DILIP TALAKSHI VORA, MUMBAI V. PRINCIPLE COMMISSIONER OF INCOME TAX-20, MUMBAI

ITA 1613/MUM/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6824 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 09-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Additional evidence
• Section: 263; 43CA; 143(3); 73

Judgement Text

P a g e | 1 ITA No.1613/Mum/2023 Dilip Talakshi Vora Vs. Pr.CIT-20 IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1613/Mum/2023 (A.Y. 2018-19) Dilip Talakshi Vora 3102, Spring Mills, Island City Centre, G.D. Ambekar Marg Near Wadala Telephone Exchange, Dadar (East) Mumbai – 400014 Vs. Principal Commissioner of Income Tax-20, Room No. 418, 4 th Floor, Piramal Chambers, Lal Baug, Parel, Mumbai - 400012 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AABPV0804C Appellant .. Respondent [ Appellant by : Paresh Shaparia Respondent by : Riddhi Mishra Date of Hearing 19.07.2023 Date of Pronouncement 05.10.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. Pr.CIT(A), Mumbai-20, dated 24.03.2023 for A.Y. 2018-19. The assessee has raised the following grounds before us: “I. ORDER PASSED U/S 263 IS BAD IN LAW: 1. The Ld. Pr.CIT erred on facts and circumstances of the case in passing the order u/s 263 which is bad in law. 2. The Ld Pr.CIT erred in passing the order u/s 263 by setting aside AO's order and directing to inquire into the claim both in terms of section 56(2)(x) and section 43CA of the Income Tax Act, 1961. 3. The Ld Pr. CIT erred in treating the order passed by AO. u/s 143(3) as erroneous and prejudicial to the interest of the revenue in relation to purchase of property i.e Flat no. E-601 at Ambe Shraddha Kamothe in Panvel (herein referred as said flat) for applicability of Section 56(2)(x) and section 43CA of the Income Tax Act, 1961 P a g e | 2 ITA No.1613/Mum/2023 Dilip Talakshi Vora Vs. Pr.CIT-20 4. The Ld Pr.CIT failed to appreciate the fact that: a) Provision of Sec 56(2)(x) are not applicable for property held as stock-in-trade b) Provision of Section 43CA are not applicable for a trader for purchase of property as the said section is applicable on sale of property. c) The AO had made detailed queries and inquiries in relation to the said flat held as Stock- in-Trade during the course of assessment proceedings and after duly application of mind passed the order u/s 143(3). 5. The Ld. Pr CIT ought not to have treated order passed u/s 143(3) as erroneous or prejudicial to the interest of revenue. 6. The order passed u/s 263 is bad in law and requires to be quashed II. PROVISION OF SECTION 56(2)(3) NOT APPLICABLE TO STOCK-IN- TRADE 1. The Ld Pr.CIT erred applying the provisions of Section 56(2)(x) to the appellant in relation the said flat held as stock-in-trade 2. The Ld Pr. CIT ought not to have applied the provisions of Section 56(2)(x) to the appellant in relation the said flat held as stock-in-trade 3. Without prejudice to the above, the provision of Section 56(2)(x) had not been correctly and properly interpreted. PROVISION OF SECTION 43CA NOT APPLICABLE TO PURCHASE OF STOCK- IN-TRADE 1. The Ld Pr. CIT erred applying the provisions of Section 43CA to the appellant in relation the purchase of the said flat held as stock-in- trade. 2. The Ld Pr. CIT ought not to have applied the provisions of Section 43CA to the appellant in relation the purchase of the said flat held as stock-in-trade 3. Without prejudice to the above, the provision of Section 43CA had not been correctly and properly interpreted. The appellant craves leave and reserves the right to add, alter, amend, modify or delete any of the ground's before or during the course of the hearing. The appellant reserves the right to produce additional evidence before or during the course of the hearing. Each one of the above grounds of appeal is without prejudice to the other.” 2. Fact in brief is that return of income declaring total income of Rs.2,14,13,310/- was filed on 17.08.2018. The case was subject to scrutiny assessment. The assessment u/s 143(3) r.w.s 143(3A) and 143(3B) was finalised on 23.10.2023 accepting the income as per the return of income filed. Subsequently, the ld. Pr. CIT, Mumbai -20, P a g e | 3 ITA No.1613/Mum/2023 Dilip Talakshi Vora Vs. Pr.CIT-20 issued notice u/s u/s 263 of the Act dated 21.02.2020 in respect of purchase of flat no. E-601 at Ambe Shraddha Kamothe in Panvel from M/s Choice Land Developers for consideration of Rs.45,00,000/- which was lower than the market value of Rs.54,21,941/- therefore holding that provisions of Sec. 56(2)(x) of the Act was attracted in the case of the assessee. 3. In response the assesse submitted that the said flat was held by him as stock in trade and not a capital asset and that Sec.56(2)(vii) will have application to the property which is in the nature of capital asset of the recipient and would not be applicable to stock-in-trade as in the case of the assessee. However, the ld Pr.CIT has not agreed with the submission of the assesse. He was of the view that in the profit and loss account the assessee has taken deposit on account of providing flat on rent and letting the immovable property i.e flats to potential tenants. Therefore, he concluded that business of the assessee was investment in the flats i.e purchasing of flats from developers, holding it for substantial period of time and letting it to the potential tenants and after that selling of the property once the price of the property is increased. The ld. Pr.CIT further stated that in case the assessee the flat in question was held as stock-in-trade then also provisions available u/s 43CA will be attracted in this case and difference between market value and actual sale consideration of the said property amounting to Rs.921,941/- is taxable. The ld. Pr.CIT has also stated that once the entire payment was made during the F.Y. 2014-15 then why the registration of the said flat was delayed since the same was registered during the F.Y. 2017-18. He further stated that assessee has not satisfied the reason for making advance payment to the builder and making delay in registration of the property. The ld. Pr.CIT observed that assessing officer has passed the order allowing the relief without inquiring into the claim in proper perspective both in terms of Section P a g e | 4 ITA No.1613/Mum/2023 Dilip Talakshi Vora Vs. Pr.CIT-20 50(2)(x) and Sec. 43CA of the Act which resulted in under assessment of income by Rs.921,941/-. Therefore, he treated the order passed by the assessing officer has erroneous and prejudicial to the interest of revenue. 4. During the course of appellate proceedings before us the ld. Counsel contended that assesse is engaged in the business of real estate purchase and sale and letting of buildings. He referred profit and loss account of the assesse placed at page no. 73 of the paper book and submitted that as on 31.03.2018 the assesse has shown impugned flat No. E-601 to the amount of Rs.45,00,000/- as stock in trade. He also referred page no. 75 of the paper book and submitted that said flat was also shown in the list of closing stock of flats for the amount of Rs.45,00,000/-. Similarly, he referred page no.80 pertaining to schedule of balance sheet and as per schedule No. 4 of closing stock of flats the flat No. E/601 was valued at Rs. 45 lacs. The ld. Counsel further submitted that ld. Pr.CIT(A) has incorrectly stated that Sec. 56(2)(x) or Sec. 43CA are applicable in the case of the assessee, the assessee has consistently shown the flats as stock in trade, therefore, these sections are not applicable to the case of the assessee. On the other hand, ld. D.R supported the order of Pr.CIT and submitted that AO has not made any inquiry during the course of assessment proceedings regarding non applicable of Sec. 56(2)(x) and Sec. 43(A) of the Act. 5. Heard both the sides and perused the material on record. The assessee is engaged in the business of real estate comprising purchase, sale and letting of residential and non-residential premises. The assessment u/s 143(3) was completed on 23.10.2020, subsequently, the ld. Pr.CIT on examination of the assessment record noticed in respect of one flat no. E-601 located at Panvel, Navi Mumbai as referred P a g e | 5 ITA No.1613/Mum/2023 Dilip Talakshi Vora Vs. Pr.CIT-20 supra in this order that the said flat was purchased from M/s Choice Land Development for a consideration of Rs.45,00,000/- and the market value of the said flat as per sale deed was Rs.54,21,941/-. Therefore, the Pr.CIT was of the view that the difference amount of Rs.921,941/- between actual sale consideration and market value is taxable. The assesse has demonstrated from the relevant supporting document placed in the file i.e Profit and loss account and balance sheet that the said flat was shown as stock-in-trade, therefore, provision of Sec. 56(2)(b) of the Act is not applicable to the case of the assessee. The assessee has substantiated from the material placed in the paper book as discussed supra in this orders that the said flat was consistently reflected in the stock-in-trade as part of opening stock and closing stock, therefore, provisions of Sec. 56(2)(x) is not applicable as the property was held as stock-in-trade. Further, provision of Sec. 43CA is also not applicable to the assesse being a trader for the purchase of property as the said section is only applicable on sale of property (as a result of transfer of an asset (other than capital asset) by an assessee). After considering the material placed in the paper book and provisions of Sec. 56(2)(x) and Sec. 43CA we consider that ld. Pr.CIT has failed to substantiate how the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue. Therefore, we set aside the order passed u/s 263 of the Act by the Pr.CIT and allow the appeal of the assessee. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 05.10.2023 Sd/- Sd/- (Amit Shukla) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 05.10.2023 P a g e | 6 ITA No.1613/Mum/2023 Dilip Talakshi Vora Vs. Pr.CIT-20 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.