Pr. Commissioner Of Income Tax-2 v. Nathuram Ramnarayan Pvt. Ltd

dik IN THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. INCOME TAX APPEAL NO. 1314 OF 2016 Pr. Commissioner of Income Tax-2...Appellant vsNathuram Ramnarayan Pvt. Ltd. ...Respondent. ..... Mr Suresh Kumar for the Appellant. Mr Jitendra Singh for the Respondent. ..... CORAM : AKIL KURESHI & B.P.COLABAWALLA, JJ. FEBRUARY 11, 2019. P.C. : This appeal is filed by the Revenue challenging the Judgment of the Income Tax Appellate Tribunal raising the following questions of law for our consideration “(a)“Whether, on the facts and circumstances of the case and in law, the Hon'bleTribunal was justified in deleting the addition of Rs.3 Crores on sale oftenancy right by Rani K Poddar ?Tribunal was justified in deleting the addition of Rs.3 Crores on sale oftenancy right by Rani K Poddar ? (b)Whether, on the facts and circumstances of the case and in law, the Hon'bleTribunal is correct in restricting the ALV at Rs.1,55,239/- as against the2,04,284 determined by the Assessing Officer ?Tribunal is correct in restricting the ALV at Rs.1,55,239/- as against the2,04,284 determined by the Assessing Officer ? (c)Whether, on the facts and circumstances of the case and in law, the Hon'bleTribunal is correct in restricting ALV at Rs.1,56,000/- as against the Rs.11.70 lakh determined by the Assessing Officer?”Tribunal is correct in restricting ALV at Rs.1,56,000/- as against the Rs.11.70 lakh determined by the Assessing Officer?” 2The appeal relates to the respondent - assessee's return for the Assessment Year 2007-08.The assessee is a private limited company and owned a building which was occupied by severaltenants, including one Rani Poddar, who was one of the Directors ofthe assessee - company. Remaining directors were the family Pg 1 of 3 6.itxa.1314.2016.db.doc members of Rani Poddar. Rani Poddaroccupied a portion of thebuilding in question. When the assessee sold the said immovableproperty, the tenants were paid certain compensation in lieu of thetenancy rights. Rani PoddarreceivedRs.3 Crores. Question No.1arise out of the action of the A.O. to hold that such payment by thecompany to its director was a colourable device to avoid the tax. TheTribunal, however, examined the facts on record and came to theconclusion that Rani Poddarwaspaid at a rate not higher than othertenants. A.O. was, therefore, not justified in discarding thetransaction as a colourable device merely because it was atransaction between the company and its director. More significantlythe Tribunal recorded that the Director Rani Poddarhad offered suchconsideration to Capital Gains and in fact paid the tax on such gain ata rate higher than the assessee company in the present case wouldhave paid. 3In facts of the present case we do not find that theTribunal committed any error. Two significant factors noted above arethat Rani Poddarreceived no amount higher than at the rate at whichthe other tenants were paid and more significantly offered the entireconsideration to tax as their Capital Gain at the rate higher than theassessee company would have been asked to pay tax on the same Pg 2 of 3 4Question No.2 relates to the action of the A.O. in revisingthe Annual Letting Value ("A.L.V." for short) of the property occupiedby Rani Poddar from Rs.1,55,239 to Rs.2,04,284/-. The A.O. treatedthe case of Rani Poddardifferently from other tenants and appliedthe inflation rate on A.L.V. of 4 % per annum. The Tribunal by theimpugned judgment restricted the A.L.V. inter alia observing that theincrease of 4 % could have been done only by the owner of the buildingand not by the A.O. and further that there is no occasion fordifferentiating case of Rani Poddarthan the other tenants. Noquestion of law, therefore, arises. 5The third question stands on the same footing on that ofthe second question, and therefore, this question is not discussedfurther. No question of law, therefore, arises. 5The third question stands on the same footing on that ofthe second question, and therefore, this question is not discussedfurther. No question of law, therefore, arises. 6In these circumstances, the Income Tax Appeal isdismissed. No order as to costs. (B.P.COLABAWALLA, J.) (AKIL KURESHI, J.) Pg 3 of 3