A.C.I.T., Circle- XXX,Kol, Kolkata V. M/s. Besco Ltd., Kolkata

ITA 1064/KOL/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4965 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 29-08-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 18-06-2009
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL
• Assessee Lawyers: MANJU LATA SHUKLA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition
• Section: 143(3)

Judgement Text

I.T.A. NO. 1064/KOL./2009 ASSESSMENT YEAR: 2003-2004 & C.O. NO. 49/KOL/2009 (IN ITA NO. 1064/KOL/2009) ASSESSMENT YEAR: 2003-2004 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1064/KOL/ 2009 ASSESSMENT YEAR : 2003-2004 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .........................APPELLANT CENTRAL CIRCLE-XXX, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 -VS.- M/S. BESCO LIMITED,................................ ......................................RESPONDENT 5/2, RUSSEL STREET, KOLKATA-700 071 [PAN : AABCB 2723 R] & C.O. NO. 49/KOL/2009 (ARSING OUT OF I.T.A. NO. 1064/KOL/ 2009) ASSESSMENT YEAR : 2003-2004 M/S. BESCO LIMITED,................................ ......................................CROSS OBJECTO R 5/2, RUSSEL STREET, KOLKATA-700 071 [PAN : AABCB 2723 R] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. .........................RESPONDENT CENTRAL CIRCLE-XXX, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 APPEARANCES BY: SHRI RAJAT KUMAR KUREEL, FOR THE DEPARTMENT SMT. MANJULATA SHUKLA, FCA., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : MARCH 16, 2016 DATE OF PRONOUNCING THE ORDER : APRIL 29, 2016 I.T.A. NO. 1064/KOL./2009 ASSESSMENT YEAR: 2003-2004 & C.O. NO. 49/KOL/2009 (IN ITA NO. 1064/KOL/2009) ASSESSMENT YEAR: 2003-2004 PAGE 2 OF 7 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-III, KOLKATA DATED 17.03.2009 AND THE SOLITARY GROUND RAISED BY THE RE VENUE THEREIN READS AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN CALCULATING SHORT TERM CAPITA L GAIN FROM SALE OF FLAT AND GARAGE BY ALLOWING DOUBL E DEDUCTION FROM THE RECEIPT ON SALE ON ACCOUNT OF LO NG TERM CAPITAL GAIN CALCULATED AND COST OF ACQUISITIO N BOTH. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 01.12.2003 DECLARING TOTAL INCOME AT NIL AND MAKING PAYMENT OF TAX ON THE BASIS OF BOOK PROFIT UNDER SECTION 115JB. AS NOTED BY THE AS SESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSES SEE-COMPANY WAS THE OWNER OF A LAND SITUATED AT 8, ANIL MAITRA ROAD, KO LKATA-700 019 AND PART OF THE SAME WAS PUT UP FOR DEVELOPMENT AS PER THE J OINT VENTURE AGREEMENT ENTERED INTO WITH M/S. SWASTIC NIRMAN PVT . LIMITED ON 26.12.2000. AS PER THE SAID AGREEMENT, THE ASSESSEE HAD RETAINED THE VARIOUS FLATS FORMING PART OF THE NEW BUILDING BEIN G 50% OF THE TOTAL BUILT UP AREA TOGETHER WITH THE CORRESPONDING 50% SHARE I N COMMON AREAS AS WELL AS CAR PARKING SPACE. ACCORDINGLY, TOTAL TWENT Y FLATS OF THE TOTAL AREA OF 27,094 SQ.FT. ALONG WITH 15 COVERED GARAGES WERE RECEIVED BY THE ASSESSEE UNDER THE JOINT VENTURE AGREEMENT. OUT OF THE SAID FLATS, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION SOLD F LATS WITH TOTAL AREA OF 23,872 SQ.,FT. ALONG WITH SEVEN COVERED GARAGES AND THREE OPEN GARAGES. BY RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS.- ESTATE OF OMPRAKASH JHUNJHUNWALA REPOR TED IN 254 ITR 152, THE ASSESSING OFFICER COMPUTED LONG-TERM CAPITAL GA IN ARISING FROM THE I.T.A. NO. 1064/KOL./2009 ASSESSMENT YEAR: 2003-2004 & C.O. NO. 49/KOL/2009 (IN ITA NO. 1064/KOL/2009) ASSESSMENT YEAR: 2003-2004 PAGE 3 OF 7 SALE PROCEEDS OF LAND AND SHORT-TERM CAPITAL GAIN A RISING FROM THE SALE PROCEEDS OF FLATS AS UNDER IN THE ASSESSMENT COMPLE TED UNDER SECTION 143(3) VIDE AN ORDER DATED 31.03.2006:- COST OF ACQUISITION (AS PER AGREEMENTS) OF 15 COTTAHS OF LAND RS.1,70,334 INDEXED COST 447X 170334/150 RS.5,07,595/- LONG TERM CAPITAL GAIN COST OF CONSTRUCTION OF 27094 SQ.FT. OF FLAT RS.1,69,55,334/- LESS: INDEX COST OF ACQUISITION OF LAND (15 KOTTACH) RS. 5,07,595/- LONG TERM CAPITAL GAIN RS.1,64,44,439/- THE SHORT TERM CAPITAL GAIN:- THE SOT OF 15 + 15 COTTAS LAND (INDEXED COST) RS.10,15,190/- THE COST OF CONSTRUCTION RS.1,69,55,334/- TOTAL COST FOR 27094 SQ.FT. RS.1,79,70,524/- SO THE COST OF 23872 SQ.FT. (SOLD RS.1,79,70,524/- X 23872 DIVIDED BY 27094 RS.1,58,33,481/- THE REALIZATION OF SALE OF FLAT DURING THE YEAR GARRAGE RS.8,50,000/- FLAT OF 23872 SQ.FT. @RS.144/- PER SQ.FT. RS.3,45,42,784/- I.T.A. NO. 1064/KOL./2009 ASSESSMENT YEAR: 2003-2004 & C.O. NO. 49/KOL/2009 (IN ITA NO. 1064/KOL/2009) ASSESSMENT YEAR: 2003-2004 PAGE 4 OF 7 (AS PER SEC. 50C) TOTAL REALISATION RS.3,53,92,784/- LESS: COST OF ACQUISITION RS.1,58,33,481/- SHORT TERM CAPITAL GAIN RS.1,95,59,303/- 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING THE QUANTUM OF LONG-TERM A ND SHORT-TERM CAPITAL GAIN COMPUTED BY THE ASSESSING OFFICER. AFT ER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND THE RELEVANT M ATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) CONFIRMED THE QUANTUM OF LONG-TERM CAPITAL GAIN AS COMPUTED BY THE ASSESSING OFFICER. HE, HOWE VER, DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE SHORT-TERM CAPI TAL GAIN AFTER TAKING INTO CONSIDERATION CERTAIN DIRECTIONS GIVEN BY HIM, WHICH RESULTED IN THE REDUCTION OF SHORT-TERM CAPITAL GAIN FROM RS.1,95,5 9,303/- TO RS.55,14,750/-. THE WORKING OF THE REVISED SHORT-TE RM CAPITAL GAIN AS DONE BY THE ASSESSING OFFICER AS PER THE DIRECTION OF THE LD. CIT(APPEALS) IS AS UNDER:- CALCULATION OF SHORT TERM CAPITAL GAIN TOTAL REALISATION RECEIVED FOR FLAT (AS PER 50C) 34,542,784/- GARRAGES 8,50,000/- 35,392,784/- SALE VALUE OF LAND TO CUSTOMER LESS : INDEXED COST 3,40,667/150.447 1,49,39,017/- 10,15,187/- I.T.A. NO. 1064/KOL./2009 ASSESSMENT YEAR: 2003-2004 & C.O. NO. 49/KOL/2009 (IN ITA NO. 1064/KOL/2009) ASSESSMENT YEAR: 2003-2004 PAGE 5 OF 7 LONG TERM CAPITAL GAIN ON LAND 13,923,830/- SALE VALUE OF FLAT SALE VALUE OF GARAGE 1,96,03,767/- 8,50,000/- RS.20,453,767/- LESS: COST OF CONSTRUCTION OF FLAT AND GARAGES RS.14,939.017/- SHORT TERM CAPITAL GAIN ON FLAT AND GARRAGE RS.5,514,750/- AGGRIEVED BY THE RELIEF ALLOWED BY THE LD. CIT(APPE ALS) TO THE ASSESESE, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TR IBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY GRI EVANCE OF THE REVENUE AS PROJECTED IN THE SOLITARY GROUND RAISED IN ITS A PPEAL AND FURTHER REITERATED BY THE LD. D.R. AT THE TIME OF HEARING B EFORE US IS THAT THE LD. CIT(APPEALS) HAS ALLOWED DOUBLE DEDUCTION TO THE AS SESSEE WHILE COMPUTING THE SHORT-TERM CAPITAL GAIN ON ACCOUNT OF COST OF CONSTRUCTION OF FLATS AND GARAGES AMOUNTING TO RS.1,49,39,017/-, WHICH IS ALSO TAKEN AS THE SALE PROCEEDS RECEIVED FROM THE FLAT-HOLDERS TO WARDS LAND AND ALLOWED AS DEDUCTION SEPARATELY. AFTER HAVING GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD INCLUDING THE RELEVANT PORTION OF THE IMPUGNED ORDER OF THE LD. CIT(APPALS) AND THE REVIS ED WORKING MADE BY THE ASSESSING OFFICER OF SHORT-TERM CAPITAL GAIN AS PER THE DIRECTIONS OF THE LD. CIT(APPEALS), WE ARE UNABLE TO ACCEPT THE S TAND OF THE REVENUE THAT THE LD. CIT(APPEALS) HAS GIVEN DOUBLE DEDUCTIO N OF THE AMOUNT OF I.T.A. NO. 1064/KOL./2009 ASSESSMENT YEAR: 2003-2004 & C.O. NO. 49/KOL/2009 (IN ITA NO. 1064/KOL/2009) ASSESSMENT YEAR: 2003-2004 PAGE 6 OF 7 RS.1,49,39,017/-. IT IS NOT IN DISPUTE THAT THE SAL E OF FLATS BY THE ASSESEE- COMPANY TO THE CUSTOMERS DURING THE YEAR UNDER CONS IDERATION GAVE RISE TO LONG-TERM CAPITAL GAIN TO THE EXTENT THE SALE PR OCEEDS WERE TOWARDS THE VALUE OF LAND AND SHORT-TERM CAPITAL GAIN TO THE EX TENT THE SALE PROCEEDS WERE TOWARDS THE PORTION OF BUILDING, I.E. CONSTRUC TION. IN SO FAR AS THE COMPUTATION OF LONG-TERM CAPITAL GAIN, THERE IS NO DISPUTE. THE ONLY DISPUTE IS RELATING TO THE COMPUTATION OF SHORT TER M CAPITAL GAIN AND THAT TOO ABOUT THE DEDUCTION ALLOWED BY THE LD. CIT(APPE ALS) FIRSTLY ON ACCOUNT OF SALE PROCEEDS RECEIVED FROM THE FLAT-HOLDERS TOW ARDS THE VALUE OF LAND AND SECONDLY ON ACCOUNT OF COST OF CONSTRUCTION, WH ICH ACCORDING TO THE REVENUE HAS RESULTED INTO DOUBLE ADDITION. IT IS PE RTINENT TO NOTE HERE THAT WHILE COMPUTING THE SHORT-TERM CAPITAL GAIN AR ISING FROM THE SALE OF FLATS, ONLY THE CONSIDERATION RECEIVED BY THE ASSES SEE FROM THE FLAT- HOLDERS TOWARDS THE VALUE OF BUILDING IS REQUIRED T O BE TAKEN INTO CONSIDERATION AND TO ARRIVE AT THE SAME, THE SALE P ROCEEDS RECEIVED TOWARDS THE VALUE OF LAND ARE REQUIRED TO BE REDUCE D FROM THE TOTAL SALE PROCEEDS. THE NET AMOUNT THUS REPRESENTED THE CONSI DERATION RECEIVED BY THE ASSESSEE FROM THE FLAT-HOLDERS TOWARDS CONSTRUC TED PORTION OF BUILDING AND THE COST INCURRED ON SUCH CONSTRUCTION IS REQUIRED TO BE REDUCED TO COMPUTE THE SHORT-TERM CAPITAL GAIN ARIS ING TO THE ASSESSEE FROM THE SALE OF CONSTRUCTED AREA OF BUILDING. SINC E THE ASSESSEE RECEIVED 50% OF THE CONSTRUCTED AREA AS CONSIDERATION FOR LA ND AS PER THE DEVELOPMENT AGREEMENT AND RETAINED THE RIGHTS IN TH E LAND AS ATTRIBUTABLE TO SUCH CONSTRUCTED AREA, THE SALE PRO CEEDS RECEIVED BY THE ASSESSEE FROM FLAT-HOLDERS TOWARDS LAND AND THE COS T OF CONSTRUCTION OF THE CORRESPONDING BUILT-UP AREA REMAINED THE SAME A ND THIS RESULTED IN THE CREATION OF A CONFUSION OR MISCONCEPTION IN THE MIND OF THE REVENUE AUTHORITIES THAT THE LD. CIT(APPEALS) HAS ALLOWED D OUBLE DEDUCTION TO THE ASSESSEE. IN OUR OPINION, THERE IS NO SUCH DOUBLE D EDUCTION ALLOWED BY THE LD. CIT(APPEALS) AND THERE BEING NO INFIRMITY I N THE IMPUGNED ORDER OF THE LD. CIT(APPEALS), THE RE-COMPUTATION OF SHOR T-TERM CAPITAL GAIN AS I.T.A. NO. 1064/KOL./2009 ASSESSMENT YEAR: 2003-2004 & C.O. NO. 49/KOL/2009 (IN ITA NO. 1064/KOL/2009) ASSESSMENT YEAR: 2003-2004 PAGE 7 OF 7 MADE BY THE ASSESSING OFFICER WHILE GIVING EFFECT T O THE ORDER OF THE LD. CIT(APPEALS) IS ABSOLUTELY RIGHT. IN THAT VIEW OF T HE MATTER, WE FIND NO MERIT IN THIS APPEAL FILED BY THE REVENUE AND DISMI SS THE SAME. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6. AS REGARDS THE CROSS OBJECTION FILED BY THE ASSE SSEE, IT IS OBSERVED THAT SOME OF THE GROUNDS RAISED THEREIN MERELY IN S UPPORT THE ORDER OF LD. CIT(APPEALS) WHILE OTHERS ARE NOT PRESSED BY THE LD . COUNSEL FOR THE ASSESSEE. WE, THEREFORE, DISMISS THE CROSS OBJECTIO N FILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 29, 20 16. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 29 TH DAY OF APRIL, 2016 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXX, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 (2) M/S. BESCO LIMITED, 5/2, RUSSEL STREET, KOLKATA-700 071 (3) COMMISSIONER OF INCOME-TAX (APPEALS), CENTRAL- III, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.