunal found that there was an agreement for joint development of property on 25.12.2000 and the assessee had also handed over the possession of the property to the builder on the same day. Therefore, this Tribunal found that the capital gain cannot be taxed in the assessment years 2003-04 and 2004-05 since the transfer took placed in the assessment year 2001-02. On the basis of this observation, the Assessing Offic .....

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n the basis of the finding of the Tribunal for the assessment year 1980-81, was found to be in order. The Ld. D.R. submitted that the CIT(Appeals) also referred to the judgment of Andhra Pradesh High Court in B.A.R. Abdul Rahman Saheb v. ITO (1975) 100 ITR 541 and submitted that sub-section (3) of Section 153 wipes the limitation provided in Section 153(1) and 153(2) of the Act. Referring to sub-section (2) to Section 153, the Ld. D.R. pointed out that if any income was excluded from the total i .....

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finding contained in the order of this Tribunal. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. 8. We have considered the rival submissions on either side and perused the relevant material on record. Initially the assessee filed the return of income for assessment year 2001-02 on 25.04.2005 consequent to the notice issued under Section 148 of the Act, disclosing the loss of ₹ 56,758/-. However, the Assessing Officer reopened .....

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ears 2003-04 and 2004-05. This contention of the assessee was accepted by the Tribunal on the ground that the joint development agreement was entered into on 25.12.2000 and the possession of the property was also handed over on the very same day. Therefore, this Tribunal found that the capital gain cannot be taxed in assessment years 2003-04 and 2004-05. This order of the Tribunal was passed on 31.05.2010. We have carefully gone through the provisions of Section 150(2) of the Act, which reads as .....

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reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. 10. In view of Section 150(2) of the Act, the provisions of sub- section (1) of Section 150 of the Act is not applicable in respect of the assessment year in which the assessment, reassessment or re- computation could not have been made at the time the order, which was subject matter of the appeal, was passed by reason of any other provisions limiting the time with .....

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ed the order on 31.05.2010. Therefore, this Tribunal is of the considered opinion that the Assessing Officer cannot take any advantage on the basis of the order of this Tribunal dated 31.05.2010 by invoking Section 150(1) of the Act. This Tribunal is of the considered opinion that the Assessing Officer can pass an order under Section 150(1) of the Act provided the appellate / revisional order was passed within the period of limitation available for reopening the assessment. In this case, on the .....

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piry of period of limitation. The Apex Court also found that sub-section (2) of Section 150 makes it clear that reassessment permissible under Section 150(1) of the Act would not be available to Department when the period of limitation for such assessment or reassessment has expired at the time it is proposed to be reopened. In this case, the Revenue proposed to reopen the assessment on 10.06.2011 by issuing a notice under Section 148 of the Act, on which date, the period of limitation was admit .....

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tion of sub-section (1) to enable the authority to reopen assessments which have not already become final on the expiry of the prescribed period of limitation under section 149. As is sought to be done by the High Court, sub-section (2) of section 150 cannot be held applicable only to reassessments based on orders in proceedings under the Act and not to orders of court in proceedings under any other law . Such an interpretation would make the whole provision under section 150 discriminatory in i .....

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ieve the desired result it was not necessary to make any amendment in sub-section (2) corresponding to sub- section (1), as is the reasoning adopted by the High Court. Sub-section (2) aims at putting an embargo on reopening assessments, which have attained finality on the expiry of the prescribed period of limitation. Sub-section (2) in putting such embargo refers to the whole of sub- section (1) meaning thereby to insulate all assessments, which have become final and may have been found liable .....

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attained finality on the expiry of the period of limitation under section 149 of the Act. On a combined reading of sub-section (1) as amended with effect from April 1, 1989, and sub-section (2) of section 150 as it stands, in our view, a fair and just interpretation would be that the authority under the Act has been empowered only to re-open assessments, which have not already been closed and attained finality due to the operation of the bar of limitation under section 149. 12. We have also care .....

