9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 2122 - HC - Income TaxMAT computation u/s 115JA - Agricultural income - proceeds from the sale of agricultural land and rubber trees could be deemed to be agricultural income u/s 10 - same granted exemption from computation of income as per Section 115JB - HELD THAT - We see that the AO had considered the aspect and ruled against the assessee. Tribunal has not considered this specific issue and had merely followed the decision in Harrisons Malayalam Ltd 2009 (5) TMI 124 - ITAT COCHIN to grant exemption to the profit received on sale of estate from computation of the book profits. In such circumstances, we are of the opinion that the aforesaid appeals have to be remanded back to the Tribunal to consider the issue afresh. We do this despite the fact that the assessee has not filed an appeal, which was not necessary since the Tribunal had allowed the appeal on a different ground which we have answered against the assessee following the Division Bench judgment of this Court. Disallowance of employees' contribution to Provident Fund and Welfare Fund u/s 36(1) (va) - HELD THAT - This Division Bench has answered the question against the assessee and in favour of the Revenue in Popular Vehicles and Service (P) Ltd 2018 (8) TMI 133 - KERALA HIGH COURT Hence the aforesaid question has to be answered in favour of the Revenue and against the assessee. Slump sale for a lumpsum consideration - Whether the sale of Boyce Estate has to be treated as capital gain u/s 50B? - Revenue admits that it cannot be treated both as being included under the Minimum Alternate Tax (MAT) and under Section 50B, but prays that the alternate contention be left open for consideration, if at all the Hon'ble Supreme Court interferes with the finding of this Court that it is possible of computation under the MAT Scheme as provided in 115JB - HELD THAT - All the investments, deposits, receivables, stock and such other current assets in the form of financial and other assets remained with the assessee Company along with the liabilities. Only those assets enumerated in the Schedules and Annexure were sold to the vendee. The consideration had also been specifically assigned to the sale of immovable property and separate consideration has been assigned to the sale of movable properties including vehicles, buildings and so on and so forth. We do not find any reason to interfere with the finding of fact by the Tribunal that there is no case of slump sale for a lumpsum consideration. The consideration is not attributable to any particular item of asset. We hence decline to answer the question framed for reason of the findings of facts being unassailable raising no question of law. Gain on sale of shares - Speculation loss or long-term capital gains - HELD THAT - The Tribunal found that the assessee had held the shares as an investment and not as a stock in trade. Loss arising out of the sale of shares would hence be in the nature of capital loss and not in the nature of speculation loss, was the clear finding. There was also no evidence on record to show that the assessee was indulging in the business of buying and selling of shares. The shares held by the assessee Company were clearly investments and on finding no dispute on facts, the Tribunal directed it to be treated as capital gains. Again, we refuse to answer the third question raised for reason of the Tribunal having answered it on facts and there arising no question of law. When the third question is thus answered in favour of the assessee, necessarily the fourth question also, in the matter of set off, has to be answered in favour of the assessee and against the Revenue. Addition u/s 14A being re-plantation expenses - AO found that the expenditure was dis-allowable u/s14A - HELD THAT - The decision of Commissioner of Income Tax v. Essar Teleholdings Ltd. 2018 (2) TMI 115 - SUPREME COURT which held that the applicability of Section 14A can only be from the assessment year 2007-08 has to be noticed. We, hence, answer the question in favour of the assessee and against the Revenue, upholding the order of the Tribunal. Revision u/s 263 - the income from the sale of old rubber trees, indexation allowed in the case of sale proceeds of Grevellea trees, proportionate interest paid relatable to the investment in subsidiary companies dis-allowable u/s 14A and dis-allowance of expenses claimed under the head share transfer expenses - HELD THAT - As far as income from the sale of old rubber trees, the decision to treat it as subjected to Central Income Tax would go contrary to the findings of Thiruvambadi Rubber Company 2011 (6) TMI 452 - KERALA HIGH COURT . We, hence, do not think that any interference can be caused to the order of the Tribunal on that count. Indexation allowed of sale proceeds of Grevellea trees Tribunal has found that the said issue was the subject matter of an appeal before the CIT (Appeals) and then before the Tribunal. Under Clause (c) of Explanation to Section 263(1) since the issue was subject matter of appeal, there could not have been any suo motu power exercised by the Commissioner under Section 263. We are in agreement with the findings of the Tribunal and we answer the question of law against the Revenue and in favour of the assessee. Disallowance u/s 14A - We have already held, following the decision of the Hon'ble Supreme Court in Essar Teleholdings Ltd. 2018 (2) TMI 115 - SUPREME COURT that the same would be applicable only from 2007-08. We, hence, answer the said issue in favour of the assessee and against the Revenue. Expenditure incurred in connection with the transfer of shares - Tribunal has found that as a matter of fact the said expenses have been incurred in connection with the maintenance of share-holders' register. Tribunal has relied on the instructions issued by the CBDT, vide F.No.10/25/63-IT(A.a) dated 18.06.1964, wherein it was clarified that the remuneration paid by the Company to its Registrar for performing duties in connection with the Company's legal obligations to be discharged under the Company Law, should be regarded as revenue expenditure . We do not think that the finding on the said issue also calls for any interference.
Issues Involved:
1. Whether proceeds from the sale of agricultural land and rubber trees can be deemed agricultural income and exempt under Section 10 of the Income Tax Act. 2. Treatment of proceeds from the sale of Boyce Estate under Section 50B and computation under Section 115JB. 3. Disallowance of employees' contribution to Provident Fund and Welfare Fund under Section 36(1)(va). 4. Classification of loss on the sale of shares as speculation loss or long-term capital loss. 5. Set off of long-term capital gains on sale of land with long-term capital loss on sale of shares. 6. Disallowance of re-plantation expenses under Sections 37 and 14A. 7. Indexation allowed on the sale proceeds of Grevellea trees. 8. Disallowance of expenses under the head "share transfer expenses." Detailed Analysis: 1. Agricultural Income and Exemption (ITA Nos.101/2012, 213/2014 & 1752/2009): The core issue was whether proceeds from the sale of agricultural land and rubber trees qualify as agricultural income under Section 10 of the Act and are exempt from computation under Section 115JB. The court referred to the Supreme Court's ruling in Ajanta Pharma Limited, which declared Sections 115JA and 115JB as self-contained codes. The Division Bench had previously ruled that proceeds from old and unyielding rubber trees do not qualify as agricultural income, as they are not returned as such before the competent state authority. The court followed this reasoning and answered the question in favor of the Revenue. However, specific issues raised by the assessee, such as losses suffered and exceptional items in the profit and loss account, were not considered by the Tribunal. Hence, the appeals were remanded back for fresh consideration. 2. Sale of Boyce Estate and Computation under Section 115JB (ITA No.1782/2009): The Tribunal had ruled in favor of the assessee regarding the computation of book profits under Section 115JB, including the sale of Boyce Estate. The CIT Appeals had directed the proceeds to be treated as capital gains under Section 50B. The Tribunal found that the sale agreement did not include all assets of Boyce Estate and was not a slump sale for a lump sum consideration. The court upheld the Tribunal's finding that the sale was not of a going concern and declined to treat it as capital gains under Section 50B. 3. Disallowance of Employees' Contribution (ITA No.1782/2009): The court referred to its previous ruling in Popular Vehicles and Service (P) Ltd., which held that disallowance under Section 36(1)(va) should be in favor of the Revenue. Hence, the question was answered against the assessee. 4. Loss on Sale of Shares (ITA No.1782/2009): The Tribunal had ruled that the loss on the sale of shares in a subsidiary company should be treated as a capital loss, not a speculation loss, as the shares were held as an investment. The court upheld this finding, stating that no question of law arose from the Tribunal's decision. 5. Set Off of Long-Term Capital Gains (ITA No.1782/2009): Since the Tribunal ruled that the loss on the sale of shares was a capital loss, the court also upheld the Tribunal's decision to allow the set-off of long-term capital gains on the sale of land with long-term capital loss on the sale of shares. 6. Disallowance of Re-Plantation Expenses (ITA No.1776/2009): The AO disallowed re-plantation expenses under Sections 37 and 14A. The court referred to the Supreme Court's decision in Essar Teleholdings Ltd., which held that Section 14A applies only from the assessment year 2007-08. Hence, the question was answered in favor of the assessee. 7. Indexation on Sale Proceeds of Grevellea Trees (ITA No.16/2013): The Tribunal found that the issue of indexation was already subject to appeal before the CIT Appeals and the Tribunal, and hence, the Commissioner could not exercise suo motu power under Section 263. The court agreed with this finding and answered the question in favor of the assessee. 8. Share Transfer Expenses (ITA No.16/2013): The Tribunal found that expenses incurred in connection with maintaining the shareholders' register should be regarded as revenue expenditure, following CBDT instructions. The court upheld this finding. Conclusion: The appeals were partly allowed, and some issues were remanded back to the Tribunal for fresh consideration. Other questions were answered in favor of either the Revenue or the assessee based on the Tribunal's findings and relevant legal precedents.
|
