MATUSHREE CHANDANDEVI AMARNATH AGARWAL TRUST, MUMBAI V. ITO 22(2)(3),

CO 215/MUM/2009

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8956 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-03-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 09-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Retrospective amendment; Valuation report
• Section: 50C; 142(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SRI H.L. KARWA, PRESIDENT, AND SHRI N.K.BILL AIYA, AM ./ I.T.A. NO. 5873/MUM/2008 ( / ASSESSMENT YEAR: 2002-03) INCOME - TAX OFFICER, CIRCLE-22(2)-3, VASHI RLY. STATION COMPLEX, TOWER NO.6, 4 TH FLOOR, VASHI NAVI MUMBAI / VS. MATUSHRI CHANDANDEVI AMARNATH AGARWAL TRUST FLAT NO.101/201, CENTRAL AVENUE, CHEMBUR, MUMBAI-400071 !' $ ./ PAN : AAAAP1423F ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) C.O. NO. 215/MUM/2009 ( / ASSESSMENT YEAR : 2002-03) MATUSHRI CHANDANDEVI AMARNATH AGARWAL TRUST FLAT NO.101/201, CENTRAL AVENUE, CHEMBUR, MUMBAI-400071 / VS. INCOME - TAX OFFIC ER, CIRCLE-22(2)-3, VASHI RLY. STATION COMPLEX, TOWER NO.6, 4 TH FLOOR, VASHI NAVI MUMBAI !' $ ./ PAN : AAAAP1423F ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) (! ) * / REVENUE BY : SHRI MANVENDRA GOYAL &''% ) * / RESPONDENT BY : SHRI VINOD KUMAR BINDAL ) +$ / DATE OF HEARING : 11-09-2013 ,- ) +$ / DATE OF PRONOUNCEMENT : 11-09-2013 ./ / O R D E R PER N.K.BILLAIYA: THIS APPEAL BY THE REVENUE AND C.O. BY THE ASSESSEE ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE CIT(A)-22, MUMBA I, DATED 25.07.2008 2 ITA NO.5873/MUM/2008 & C.O. NO.215/MUM/09 MATUSHRI CHANDANDEVI AMARNATH AGARWAL TRUST PERTAINING TO A.Y.2002-03. BOTH THESE WERE HEARD TO GETHER AND ARE DISPOSED OF FOR THE SAKE OF CONVENIENCE AND BREVITY . ITA NO.5873/MUM/2008 2. REVENUE IS AGGRIEVED BY THE DELETION OF THE ADDITIO N OF RS.2,21,99,930/- MADE BY THE AO ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE REVENUE IS FURTHER AGGRIEVED BY THE DECISION OF THE CIT(A) FOR TREATING THE AMOUNT OF RS.60 LAKHS AS COMPENSATION TO THE OC CUPANTS. FACTS AT THE ASSESSMENT STAGE SHOW THAT AMARNATH JAIKISHANDAS AG ARWAL, SMT. CHANDANDEVI, MANOHARLAL AMARNATH AGARWAL, AND SMT. KANTARANI AGARWAL FORMED A PRIVATE TRUST KNOWN AS MATUSHRI CHANDANDEV I AMARNATH AGARWAL TRUST. THE SELF ACQUIRED PROPERTY WAS TRANSFERRED TO THE SAID TRUST AT THE PREVAILING MARKET RATE OF RS.30,000/-. THEREAFTER, THE TRUST ENTERED INTO AN AGREEMENT WITH MHATRE BROTHERS FOR CIVIL WORK FOR A CONSIDERATION OF RS.33,02.83 PS. THEREAFTER, ON THE SAID PIECE OF L AND A BUILDING WAS CONSTRUCTED WHICH CONSISTED OF TRUST OFFICE, PRIVAT E TEMPLE AND RESIDENTIAL FLATS. THE SAID TRUST ENTERED INTO A DEVELOPMENT A GREEMENT WITH M/S RUNWALL BUILDERS PVT. LTD. ON 05 TH MARCH 2002 AND ACCORDINGLY DEVELOPMENT RIGHT WAS TRANSFERRED TO M/S RUNWALL BU ILDERS FOR A CONSIDERATION OF RS.70,00,00/-. WHEN THIS TRANSAC TION CAME TO THE NOTICE OF THE AO, HE ISSUED A NOTICE U/S148 OF THE ACT ASK ING THE ASSESSEE TO FILE ITS RETURN OF INCOME IN RESPONSE TO THE SAID NOTICE . THE ASSESSEE/TRUST FILED RETURN OF INCOME ON 13.04.2007 DECLARING NIL INCOME . STATUTORY NOTICES U/S 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED UPON THE ASSESSEE. IN THE RETURN FILED THE ASSESSE E HAS SHOWN RS.70,00,000/- AS COMPENSATION ON SALE OF DEVELOPME NT RIGHTS, THE COST OF PROPERTY WAS SHOWN AT RS.16,83,366/- WHICH WAS SUPP ORTED BY A VALUATION REPORT DATED 06.04.2001 OF A REGISTERED VALUER. TH E AO DID NOT ACCEPT THE VALUATION SHOWN BY THE VALUER. ACCORDING TO THE AO , THE VALUATION ADOPTED BY STAMP DUTY OFFICE FOR THE PROPERTY SALE OF THE A SSESSEE IS ON A HIGHER 3 ITA NO.5873/MUM/2008 & C.O. NO.215/MUM/09 MATUSHRI CHANDANDEVI AMARNATH AGARWAL TRUST SIDE. THE AO FURTHER OBSERVED THAT THE BUILDER HAS ALLOTTED TWO FLATS OF RS.30,00,000/- EACH TO THE TRUSTIES ON WHICH STAMP DUTY WAS PAID AT RS.2,74,590/-PER FLAT. ACCORDING TO THE AO THE VAL UE OF TWO FLATS SHOULD ALSO BE TREATED AS PART OF THE COMPENSATION TAKING THE STAMP DUTY VALUE AND ADDING THE SUM OF RS.60,00,000/- PLUS 60,000/- ON ACCOUNT OF STAMP DUTY PAID , THE AO CALCULATED THE MARKET VALUE OF THE PROPERTY/DEVELOPMENT RIGHT TRANSFERRED BY THE ASSES SEE AT RS.1.64CRORES. THE AO FURTHER ADDED THE COST OF THE PERMANENT ALTE RNATE ACCOMMODATION PROVIDED BY THE BUILDERS TO THE TRUST AND FINALLY C OMPUTED THE COMPENSATION RECEIVED BY THE ASSESSEE AT RS.2,24,60 ,000/- AND SUBSTITUTED THE SAME FOR RS.70,00,000/- AS SHOWN BY THE ASSESSEE AND RECOMPUTED THE CAPITAL GAINS AT RS.2,21,99,930/-. 3. AGGRIEVED BY THIS COMPUTATION OF CAPITAL GAINS, ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS EXPLAINED THA T THE AO GROSSLY ERRED IN SUBSTITUTING THE COMPENSATION RECEIVED BY THE TRUST . IT WAS FURTHER CONTENDED THAT THE AO HAS GROSSLY ERRED IN TAKING T HE STAMP DUTY VALUATION AS PER PROVISIONS OF SECTION 50C OF THE ACT, WHICH IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE FURTHER AGI TATED THE ADDITION OF RS.60,00,000/- BEING COMPENSATION PAID TO EVACUATE THE PROPERTY IN THE FORM OF ALLOTMENT OF TWO FLATS TO THE OCCUPANTS. 4. AFTER CONSIDERING THE ENTIRE FACTS AND SUBMISSIO NS MADE BY THE ASSESSEE, THE CIT(A) OBSERVED THAT PROVISIONS OF SE CTION 50C ARE APPLICABLE FROM A.Y.2003-04, WHEREAS THE IMPUGNED ASSESSMENT Y EAR IS 2002-03. THEREFORE, THE ACTION OF THE AO ADOPTING THE STAMP DUTY VALUE IS NOT SUSTAINABLE. FURTHER THE ADDITION MADE ON ACCOUNT O F ALLOTMENT OF FLATS TO THE TWO OCCUPANTS OF THE EXISTING BUILDING WAS ALS O DELETED AS THE SAME CANNOT BECOME PART OF THE SALE CONSIDERATION IN THE HANDS OF THE ASSESSEE. 