Itxa/2439/2009 Of The Commissioner Of Income Tax - 20 Mumbai v. Pankaj S. Majithia

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2439 OF 2009 The Commissioner of Income Tax ..Appellant. V/s. Pankaj S. Majithia ..Respondent. Ms. Suchitra Kamble for appellant. None for respondent. CORAM : DR. D.Y.CHANDRACHUD AND J.P.DEVADHAR, JJ.DATED : 22ND FEBRUARY, 2010 P.C. :- 1.The following questions of law have been formulated in the appeal by the Revenue against the order of the I.T.A.T. dated 13th January, 2009:- a)Whether on the facts and circumstances of the case and in law, the ITAT is justified in deleting the addition of forfeited advance of Rs.90,85,000/- for A.Y. 2000-01 to the income of the assessee by holding that the transaction as genuine transaction ?is justified in deleting the addition of forfeited advance of Rs.90,85,000/- for A.Y. 2000-01 to the income of the assessee by holding that the transaction as genuine transaction ? b)Whether on the facts and circumstances of the case and in law, the ITAT is justified in overlooking the dubious way in tax planning as there is no forfeiture clause in the original agreement but the same was inserted by way of supplementary agreement ?is justified in overlooking the dubious way in tax planning as there is no forfeiture clause in the original agreement but the same was inserted by way of supplementary agreement ? c)Whether on the facts and circumstances of the case and in law, the ITAT is justified in not appreciating that the transaction in this case is a colourable device between the assessee and the company in which the assessee was Director to defraud the Revenue ?is justified in not appreciating that the transaction in this case is a colourable device between the assessee and the company in which the assessee was Director to defraud the Revenue ? d)Whether on the facts and circumstances of the case and in law, the ITAT is justified in overlooking that there was no real intentions of the assessee to transfer the concerned asset ?is justified in overlooking that there was no real intentions of the assessee to transfer the concerned asset ? 2.From the narration of the facts contained in the order of the Tribunal, it appears that the assessee and the members of his family, claiming as co-owners of certain land, entered into a sale agreement on 21[st ]September, 1998 for a consideration of Rs.19.53 crores, out of which the assessee received Rs.90.85 lakhs as his share of advance. As the purchaser could not fulfill the contractual commitment, the advance was forfeited. Certain arbitration proceedings took place in which an award was passed in favour of of the assessee on 5th June, 2000. The award is stated to have been upheld by a Single Judge of this Court on 23rd January, 2001 against which an appeal is pending. 3.The CIT (A), held that, forfeiture of advance should not be treated as business income and in holding that relied upon the decision of the ITAT in the case of two co-owners of the assessee. The Tribunal has in paragraph 5 of its judgment referred to the decision of a coordinate Bench in the case of Shantikumar D. Majithia. In that case, relying upon a judgment of the Supreme Court in Travancore Rubber Co. Ltd. V/s. CIT[1], the Tribunal held that forfeiture of earnest money and advance by the vendor constitute a capital receipt. In the present case, apart from relying upon the judgment of the coordinate Bench in the case of Shantikumar D. Matjithia, the Tribunal has noticed that the same view was taken by another Bench of the Tribunal in the case of another co-owner Sudhir Majithia. The Tribunal has in the circumstances, followed the decisions of its coordinate Benches noting that no contrary material is brought to its notice. circumstances, followed the decisions of its coordinate Benches noting that no contrary material is brought to its notice. 4.During the course of hearing of this appeal, counsel appearing on behalf of the Revenue has placed on record a copy of the decision dated 19th January, 2005 of the Tribunal in the case of Shri Shantikumar D.Majithia V/s. the Asstt. Commissioner of Income Tax [ITA NO.8312/Mum/2004] pertaining to assessment year 1999-2000. Counsel for the Revenue has stated that no appeal has been filed by the Revenue against the decision of the Tribunal. We may note that during the course of hearing in this proceeding, no submission has been raised on merits. No effort has been made to urge before the Court any submission which would warrant this Court to draw a different conclusion nor any effort has been made to point out any distinguishing features in this case. Similarly, no reasons have been assigned at all before this Court as to why, having accepting the decision of the Tribunal in the case of two co-owners, the Revenue has filed an appeal in this case. We do not find it to be a fit and proper case to entertain this appeal, since no substantial question of law would arise. The appeal is, therefore, dismissed. (J.P.DEVADHAR, J.) (DR. D.Y.CHANDRACHUD, J.)