2021 (11) TMI 931 - HC - Income Tax

Capital gain - land in dispute to M/s ESS ESS Metals and Electricals on lease for 99 years in the year 1975, and subsequent to the death of Jeewan Lal Virmani, his children selling the same to the assessee under three sale deeds on different dates - sale consideration for transfer of respective shares in the property - Whether parties were closely related and there was no proper basis for settlement of sale consideration between them and it was done with a view to evade payment of tax? - HELD THAT - CIT(A) and the ITAT have given concurrent findings on the above. It is also not denied that M/s ESS ESS Metals and Electricals held a lease for 99 years with respect to the land and the vendee has paid consideration of ₹ 17 Crores for cancellation of the said lease. In the present case, the vendor did not have an unencumbered right over the land and M/s ESS ESS Metals and Electricals admittedly had a perpetual leasehold right over the land, which right was also extinguished under the Sale Deed. The bifurcation of the sale consideration was not challenged by the Assessing Officer. In fact, the Assessing Officer took ₹ 18 crores received by the respondent as the Sale Consideration. This was clearly erroneous as the Sale Consideration was ₹ 35 crores, however, was bifurcated between two right-holders over the land. The transaction being collusive was not the case of the Assessing Officer. Keeping in view the concurrent findings of fact by the CIT(A) and the Tribunal, this Court is of the view that the said findings should not be lightly interfered with. In fact, the Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs), 1999 (8) TMI 1008 - SUPREME COURT has reiterated that under Section 100 of the Code of Civil Procedure, 1908, the jurisdiction of the High Court to interfere with the orders of the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Supreme Court in State of Haryana Ors. vs. Khalsa Motor Limited Ors.,. 1990 (8) TMI 416 - SUPREME COURT has held that the High Court was not justified in law in reversing, in second appeal, the concurrent finding of the fact recorded by both the Courts below. The Supreme Court in Hero Vinoth (Minor) vs. Seshamma 2006 (5) TMI 478 - SUPREME COURT has also held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. It has also held that there is a difference between question of law and a substantial question of law .

Summary

Issues:
Challenge to ITAT order dismissing appeal against assessment order invoking Section 50C of the Income Tax Act, 1961. Questions of law on settlement of sale consideration and compliance with Rule 46A of Income Tax Rules, 1962.

Analysis:
1. The appeal challenged an order by the Income Tax Appellate Tribunal (ITAT) dismissing the appellant's appeal against an assessment order invoking Section 50C of the Income Tax Act, 1961. The appellant raised questions of law regarding the settlement of sale consideration and compliance with Rule 46A of the Income Tax Rules, 1962.

2. The case involved a property originally owned by late Shri Jeewan Lal Virmani, subsequently transferred to the respondent through sale deeds by his legal heirs. The property was then sold to M/s HH Buildtech Private Ltd. for &8377; 35 Crores, with a portion of the sale consideration received by the respondent and the rest by M/s ESS ESS Metals and Electricals.

3. The Assessing Officer initially added an amount to the respondent's income under Section 50C, claiming the sale consideration was below the Circle Rate. However, the Commissioner of Income Tax (Appeals) (CIT(A)) allowed the appeal, stating that the Circle Rate was not applicable as the actual sale consideration was &8377; 35 Crores.

4. The ITAT upheld the CIT(A) order, emphasizing that both the respondent and M/s ESS ESS Metals and Electricals had rights over the property, with the respondent not being the sole owner. The ITAT highlighted that the Assessing Officer erred in ignoring the leasehold rights held by M/s ESS ESS Metals and Electricals.

5. The appellant contended that the entire sale consideration should have been disclosed as income by the respondent, with a deduction claimed for the amount paid to M/s ESS ESS Metals and Electricals. However, the Court found no merit in this argument.

6. The Court noted that the Assessing Officer's decision to consider only a portion of the sale consideration was erroneous, as the actual consideration was &8377; 35 Crores, split between the two right-holders. The Court upheld the concurrent findings of fact by the CIT(A) and ITAT, citing precedents that limit interference with factual findings.

7. Ultimately, the Court found no perversity in the CIT(A) and ITAT's findings, leading to the dismissal of the appeal challenging the ITAT order. No arguments were presented on the second question of law proposed in the appeal.