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2023 (5) TMI 25 - AT - Income TaxRecomputation of capital gains - Considering lower value of consideration for the sale of equity shares than the consideration initially agreed among the parties - HELD THAt - As when the title of the subject land itself was found to be not clear and shrouded by litigation, the purchaser not only initiated the legal action against the seller of the land but also, on the other hand, entered into a Settlement Deed to close the transaction of sale of shares of Shivalik Land Development Ltd at Rs.25 lakh, which was already paid to the assessee. No other allegation has been made by the Revenue in the present case. Revenue has not doubted any leg of the transaction, and their plea is only limited to the revaluation of shares. There is also nothing to prove that the entire consideration of Rs.10 crore was received by the assessee and therefore the capital gains as initially offered by the assessee be upheld. Thus we find no infirmity in the impugned order in directing the AO to recompute the capital gains on the transfer of shares of Shivalik Land Development Ltd by taking the total sale consideration at Rs.25 lakh. As a result, the grounds raised by the Revenue are dismissed.
Issues Involved:
1. Condonation of Delay in Filing Appeal 2. Re-computation of Capital Gains Summary: Condonation of Delay in Filing Appeal: The present appeal, filed by the Revenue, was delayed by 130 days. The learned Departmental Representative (DR) argued that the limitation period for filing the appeal was extended until 29/05/2022 due to an order by the Hon'ble Supreme Court during the Covid period. The appeal was filed on 27/05/2022. The learned Authorised Representative (AR) did not object to the condonation of delay. Consequently, the Tribunal concluded that the appeal was filed within the extended time and proceeded to decide on the merits. Re-computation of Capital Gains: The Revenue challenged the learned Commissioner of Income Tax (Appeals) [CIT(A)]'s decision to compute capital gains by considering Rs. 25,00,000 as the total consideration for the sale of equity shares, as opposed to Rs. 10,00,00,000 shown by the assessee in its return. The assessee, engaged in real estate, had initially declared a total income of Rs. 22,98,44,928 for the assessment year 2009-10, including capital gains from the transfer of shares of its wholly-owned subsidiary, Shivalik Land Development Ltd., at Rs. 10 crore. The learned CIT(A) had allowed the assessee's appeal, directing the AO to compute the capital gains based on a revised sale consideration of Rs. 25 lakh, as per a Settlement Deed and Supplementary Share Purchase Agreement. The Revenue contended that the learned CIT(A) failed to examine how the sales consideration was reduced from Rs. 10 crore to Rs. 25 lakh and argued that a post facto event cannot reduce the sales consideration. The Tribunal reviewed the sequence of events and documents, including the initial Share Purchase Agreement, Mortgage Deed, Settlement Deed, and Supplementary Share Purchase Agreement. It was found that the title of the land held by Shivalik Land Development Ltd. was not clear and was under litigation, leading to the revision of the sale consideration. The Tribunal noted that the AO's allegations lacked basis and that the assessee had adequately explained the reduction in sale consideration. The Tribunal concluded that there was no evidence to prove that the entire consideration of Rs. 10 crore was received by the assessee. Thus, the Tribunal found no infirmity in the learned CIT(A)'s order and dismissed the Revenue's appeal, directing the AO to recompute the capital gains by considering the total sale consideration of Rs. 25 lakh. Order Pronounced: The appeal by the Revenue was dismissed, and the order was pronounced in the open Court on 31/03/2023.
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