Majeeda Begum, CHENNAI V. DCIT, CHENNAI

ITA 1246/CHNY/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73721 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-02-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 04-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB IRS
• Assessee Lawyers: S SRIDHAR
• Section: 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , !' , # $! % BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO. 1245(MDS)/2009 # & '& / ASSESSMENT YEAR : 2001-02 SHRI MOHAMMAD SHERIFF, 7, RAMESWARAM ROAD, T. NAGAR, CHENNAI - 600 017. PAN : AAJPS 6250 P V. THE DEPUTY COMMISSIONER OF INCOME TAX, CITY CIRCLE I, CHENNAI - 600 034. (')/ APPELLANT) (+,')/ RESPONDENT) ./ ITA NO. 1246(MDS)/2009 # & '& / ASSESSMENT YEAR : 2001-02 SMT. MAJEEDA BEGUM, 7, RAMESWARAM ROAD, T. NAGAR, CHENNAI - 600 017. PAN : AACPB 8927 F V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, CHENNAI - 600 034. (')/ APPELLANT) (+,')/ RESPONDENT) ') - / APPELLANTS BY : SHRI S. SRIDHAR, ADVOCATE +,') - / RESPONDENT BY : SHRI SHAJI P. JACOB, IRS, ADDL. CIT . - /0 / DATE OF HEARING : 11 TH FEBRUARY, 2014 12' - /0 / DATE OF PRONOUNCEMENT : 12 TH FEBRUARY, 2014 2 I.T.A. NOS. 1245 & 1246/MDS/09 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THESE APPEALS FILED BY THE ASSESSEES RELATE TO TH E ASSESSMENT YEAR 2001-02. THE ASSESSEES ARE HUSBAND AND WIFE. THE APPEALS ARE DIRECTED AGAINST THE ORDERS OF COMM ISSIONER OF INCOME TAX (APPEALS) VI AT CHENNAI, DATED 16.4.20 09 AND ARISE OUT OF THE ASSESSMENTS COMPLETED UNDER SECTION 143( 3) READ WITH SECTION 147 OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEES WERE THE TENANTS OF A PROPERTY AT T. NAGAR, CHENNAI. THE PROPERTY WAS OWNED BY ONE SHRI A.N.A. HAJA MOHIDEEN. THE ASSESSEES ENTERED INTO AN AGREEMENT WITH SHRI A.N.A. HAJA MOHIDEEN TO PURCHASE THE PROPERTY IN WH ICH THEY WERE TENANTS. AS PER THE AGREEMENT, IT WAS THE RESPONSI BILITY OF THE ASSESSEES TO VACATE THE REMAINING TENANTS FROM THE PROPERTY FOR THEIR OWN CONSUMPTION. BUT, LATER ON, THE AGREEMEN T COULD NOT BE EXECUTED AND THE SAME CONTRACT WAS NOT CONCLUDED. AS A RESULT OF WHICH, THE ASSESSEES RELINQUISHED THEIR RIGHT TO PU RCHASE THE PROPERTY BY ENTERING INTO A TERMINATION AGREEMENT. AS PER THE 3 I.T.A. NOS. 1245 & 1246/MDS/09 TERMINATION AGREEMENT, THE ASSESSEES RECEIVED FROM SHRI A.N.A. HAJA MOHINDEEN A SUM OF ` 1 CRORE IN ADDITION TO THE SUM OF ` 42 LAKHS PAID BY THE ASSESSEES AS ADVANCE. ACCORDINGL Y, THE AGREEMENT WAS TERMINATED AND THE ASSESSEES GOT A CO MPENSATION OF ` 1 CRORE. 3. THE FACTS RELATING TO THE CASE HAVE BEEN EXAMINE D AND DISCUSSED IN DETAIL BY THE ASSESSING OFFICER AND TH E COMMISSIONER OF INCOME TAX (APPEALS) IN THEIR ORDERS. BUT, THE SHORT QUESTION IS WHAT IS THE AMOUNT TO BE ASSESSED IN THE HANDS OF T HE ASSESSEES AS CAPITAL GAINS? 4. THE ASSESSING AUTHORITY HAS TREATED THE AMOUNT O F ` 1 CRORE RECEIVED BY THE ASSESSEES AS COMPENSATION FROM SHRI A.N.A. HAJA MOHIDEEN, AS CAPITAL GAINS FOR THE REASON THAT THE RIGHT TO PURCHASE THE PROPERTY WAS IN THE NATURE OF AN ASSET AND THEY HAVE TRANSFERRED THE SAME RIGHT BY RELINQUISHING AND TERMINATING THE SALE AGREEMENT. THE ASSESSING AUTHORITY TREATED ` 50 LAKHS IN THE HANDS OF EACH ASSESSEE AND TREATED THEM AS TAXABLE IN THE NATURE OF CAPITAL GAINS. 5. THOUGH DIFFERENT ARGUMENTS ADVANCED BY THE ASSES SEES, THE ISSUE IS WHETHER THE ASSESSEES ARE ENTITLED TO CLAI M FOR THE EXPENDITURES IN COMPUTING THE TAXABLE CAPITAL GAINS . ACCORDING TO 4 I.T.A. NOS. 1245 & 1246/MDS/09 ASSESSEES, THEY WERE OBLIGED TO VACATE THE TENANTS FROM THE PROPERTY AND THEY HAD IN FACT VACATED THOSE TENANTS AND IN THAT CONTEXT, THE ASSESSEES HAD INCURRED EXPENDITURE AND THE SAID EXPENDITURE OUGHT TO HAVE BEEN ALLOWED AS DEDUCTION WHILE COMPUTING THE CAPITAL GAINS IN THEIR HANDS. THE AS SESSING OFFICER DID NOT ALLOW ANY SUCH EXPENDITURE ON THE GROUND TH AT THE ASSESSEES DID NOT PRODUCE ANY EVIDENCE BEFORE HER. ` 50 LAKHS WAS ADDED IN THE HANDS OF EACH ASSESSEE AND THE ASS ESSMENTS WERE COMPLETED. THE ASSESSMENTS WERE CONFIRMED IN THE FIRST APPEALS. 6. NOW COMING TO THE SHORT QUESTION BEFORE US, WE H AVE TO CONSIDER WHETHER THE ASSESSEES HEREIN ARE ENTITLED FOR CLAIMING ANY EXPENDITURE WHILE COMPUTING THE CAPITAL GAINS ATTRI BUTABLE TO THEM. EVEN THOUGH THE ASSESSING OFFICER HAS STATED THAT T HE ASSESSEES HAVE NOT PRODUCED ANY EVIDENCE FOR THE EXPENDITURE INCURRED, THE ASSESSEES HAVE RELIED ON THEIR SALE AGREEMENT AS WE LL AS THE TERMINATION AGREEMENT. AS PER THE SALE DEED, THE A SSESSEES ARE OBLIGED TO VACATE THE TENANTS. AS PER THE TERMINAT ION AGREEMENT, THE AMOUNT OF ` 1 CRORE WAS PAID TO THE ASSESSEES FOR EVICTION OF THE TENANTS, PREPARATION OF PLANS, DEVELOPMENT AND IMPROVEMENT EXPENSES, ETC. 5 I.T.A. NOS. 1245 & 1246/MDS/09 7. ONE OF THE CRUCIAL ISSUES TO BE CONSIDERED IN TH E PRESENT CASE IS WHETHER THE REMAINING TENANTS WERE IN FACT VACATED BY THE ASSESSEES OR NOT. THE ORDERS OF THE ASSESSING OFFI CER AND THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) ARE SILENT ON THIS CRUCIAL ISSUE. IF THE TENANTS WERE VACATED FROM TH E PROPERTY, THE CONSEQUENTIAL PRESUMPTION COULD HAVE BEEN THAT THE ASSESSEES HAVE INCURRED SOME AMOUNT OF EXPENDITURE IN THE EVI CTION OF THOSE TENANTS. THIS MATTER IS NOT, THEREFORE, CLEAR BEFO RE US. EVEN IF THERE IS NO WEIGHT AND BULK EVIDENCE, IF THE TENANTS WERE VACATED FROM THE PROPERTY, THAT WOULD HAVE BEEN A GOOD GROUND FOR TH E ASSESSEES TO CLAIM A REASONABLE AMOUNT OF EXPENDITURE. MOREOVER , THE SAID INCURRING OF EXPENDITURE COULD HAVE ALSO BEEN INVES TIGATED. THUS, THE CRUCIAL FACT WHETHER THE ASSESSEES HAVE EVACUAT ED THE TENANTS FROM THE PROPERTY HAS NOT BEEN DISCUSSED IN THE ORD ERS OF LOWER AUTHORITIES. 8. THEREFORE, WE REMIT BACK THE ISSUE TO THE ASSESS ING OFFICER FOR RECONSIDERATION. SHE IS DIRECTED TO MAKE ENQUI RIES TO FIND OUT WHETHER THE TENANTS IN THE SAID PROPERTY WERE ACTUA LLY VACATED BY THE EFFORTS OF THE ASSESSEES. IF IT IS PROVED SO, ASSESSEES SHALL BE ENTITLED FOR A REASONABLE AMOUNT OF EXPENDITURE AND QUANTUM OF EXPENDITURE SHALL BE DECIDED BY THE ASSESSING OFFIC ER AFTER 6 I.T.A. NOS. 1245 & 1246/MDS/09 CONDUCTING NECESSARY ENQUIRIES, IF ANY REQUIRED. A S THIS CRUCIAL ISSUE HAS ALREADY BEEN REMITTED BACK, THE ASSESSING OFFICER IS ALSO DIRECTED TO EXAMINE OTHER POSSIBLE EXPENDITURES THA T WOULD HAVE BEEN INCURRED BY THE ASSESSEE, ESPECIALLY IN HOLDIN G ON THE PROPERTY. 9. WE MAKE IT CLEAR THAT THE ONLY SHORT ISSUE CONSI DERED BY THE TRIBUNAL IS REGARDING THE ADMISSIBILITY OF EXPENDIT URE TO BE ALLOWED IN FAVOUR OF THE ASSESSEES, WHILE COMPUTING THE CAP ITAL GAINS ATTRIBUTABLE TO THEM. THIS ISSUE SHALL BE DECIDED BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS, IN ACCORDANCE WI TH LAW. 10. IN RESULT, THESE TWO APPEALS FILED BY THE ASSES SEES ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDERS PRONOUNCED IN THE COURT ON WEDNESDAY, THE 12 TH OF FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 12 TH FEBRUARY, 2014. KRI. 7 I.T.A. NOS. 1245 & 1246/MDS/09 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT, CHENN AI-IV, CHENNAI 4. CIT(A)-VI, CHENNAI-34 5. DR 6. GF.