M/s Parshwanath Corporation, Ahmedabad V. The Addl.CIT.Range-7, Ahmedabad

ITA 1182/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76830 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVED I, A.M.) I.T. A. NO. 1182/AHD/2011 (ASSESSMENT YEAR: 2007-08) M/S. PARSHWANATH CORPORATION 50- HARSIDDH CHAMBERS, ASHRAM ROAD, AHMEDABAD V/S THE ACIT RANGE-7, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABFP 9058 J APPELLANT BY : MS. AARTI SHAH RESPONDENT BY : SHRI A.K. PANDEY, SR. D.R. ( )/ ORDER DATE OF HEARING : 03-06-2014 DATE OF PRONOUNCEMENT : 13 -06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-VI, AHMEDABAD DATED 29.03.2011 FOR A.Y. 2007-08. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE CONSTRUCTION BUSINESS. ASSESSEE FILED ITS RETURN OF INCOME FOR A .Y. 07-08 ON 31.08.2007 DECLARING TOTAL INCOME OF RS. 1,60,22,49 0/-. THE CASE WAS ITA NO 1182/AHD/2011 . A.Y. 2007-0 8 2 SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 23.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 2,61,59,749/-. AGGRIEVED BY THE O RDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) V IDE ORDER DATED 29.03.2011 DISMISSED THE APPEAL OF THE ASSESSEE. AG GRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY CONFIRMING THE DISALLOWANCE MA DE BY ASSESSING OFFICER OF BANAKHAT CANCELLATION CHARGES OF RS. 11,47,282/- AS COST OF ACQUISITION O F LAND. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD CLAIMED BANAKHAT CANCELLATION CHARGES RELEVANT TO THE LAND SOLD AS COST OF IMPROVEMENT FOR THE PURPOSE OF CALCULATIO N OF LONG TERM CAPITAL GAIN. A.O NOTED THAT IN ASSESSMENT YEAR 04-05 HIS P REDECESSOR HAS NOTED THAT ASSESSEE WAS NOT UNDER AN OBLIGATION TO PAY BA NAKHAT CANCELLATION CHARGES AND THEREFORE IT CANNOT BE CONSTRUED AS PAY MENT MADE TO RETAIN THE LANDS AND CANNOT BE ATTRIBUTABLE TO THE COST OF TRANSFER OF LAND. HE ACCORDINGLY FOLLOWING THE ORDER OF HIS PREDECESSOR DISALLOWED THE CLAIM OF ASSESSEE. AGGRIEVED BY THE ORDER OF A.O, ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A), FOLLOWING THE ORDER OF HIS P REDECESSOR FOR A.Y. 04-05 UPHELD THE ORDER OF A.O AND DISMISSED THE APP EAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. 5. BEFORE US, AT THE OUTSET LD. A.R. SUBMITTED THAT ON IDENTICAL FACTS IN EARLIER YEARS ASSESSEE HAD PREFERRED APPEAL BEFORE HONBLE ITAT. HONBLE ITAT VIDE ORDER DATED 21.03.2012 DISMISSED THE APPE AL OF THE ASSESSEE. SHE THEREFORE SUBMITTED THAT SINCE THE FACTS OF THE CASE IN THE YEAR UNDER ITA NO 1182/AHD/2011 . A.Y. 2007-0 8 3 APPEAL ARE IDENTICAL TO THAT OF EARLIER YEARS, THE ISSUE BE DECIDED AGAINST THE ASSESSEE. THE LD. D.R. DID NOT OBJECT TO THE SU BMISSIONS OF THE LD. A.R. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN ITA NO. 4359/AHD/2007 FOR A.Y. 04-0 5 IDENTICAL ISSUE WAS BEFORE HONBLE TRIBUNAL. HONBLE TRIBUNAL DECID ED THE ISSUE AGAINST THE ASSESSEE BY HOLDING AS UNDER:- 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE JUDGME NTS CITED BY THE LEARNED AR OF THE ASSESSEE. WE FIN D THAT AS PER CLAUSE-5 OF THE BANAKHAT AGREEMENT, COP Y OF WHICH IS AVAILABLE AT PAGE NO.52 OF THE PAPER BOOK, THE TITLE CLEARANCE CERTIFICATE AND ALSO THE LAND POSSESS MARKETABLE WAY WILL BE OBTAINED BY THE PARTY OF THE SECOND PART I.E. BUYER AND NOT THE ASS ESSEE. AS PER CLAUSE-6 OF THE AGREEMENT, IN CASE OF NON-EXECUTION OF SALE DEED/CONVEYANCE AGREEMENT, AN D IF ANY EXPENSES IS REQUIRED TO BE INCURRED ON THIS COUNT, THE SAME SHOULD BE BORNE BY THE PARTY O F THE SECOND PART I.E. THE PURCHASER NOT BY THE ASSESSEE. THERE IS NO CLAUSE IN THE BANAKHAT AGREEM ENT AS PER WHICH ANY COMPENSATION IS PAYABLE BY THE ASSESSEE TO THE PROSPECTIVE BUYERS IN CASE THE ASSESSEE FAILED TO EXECUTE THE CONVEYANCE DEED. AS PER THE BANAKHAT CANCELLATION AGREEMENT, THE PURCHA SING PARTY TERMINATED THE BANAKHAT AGREEMENT. HENCE, IT IS SEEN THAT THE BANAKHAT CANCELLATION IS NOT MADE BY THE ASSESSEE BUT BY THE PURCHASING PARTY AND IN THE ABSENCE OF ANY CLAUSE IN THE BANAK HAT AGREEMENT FOR PAYMENT OF ANY COMPENSATION AT THE TIME OF CANCELLATION OF BANAKHAT AGREEMENT, IT GOES TO SHOW THAT THIS PAYMENT IS NOT RELATED WITH BANAKHAT AGREEMENT. IT IS ALSO MENTIONED IN THE BAN AKHAT CANCELLATION AGREEMENT THAT ON CANCELLATION OF BANAKHAT AGREEMENT, BUYER WILL BE PUT TO HEAVY F INANCIAL LOSS AND THEREFORE, BOTH THE PARTIES AGREE THAT THE ASSESSEE WILL RETURN THE AMOUNT TAKEN FROM THE BUYER AND THE BUYER WILL CANCEL THE BANAKHAT AGREEMENT ON RECEIPT OF ADHOC COMPENSATION OF RS.20 LAKHS. THIS CLAUSE ALSO GOES TO SHOW THAT THE COMPENSATION WAS GIVEN BY THE ASSESSEE TO THE BUYER IN VIEW OF HEAVY FINANCIAL LOSS TO BE INCURRED BY THE BUYER ON CANCELLATION OF BANAKHAT AGREEMENT, BU T THE CANCELLATION OF BANAKHAT AGREEMENT WAS AT THE BEHEST OF THE BUYER ONLY AND NOT AT THE BEHEST OF THE SELLER, AND IN THESE FACTS, WE FEEL THAT THE AO HAS RIGHTLY HELD THAT THESE PAYMENTS OF BANAKHAT CA NCELLATION CHARGES CANNOT BE CONSTRUED AS PAYMENT MADE TO RETAIN THE LANDS AND IN ANY CASE, IT CANNOT BE ATTRIBUTABLE TO THE COST OF TRANSFER OF LAND, W HICH HAS BEEN ADDED IN THE COMPUTATION OF CAPITAL GAIN I N TOTAL ACQUISITION COST. REGARDING THE JUDGMENT CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE IN TH E CASE OF SHAKUNTALA KANTILAL (SUPRA), WE FIND THAT THIS JUDGMENT IS NOT APPLICABLE TO THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THIS CASE, THE SELLER DID NOT EXECUTE AGREEMENT AND BUYER FILED A SUIT AGAINST THE SELLER IN BOMBAY HIGH COURT FOR SPECIFIC PERFORMANCE, AND IT WAS THE REQUEST BEFORE THE BOMBAY HIGH COURT THAT EITHER SELLER SHOULD BE ASKED TO PERFORM THE AGREEMENT FOR SALE OR IN THE A LTERNATIVE, COMPENSATION SHOULD BE GRANTED TO THE BUYER AND IN THESE FACTS, THE SELLER AGREED TO PAY THE COMPENSATION TO THE BUYER AND SUCH COMPENSATION WAS ALLOWED TO BE DEDUCTED FROM THE CAPITAL GAIN WH EN THE LAND WAS ACTUALLY SOLD THEREAFTER. IN THE PRESENT CASE, WE FIND THAT THERE IS NO OBLIGATION O N THE PART OF THE ASSESSEE TO PAY ANY COMPENSATION AS PER THE BANAKHAT AGREEMENT, AND IT IS NOT THE ASSES SEE WHO HAS OPTED OUT FROM THE BANAKHAT AGREEMENT AND IT IS THE BUYER ON WHOSE BEHEST THE BANAKHAT CA NCELLATION AGREEMENT WAS EXECUTED AND BECAUSE OF THIS DIFFERENCE IN FACT, THIS JUDGMENT IS NOT APPLI CABLE TO THE PRESENT CASE. THE SECOND JUDGMENT CITED BY THE LEARNED AR OF THE ASSESSEE IS THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF ABRAR ALV I (SUPRA). WE FIND THAT THIS JUDGMENT IS ALSO NOT APPLICABLE TO THE PRESENT CASE, BECAUSE THE FACTS A RE DIFFERENT. IN THAT CASE THERE WAS ACRIMONIOUS DISPUTE BETWEEN THE ASSESSEE AND HIS SON, WHO HAD F ILED A SUIT TO RESTRAIN THE TRANSFER. THE ASSESSEE PAID RS.8 LAKHS TO HIS SON TO EFFECT THE TRANSFER. IN THESE FACTS, IT WAS HELD THAT THE TRIBUNAL RIGHT LY ITA NO 1182/AHD/2011 . A.Y. 2007-0 8 4 ALLOWED THE EXPENDITURE INCURRED BY THE ASSESSEE TO REMOVE THE ENCUMBRANCE TO THE TRANSFER. IN THE PRESENT CASE, NOTHING IS BROUGHT TO SHOW THAT THERE WAS ANY ENCUMBRANCE ON THE TRANSFER, WHICH WAS REMOVED BY THE ASSESSEE BY PAYING COMPENSATION ON C ANCELLATION OF BANAKHAT AGREEMENT OR BY PAYING COMPENSATION OF RS.3 LAKHS AND HENCE, THIS JUDGMENT IS ALSO OF NO HELP TO THE ASSESSEE. IN THESE FACTS OF THE CASE, WE FIND NO REASON TO INTERFERE WITH THE O RDER OF THE LEARNED CIT(A). 7. SINCE ITS AN ADMITTED POSITION, THAT THE FACTS OF T HE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF EARLIER YEARS, WE R ESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS DISMISS THIS GROU ND OF ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 06 - 2014. (D.K.TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD