Wp(C)/7556/2014 Of C.t.narayanan v. The Commissioner Of Income Tax (Appeals)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 31ST DAY OF MARCH 2014/10TH CHAITHRA, 1936 WP(C).No. 7556 of 2014 (T) -------------------------------------- PETITIONER(S): ---------------------- C.T.NARAYANAN, AGED 81 YEARS, S/O. THUPRAKUTTY, CHAKKARATHU VEEDU, NORTH KULAMAKKAL, M.O. WARD, ALAPPUZHA DISTRICT. BY ADVS.SMT.M.S.KIRAN SRI.N.MANOJ KUMAR RESPONDENT(S): ------------------------- 1. THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI-682011. 2. THE INCOME TAX OFFICER, WARD NO.3, ALAPUZHA, INCOME TAX OFFICE, AARATTUKULAKKARA COMPLEX, OPP. GENERAL HOSPITAL, AN PURAM, ALAPUZHA-688011. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31-03-2014, ALONG WITH WPC. 7637/2014 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 7556 of 2014 (T) -------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS ------------------------------------- P1. TRUE COPY OF THE MEMORANDUM OF UNDERSTANDING DT. 2-1-2009 ENTERED INTO BETWEEN CTN AGRO & COIR PVT. LTD. THE CMPANY AND ITSSHARE WITH M/S. TWINKLE HOSPITALITY PVT. LTD. & ORS.ENTERED INTO BETWEEN CTN AGRO & COIR PVT. LTD. THE CMPANY AND ITSSHARE WITH M/S. TWINKLE HOSPITALITY PVT. LTD. & ORS. P2. TRUE COPY OF THE SALE PURCHASE AGREEMENT DATED 22-12-2009 ENTERED INTO BETWEEN CTN AGRO & COIR PVT. LTD. THE COMPANY AND ITS SHARE WITH M/S. TWINKLE HOSPITATLITY PVT. LTD. AND ORS.ENTERED INTO BETWEEN CTN AGRO & COIR PVT. LTD. THE COMPANY AND ITS SHARE WITH M/S. TWINKLE HOSPITATLITY PVT. LTD. AND ORS. P3. TRUE COPY OF NOTICE DATED 11-1-2013 ISSUED BY THE 2ND RESPONDENT P4. TRUE COPY OF REPLY DATED 6-2-2013 SUBMITTED BY THE PETITIONER. P5 TRUE COPY OF THE NOTICE DATED 8-3-2013 OF THE 2ND RESPONDENT. P6. TRUE COPY OF THE REPLY DATED 14-3-2013 SUBMITTED BY THE PETITIONER.PETITIONER. P7. TRUE COPY OF NOTICE DATED 14-3-2012 OF THE 2ND RESPONDENT. P8. TRUE COPY OF THE VALUATION REPORT DATED 3-11-2008 DONE BY M/S. N.N.MULE & ASSOCAITESMULE & ASSOCAITES P9. TRUE COPY OF THE REPLY DATED 20-3-2013 SUBMITTED BY THE PETITIONER.PETITIONER. P10. TRUE COPY OF LETTER DATED 26-34-2013 M/S. CITRUS RETREATS KERALA PVT. LTD.,PVT. LTD., P11. TRUE COPY OF THE RELEVANT PAGE OF THE ACKNOWLEDGEMENT BOOK EVIDENCING THE RECEIPT OF LETTER FROM M/S. CITRUS LTD. BY THE 2ND RESPONDENT ON 28-3-2013.EVIDENCING THE RECEIPT OF LETTER FROM M/S. CITRUS LTD. BY THE 2ND RESPONDENT ON 28-3-2013. P12. TRUE COPY OF THE ASSESSMENT ORDER DATED 25-3-2013 PASSED BY THE 2ND RESPONDENT.2ND RESPONDENT. P12A. TRUE COPY OF THE ASSESSMENT ORDER DATED 27-3-2013 PASSED BY THE 2ND RESPONDENT.2ND RESPONDENT. P13. TRUE COPY OF THE APPEAL FOR ASSESSMENT YEAR 2009-2010 FILED BEFORE THE 1ST RESPONDENT.BEFORE THE 1ST RESPONDENT. P13A. TRUE COPY OF THE APPEAL FOR ASSESSMENT YEAR 2010-2011 FILED BEFORE THE 1ST RESPONDENT.BEFORE THE 1ST RESPONDENT. P14. TRUE COPY OF APPLICATION OF STAY FOR ASSESSMENT YEAR 2009-2010 FILED BEFORE THE 1ST RESPONDENT.FILED BEFORE THE 1ST RESPONDENT. PJ WP(C).No. 7556 of 2014 (T) -------------------------------------- P14A. TRUE COPY OF APPLICATION OF STAY FOR ASSESSMENT YEAR 2010-2011 FILED BEFORE THE 1ST RESPONDENT.FILED BEFORE THE 1ST RESPONDENT. P15. TRUE COPY OF THE JUDGMENT OF THE HIGH COURT OF KERALA, DATED 20-8-2013 IN WPC NO. 20509 OF 2013.20-8-2013 IN WPC NO. 20509 OF 2013. P16. TRUE COPY OF THE ORDER DATED 18-2-2014 OF THE 1ST RESPONDENT. RESPONDENT(S)' EXHIBITS --------------------------------------- NIL. / TRUE COPY / P.S. TO JUDGE PJ P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 --------------------------------------- Dated this the 31[st] day of March, 2014. JUDGMENT PJ WP(C).No. 7556 of 2014 (T) -------------------------------------- P14A. TRUE COPY OF APPLICATION OF STAY FOR ASSESSMENT YEAR 2010-2011 FILED BEFORE THE 1ST RESPONDENT.FILED BEFORE THE 1ST RESPONDENT. P15. TRUE COPY OF THE JUDGMENT OF THE HIGH COURT OF KERALA, DATED 20-8-2013 IN WPC NO. 20509 OF 2013.20-8-2013 IN WPC NO. 20509 OF 2013. P16. TRUE COPY OF THE ORDER DATED 18-2-2014 OF THE 1ST RESPONDENT. RESPONDENT(S)' EXHIBITS --------------------------------------- NIL. / TRUE COPY / P.S. TO JUDGE PJ P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 --------------------------------------- Dated this the 31[st] day of March, 2014. JUDGMENT The petitioners in these cases are mainly aggrieved of thecondition imposed by the 1[st] respondent as per the impugnedorder, whereby 25% of the disputed liability is directed to besatisfied, so as to avail the benefit of interim stay, during thependency of appeals. 2. The case of the petitioners is that, CTN Agro & Coir Pvt.Ltd. was floated with forty thousand paid up shares of the valueof Rs.10/- per share. According to the petitioners, who are havingthe specified extent of shares, the Company purchased nearly 5.6Acres of land as per the Sale Deed dated 11.05.2006 for a totalconsideration of Rupees Twelve lakhs. It is stated that, quite ahuge expenditure was incurred for development of the plot, tothe tune of nearly Rs.3.49 Crores as on 31.03.2008. It wasthereafter, that a 'Memorandum of Understanding' was executed W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 with one M/s. Twinkle Hospitality Pvt. Ltd. & others for transfer of40,000 shares on 02.01.2009, as per which, the shares wereagreed to be purchased for a value of Rs.1,837.50 per share,thus for a total consideration of Rs.7,35,00,000/- (for 40000shares), which includes the liability of Rs.2,40,00,000/- to becleared towards the secured loan. According to the petitioners, itis a pre-requisite, to have satisfied the specified conditions, forfacilitating such transfer of shares and hence the petitioners hadto effect various improvements, particularly as enumerated initems 'n' to 'z' under Clause 5 of the 'MOU'. Various constructionswere effected, also providing the necessary infrastructure andimprovements and thereafter, a 'Share Purchase Agreement' wasexecuted between the petitioners' Company and the proposedpurchaser on 22.12.2009, fixing the sale price of the shares @Rs.1,362.50 per share. 3. The learned counsel for the petitioners points out that, itwas thereafter that the works were completed and the lastpayment was received on 15.03.2010, on completion of the W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 works. However, it is added that, since the obligation could notbe satisfied in toto, a sum of Rupees Twenty five lakhs wasdeducted and only the balance was taken up for fixation of thefinal figures. 4. The dispute is mainly with regard to the 'Capital gains'sustained and the petitioners have been mulcted with a hugeliability, without giving any deduction in respect of the variousimprovements effected as mentioned above. Being aggrieved ofExts.P12 & P12(a) orders for the assessment years 2009-2010and 2010-2011, the petitioners approached the AppellateAuthority by filing Exts.P13 & P13(a) appeals, along withInterlocutory Applications for stay as borne by Exts.P14 & P14(a).In view of the coercive proceedings taken in the meanwhile, thepetitioners approached this Court by filing WP(c) No.20509 of2013, which was disposed of as per Ext.P15 judgment dated20.08.2013, directing the Appellate Authority to consider andpass appropriate orders in the Interlocutory Applications for stay.This led to Ext.P16 order, whereby the claim of the petitioners W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 has been rejected in toto, and hence under challenge in thesewrit petitions. W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 has been rejected in toto, and hence under challenge in thesewrit petitions. 5. A statement has been filed on behalf of the2[nd] respondent, seeking to sustain the course and events,particularly with regard to the fixation of the share value and thecapital gains resulted in the hands of the petitioners. It is alsopointed out that absolutely no objection was raised from the partof the petitioners when the proceedings were considered andfinalised by passing Ext.P16 order, recording that the petitionershad conceded to satisfy 25% of the liability for availing thebenefit of interim stay, during the pendency of the appeal. Thesaid version has been sought to be specifically rebutted by thepetitioners as stated in 'paragraph 15' of the writ petitions,pointing out that the Authorised Representative had not agreedto any such condition and in fact, by virtue of the actual facts andfigures involving construction of various improvements/arrangements of the agreed infrastructure, the entire amount hadto be reduced and as such, there was no need, necessity or W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 5 occasion to have conceded to satisfy 25% of the disputedliability. The said assertion in the writ petition has not beenrebutted from the part of the respondents. This being theposition, this Court finds that the matter requires to bereconsidered by the 1[st] respondent. 6. Accordingly, the impugned orders (Ext.P16), fixing thecondition upon the petitioners, are set aside and the AppellateAuthority is directed to reconsider the matter, after hearing thepetitioners and pass a 'speaking order' with reference to thespecific nature of contentions raised from the part of thepetitioners. This shall be done at the earliest, at any rate, within'one month' from the date of receipt of a copy of this judgment.It is open for the Appellate Authority to consider and finalise theappeals preferred by the petitioners and to have passedappropriate orders in this regard as well. Coercive proceedingsshall be kept in abeyance till such time. The petitioners shall produce a copy of this judgment, alongwith a copy of the writ petitions, before the Appellate Authority, W.P.C. Nos.7556, 7637, 7669, 8033, 8066 & 8071 OF 2014 for further steps. All these writ petitions are disposed of. P.R. RAMACHANDRA MENON, JUDGE sp