ITO 24(2)(4), MUMBAI V. AKHTAR MOHD MANSURI, MUMBAI

ITA 1109/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4154 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 01-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: DILIP V LAKHANI
• Keywords: Advance ruling
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.1103/M/2011 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER-24(2)(4), 6 TH FLOOR, C-13 BLDG., R. NO.605, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 VS. SHRI IMTIAZ MOHD. MANSURI, 802/E, NAZARENE APARTMENTS, MARVE ROAD, MALAD (W), MUMBAI 400 095 PAN: AACPM8953E (APPELLANT) (RESPONDENT) ITA NO.1109/M/2011 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER-24(2)(4), 6 TH FLOOR, C-13 BLDG., R. NO.605, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 VS. (I) SMT. KHALIDA AKHTAR MANSURI (WIFE) (II) MS. FARAH WAFI DADAN (DAUGHTER) (III) MR. ASIF AKHTAR MOHD. MANSURI (SON) LEGAL HEIRS OF LATE SHRI AKHTAR MOHD. MANSURI, 802/E, NAZARENE APARTMENTS, MARVE ROAD, MALAD (W), MUMBAI 400 095 PAN: AAHPM0871G (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DILIP V. LAKHANI, A.R. REVENUE BY : SHRI B. YADAGIRI, D.R. DATE OF HEARING : 01.12.2015 DATE OF PRONOUNCEMENT : 05.02.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E REVENUE AGAINST TWO SEPARATE ORDERS BOTH DATED 02.12.2010 OF THE COMMIS SIONER OF INCOME TAX ITA NO.1103/M/2011 & ITA NO.1109/M/2011 SHRI IMTIAZ MOHD. MANSURI & LEGAL HEIRS OF LATE SHRI AKHTAR MOHD. MANSURI 2 (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELATING TO TWO DIFFERENT BUT RELATED (BROTHERS) ASSESSEES. THE COMMON ISSUE TAK EN IN BOTH THE APPEALS IS REGARDING THE YEAR OF TAXABILITY OF THE CAPITAL GAI NS EARNED BY THE ASSESSEES ON THE SALE OF THEIR LAND BY WAY OF COMMON AGREEMENT D ATED 17.05.06. 2. THE BRIEF FACTS OF THE CASE ARE THAT BOTH THE AS SESSEES WERE HAVING OWNERSHIP OF IMMOVABLE PROPERTY AS DETAILED IN THE ASSESSMENT ORDER. SOME PART OF THE PROPERTY WAS OCCUPIED BY A TENANT ALSO. ADJOINING TO THE PROPERTY OF THE ABOVE NAMED ASSESSEES, A PROPERTY BELONGING TO ONE MR. MARIO MIRANDA WAS ALSO SITUATED. BOTH THE ABOVE NAMED ASSESSEES AND MR. MARIO MIRANDA ENTERED INTO A MEMORANDUM OF UNDERSTANDING (MOU) DA TED 01.12.05 WITH THE PURCHASERS. THE TOTAL CONSIDERATION SETTLED FOR TH E SALE OF PROPERTY WAS AT RS.3,12,00,000/- OUT OF WHICH THE ABOVE NAMED ASSES SEES WERE ENTITLED TO RS.2,52,00,000/- AND MR. MARIO MIRANDA TO RS.60,00, 000/-. THE ABOVE NAMED ASSESSEES WERE ALSO THE POWER OF ATTORNEY HOLDERS O F MR. MARIO MIRANDA AND THUS WERE AUTHORIZED TO ENTER INTO TRANSACTION WITH THE PURCHASERS ON BEHALF OF MR. MARIO MIRANDA ALSO. OUT OF THE TOTAL CONSIDERA TION OF RS.2,52,00,000/- PAYABLE TO THE ABOVE NAMED ASSESSEES, THE PURCHASER MADE THE TOTAL PAYMENT AMOUNTING TO RS.1,32,00,000/- SPREAD BETWEEN THE DA TES 01.12.05 TO 15.05.06. A DEED OF CONVEYANCE/AGREEMENT WAS EXECUTED AND REG ISTERED ON 17.05.06 WHEREIN IT HAS BEEN AGREED THAT THE PURCHASERS WOUL D PAY THE BALANCE AMOUNT OF RS.1,20,00,000/- TO THE ASSESSEES ON OR BEFORE 3 0.06.06 AND ON SUCH PAYMENT OF RS.1,20,00,000/- THEY WOULD HAVE RIGHT T O ENTER INTO THE POSSESSION OF THE PROPERTY IN QUESTION. HOWEVER, BEFORE THE P AYMENT OF THE SAID BALANCE AMOUNT OF RS.1,20,00,000/-, THE VENDORS WOULD HAVE FIRST CHARGE ON THE PROPERTY AND THAT CHARGE WOULD STAND VACATED ONLY O N THE PAYMENT OF BALANCE AMOUNT OF RS.1,20,00,000/-. ACCORDING TO THE ASSES SING OFFICER (HEREINAFTER REFERRED TO AS THE AO), THE TRANSFER/TRANSACTION HA D TAKEN PLACE ON THE REGISTRATION OF THE AGREEMENT ON 17.05.06, HENCE TH E ENTIRE CAPITAL GAINS ACCRUED/EARNED BY THE ASSESSEES WERE TAXABLE IN THE A.Y. 2007-08. HOWEVER, ITA NO.1103/M/2011 & ITA NO.1109/M/2011 SHRI IMTIAZ MOHD. MANSURI & LEGAL HEIRS OF LATE SHRI AKHTAR MOHD. MANSURI 3 THE CASE OF THE ASSESSEES IS THAT EVEN THOUGH THE S ALE DEED FOR IMMOVABLE PROPERTY WAS DATED 17.05.06, HOWEVER THE POSSESSION WAS GIVEN AFTER GETTING THE BALANCE PAYMENT AS NARRATED ABOVE. IT HAS ALSO BEEN EXPLAINED THAT DUE TO NON FULFILLMENT OF CERTAIN CONDITIONS BY THE ASSESS EES, THE PURCHASER HAD FILED A SUIT AGAINST THE ASSESSEES IN THE HIGH COURT. ULTI MATELY A COMPROMISE WAS ARRIVED AT BETWEEN THE PARTIES AND AS PER THE CONSE NT TERMS, THE BALANCE PAYMENT WAS RECEIVED BY THE ASSESSEES AND THE PEACE FUL POSSESSION OF THE PROPERTY IN QUESTION WAS HANDED OVER TO THE PURCHAS ERS IN THE MONTH OF MARCH 2008 ONLY. THEREFORE, THE WHOLE CAPITAL GAINS EARN ED BY THE ASSESSEES WERE ACCOUNTED FOR IN THE A.Y. 2008-09 AFTER CLAIMING CE RTAIN DEDUCTIONS UNDER SECTION 54 OF THE ACT. THE AO, HOWEVER, HELD THAT THE CAPITAL GAINS WERE TAXABLE IN THE A.Y. 2007-08 ONLY. 3. ON APPEAL, THE LD. CIT(A), AFTER GOING THROUGH T HE FACTS AND EVIDENCES ON THE FILE, OBSERVED THAT IN THE INSTANT CASE, APA RT FROM THE SALE AGREEMENT IN QUESTION, THE ASSESSEES HAD SIMULTANEOUSLY EXECUTED A MEMORANDUM OF UNDERSTANDING (MOU) IN WHICH THEY HAD AGREED TO HAN DOVER THE PEACEFUL POSSESSION OF THE PROPERTY AFTER GETTING THE PART O F THE PROPERTY VACATED FROM THE TENANT AND COMPLETING CERTAIN OTHER OBLIGATIONS AS DETAILED AND AGREED VIDE THE SAID SEPARATE MOU. SINCE THE ASSESSEES HAD FAI LED TO FULFILL THE CONDITIONS OF THE SAID MOU, THE PURCHASERS HAD FILED A SUIT IN THE HONBLE BOMBAY HIGH COURT AND AS NARRATED ABOVE, SUBSEQUENTLY A SETTLEM ENT WAS REACHED OUT ON 07.03.08. AS PER THE SAID SETTLEMENT, THE BALANCE AMOUNT WAS PAID BY THE PURCHASERS, THE CHARGE OF THE ASSESSEES ON THE PROP ERTY IN QUESTION WAS VACATED AND THE PEACEFUL POSSESSION OF THE PROPERTY WAS HAN DED OVER TO THE PURCHASERS IN THE MONTH OF MARCH, 2008 ONLY AND THE RESULTANT CAPITAL GAINS WERE OFFERED IN A.Y. 2008-09 ACCORDINGLY. THE LD. CIT(A), AFTER APPRECIATING THE FACTS AND EVIDENCES ON THE FILE, HELD THAT THE TRANSACTIONS I N QUESTION WAS COMPLETED IN A.Y. 2008-09 ONLY AND ACCORDINGLY HELD THAT THE CAP ITAL GAINS WERE TAXABLE IN THE A.Y. 2008-09. HE ALSO DIRECTED THE AO TO CONSI DER THE CLAIM OF THE ITA NO.1103/M/2011 & ITA NO.1109/M/2011 SHRI IMTIAZ MOHD. MANSURI & LEGAL HEIRS OF LATE SHRI AKHTAR MOHD. MANSURI 4 ASSESSEE FOR ALLOWANCE OF DEDUCTION UNDER SECTION 5 4 OF THE ACT IN THE A.Y. 2008-09 ONLY. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS FILED THE ABOVE APPEALS BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE SALE AGREEMENT IN QUESTION, THE MOU AND THE OTHER EVIDEN CES RELIED UPON BY BOTH THE PARTIES. WE FIND FROM THE DOCUMENTS ON THE FIL E THAT AS PER THE REGISTRATION AGREEMENT/SALE DEED, THE POSSESSION WAS NOT HANDED OVER TO THE PURCHASERS. IT WAS AGREED TO BE HANDED OVER ON THE PAYMENT OF BALA NCE CONSIDERATION OF RS.1,20,00,000/-. APART FROM THE SAID AGREEMENT AN OTHER MOU WAS ALSO ENTERED INTO BETWEEN THE PARTIES. AS PER THE SAID MOU, THE ASSESSEES, WHO WERE ALSO THE POWER OF ATTORNEY HOLDERS OF MR. MARI O MIRANDA, HAD TO COMPLETE CERTAIN FORMALITIES FOR CLEARANCES OF TITL E OF THE PROPERTY BELONG TO MR. MARIO MIRANDA AND THEREAFTER THE SAME WAS TO BE CONVEYED/SOLD/HANDED OVER TO THE PURCHASERS IN QUESTION. APART FROM THA T, THE ASSESSEES HAD ALSO AGREED TO GET THE PROPERTY VACATED FROM THE TENANT AND HANDOVER THE POSSESSION OF THE SAME TO THE PURCHASERS. SINCE THE ASSESSEES COULD NOT FULFILL THEIR PART OF OBLIGATIONS AS PER MOU, THE DISPUTE HAD ARISEN BETW EEN THE PARTIES RESULTING INTO A CIVIL SUIT/LITIGATION WHICH WAS SETTLED BY T HE PARTIES BY WAY OF CONSENT TERMS AND ULTIMATELY THE VACANT POSSESSION OF THE P ROPERTY WAS OFFERED BY THE ASSESSEES TO THE PURCHASERS IN THE MONTH OF MARCH 2 008. THE LD. A.R. OF THE ASSESSEES HAS BROUGHT OUR ATTENTION TO THE MOU IN Q UESTION AS WELL AS AN AGREEMENT WITH THE TENANT VIDE WHICH HE HAD AGREED TO VACATE THE POSSESSION OF THE PROPERTY IN QUESTION AFTER RECEIVING COMPENSATI ON FROM THE ASSESSEES. THE LD. CIT(A) AFTER FULLY APPRECIATING THE FACTS ON TH E FILE HAS HELD THAT IT IS NOT THE DATE OF AGREEMENT BUT VIRTUALLY THE ACTUAL DATE OF TRANSACTION WHICH MATTERS AND IN FACT, THE TRANSACTION WAS COMPLETED AND POSS ESSION WAS HANDED OVER TO THE PURCHASER BY THE ASSESSEES IN THE MONTH OF MARC H 2008 ONLY. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) I N THIS RESPECT. ITA NO.1103/M/2011 & ITA NO.1109/M/2011 SHRI IMTIAZ MOHD. MANSURI & LEGAL HEIRS OF LATE SHRI AKHTAR MOHD. MANSURI 5 5. SO FAR AS THE CASE LAWS RELIED UPON BY THE LD. D .R. ARE CONCERNED, WE FIND THAT THE SAME ARE NOT STRICTLY APPLICABLE TO T HE CASES OF THE ASSESSEES BEFORE US. SO FAR AS THE DECISION OF THE AUTHORITY OF ADV ANCE RULINGS, NEW DELHI [(2007) 164 TAXMAN 108 (AAR) NEW DELHI] IN THE CA SE OF JASBIR SINGH SARKARIA STRONGLY RELIED UPON BY THE LD. D.R. AND ALSO REFERRED TO IN THE GROUNDS OF APPEAL IS CONCERNED, WE FIND THAT IN THE SAID DECISION, THE AUTHORITY FOR ADVANCE RULINGS HAS HELD THAT THE DATE OF ENTER ING INTO THE AGREEMENT CANNOT BE THE DETERMINING FACTOR RATHER IT IS THE D ISTINCT TRANSACTION, THAT GIVES RISE TO THE EVENT OF ALLOWING THE CONTRACTEE TO ENT ER INTO POSSESSION, THAT MATTERS. IT IS NOT THE DATE OF AGREEMENT BUT THE T ERMS OF THE AGREEMENT THAT MATTERS AND THE TRANSACTION WHICH HAS DIRECT AND IM MEDIATE BEARING ON THE ALLOWING OF POSSESSION THAT AMOUNTS TO TRANSFER. F ROM THE FACTS OF THE CASE, WE FIND THAT EVEN IF, WE APPLY THE ABOVE STATED CASE L AW STRONGLY RELIED UPON BY THE REVENUE, THE FACT REMAINS THAT THE TRANSFER IN QUESTION DID NOT TAKE PLACE ON THE DATE OF EXECUTION OF THE AGREEMENT, RATHER SUBS EQUENTLY IN THE MONTH OF MARCH 2008 AND HENCE THE ABOVE NAMED ASSESSEES RIGH TLY OFFERED THE CAPITAL GAINS IN THE A.Y. 2008-09. WE, THEREFORE, DO NOT F IND ANY INFIRMITY IN THE IMPUGNED ORDERS OF THE LD. CIT(A) AND THE SAME ARE ACCORDINGLY UPHELD. 6. IN THE RESULT, BOTH THE ABOVE TITLED APPEALS OF THE REVENUE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 05.02.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.1103/M/2011 & ITA NO.1109/M/2011 SHRI IMTIAZ MOHD. MANSURI & LEGAL HEIRS OF LATE SHRI AKHTAR MOHD. MANSURI 6 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.