W.M.M.Mahmood Asia, CHENNAI V. ITO, CHENNAI

ITA 1563/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7849 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 05-12-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHJCIT
• Assessee Lawyers: MOHAMED KHALIULLAHC A
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Business income; Cost of acquisition
• Section: 50C; 54F

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.1563 /MDS./2016 ( / ASSESSMENT YEAR :2007-08) MR.W.M.M.MAHMOOD ASIA, 191,N.S.C.BOSE ROAD, CHENNAI 600 001. VS. THE INCOME TAX OFFICER, BUSINESS WARD VIII(2), CHENNAI. PAN AAFPA 3245 E ./ I.T.A.NO.1564 /MDS./2016 ( / ASSESSMENT YEAR :2007-08) MR.UVAIS WAVOO MAGUDOOM, 191,N.S.C.BOSE ROAD, CHENNAI 600 001. VS. THE INCOME TAX OFFICER, BUSINESS WARD IX(2), CHENNAI. PAN AAAPW 4112 B ( / APPELLANT ) ( / RESPONDENT ) ./ I.T.A.NO.1565 /MDS./2016 ( / ASSESSMENT YEAR :2007-08) MR.W.M.M.SHAMSUDEEN, 191,N.S.C.BOSE ROAD, CHENNAI 600 001. VS. THE INCOME TAX OFFICER, BUSINESS WARD IX(4), CHENNAI. PAN AAOPS 9619 R ( / APPELLANT ) ( / RESPONDENT ) ( / APPELLANT ) ( / RESPONDENT ) ITA NOS.1563 TO 1565 /MDS/2016 2 ! ' # / APPELLANT BY : MR.MOHAMED KHALIULLAH,C.A $% ! ' # / RESPONDENT BY : MR.A.V.SREEKANTH,JCIT, D.R & ' ' ( ) / DATE OF HEARING : 05.12.2016 *+ ' ( ) /DATE OF PRONOUNCEMENT : 15.12.2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE APPEAL ARE FILED BY THE DIFFERENT ASSESSEES , AGGRIEVED BY THE DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX(A)- 13, CHENNAI DATED 28.03.2016 PERTAINING TO ASSESSME NT YEAR 2007- 08. SINCE ISSUES INVOLVED IN ALL THESE ASSESSEES APPEALS ARE COMMON IN NATURE, THESE APPEALS ARE CLUBBED TOGETHE R, HEARD TOGETHER, DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST COMMON GROUND IN ALL THESE APPEALS IS WITH REGARD TO DETERMINATION OF SALES CONSIDERATION OF A SALE OF P ROPERTY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. ITA NOS.1563 TO 1565 /MDS/2016 3 3. THE FACTS OF THE CASE ARE THAT THE SALE OF PROP ERTY WAS SAID TO BE ON 21.07.2006 AT A SALE PRICE, WHICH IS ABOVE TH E GUIDELINE OF ` 1282 PER SQ.FT. AND TOTAL SALES CONSIDERATION PASSE D BETWEEN THE PARTIES WAS ` 75 LAKHS AND THE BUYER PAID THE STAMP DUTY ON THE SAME AT ` 6 LAKHS. ACCORDING TO ASSESSEES, THE SALE DEED WAS KEPT PENDING FOR REGISTRATION DUE TO SOME MUSLIM LAW AND ULTIMATELY IT WAS REGISTERED ON 05.01.2008 BY PAYING ADDITIONAL STAMP DUTY OF ` 9,75,000/-, FIXING THE VALUE OF PROPERTY AT ` 3,000/- PER SQ. FT. BASED ON THE SUBSEQUENT REVISION OF GUIDELINE VALUE, THER EBY DETERMINING THE SALES CONSIDERATION AT ` 1,96,87,500/-. ACCORDING TO LD.A.R, THE VALUE OF THE PROPERTY TO BE CONSIDERED ON THE DATE OF SALES DEED, AND THE REGISTRATION DELAYED ON BONA FIDE REASONS, WHIC H IS BEYOND CONTROL OF THE ASSESSEE. THE ASSESSEE CANNOT BE REA SONED FOR SUCH DELAY AND THE AO IS REQUIRED TO ADOPT THE SRO RATE AS ON THE DATE OF SALE ON 21.07.2006 IN TERMS OF SEC.50C OF THE ACT A ND NOT THE SUBSEQUENT REVISION RATE, WHEN THE SALES DEED WAS A CTUALLY REGISTERED. FOR THIS PURPOSE, HE RELIED ON THE DECI SION OF CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF SRI S.VENKT REDDY AND SRIK.PRABHAKAR REDDY IN ITA NO.975 & 975/HYD./2010 DATED ITA NOS.1563 TO 1565 /MDS/2016 4 09.11.2012. THE LD.A.R ALSO RELIED ON THE SUB REGI STRAR CERTIFICATE DATED 25.11.2016 STATING THAT THE IMPUGNED PROPERTY TO BE VALUED AT ` 1282 PER SQ.FT. WHICH IS A RATE PREVAILING BETWEEN 01.04.2003 TO 31.07.2007 AND ALSO CORRESPONDING GUIDELINES VALUE UPLOADED FROM NET. 4. ON THE OTHER HAND LD.D.R SUBMITTED THAT THE PRO PERTY WAS ACTUALLY REGISTERED ON 20.01.2009 AND THE PREVAILIN G GUIDE LINE RATE AS ON THE DATE WAS ` 3,000/- PER SQ. FT. IN RESPECT OF IMPUGNED PROPERTY , THE PURCHASER PAID THE STAMP DUTY OF ` 15,75,000/- TO THE TOTAL SALES CONSIDERATION OF ` 1,96,87,500/-. ACCORDING TO HIM, SEC.50C IS APPLICABLE AND HE SUPPORTED THE ORDERS OF LOWER AUT HORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, THERE WAS A SALE DEED DATED 21.07.2006. ACCORDING TO THIS, SALES CONSIDERATION WAS ` 75 LAKHS. HOWEVER, THIS WAS NOT GOT REGISTERED AS ON DATE AND ACTUALLY REGISTERED ON 28.01.2009. CONSEQUENTLY, THE PURCHA SER PAID TOTAL STAMP DUTY OF ` 15,75,000/-. NOW, THE CONTENTION OF THE LD.A.R IS T HAT ITA NOS.1563 TO 1565 /MDS/2016 5 THE TRANSFER WAS ACTUALLY TOOK PLACE ON 21.07.2006 AND SUBSEQUENT REVISION OF SUB REGISTRAR VALUE CANNOT BE CONSIDERE D FOR APPLICABILITY OF SEC.50C OF THE ACT. HE SUBMITTED THAT THE DELAY IN REGISTERING OF THE SALES DEED HAD OCCURRED BECAUSE OF THE GENUINE REASONS, WHICH WAS BEYOND THE CONTROL OF THE ASSESSEE AND THAT CAN NOT BE REASONED TO CONSIDER THE SRO RATE AS ON 20.01.2009. BUT THE FACT REMAINS THAT THE ACTUAL REGISTRATION TOOK PLACE ONLY ON 20.01.20 09 AND THE ASSESSEE WAS NOT ABLE TO EXPLAIN HOW THE STAMP DUT Y WAS PAID AT ` 3,000 PER SQ. FT AND ALSO NOT EXPLAINED THE EXACT REASONS FOR PENDING OF THE REGISTRATION FROM THE ORIGINAL DATE I.E.21.07.2006 TO 20.01.2009. IF THE PROPERTY WAS ACTUALLY TRANSFE RRED ON 21.07.2006, THEN THE SRO RATE PREVAILING ON THIS DATE TO BE CO NSIDERED TO DETERMINE THE CAPITAL GAIN IN THAT ASSESSMENT YEAR ONLY. THE AO HAS TO SEE THAT THE DATE ON WHICH TRANSFER ACTUALLY TOO K PLACE IN TERMS OF SEC.2(47)(V) OF THE ACT AND WHO HOLDS THE POSSESSIO N OF THE PROPERTY AND WHO HAS PAID THE LAND REVENUE, DURING INTERMEDI ARY PERIOD THEREAFTER THE PROVISIONS OF THE SECTION 50C IS TO BE APPLIED IN THE ASSESSMENT YEAR, IF THE ACTUAL SALE AND REGISTRATIO N TOOK PLACE IN THIS ITA NOS.1563 TO 1565 /MDS/2016 6 ASSESSMENT YEAR. WITH THIS OBSERVATION, WE REMIT T HE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION IN ALL THESE THREE AP PEALS. 6. THE NEXT GROUND IS WITH REGARD TO DETERMINATION OF COST OF ACQUISITION OF THE ABOVE PROPERTY AS ON 01.04.1981. 7. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE CL AIMED THAT THE PROPERTY HAS BEEN GIFTED TO THE ASSESSEE BY HIS AUN T ON 27.08.2000. FOR THE PURPOSE OF INDEXATION, THE ASSESSEE HAS TAK EN THE COST OF ACQUISITION OF PROPERTY AS ON THE DATE OF HIS AUNT WHO PURCHASED THE PROPERTY I.E THE YEAR 1988 AND RELIED ON THE JUDGEM ENT OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH I N [2013] 355 ITR 474 (BOM) WHEREIN HELD THAT CAPITAL GAINS ARISI NG ON TRANSFER OF A CAPITAL ASSET ACQUIRED UNDER A GIFT OR WILL, THE IN DEXATION COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO TH E YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECOMES THE OWNER OF THE ASSET. HOWEVER, THE LOWER AUTHORITIES CONSIDERED THE YEAR ON WHICH THE ASSESS EE GOT THE PROPERTY. AGAINST THIS THE ASSESSEE IS IN APPEAL BE FORE US. ITA NOS.1563 TO 1565 /MDS/2016 7 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ACCORDING TO LD.A.R, HOLDING PERIOD OF THE ASSESSEE SHALL BE CONSIDERED FROM THE YEAR ASSESSEES AUNT ACQUIRED T HE PROPERTY. ACCORDING TO AO, THE ASSESSEE BECAME THE OWNER OF T HE PROPERTY, VIDE GIFT RECEIVED FROM THE ASSESSEES AUNT I.E. ON 25.08.2000, WHICH IS EVIDENCED BY THE DECLARATION DEED DATED 27.08.20 00. ACCORDING TO THE AO, THE YEAR 2000-01 WAS THE FIRST YEAR IN WHIC H THE ASSESSEE BECAME THE OWNER. ACCORDING TO HIM, PROVISIONS OF THE SECTION 48(III) IS APPLICABLE. IN OUR OPINION, SIMILAR ISSUE WAS CO NSIDERED BY THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH CITED SUPRA WHEREIN HELD THAT WHEN THE ASSESSEE SALES HIS OR HER IMMOVABLE PROPERTY, WHICH IS ACQUIRED UNDER THE GI FT OR WILL, WHILE COMPUTING THE CAPITAL GAINS THE INDEXATION COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECOME THE OWNER OF THE ASSET. THEREFORE, RATIO OF THE A BOVE DECISION IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. HENCE , FOR THE PURPOSE OF INDEXATION COST OF ACQUISITION, THE DATE ON WHICH, THE ASSESSEES AUNT ITA NOS.1563 TO 1565 /MDS/2016 8 BECAME THE OWNER OF IMPUGNED PROPERTY TO BE CONSIDE RED AND NOT THE DATE ON WHICH THE PRESENT ASSESSEES BECAME THE OWNER OF ASSET. ACCORDINGLY, THIS GROUND IS ALLOWED IN FAVOUR OF TH E ASSESSEES. 9. THE LAST GROUND INITANO.1565/MDS./16 IS WITH RE GARD TO DENIAL OF EXEMPTION U/S.54F OF THE ACT. 10. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WA S LIVING AT 27,JAMBULINGAM STREET, NUNGAMBAKKAM, WHICHWAS THEIR RESIDENCE AND SOLD IT. THE SALEPROCEEDS OF THIS RESIDENTIAL H OUSE WAS INVESTED IN ANOTHER RESIDENTIAL PROPERTY AT NEELANGARAI TO T HE EXTENT OF ` 5,53,591/-. THE ASSESSEE CLAIMED DEDUCTION OF EXEM PTION FROM CAPITAL GAINS. THE AO ASKED THE ASSESSEE TO FURNIS H THE LIST OF RESIDENTIAL PROPERTIES AS ON 31.03.2007 IN ORDER TO DETERMINE ELIGIBLE CLAIM OF EXEMPTION U/S.54F OF THE ACT. IN RESPONS E, THE ASSESSEE SUBMITTED THE FOLLOWING PROPERTIES APART FROM 3 COM MERCIAL PROPERTIES. 1. 50% IN 18, MOORE STREET, CHENNAI-1 PA RTLY COMMERCIAL AND PARTLY RESIDENTIAL. 2. A6,II AVENUE, WAVOO MAQDOOM PLAZE PARTLY COMMERCIAL AND PARTLY ANNA NAGAR RESIDENTIAL ITA NOS.1563 TO 1565 /MDS/2016 9 3. 2/16 TH SHARE IN ESTATE OF RESIDENTIAL LATE W.S.MAQDOOM MOHAMED 10.1 ALL THE ABOVE PROPERTIES ARE REFLECTED IN TH E RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 AND HE HAS BEEN ADMITTING R ENTAL INCOME FROM THESE PROPERTIES. IT IS SEEN THAT THE ASSESSE E WAS IN POSSESSION OF MORE THAN ONE RESIDENTIAL PROPERTY, OTHER THAN T HE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET. AS PER PROVISION OF SEC.54F PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTIO N SHALL APPLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIA L HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR ---- THEREFORE, THE AO REJECTED THE CLAIM OF DEDUCTIO N U/S.54 OF THE ACT. ON APPEAL THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LOWER AUTHORITIES CLEARLY BROUGHT ON RE CORD THAT AS STATED ABOVE, THE ASSESSEE IS OWNING MORE THAN ONE RESIDE NTIAL HOUSE. AS SUCH, THE ASSESSEE CANNOT BE GRANTED EXEMPTION U/S. 54F OF THE ACT. IF THE ASSESSEE USES THAT PROPERTY HIMSELF OR BY TE NANT FOR RESIDENTIAL ITA NOS.1563 TO 1565 /MDS/2016 10 PURPOSE, IT DOES NOT CHANGE THE CHARACTER OF PROPER TY FROM COMMERCIAL TO RESIDENTIAL, OR RESIDENTIAL TO COMMER CIAL. IN THE PRESENT CASE, ADMITTEDLY THE PROPERTY WAS SUBJECT TO RESIDE NTIAL USAGE. AS SUCH, THE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL PROPERTY. IN VIEW PROVISIONS OF THE SECTION 54F(1) OF THE ACT, THE ASSESSEE CANNOT BE GRANTED EXEMPTION U/S.54F(1) OF THE ACT. ACCORDI NGLY, THIS GROUND RAISED IN ITA NO.1565/MDS./16 STANDS DISMISSED. 12. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 15 TH DECEMBER, 2016 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 15 TH DECEMBER, 2016 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF