ARTHUR ANDERSEN & CO., MUMBAI V. ASST CIT 11(2), MUMBAI

ITA 1042/MUM/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9677 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard
• Section: 50C; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 1042 / MUM/ 20 13 ( / ASSESSMENT YEAR: 20 0 9 - 10 ) ARTHUR ANDERSON & CO 102 - B, 10 TH FLOOR, MAKER TOWER F C UFFE PARADE, MUMBAI PIN: 400005 / VS. ACIT 11(2), MUMBAI AAYAKAR BHAVAN, MUMBAI PIN: 400020 ./ ./ PAN/GIR NO. : AAACA 4230 D ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 09 .0 2 .201 8 / DATE OF PRONOUNCEMENT : 28 . 0 3 . 2018 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILE D THE PRESENT APPEAL AGAINST THE ORDER DATED 03 . 1 2 .201 2 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2009 - 10 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE COMMISSIO NER OF INCOME TAX (APPEALS) - 3, MUMBAI, HEREINAFTER REFERRED TO AS CIT(A), HAS ERRED IN CONFIRMING ADOPTION OF VALUES OF THE THREE OFFICE PREMISES WHICH WERE INCORRECTLY COMPUTED BY THE STAMP VALUATION AUTHORITY, FOR THE PURPOSE OF COMPUTATION OF CAPITAL G AIN AS PER SECTION 50C OF THE INCOME TAX ACT, 1961. ASSESSEE BY : SHRI MADHUR AGRAWAL (AR) RE VENUE BY: SHRI RAJESH KUMAR YADAV ( DR ) ITA. NO.1042/M/2013 A.Y. 2009 - 10 2 2. THE CIT(A) HAS ALSO ERRED IN CONFIRMING DISALLOWANCES OF THE SHORT TERM CAPITAL LOSS OF RS.8,72,034 TOWARDS BLOCK OF OFFICE FIT UPS, RS.37,74,985 TOWARDS BLOCK OF FURNITURE AND RS.15,05,946 TOWARDS BLO CK OF EQUIPMENT. 3 . THE BRIEF FACTS O F THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 10.02.2010 DECLARING TOTAL INCOME TO THE TUNE OF RS.6,57,48,800/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY. T HE NOTICES U/S 143(2) OF THE ACT & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS A FIRM OF CHARTERED ACCOUNTANT. THE FIRM DISCONTINUED ITS PROFESSION W.E.F. 1 ST NOVEMBER, 2003 AND DISSOLVED THEIR FIRM ON 30 TH NOVEM BER, 2003. I N ACCORDANCE WITH THE PROVISIONS OF 176 R.W.S. 189, THE ASSESSEE PREPARED THE RETURN OF INCOME. DURING THE YEAR UNDER ASSESSMENT THE ASSESSEE DECLARED INCOME FROM THE HEAD OF CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THE ASSESSEE WAS HAVING ITS OFFICES WITH NOS. 66, 68,69A, 65, 62 AND 102B IN MAKER TOWER, F CUFFE PARADE, MUMBAI. DURING THE YEAR , THE ASSESSEE SOLD THE OFFICES BEARING N. 66,68, & 69A WITH THE SALE VALUE OF RS.1,50,22,000/ - , RS.2,09,79,000/ - AND RS.1,52,81,000/ - RESPECTIVELY. ON APPRAISAL OF THE SALE - DEED , IT WAS FOUND THAT THE VALUE ADOPTED BY STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY WERE OF RS.1,50,22,000/ - RS.2,09,79,000/ - AND RS.1,52,81,000/ - RESPECTIVELY . THEREFORE, NOTICE WAS GIVEN AND AFTER GETTI NG THE REPLY THE SALE CONSIDERATION WAS TAKEN INTO CONSIDERATION ACCORDINGLY REGARDING THE OFFICES 66, 68, 69A WITHIN THE MEANING OF ITA. NO.1042/M/2013 A.Y. 2009 - 10 3 SECTION 48 OF THE I.T. ACT, 1 961. THE ASSESSEE SOLD OFFICE FIT UP, FURNITURE & EQUIPMENT WITH SALE VALUE OF RS. 8,22,685/ - , RS.55,23,824/ - AND RS.23,71,491/ - RESPECTIVELY AND HAS DEDUCTED THE WRITTEN DOWN VALUE OF THE ABOVE BLOCKS AS APPEARING IN THE BALANCE SHEET OF 2004 - 05 TO ARRIVE AT SHORT TERM CAPITAL LOSSES OF RS. 8,72,034/ - , RS.37,74,985/ - AND RS.15,05,346/ - RESPECTIVE LY. THE ASSESSEE DID NOT S HOW PROPERLY WITH REGARD TO THE NON - REALIZATION OF THE AMOUNT WITH REGARD TO THE FURNITURE AND FIXTU RE. THEREFORE, THE CLAIM WAS DECLINED AND ACCORDINGLY THE ADDITION TO THE TUNE OF RS. 61,52,965/ - WAS MADE TO THE INCOME OF THE ASS ESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 7,75,72,770/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAID ADDITION , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE N O. 1: - 4. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADOPTION OF VALUES OF THE THREE OFFICE PREMISE COMPUTED ON THE BASIS OF STAMP VALUATION OF REVENUE AUTHORITY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN AS PER SECTION 50C OF THE I.T. ACT, 1961. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE COLLECTOR OFFICE HAD COMPUTED MARKET VALUE BASED UPON THE RATE OF RS. 3,50,900/ - PER SQ. METER FOR ZONE INSTEAD OF RS.3,25,100/ - PER SQ. METER FOR CORRECT ZONE NO. 1/5A. BUT T HE ASSESSING OFFICER HAS WRONGLY ITA. NO.1042/M/2013 A.Y. 2009 - 10 4 CONSIDERED THE ZONE WHICH IS AN APPARENT ERROR AS OFFICE SITUATED AT PLOT NOS. 73A, 74, 83, 84 AND 85 FELL UNDER ZONE 1/5A HAVING RATE OF RS.3,25,100/ - PER SQ. METER , T HEREFORE, IN THE SAID CIRCUMSTANCES THE ASSESSIN G OFFICER HAS WRONGLY CONSIDERED VALUE FOR ASSESSING THE SHORT TERM CAPITAL GAIN WHICH IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. IT IS ALSO ARGUED THAT THE ASSESSEE RECEIVED THE CORRECT VALUE CERTIFICATE ISSUE D FROM THE OFFICE OF THE DEPUTY DIRE CTOR OF TOWN PLANNING AND VALUATION DEPARTMENT, MUMBAI CERTIFYING THE CORRECT ZONE1/5A AND CORRECT MARKET VALUE TO THE TUNE OF RS.3,25,100/ - PER SQ. METER FOR THE PLOT NOS. 73A, 74, 83, 84 AND 85 ON WHICH THE BUILDING AT MAKER TOWER F, CUFFEE PARADE, MUMBA I 400005 IS LOCATED. THE SAID LETTER WAS ANNEXED 1 4 IN THE PAPER BOOK AND ACCORDINGLY, TH E CALCULATION WAS REQUIRED TO BE DONE BY THE AO . THEREFORE, TH E FINDING OF THE CIT(A) AFFIRMING THE ORDER OF THE AO IS NOT JUSTIFIABLE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. AFTER DUE CONSIDERATION OF THE ARGUMENT ADVANCED BY THE LD. R EPRESENTATIVE OF THE PARTIES AND PERUSING THE RECORD, WE NOTICED THAT THE ASSESSEE SOLD ITS OFFICES BEARING NOS. 66,68 AND 6 9A AND MAKER TOWER F, CUFFEE PARADE, MUMBAI WHICH WERE CAPITALIZED AS PART OF THE BLOCK OF ASSETS BY VIRTUE OF SALE - DEED DATED 17 TH NOVEMBER, 2008 IN A CONSIDERATION OF RS. 1,50,22,000/ - , RS.2,09,79,000/ - & RS.1,52,81,000/ - RESPECTIVELY. SHORT TERM CAPITAL GAIN WAS COMPUTED AS SALE VALUE EXCEEDING THE TOTAL BLOCK VALUE. THE OFFICE BUILDING PLOT NOS. WERE SITUATED AT PLOT N. 73A ITA. NO.1042/M/2013 A.Y. 2009 - 10 5 74, 83,84 AND 85. THE ASSESSEE PROPERTY FA LLS UNDER THE ZONE 1/5A WHEREAS THE AO HAD COMPUTED THE MARKET VALUE BASED AT RS. 3,50,9 00 / - PER SQ. METER FOR IN CORRECT ZONE NO. . THE CALCULATION SEEMS TO BE WRONG BECAUSE THE PROPERTY SITUATED IN ZONE 1/5A HAVING DIFFERENT RATES WHEREAS CALCULATION WAS MADE ON THE BASIS OF THE PROPERTY STATED IN THE ZONE . THE LETTERS OF THE SOCIETY ARE ON THE FILE ATTACHED AS ANNEXURE 1A, 1B AND 1C WHICH LIES AT PAGE NO. 10,11 AND 12 OF THE PAPER BOOK . ON THE ASKING OF THE ASSESSEE , THE ASSESSING OFFICER PROVIDED THE CORRECT ZONE WHICH LIES AT PAGE NO. 68 OF THE PAPER BOOK .I N T HE LIGHT OF THE SAID EVIDE NCES, W E ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS NOT CORRECT BECAUSE THESE PIECE OF EVIDENCE WERE NOT CONSIDER ED BY HIM . ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND REMAND THIS ISSUE BEFORE THE AO TO RE - CONSIDER THE MATT ER OF CONTROVERSY IN THE LIGHT OF THE OBSERVATION MADE ABOVE IN ACCORDANCE WITH LAW BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . ACCORDINGLY, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 2: - 5. UNDER THI S ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF DISALLOWANCE OF THE SHORT TERM CAPITAL LOSS OF RS. 8,72,034/ - TOWARDS BLOCK OF OFFICE FIT UPS, RS.37,74,985/ - TOWARDS BLOCK OF FURNITURE AND RS.15,05,946/ - TOWARDS BLOCK OF EQUIPMENT. IT IS ARGUED THAT THE LD. REPRESENTATIVE OF THE ASSESSEE THAT THE ASSESSEE WAS RUNNING HIS ITA. NO.1042/M/2013 A.Y. 2009 - 10 6 BUSINESS IN THE SIX OFFICES AND THREE OFFICE S WERE SOLD IN THE F.Y. 2008 - 09 AND THE REMAINING ASSETS WAS SHOWN IN RECORDS IN VIEW OF SECTION 32(3) OF THE ACT. IT IS ARGUED THAT THE B LOCK ASSETS CEASED TO BE EXIST IN THE F.Y. 2008 - 09 AND DIFFERENCE BETWEEN OF SUB - VALUE AND SHARE VALUE OF CLAIMED AS SHORT TERM CAPITAL GAIN LOSS. THE PARTNER CONFIRM ED THE LOSS WHICH WAS WRITTEN IN THE BOOKS BUT THE AO DID NOT ALLOW THE SAME , THEREFORE, T HE FINDING OF THE CIT(A) IS WRONG AND IS LIABLE TO BE SET ASIDE . HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. IN VIEW OF THE ARGUMENT ADVANCED BY THE LD. REPRESENT ATIVE OF THE PARTIES AND PERUSING THE RECORD. WE ARRIVE D AT THIS CONCLUSION THAT THIS ISSUE WAS NOT PROPERLY CONSIDERED BY THE ASSESSING OFFICER IN THE LIGHT OF THE EVIDENCE ADDUCED BY THE ASSESSEE. THE ASSESSEE SOLD THREE PREMISES IN THE F.Y. 2008 - 09. THE ASSETS WHICH WAS SALEABLE , WAS SO LD IN THE F.Y. 2008 - 09 AND THE REMAINING WAS WRITTEN IN VIEW OF THE PROVISION U/S 32(1)(B) OF THE ACT. THE DIFFERENCE BETWEEN THE PENDING STOCK VALUE AND SALE VALUE WAS CLAIMED AS SHORT TERM CAPITAL LOSS. THE PARTNERS HAVE ALSO FILED THE CONFIRMATION DATE D 19.09.2011 WITH REGARD TO THE REMAINING ASSETS WRITTEN IN THE BOOKS COPY OF WHICH ENCLOSED AS ANNEXURE 20. CERTIFICATE COPY OF LEDGER ACCOUNT SALARY WAS ALSO SUBMITTED BEFORE THE AO WHICH WAS NOWHERE DISCUSSED. THE BALANCE HAS BEEN SHOWN AS NIL IN CONNE CTION WITH THE SAID THREE OFFICE S IN THE YEAR ENDED MARCH 31 ST , 2009 . T HE ASSESSEE HAS ALSO SUBMITTED TH E REPORT OF INDEPENDENT VALUER IN ITS RETURN IN THE MARCH 2009. T HESE ITA. NO.1042/M/2013 A.Y. 2009 - 10 7 PIECE OF EVIDENCE NOWHERE CONSIDERED AND DISCUSSED WHILE DECIDING THE ISSUE NO. 2 . I N VIEW OF THE OBSERVATION MADE IN DECIDING THIS ISSUE WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE , THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DECIDE THE MATTER AFRESH AFTER GIVING AN O PPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE A LLOWED FOR STATISTICAL PUR POSE . ORDER PRONOUNCED IN THE OPEN COURT ON 28.03 . 201 8 . SD/ - SD/ - ( G.S. PANNU ) ( AMARJIT SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 28.03 . . 201 8 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2 . / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI