Shri Sameer M Agrawal, Nagpur V. Asstt.Commissioner of Income Tax, Nagpur

ITA 114/NAG/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3188 (ITAT-NAGPUR)
• Duration Of Justice: 7 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 03-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M BHUSARI
• Keywords: Cost of acquisition
• Section: 153A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI RAJENDRA , A M ITA NO. 114 / N AG / 20 1 2 ( ASSESSMENT YEAR : 200 4 - 0 5 ) SHRI SAMEER M. AGRAWAL, PLOT NO.1,GHATATE LAYOUT, CIVIL LINES, NAGPUR (MS) - 440 001 VS. ACIT, CENT. CIR.1(2), NAGPUR - 440 001. PAN/GIR NO. : A AUPA 913 2 H ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. K.P.DEWANI /REVENUE BY : M R. M. BHUSARI DATE OF HEARING : 2 9 TH JAN ., 201 3 DATE OF PRONOUNCEMEN T : 6 TH FEB. ,201 3 O R D E R P ER SHRI R.K.G UPTA, JM : TH IS APPEAL HA S BEEN PREFERRED BY THE ASSESSEE BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAINST THE ORDER OF LEANED CIT (A) - I , NAGPUR (MAHARASHTRA) RELATING TO THE ASSESSMENT YEAR 200 4 - 0 5 , WHICH HA S BEEN HEARD THROUGH E - COURT, MUMBAI . 2 . THE A SSESSEE IN GROUNDS NO.1 & 2 IS OBJECTING IN THE CONFIRMATION OF THE ADDITION OF RS. 14,95,250/ - AS SHORT TERM CAPITAL GAIN UNDER THE PROVISIONS OF SECTION 46(2) OF THE ACT. ITA NO . 114 /20 1 2 2 3 . BRIEF FACTS OF THE C ASE ARE THAT A SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE AND IN PURSUANT TO WHICH NOTICE U/S153A WAS ISSUED AND A RETURN OF INCOME WAS FILED ON 19 - 04 - 2008 SUBSEQUENT TO ISSUE OF NOTICE U/S. 153A OFFERING TOTAL INCOME OF RS.9,63,450/ - . IN THE COU RSE OF ASSESSMENT PROCEEDINGS A.O. OBSERVED THAT INTEREST ON FD OF RS.20,000/ - AND SHORT TERM CAPITAL GAIN ON SALE OF MOUZA DABHA PLOT OF RS.1,07,680/ - WAS NOT OFFERED TO TAX AND WAS BROUGHT TO TAX THE SAID AMOUNTS. FURTHER A.O. OBSERVED THAT THE APPELLANT HAD SOLD A PLOT AT BACHRAJ FACTORY FOR RS.55,00,000/ - AND OFFERED LONG TERM CAPITAL GAIN OF RS.8,50,410/ - . ACCORDING TO A.O. THE COST OF THE PLOT ADOPTED AS RS.40,77,180/ - IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. A.O. OBSERVED THAT THE PROPERTY WAS R ECEIVED ON DISTRIBUTION OF ASSETS OF THE COMPANY M/S BONNIE CONSTRUCTION (P) LTD. THE PROPERTY RECEIVED WAS REGISTERED FOR A VALUE OF RS.32,96,5000/ - THUS THE ASSESSEES SHARE OF VALUE OF ASSETS DISTRIBUTED BY THE COMPANY BEING RS.16,48,250/ - IS REQUIRED T O BE TREATED AS FUL L VALUE OF CONSIDERATION U/S 46(2). WHILE WORKING OUT SHORT TERM CAPITAL GAIN A.O. CONSIDERED THE COST OF ACQUISITION OF SHARES OF BONNIE CONSTRUCTION (P) LTD. AT RS.1,53,000/ - AS PER THE BALANCE SHEET AND DETERMINED STCG OF RS.14,95,250 / - . A.O. ALSO TOOK COGNIZANCE OF THE FACT THAT THE PROPERTY IN QUESTION WAS SOLD BY ASSESSEE ON 10 - 02 - 2004 FOR RS.55,00,000 AND WORKED OUT STCG OF RS.38,51,750/ - . ITA NO . 114 /20 1 2 3 4 . ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT(A) , WHO AFTER TAKING INTO CONSIDERATION TH E SUBMISSIONS AND THE ORDER OF THE AO FOUND THAT THE AO WAS JUSTIFIED IN MAKING THE ADDITIONS ON ACCOUNT OF SHORT TERM CAPITAL GAIN AND ON ACCOUNT OF SALE OF PROPERTY OF BACHRAJ FACTORY. ACCORDINGLY, HE CONFIRMED THE ORDER OF THE AO, HOWEVER, LEARNED CIT(A ) HELD THAT A DEDUCTION OF RS. 5,52,770/ - BEING REGISTRATION CHARGES WAS REQUIRED TO BE REDUCED FROM THE SALE CONSIDERATION OF RS. 55 LAKHS ON ACCOUNT OF SALE OF BACHRAJ FACTORY. 5 . AGGRIEVED THEREBY, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6 . IN REGARD TO GROUNDS NO.1 & 2, WHICH RELATE TO CONFIRMING THE ADDITION OF RS. 14,95,250/ - , IT WAS SUBMITTED THAT ALL THE DETAILS WERE FILED BEFORE AO AS WELL AS BEFORE THE CIT(A) , WHICH WERE SENT TO THE AO FOR HIS REMAND REPORT. THE REMAND REPORT WAS S OUGHT, THEREFORE, LEARNED CIT(A) WITHOUT CONSIDERING THE DETAILS FILED BEFORE HIM, WHICH WAS SENT TO THE AO FOR HIS REMAND REPORT, WAS NOT JUSTIFIED. ATTENTION OF THE BENCH WAS DRAWN AT PAGE 4 TO 17 OF THE PAPER BOOK, WHERE DETAIL OF SHARES AND ALLOTTED I N THE NAME OF MRS. ASHA AGRAWAL, WHO IS MOTHER OF THE ASSESSEE AND THEREAFTER TRANSFERRED ITS SHARES IN THE NAME OF THE ASSESSEE. IT WAS SUBMITTED THAT ALL THESE DETAILS WERE ALSO BEFORE THE AO AND CIT(A) , HOWEVER, THEY HAVE NOT CONSIDERED THESE DETAILS IN RIGHT PERSPECTIVE. IT WAS ALSO SUBMITTED THAT IT IS WRONG ON THE PART OF THE CIT(A) THAT NO DETAILS WERE FILED IN RESPECT OF SALE CONS IDERATION PAID TO THE MOTHER OF THE ASSESSEE IN LAST YEARS. ITA NO . 114 /20 1 2 4 ATTENTION OF THE BENCH WAS DRAWN ON VARIOUS DETAILS PLACED I N THE PAPER BOOK. THESE DETAILS WERE EXPLAINED BY THE LEARNED AR OF THE ASSESSEE. 7 . LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF THE AO & CIT(A) . PARA 6.5 OF THE ORDER OF THE AO AND PARA 7 OF THE ORDER OF THE CIT(A) WERE READ ALSO. IT WAS FURTHER SUBMI TTED THAT COMPLETE DETAILS WERE NOT FILED, THEREFORE, THE AO AND CIT(A) WERE JUSTIFIED IN MAKING ADDITION AND CONFIRMING THE SAME AS SHORT TERM CAPITAL GAIN AT RS. 14,95, 250/ - . 8 . WE HAVE HEARD RIVAL SUBMISSION AND CONSIDERED THEM CAREFULLY. AFTER CONSIDER ING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THE OF SHARES PURCHASED FROM MOTHER OF THE ASSESSEE ADOPTED BY THE AO OF RS. 1,53000/ - WAS NOT JUSTIFIED. WE HAVE GONE THROUGH THE DETAILS FILED BEFORE THE LOWER AUTHORITIES, COPIES OF W HICH HAVE BEEN PLACED IN THE PAPER BOOK AND FOUND THAT ALL THE DETAILS PROVE THAT SHARES WERE PURCHASED FROM THE MOTHER OF THE ASSESSEE AND LATERON THEY WERE SOLD AND CAPITAL GAIN WAS COMPUTED ACCORDINGLY. IT IS SEEN THAT SMT. ASHA AGRAWAL ACQUIRED 1,86,7 50/ - EQUITY SHARES OF BONNIE CONSTRUCTIONS PVT. LTD. FROM BACHHRAJ FACTORIES AND FURTHER 15,300 EQUITY SHARES WERE ALLOTTED BY BONNIE CONSTRUCTIONS PVT. LTD. DIRECTLY TO SMT. ASHA AGRAWAL. ALL THE PAYMENTS WERE MADE BY CHEQUES AND THE SAME HAVE BEEN DULY SHOWN IN THE BALANCE SHEET OF SMT. ASHA AGRAWAL AT PAGE 11 OF THE PAPER BOOK. COPY OF THE SHARE ACQUIRED BY THE BONNIE CONSTRUCTIONS PRIVATE LIMITED IS PLACED AT PAGE 4 OF THE PAPER BOOK, FROM WHICH IT IS SEEN THAT 1,86,750/ - SHARES WERE ITA NO . 114 /20 1 2 5 ALLOTTED IN THE NA ME OF SMT. ASHA AGRAWAL ON 12 - 11 - 2001. THESE SHARES WERE SOLD TO ASSESSEE ON 23 - 10 - 01 AND AN ENDORSEMENT WAS MADE BY THE COMPANY I.E. BONNIE CONSTRUCTIONS PVT. LTD. 30 - 3 - 2003 . IT IS FURTHER STATED THAT MINUTES FOR TRANSFERRING THE SHARES IN THE NAME OF MRS . ASHA AGRAWAL TO MR. SAM I R AGRAWAL, WHO IS ASSESSEE HERE IN THIS CASE, WAS DRAWN ON 30 - 3 - 2003 ITSELF. COPY OF THE MINUTES OF BOARD OF DIRECTORS IS PLACED AT PAGE 6 OF THE PAPER BOOK. THE COMPANY HAS FURTHER ALLOTTED 30,600 SHARES TO SHRI SAMIR AGRAWAL, WH ICH IS MENTIONED IN THE MINUTES PASSED BY THE BOARD OF DIRECTORS ON 30 - 3 - 2003 . COPY OF THE SAME IS PLACED AT PAGE 7.THE PAYMENT ON ACCOUNT OF SHARES TRANSFERRED FROM SMT. ASHA AGRAWAL TO SHRI SAMIR AGRAWAL, WAS NOT MADE, HOWEVER, THE SAME WAS SHOWN AS PAYA BLE. COPY OF THE BALANCE SHEET OF SMT. ASHA AGRAWAL IS PLACED AT PAGE 11 AND A SUM OF RS. 20,85,353/ - IS SHOWN AS OUTSTANDING IN THE NAME OF SHRI SAMIR AGRAWAL. COPY OF THE BALANCE SHEET OF SHRI SAMIR AGRAWAL IS ALSO PLACED AT PAGE 13 AND AN AMOUNT OF RS. 20 ,85,352/ - IS PAYABLE TO SMT. ASHA AGRAWAL , WHO IS MOTHER OF THE ASSESSEE. COPY OF LEDGER AMOUNT OF SMT. ASHA AGRAWAL IN THE BOOKS OF SHRI SAMIR AGRAWAL IS PLACED AT PAGE 14 WHERE ALSO AN AMOUNT OF RS. 20,85, 352.50 / - IS PAYABLE . IT IS FURTHER SEEN THAT THE ASSESSEE HAS PAID PART PAYMENT TO SMT. ASHA AGRAWAL ON ACCOUNT OF PURCHASE OF SHARES OF RS. 12 LACS OR ODD IN SUBSEQUENT YEAR . THE BALANCE SHEET OF SHRI SAMIT AGRAWAL IS PLACED AT PAGE 15 RELATING TO ASSESSMENT YEAR 2004 - 05 . IN THIS BALANCE SHEET, AN AMOUNT OF RS. 8,02,203/ - IS SHOWN AS PAYABLE. COPY OF THE BALANCE ITA NO . 114 /20 1 2 6 SHEET OF SMT. ASHA AGRAWAL IS ALSO PLACED AND SHE HAS SHOWN RECEIVABLE OF RS. 8,02,203/ - IN ASSESSMENT YEAR 2004 - 05. 9 . FROM T HIS FACT IT CLEARLY ESTABLISHES THAT THE ASSESSEE HAS PAID MONEY ON AC COUNT OF PURCHASE OF SHARES FROM SMT. ASHA AGRAWAL. THIS FACT HAS NOT BEEN CONSIDERED BY THE LEARNED CIT(A) IN RIGHT PERSPECTIVE AS HE HAS MENTIONED THAT NO EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE SHOWING THAT THE AMOUNT ON ACCOUNT OF PURCHASE OF SHARES FROM SMT. ASHA AGRAWAL HAS BEEN PAID WHERE AS THE SAME COPY OF ACCOUNT AND SAME BALANCE SHEET WERE PRODUCED BEFORE THE AO AS WELL AS THE CIT(A) . LEARNED CIT(A) ACCEPTED THAT THERE WAS A TRANSFER OF SHARES IN THE NAME OF ASSESSEE FROM SMT. ASHA AGRAWAL, HO WEVER, HE HAD MENTION ED THAT SIMILAR DETAILS OF PAYMENTS BY SHRI SAMIR AGRAWAL TO MOTHER SMT. ASHA AGRAWAL HAS NOT BEEN FURNISHED, WHEREAS ALL THE DETAILS WHICH WERE DISCUSSED ABOVE WERE FILED BEFORE THE LEARNED CIT(A) . ACCORDINGLY, WE DIRECT THAT WHILE C OMPUTING THE CAPITAL GAIN, THE COST OF SHARES PURCHASED FROM SMT. ASHA AGRAWAL TO BE TAKEN AS RS. 20,85,352/ - AGAINST AMOUNT OF RS. 1,53,000/ - ADOPTED BY THE AO. THESE GROUNDS OF THE ASSESSEE ARE DISPOSED OF ACCORDINGLY. 10 . REMAINING GROUND RELATE TO CONF IRMING THE SHORT TERM CAPITAL GAIN OF RS. 38,51,750/ - AS SALE OF PROPERTY. 11 . THE SALE CONSIDERATION OF RS. 55 LACS WAS RECEIVED ON ACCOUNT OF SALE OF BCHRAJ FACTORY. WHILE COMPUTING THE CAPITAL GAIN THE ASSESSEE HAS REDUCED A SUM OF RS. 19,10,093/ - ON ACC OUNT OF CERTAIN AMOUNTS FOR ITA NO . 114 /20 1 2 7 DEVELOPMENT EXPENSES TO NIT AND REGISTRATION EXPENSES, TOTALING TO RS.19,10,093/ - . HOWEVER, THE AO WAS NOT CONVINCED WITH THE COMPUTATION AS HE COMPUTED HE CAPITAL GAIN IN THE FOLLOWING MANNER : - SALE CONSIDERATION RS. 55,00,0 00 LESS COST U/S 46(2) RS 16,48,250 SHORT TERM CAPITAL GAIN RS 38,51,750/ - THE ASSESSEE HAS GIVEN DETAIL OF EXPENSES AS UNDER : - A) DEVELOPMENT EXPENSES RS 970000 B) PAYMENT TO NIT RS 387323 C) REGISTRATION EXPENSES RS 552770 TOTAL RS 1910093 T HE ASSESSEE WAS ASKED TO EXPLAIN THE GENUINENESS OF THESE EXPENSES AND SOURCE OF THESE EXPENSES . THE AO NOTED THAT THIS CLAIM OF EXPENSES WERE NOT MADE IN THE COMPUTATION, THEREFORE, HE DISALLOWED THE CLAIM OF EXPENSES. 12 . BEFORE THE CIT(A) , IT WAS SUBM ITTED THAT THOUGH THEY WERE NOT SHOWN IN THE RETURN BUT THE DETAIL OF THESE EXPENSES FILED BEFORE THE AO . AS PER THE ORDER OF THE AO, THE ASSESSEE DID NOT SUBMIT ANY DETAIL, NEITHER SOURCE OF THESE EXPENSES WERE EXPLAINED, THEREFORE, DEDUCTION OF RS. 1 9 ,10, 093/ - WAS NOT ALLOWED BY THE AO. ALL DETAILS WERE FILED BEFORE THE CIT(A) AND THEY WERE SENT TO THE AO FOR REMAND REPORT. IT WAS SUBMITTED IN THE REMAND REPORT THAT AS REGARDS THE CAPITAL GAIN ON SALE OF PROPERTY, THE ASSESSEE FOR THE FIRST TIME MADE CLAIM OF EXPENDITURE OF DEVELOPMENT EXPENSE, PAYMENT TO NIT AND REGISTRATION EXPENSES, TOTALING TO RS. 19,10,093/ - . IT WAS FURTHER SUBMITTED THAT OUT ITA NO . 114 /20 1 2 8 OF THESE PAYMENTS, CERTAIN PAYMENTS ARE MADE TO THE NAGPUR IMPROVEMENT TRUST AND THE REGISTRATION EXPENSES WHICH THE ASSESSEE HAS INCURRED AND, THEREFORE, WHILE CALCULATING THE CAPITAL GAIN AT RS. 38,51,750/ - IS CORRECT. REPLY IN RESPONSE TO REMAND REPORT WAS ALSO FILED. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, THE CIT(A) FOUND THAT THE A SSESSEE IS UNABLE TO SUBSTANTIATE ITS CLAIM OF EXPENSES ON ACCOUNT OF DEVELOPING EXPENSES AND PAYMENT TO NIT, THEREFORE, HE REJECTED THE EXPLANATION OF THE ASSESSEE, HOWEVER, THE PAYMENT MADE ON ACCOUNT OF REGISTRATION CHARGES AT RS. 5,52,770/ - WAS DIRECTED TO BE ALLOWED. 13 . LEARNED COUNSEL OF THE ASSESSEE INVITED ATTENTION OF THE BENCH AT PAGE 49 OF THE PAPER BOOK WHERE DETAIL OF EXPENSES ARE SHOWN. A SUM OF RS. 3,87,223/ - WAS PAID TO NIT NAGPUR BY CHEQUE ON 23 - 1 - 2004 .FURTHER A PAYMENT OF RS. 5 , 52,770/ - WAS PAID FOR REGISTRATION CHARGES ON 31 - 3 - 2004 . THE COST OF LAND WAS SHOWN AT RS. 19,14,187/ - . 14 . IN FACT, THE ASSESSEE PURCHASED THE SHARE OF RS. 20 LACS OR ODD FROM HIS MOTHER SMT. ASHA AGRAWAL AND IN LIEU OF SHARES THE ASSETS IN SHAPE OF BACHRAJ FACTORY WAS GIVEN TO THE ASSESSEE, VALUE OF THESE ASSET HAS BEEN SHOWN AT RS. 19,14, 187/ - . THE PROFIT OF RS. 14, 22,819/ - WAS SHOWN ON ACCOUNT OF SALE OF THESE LAND. IN THE BALANCE SHEET, THIS PROFIT HAS BEEN INCORPORATED, COPY OF WHICH IS PLACED AT PAGE 15 OF THE CO MPILATION. IT IS FURTHER SEEN THAT THE ASSESSEE MADE A PAYMENT OF RS. 7,75, 375/ - ON 23 - 1 - 2004, BEING AMOUNT PAID TO NIT ON ACCOUNT OF ITA NO . 114 /20 1 2 9 DEVELOPING CHARGES, THESE ARE MADE THROUGH ACCOUNT PAYEE CHEQUES. THEREFORE, IN OUR CONSIDERED VIEW, THERE IS NO DISPUTE IN RESPECT TO EXPENDITURE OF RS. 17,75,375/ - , RS. 3,87,223/ - AND RS. 5,52,770/ - , TOTAL COST OF THE ASSET WAS RS. 19,14,187/ - AND FURTHER THERE IS A LIABILITY OF RS. 1,53,000/ - WHICH WAS ON ACCOUNT OF PURCHASE OF SHARES BY SMT. ASHA AGRAWAL FROM M/S BONNIE CONSTRU CTION PVT. LTD. ORIGINALLY. IF ALL THESE FIGURES ARE TAKEN INTO CONSIDERATION THEN IN OUR CONSIDERED VIEW, DEDUCTION ON ACCOUNT OF DEVELOPMENT CHARGES AND PAYMENT TO NIT ARE ALLOWABLE. ACCORDINGLY, WE REMIT BACK THIS ISSUE TO THE FILE OF THE AO TO CONSIDER ALL THESE PAYMENTS INCURRED ON DEVELOPING CHARGES AND PAID TO NIT AND THEN RECALCULATE THE CAPITAL GAIN ACCORDINGLY. THE ASSESSEE SHOULD BE ALLOWED AN OPPORTUNITY TO EXPLAIN HIS SIDE. WE ORDER ACCORDINGLY. 1 5 . IN THE RESULT , APPEAL OF THE ASSESSEE IS AL LOWED IN PART AND PARTLY FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE E - COURT ON THIS 6 TH DAY OF FEB , 201 3 . - 201 3 SD/ - SD/ - ( ) ( RAJENDRA ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 0 6 / 02 / 201 3 . /PKM , PS ITA NO . 114 /20 1 2 10 COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / N AGPUR . 6. GUARD FILE. //TRUE COPY//