Raghuvirsinh Amarsinh Vaghela, Ahmedabad V. The ITO, Ward-3(3)(4) Now Ward- 3(3)(1), Ahmedabad

ITA 174/AHD/2023

AI Insights

The case revolves around an appeal by Raghuvirsinh Amarsinh Vaghela against the order of the Learned Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 92 lakhs to the assessee's income as compensation paid to Popular Estate Management Limited. The assessee, along with his brother, had entered into a development agreement with the said company, which was later cancelled, leading to the payment of compensation. The Assessing Officer disallowed the claim for deduction of this compensation in the assessee's hands but allowed it for the co-owner, leading to the present appeal. The Tribunal, referencing similar cases and the principle of equality under Article 14 of the Constitution, ruled in favor of the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135819 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-07-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 19-03-2023
• Other Referred Cases: M. Ambalal Desai v. ITO, ICT v. Kumararani Meenakshi Achi, Chetanbhai Prahladbhai Gami v. ITO, Prabhodhchandra Ambelal Desai v. ITO, Smt. Prabhaben Harshadrai Desai v. ITO
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MSCHITRASONEJI
• Keywords: Search and seizure

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And MsMADHUMITAROY,JUDICIALMEMBER आयकरअपीलसं ./ITANo.174/AHD/2023 धििाधरणवरध/Asstt.Year:2009-2010 RaghuvirsinhAmarsinhVaghela, PramukhTirthBunglow, GodhaviRoad, Godhavi, Sanand, Ahmedabad. PAN:AAFPV9344P Vs. I.T.O, Ward3(3)(4), Ahmedabad. (NowITO,Ward-3(3)(1), Ahmedabad (Applicant)(Respondent) Assesseeby:MsNupurShah,A.R Revenueby:MsChitraSoneji,Sr.D.R सुिवाईकीतारीख /DateofHearing:13/07/2023 घोरणाकीतारीख /DateofPronouncement:02/08/2023 आदेश/ORDER PERWASEEMAHMEDACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals),Ahmedabad,(in short“Ld.CIT(A)”)arisinginthematterofassessmentorderpassedunders. 143(3)r.w.s.147oftheIncomeTaxAct1961(here-in-afterreferredtoas"the Act")relevanttotheAssessmentYear2009-10. ITAno.174/AHD/2023 Asstt.Year2009-10 2 2.TheinterconnectedissueraisedbytheassesseeisthattheLd.CIT(A), erredinconfirmingtheadditionmadebytheAOforRs.92lakhsbeing compensationpaidtothepartynamelyPopularEstateManagementLimited. 3.Thenecessaryfactsarethattheassesseeinthepresentcaseisan individualanddrawinghisincomeundertheheadhouseproperty,shortterm capitalgainandothersources.Theassesseeinthereturnofincomewhile calculatingSTCGhasclaimedthedeductionofRs.92lakhsrepresentingthe compensationpaidtoPopularEstateManagementLtd.Aspertheassessee,he hasacquiredpieceoflandalongwithhisbrotherbearingsurveyNo.232 admeasuring57466Sqmtr.atMaujvillageTalukaSanand,Dist.Ahmedabad.The assesseetodevelopthelandalongwithhisbrotherhasenteredintoa developmentagreementwithacompanynamelyPopularEstateManagement Limitedvideagreementdated18/03/2008,whichwassubsequentlycancelledvide terminationagreementdated27/09/2008.Asaresultofterminationagreement, theassesseehadtopaycompensationalongwithhisbrothertoPopularEstate ManagementLimitedamountingtoRs.1,15,00,000/-only.Theshareofthe assesseewasRs.82lakhsandshareofthebrotheroftheassesseewasRs.23 lakhsintheamountofgrosscompensation.However,theAOintheproceeding u/s147oftheAct,disallowedtheclaimoftheassesseeforRs.92lakhsand addedtothetotalincomeoftheassessee. 4.Onappealbytheassessee,theLd.CIT(A)confirmedtheorderoftheAO. 5.BeingaggrievedbytheorderoftheLd.CIT(A),theassesseeisinappeal beforeus. 6.TheLd.ARbeforeuscontendedthatthecompensationpaidbythebrother oftheassesseeforRs.23lakhstothePopularEstateManagementLimitedwas allowedasdeductionbytherevenue.Assuchtherevenueontheamountof ITAno.174/AHD/2023 Asstt.Year2009-10 3 compensationpaidtoPopularEstateManagementLimitedhasinitiatedthe proceedingsagainsttheassesseebutallowedthedeductionofthesametothe brotheroftheassessee.Thus,itwascontendedbytheLd.ARthattheclaimfor thecompensationinthecaseoftheco-ownerwasadmittedbytherevenueand thereforetherevenuehastakencontrarystandbydisallowingtheadditioninthe handoftheassessee. 7.Ontheotherhand,theLd.DRvehementlysupportedtheorderofthe authoritiesbelow. 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Thereisnodisputetothefactthattheclaim representingthecompensationtoPopularEstateManagementLtd.wasnot disturbedinthecaseofco-owner,ratherthesamewasadmittedbytherevenue asgenuine.Thefactthattheco-ownerbeingShriBalbhadaSinghRaghuvirSinh VaghelahasclaimedthedeductionofRs.23lacscanbeverifiedfromthe assessmentorderinthecaseofPopularEstateManagementLimited,as reproducedhere-in-under: RAGHUVIRSINHAMERSINHVAGHELA 10&11,PremuhDrastti, Opp.StarIndiaBazar,Satellite,Ahmedabad PAN:AAFPV9344P ParticularsAmountAmount SaleProceeds110335000 Less:)(i)PurchaseCost1057500 (ii)StampDuty52000 (iii)Registration107951120295 Less:Compensationto PEML 9914705 9200000 ShortTermCapital Gain 714705 BALBHADASINGHRAGHUVIRSINHVAGHELA 10&11,PremuhDrastti, Opp.StarIndiaBazar,Satellite,Ahmedabad PAN:AEFPV9541A ParticularsAmountAmount ITAno.174/AHD/2023 Asstt.Year2009-10 4 SaleProceeds2759000 Less:)(i)Purchase Cost 264500 (ii)StampDuty13000 (iii)Registration2855280355 Less:Compensation toPEML 2478645 2300000 ShortTermCapital Gain 178645 8.1Thus,weareoftheviewthatthattherevenuecannotdisturbtheclaimof theassesseeonhand.Inholdingsowedrawsupportandguidancefromthe orderofthecoordinatebenchofthistribunalincaseofM.Ambalal Desaiv.ITO[ITAppealNo.1870(AHD.)of2015,dated7-1-2021whereinitwas heldasunder: "7.WehaveconsideredthesubmissionofboththepartiesandgonethroughtheordersofLower Authoritiescarefully.WehavealsodeliberatedonvariouscaselawsreliedbytheARoftheassessee. Beforeus,theARoftheassesseevehementlysubmittedthatinassessee'sco-ownercase,the revenuehasacceptedsimilarLongTermCapitalGaininthescrutinyassessment.Copyofthe assessmentorderinrespectoftwoco-ownersisplacedonrecord.Wehavenotedthatnocounterto thesubmissionoftheassessee,wasmadebyDRthatsimilarLongTermCapital Gainwasacceptedincaseofco-owner. 8.TheHon'bleMadrasHighCourtinICTv.KumararaniMeenakshiAchi(supra)heldthatduringthe sameassessmentyearsamequantityofwealthinpossessionofco-sharerissubjectedtoalower rateoftaxation,itwouldbehighlyimpropertoburdenasimilarlysituatedco-sharerwithahigher rateoftax.Ifsuchanactiononthepartoftheassessingauthoritiesissanctioneditwouldmilitate againsttheprincipleofequalityoflawsenshrinedinArticle14oftheConstitution.Byfollowingthe sameprinciple,theCo-ordinateBenchofthisTribunalinChetanbhaiPrahladbhaiGamiv.ITOinITA No.2082/AHD/2013dated19-7-2019,theTribunalgrantedrelieftotheassesseeholdingthatwhile makingtheassessmentofthesamepropertythesimilartreatmentshouldbegranted. 9.Wehavenotedthatinassessee'sco-owner'scasewithrespecttothepropertyagainstthesaleof whichtheassesseeclaimedLongTermCapitalGain,theAOinassessee'sco-ownercasein PrabhodhchandraAmbelalDesaiallowedthesimilarLongTermCapitalGainbypassingthefollowing order: "3.Onperusalofrecordsanddetailssubmittedbytheassesseeitwasfoundthatthe assesseewasco-ownerhavingshareof6.25%inthepropertysoldforRs.2,00,00,001/-on 19-1-2009situatedatSurveyNo.86,Lunsikui,Navsari.Valueofpropertyasperstampduty valuationwasdeterminedatRs.4,09,01,000/-.Theassesseehasnot declaredcapitalgainashehasnotfiledReturnofIncomeforAY2009-10.Thesaid propertywasinheritedbytheassessee.Theassesseehassubmittedvaluationreportofthe propertyfromGovt.ApprovedValuerwhohasarrivedvalueofpropertyatRs.66,61,020as on1-4-1981.Thevalueoftheassessee'ssharecomestoRs.4,16,314.Indexedcostasper section48oftheActisworkedoutatRs.24,22,947/-.Asperstampdutyauthoritythe assessee'ssharebeing6.25%ofsalevalueinthepropertycomestoRs.25,56,310/-. ThuscapitalgaincomestoRs.1,33,363/-,whichwastaxableinthehandsoftheassessee. ThecapitalgainofRs.1,33,363hasnowbeenshownbytheassesseeintheReturnof Incomefiledinresponsetonoticeu/s148oftheAct.However,theassesseehasnot declaredsuomotoLongTermCapitalGainashehasnotfiledreturnofIncome.The assesseehasconsciouslynotfiledreturnofincometoavoidpaymentoftax.Therefore, Penaltyproceedingsu/s.271(1)(c)oftheActareinitiatedonthisissueforconcealmentof income." ITAno.174/AHD/2023 Asstt.Year2009-10 5 10.Wehavenotedthatidenticalwordedassessmentorderwaspassedinotherco- ownercasei.e.Smt.PrabhabenHarshadraiDesai,relevantpartoftheassessmentorderisextracted below;: "3.Onperusalofrecordsanddetailssubmittedbytheassesseeitwasfoundthatthe assesseewasco-ownerhavingshareof6.25%inthepropertysoldforRs.2,00,00,001/-on 19-1-2009situatedatSurveyNo.86,Lunsikui,Navsari.Valueofpropertyasperstampduty valuationwasdeterminedatRs.4,09,01,000/-.Theassesseehasnot declaredcapitalgainashehasnotfiledReturnofIncomeforAY2009-10.Thesaidproperty wasinheritedbytheassessee.Theassesseehassubmittedvaluationreportoftheproperty fromGovt.ApprovedValuerwhohasarrivedvalueofpropertyatRs.66,61,020ason1-4- 1981.Thevalueoftheassessee'ssharecomestoRs.4,16,314.Indexedcostaspersection 48oftheActisworkedoutatRs.24,22,947/-.Asperstampdutyauthoritytheassessee's sharebeing6.25%ofsalevalueinthepropertycomestoRs.25,56,310/-. ThuscapitalgaincomestoRs.1,33,363/-,whichwastaxableinthehandsoftheassessee. ThecapitalgainofRs.1,33,363hasnowbeenshownbytheassesseeintheReturnof Incomefiledinresponsetonoticeu/s148oftheAct.However,theassesseehasnot declaredsuomotoLongTermCapitalGainashehasnotfiledreturnofIncome.The assesseehasconsciouslynotfiledreturnofincometoavoidpaymentoftax.Therefore, Penaltyproceedingsu/s.271(1)(c)oftheActareinitiatedonthisissueforconcealmentof income." 11.Inviewoftheaboveaforesaidfactualandlegaldiscussionandrespectfullyfollowingthedecision ofMadrasHighCourtinKumararaniMeenakshiAchi(supra)anddecisionofCo-ordinateBench inPrabhodhchandraAmbelalDesai(supra),therevenuecannottreattheassesseeindifferentway, therefore,theadditiontotheLongTermCapitalGainaddedbytheAO,confirmedbyld.CIT(A)is deleted.Intheresultthegroundsofappealraisedbytheassesseeareallowed." 8.2Inviewoftheabove,weholdthattheclaimoftheassesseecannotbe deniedforthefactthattheclaiminthecaseofco-ownerwasadmittedbythe revenue.Accordingly,wesetasidethefindingsoftheLd.CIT(A)anddirectthe AOtodeletetheadditionmadebyhim.Hence,thegroundofappealofthe assesseeisallowed. 9.Intheresult,theappealfiledbytheassesseeisallowed. OrderpronouncedintheCourton02/08/2023atAhmedabad. Sd/-Sd/- (MADHUMITAROY)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated02/08/2023 Manish