M/s. D.K. Industries, Kolkata V. ITO, Ward - 34(3), Kolkata, Kolkata

ITA 1195/KOL/2010

• Counselvise Citation: 119523514 RSA 2010
• Duration Of Justice: 4 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Assessee Lawyers: K L BOTHRA
• Keywords: Assessment record
• Section: 131; 234B

Judgement Text

I.T.A. NO . 1195 /KOL./201 0 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) I.T.A. NO. 1195 /KOL . / 20 1 0 ASSESSMENT YEAR : 200 7 - 20 0 8 M/S. D.K. INDUSTRIES,........... ........... ....... .... ............ .. .APP ELL ANT 2, CLIVE GHAT STREET, KOLKATA - 700 001 [PAN : A A BFD 9250 E ] - VS. - INCOME TAX OFFICER , . ............ .. ............................ . RESPONDENT WARD - 34 ( 3 ) , KOLKATA , 18, RABINDRA SARANI, KOLKATA - 700 001 APP EARANCES BY: SHRI K.L. BOTHRA , ADVOCATE , FOR THE ASSESSEE SHRI P INAKI MUKHERJEE , JCIT, FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : NOVEMBER 1 4 , 2 01 4 DATE OF PRONOUNCING THE ORDER : DEC EM BER 09 , 201 4 O R D E R PER MAHAVIR SINGH : THIS IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XX, KOLKATA IN APPEAL NO. 182/CIT(A) - XX/WD - 34(3)/09 - 10/KOL. DATED 22 .0 3 .201 0 FOR TH E ASSESSMENT YEAR 200 7 - 0 8 CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE TRANSACTION OF SALE OF PROPERTY AS COMPLETE IN TERMS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT , 1882 READ WITH SECTION 2 ( 47 ) OF THE ACT. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING THREE GROUNDS: - ( 1 ) THAT THE LD. CIT(APPEALS) ERRE D IN CONFIRMING THE ORDER OF INCOME TAX OFFICER IN TREATING A SUM OF RS.1,22,66,509/ - AS LONG TERM CAPITAL GAINS WHEREAS THE AMOUNT OF RS.1,33,01,050/ - HAS BEEN RECEIVED AS AN ADVANCE AGAINST THE SALE OF OFFICE PREMISES AND AS SALE DEED WAS NOT EXECUTED BE FORE REGISTRAR OF ASSURANCES, THE SALE WAS NOT COMPLETE3D AS AND IT SHOULD BE TREATED AS LONG TERM CAPITAL GAINS BUT IS AN ADVANCE AMOUNT ONLY. I.T.A. NO . 1195 /KOL./201 0 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 2 OF 6 ( 2 ) THAT WITHOUT PREJUDICE TO ABOVE THE NET AMOUNT RECEIVED AFTER PAYMENT TO MITTAL TOWER PREMISES COOPERATIVE SOC IETY IS RS.1,30,00,000/ - AND NOT RS.1,34,65,000/ - AS STATED BY THE INCOME TAX OFFICER (RS.4,65,000/ - RELATES TO REIMBURSEMENT OF REGISTRATION CHARGES). ( 3 ) THAT THE CIT(APPEALS) ERRED IN CONFIRMING THE ORDER OF THE INCOME TAX OFFICER IN CHARGING INTEREST U/S. 234B & 234C AS DELAY IN PAYMENT OF LONG TERM CAPITAL GAINS IS NOT ATTRIBUTED TO THE APPELLANT. THE APPELLANT WAS UNDER THE BELIEF THAT TILL REGISTRATION OF SALE DEED IS EXECUTED BEFORE THE REGISTRAR OF ASSURANCES THE SALE IS NOT COMPLETED AND HENCE THE LE VY AND CHARGING OF INTEREST IS NOT VALID AND REASONABLE AND SHOULD BE WAIVED CBDT NOTIFICATION DATED 02.05.1994 AND 23.05.1996 AND CIRCULAR NO. 783 DATED 18.11.1999 AND J.K. SYNTHETICS LTD. VS. - CIT (2004) 265 ITR PAGE 411. 2 . SHRI K.L. BOTHRA , ADVOCATE, REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI P INAKI MUKHERJEE, JCIT, REPRESENTED ON BEHALF OF THE REVENUE. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE BALANCE - SHEET DRAWN AS ON 31.03.2007 THAT THE ASSESSEE HAS RECEIVED TO SHOW AS AN ADVANCE OF RS.1,33,01,050/ - RECEIVED FROM ONE MR. NAWSHI R MIRZA. THE ASSESSING OFFICER REQUIRED THE ASSES SEE TO EXPLAIN AS TO WHY THIS ADVANCE BE NOT TREATED AS FULL SALE CONSIDERATION RECEIVED FOR SALE OF ITS O FFICE PREMISES NO. 117(BUILT - UP AREA 640 SQ.FT.) WITH OPEN CAR PARKING SPACE ON 11 TH FLOOR ON MITTAL TOWER, B BLOCK AT 210 NARIMAN POINT, MUMBAI - 400 021. NO REPLY OR REPRESENTATION CAME FROM THE ASSESSEE AND IN TURN ASSESSING OFFICER ISSUED SUMMONS UNDER SECTION 131 TO MR. NAWSHI R MIRZA, WHO REPLIED VIDE LETTER DATED 26.11.2009 AND THE CONTENTS OF REPLY READ AS UNDER: - (A) THAT AGREEMENT DATED 12.01.2 007 (NOTARISED ON 23.01.2009) BETWEEN THE ASSESSEE AND MR. MIRZA WAS ENTERED. THE AGREEMENT WAS FOR SALE OF OFFICE PREMISES NO. 117 (BUILT UP AREA 640 SQ. FT) WITH OPEN CAR PARKING I.T.A. NO . 1195 /KOL./201 0 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 3 OF 6 SPACE, ON THE 11 TH FLOOR OF MITTAL TOWER B , AT 210 NARIMAN POINT, MUMBA I - 400 021. (B) THAT THIS OFFICE PREMISES WITH OTHER OFFICES OF THE BUILDING WAS ORGANIZED IN TO A COOPERATIVE SOCIETY KNOWN AS MITTAL TOWER PREMISES COOPERATIVE SOCIETY LIMITED DULY REGISTERED UNDER THE PROVISIONS OF MAHARASTRA COOPERATIVE SOCIETY ACT, 1960. (C) THAT THE ASSESSEE FIRM HAD PURCHASED THE ABOVE OFFICE PREMISES BY AGREEMENT DATED 17.05.1983. (D) THAT THE ABOVE SOCIETY TOOK OVER THE CONTROL AND MANAGEMENT OF ENTIRE BUILDING MITTAL TOWER AND HAD ALLOTTED TO THE ASSESSEE FIRM 5(FIVE) FULLY PAID UP SHARES OF RS.50/ - EACH, BEARING DISTINCTIVE NOS. 616 TO 620, AND CERTIFICATE NO. 124 DATED 01.04.1986. (E) THAT THE ASSESSEE FIRM AND MR. MIRZA AGREED TO PURCHASE THE SAID OFFICE PREMISES FOR RS.1,34,65,000/ - (RUPEES ONE CRORE THIRTY - FOUR LAKHS SI XTY - FIVE THOUSAND ONLY). (F) THAT THE ASSESSEE FIRM RECEIVED RS.1,30,00,000/ - FROM MR. MIRZA VIDE D.D. NO. 16436 DATED 11.01.2007 DRAWN ON HDFC BANK. (G) THAT MR. NIRMAL KUMAR BHURA, RELATIVE OF THE PARTNERS OF THE ASSESSEE FIRM, RECEIVED RS.4,65,000/ - V IDE CHEQUE NO. 825209, DATED MARCH 16, 2007, TOWARDS THE SALE PROCEED OF THE ABOVE OFFICE PREMISES. HE ALSO RECEIVED RS.36,190/ - VIDE CHEQUE NO. 825208 DATED 16.03.2007 AGAINST THE SOCIETY DEPOSIT OF THE ASSESSEE FIRM LAYING WITH THE SOCIETY. (H) THAT MR. MIRZA IS IN POSSESSION OF THE SAID FIVE SHARES CERTIFICATES OF THE SOCIETY AND GOT IT TRANSFERRED IN HIS NAME VIDE TRANSFER NO. 180 ON 19.01.2007. (I) THAT MR. MIRZA HAS PEACEFUL PHYSICAL POSSESSION OF THE OFFICE PREMISES (WITH CAR PARKING SPACE) ON JANUA RY 12, 2007. (J) MR. MIRZA BECAME THE MEMBER OF THE SOCIETY BY PAYING FEES OF RS.11/ - TOWARDS FULL PAYMENT TOWARDS ENTRANCE AND MEMBERSHIP FEES. THE AMOUNT WAS PAID BY HIM VIDE CHEQUE NO. 692683 DATED 24.01.2007 DRAWN ON HDFC BANK LTD. THE SAME WAS ACKNOW LEDGED BY MITTAL TOWER I.T.A. NO . 1195 /KOL./201 0 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 4 OF 6 PREMISES COOPERATIVE SOCIETY LTD., VIDE RECEIPT B. NO. BR/1125 DAGTED 25.01.2007 FOR OFFICE NO. 117/B WING. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS RECEIVED FULL AND FINAL PAYMENT FOR SALE OF OFF ICE PREMISES NO. 117 IN MITTAL TOWER (COMPLETE ADDRESS IS GIVEN ABOVE) FOR A CONSIDERATION OF RS.1,33,01,050/ - AND POSSESSION WAS ALSO GIVEN. THE COMPLETE DETAILS OF PAYMENTS WERE NOTED ABOVE, WHICH ARE PART OF REPLY OF THE PURCHASER MR. NAWSHI R MIRZA, WHI CH CLEARLY SHOW THAT ALONGWITH PAYMENT MEMBERSHIP WAS ALSO TRANSFERRED BY MITTAL TOWER PREMISES COOPERATIVE SOCIETY LIMITED VIDE RECEIPT B. NO. - BR/1125 DATED 25.01.2007 FOR OFFICE NO. 117/B WING. IN TERMS OF THE ABOVE, ASSESSING OFFICER ASSESSED THE ENTIRE CONSIDERATION AS LONG - TERM CAPITAL GAIN S . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(APPEALS). 4. LD. CIT(APPEALS) AFTER CONSIDERING THE FACTS NOTED THAT THE ASSESSEE ITSELF HAS ADMITTED THAT IT HAD SOLD ITS PROPERTY, I.E. THE OFFICE SPACE I N MITTAL TOWER . FULL AND FINAL CONSIDERATION RECEIVED DURING THE ASSESSMENT YEAR 2007 - 08 AND POSSESSION WAS ALSO HANDED OVER. ACCORDING TO LD. CIT(APPEALS), EVEN THE MEMBERSHIP IN MITTAL TOWER PREMISES COOPERATIVE SOCIETY LIMITED WAS TRANSFERRED IN THE N AME OF THE PURCHASER ON 25.01.2007 I.E. WITHIN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR. IN VIEW OF THIS, LD. CIT(APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN TREATING THE ADVANCE SHOWN BY THE ASSESSEE AS LONG - TERM CAPITAL GAIN S . AGG RIEVED, ASSESSEE CAME IN APPEAL BEFORE US. 5. WE AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE FACTS OF THE CASE NOTED THAT THE ASSESSEE ENTERED INTO FULL AND FINAL AGREEMENT DATED 12.01.2007 WITH SHRI NAWSHI R MIRZA FOR SALE OF ITS OFFICE PREMISES IN MITTAL TOWER, NARIMAN POINT, MUMBAI FOR A TOTAL CONSIDERATION OF RS.1,34,65,000/ - . WE FIND THAT BOTH THE AUTHORITIES BELOW HAVE GIVEN A CONCURRENCE FINDING THAT THE PHYSICAL POSSESSION OF THE PROPERTY WAS I.T.A. NO . 1195 /KOL./201 0 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 5 OF 6 HANDED OVER TO THE PURCHASER ON 12.01.2007 , WHICH IS NOW NOT NEGATED BY THE ASSESSEE S COUNSEL. ACCORDING TO THE ASSESSING OFFICER, THE PURCHASER IS ACTUALLY USING THE OFFICE PREMISES AND TRANSFER IS COMPLETE IN TERMS OF THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 READ WITH SECTIO N 2 ( 47 ) OF THE ACT. FROM THE ABOVE FACTS, IT IS CLEAR THAT ACTUALLY THE PROPERTY IS SOLD AND THE ASSESSEE HAS RECEIVED FULL AND FINAL PAYMENT FOR THE SAME. EVEN THE POSSESSION IS HANDED OVER TO THE PURCHASER AND HE IS USING THE SAME. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS GROUNDS OF APPEAL IS THAT THE SALE DEED WAS NOT EXECUTED WITH THE REGISTRAR OF A SSURANCES BUT IT IS CLEAR THAT THE COOPERATIVE SOCIETY KNOWN AS MITTAL TOWER PREMISES COOPERATIVE SOCIETY LIMITED, IN WHICH THE OFFICE PREMISES OF THE AS SESSEE WAS DULY TRANSFERRED THE MEMBERSHIP VIDE RECEIPT DATED 25.01.2007. IN TERMS OF THE ABOVE, AS THE FACTS ARE VERY CLEAR, THE ASSESSEE IS ASSESSABLE TO LONG - TERM CAPITAL GAIN S ON THE ABOVE TRANSACTION. WE FIND NO INFIRMITY IN THE ORDER OF LOWER AUTHORI TIES. HENCE, WE CONFIRM THE SAME. 6. ONE POINT HERE IS TO BE NOTED THAT OUT OF THE TOTAL AMOUNT OF RS.1,34,65,000/ - THE SUM OF RS.4,65,000/ - RELATES TO REIMBURSEMENT OF REGISTRATION CHARGES AND WHICH HAS BEEN ADMITTED BY THE PURCHASER SHRI NAWSHI R MIRZA A ND HE HAS GIVEN THE FOLLOWING DETAILS VIDE LETTER DATED 28.10.2009 TO THE I.T.O., WARD - 34(3), KOLKATA WHICH IS PART OF THE ASSESSMENT RECORD OF THE ASSESSEE AND THE SAME READS AS UNDER: - BY AN AGREEMENT DATED 12 TH JANUARY, 2007 I PURCHASED A MEMBERSHIP IN THE MITTAL TOWER PREMISES COOPERATIVE SOCIETY LIMITED THAT ENTITLED ME TO OCCUPY OFFICE NO. 117 IN WING B OF THEIR BUILDING. I HAVE PAID THE CONSIDERATION IN TWO AMOUNTS AS FOLLOWS: - DATE PARTICULARS AMOUNT 11/01/2007 PAYMENT MADE TO D.K. INDUSTRIES 1, 30,00,000/ - 16/03/2007 PAYMENT MADE TO D.K. INDUSTRIES (REGISTRATION OF DEED) 4,65,000/ - I.T.A. NO . 1195 /KOL./201 0 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 6 OF 6 THE ABOVE PAYMENTS WERE MADE THROUGH DEMAND DRAFT IN FAVOUR OF D.K. INDUSTRIES . AS THE SAME AMOUNT OF RS.4,65,000/ - PERTAINS TO REGISTRATION CHARGES AND IS REI MBURSEMENT, THIS CANNOT BE INCLUDED IN THE TOTAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF LONG - TERM CAPITAL GAIN S . HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE THIS AMOUNT FROM COMPUTATION OF LONG - TERM CAPITAL GAIN S WHILE GIVING EFFECT TO T HIS ORDER. 7. IN TERMS OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH DEC EM BER, 2014. SD/ - SD/ - SHAMIM YAHYA MAHAVIR SINGH ( ACCOUNTANT MEMBER) ( JUDI CIAL MEMBER) KOLKATA, THE 09 TH D AY OF DEC EM B ER , 201 4 COPIES TO : (1) M/S. D.K. INDUSTRIES, C/O. B.D.B. EXPORTS PVT. LTD., 2, CLIVE GHAT STREET, KOLKATA - 700 001 (2) INCOME TAX OFFICER, WARD - 34(3), KOLKATA, 18, RABINDRA SARANI, KOLKATA - 700 001 ( 3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TA X APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.