HARKANT MAGANLAL JOSHI, MUMBAI V. THE ITO - 33(1)(5), MUMBAI

ITA 168/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1774 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 21-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 54; 250; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE HON'BLE SHRI SANJAY GARG, JUDICIAL MEMBER ITA No. 168 & 167/Mum/2021 (As se ss me nt Y e a r s 2 0 1 2 -1 3 & 2 0 1 3 -1 4 ) Ha rka n t Ma ga n la l J o sh i 7 0 1 , S h ra d h a T o we r, T h a ku r Co m p le x, K a n d i va l i (E ) , Mu m b a i-4 0 0 1 0 1 Vs . T he IT O War d 3 3 (1 ) (5 ) , Ka ut i ly a B ha va n , I nco me T a x O ff ice r , B KC , B an dr a ( E ), Mu mb a i-4 0 0 0 5 1 (Appellant) (Respondent) PAN No.ABPPJ2253D Assessee by : S h r i A s h o k B a n s a l, A R Revenue by : S h r i K a n h y a L a l K a n a k, D R Date of hearing: 19 . 05 .2 0 22 Date of pronouncement : 19 . 05 .2 0 22 O R D E R 01. The present appeals have been preferred by the assessee for Assessment Year 2012-13 and 2013-14 respectively, against the orders even dated 22.11.2019 of the Commissioner of Income-tax (Appeals) [hereinafter referred to as the ‘CIT (A)’] passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). ITA No. 168/Mum/2021 02. At the outset, the learned counsel for the assessee has submitted that as per instruction, he does not press the ground taken in ITA No. 168/Mum/2021 for A.Y. 2012-13. He therefore, had pleaded that the aforesaid appeal may be dismissed as not pressed. Hence, the ITA No. Page | 2 ITA Nos.167 & 168/Mum/2021 Harkant Maganlal Joshi; A.Ys. 12-13 & 13-14 168/Mum/2021 for A.Y. 2012-13 is dismissed as not pressed. ITA No. 167/Mum/2021 03. Now, coming to assessee’s appeal in ITA No. 167/Mum/2021 for A.Y. 2013-14, the assessee has raised the following grounds of appeal:- “1. The Ld. CIT (Appeals) erred in holding that there is no merit in the contention of the appellant that sufficient opportunity was not provided by AO. 2. The Ld. CIT (Appeals) erred in confirming the addition of Rs. 10,53,576/- in respect of entire one forth of Capital Gains instead of 50% of one forth of Capital Gains of the Joint Venture. 3. The Ld. CIT (Appeals) erred in dismissing the allowance of deduction u/s 54 of the Income tax Act, 1961.” 04. The sole issue raised by the assessee in this appeal is relating to the computation of capital gains received by the assessee on account of sale of flat. 05. The brief facts relating to the issue are that the assessee owned a land since 1971. In the year relevant to Assessment Year 2010-11, the assessee entered into a Joint Development Agreement (JDA) for development of the said land. On completion of the project, the assessee got entitled to 40% share in four (4) flats in exchange of his land as per the terms of JDA. As per the Assessing Page | 3 ITA Nos.167 & 168/Mum/2021 Harkant Maganlal Joshi; A.Ys. 12-13 & 13-14 Officer, the assessee sold three flats in the year relevant to A.Y. 2012-13 and sold the fourth flat in the year relevant to A.Y. 2013-14. The Assessing Officer treated the land as converted into stock-in-trade at the time of execution of JDA in the year relevant to A.Y. 2010-11 and thereafter, computed the capital gains on the sale of 3 flats in the Assessment Year 2012-13 and on the fourth flat in the Assessment Year 2013-14. The learned CIT (A) made certain modification relating to computation of capital gains. 06. Now, before this Tribunal, the learned Authorized Representative has not disputed the computation of capital gains, so far as, Assessment Year 2012-13 is concerned and as observed above, he has not pressed the grounds relating to the appeal bearing in ITA No.168/Mum/2021 relevant to Assessment Year 2012-13. So far as, the computation of capital gains relating to the fourth flat which was allegedly sold in A.Y. 2013-14 is concerned, the learned counsel has pleaded that the assessee in fact had not sold the fourth flat and the same is still retained by the assessee. He has pleaded not as per the provision of Section 45 of the Act, the capital gains arising on the conversion of capital asset into stock-in- trade are liable to be taxed in the year of sale of stock-in- trade and since, the fourth flat as per learned counsel has not been sold, therefore, the gains cannot be taxed in the assessment year under consideration i.e. A.Y. 2013-14. Page | 4 ITA Nos.167 & 168/Mum/2021 Harkant Maganlal Joshi; A.Ys. 12-13 & 13-14 07. The learned Departmental Representative on the other hand has submitted that a categorical observation have been made by the Assessing Officer as well as by the learned CIT (A) that the assessee has sold one flat in FY 2012-13 relevant to A.Y. 2013-14. At this stage, the learned Counsel for the assessee has submitted that the matter may be restored back to the file of the Assessing Officer for verification of the fact on this aspect. In view of this, the impugned order of learned CIT (A) for A.Y. 2013- 14 is set aside and the matter is restored back to the file of the Assessing Officer with a direction to verify the date of sale of the 4 th (fourth) flat and with a further direction that the capital gains relating to conversion of stock-in- trade to capital asset will be taxed on the sale of flat and also the corresponding profits on sale of stock-in-trade i.e. flat in question. With the above observations, the appeal of the assessee is treated as allowed for statistical purposes. 08. In the result, assessee’s appeal for A.Y. 2012-13 in ITA No. 168/Mum/2021 is hereby dismissed, whereas appeal of the assessee for A.Y. 2013-14 in ITA No. 167/Mum/2021 is treated as allowed for statistical purposes. Order pronounced in the open court on 19.05.2022. Sd / - /- (SANJAY GARG) (J UD IC I AL M EMB ER) Mumbai, Dated: 19.05.2022 Sudip Sarkar, Sr.PS Page | 5 ITA Nos.167 & 168/Mum/2021 Harkant Maganlal Joshi; A.Ys. 12-13 & 13-14 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai