Subhas Chandra Parmanandka, Kolkata V. ITO, Ward - 38(4), Kolkata, Kolkata

ITA 1614/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74972 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P LAHIRI SRDR
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI, P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 1614 / KOL / 2010 ASSESSMENT YEAR :2006-07 SUBHAS CHANDRA PARMANANDKA 26, P.K.TAGORE STREET, KOLKATA 700 006 [ PAN NO.AFRPP 4574 N ] V/S . INCOME TAX OFFICER, WARD-38(4), 18, RABINDRA SARANI, PODDAR COURT, KOLKATA 700 001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRA CHOUDHURY, AR /BY RESPONDENT SHRI S.P. LAHIRI, SR-DR /DATE OF HEARING 08-01-2014 /DATE OF PRONOUNCEMENT 16-01-2014 / // / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXIV, KOLKATA IN APPEAL NO.517/ CIT(A)-XXIV/38(4)/08-09 DATED 25-06-2010 FOR ASSESS MENT YEAR 2006-07. SHRI SOUMITRA CHOUDHURY, ADVOCATE REPRESENTED ON BE HALF OF ASSESSEE AND SHRI S.P. LAHIRI, LD. SR-DR REPRESENTED ON BEHALF O F DEPARTMENT. 2. IN THE ASSESSEES APPEAL, ASSESSEE HAS RAISED EI GHT GROUNDS. 3. IT WAS THE SUBMISSION OF LD. AR OF THE ASSESSEE THAT ISSUE IN THE APPEAL WAS AGAINST THE ACTION OF THE ASSESSING OFFICER IN TREATING THE COMPENSATION RECEIVED BY THE ASSESSEE AND OFFERED BY THE , AS C APITAL GAINS AS, INCOME ITA NO.1614/KOL/2010 A.Y.2006-07 SUBHAS CH. PARMANANDKA . ITO WD-38(4) KOL PAGE 2 FROM UNDISCLOSED SOURCE AND CONSEQUENTIAL DENIAL O F DEDUCTION U/S 54F OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT). IT WAS THE SUBMISSION OF LD. AR THAT ASSESSEE HAD BOOKED 1,000 SQ.FT. SPACE AT SIDDHA GARDEN, 3B RAM MOHAN MULLICK GARDEN LANE, KOLKATA 700 010 WITH M/S. SIDDHA GRIHA NIRMAN PVT. LTD., (MSGNPL IN SHORT) O N 25-03-1998 BY PAYING AN AMOUNT OF RS.1 LAKH. HE DREW OUR ATTENTION TO PAGE-26 OF THE PAPER BOOKS, WHICH WAS THE COPY OF THE RECEIPT ISSUED BY MSGNP L. AS MSGNPL WAS UNABLE TO PROVIDE HIM THIS SPACE IN THE PROPOSED BU ILDING, ON 13-01-2006 RELEVANT TO ASST. YEAR UNDER THE APPEAL, THEY HAD P AID AN AMOUNT OF RS.13.25 LAKH TO THE FOR CANCELLATION OF THE AGREEMENT. HE DREW OUR ATTENTION TO PAGE- 25 OF THE PAPER BOOK, WHICH WAS THE AGREEMENT WITH MSGNPL. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD OFFERED THE DIFFER ENTIAL OF RS.12.25 LAKH AS THE LONG TERM CAPITAL GAINS (LTCG) AND HAD CLAIMED DEDUCTION U/S 54F OF THE ACT IN RESPECT OF ANOTHER RESIDENTIAL PROPERTY WHICH HAD BEEN ACQUIRED BY THE ASSESSEE. IT WAS THE SUBMISSION THAT IN THE COU RSE OF ASSESSMENT, THE AO HAD HELD THAT THE AMOUNT OF RS.12.25LAKH RECEIVED B Y THE ASSESSEE WAS NOT LIABLE TO BE TREATED AS LTCG IN SO FAR AS THE ALLEG ED FLAT BOOKING WAS NEVER CONVERTED INTO OWNERSHIP OF THE FLAT. IT WAS THE SU BMISSION BY THE LD. AR THAT THE FACT THAT ASSESSEE HAD THE RIGHT TO ACQUIRE A 1 ,000 SQ. FT FLAT IN THE BUILDING BEING CONSTRUCTED BY MSGNPL AT SIDDHA GARDEN, 3B RA M MOHAN MULLICK GARDEN LANE, KOLKATA AND FOR WHICH THE ASSESSEE HAD PAID THE ADVANCE OF RS.1 LAKH CLEARLY SHOWED THAT ASSESSEE HAD A RIGHT AND IT WAS THIS RIGHT, WHICH WAS SURRENDERED TO MSGNPL ON 13-01-2006 FOR RS.13.2 5 LAKH. IT WAS THE SUBMISSION THAT THIS RIGHT WAS A CAPITAL ASSET AS D EFINED IN SECTION-2(14) OF THE ACT AND BY THE SURRENDER OF THIS RIGHT THERE WA S A TRANSFER AS PROVIDED IN SECTION-2(47) OF THE ACT. IT WAS THE SPECIFIC SUBMI SSION BY LD. AR THAT THE SURRENDER OF ANY RIGHT WAS TREATED AS TRANSFER IN S ECTION-2(47)(II) OF THE ACT. IT WAS THE SUBMISSION THAT ASSESSEE HAVING TRANSFERRED HIS RIGHT TO PURCHASE 1,000 SQ.FT FLAT, THE GAINS THAT AROSE TO THE ASSES SEE HAD BEEN RIGHTLY OFFERED UNDER THE HEAD LTCG. IT WAS THE SUBMISSION THAT CON SEQUENT TO THE AOS ACTION IN NOT TREATING THE RECEIPT FROM MSGNPL AS L TCG, THE AO HAD DENIED ITA NO.1614/KOL/2010 A.Y.2006-07 SUBHAS CH. PARMANANDKA . ITO WD-38(4) KOL PAGE 3 THE ASSESSEES BENEFIT OF DEDUCTION U/S.54F OF THE ACT FOR THIS AMOUNT. IT WAS FURTHER SUBMISSION THAT ON APPEAL, THE LD. CIT(A) W ITHOUT APPRECIATING THE CONTENTIONS OF THE ASSESSEE DISMISSED THE APPEAL OF ASSESSEE BY HOLDING THAT ALTERNATIVELY THE INCOME BEING THE AMOUNT OF RS.13. 25 LAKH WAS LIABLE TO BE TREATED AS INCOME UNDER THE PROVISIONS OF SECTION 5 6(2) OF THE ACT BEING INCOME FROM OTHER SOURCES. IT WAS THE SUBMISSION THAT ASSESSEE HAVING TRANSFERRED HIS RIGHT TO PURCHASE THE FLAT, SUCH RI GHT HAVING BEEN HELD FOR MORE THAN 36 MONTHS, SAME WAS LIABLE TO BE TREATED AS LT CG AND BENEFIT OF DEDUCTION U/S. 54F OF THE ACT AVAILABLE TO THE ASSE SSEE. 4. IN REPLY, LD. SR-DR VEHEMENTLY SUPPORTED THE ORD ERS OF AO AND LD. CIT(A). LD. SR-DR RELIED UPON THE ORDER OF LD. CIT( A) IN PARA-3.8 TO SUBMIT THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES, AS THE ASSESSEE D ID NOT HAVE ANY TANGIBLE ASSET WHICH HE HAD TRANSFERRED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION. A PERUS AL OF THE ASSESSMENT ORDER AS ALSO THE ORDER OF LD. CIT(A) CLEARLY SHOW THAT THE RECEIPT ISSUED BY THE MSGNPL FOR THE AMOUNT OF RS.1 LAKH FOR BOOKING A 1,000 SQ.FT. SPACE AT SIDDHA GARDEN, 3B RAM MOHAN MULLICK GARDEN LANE, KO LKATA OR THE AGREEMENT FOR CANCELLATION OF THE SAID PURCHASE AGR EEMENT ARE NOT DISBELIEVED NOR IS THE REVENUE MAKING ANY CONTENTI ON THAT THE AMOUNT RECEIVED OF RS.13.25 LAKH BY THE ASSESSEE IS NOT FR OM MSGNPL FOR THE CANCELLATION OF THE AGREEMENT. ONCE THE ASSESSEE HA S ENTERED INTO AN AGREEMENT FOR THE PURCHASE OF SPACE WHICH IS SPECIF IED AND THE PLACE IS ALSO SPECIFIED THEN IT BECOMES THE RIGHT OF THE ASSESSEE AND SUCH RIGHT IS AN ASSET WHICH HAS A VALUE. IT IS, THIS RIGHT WHICH HAS BEEN SURRENDERED OR TRANSFERRED BY THE ASSESSEE FOR A CONSIDERATION OF RS.13.25 LAK H. THIS RIGHT WAS HELD BY THE ASSESSEE, ADMITTEDLY FOR MORE THAN 36 MONTHS. T HE GAINS ARISING ON THE TRANSFER OF SUCH ASSET IS LIABLE TO BE TREATED ONLY AS LTCG. AS LONG AS THE SOURCE OF THE RECEIPT IS NOT DISPUTED, THE SAME CAN NOT BE TREATED AS ITA NO.1614/KOL/2010 A.Y.2006-07 SUBHAS CH. PARMANANDKA . ITO WD-38(4) KOL PAGE 4 UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER, THE FA CT THAT ASSESSEE HAS RECEIVED THE AMOUNT ON THE TRANSFER OF THE RIGHT VE STED IN HIM DOES NOT BRING THE RECEIPT UNDER THE PURVIEW OF THE HEAD INCOME F ROM OTHER SOURCES, ESPECIALLY WHEN THE SAID RECEIPT FALLS UNDER THE SP ECIFIC HEAD BEING INCOME FROM CAPITAL GAINS. INCOME FROM OTHER SOURCES IS A RESIDUARY HEAD. AS MENTIONED EARLIER, GAINS DERIVED BY THE ASSESSEE ON THE TRANSFER OF THE RIGHT TO PURCHASE THE FLAT BEING LIABLE TO TAX UNDER THE CAP ITAL GAINS, THE ASSESSEE WOULD BE ENTITLED TO BENEFIT OF DEDUCTION U/S.54F O F THE ACT. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER OF THE AO AND THAT OF LD. CIT(A) IS LIABLE TO A REVERSED AND WE DO SO ON THIS ISSUE. IN THE CIRCUMSTANCES, THE AO IS DIRECTED TO TREAT THE REC EIPT ON THE TRANSFER OF THE RIGHT TO PURCHASE THE FLAT AS LTCG AND GRANT THE AS SESSEES BENEFIT OF DEDUCTION U/S. 54F OF THE ACT AS CLAIMED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2014 SD/- SD/- (P.K.BANSAL) (GEORGE MATHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP !- 16/01/2014 , , , , -, -, -, -, / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. 2 / CONCERNED CIT 4. 2- / CIT (A) 5. , , , / DR, ITAT, KOLKATA 6. 8 / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ,