ADITYA D. MAHADEVIA, MUMBAI V. ASST CIT 19(1), MUMBAI

CO 166/MUM/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2563 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2016
• Court: TRIBUNAL
• Department Lawyers: JITENDERA JAIN
• Assessee Lawyers: A K DHONDIAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Question of law
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ./ ITA NO. 1351 / MUM/201 5 ( / ASSESSMENT YEAR : 201 1 - 20 12 ) ACIT 19(1) , MUMBAI VS. SHRI ADITYA D MAHADEVIA E - 12, SEA FACE PARK BHULA BHAI DESAI ROAD MUMBAI - 400026 ./ ./ PAN/GIR NO. : AABPM3641A ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO. 1 66 /MUM/201 6 ( ARISING OUT OF I TA NO. 1351 /MUM/201 5 ) ( / ASSESSMENT YEAR : 2011 - 20 1 2 ) SHRI ADITYA D MAHADEVIA E - 12, SEA FACE PARK BHULA BHAI DESAI ROAD MUMBAI - 400026 VS. ACIT 19(1), MUMBAI ./ ./ PAN/GIR NO. : AABPM3641A ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI A.K.DHONDIAL /REVENUE BY : SHRI JITENDERA JAIN / DATE OF HEARING : 24/10 /2016 / DATE OF PRONOUNCEMENT 04 / 11 / 201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), FOR THE ASSESSMENT YEAR 20 1 1 - 20 1 2 AND CROSS OBJECTION BY THE ASSESSEE . 2. THE GRIEVANCE OF REVENUE RELATE S TO DELETING THE ADDITION OF RS.41,47,204/ - MADE BY AO ON ACCOUNT OF TRANSFER OF LEASE HOLD RIGHTS IN THE PROPERTY UNDER SECTION 50C OF THE IT ACT. SHRI ADITYA D. MAH ADEVIA 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE ACQUIRED LEASE HOLD RIGHTS FROM LAVASA CORPORATION LTD.,. IT W AS CONTENTION OF ASSESSEE THAT PROPERTY RIGHTS WERE ACQUIRED ON LEASE BASIS AND THE LEASE AMOUNT FOR THE SAME WAS TO BE PAID IN INSTALMENTS. SINCE ASSESSEE ON ACCOUNT OF FINANCIAL DIFFICULTI ES COULD NOT MAKE THE PAYMENT OF LEASE AS PER THE SCHEDULE, THE LE ASE HOLD RIGHTS WERE ASSIGNED TO M/S. DEEPAK TEXTILES FOR CONSIDERATION OF RS.28,59,395/ - . THE AO HELD THAT ASSESSEE HAS TRANSFERRED RIGHTS IN AN IMMOVABLE PROPERTY, ACCORDINGLY HE INVOKED THE PROVISIONS OF SECTION 50C AND MADE AN ADDITION OF RS.41,47,204/ - . 5. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION AFTER FOLLOWING THE ORDER OF THE ITAT - MUMBAI BENCH IN CASE OF ATUL G PURANIK VS. ITO ( 132 ITD 499 ) AND KOLKATA BENCH OF ITAT IN CASE OF TEJINDER SINGH ( 19 TAXMANN.COM 4 ) . 6. ON THE OTHER HAND, LEARNE D AR PLACED ON RECORD ORDER OF THE ITAT - MUMBAI BENCH IN CASE OF SHAVO NORGREN (P) LTD., - 33 TAXMANN.COM 491 IN SUPPORT OF THE PROPOSITION THAT PROVISIONS OF SECTION 50C IS APPLICABLE EVEN IN CASE OF TRANSFER OF LEASE HOLD RIGHTS IN PLOTS AS WELL AS RIGHTS IN BUILDING. 7 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ISSUE UNDER CONSIDERATION IS COVERED BY THE NUMBER OF DECISIONS OF ITAT - MUMBAI BENCH IN CASE OF ATUL G.PURANIK 58 DTR 208 PRADEEP STEEL RE - ROLLING MILLS (P) LTD., ( 39 TAXMANN.COM 123 ) WHER EIN IT WAS HELD THAT SECTION 50C APPLIES ONLY TO CAPITAL ASSETS BEING LAND OR BUILDING OR BOTH, IT DOES SHRI ADITYA D. MAH ADEVIA 3 NOT IN TERMS INCLUDE LEASEHOLD RIGHTS IN LAND OR BUILDING WITHIN ITS SCOPE. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF VOLTAS LTD., ( 74 TAXMANN.COM 99 ) , ITAT BENCH IN CASE OF KANCAST (P) LTD., ( 55 TAXMANN.COM 171 ) . RECENTLY HONBLE BOMBAY HIGH COURT IN CASE OF HEATEX PRODUCTS PVT. LTD., VIDE ORDER DATED 26/07/2016 DISMISSED THE APPEAL FILED BY THE REVENUE WHEREIN TRIBUNAL FOLLOWING THE DECISION IN CASE OF ATUL G PURANIK 58 DTR 208 HELD THAT PROVISIONS OF SECTION 50C WOULD APPLY ONLY TO CAPITAL ASSETS BEING LAND OR BUILDING OR BOTH AND IT COULD NOT BE APPL IED TO TRANSFER OF LEASE HOLD RIGHTS IN LAND. 9. THE PRECISE OBSERVATION OF THE HONBLE BOMBAY HIGH CO URT IN CASE OF HEATEX PRODUCTS PVT. LTD., WAS AS UNDER: - 3. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEAL IS THAT THE PROVISIONS OF SECTION 50C OF THE ACT MANDATES THAT WHERE A TRANSFER OF CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS FOR CONSIDERATI ON LESS THEN ITS VALUE AS ADOPTED/ASSESSED BY THE STATE GOVERNMENT FOR THE PURPOSE OF STAMP DUTY THEN THE STAMP DUTY VALUE WOULD BE ADOPTED AS BEING THE FULL VALUE OF CONSIDERATION FOR COMPUTING CAPITAL GAINS ARISING OUT OF TRANSFER OF THE ASSET. IT IS THE CASE OF THE REVENUE THAT SECTION 50C OF THE ACT WOULD APPLY ALSO TO TRANSFER OF LEASEHOLD INTEREST IN LAND AND IS NOT LIMITED TO ONLY TO TRANSFER OF LAND AND BUILDING OR BOTH. 4. THE IMPUGNED ORDER OF THE TRIBUNAL ALLOWED THE RESPONDENT ASSESSEE'S APPE AL BY FOLLOWING ITS OWN DECISION IN ATUL G. PURANIK V. ITO REPORTED IN 58 DTR 208 ON IDENTICAL ISSUE. THE TRIBUNAL IN ATUL G. PURANIK (SUPRA) HELD THAT SECTION 50C OF THE ACT WOULD APPLY ONLY TO A SHRI ADITYA D. MAH ADEVIA 4 CAPITAL ASSET BEING LAND OR BUILDING OR BOTH AND IT CANNOT APPLY TO TRANSFER OF LEASE RIGHTS IN A LAND. 5. IT APPEARS THE REVENUE HAS ACCEPTED THE DECISION OF THE TRIBUNAL IN ATUL G. PURANIK (SUPRA). THIS INFERENCE IS DRAWN AS NO EVIDENCE OF FILING AN APPEAL FROM THE ORDER OF THE TRIBUNAL IN ATUL G. PURANIK (SUPR A) IS PRODUCED. THE FACT SITUATION IN BOTH ATUL G. PURANIK (SUPRA) AND THIS CASE IS IDENTICAL AS NO DISTINCTION IN FACTS OF THE PRESENT CASE FROM THOSE ARISING IN ATUL PURANIK (SUPRA) HAS BEEN POINTED OUT. 6. IN ABOVE VIEW THE QUESTION AS FRAMED DOES NOT GIVE ANY RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND THUS NOT ENTERTAINED. 10. RESPECTFULLY FOLLOWING THE PROPOSITION OF LA W LAID DOWN BY HONBLE BOMBAY HIGH COURT , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING ADDITION BY HOLDING THAT SECTION 50C IS NOT APPLICABLE IN CASE OF LEASE HOLD RIGHTS. 11 . THE NEXT GRIEVANCE OF REVENUE RELATE S TO ALLOWING SET OFF LOSS AGAINST INCOME FROM OTHER SOURCES IN PLACE OF AOS ACTION IN ALLOWING SET OF OFF LOSS AGAINST LONG TERM CAPITAL GAINS . 1 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. DURING THE COURSE OF ASSESSMENT AO ALLOWED SET OFF BUSINESS LOSS AGAINST LONG TERM GAI NS, AS AGAINST ASSESSEES CLAIM OF ALLOWING SET OFF LOSS AGAINST INCOME FROM OTHER SOURCES. 13 . BY THE IMPUGNED ORD ER CIT(A) ALLOWED ASSESSEES CLAIM AS PER CBDT CIRCULAR NO.26 (LXXVI - 3) (F.NO.4(53) - IT/54) DATED 07 - 07 - 1955 RELATING TO SET OFF / CARRIED FORWARD AS PER SECTION 24(1)(2) OF THE I.T.ACT, 1922 WHICH SHRI ADITYA D. MAH ADEVIA 5 DIRECTS THE REVENUE TO ADOPT THE MODE OF SET OFF WHICH ALLO WS THE ASSESSEE MAXIMUM BENEFIT. 14 . WE HAVE CONSIDERED RIVAL CONTENTIONS . A S PER THE PROVISIONS OF SECTION 71(2) , A SSESSEE IS ENTITLED TO SET OFF CURRENT YEAR BUSINESS LOSS AGAINST INCOME FROM OTHER SOURCES S INCE ASSESSEE WAS ALSO HAVING LONG TERM CAPIT AL GAINS. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) F OR ALLOWING SET OFF OF LOSS OF RS.1,00,258/ - IN THE VERY SAME YEAR AGA INST INCOME FROM OTHER SOURCES, SO THAT ASSESSEE CAN ENJOY SPECIAL RATE OF 10% TAX ON LONG TERM CAPITAL GAINS, IN TERMS OF CBDT CIRCULAR NO.26 (LXXVI - 3) (F.NO.4(53) - IT/54). 10. AS WE HAVE ALREADY DECIDED REVENUES APPEAL, CO FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. 11. IN THE RESULT APPEAL OF THE REVENUE AND CO FILED BY THE ASSESSEE ARE DISMISSED. O RDER PRO NOUNCED IN THE OPEN COURT ON THIS 04 / 11 / 201 6 . S D/ - SD/ - RAVISH SOOD R.C.SHARMA / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 04 / 11 / 201 6 . . /KARUNA , . / SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI SHRI ADITYA D. MAH ADEVIA 6 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//