SANGEETA ASHOK SALUJA, MUMBAI V. ITO WD 23(1)(4), MUMBAI

ITA 1161/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1201 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2014
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI; ARJU GARODIA
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Opportunity of being heard; Principle of natural justice
• Section: 50C; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.1161/M/2014 (AY 2009 - 2010) MRS. SA NGEETA ASHOK SALUJA, C/O. M/S. FAIR TRADING COMPANY, SHOP NO.2, BURJOUR BAUG, L.B.S. MARG, BHANDUP (W), MUMBAI 400 078. / VS. ITO - WARD 23(1) - 4, MUMBAI. ./ PAN : AARPS9299N ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : DR. K. SHIVRAM & MR. RAHUL HAKANI / RESPONDENT BY : SHRI ALOK JOHRI & MS. ARJU GARODIA, DR / DATE OF HEARING : 08 .03.2017 / DATE OF PRONOUNCEMENT : 12 .04.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) - 7, MUMBAI DATED 16.12.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GOURDS WHICH READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT (A) HAS FURTHER ERRED IN CONFIRMING THE APPEAL FOR DISALLOWANCES OF RS. 19,54,700/ - CLAIMED AS DEDUCTION U/S 54 OF THE ACT. 2. THE LD CIT (A) HAS NOT APPRECIATED THE FACTS THAT THE TRANSACTION OF THE SALE OF PROPERTY WAS ACTUALLY A TRANSACTION OF GIFT BETWEEN THE TWO BROTHERS WHEREIN NO CONSIDERATION WAS PASSED. 3. THE LD CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE APPLICATION OF SECTION 50C OF THE ACT. 2. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO THE RELEVANT DATE OF POSSESSION OF THE ASSET PURCHASED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS AND THE DEDUCTION U/S 54 OF THE ACT. THE DISPUTE REVOLVES AROUND THE ISSUE IF THE DATE OF REGISTRATION OF THE SAID ASSET SHOULD BE CONSIDERE D FOR DETERMINING THE HOLDING PERIOD OF THE ASSET FOR THE SAID PURPOSES. REVENUE IS OF THE VIEW THAT THE DATE OF REGISTRATION OF THE PROPERTY IE 13.5.2005 MUST BE CONSIDERED FOR COMPUTING 2 THE HOLDING PERIOD OF THE ASSET WHICH WAS ACTUALLY SOLD ON 5.9.2008 , THE DATE OF SALE. HOWEVER, THE CASE OF THE ASSESSEE IS THAT THE DATE 22.10.2007, BEING THE DATE OF POSSESSION OF THE SAID ASSET IS RELEVANT FOR COMPUTING THE PERIOD OF HOLDING. IF THE DATE OF REGISTRATION IS CONSIDERED, THE HOLDING PERIOD GOES BEYOND T HE ONE YEAR IN THAT CASE, ASSESSEE IS NOT ENTITLED TO BENEFIT OF DEDUCTION PROVIDED UNDER THE SAID SECTION. BY THRUSTING ON THE ASSESSEE, THE DATE OF POSSESSION (IE 22.10.2007), AO DENIED THE SAID BENEFITS. 3. BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGH T OUR ATTENTION TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. BEENA K. JAIN [1996] 217 ITR 363 (BOM.) (HC) AND SUBMITTED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE SAID HIGH COURT AND THE MATTER WAS DECIDED I N FAVOUR OF THE ASSESSEE. PARA 2 OF THE SAID JUDGMENT IS RELEVANT IN THIS REGARD. 4. AFTER HEARING BOTH THE PARTIES ON THIS ISSUE, WE FIND THAT THE QUESTION RAISED BEFORE THE HONBLE HIGH COURT AND THE DECISION GIVEN ASSUMES SIGNIFICANCE AND THEREFORE, TH E SAME ARE EXTRACTED AS UNDER: - WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN ALLOWING EXEMPTION OF RS. 11,04,423/ - UNDER SECTION 54F OF THE INCOME TAX ACT, 1961 CONSIDERING THE DATE OF POSSESSION OF THE NEW RESIDENT IAL PREMISES INSTEAD OF DATE OF SALE AGREEMENT AND DATE OF REGISTRATION? 2. UNDER SECTION 54F IN THE CASE OF AN ASSESSEE IF ANY CAPITAL GAIN FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE AND ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF WHICH THE TRANSFER TOOK PLACE PURCHASED A RESIDENTIAL HOUSE, THE CAPITAL GAIN SHALL BE DEALT WITH AS PROVIDED IN THAT SECTION. AS PER THE SECTION CERTAIN EXEMPTION HAS TO BE ALLOWED IN RESPECT OF THE CAPIT AL GAINS TO BE CALCULATED AS SET OUT THEREIN. THE DEPARTMENT CONTENDS THAT THE ASSESSE E DID NOT PURCHASE THE RESIDENTIAL HOUSE EITHER ONE YEAR PRIOR TO OR TWO YEARS AFTER THE SALE OF THE CAPITAL ASSET WHICH RESULTED IN LONG TERM CAPITAL GAINS. ACCORDING TO THE DEPARTMENT, THE AGREEMENT FOR PURCHASE OF THE NEW FLAT WAS ENTERED INTO MORE THAN ONE YEAR PRIOR TO THE SALE. HENCE, THE PETITIONER IS NOT ENTITLED TO THE BENEFIT U/S 54F. IN OUR VIEW, THE TRIBUNAL HAS RIGHTLY NEGATIVATED THIS CONTENTION AND HAS H ELD THAT THE NEW RESIDENTIAL HOUSE HAD BEEN PURCHASED BY THE ASSESSEE WITHIN TWO YEARS AFTER THE SALE OF THE CAPITAL ASSET WHICH RESULTED IN LONG TERM CAPITAL GAINS. THE TRIBUNAL HAS HELD THAT THE RELEVANT DATE IN THIS CONNECTION IS 29.7.1988 WHEN THE PET ITIONER PAID THE FULL CONSIDERATION AMOUNT ON THE FLAT BECOMING READY FOR OCCUPATION AND OBTAINED POSSESSION OF THE FLAT. THIS HAS BEEN TAKEN BY THE TRIBUNAL AS THE DATE OF PURCHASE. THE TRIBUNAL HAS LOOKED AT THE SUBSTANCE OF THE TRANSACTION AND CAME TO THE CONCLUSION THAT PURCHASE WAS SUBSTANTIALLY EFFECTED WHEN THE AGREEMENT OF PURCHASE WAS CARRIED OUT OR COMPLETED BY PAYMENT OF FULL CONSIDERATION ON 29.7.2988 AND HANDING OVER THE POSSESSION OF THE FLAT ON THE NEXT DAY. 3 5. ON PERUSAL OF THE ABOVE JUDGMENT OF THE HIGH COURT, WE FIND, THE ISSUE SH OULD BE SENT BACK TO THE CIT (A) FOR COMPLYING WITH THE ABOVE RATIO OF THE HIGH COURT AND DECIDE THE ISSUE AFRESH. ACCORDINGLY WE ORDER. CIT (A) IS DIRECTED TO PASS A SPEAKING ORDER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 250(6) OF THE ACT AND TO FOLLOW THE PRINCIPLES OF NATURAL JUSTICE IN AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2017. SD/ - SD/ - ( SANDEEP GOSAIN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 12.04.2017 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI