MAHENDRA A GANDHI, MUMBAI V. ITO 12(3)(4), MUMBAI

ITA 131/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2879 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR ITA NO M A Y
• Assessee Lawyers: SATISH R MODI
• Keywords: Capital asset; Cost of acquisition
• Section: 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.131/M/13 ( %' ( / ASSESSMENT YEAR: 2009-10) SHRI MAHENDRA A. GANDHI FLAT NO.801, PALM GROVE, INSIDE NEW INDIA ASSURANCE COLONY, C.D.BARFIWALA MARG, ANDHERI (W) MUMBAI - 400058 ' / VS. INCOME TAX OFFICER12(3)(4) INCOME TAX MAIN OFFICE, CHURCHGATE, MUMBAI - 400020 / I.T.A. NO.1206/M/13 ( %' ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER 12(3)(4) ROOM NO. 123, 1 ST FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 ' / VS. SHRI MAHENDRA A. GANDHI PLOT NO.17A, FLAT NO.21, 2 ND FLOOR, VISWAS APARTMENT JANKI KUTIR, JUHU, CHURCH ROAD, JUHU, MUMBAI - 400049 ./ ./ PAN/GIR NO. : AACPG2641R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 18.03.2016 ASSESSEE BY: SHRI SATISH R. MODI DEPARTMENT BY: SHRI SUMIT KUMAR ITA NO.131&1206/M/13 A.Y. 2009-10 2 !' /DATE OF PRONOUNCEMENT: 22.06.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS ORDER SHALL DISPOSED OF THE ABOVE MENTIONED AP PEALS FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST T HE ORDER DATED 21.11.2012 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 23, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2009-10. THESE APPEALS ARE BEING TAKEN UP TOGET HER FOR ADJUDICATION BEING THESE APPEALS HAVE BEEN AROSE BY THE SINGLE ORDER VIDE WHICH THE PARTIES ARE ALSO THE SAME AND THE MA TTER OF CONTROVERSY CAN CONVENIENTLY BE ADJUDICATED BY A SINGLE ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF HIS INCOME ON 12.08.2009 DECLARING TOTAL INCOME TO THE TUNE OF RS.6,03,245/- FOR THE A.Y.2009-10. THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) ACCEPTING THE RETURNED OF INCOME. THEREAFTER, THE CASE WAS S ELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS SENT ON 24.08. 2010 WHICH WAS DULY SERVED UPON THE ASSESSEE. SUBSEQUENTLY, FURTH ER NOTICE U/S.142(1) OF THE ACT ALONGWITH DETAILED QUESTIONNA IRE WAS SENT TO THE ASSESSEE ON 09.02.2012, 18.07.2011 AND 08.09.2011. THEREAFTER, THE ASSESSMENT WAS COMPLETED ASSESSING THE INCOME TO TH E TUNE OF RS.1,65,66,772/-. THE ASSESSING OFFICER DISALLOWED THE LONG TERM CAPITAL GAIN TO THE TUNE OF RS.7,23,902/- WHICH WAS CONFIRMED BY THE ITA NO.131&1206/M/13 A.Y. 2009-10 3 CIT(A), THEREFORE, THE ASSESSEE FILED THE PRESENT A PPEAL BEFORE US WHEREAS THE CIT(A) DELETED THE ADDITION TO THE TUNE OF RS.1,31,91,550/-, THEREAFTER THE REVENUE HAS ALSO F ILED THE APPEAL BEFORE US. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- '1. THE LEARNED CIT(APPEAL) ERRED IN NOT ALLOWING WDV OF FIXED ASSETS WORTH RS.7,23,907/- AGAINST SALE CONSIDERATION OF TENANTED PROPERTY. THE LEARNED CIT HAS NOT CONSIDERED OR REFER LETTER DATED 06.03.2012 OF M/S.DHWANI MERCANTILE PVT. LTD. STATING THAT CONSIDERATION OF SURRENDER PAID TO HIM WAS INCLUSIVE OF FURNITURE FIXTURES FITTING ETC LYING THE AFORESAID OFFICE PREMISES OF NO COMMUNICATION VALUE TO US. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,31,91,5550/- WITHOUT APPRECIATION THE FACT THAT THE ASSESSEE HAS PAID FULL COST OF ACQUISITION OF THE NEW ASSET FOR WHICH THE DEDUCTION U/S.54F HAS BEEN CLAIMED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,31,91,550/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE CAN CLAIM EXEMPTION U/S.54F WITH RESPECT TO ONE RESIDENTIAL HOUSE WHICH HAS ALREADY BEEN PURCHASED BY THE ASSESSEE AND THERE IS NOTHING LEFT ON WHICH THE ASSESSEE CAN CLAIM THE EXEMPTION U/S.54F. HENCE, THE ASSESSEE WILL ITA NO.131&1206/M/13 A.Y. 2009-10 4 NOT BE ABLE TO CLAIM THE DEDUCTION U/S.54F. HENCE, THE ASSESSEE WILL NOT BE ABLE TO CLAIM THE DEDUCTION U/S.54F ON THE AMOUNT DEPOSITED IN THE CAPITAL GAIN A/C. SCHEME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,31,91,550/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT / COULD NOT SUBSEQUENTLY UTILIZED THIS AMOUNT FOR THE PURPOSE OF THE NEW ASSET ON WHICH DEDUCTION U/S.54F HAS BEEN CLAIMED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) IS RIGHT IN HOLDING THAT ASSESSEE WILL BE ENTITLED FOR EXEMPTION U/S.54F ON THE BALANCE AMOUNT DEPOSITED IN THE CAPITAL GAIN A/C SCHEME LEFT AFTER WHEN THE ASSESSEE HAS ALREADY PURCHASED A NEW ASSET AND FULL COST OF ACQUISITION OF NEW ASSET PURCHASED HAS BEEN PAID BY THE ASSESSEE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUND(S) BE SET ASIDE AND THAT THE ASSESSING OFFICER BE RESTORED. I.T.A. NO.131/M/13(ASSESSEES APPEAL):- 5. ISSUE NO.1 RAISED BY THE ASSESSEE IS IN CONNECTI ON WITH THE DISALLOWANCE OF LONG TERM CAPITAL GAIN TO THE TUNE OF RS.7,23,907/- IN CONNECTION WITH THE FURNITURE AND FIXTURES ATTAC HED WITH THE TRANSFER OF TENANCY RIGHTS. THE ASSESSING OFFICER NOTICED T HAT THE ASSESSEE TRANSFERRED TENANCY RIGHTS IN A PROPERTY FOR A TOTA L CONSIDERATION OF RS.2.75 CRORE AGAINST WHOM HE CLAIMED COST OF FURNI TURE AT RS.7,23,902/-. IT WAS ALSO NOTICED BY THE ASSESSIN G OFFICER THAT THE ITA NO.131&1206/M/13 A.Y. 2009-10 5 PROPERTY WAS IN POSSESSION OF M/S.A.K.INDUSTIRES, A PARTNERSHIP FIRM IN WHICH ASSESSEE WAS A PARTNER ALONG WITH HIS FATH ER SHRI AMRITLAL KERSARDAS GANDHI. THE RENT RECEIPT WAS ORIGINALLY IN THE NAME OF HIS FATHER. BY VIRTUE OF FAMILY ARRANGEMENT, AN AGREEM ENT DATED 4 TH DECEMBER, 1997, THE TENANCY RIGHT WAS CONFIRMED TO BE BELONGING TO SHRI MAHENDRA AMRITLAL GANDHI WHICH WAS ALSO INDEMN IFIED SUBSEQUENTLY BY ALL FAMILY MEMBERS IN THE DECLARATI ON CUM INDEMNITY BOND EXECUTED ON 12 TH MAY, 2008. THE TENANCY RIGHT WAS TRANSFERRED TO THE LANDLORD M/S.DHERANI FINANCE AND INVESTMENT (P) LTD. VIDE AGREEMENT DATED 12 TH MAY, 2008. IT HAS SPECIFICALLY MENTIONED IN THE AGREEMENT THAT THE ABOVE CONSIDERATION WAS PAID FOR SURRENDERING OF TENANCY RIGHT AND NO OTHER ASSETS. IN VIEW OF THIS , THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF COST OF FURNITURE AT RS.7,23,902/- AGAINST RECEIPT OF TENANCY RIGHTS. THE EXPLANATION OF THE ASSESSEE IS THAT TENANCY PROPERTY WAS GIVEN WITH ALL THE STRUCTURE A S IT WAS AND HENCE ONLY COST WAS ADJUSTED AGAINST FURNITURE. THE FURN ITURE IS TAKEN SEPARATELY, IT WOULD NOT HAVE GIVEN ANY VALUE AND H AD TO BE SCRAPED. THERE WAS NO POSSIBILITY OF HAVING ANY SHORT TERM C APITAL GAIN ON SALE OF FURNITURE. SINCE THE ASSESSING OFFICER WAS NOT S ATISFIED, THEREFORE DECLINED THE CLAIM OF THE ASSESSEE WHICH WAS ALSO C ONFIRMED BY THE CIT(A). THE TENANCY RIGHT HAS ONLY BEEN SURRENDER IN THE PROPERTY AND THERE IS NO TRANSFER OF ANY KIND OF FURNITURE A ND FIXTURE IN THE LEASE DEED. TRANSFER OF FURNITURE AND FIXTURE IS NOT PAR T AND PARCEL OF THE AGREEMENT ENTERED INTO BY THE APPELLANT WITH THE LA NDLORD. THERE IS NO ITA NO.131&1206/M/13 A.Y. 2009-10 6 BIFURCATION OF THE VALUE OF SURRENDERING OF FURNITU RE AND FIXTURE. EARLIER THE TENANCY PROPERTY WAS IN POSSESSION OF A .K. INDUSTRIES IN WHICH ASSESSEE WAS A PARTNER WITH HIS FATHER. NO D OUBT AT THIS TIME THE FURNITURE AND FIXTURE IF ANY WAS BELONGING TO T HE PARTNERSHIP FIRM. THE ASSESSEE HAS NO RIGHT TO CLAIM THE OWNERSHIP OF FURNITURE AND FIXTURE OF THE PARTNERSHIP FIRM. SINCE AGREEMENT D ATED 12 TH MAY 2008 NOWHERE SPEAKS ABOUT THE TRANSFER OF FURNITURE AND FIXTURE, THEREFORE, IN THE SAID CIRCUMSTANCES THE CLAIM OF THE ASSESSEE WITH REGARD TO THE FURNITURE AND FIXTURE DOES NOT SEEM JUSTIFIABLE, TH EREFORE, CIT(A) HAS NO DOUBT RIGHTLY CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER WHICH DOES NOT REQUIRE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. HENCE, THIS ISSUE IS DECIDED IN FAVOUR OF THE REVEN UE AND AGAINST THE ASSESSEE. I.T.A. NO.131/M/13 (REVENUES APPEAL):- 6. ISSUE NO.1 TO 4 OF REVENUES APPEAL ARE INTERCON NECTED, THEREFORE, ARE BEING TAKEN TOGETHER FOR ADJUDICATIO N. UNDER THESE ISSUES THE MATTER OF CONTROVERSY IS CONNECTION WITH THE DELETION OF ADDITION OF RS.1,31,91,550/-. THE REVENUE HAS CONT ENDED THAT THE ASSESSEE CAN CLAIM EXEMPTION IN RESPECT OF ONE RESI DENTIAL HOUSE WHICH HAS ALREADY BEEN PURCHASED BY THE ASSESSEE AN D THEREAFTER NOTHING COULD BE CLAIMED U/S.54F OF THE ACT. THERE FORE, IN THE SAID CIRCUMSTANCES THE DELETION OF ADDITION OF RS.1,31,9 1,550/- IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE . HOWEVER, ON THE ITA NO.131&1206/M/13 A.Y. 2009-10 7 OTHER HAND LEARNED REPRESENTATIVE OF THE ASSESSEE H AS REFUTED THE SAID CONTENTIONS. BEFORE GOING FURTHER IT IS NECESSARY TO ADVERT THE FINDING OF CIT(A) ON RECORD. CIT(A) HAS DECIDED THIS ISSUE IN PARA NO. 4.3 WHICH IS HEREBY REPRODUCED BELOW:- 4.3 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND APPELLANTS SUBMISSION. THE ASSESSEE HAS RECEIVED CONSIDERATION OF RS.2,75,00,000/- ON TRANSFER OF TE NANCY RIGHT AND AFTER CLAIMING BROKERAGE HE RECEIVED THE NET CO NSIDERATION AT RS.2,71,50,000/-, OUT OF WHICH A SUM OF RS.30 LA C WAS INVESTED IN REC BONDS AND AN AMOUNT OF RS.1,07,58,4 50/- WAS INVESTED IN THE HOUSE PROPERTY. THE BALANCE AMOUNT OF RS.1,31,91,550/- WHICH REMAINED UNUTILIZED WAS DEPO SITED IN CAPITAL GAIN SAVING ACCOUNT SCHEME WHICH WILL BE TA XED AFTER THE EXPIRY OF THREE YEARS AFTER THE DATE OF TRANSFE R OF LONG TERM CAPITAL ASSET I.E. ON 17.05.2011 RELEVANT TO ASSESS MENT YEAR 2012-13 AS PER THE PROVISION OF SUB SECTION 4 OF SE CTION 54F OF THE I.T.ACT. THE APPELLANT HAS STATED THAT HE HAS ALREADY PAID TAX OF RS.25,68,337/- ON 29.08.2011 CONSEQUENT TO T HE WITHDRAWAL OF THE MONEY FROM HIS CAPITAL GAINS DEPO SIT SAVING ACCOUNT. PROVISO (I)(A) AND (B) OF SUB SECT ION (4) OF SECTION 54F READS AS UNDER: ITA NO.131&1206/M/13 A.Y. 2009-10 8 THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTI ON IS NOT UTILIZED WHOLLY OR PARTLY FOR THE PURCHASE OR CONST RUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTIO N (1), THEN (I) THE AMOUNT BY WHICH (A) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFE R OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS PROVIDED IN C LAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B) OF SUB-SECTI ON (1), EXCEEDS (B) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED HAD THE AMOUNT ACTUALLY UTILIZED BY THE ASSESSEE FOR TH E PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN TH E PERIOD SPECIFIED IN SUB-SECTION (1) BEEN THE COST O F THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FR OM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUT ILIZED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. HENCE, THE ACTION OF THE A.O. IN RESTRICTING THE EX EMPTION U/S.54F WITHOUT CONSIDERING THE FACT, THAT THE BALA NCE AMOUNT REMAINED WITH THE ASSESSEE AFTER THE PURCHASE OF HO USE PROPERTY ITA NO.131&1206/M/13 A.Y. 2009-10 9 WAS DEPOSITED IN CAPITAL GAINS DEPOSIT SAVING ACCOU NT, IS NOT IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT . HENCE, THIS GROUND OF APPEAL IS ALLOWED. 6.1 IN VIEW OF THE FINDING MENTIONED ABOVE APPARENT LY, THE ASSESSEE HAS RECEIVED CONSIDERATION OF RS.2,75,00,000/- ON T RANSFER OF TENANCY RIGHT AND AFTER CLAIMING BROKERAGE HE RECEIVED THE NET CONSIDERATION TO THE TUNE OF RS.2,71,50,000/-, OUT OF WHICH A SUM OF RS.30,00,000/- WAS INVESTED IN REC BONDS AND AMOUNT OF RS.1,07,58, 450/- WAS INVESTED IN HOUSE PROPERTY. THE BALANCE AMOUNT OF R S.1,31,91,550/- REMAINED UNUTILIZED WAS DEPOSITED IN CAPITAL GAIN SAVING ACCOUNT SCHEME WHICH WILL BE TAXED AFTER THE EXPIRY OF THRE E YEARS AFTER THE DATE OF TRANSFER OF LONG TERM CAPITAL ASSET I.E. ON 17.05.2011 RELEVANT TO ASSESSMENT YEAR 2012-13 AS PER THE PROV ISIONS OF SUB SECTION 4 OF SECTION 54F OF THE ACT. THE APPELLANT PAID THE TAX TO THE TUNE OF RS.25,68,337/- ON 29.08.2011. CONSEQUENTLY , THE WITHDRAWAL OF THE MONEY FROM HIS CAPITAL GAIN DEPOSIT SAVING A CCOUNT NOWHERE ATTRACT THE TAX. NO DOUBT IN THE SAID CIRCUMSTANCE S THE CIT(A) HAS RIGHTLY DECIDED THESE ISSUES IN FAVOUR OF THE ASSES SEE AND AGAINST THE REVENUE AND THESE ISSUES ARE ALSO DOES NOT REQUIRE TO INTERFERE WITH AT THIS APPELLATE STAGE HENCE THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE AS WELL AS REVENUE ARE HEREBY DISMISSED . ITA NO.131&1206/M/13 A.Y. 2009-10 10 ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 22 ND JUNE, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI