Subhash Krishnarao Saptarshi, Pune V. Income-tax Officer, Ward - 5(2), Pune

CO 47/PUN/2022

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the Commissioner of Income-tax (Appeals), which had deleted the addition made by the Assessing Officer on account of capital gains. The main legal issue was the correct assessment year for the capital gains arising from the sale of a property by the assessee, Subhash Krishnarao Saptarshi. The Revenue contended that the gains should be assessed in the year 2011-12, while the assessee argued for the year 2004-05, the year in which a development agreement was executed and possession was transferred to the developer. The Tribunal agreed with the assessee, referencing the Supreme Court's decision in CIT Vs. Balbir Singh Maini, which supported the assessee's position that the transfer and thus the taxability of capital gains occurred in 2004-05.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 137278 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2022
• Assessment Year: misc
• Appeal Filed On: 24-09-2022
• Other Referred Cases: Bagri Impex Pvt Ltd [214 Taxman 305 (Calcutta)], CIT Vs. Balbir singh Maini (2017) 398 ITR 537 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA No.125/PUN/2018 with Cross Objection No.47/PUN/2022 Assessment Year : 2011-12 Income Tax Officer, Ward-5(2), Pune Vs. Subhash Krishnarao Saptarshi, Flat No.3, Plot No.58, Nivant Appartment, Tulshibagwale Colony, Sahakar Nagar No.2, Pune 411 009 PAN : ABEPS0783R Appellant Respondent/Cross Objector आदेश / ORDER PER S.S. GODARA, JM : This Revenue’s appeal ITA No.125/PUN /2018 and assessee’s cross objection No.47/PUN/2022 arise against the CIT(A), Pune-4’s order dated 11.09.2017 passed in case No. PN/CIT(A)-ITO,Ward-5(2), Pune/282/2016-17/617, involving proceedings under 143(3) of the Income Tax Act, 1961 in short ‘the Act’. Heard both the parties. Case file perused. 2. The Revenue’s appeal ITA No.125/PUN/2018 raises the following substantive grounds : Assessee by : Shri Kishor B. Phadke Revenue by : Shri Pankaj Kumar Date of hearing : 28-11-2022 Date of pronouncement : 06-12-2022 ITA No.125/PUN/2018 and CO No.47/PUN/2022 Subhash Krishnarao Saptarshi 2 “1. The order of the learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs.5,39,20,436/- made by the Assessing Officer on account of capital gain. 3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in not adopting the deemed sale consideration as per provision of section 50C of the Income-tax Act. 4. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in deleting the additions contrary to the decision of Hon’ble High Court of Calcutta in the case of Bagri Impex Pvt Ltd [214 Taxman 305 (Calcutta)]. 5. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in allowing rehabilitation expenses of Rs 19,20,000/- paid to slum dwellers during construction period without any documentary evidence and such expenses are not allowable for computation of capital gain. 6. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in allowing amount paid to Shri Rajendra Shitole of Rs 115 lakhs towards surrender of rights in the property acquired vide agreement dated 27.06.1996 as such expenses are not allowable for computation on the capital gain. 7. On the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in allowing amounts paid to slum dwellers and Shri Rajendra Shitole (as per GOA No 5 & 6) as deduction without considering following judicial pronouncements, according to which such amounts are not allowable for deduction for computation of capital gain:- i) V.S.M.R. Jagadish Chandran V. CIT (93 Taxmann 389-SC). ii) CIT V. Attili N. Rao (119 Taxmann 1030 - SC). iii) Smt S. Valliammai V. CIT (6 Taxmann 240 - Madras). iv) Ashok Soi V. CIT (144 Taxmann 383 Delhi). v) Smt Sita Nanda V. CIT (119 Taxmann 227 - Delhi). vi) Sri Kanniah Photo Studio (235 Taxmann 58 - Madras). vii) ACIT Circle-3 V. Mohanbhai Turakhiya (40 Taxmann.com 98 - Ahmedabad Tribunal). viii) Maradia Wires Rods Ltd (9 Taxmann.com 66 - Ahmedabad). ix) R.M. Arunachalam V. CIT (93 Taxmann 423 - SC). 8. For these and such other reasons as may be urged at the time of hearing, the order of the Ld. CIT(A) may be vacated and that of the Assessing Officer be restored. 9. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon’ble Tribunal.” 3. Coming to the assessee’s cross objection No.47/PUN/2022 instituted on 25-08-2022, it emerges that the same suffers from 504 days ITA No.125/PUN/2018 and CO No.47/PUN/2022 Subhash Krishnarao Saptarshi 3 delay mainly pertaining to Covid-19 pandemic outbreak period right from March, 2020 to 28-02-2022 which deserves to be condoned in light of hon’ble apex court’s directions in Extension of Limitation, In re 438 ITR 296 (SC) read with Cognizance for Extension of Limitation, In re 432 ITR 206 (SC) dated 08-03-2021. We accordingly condone the impugned delay. The assessee’s cross objection No.47/PUN/2022 is taken up for adjudication on merits which raises the following pleadings: “1. Learned CIT(A)-4), Pune and learned AO erred in law and on facts in not appreciating that, the rightful year of transfer of the slum property situated at CIS No. 786 & 787, Bhawani Peth, Pune; ought to be AY 2004-05 and not AY 2011- 12; considering the aspects of possession of the said property and various clauses of the registered Development Agreement dated 15/01/2004. 2. Learned CIT(A)-4, Pune and learned AO erred in law and on facts in not appreciating that, Ist proviso to section 50C of ITA, 1961 introduced from 01/04/2017 is curative in nature and as such, has a retrospective / retroactive effect. 3. Learned CIT(A)-4, Pune and learned AO erred in law and on facts in not granting deduction of indexed cost of acquisition (instead of grant of mere deduction of cost) w.r.t. following items u/s 48 of ITA, 1961 read with Explanation (iv) thereto- (a) Compensation of Rs.1,15,00,000 paid to Mr. Rajendra Shitole on 09/03/2004 (b) Compensation of Rs.10,00,000 paid to Mr. Saiim Motiwaia on 21/01/2004 (c) Slum dwellers Rehabilitation expenses of Rs. 19,20,000 incurred from time to time. 4. Learned CIT(A)-4, Pune and learned AO erred in law and on facts in not granting deduction of legal and administrative expenses of Rs. 11,00,000 claimed on best estimate basis u/s 48(i) of ITA, 1961. 5. Appellant craves leave to add/modify/delete alter all or any of the grounds of appeal.” 4. It thus transpires that the main issue that arises for our apt adjudication in the instant twin cases is that of year of taxability of capital gains on account of assessee’s sale deed dated 11-10-2010 ITA No.125/PUN/2018 and CO No.47/PUN/2022 Subhash Krishnarao Saptarshi 4 executed with M/s. Aum Developers involving the sale price of Rs.2.10 crore(s). A perusal of the assessee’s paper book at page 27 to 48 indicates that he had infact executed a development agreement with the very vendee way back on 15-01-2004; by way of a registered document; involving the same consideration of Rs.2.10 crore(s) only. He had also delivered possession to the developer wherein the latter was made entitled to develop the capital asset in question with further right and authority to sell the residential units raised thereupon to various buyers. It is thus an instance wherein the assessee had actually executed a registered transfer with developer way back in the assessment year 2004- 05 itself which held the field right upto the date of sale deed. 5. Mr. Murkunde at this stage sought to invite our attention to various clauses and more particularly stipulation No.7 at page 31 that M/s. Aum Developers had infact been granted “license” only than any right or transfer over the assessee’s land. We find no merit in this clinching expression “license” incorporated in the agreement on stand-alone basis wherein the assessee’s developer was authorized to carry out all works including transfer of the residential units in favour of the buyers. We, thus express our inability to read the foregoing concerned terms in isolation as it is argued at the Revenue’s behest. Mr. Phadke at this stage further highlighted the fact that various buyers had already been transferred their respective residential units in all the intervening assessment years. Be that as it may, we conclude in light of hon’ble ITA No.125/PUN/2018 and CO No.47/PUN/2022 Subhash Krishnarao Saptarshi 5 apex court’s landmark decision in CIT Vs. Balbir singh Maini (2017) 398 ITR 537 (SC) that the assessee had very well transferred the land to the developer way back in the year 2004-05 than that in issue A.Y. 2011- 12 before us & more so, because the sale consideration of Rs.2.10 crore(s) has remained the same in both the development agreement as well as sale deed and therefore, the learned lower authorities have erred in law and on facts in assessing the corresponding capital gains arising therefrom in A.Y. 2011-12. We reverse both the lower authorities corresponding findings rejecting the assessee’s stand to this effect therefore. The first and foremost ground in assessee’s cross objection No.47/PUN/2022 succeeds which renders all other rival pleadings hereinabove as academic. Ordered accordingly. 6. To sum up, this Revenue’s appeal ITA No.125/PUN/2018 is dismissed and the assessee’s cross objection No.47/PUN/2022 succeeds. A copy of this common order be placed in the respective case files. Order pronounced in the Open Court on 06 th December, 2022. Sd/- Sd/- (G.D.PADMAHSHALI) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER प ु णे Pune; दनांक Dated : 06 th December, 2022 Satish ITA No.125/PUN/2018 and CO No.47/PUN/2022 Subhash Krishnarao Saptarshi 6 आदेश क त ल प अ े षत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The concerned CIT(A) concerned; 4. 5. The CIT concerned िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे “A” / DR ‘A’, ITAT, Pune 6. गाड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 29-11-2022 Sr.PS 2. Draft placed before author 02-12-2022 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.