4 ITA NO.5873/MUM/2008 & C.O. NO.215/MUM/09 MATUSHRI CHANDANDEVI AMARNATH AGARWAL TRUST 5. AGGRIEVED BY THIS REVENUE IS BEFORE US. THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF THE AO. COUNSEL FOR THE ASSESSEE R EITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. THE UNDISPUTED FACT IS THAT THE PROPERTY UNDER QUESTION BELONG TO THE TRUST WHICH HAD CERTAIN OCCUPANTS . THE AGREEMENT WITH TH E BUILDER CLEARLY SHOWS THAT THE TRANSFER OF THE DEVELOPMENT RIGHT OF THE PROPERTY WAS ON AS IS WHERE IS BASIS MEANING THEREBY THAT THE PURCHAS ER TOOK THE RESPONSIBILITY TO GET THE PROPERTY EVACUATED. IT I S ALSO NOT IN DISPUTE THAT THE TOTAL CONSIDERATION PAID BY THE BUILDER TO THE ASSESSEE IS RS.70,00,000/- . TO GET THE PROPERTY EVACUATED THE BUILDER HAS ON HIS OWN GAVE TWO FLATS TO TWO OCCUPANTS. THEREFORE, THE VA LUE OF THESE TWO FLATS CANNOT BE CONSIDERED AS PART OF THE TOTAL SALE CONS IDERATION. WE FURTHER FIND THAT THE AO HAS ADOPTED STAMP DUTY VALUE FOR T HE PURPOSES OF CALCULATING THE SALE CONSIDERATION. WHICH IS AGAIN ST THE PROVISIONS OF SECTION 50C WHICH CAME INTO EFFECT FROM A.Y.2003-04 AND IT IS NOWHERE MENTIONED THAT IT HAS RETROSPECTIVE EFFECT. THEREF ORE, THE SAME CANNOT BE APPLIED FOR THE IMPUGNED ASSESSMENT YEAR. CONSIDER ING ALL THESE FACTS IN TOTALITY, THE CIT(A) HAS VERY CORRECTLY DIRECTED TH E AO TO ACCEPT THE SALE CONSIDERATION AT RS.70,00,000/- AS RETURNED BY THE ASSESSEE. FURTHER, WE DO NOT FIND ANY MERIT IN ADDING THE VALUE OF THE TW O FLATS AS PART OF SALE CONSIDERATION , THE SAME HAS TO BE CONSIDERED IN TH E HANDS OF THE TWO PERSONS TO WHOM FLATS HAVE BEEN ALLOTTED. 7. IN THE RESULT, FINDINGS OF THE CIT(A) ARE CONFIR MED AND APPEAL FILED BY THE REVENUE IS DISMISSED. 5 ITA NO.5873/MUM/2008 & C.O. NO.215/MUM/09 MATUSHRI CHANDANDEVI AMARNATH AGARWAL TRUST C.O. NO.215/MUM/2009 8. THIS CROSS OBJECTION BY THE ASSESSEE CHALLENGES THE VALIDITY OF THE ASSESSMENT U/S 147 OF THE ACT. AS WE HAVE DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE VIDE ITA NO.5873/MUM/2008, WE DO NOT F IND IT NECESSARY TO DECIDE THE SAME ON POINT OF LAW. C.O. IS ACCORDING LY DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED AND C.O. FILED BY THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/0 9/2013 ./ ) ,- $ 0. 11/09/2013 , - ) 1 SD/- (H.L.KARWA) SD/- (N.K.BILLAIYA) HONBLE PRESIDENT ACCOUNTANT MEMBER MUMBAI; 0. /DATED : 11 TH SEPTEMBER, 2013. SHEKHAR. P.S. ./ ./ ./ ./ ) )) ) &+23 &+23 &+23 &+23 43 + 43 + 43 + 43 + / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 5 ( ) / THE CIT- , MUMBAI. 4. 5 / CIT(A)- , MUMBAI 5. 361 &+ , , / DR, ITAT, MUMBAI 6. 17 8 / GUARD FILE. ./ ./ ./ ./ / BY ORDER, '3+ &+ //TRUE COPY// 9 99 9 / : : : : ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI