9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 885 - AT - Income TaxCorrect head of income - Addition of severance compensation - Addition u/s. 56(2)(vii) - maintainability of the appeal - second round of proceedings also accomplished - Whether receipt in question could neither be charged to tax under the head 'Profits Gains of Business' u/s. 28(iia) of the Act nor by way of 'capital gains' u/s.45 - Whether second situation did exist on the facts so as to invoke the provisions of Section 28(iia) or Section 45? - HELD THAT - This Tribunal does not have the power of enhancement nor can it take back the benefit already granted by the AO to the assessee. As stated earlier, the AO sought to tax only sum to the extent of ₹ 174,20,35,742/- u/s. 56(2)(vii) of the Act and the same was again reiterated in the remand report furnished before the ld. CIT(A) - this ground raised by the Revenue seeking to tax the entire sum of ₹ 200 crores cannot be entertained at this stage before us. Moreover, this ground also contradicts the Form No. 36 filed by the Revenue. Upon being afforded the opportunity to explain the maintainability of the appeal, the Revenue filed a note dated 30/10/2018 along with revised grounds of appeal but they stood by their Form 36 which was filed on 06/11/2019. In Column 7 of the said Form, the Revenue has clearly stated that the disputed addition is ₹ 174,20,35,742/- and not ₹ 200 crores as claimed in this ground (i). For the reasons as aforesaid, this ground of appeal is held to be not maintainable. Revenue without prejudice to one another seems to be an attempt to make fishing and roving explorations to bring to tax the compensation under several Sections of the Act. Having had two opportunities i.e., of the first second round of proceedings, the AO/Revenue is still not clear as to under which specific Section does it seek to tax the compensation received by the assessee. Revenue has raised several sections to tax such compensation inter alia including such provisions which was never the case of the AO as well. It appears that the Revenue wants an academic debate before this Tribunal and explore the possibility of taxing the compensation under each of the five specified heads of income. As held Revenue cannot travel beyond the case of the AO. He is required to restrict himself to the averments made by the AO and support or strengthen it, but nothing beyond. CIT, DR's averment that, this stand taken by the Revenue in the first round of appeal were the private and personal views of the counsel appearing on their behalf and that this statement was made without seeking their approval and for that reason they are legally permitted to raise this issue again before this Tribunal. If that had been the case that the Revenue was not agreeable to this stand, nothing prevented them from agitating this before the higher appellate forum being the Hon'ble Calcutta High Court or file a Miscellaneous Application u/s. 254(2) in this regard. Admittedly, the Revenue did not pursue either of the remedies available to them. Consequentially therefore, this stand of the Revenue before the Tribunal that the compensation was not taxable u/s. 56(2)(vii) has since attained finality and the legal effect is that the AO's order charging to tax, the receipt u/s. 56(2)(vii) also goes. Hence, the pith and substance that one can draw from this event, that consequent to the order dated 16/11/2018 passed by this Tribunal in the first round of appeal proceedings, against which no appeal was preferred by the Revenue, there is no addition in existence u/s. 56(2)(vii) of the Act of ₹ 174.20 crores in the hands of the assessee for the relevant AY 2014-15. As rightly held by the ld. CIT(A), since the Revenue had conceded this ground before this Tribunal, the AO could not have agitated this issue again in the remand proceedings and that the stand on this issue had become final. Estoppel indeed applies on these facts. For the reasons aforesaid, we agree with the contention of the ld. AR of the assessee that ground (ii) taken by the Revenue seeking to tax the compensation u/s. 56(2)(vii) is unsustainable in law and hence is not being entertained. Taxability of compensation u/s. 28(iia) or 45 - In the facts of the present case also, the Revenue has clearly failed to lay down whether the second situation did exist on facts so as to test the provisions of Section 28 or Section 45 of the Act. Instead the Revenue's case before the ld. CIT(A) continued to be the same as the original assessment order i.e. the compensation was taxable u/s. 56(2)(vii) of the Act. Hence, without laying down the foundational facts, the Revenue cannot be permitted to re-urge taxability under Section 28 or Section 45 of the Act. Revenue's claim of taxing such receipt u/s. 17(3)/56(1) was neither their case in the original assessment order or the first round of appeal proceedings or in the second round before the ld. CIT(A). These grounds raised by AO/Revenue shows that they have not still made up their mind as to which section of the Act is attracted in the facts of this case and exposes the lack of application of mind. For the reasons as set out in Paras 11.2 to 11.4 above, these grounds raised by the Revenue being alien to the case of the AO is held to be not maintainable. Addition made in the original assessment order u/s. 56(2)(vii) ceased to exist consequent to the order passed by this Tribunal in the first round on 16/11/2018. Hence, there was no surviving addition in existence to the returned income of the assessee. No further appeal was preferred by the Revenue on this aspect and therefore this particular issue had crystallised and attained finality. Further even before the ld. CIT(A) in the second round, it was never the case of the AO that the second situation prevailed or that addition was required to be made under Section 28(iia)/45/17(3)/56(1) of the Act. Instead the AO remained firm on the stand taken in the original assessment order u/s. 56(2)(vii) of the Act. Neither did he brought any material/fact through his remand-report called for by the Ld. CIT(A) in the second round to facilitate/make-out a factual basis for the Ld. CIT(A) to bring the receipt in the teeth of the charging section under the Act or under Section 28/45/17(3)/56(1) of the Act. Thus we note that the AO failed to bring any facts on record in front of the Ld. CIT(A) second round to fit in the second situation as stated by him in the assessment order (supra) and for which precise reason this Tribunal remitted the matter back to Ld. CIT(A) who enjoyed coterminous powers as that of AO. In the absence of material/facts as required to bring the receipt in the teeth of section 28(iia) or under section 45 of the Act, the Ld. CIT(A) didn't made any addition or raised any demand consequent thereto was raised upon the assessee. Even Column (7) of Form 36 filed by the Revenue shows that they are disputing addition which was made u/s. 56(2)(vii) of the Act (which has already been conceded and given up in first round) and not the purported sum of ₹ 200 crores under Section 28(iia)/45/17(3)/56(1) of the Act. This shows the self contradictory stand of the AO/Revenue - Decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Maintainability of the Departmental appeal. 3. Taxability of severance compensation received by the assessee. 4. Applicability of Section 56(2)(vii) of the Income-tax Act. 5. Applicability of Section 28(ii)(a) and Section 45 of the Income-tax Act. 6. Jurisdiction and powers of the Tribunal in relation to the appeal. Detailed Analysis: 1. Delay in Filing the Appeal: The appeal filed by the Revenue had a delay of two days. The Tribunal condoned this delay, allowing the appeal to proceed. 2. Maintainability of the Departmental Appeal: The assessee challenged the maintainability of the Departmental appeal. The Tribunal examined the background facts and earlier appellate orders, particularly the order dated 16/11/2018. The Tribunal noted that the Revenue had conceded the ground of taxability under Section 56(2)(vii) in the first round and did not press this ground. Consequently, the Tribunal held that this issue had attained finality and could not be re-agitated by the Revenue. 3. Taxability of Severance Compensation: The assessee received severance compensation of ?200 crores from P&G Netherlands, claimed as a capital receipt not exigible to tax. The AO initially taxed ?174,20,35,742/- under Section 56(2)(vii) of the Act, attributing it to group entities’ shareholding. The Tribunal, in the first round, set aside the issue to the CIT(A) to examine the applicability of Section 28(ii)(a) and Section 45 of the Act. 4. Applicability of Section 56(2)(vii) of the Income-tax Act: The AO's original assessment taxed the compensation under Section 56(2)(vii). However, during the first round of appeal, the Revenue conceded that this section was not applicable. The Tribunal noted that this concession had attained finality, and the AO could not revert to this section in the remand proceedings. 5. Applicability of Section 28(ii)(a) and Section 45 of the Income-tax Act: The Tribunal remitted the matter to the CIT(A) to examine the applicability of these sections. The AO, in the remand report, did not bring any new material to support the applicability of these sections. The CIT(A) concluded that the compensation could not be taxed under these sections. The Tribunal held that the Revenue could not now seek to tax the compensation under these sections without establishing the foundational facts. 6. Jurisdiction and Powers of the Tribunal in Relation to the Appeal: The Tribunal emphasized that it does not have the power to enhance the assessment or take back benefits granted by the AO. The Tribunal can only adjudicate on the issues raised in the appeal and cannot go beyond the scope of the appeal. The Tribunal noted that the Revenue’s grounds of appeal were not maintainable as they sought to re-agitate issues already settled or introduce new grounds not raised by the AO. Conclusion: The Tribunal dismissed the Revenue’s appeal as not maintainable, reiterating that the issues of taxability under Section 56(2)(vii) had attained finality, and the Revenue could not introduce new grounds or re-agitate settled issues. The Tribunal emphasized the importance of adhering to the scope of the appeal and the limitations on its powers to enhance assessments or take back benefits granted by the AO.
|
