ITO, Ward 35(2), Kolkata, Kolkata V. Smt. Nalini Bothra, Kolkata

ITA 1405/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6242 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: A KOCHAR
• Keywords: Capital asset
• Section: 143(3); 54F; 2(14); 133(6); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 1405/KOL/20 17 ASSESSMENT YEAR : 2014-1 5 ITO, WARD-35(2), KOLKATA -VS- SMT. NALINI BO THRA. [PAN: ADRPB 5103 F] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI A. BHATTACHAR JEE, ADDL. CIT FOR THE RESPONDENT : SHRI A. KOCHAR DATE OF HEARING : 13.06.2018 DATE OF PRONOUNCEMENT : 04.07.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-10, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO. 219/CIT(A)- 10/W-35(3)/16-17/KOL. DATED 14.03.2017 AGAINST THE ORDER PASSED BY THE ITO, WARD- 35(2), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 27.12.2016 FOR THE ASS ESSMENT YEAR 2014-15. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN GRANTING EXEMPTION U/S 54 OF THE ACT IN THE FACT S AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS APPEAL ARE THAT THE ASSE SSEE IS AN INDIVIDUAL DERIVING INCOME FROM CAPITAL GAINS AND OTHER SOURCES. THE RETURN O F INCOME FOR THE ASST YEAR 2014-15 2 ITA NO.1405/KOL/2017 SMT. NALINI BOTHRA A.YR. 2014-15 2 WAS FILED ON 23.8.2014 DECLARING TOTAL INCOME OF RS 6,37,430/- COMPRISING OF THE FOLLOWING:- INCOME FROM SHORT TERM CAPITAL GAINS - RS 1,39,413 /- INCOME FROM OTHER SOURCES - RS 6,16,494/- ------------------ RS 7,56,907/- LESS: DEDUCTIONS UNDER CHAPTER VIA RS 1,18,479/- ------------------ RS 6,37,428/- ------------------ 3.1. THE ASSESSEE ALONG WITH A CO-OWNER MR MANOJ KU MAR BOTHRA (HUSBAND OF ASSESSEE) JOINTLY RECEIVED AN ALLOTMENT OFFER LETTER FROM SOU TH CITY PROJECTS (KOLKATA) LTD VIDE THEIR LETTER NO. UN/5/00007 DATED 12.4.2008 FOR ALL OTMENT OF UNIT NO. B AT FLOOR NO. 15 OF TOWER NO. 5, CYPREES IN THE RESIDENTIAL COMPLEX OF SOUTH CITY PROJECTS (KOLKATA) LTD, 375, PRINCE ANWAR SHAH ROAD, KOLKATA 700068 HAVING SUPER BUILT UP AREA OF 3175 SQ.FT AGAINST UNIT PRICE OF RS 1,61,13,125/- A LONG WITH CAR PARKING SPACE FOR RS 7,00,000/- TOTALING OF RS 1,68,13,125/- . THE ASSE SSEES SHARE OF PURCHASE COMES TO RS 84,06,562/- BEING 50% OF HER OWNERSHIP. THE DETAIL S OF PAYMENTS MADE THEREON TOGETHER WITH INCIDENTAL EXPENSES ARE AS UNDER:- 3.2. THE ASSESSEE SOLD THIS PROPERTY ALONG WITH THE CO-OWNER FOR A TOTAL CONSIDERATION OF RS 5,50,00,000/- PURSUANT TO AN AGREEMENT DATED 10. 9.2013 ENTERED INTO WITH MRS NITU CHOWDHURY AND MR SANTOSH KR. CHOWDHURY AND HANDED O VER POSSESSION OF THE PROPERTY TO THEM AS ON THE DATE OF AGREEMENT. THE ASSESSEES SHARE OF 50% OF THE SALE 3 ITA NO.1405/KOL/2017 SMT. NALINI BOTHRA A.YR. 2014-15 3 CONSIDERATION WAS RS 2,75,00,000/-. THEREAFTER THE ASSESSEE ALONG WITH THE CO-OWNER REINVESTED THE SALE CONSIDERATION IN PURCHASE OF AN OTHER FLAT VIDE AGREEMENT DATED 6.12.2013 WITH M/S BANGIYA VANIJYA PVT LTD FOR PURC HASE CONSIDERATION OF RS 3,70,00,000/- , OUT OF WHICH RS 2,33,14,159/- WAS P AID AS ON THE DATE OF AGREEMENT. THE LD AO OBSERVED FROM THE AFORESAID FACTS AS UNDER:- A) THE ASSESSEE WAS OFFERED ALLOTMENT LETTER BY SOU TH CITY PROJECTS (KOLKATA) LTD ON 18.4.2008. B) THE ASSESSEE PAID PURCHASE CONSIDERATION IN INST ALMENTS COMMENCING FROM APRIL 2008 TO APRIL 2013. C) THEREAFTER THE ASSESSEE TOOK POSSESSION OF THE P ROPERTY AS ON 13.5.2013. D) THE PROPERTY WAS NOT A REGISTERED PROPERTY AND T HE ASSESSEE BECAME OWNER OF THE PROPERTY AS PER AGREEMENT BASIS WITH SOUTH CITY PRO JECTS (KOLKATA) LTD AS PART PERFORMANCE OF THE CONTRACT IN TERMS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT THAT ENVISAGES THAT WHERE ANY PERSON CONTRACTS TO TRANS FER FOR CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM AND THE TRANSFERE E HAS IN PART PERFORMANCE OF THE CONTRACT TAKEN POSSESSION OF THE PROPERTY OR ANY PA RT THEREOF THEN THE TRANSFER HAS BEEN COMPLETED. SO, IT IS EVIDENT THAT THE TERM POSS ESSION OF THE PROPERTY IS AN IMPORTANT FACTOR IN THE CASE WHERE PROPERTY HAS BEEN TRANSFER RED IN TERMS OF PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. 4. THE ASSESSEE REPLIED TO THE LD AO BY STATING THA T SHE HAD ACQUIRED THE RIGHT TO THE SAID FLAT VIDE ALLOTMENT LETTER DATED 12.4.2008 AND SINC E THIS IS THE RIGHT IN CONSEQUENT TO WHICH THE ASSESSEE GOT POSSESSION OF THE FLAT AS ON 13.5.2013, THE TRANSFER AS PER PROVISIONS OF SECTION 2(47) OF THE ACT IS TO BE CON SIDERED FROM 12.4.2008 AND NOT 13.5.2013. THE LD AO OBSERVED THAT THE ASSESSEE S CONTENTION IS NOT ACCEPTABLE ON THE GROUND THAT IN TERMS OF PROVISIONS OF SECTION 2(47) (V) OF THE ACT, TRANSFER HAS BEEN DEFINED AS ANY TRANSACTION INVOLVING THE ALLOWING THE POSSESSION OF IMMOVABLE 4 ITA NO.1405/KOL/2017 SMT. NALINI BOTHRA A.YR. 2014-15 4 PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANC E OF CONTRACT OF THE NATURE REFERRED TO SECTION 53A OF THE TRANSFER OF PROPERTY ACT. SO I N TERMS OF PROVISIONS OF SECTION 2(47) OF THE ACT, HE HELD THAT PROPERTY WAS ACQUIRED BY T HE ASSESSEE ONLY ON 13.5.2013 AND THE SAID PROPERTY WAS TRANSFERRED ON 10.9.2013. SINCE THE PROPERTY WAS AN IMMOVABLE PROPERTY WHICH WAS HELD BY THE ASSESSEE ONLY FOR 4 MONTHS UNDER HER POSSESSION, SO THE ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN FROM TRA NSFER OF SUCH PROPERTY IS NOT ACCEPTABLE AND GAIN EARNED BY SUCH TRANSFER IS TO B E CONSIDERED AS SHORT TERM CAPITAL GAIN AMOUNTING TO RS 1,90,93,438/- ( RS 2,75,00,000 RS 84,06,562). CONSEQUENTLY THE CLAIM OF DEDUCTION U/S 54 / 54F OF THE ACT IS A LSO NOT ELIGIBLE . THE LD AO ACCORDINGLY MADE AN ADDITION OF RS 1,90,93,438/- IN THE ASSESSMENT. 5. THE LD CITA OBSERVED THAT THE ASSESSEE AND HER H USBAND BEING CO-OWNERS OF THE PROPERTY, RECEIVED AN ALLOTMENT OFFER LETTER FROM S OUTH CITY PROJECTS (KOLKATA) LTD VIDE THEIR LETTER DATED 12.4.2008 FOR ALLOTMENT OF UNIT NO. B AT FLOOR NO. 15 OF TOWER NO. 5, CYPRESS IN RESIDENTIAL COMPLEX OF SOUTH CITY PROJEC TS (KOLKATA) LTD AT 375, PRINCE ANWAR SHAH ROAD, KOLKATA 700068 HAVING SUPER BUIL T UP AREA OF 3175 SQ.FT AGAINST UNIT PRICE OF RS 1,61,13,125/- ALONG WITH CAR PARKI NG SPACE FOR RS 7,00,000/- TOTALING TO RS 1,68,13,125/-. SO THE SHARE OF THE ASSESSEES S HARE OF PURCHASE COMES TO RS 84,06,562/- BEING 50% OF HER OWNERSHIP. HE TOOK CO GNIZANCE OF THE FACT THAT AN INFORMATION WAS OBTAINED BY THE LD AO FROM SOUTH CI TY PROJECTS (KOLKATA) LTD U/S 133(6) OF THE ACT FROM WHICH THE LD AO CAME TO THE CONCLUSION THAT THE POSSESSION OF THE PROPERTY FROM SOUTH CITY PROJECTS (KOLKATA) LTD WAS GIVEN ONLY ON 13.5.2013. THE LD CITA APPRECIATED THE FACT THAT THE ASSESSEE AND HER HUSBAND HAD ACQUIRED THE RIGHT, TITLE AND INTEREST IN THE SUBJECT MENTIONED FLAT VI DE ALLOTMENT LETTER DATED 12.4.2008 ITSELF PURSUANT TO WHICH MONIES WERE PAID IN INSTALLMENTS TOWARDS THE PROPERTY, AS PER THEIR DEMAND UPON COMPLETION OF THE STAGE WISE CONSTRUCTI ON. THE LD CITA ALSO APPRECIATED THE FACT THAT THIS RIGHT WAS ACQUIRED PURSUANT TO A LLOTMENT LETTER DATED 12.4.2008 AND IT WAS THIS RIGHT IN CONSEQUENT TO WHICH THE ASSESSEE HAD BECOME OWNER OF THE SUBJECT 5 ITA NO.1405/KOL/2017 SMT. NALINI BOTHRA A.YR. 2014-15 5 MENTIONED FLAT AND LATER THIS RIGHT HAS BEEN TRANSF ERRED. THERE WAS NO DEED OF CONVEYANCE. IT IS ONLY A MATTER OF NOMINATING THE TRANSFEREES. THE LD CITA HELD THAT THE ASSESSEE AND HER HUSBAND HAD HELD THE RIGHT IN THE PROPERTY FROM 12.4.2008 ONWARDS FOR MORE THAN THREE YEARS AND HAD SUBSEQUENTLY TRANSFER RED THAT RIGHT TO MRS NITU CHOWDHURY AND MR SANTOSH KR. CHOWDHURY ON 10.12.20 13. HE HELD THAT AS PER SECTION 2(47) OF THE ACT , TRANSFER IN RELATION TO A CAPIT AL ASSET INCLUDES THE EXTINGUISHMENT OF ANY RIGHT THEREIN. HENCE IT IS THIS RIGHT IN THE CAPITAL ASSET WHICH HAS BEEN DISPOSED OFF BY THE ASSESSEE AND TIME GAP IS MORE THAN THREE YEA RS AND HENCE THE GAIN THAT AROSE IS LONG TERM CAPITAL GAIN. THE LD CITA ALSO OBSERVED THAT SECTION 2(14) OF THE ACT DEFINES CAPITAL ASSET AS UNDER:- PROPERTY INCLUDES AND SHALL BE DEEMED TO HAVE ALWAY S INCLUDED ANY RIGHTS IN OR IN RELATION TO AN INDIAN COMPANY, INCLUDING RIGHTS OF MANAGEMENT OR CONTROL OR ANY OTHER RIGHTS WHATSOEVER. 5.1. THE LD CITA CATEGORICALLY HELD THAT THE CRUCIA L DATE IS THE DATE OF ALLOTMENT AND THE PAYMENT OF MONIES IN INSTALLMENTS IS A FOLLOW UP AC TION. THE LD CITA ALSO PLACED RELIANCE IN SUPPORT OF HIS OBSERVATIONS ON THE FOLL OWING DECISIONS :- A) CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF ANITA D KANJANI VS ACIT REPORTED IN (2017) 79 TAXMANN.COM 67 (MUMBAI TRIB .) DATED 13.2.2017 . B) DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT MADHU KAUL VS CIT, CHANDIGARH REPORTED IN (2014) 43 TAXMANN.CO M 417 (P&H HIGH COURT) C) DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VINOD KUMAR JAIN VS CIT, LUDHIANA REPORTED IN 344 ITR 501 (P&H ) 5.2. THE LD CITA HELD THAT THE ASSESSEE HAD HELD TH E RIGHT IN THE PROPERTY FOR MORE THAN THREE YEARS AND LATER TRANSFERRED THE SAME FOR A CO NSIDERATION AND HENCE THE GAIN ARISING ON TRANSFER OF SUCH LONG TERM CAPITAL ASSET SHOULD BE CONSTRUED ONLY AS LONG TERM CAPITAL GAIN. CONSEQUENTLY HE DIRECTED THE LD AO TO GRANT E XEMPTION U/S 54 OF THE ACT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6 ITA NO.1405/KOL/2017 SMT. NALINI BOTHRA A.YR. 2014-15 6 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF THE LD AO. THE AFORESAID FACTS REMAIN UNDISPUTED A ND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD ACQUIRED THE RIGHT IN THE IMMOVABLE PROPERTY PURSUANT TO INITIAL ALLOTMENT LE TTER DATED 12.4.2008 ISSUED BY SOUTH CITY PROJECTS (KOLKATA) LTD. IT IS NOT IN DISPUTE THAT THE SAID ALLOTMENT LETTER CONFERRED RIGHT ON THE ASSESSEE TO NOMINATE ANY OTHER PERSON IN HER STEAD. THE SAID RIGHT WAS SUBSEQUENTLY TRANSFERRED BY THE ASSESSEE IN FAVOUR OF MRS NITU CHOWDHURY AND MR SANTOSH KR. CHOWDHURY ON 10.12.2013 . THIS IS NOTH ING BUT A TRANSFER OF NOMINEES IN THE SUBJECT MENTIONED PROPERTY. THERE WAS NO DEED OF CONVEYANCE EXECUTED EITHER IN FAVOUR OF THE ASSESSEE OR IN FAVOUR OF MRS NITU CHO WDHURY AND MR SANTOSH KR. CHOWDHURY. SECTION 2(14) OF THE ACT CLEARLY STIPULA TES THAT RIGHT IN A PROPERTY IS A CAPITAL ASSET. SINCE THIS RIGHT HAS BEEN ACQUIRED BY THE ASSESSEE PURSUANT TO ALLOTMENT LETTER DATED 12.4.2008 AND THE SAME HAS BEEN HELD B Y THE ASSESSEE UP TO 9.12.2013 (I.E FOR MORE THAN THREE YEARS) , THE GAIN AROSE PURSUAN T TO SUCH TRANSFER WOULD HAVE TO BE CONSTRUED ONLY AS LONG TERM CAPITAL GAIN, WHICH HAS BEEN RIGHTLY CONSIDERED BY THE LD CITA. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD D ULY REINVESTED THE SALE CONSIDERATION IN NEW PROPERTY PROPOSED TO BE PURCHASED FOR RS 3,70,0 0,000/- AND OUT OF WHICH RS 2,33,14,159/- WAS PAID ON 10.12.2013 ITSELF ( I.E T HE DATE OF AGREEMENT). HENCE THE RESULTANT GAIN IS LONG TERM CAPITAL GAIN AND SINCE THE REINVESTMENT HAD HAPPENED WITHIN THE STIPULATED TIME, THE ASSESSEE WOULD BE ENTITLED FOR EXEMPTION U/S 54 OF THE ACT. WE FIND THAT THE LD CITA HAD RIGHTLY PLACED RELIANCE O N THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VINOD KUMAR JAIN VS CIT REPORTED IN 344 ITR 501 (P&H) AMONG OTHERS, WHEREIN THE HEAD NOTES ARE REPR ODUCED BELOW:- SECTION 2(29A) , READ WITH SECTION 54 OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - LONG-TERM CAPITAL GAINS/ASSETS - ASSESSMENT YEAR 1989-90 - ASSESSEE WAS ALLOTTED A FLAT UNDER SCHEME OF DDA ON 27-2-1982 - DELIVERY OF POSSESSION OF SAID FLAT TOOK PLACE ON 15-5-1986 WHEN ACTUAL FLAT NUMBER WAS ALLOCATED TO ASSESSEE - ASSESSEE SOLD SAID FLAT ON 6-1-1989 - HE CLAIMED THAT CAPITAL GAINS ARISING ON SALE OF FLAT WAS A LONG-TERM CAPITAL GAIN BUT ACCORDING TO REVENUE AUTHORITIES, FLAT WAS ALLOTTED ON 15-5-1986 AND, THEREFORE, CAPITAL GAIN WAS SHORT-TERM CAPITAL GAIN -WHETHER UNDER 7 ITA NO.1405/KOL/2017 SMT. NALINI BOTHRA A.YR. 2014-15 7 SELF-FINANCING SCHEME, AN ALLOTTEE GETS TITLE TO PR OPERTY ON ISSUANCE OF AN ALLOTMENT LETTER AND PAYMENT OF INSTALMENTS IS ONLY A CONSEQUENTIAL ACTION UPON WHICH DELIVERY OF POSSESSION FLOWS - HELD, YES - WHETHER THEREFORE, RIGHT OF ASSESSEE PRIOR TO 15-5-1986 WAS A RIGHT IN PROPERTY AND EVEN PRIOR TO SAID DATE ASSESSEE WAS HOLDING SAID FLAT - HELD, YES - WHETHER, THEREFORE, CAPITAL GAIN ARISING ON SALE OF SAID FLA T WAS A LONG-TERM CAPITAL GAIN AND, CONSEQUENTLY, ASSESSEE WAS ENTITLED TO SE T OFF SAME UNDER SECTION 54 - HELD, YES CIRCULARS AND NOTIFICATIONS : CBDT CIRCULAR NO. 471 , DATED 15-10-1996 6.1. IN VIEW OF THE AFORESAID FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENT RELIE D UPON HEREINABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN THIS R EGARD. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 04.07.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 04.07.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-35(2), KOLKATA, ROOM NO. 716, 7 TH FLOOR, AAYAKAR BHAWAN POORVA, 110, SHANTIPALLY, E.M. BYE PASS, KOLKATA-700107. 2. SMT. NALINI BOTHRA, 146/2, OLD CHINA BAZAR STREE T, KOLKATA-700001. 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 8 ITA NO.1405/KOL/2017 SMT. NALINI BOTHRA A.YR. 2014-15 8