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2025 Supreme(Guj) 1571
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, PRANAV TRIVEDI, JJ.
Commissioner Of Income Tax International Taxation And Transfer Pricing - Appellant
Versus
Bridgestone Corporation – Respondent
R/Tax Appeal No. 219 of 2024
Decided On : 23-06-2025
For the Appellant : Mr. Varun K. Patel.
For the Respondent: Mr. B.S. Soparkar.
The Income Tax Appellate Tribunal can entertain new legal claims even if not made in the original return, provided relevant facts are on the record.
Headnote:(A) Income Tax Act, 1961 - Sections 112(1)(c)(ii), 112(1)(c)(iii), 139, 119 - Appeal filed by Revenue challenging ITAT's decision allowing a reduced tax rate on long-term capital gains without a revised return - Court found the ITAT correctly applied retrospective amendment and allowed the assessee's claim at 10% contrary to initial 20% offer - The appellate authority can entertain new claims based on existing facts - Revenue's appeal dismissed. (Paras 2, 10, 18)
(B) Judicial Precedents - Income Tax Appellate Tribunal has the power to entertain new claims and legal contentions not raised earlier as long as relevant facts are on record - Such authority does not infringe the limitations on assessing officers for claims requiring revised returns. (Paras 10, 13, 15, 18)
| Table of Content |
|---|
| 1. respondent assessee is a foreign company. (Para 3 , 4 , 5 , 6) |
| 2. assessing officer rejected lower tax rate claim. (Para 7 , 8) |
| 3. tribunal ruled on tax rate eligibility. (Para 9 , 10) |
| 4. contention on appellate authority's powers. (Para 12 , 14 , 15) |
| 5. no substantial question of law arises. (Para 17 , 18) |
ORDER :
BHARGAV D. KARIA, J.
1. Heard learned Senior Standing Counsel Mr. Varun K. Patel for the appellant and learned advocate Mr. B.S. Soparkar for the respondent.
2. By this appeal under section 260A of the Income Tax Act, 1961 (For short “the Act”), Revenue has proposed the following questions of law arising out of judgment and order dated 22.02.2023 passed by Income Tax Appellate Tribunal, Ahmedabad “D” Bench (For short “the Tribunal”) in ITA No.163/Ahd/2021 for Assessment Year 2014-2015:
“(a) Whether on the facts and in the circumstances of the case and in law, the ld. ITAT is correct in allowing the claim of assessee u/s.112(1)(c)(iii) with regard to taxing the Long term capital gain on sale of shares @10% though in Return of Income it was offered for tax @ 20% u/s.112(1)(c)(ii) and thereby contravening the provisions of section 139(5) of the Act and Section 119 as per if a person having furnished a return under sub section (1) of Section 139 or sub section (4) of Section 139 discovers any omission or any wrong statement herein he may file revised return within specified time only or on condonation of delay u/s 119 by the CBDT?
(b) Whether on the facts and in the circumstances of the case and in law the Id. ITAT is correct in allowing the claim of assessee u/s. 112(1)(c)(iii) with regard to taxing the Long-Term Capital Gain on sale of shares @10% though in Return of Income it was offered for tax @ 20% u/s.112(1)(c)(ii) without considering the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd Vs CIT (2006) 204 CTR (SC) 182 wherein it was held that the assessee can make a claim for deduction, which has not been claimed in the return, only by filing a revised return within the time allowed?”
3. Brief facts of the case are that the respondent assessee is a foreign company incorporated in Japan and engaged in the business of manufacture of tyres.
4. In the return of income for Assessment Year 2014-2015, the respondent assessee company offered long term capital gains of Rs.6,78,23,37,511/- on sale of shares of its associated company Bridgestone India Private Limited at the rate of 20%.
5. A note in the return of income was also submitted to the effect that capital gains on sale of shares of its Indian subsidiary are taxable in India in view of paragraph 3 of Article 13 of the India- Japan Tax Treaty read with section 45 of the Act.
6. During the course of assessment proceedings, the respondent assessee also filed a letter before the Assessing Officer that in view of the retrospective amendment to section 112(1)(c)(iii) of the Act, the long term capital gain claimed by the assessee should be taxed at the rate of 10% instead of 20% as offered in the return of income.
7. The Assessing Officer however, rejected the contention of the assessee on the ground that there was uncertainty as to whether the unlisted securities as mentioned in section 112(1)(c)(iii) of the Act would include shares of a private limited company or not and accordingly, out of abundant caution, the assessee paid taxes at the rate of 21.63% on the sale of unlisted shares of private limited company. It appears that thereafter by FINANCE ACT , 2016, section 112(1)(c)(iii) of the Act was amended to provide that long term capital gains arising from the transfer of a capital asset being shares of the company not being company in which the public are substantially interested, shall be chargeable to tax at the rate of 10%. However, the said amendment was made applicable from Assessment Year 2017-2018. Thereafter, FINANCE ACT , 2017 clarified that such amendment will be applicable retrospectively from Assessment Year 2013- 2014 and subse