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tion 150(2) was misplaced. The Karnataka High Court had no benefit of going through the subsequent judgment of Apex Court in K.M. Sharma (supra). In view of finding of the Apex Court in K.M. Sharma (supra), as extracted above, the judgment of Karnataka High Court in Spences Hotel (P) Ltd. (supra) may not be of any assistance to the Revenue. 13. Now coming to the judgment of Andhra Pradesh High Court in B.A.R. Abdul Rahman Saheb (supra), the assessee before the Andhra Pradesh High Court challenge .....

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ent years 1957-58 and 1958-59 should not be reopened and unexplained investments in the respective accounting years added. The assessee challenged the action of the Assessing Officer on the ground that the notice issued on 20.03.1969 for reopening assessments for assessment years 1957-58 and 1958-59 were time barred and bad in law. The Andhra Pradesh High Court found that Explanation 2 to Section 153 of the Act provides for taking steps under Section 147 to assess the income of another year with .....

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. The compensation was awarded on 12.09.1990 and 29.05.1993 by the orders of Punjab & Haryana High Court. Interest was also paid on 21.08.2001 from the date of taking over the possession of the land. Subsequently, the assessee shifted to Noida in the year 1991 and doing business there. After receiving the interest on the compensation amount on 21.08.2001, the assessee filed revised return on 14.01.2001 for assessment years 1995-96 to 2001-02. The Assessing Officer reopened the assessment by .....

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fter 01.04.1989, i.e. after the amended Act came into effect from 01.04.1989 and accordingly, rejected the contention of the assessee. 15. We have also carefully gone through the judgment of Madras High Court in Vellore Electric Corporation (supra). In the case before the Madras High Court, the issue arose for consideration was whether the period of limitation prescribed for reopening the assessment was applicable even for an order passed by the Assessing Officer by invoking the provisions of Se .....

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ction 150 insulates all assessments which have become final and may have been found liable for reassessment or re-computation on the basis of orders of the authorities under Income-tax Act or orders of High Court or under any other law. The Madras High Court further found that Section 150(1) as amended with effect from 01.04.1989 did not enable the authorities to reopen assessments which have become final due to the bar of limitation prior to 01.04.1989 and this position was equally applicable t .....

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through the judgment of the Apex Court in Green World Corporation (supra). After referring to Section 150 of the Act, the Apex Court observed that if no proceedings before the authority or if the assessment year in question is not a subject matter which would fall for consideration, Section 150 of the Act will have no application. In fact, the Apex Court has observed as follows at para 60 to 67 of its judgment:- 60. The aforementioned provision although appears to be of a very wide amplitude, b .....

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er authority. For the said purpose, the records of the proceedings must be before the appropriate authority. It must examine the records of the proceedings. If there is no proceeding before it or if the assessment year in question is also not a matter which would fall for consideration before the higher authority, section 150 of the Act will have no application. 62. In ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC), it was held (page 339) : " The proceedings would be in time, if the se .....

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effect to any find ing or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A.' Prima facie this proviso lifts the ban of limitation imposed by the other provisions of the section in the matter of taking an action in respect of or making an order of assessment or reassessment falling within the scope of the said proviso. The scope of the proviso is con fined to an assessment or reassessment made on the assessee or any person in c .....

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igh Court' s order to the Supreme Court. Learned counsel for the appellant contends that the scope of the proviso is only confined to the assessment of the year that is the subject-matter of the appeal or the revision, as the case may be. Learned counsel for the Department argues that the comprehensive phraseology used in the proviso takes in its broad sweep any finding given by the appropriate authority necessary for the disposal of the appeal or the revision, as the case may be, and to any .....

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ision of the Income-tax Officer given in a particular year does not operate as res judicata to opine (page 343) : " The lifting of the ban was only to give effect to the orders that may be made by the appellate, revisional or reviewing tribunal within the scope of its jurisdiction. If the intention was to remove the period of limitation in respect of any assessment against any person, the proviso would not have been added as a proviso to sub-section (3) of section 34, which deals with compl .....

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ncome for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression ' direction' cannot be con strued in vacuum, but must be collated to the directions which the Appellate .....

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l meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional autho rity, as the case may be, is empowered to give under the sections mentioned therein." 65. It was clarified that the words " any person" would refer to those who were not eo nomine parties to the appeal although the assessment of their income would depend upon the assessments of the .....

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n the assessee, is invalid as it infringes the provisions of article 14 of the Constitution. That, however, is a question apart. What we have to consider is the legislative intent, and for ascertaining it, it is legitimate to look also at that part of the enactment which has been held to be invalid." 67. To the similar effect are the decisions of this court in N. Kt. Sivalingam Chettiar v. CIT [1967] 66 ITR 586 and Rajinder Nath v. CIT [1979] 120 ITR 14 (SC). In the case before us, the Trib .....

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401 considered an identical issue and observed as follows at pages 408 & 409 of ITR:- A reading of these Explanations clearly shows that they merely illustrate and clarify the meaning of the words " in consequence of or to give effect to any finding or direction " contained in an appellate, revisional or any other order. Explanation 2 says that where an appellate, revisional or other order excludes any income from the total income of the assessee for an assessment year, the assess .....

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and section 153, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the order, provided, of course, such other person was given an opportunity of being heard before the said order was made. What is, however, clear is that Explanations 2 and 3 do not purport to obliterate or remove the restriction contained in sub- section (2) of section 150. They, no doubt, refer to section 150, but for a limited purpose, mentioned above. A review of the above p .....

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ions 2 and 3, no doubt, are relevant both for section 150 and section 153(3), but their purpose is merely to illustrate certain words occurring therein, and not to remove or obliterate the time limits prescribed in the several provisions referred to above. Learned standing Counsel for the Revenue brought to our notice certain decisions, all of which appear to have been rendered with reference to Explanation 2 in section 153. In B. A. R. Abdul Rahman Saheb v. ITO [1975] 100 ITR 541, a Bench of th .....

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ction 153. The Bench read sub- section (2) of section 150 as providing that the provisions of sub-section (1) thereof will not apply to a case of assessment, reassessment or recomputation of income, if it related to an assessment year in respect of which assessment, reassessment, etc., could not have been made at the time when the order, which was the subject- matter of appeal, reference or revision, was made, by reason of the time limits fixed under section 153 for making the assessment, reasse .....

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) read with Explanation 2 is that if any income is deleted from assessment in a higher proceeding on the ground that it is not the income of that year, steps may be taken under section 147 to assess it as the income of another year, without any limitation applying to the issue of notice under section 148 or to the completion of the assessment or reassessment..." With great respect, we think that this observation overlooks the provisions contained in sub-section (2) of section 150. However, .....

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s of the lower authorities are set aside. 20. In the result, the appeal of the assessee is allowed. ORDER PER CHANDRA POOJARI: ACCOUNTANT MEMBER I have gone through the draft order proposed by the learned Judicial Member. I am not able to persuade myself to agree with the findings therein. Therefore, I am constrained to pass a separate order as here under: 2. The assessee has raised the following grounds: 1. The order of the learned Commissioner of Income Tax (Appeals)-14 (CIT(A)-14) in upholdin .....

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8 of 2010 to invoke jurisdiction under section 150(1) of the Income Tax Act. The learned Commissioner ought to have seen that the Hon'ble ITAT while passing the aforesaid orders has only given finding to the effect that the capital gains will not arise during the A. Y.2003-04 & 2004-05 but however there is no specific finding or direction to the effect that capital gains will have to be assessed in the A. Y.2001-02. 3. The Learned Commissioner of Income Tax ought to have seen that the fi .....

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the assessment. 5. The Learned Commissioner of Income Tax ought to have seen that the assessing officer does not get unbridled power under section 150(1) of the Income Tax Act to open any assessment order. The restrictive covenant for application of section 150(1) is clearly dealt with in section 150(2) of the Income Tax Act and that Section 150(2) deals with circumstances in which section 150(1) is not applicable. 6. The Learned Commissioner of Income Tax ought to have seen that the case of th .....

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ssessment year in question is also not a matter which would fall for consideration before the higher authority, s. 150 of the Act will have no application. 7. The learned CIT(A) erred in relying on the decision of B.A.R.Abdul Rahman Sahib Vs ITO (100 ITR 541), Ambaji Traders Vs ITO (105 ITR 273) &t DCIT Vs Spencers Hotel (208 CTR 224) to affirm the order of re-assessment. The learned CIT(A) ought to have seen that the fact of the aforesaid case is distinguishable in so far as the Tribunal ha .....

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has expired . Hence by operation of section 150(2) of the Income Tax Act the provision of section 150(1) cannot extend the period of limitation. 9. The learned CIT(A) ought to have seen that even the computation of Capital Gains by the assessing officer is erroneous. 10. The learned Commissioner of Income Tax failed to see that in computing the Capital Gains for the A. Y.2001-02 the assessing officer erred in applying section 50C of the Income Tax Act. The learned Commissioner ought to have seen .....

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d at Dandapani Street, T. Nagar, Chennai-600017. This property was under a deed of Sale dated 3.2.1970 registered as Document No.159 of 1970 in the office of the Sub-Registrar, Theyagarayanagar from Executor of the Estate of Late Pasupuleti Kannambal. 3.2 In the assessment year 2001-02, the assessee company entered into a development agreement on 25th December 2000 with a builder, namely M/s Doshi Housing Limited, Chennai. Under the said development agreement, the assessee agreed to transfer 40% .....

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rn of income for the assessment year 2001- 2002 although it had rental income on lease of Flat No.3A, Doshi Apartments, Old Door No.9(New No.17), Dhandapani Street, T.Nagar, Chennai-600017. Since there was escapement of income notice under section 148 of the Income Tax Act was served on the assessee calling upon the assessee to file its return of income for the A.Y.2001-02. In response to the aforesaid notice the assessee filed its return of income on 25.04.2005 admitting total loss of ₹ 2 .....

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ny by the Investigation Wing of the Income Tax Department. A statement u/s. 131 was recorded from her on 03.02.2005. The issue of Capital Gains Tax liability arose regarding sale of Company's property at No.9, Dhandapani Street, T. Nagar, Chennai for Joint Development of the said property with M/s. Doshi Housing Ltd. 3.5 No income related to the capital gains was offered for this year. During the course of assessment proceedings for the assessment year 2001-02 u/s. 143(3) r.w.s. 147, the ass .....

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een managing the show. But they both could not develop the business and hence resorted to the joint promotion of the said property with the builder, Mls Doshi Housing Ltd. The arrangement with the builder was to get ₹ 10.00 lakhs as cash compensation and 60% of the constructed area of residential apartments with proportionate share of undivided land area. We refer clause 29 of the Joint development agreement dated 25th December 2000 wherein it was clearly stated that the owner shall remain .....

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he FY 2003-2004 and hence the company has returned the capital gains on the transfer of land in the AY 2004-05 and paid taxes on the taxable income. We refer clause 10 of JV agreement dated 25th December 2000 wherein the consideration for the transfer of 40% of undivided share of the land shall be in full settlement of the cost of 60% area constructed and allotted to the owner by the developer & part consideration of ₹ 10.00 lakhs paid by the developer to the owner". The AO accept .....

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ancial Year 2003-04. 3.7 Subsequently, assessee had filed the return of income for the assessment years 2001-02, 2003-04 & 2004-05 in response to the notices u/s 148 and 142(1) on 25.04.2005 respectively. In the returns filed, the assessee admitted LTCG of ₹ 13,70,752/- and ₹ 60,79,708/- for the assessment years 2003-04 and 2004-05 respectively and paid the tax on the Capital Gains as per return of income. The Long Term capital gains were related to the sale of land in a Joint ve .....

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f one apartment owned by the company sold to Vijayavalli during the year 40,79,675 Less: cost of construction of the above sale 2010 sq.ft. 15,77,225 Less: Indexed value of land sold(Note below) 11,31,698 27,08,923 Capital gains on the sale of owned construction 13,70,752 In the assessment order made u/s 143(3) r.w.s. 147 on 30.03.2006, the AO applied the guideline value furnished by the Sub-Registrar as the fair market value as on 1.4.1981 at ₹ 25/- per sq.ft u/s 2(22B) of the Income-tax .....

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ld in the relevant previous year and computed the Long term capital gains at ₹ 60,79,708:- Construction Cost of the building (Note 1 below) 1,18,64,975 Initial cash component, non-refundable 10,00,000 Monthly rentals given 7500x41 months 3,07,500 Total consideration received 1,31,72,475 Less: Indexed value of 40% of cost of land exchanged (Note 1) 68,07,395 Less: Cost of construction of the area compensated to the lessee Mrs. Nirmala Sft 4010 Less: Improvement cost to building, that Stands .....

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,708 The AO assessed the taxable income as follows: Value as adopted 2,02,98,911 Less: cost of construction of the flats sold 59,16,950 Less: Indexed cost of land sold(5458.06x25x4.63) 6,31,770 65,48,720 Long Term Capital gains at the time of sale of lands to allottee of flats 1,37,50,191 Long Term Capital gains on sale of flats 1,46,12,090 Total Capital Gains (1,146,12,090 + 1,37,50,191) 2,83,62,281 3.11 The assessee filed appeals before the CIT(A). In regard to adoption of Guideline value on t .....

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ing Officer as provision 50C is binding. 3.13 While disposing the Revenue appeal, ITAT estimated the fair market value of the property as on 01/04/1981 at 85 sq.ft. as against 143 per sq.ft estimated by CIT (A). 3.14 However, the ITAT separately adjudicated the assesse's appeal for the assessment years 2003-04 & 2004-05, vide its order dated 31.05.2010. On the issue pertaining to capital gains arising on account of development of its property the Tribunal while adjudicating the said issu .....

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10.06.2011 and re- opened the assessee s case for the assessment year 2001-02. The assessing officer re-opened the said assessment on the basis of observation in Para 6 of the order of the ITAT for the A.Ys. 2003-04 & 2004-05 in ITA Nos. 327 & 328/Mds/2010. 3.16 On the basis of the aforesaid reasons, the AO reopened the assessment for the aforesaid assessment year and completed the assessment vide his order dated 25.3.2013 assessing the entire capital gains in the assessment year 2001-0 .....

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d of limitation what is considered in the said section is the relevant assessment year and not the year in which the assessment order is passed. Thus no notice under section 148 of the Income Tax Act would have legal sanctity if the same is issued after 31.3.2007 viz the maximum time of 6 years as mentioned in clause (2) to section 149 of the Income-tax Act. 4.2 The CIT(Appeals) observed that the AO had invoked the provisions of sec.150 which reads as: Provision for case were assessment is in pu .....

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in sec.149 and it states that notice may be issued at any time to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act. The notice issued to the assesse was pursuant to the finding of the Tribunal. Thus, the time limit set out in section 149 has no relevance to the present case. 4.4 Regarding the contention of the assessee that there is no specific direction of the Tribunal and hence, sec.150 cannot be invoked, the Commissioner of .....

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order on appeal, etc. Sub-section reads as follows: (1) Nothwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. Thus, section 150(1) provid .....

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d to follow it. He is justified in initiating proceedings u/s 147 in order to give effect to the observations and findings of the ITAT. Thus the CIT(Appeals) rejected the contentions of the assesse and dismissed this ground of appeal. 4.7 Regarding the applicability of sec.150(2) of the Act, the Commissioner of Income-tax(Appeals) observed that there are two Explanations to sec.153, which are made applicable for sec.150 also and the same are reproduced herein below: Explanation 2.- Where, by an .....

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t also for the purposes of sec.150. Sec.150 cannot be read in isolation but has to be read along with Explanations 2 and 3 to sec.153, which set out the circumstances in which the assessment, reassessment, etc. is deemed to be one made in consequence of or to give effect to an order passed in an appeal, revision etc. Explanations 2 and 3 clearly illustrate and clarify the meaning of the words in consequence of or to give effect to any finding or direction contained in an appellate, revisional or .....

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(2) of sec.153 might have expired. It is in such a situation that sub-sec.(3) comes to the rescue of the Revenue. Explanation 2 to sec.153 has the effect of enlarging the period of limitation for completion of an assessment or reassessment. 4.9 The CIT(Appeals), after relying on certain decisions, held that if any income is deleted from assessment by the order of a higher authority on the ground that it is not the income of that year, steps may be taken u/s.147 to assess it as the income of ano .....

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d that transfer of asset has already taken in the year 2000, the capital gains cannot be taxed in the assessment years 2003-04 and 2004- 5. In order to give effect to the above findings of the Tribunal, the Assessing Officer initiated proceedings u/s.147 of the Act by duly issuing notice u/s.148 of the Act on 10.2.2011. It is seen from the records that sec.149 prescribed time limit for issue of notice u/s.148 of the Act. This section was amended by the Finance Act, 2001 w.e.f. 1.6.2001 describin .....

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ssued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in any order passed under the Act by way of appeal, reference or revision or by a Court in any proceedings under any other law. Having thus removed the time limits for issuing notice u/s.148 in such cases, sub-sec.(2) of sec.150 hastens to add that where any appeal, reference or revision or an order of a Court in any proceedings unde .....

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nfer upon the AO the jurisdiction to reopen an assessment which the Act did not otherwise possess. It says that where the reassessment proceedings would have been barred by time even at the point of time when the order which became subject matter of the appeal, revision etc., was passed, resort cannot be made to sub-sec.(1) of sec.150. 6. An example may make the position clear. Supposing for the assessment year 1999-2000 the AO includes an item of income which on appeal is held to relate to the .....

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for the assessment year 1998-99 would have been permissible at the point of time when the assessment order for the assessment year 1999-2000 was passed. That is the reason why sub-sec.(2) of sec.150 provides that the enlargement of time provided in sub-sec.(1) will not be available where, even on the date when the assessment was completed, an assessment or reassessment of the income for the assessment year 1998-99 (in this example) would have been barred by time. 7. Keeping in view of the above .....

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ook place in the year 2000, capital gains cannot be taxed in the assessment years 2003-04 and 2004-05. 8. The question for consideration is whether 28.12.2006, the date on which the assessment for the assessment years 2003-04 and 2004-05 was framed, the AO could have taken action by issue of notice u/s.149(1)(b) of the Act. As it stood w.e.f. 1.6.2001, no notice u/s.148 shall be issued for the relevant assessment year, if four years but not more than six years from the end of the relevant assess .....

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cording to which assessment of six years would have been lapsed from the assessment year 2002-03 to the date of service of notice on 10.6.2011. I am unable to accept the contention of the ld. AR because sec.150(2), the time limit within which notice u/s.148 could be issued by the AO has to be reckoned, in the very nature of things, under the provisions of sec.149, as they stood on 28.12.2006. As it clear from the words assessment year in respect of which on assessment, reassessment or recomputat .....

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e AO could have issued notice u/s.148 within the time limit as provided by sec.149(1)(b) of the Act as it stood on that date. Therefore, this contention of the ld. AR cannot be accepted. The AO is very well within the time limit to issue notice u/s.148 of the Act for the AY 2001-02 as on the date of assessment for the AY 2004-05 i.e.28.12.2006 (being the latest date). Since there is a direction of the Tribunal in the AYs 2003-04 & 2004-05 that the transfer of asset took place in the year 200 .....

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of the assessee that there is no finding or direction of Tribunal in his order cited supra, when the Tribunal observed that the transfer of capital asset has already taken place in 2000 and the capital gains cannot be taxed in the assessment year 2003-04 and 2004-05, is not correct. It implies that if the income is included from the total income for one assessment year under appeal then it is natural that it is open to the Assessing Officer to bring the deleted income by the appellate authority .....

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wherein it was held that Notice under s. 148 for asst. year 1976-77 issued on 17th Nov., 1998, on the basis of the finding of the Tribunal in its order for asst. year 1980- 81 that certain income was assessable in asst. year 1976-77 was not barred by limitation under s. 149 in view of overriding provisions of s. 150(1). It was observed: The Tribunal in its order dt. 26th June, 1998 held that the escaped tax shall be assessed for the year 1976-77. That order has become final and the same was with .....

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g of the Tribunal referred to supra regarding the escaped income for assessment of income-tax. Therefore, the single Judge committed an error in law by quashing the same, as the same is contrary to the finding recorded by the Tribunal with regard to the escaped taxable income derived by the assesse. The legal submission made by the counsel placing reliance upon s. 150(2) in justification of the order of the single Judge is misplaced for the reason that the above provision is not applicable to th .....

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amlapath Motilal vs. CIT (SC) 193 ITR 338 (ii) Mahadeo Prasad Rais (Decd. By LRs.) vs. ITO (SC) 192 ITR 402 (iii) Ashwani Dhingra v. CCIT (All.) 141 Taxman 651). In view of the above, in my opinion, the provisions of sec.150(1) are applicable. Thus, ground Nos. 1 to 8 are dismissed. 10. Now, the assessee has raised ground Nos.9 & 10 for the first time before us, which are not before the Commissioner of Income-tax(Appeals) and he had no occasion to consider the same. Being so, in the interest .....

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x Act, 1961, to resolve the points of difference. It may be noted that even while framing the points of difference, there was a difference of opinion. According to the learned Judicial Member, the following questions need to be resolved: (1) In the facts and circumstances of the case, in the absence of any specific finding/direction to assess the income for the assessment year 2001- 02 in the order of this Tribunal dated 31.05.2010, can there be an inference/presumption, especially, when no proc .....

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actor (I) (P.) Ltd. v. ACIT (2010) 124 ITD 14, especially when this Bench of the Tribunal in Sriram Capital Ltd. v. DCIT in I.T.A. Nos.512 & 513/Mds/2015 dated 26.06.2015 (the very same Ld. Accountant Member is a party/author) found that the Appellate authority cannot travel beyond the assessment year in appeal and expunge the directions (to refer p.63 & 64 at para 19.3 of the Tribunal order in I.T.A. Nos.512 & 513/Mds/2015 dated 26.06.2015)? (3) In the facts and circumstances of the .....

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ed in consequence to the order passed by the Tribunal for the assessment years 2003-04 & 2004-05? (2) Whether, on the facts and circumstances of the case, the ratio laid down by the Supreme Court in the case of CIT vs. Green World Corporation (2009) 314 ITR 81 is applicable to the present case which is delivered on different context? (3) Whether, on the facts and circumstances of the case, the ratio laid down by the Chennai Bench of the Tribunal in the cases of Sun Metal Factor (I) (P.) Ltd. .....

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formulated the points of difference emerging out of the respective orders of Hon'ble Members. On going through the same, and after discussing the matter with the parties, I have reframed the points of difference as under: 1. Whether the notice issued u/s 148 r.w.s 150(1)of the Act dated 10.6.2011 for the assessment year 2001-02 is based on any finding or direction issued by the ITAT in I.T.A.Nos.327 & 328/Mds/2010? 2. In the event of holding that there is a finding or direction, whether .....

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42/- by an order dated 30.3.2006. 6. It is to be noticed that there was an agreement for joint development of property on 25.12.2000 and the assessee handed over the possession of the property to the builder on the same date. The assessee offered to tax the capital gains thereon in the assessment years 2003-04 and 2004-05, but at a later stage, it was contended that no transfer took place in the respective assessment years and hence, it is not assessable to tax on capital gains in assessment yea .....

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transfer of the asset has already taken place in the year 2000, capital gains cannot be taxed in the AY 2003-04 and 2004-05. 7. Based on the observation made by the ITAT, the Assessing Officer sought to invoke the provisions of sec. 148, r.w.s 150 of the Act, for the assessment year 2001-02 and accordingly, issued a notice on 10.6.2011. The case of the assessee that the proceedings for the assessment year 2001-02 are barred by limitation and hence notice issued u/s 148 r.w.s 150 is beyond the pe .....

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or the assessment year 2001-02 cannot be reopened; the Assessing Officer cannot take the benefit of sec. 150 of the Act for reopening the completed assessment after expiry of limitation provided u/s 149 of the Act. It was also contended that even if the observation of the Tribunal is considered as a finding or direction, the Assessing Officer is entitled to reopen the assessment only when it is not barred by limitation period of maximum six years, reckoned from the end of the assessment year. In .....

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and 2004-05, the limited contention of the assessee was that the capital gains arising out of the transfer of asset cannot be taxed in assessment years 2003-04 and 2004-05 which was ultimately accepted on the ground that the joint development agreement was entered into on 25.12.2000 and the possession of the property was also handed over on the same date. This cannot be equated to a finding or direction. He also analysed the provisions of sec. 150(1) and 150(2) of the Act to highlight that the .....

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a, the limitation expired on 31.3.2008, whereas the Tribunal passed the order on 31.5.2010 in which event the Assessing Officer cannot make any addition on the basis of a later order of the Tribunal by invoking the provisions of section 150(1) of the Act. 9. He also referred to the judgment of the Apex Court in the case of K.M.Sharma (supra) to highlight that sec. 150(2) of the Act puts an embargo on reopening of assessments which have attained finality on expiry of period of limitation and in t .....

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s Green World Corporation (2009) 314 ITR 81, to emphasise that if no proceedings were pending before the authority before the expiry of limitation period, such proceedings cannot be reactivated merely on the basis of a subsequent order passed by the appellate authority. In conclusion, the learned Judicial Member observed that even if it is assumed that there is a finding or direction, still the provisions of section 150(2) of the Act comes into play in which event the proceedings which were alre .....

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judicating the assessee s appeals for assessment years 2003-04 and 2004-05, the issue has come to light that the amount is taxable in assessment year 2001-02 and thus, the Assessing Officer was justified in reopening the assessment by issuing notice u/s 148 r.w.s 150 of the Act since it amounts to a direction or finding by the Tribunal. 12. With regard to time limit for reopening of assessment, the learned Accountant Member was of the opinion that the provisions of sec. 150 of the Act enable the .....

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ed to the Hon'ble President u/s 255(4) of the Act and the Hon'ble President, in turn, was pleased to nominate me as Third Member to resolve the points of difference. As already stated hereinabove, the precise points of difference were reframed and placed before both the parties who have accepted that the points of difference as reframed would correctly focus the issues. Arguments were advanced accordingly. 14. The learned Counsel appearing for the assessee submitted that apart from the t .....

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mit that even if no time limit is prescribed (as assumed by the learned AM), still a reasonable time frame has to be assumed, as otherwise, the Assessing Officer will get unlimited time to reopen the assessment at his own will which is not permitted in law. In this regard, he relied upon the decision of ITAT, Hyderabad, in the case of S.Sankara Reddy vs. Assessing Officer (2005) 92 ITD 84. 15. In the instant case, the period of limitation expired in 2008 whereas the Tribunal has passed an order, .....

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relied upon the order passed by the learned Accountant Member and submitted that the order of the Tribunal should be treated as a finding or direction based on which the Assessing Officer is entitled to reopen the assessment. With regard to interpretation placed by the learned Accountant Member, vis-à-vis the non-applicability of limitation period prescribed in sec. 150(2) of the Act - in the backdrop of the language employed in sec. 149 and 150(1) of the Act - the ld. Departmental Repres .....

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t year 2003-04 and 2004-05; but there is no specific finding or direction that it is assessable to tax in assessment year 2001-02. Even if it is assumed that there is a finding or direction, in my humble opinion, the Hon'ble Madras High Court, in the case of M/s Goldmine Investments (supra), has considered an identical issue wherein it was held that in respect of any assessment year wherein further proceedings are barred by limitation, the same cannot be reopened merely by virtue of an opini .....

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