9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 331 - HC - Income TaxExemption from computation of income as per Section 115JB - proceeds from the sale of agricultural land and rubber trees could be deemed to be agricultural income under Section 10 - when the proceeds received out of the sale of rubber trees, for reason of the trees having become old and unyielding; whether the amounts credited in the profit and loss account could be included in the computation of book profits as per Section 115JA - Held that - The proceeds from the sale of the estate not being an income of a current or recurring nature, was shown as an exceptional item in the profit and loss account and the same adjusted against the losses of the previous years as per accounting standards. We see that the Assessing Officer had considered the aspect and ruled against the assessee. However, the Tribunal has not considered this specific issue and had merely followed the decision in Harrisons Malayalam Ltd. to grant exemption to the profit received on sale of estate from computation of the book profits. 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 made u/s 36(1) (va) and Section 224(1) - Held that - Question to be decided against the assessee and in favour of the Revenue in Popular Vehicles and Service (P) Ltd. v. Commissioner of Income Tax 2018 (8) TMI 133 - KERALA HIGH COURT . Hence the aforesaid question has to be answered in favour of the Revenue and against the assessee. Whether the sale of Boyce Estate has to be treated as capital gain under Section 50B - Held that - on a reading of the said decision, we find that therein also the consideration agreed was the aggregate value for the land, building, machinery and all equipment with liability specifically mentioned in the agreement entered into between the parties. The facts are quite distinct in this case. The liabilities were not sold and the sale agreement did not include investments and deposits was the clear finding of the Tribunal. 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. However, 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. Long term capital loss suffered on sale of shares was assessable as speculation loss within the meaning of Explanation to Section 73 - Held that - Assessing Officer assessed it as capital gains, while the CIT appeals directed it to be treated as speculation loss. The Tribunal found that the assessee had held the shares as an investment and not as a stock in trade. The 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 made by the AO invoking the provisions of Sections 37 and 14A - Held that - The AO found that the expenditure was dis-allowable under Section 14A of the Act. In this context, the decision of the Hon ble Supreme Court in Commissioner of Income Tax v. Essar Teleholdings Ltd. 2018 (2) TMI 115 - SUPREME COURT OF INDIA , 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. Treating the consideration received on sale of shade trees as long term capital loss entitled to be carried forward from the earlier years - We see that the Tribunal had considered the facts and had held that the order of the CIT (Appeals) directing deletion of such deduction in the capital gains has to be set aside, on facts. The Tribunal has also held that it being long term capital loss, is entitled to be carried forward. We do not see any question of law arising from the order of the Tribunal and, hence, uphold the order to that extent. 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 a Division Bench of this Court in CIT v. 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. Issue of indexation allowed of sale proceeds of Grevellea trees - the 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. Expenditure incurred in connection with the transfer of shares - Held that - The Tribunal has found that as a matter of fact the said expenses have been incurred in connection with the maintenance of share-holders register. The 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 under Section 10 of the Income Tax Act and exempt from computation of income under Section 115JB. 2. Computation of book profits including proceeds from the sale of Boyce Estate under Section 115JB. 3. Disallowance of employees' contributions to Provident Fund and Welfare Fund under Section 36(1)(va). 4. Taxability of surplus from the sale of Boyce Estate as capital gains under Section 50B. 5. Treatment of loss on the sale of shares of a subsidiary company as speculation loss or long-term capital loss. 6. Set off of long-term capital gains on the sale of land with long-term capital loss on the sale of shares. 7. Disallowance under Sections 37 and 14A regarding re-plantation expenses. 8. Treatment of consideration received on the sale of shade trees as long-term capital loss. 9. Validity of the Commissioner's order under Section 263 on various issues including the sale of old rubber trees, indexation on sale proceeds of Grevellea trees, and share transfer expenses. Detailed Analysis: Issue 1: The court examined whether proceeds from the sale of agricultural land and rubber trees could be considered agricultural income under Section 10 and exempt from computation under Section 115JB. The court referred to the Division Bench judgment in Commissioner of Income Tax, Cochin v. Thiruvambadi Rubber Factory Limited, which held that proceeds from old and unyielding rubber trees are not agricultural income. The court decided in favor of the Revenue, remanding ITA Nos. 101/2012 and 213/2014 back to the Tribunal for reconsideration of the assessee's specific issue of suffering losses and the sale being necessitated due to those losses. Issue 2: In ITA No. 1782 of 2009, the court addressed the computation of book profits including the consideration from the sale of Boyce Estate under Section 115JB. The Tribunal had ruled in favor of the assessee, treating the sale as capital gains under Section 50B. The court found no need to leave the alternate contention open and upheld the Tribunal's finding that the sale was not of a going concern but specific assets, hence not a slump sale. The court declined to answer the question, finding no question of law. Issue 3: The court answered the question of disallowance of employees' contributions to Provident Fund and Welfare Fund under Section 36(1)(va) against the assessee, following the precedent set in Popular Vehicles and Service (P) Ltd. v. Commissioner of Income Tax. Issue 4: The court upheld the Tribunal's decision that the sale of Boyce Estate was not a slump sale and thus not taxable under Section 50B. The Tribunal's detailed examination of the agreement and allocation of consideration to specific assets was found to be correct. Issue 5: The court upheld the Tribunal's finding that the loss on the sale of shares of a subsidiary company was a capital loss, not a speculation loss, as the shares were held as investments. The Tribunal's factual determination was found unassailable, raising no question of law. Issue 6: Following the decision on the treatment of the loss on the sale of shares, the court upheld the Tribunal's decision allowing the set off of long-term capital gains on the sale of land with long-term capital loss on the sale of shares. Issue 7: In ITA No. 1776 of 2009, the court upheld the Tribunal's decision deleting the addition made by the AO under Sections 37 and 14A for re-plantation expenses, following the Supreme Court's decision in Commissioner of Income Tax v. Essar Teleholdings Ltd., which held Section 14A applicable only from the assessment year 2007-08. Issue 8: The court upheld the Tribunal's decision treating the consideration received on the sale of shade trees as long-term capital loss entitled to be carried forward, finding no question of law arising from the Tribunal's factual determination. Issue 9: In ITA No. 16 of 2013, the court upheld the Tribunal's decision interfering with the Commissioner's order under Section 263 on various issues: - The sale of old rubber trees was not subject to Central Income Tax, following the Division Bench judgment in CIT v. Thiruvambadi Rubber Company. - Indexation on sale proceeds of Grevellea trees was correctly allowed as the issue was subject to appeal, precluding the Commissioner's suo motu power under Section 263. - Disallowance under Section 14A was applicable only from 2007-08. - Share transfer expenses were correctly treated as revenue expenditure per CBDT instructions. The court rejected ITA No. 16 of 2013, upholding the Tribunal's order. All parties were left to bear their respective costs.
|
