Ita/247/2018 Of Devon Plantations And Industries Ltd v. The Dy. Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 22 DAY OF MARCH 20271| PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE M.G.S. KAMAL| LT.A. NO.247 OF ZO1L8 BETWEEN: DEVON PLANTATIONS AND INDUSTRIES LITD.,NO.29, EMPIRE INFANTRY| INFANTRY ROAD, SHIVAJI NAGAR.BENGALURU-560001 REP. BY ITS MANAGING DIRECTOR|MS. ROSHIN VARGHESE. ... APPELLAN[. (BY SRI. THOMAS VELLAPALLY, ADV.,). AND: 1.|THE DY. COMMISSIONER OF INCOME TAX. CIRCLE 11(1), C.R. BUILDING QUEENS ROAD, BENGALURU-S60001.. 2 |THE COMMISSIONER OF INCOME TAX.C.R. BUILDING, QUEENS ROADBENGALURU-56000 1.C.R. BUILDING, QUEENS ROADBENGALURU-56000 1. .., RESPONDENTS (BY SRI. E.I. SANMATHI, ADV., FOR R1 & R2) THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX)ACT 1961, ARISING OUT OF ORDER DATED 17.11.2017 PASSED|IN|ITANO.1940/BANG/2016.(ANNEXURE-G),FOR.THEASSESSMENT YEAR 2007-08, PRAYING TO FORMULATE THE! SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. ALLOW THE|APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE [INCOMETAXAPPELLATETRIBUNAL,|'C' BENCH,|BANGALORE,PRONOUNCEDON17.11.2701 IN|TTA!NO.1940/BANG/2016.(ANNEXURE-G) TO THE EXTENT QUESTIONED HEREIN. PASS|SUCH OTHER OR FURTHER ORDERS AS THIS HON BLE COURT|DEEMSFITTO!GRANTON.THE|FACTSAND|IN|THE|CIRCUMSTANCES OF THE CASE AND IN THE INTERESTS OF|JUSTICE AND EQUITY. THIS I.T.A. COMING ON FOR’ HEARING, THIS’ DAY, | ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax) Act, 1961 (hereinafter referred to as the Act for short) has been filed against the judgment dated 17.11.2017.passed by the Income Tax Appellate Tribunal. | 2. The appeal was admitted by a bench of this) Court vide order dated 09.11.2018 on the followingsubstantial questions of law: “(1) Whether the appellant was entitled to aajust the indexed cost of acquisitionunder the second proviso to Section 48 of the Income Tax Act, 1961, while computingcapital gains on the sale of shade treesduring the assessment year 2007-08? 2. Whether the findings of the Tribunal“that it was incumbent on the appellant toallege during the assessment proceedingsthat the trees which were now sold were Inexistence prior to 01.04.1981” and “no suchmaterial / evidence was brought on recordbefore the Tribunel or the lower authorities”is perverse, contrary to the record andillegal?” 3.Facts leading to filing of this appeal brieflystated are that the assessee is a Company engaged in.tea/coffee business and owns estates in the State ofKarnataka. For the assessment year 2007-08, thebusiness income of the assessee was worked out as perRule 7B and Rule 8 of the Income Tax Rules. Theassessee had declared short term capital gain ofRs./78,412/- from sale of shares and long term capitalloss on coffee futures exchange of Rs./7,200/-. The assessee also declared loss of Rs.60,48,245/- under thehead ‘long term capital loss’ on sale of timber. Afteradjusting long term capital loss on the sale of timber,the net loss of the assessee was Rs.59,/7,032/-. 4. During the course of the _ re-assessmenproceedings, it was found that the assessee was wronglyreporting income from capital gains, as the assessee had.adopted wrong methods of indexation of sale of timber. ©The case was re-opened for assessment. The AssessingAuthority, by an order dated 30.09.2014, completed theassessment and held that 30% of the total saleconsideration should be taken as capital gain for the.Assessment year 2007-2008 and Assessment year2008-27009. | 5.|The.Assessee filedappealsbeforetheCommissioner of Income Tax (Appeals), who by orderdated 10.08.2016, dismissed the appeals preferred bythe Assessee in respect of the Assessment years 2007- 4. During the course of the _ re-assessmenproceedings, it was found that the assessee was wronglyreporting income from capital gains, as the assessee had.adopted wrong methods of indexation of sale of timber. ©The case was re-opened for assessment. The AssessingAuthority, by an order dated 30.09.2014, completed theassessment and held that 30% of the total saleconsideration should be taken as capital gain for the.Assessment year 2007-2008 and Assessment year2008-27009. | 5.|The.Assessee filedappealsbeforetheCommissioner of Income Tax (Appeals), who by orderdated 10.08.2016, dismissed the appeals preferred bythe Assessee in respect of the Assessment years 2007- 2008 and 2008-2009. The assessee thereupon filedappeals before the Income Tax Appellate Tribunal. TheTribunal, by a common order dated 1/7.11.201/7dismissed the appeals preferred by the assessee andinteralia held that the assessee had no case on the issuethat the trees in question were planted / acquired priorto 1981. 6. The learned counsel for the assessee submitted.that the finding recorded by the Tribunal in this regard isperverse, as the same is based on surmises andconjectures. It is further submitted that the matterdeserves to be remanded to the Assessing Officer, asthe issue requires factual adjudication afresh. InSupport of the aforesaid submission, learned counselplaces reliance on a decision of this court in the case ofTATA COFFEELIMITED.VS,JHEJOINTCOMMISSIONER OF INCOME TAX (2012) 211TAXMAN 7 (Kar). 7. Learned counsel! for the Revenue submitted thatall the contentions of both the parties may be kept openand the Assessing Officer may be directed to re-do theassessment, in accordance with law. 8. We have considered the submissions made on.both sides and have perused the record. 9. After perusal of the record, in our considered|opinion, the factual controversy between the partiesrequires adjudication afresh, in the light of the materialavailable on record. The impugned orders passed by the.Tribunal / Commissioner of Income Tax (Appeals) aswell as by the Assessing Officer are hereby quashed. —The matter is remitted to the Assessing Officer to make.a fresh assessment again. | It is needless to state that all the contentions of|the parties to be kept open. Therefore, for the afore-|mentioned reasons, it is not necessary for us to answerthe substantial questions of law framed in this appeal. — �6�:.3�83054:��:.3�122314�/0�7/02;037�;<�C/:.�:.3� 1<;8301/7�7/839:/;6�� ��� ����������� ���������������������� �����������