Madras High Court
Principal Commissioner Of Income ... vs T.T.Siddarth on 17 June, 2021
T.C.A.Nos.289 & 290 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE: 17.06.2021
CORAM:
THE HON'BLE MR. JUSTICE M.DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE R.HEMALATHA
T.C.A.Nos.289 & 290 of 2017
Principal Commissioner of Income Tax-4,
No.121, Mahatma Gandhi Road,
Chennai – 600 034. ... Appellant in both TCAs
Vs.
T.T.Siddarth ... Respondent in TCA.289/17
Maya Varadarajan ... Respondent in TCA.290/17
Appeals preferred under Section 260A of the Income Tax Act,
1961, against the order of the Income Tax Appellate Tribunal, Madras,
"C" Bench, dated 11.05.2016 in I.TA.Nos.2074 & 2075/Mds/2015 for
Assessment Year 2012-13.
For Appellant : Mr.Karthik Ranganathan,
(in both TCAs) Senior Standing Counsel
For Respondent : Ms.A.Janane
(in both TCAs)
COMMON JUDGMENT
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(Judgment was delivered by M.DURAISWAMY, J.)
Challenging the common order passed in I.TA.No.2074/Mds/2015
and I.T.A.No.2075/Mds/2015 on the file of the Income Tax Appellate
Tribunal, Chennai, "C" Bench in respect of the Assessment Year
2012-13, the Revenue has filed the above appeals.
2.The respondents in the above two appeals are different assessees.
Since the issues involved in these appeals are common in nature, the
above appeals are clubbed together, heard together and disposed of by
this common judgment. The Income Tax Appellate Tribunal also
disposed of both the appeals filed by the respondents herein by its
common order.
3.In the Assessment Year 2012-13, the respondents–assessees,
while filing the return of income on 29.08.2012, claimed exemption
under Section 54F of Rs. 8 crores and Rs.36.99 crores. During the course
of the assessment proceedings, the Assessing Officer found that the
assessees had been gifted “Trade Mark” by way of Settlement Deed
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T.C.A.Nos.289 & 290 of 2017
dated 19.12.2010 by Mrs.Malathi Rangaswami and Mr.T.T.Varadarajan.
Trade Mark being a capital asset, settled without any consideration of
money or money's worth and was transferred out of natural love and
affection to the assessees. The assessees claimed exemption under
Section 49(1)(ii) of the Income Tax Act. Since the period during which
the previous owners held the right over the Trade Mark was also to be
considered for deciding whether the asset is of long term capital asset,
the Assessing Officer in the assessment order under Section 143(3) has
rejected the assessees' claim for deduction under Section 54F by treating
the period of holding of the assets as short term gain. The Assessing
Officer disallowed the claim under Section 54F made by the respondents-
assessees. Aggrieved over the order passed by the Assessing Officer, the
assessees filed appeals before the Commissioner of Income Tax
(Appeals) and the Commissioner of Income Tax (Appeals) has confirmed
the disallowance made by the Assessing Officer and dismissed the
appeals filed by the assessees. Challenging the same, the assessees
preferred the appeals before the Income Tax Appellate Tribunal and the
Tribunal, by its common judgment, remitted the matters to the Assessing
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T.C.A.Nos.289 & 290 of 2017
Officer to determine the period of hold of the impugned capital assets
and decide the issue afresh. Challenging the common order passed by the
Tribunal, the Revenue has filed the above appeals.
4.The appellant-Revenue has raised the following substantial
questions of law in the above appeals:
1. Whether on the facts and circumstances of the case
and in law, Tribunal was right and justified in holding
that assessee is eligible for deduction u/s 54F when
the capital asset transferred was not a long term
capital asset in view of Section 2(29A) r.w.s.2(42A) of
the Income Tax Act?
2. Whether on the facts and circumstances of the case
and in law, Tribunal erred in treating the asset held
by assessee for less than four months as long term
capital asset as against stipulation in Sec.2(29A) r.w.s
2(42A) is holding for more than 36 months?
3. Whether on the facts and circumstances of the case
and in law, Tribunal was correct and justified in
holding that Expl.1(b) below sec.2(42A) is applicable
and the period of holding of the asset by the previous
owner also needs to be considered even though
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assessee did not receive the asset through gift or will
as mentioned in sec.49(i)(ii) but by settlement deed?
4. Whether on the facts and circumstances of the case
and in law, Tribunal erred in holding that there is no
legal differences between settlement and gift
overlooking the detailed discussion made by
Commissioner of Income Tax (A) in his order?
5.When the appeals are taken up for hearing, Mr.Karthik
Ranganathan, learned senior standing counsel appearing for the
appellant-Revenue fairly submitted that the issues involved in the above
appeals were already decided against the Revenue by the Hon'ble
Division Bench of this Court in its judgment dated 07.12.2020 made in
T.C.A.No.420 of 2020 [The Principal Commissioner of Income Tax,
Chennai – 34 Vs. Smt.Deepa Vijay] wherein the Division Bench held as
follows:
“...
2. The Revenue has filed the above appeal by raising
the following substantial questions of law:
“i. Whether, on the facts and in the circumstances of
the case and in law, the Tribunal was right and justified in
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holding that the assessee is eligible for deduction under
Section 54F when the capital asset transferred was not long
term capital asset in view of Section 2(29A) read with
Section 2(42A) of the Act?
ii. Whether, on the facts and in the circumstances of
the case and in law, the Tribunal erred in treating the asset
held by the assessee for less than four months as long term
capital gain asset as against stipulation in Section 2(29A)
read with Section 2(42A) is holding for more than 36
months? And
iii. Whether, on the facts and in the circumstances of
the case and in law, the Tribunal was right and justified in
holding that Explanation 1(b) of Section 2(42A) is
applicable and the period of holding of the asset by the
previous owner also needs to be considered even though the
assessee did not receive the assset through gift or will as
mentioned in Section 49(1)(ii) but by settlement deed?”
3. We have heard Mr.Karthik Ranganathan, learned
Standing Counsel appearing for the appellant/Revenue and
Mr.R.Vijayaraghavan, learned counsel appearing on behalf
of the respondent/assessee.
4. The assessee, who is an individual, filed the return
of income for the assessment year under consideration
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namely AY 2012-13 on 29.8.2012 by showing income from
salaries at Rs.12 lakhs. In fact, the income returned by the
assessee included the long term capital gains to the tune of
Rs.16,49,71,644/- after claiming deduction of
Rs.3,50,28,356/- under Section 54F of the Act. It came to the
notice of the Assessing Officer during the course of
assessment proceedings that the assessee received a gift of a
trademark from one Mrs.Malathi Rangaswamy and one
Mr.T.T.Varadarajan through a document titled as settlement
deed dated 19.12.2010.
5. The Assessing Officer considered the said capital
asset as a short term capital asset as per the definition under
Section 2(42A) read with Section 49(1) of the Act since the
assessee held the trademark for a period of less than four
months. The assessment was accordingly completed under
Section 143(3) of the Act by order dated 19.3.2015
disallowing the deduction claimed by the assessee under
Section 54F of the Act, considered the long term capital
asset declared by the assessee to the tune of Rs.16.49 crores
as short term capital gains and rejected the claim of
Rs.3,50,28,256/- under Section 54F of the Act.
6. As against the assessment order, the assessee
preferred an appeal before the Commissioner of Income Tax
(Appeals)-8, Chennai-34 [for short, the CIT(A)]. The appeal
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was allowed by order dated 28.3.2018. Questioning the
correctness of the same, the Revenue filed an appeal before
the Tribunal and it was dismissed by the impugned order.
7. Going by the said document dated 19.12.2010,
which was titled as settlement deed, the Assessing Officer
held the same to be not a gift. The correctness of this finding
was tested by the CIT(A), who, in our opinion, had done an
elaborate factual exercise, gone through the covenants and
conditions contained in the said document dated 19.12.2010
and held that the said document was only a deed of gift
because it was voluntary as there was no consideration
passed on and the donee accepted the gift unconditionally.
The correctness of the factual finding was tested by the
Tribunal, which had also gone through the issue in detail,
taken note of the decision of the same Tribunal in the case of
other owners namely Shri T.T.Siddharth and Smt.Maya
Varadarajan [ITA.Nos.2074 and 2075/Mds/ 2015 dated
11.5.2016] and dismissed the appeal filed by the Revenue in
this regard.
8. On going through the orders passed by both the
CIT(A) as well as the Tribunal, we find that the entire issue
deeply revolves around the factual matrix, which, in our
considered view, has been thoroughly examined by the
CIT(A) and the Tribunal and we also find that no question of
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law much less substantial question of law arises for
consideration in this appeal.”
6.The learned counsel appearing for the respondents-assessees also
submitted that in view of the judgment of the Division Bench of this
Court made in T.C.A.No.420 of 2020, the above appeals are liable to be
dismissed.
7.Having regard to the submissions made by the learned counsel
on either side, following the ratio laid down by the Hon'ble Division
Bench of this Court dated 07.12.2020 made in T.C.A.No.420 of 2020, the
questions of law are decided against the Revenue and in favour of the
assessees. Accordingly, the Tax Case Appeals are dismissed. No costs.
Index : Yes/No [M.D., J.] [R.H., J.]
Internet : Yes 17.06.2021
va
To
The Income Tax Appellate Tribunal, Chennai, "C" Bench
M.DURAISWAMY, J.
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T.C.A.Nos.289 & 290 of 2017
and
R.HEMALATHA, J.
va
T.C.A.Nos.289 & 290 of 2017
17.06.2021
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