DCIT CIR 3, THANE V. RAMESH MADHAVRAO BHUJANG, MUMBAI

ITA 1072/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5498 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 15-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI LD
• Assessee Lawyers: RAJ KUMAR SINGH LD
• Keywords: Salary income; Cost of acquisition; Tax effect
• Section: 143(3)

Judgement Text

ITA NO.1072/MUM/2017 RAMESH MADHAVRAO BHUJANG ASSESSMENT YEAR-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1072/MUM/2017 ( / ASSESSMENT YEAR: 2012-13) DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -3 ROOM NO.02, 6 TH FLOOR ASHAR IT PARK B-WING WAGLE INDUSTRIAL ESTATE THANE(W)-400 604 / VS. RAMESH MADHAVRAO BHUJANG ROOM NO.402, SAKET APARTMENT DR.M.B.RAUT ROAD SHIVAJI PARK, DADAR(W) MUMBAI-400 028 ! ./ ./PAN/GIR NO. ALHPB-1341-D ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : RAJ KUMAR SINGH, LD. AR RE VENUE BY : RAM TIWARI, LD. DR / DATE OF HEARING : 17/07/2018 / DATE OF PRONOUNCEMENT : 20/07/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2012-13 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-2, THANE [CIT(A)], APPEAL NO.80/15-16 DATED 29/11/2016 BY RAISING THE FOLLOWING GROUNDS OF APPEAL:- ITA NO.1072/MUM/2017 RAMESH MADHAVRAO BHUJANG ASSESSMENT YEAR-2012-13 2 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE C IT(A) IS CORRECT IN TREATING 26/06/2008 (DATE OF FULL PAYMENT) AS DATE OF ACQUIS ITION WITHOUT APPRECIATING THE FACT THAT THE DATE TO REGISTERED DOCUMENT, I.E. 30/09/20 09 IS THE CORRECT DATE OF ACQUISITION AS PER THE PROVISIONS OF THE IT ACT, 19 61 AND THEREFORE BY SELLING OUT THE PROPERTY (VIDE SALE AGREEMENT DATED 29/07/2011), TH E GAIN ARISES IN THE HANDS OF ASSESSEE IS IN THE NATURE OF SHORT TERM CAPITAL GAI N. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE C IT(A) WAS CORRECT IN NOT RELYING UPON THE CASE OF GULSHAN MLIK VS CIT [2014] 43 TAXMANN.COM 200 (DELHI) WHEREIN THE FACTS AND CIRCUMSTANCES ARE SIMILAR TO THE CASE OF ASSESSEE. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-CIRCLE-3, THANE [AO] U/S 143(3) ON 27/02/2015 WHEREIN THE INCOME OF THE ASSESSEE HAS B EEN ASSESSED AT RS.187.41 LACS AS AGAINST RETURNED INCOME OF RS.68. 77 LACS FILED BY THE ASSESSEE ON 30/07/2012. 2. THE ASSESSEE BEING RESIDENT INDIVIDUAL REFLECTED INCOME FROM SALARY, CAPITAL GAIN AND OTHER SOURCES DURING THE IMPUGNED AY. THE ONLY DISPUTE UNDER APPEAL IS NATURE OF CAPITAL GAIN BY T HE ASSESSEE FROM SALE OF A FLAT SITUATED AT SARVODAYA HEIGHTS, MULUND . THE AFORESAID FLAT WAS SOLD FOR RS.118.64 LACS VIDE REGISTERED SALE DOCUME NT DATED 02/08/2011. THE SAID FLAT WAS PURCHASED BY THE ASSE SSEE FROM NAHUR & SETH ENTERPRISES VIDE ALLOTMENT LETTER 10/03/2008, THE RIGHTS OF WH ICH WERE CONVEYED VIDE REGISTERED AGREEMENT DATED 30/09 /2009. THE COST OF THE PROPERTY WAS RS.87.21 LACS INCLUDING REGISTRATI ON & STAMP DUTY OF RS.4.27 LACS. THE ASSESSEE REFLECTED THE CONSEQUENT IAL GAIN AS LONG TERM CAPITAL GAIN SINCE THE DURATION OF PERIOD AS COUNTED FROM DATE O F ALLOTMENT / FINAL PAYMENT WAS MORE THAN THREE YEARS . HOWEVER, NOT CONVINCED, LD. AO OPINED THAT THE AFORESAID GAIN WA S IN THE NATURE OF SHORT TERM CAPITAL GAIN SINCE HOLDING PERIOD AS COUNTED FROM REGISTERED PURCHASE DOCUMENT TO SALE DOCUMENT WAS LESS THAN TH REE YEARS. ITA NO.1072/MUM/2017 RAMESH MADHAVRAO BHUJANG ASSESSMENT YEAR-2012-13 3 ACCORDINGLY, THE AFORESAID INCOME WAS ASSESSED AS SHORT TERM CAPITAL GAIN AND THE BENEFIT OF INDEXATION WAS DENIED TO THE ASS ESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/11/2016 WHE REIN THE MATTER WAS CONCLUDED IN THE FOLLOWING MANNER:- 6. I HAVE CAREFULLY CONSIDERED FACTS OF THE CASE, F INDINGS OF THE AO IN THE ASSESSMENT ORDER, SUBMISSIONS OF THE LD. AR AND MAT ERIAL PLACED ON RECORD. FROM THE FACTS OF THE CASE, IT IS NOTICED THAT DURING TH E YEAR UNDER APPEAL, THE APPELLANT HAD SOLD THE RIGHT TO ACQUIRE THE FLAT NO. 1202, IN SARVODAYA HEIGHTS, MULUND VIDE AGREEMENT TO SALE DATED 29.07.2011. WHICH WAS REGIS TERED ON 02.08.2011, FOR TOTAL CONSIDERATION OF RS.1,18,64,300/-. THE SAID FLAT WA S BOOKED WITH M/S NAHAR & SETH ENTERPRISE, BY PAYING RS.11,00,000/- ON 10.03.2008, FOR TOTAL CONSIDERATION OF RS.83,30,000/-. THE BALANCE AMOUNTS OF RS.29,00,000 /- ON 28.03.2008. RS.8,00,000/- ON 25.06.2008 AND RS.35,30,000/- ON 2 5.06.2008 WERE ALSO PAID. HOWEVER, THE PURCHASE AGREEMENT DATED 29.09.2009 WA S REGISTERED ON 30.09.2009 DUE TO HIS SERVICE/EMPLOYMENT COMPULSION. THE APPEL LANT ACCORDINGLY TREATED THE HOLDING PERIOD OF RIGHT IN THE FLAT FOR MORE THAN 3 YEARS (10.03.2008/26.06.2008 TO 02.08.2011), AND DETERMINED THE RESULTANT LTC LOSS AT RS.1,57,414/- AGAINST SALE OF THE SAID FLAT AFTER TAKING THE BENEFIT INDEXATIO N OF THE COST OF FLAT AND DECLARED THE SAME IN ROI. 6.1 THE AO, HOWEVER, DID NOT ACCEPT THE ABOVE DATES I.E. 10.03.2008/26.06.2008 AS DATE OF PURCHASE OF FLAT, RATHER TAKEN THE DATE OF REGISTRATION OF PURCHASE AGREEMENT I.E.29.07.2009, AS DATE OF PURCHASE AND ACCORDINGLY HELD THAT THE RIGHT IN THE FLAT WAS HELD FOR PERIOD OF LESS THAN 3 YEARS (02.08.2011 TO 29.07.2009), AND ACCORDINGLY DETERMINED THE STCG (SHORT TERM CAPITAL GAIN) AT RS .1,18,,64,300/- WITHOUT EVEN DEDUCTING THE COST OF LAND WITH THE PLEA THAT THE R IGHT WAS HELD FOR PERIOD OF LESS THAN 3 YEARS. THE AO FURTHER HELD THAT ON THE DATE OF SALE, THE SAID BUILDING WAS UNDER CONSTRUCTION AND ASSESSEE HAD NOT RECEIVED THE POSS ESSION OF THE SAID FLAT, THEREFORE, THE APPELLANT IS NOT ELIGIBLE FOR ANY IN DEXATION. 6.2 FROM THE ABOVE FACTS IT IS SEEN HAT THE RIGHT I N THE FLAT WAS ALLOTTED ON 10.03.2008 AND ENTIRE PAYMENTS OF RS.83,30,000/- AG AINST PURCHASE OF SAID FLAT WAS MADE BY 26.06.2008. ON VERIFICATION OF THE BANK ACC OUNT OF THE APPELLANT IT IS SEEN THAT ENTIRE AMOUNT OF RS.83,30,000/- WAS PAID THROU GH BANKING CHANNELS AND DULY DEBITED IN THE BANK ACCOUNT OF THE APPELLANT BY 26. 06.2008. DUE TO SERVICE COMPULSION, AS STATED ABOVE, THE REGISTRATION OF TH E FLAT WAS DONE ON 29.09.2009, BY PAYING THE DUE STAMP DUTY, AS APPLICABLE ON THE DAT E OF PURCHASE. THE RIGHT IN THE SAID FLAT WAS SOLD FOR RS.1,18,64,300/- ON 02.09.20 11. IN VIEW OF THESE FACTS, IT IS SEEN THAT THE APPELLANT HAD HELD THE RIGHTS IN THE SAID FLAT, FOR A PERIOD OF MORE THAN 3 YEARS (02.08.2010 TO 10.03.2008/26.06.2008). HENC E, THE CONTENTION OF THE AO IS INCORRECT TO TREAT THE SAID RIGHT AS SHORT TERM ASS ET. IT IS FURTHER NOTICED THAT THE AO HAD NOT EVEN ALLOWED THE SET OFF OF COST OF FLAT I. E. RS.83,30,000/- AGAINST SALE CONSIDERATION OF RS.1,18,64,300/-, THEREBY WRONGLY ASSESSED THE ENTIRE SALE CONSIDERATION AS STCG. CONSIDERING THE FACTS IN ENT IRETY, CBDT CIRCULAR NO. 471 ITA NO.1072/MUM/2017 RAMESH MADHAVRAO BHUJANG ASSESSMENT YEAR-2012-13 4 DATED 15.10.1986, VARIOUS CASE LAWS, AS RELIED BY T HE LD. AR, ETC., IN MY CONSIDERED VIEW, THE APPELLANT HAD HOLD THE RIGHT IN THE SAID FLAT FOR PERIOD OF MORE THAN 3 YEARS, THEREFORE, THE AO IS HEREBY DIRECTED TO ALLOW THE C OST OF LAND OF RS.83,30,000/- AND DETERMINED THE CORRECT AMOUNT OF RESULTANT GAIN, AS PER PROVISION OF THE ACT. ALL THE GROUNDS OF APPEAL ARE ALLOWED, ACCORDINGLY. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE [AR], SHRI RAJ KUMAR SINGH VEHEMENTLY SUPPORTED THE STAND TAKEN BY LD. CIT(A) WHICH HAS BEEN CONTROVERTED BY LD. DEPARTMENTAL REPRESENTATIVE [DR ], SHRI. RAM TIWARI BY SUPPORTING THE STAND OF LD. AO. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAD ACQUIRED THE RIGHT IN THE PROPERTY PURSUANT TO ALLOTMENT LET TER DATED 10/03/2008, A COPY OF WHICH HAS BEEN PLACED ON PAGE NUMBER-111 OF THE PAPER-BOOK. THE ASSESSEE HAS MADE THE FULL PAYMENT OF RS.83.30 LACS BY 25/06/2008. THE SAID FACT IS DULY SUPPORTED BY THE BANK STATEMENTS AS PLACED ON RECORD FROM WHERE THE PAYMENTS WERE MADE BY THE ASSESSEE. THE ABOVE STATED FACT DEMONSTRATES THAT THE ASSESSE E HAD ACQUIRED A IDENTIFIABLE RIGHT IN A SPECIFIC PROPERTY AND ALSO MADE THE FULL PAYMENT THEREOF BY 25/06/2008. THE REGISTRATION OF PURCHASE DOCUMENTS, IN SUCH A CASE, WAS TO CONVEY THE OWNERSHIP RIGHTS TO THE A SSESSEE WHICH ALREADY EXISTED IN ASSESSEES FAVOR BY WAY OF ALLOT MENT LETTER DATED 10/03/2008. IT IS ALSO UNDISPUTED FACT THAT THE SAM E PROPERTY HAS BEEN SOLD BY THE ASSESSEE DURING IMPUGNED AY. THIS BEING THE CASE, WE HAVE NO HESITATION IN CONCURRING WITH THE STAND OF LD. C IT(A), IN THIS REGARD. 6. ANOTHER ASPECT OF THE CASE IS THAT LD. AO HAS AD DED ENTIRE SALE CONSIDERATION IN THE HANDS OF THE ASSESSEE WITHOUT DEDUCTING THERE-FROM ITA NO.1072/MUM/2017 RAMESH MADHAVRAO BHUJANG ASSESSMENT YEAR-2012-13 5 THE COST OF ACQUISITION, WHICH IS CLEARLY ERRONEOUS . THE COMPUTATIONS AS PLACED ON RECORD BY LD. AR REVEAL THAT IF THE COST OF ACQUISITION IS ALLOWED TO THE ASSESSEE, THE TAX EFFECT OF THE IMPU GNED ADDITIONS SHALL BE BELOW RS.20 LACS AND THE SAME IS SQUARELY COVERE D BY THE RECENT LOW TAX EFFECT CIRCULAR NO. 03/2018 DATED 11/07/201 8 ISSUED BY THE CBDT AND KEEPING IN VIEW OF THE SAME, THE APPEAL OF THE REVENUE IS OTHERWISE NOT MAINTAINABLE. 7. ON BOTH COUNTS, WE CONCUR WITH THE STAND OF LD. AR AND THEREFORE, CONFIRM THE STAND OF LD. FIRST APPELLATE AUTHORITY. 8. RESULTANTLY, THE REVENUES APPEAL STAND DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 20.07.2018 SR.PS:-THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + ,$ - , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI