SHRI SHAILENDRA KAMALKISHOR JAISWAL, Nagpur V. ACIT, CIRCLE- 6, Nagpur

ITA 18/NAG/2015

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8857 (ITAT-NAGPUR)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Set aside
• Section: 56(2)(vii)(b); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 18 /NAG. /2015 ( ASSESSMENT YEAR : 20 10 11 ) SHRI SHAILENDRA KAMALKISHORE JAISWAL R 114, PARVATIPURA, RESHIMBAGH KESHAV NAGAR, NAGPUR 400 009 PAN ACCPJ9355K APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 6, NAGPUR . RESPONDENT ASSESSEE BY : SHRI K.P. DEWANI REVENUE BY : SHRI GITESH KUMAR DATE OF HEARING 0 9 .0 5 .2017 DATE OF ORDER 11.05.2018 O R D E R PER SHAMIM YAHYA, A.M. TH E AFORESAID APPEALS AT THE INSTANCE OF THE ASSESSEE DIRECTED IS AGAINST IMPUGNED ORDER DATED 17 TH SEPTEMBER 2014 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) II , NAGPUR, FOR THE ASSESSMENT YEAR 2010 11 . 2 . THE GROUND S RAISED BY THE ASSESSEE ARE REPRODUCED BELOW: 1. THE LEARNED A.O. ERRED IN MAKING ADDITION O F ` 48,57,000 UNDER THE HEAD INCOME FROM OTHER SOURCES. 2 SHRI SHAILENDRA KAMALKISHORE JAISWAL 2. THE ADDITION MADE BY A.O. AT ` 48,57,000 IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 3. THE LEARNED A.O. ERRED IN HOLDING THAT ASSESSEE HAS RECEIVED PROPERTY WITHOUT CONSIDERATION AND IS LIABLE TO BE ASSESSED ON INCOME AT ` 48,57,000. 4. THE LEARNED CIT(A) ERRED IN UPHOLDING ADDITION MADE BY A.O. AT ` 48,57,000 . 5. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S 234B OF INCOME TAX ACT 1961. WITHOUT PREJUDICE LEVY OF INTEREST U/S 234B IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING INCOME O F ` 32,70,730 ON 31 ST MARCH 2011. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN COUNTRY LIQUOR. THE ASSESSEE IS ALSO A DIRECTOR IN THE COMPANY M/S. INFRATECH REAL ESTATE PVT LTD. THE ASSESS ING OFFICER OBTAINED INFORMATION REGARDING THE PURCHASE OF ONE IMMOVABLE PROPERTY BY THE ASSESSEE FOR A CONSIDERATION OF ` 48,57,000. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH DETAILS OF THE SAID TRANSACTION AND ALSO MADE ENQUIRY WITH THE OFFI CE OF SUB REGISTRAR OFFICE, KUHI, NAGPUR, AND OBTAINED THE SALE DEED IN RESPECT OF THE SAID TRANSACTION. ON A PERUSAL OF THE SAID SALE DEED THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PURCHASED ONE PLOT OF LAND AT MOUZA PIPRI, TAH. KUHI, NAGPUR, FR OM M/S.INFRATECH REAL ESTATE PVT. LTD. FOR THE CONSIDERATION OF ` 48,57,000 ON 6 TH JUNE 2009. HE ALSO NOTED THAT IT WAS MENTIONED IN THE SAID REGISTERED SALE DEED THAT THE ASSESSEE HAD PAID THE CONSIDERATION OF ` 48,57,000 BY WAY OF CHEQUE NO.573883 ISSUED BY CANARA BANK, 3 SHRI SHAILENDRA KAMALKISHORE JAISWAL BADKAS CHOWK, NAGPUR, AND THAT THE SALE DEED ALSO MENTIONED THAT THE VENDOR HAS MADE A SPECIFIC DECLARATION THAT HE HAD RECEIVED THE ENTIRE SALE CONSIDERATION FROM THE ASSESSEE AND HAD NOTHING FURTHER TO RECEIVE FROM IN RESPECT OF SAID LAN D TRANSACTION. THE ASSESSING OFFICER FURTHER EXAMINED THE SAID TRANSACTION AND NOTED THAT THE ASSESSEE AS WELL AS M/S. INFRATECH REAL ESTATE PVT. LTD. HAD NOT SHOWN THE SAID TRANSACTION IN THE BOOKS OF ACCOUNTS OR RETURN OF INCOME. THE ASSESSEE EXPLAINED T HAT HE WAS DIRECTOR OF M/S. INFRATECH REAL ESTATE PVT. LTD. AND THAT THE COMPANY NEEDED FINANCE OF ` 3 CRORE AND HAD APPROACHED ONE FINANCE COMPANY (SHRIRAM CHIT FUND LTD.) FOR THE SAME AND WERE INFORMED THAT THE SAID FINANCE COMPANY WOULD NOT BE ABLE TO S ANCTION MORE THAN ` 1 CRORE IN A SINGLE NAME AND HAD, THEREFORE, TRANSFERRED THE SAID PLOT IN THE NAME OF THE ASSESSEE FOR A CONSIDERATION OF ` 48,57,000 AND THE ASSESSEE HAD SUBSEQUENTLY OBTAINED LOAN FROM THE FINANCE COMPANY WHICH WAS TRANSFERRED TO M/S. INFRATECH REAL ESTATE PVT. LTD. THE ASSESSING OFFICER, HOWEVER, DID NOT AGREE WITH THE SUBMISSIONS AND CAME TO THE CONCLUSION THAT THE SAID PROPERTY HAS BEEN ACQUIRED WITHOUT ANY CONSIDERATION AND ADDLED THE AMOUNT OF ` 48,57,000 TO THE INCOME OF THE ASSES SEE AS INCOME FROM OTHER SOURCES. AGAINST THIS ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 SHRI SHAILENDRA KAMALKISHORE JAISWAL 3 . BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE MADE SUBMISSIONS, HOWEVER, THE LEARNED COMMISSIONER (APPEALS) WAS NOT CONVINCED AND UPHELD THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. AS PER SECTION 2(47) OF THE I T ACT, TRANSFER IN RELATION TO CAPITAL ASSET INCLUDE S SALE OF PROPERTY. ON THE BASIS OF MATERIAL COLLECTED BY THE LEARNED A.O., IT IS QUITE EVIDENT THAT IN THIS CASE THE REGISTERED SALE DEED WAS ENTERED INTO BY THE APPELLANT WITH M /S . INFRATECH REAL ESTATE PVT LTD ON 06/06/2009 BY VIRTUE OF WHICH THE SAID P LOT OF LAND STOOD TRANSFERRED FROM M/S INFRATECH REAL ESTATE PVT LTD TO THE NAME OF THE APPELLANT. THUS IT IS CLEAR THAT THE APPELLANT HAS BECOME THE OWNER AND HAS RECEIVED THE SAID PLOT OF LAND FROM M/S INFRATECH REAL ESTATE PVT LTD. 5.1 IT IS ALSO EVIDENT THAT NO CONSIDERATION HAS BEEN PAID BY THE APPELLANT FOR BECOMING THE OWNER OF THE SAID PROPERTY. AS A MATTER OF FACT, DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS AGAIN REITERATED THE FACT THAT THE CHEQUE WHICH HAD BEEN ISSUED BY IT HAS NOT BEEN EN - CASHED BY THE SAID M/S INFRATECH REAL ESTATE PVT LTD. THUS IT IS CLEAR THAT THE APPELLANT HAS RECEIVED THE IMMOVABLE PROPERTY WITHOUT ANY CONSIDERATION. 5.2 THE FACT THAT THE APPELLANT HAS BECOME THE OWNER OF THE SAID PROPERTY ALSO BECO MES EVIDENT FROM THE LEGAL OPINION REPORT, TITLE VERIFICATION AND SEARCH REPORT PROVIDED BY THE COMPANIES ADVOCATE TO THE ID. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN IT IS CLEARLY MENTIONED THAT THE OWNER OF THE SAID PROPERTY IS THE APPELLAN T. 5.3 IN VIEW OF SUCH CLEAR FACTS, IT IS EVIDENT THAT THE APPELLANT HAS RECEIVED, DURING THE YEAR UNDER CONSIDERATION, THE SAID IMMOVABLE PROPERTY WITHOUT CONSIDERATION AND HENCE THE SAID INCOME HAS TO BE CHARGED TO INCOME - TAX UNDER THE HEAD OF INCOME FR OM OTHER SOURCE' U/S.56(2)(VII)(B). I THEREFORE DECLINE TO INTERFERE WITH THE FINDINGS OF THE ID. AO. THESE GROUNDS ARE THEREFORE DISMISSED. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL TRIBUNAL. 5 SHRI SHAILENDRA KAMALKISHORE JAISWAL 4 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MADE SUBMISSIONS WHICH ARE SUMMARIZED AS UNDER: A) A.O. HAS MADE ADDITION OF RS.48,57,000/ - U/S 56(2)(VII) OF I . T. ACT 1961. A.O. HAS OBSERVED THAT ASSESSEE HAS PURCHASED LAND FROM M/S INFRATECH REAL ESTATE PVT. LTD ON 06/06/2009 FOR CONSIDERAT ION OF RS.48,57,000/ - . THE DETAILS OF CONSIDERATION PAID IS ALSO OBSERVED BEING CHEQUE NO.573883 OF CANARA BANK, NAGPUR. A.O. HAS NOTED THAT ASSESSEE IS WORKING DIRECTOR OF THE SAID COMPANY AND THE AFORESAID TRANSACTION IS NOT SHOWN IN RETURN OF INCOME. IT IS ALSO NOTED BY A.O. THAT CANARA BANK A/C CHEQUE NO.573883 GIVEN BY ASSESSEE WAS NOT PRESENTED FOR CLEARING. B) A.O. ON VERIFICATION OF AUDITED BALANCE SHEET OF M/S INFRATECH REAL ESTATE PVT. LTD. HAS OBSERVED THAT NEITHER THE TRANSACTION OF SALE OF LA ND IS REFLECTED IN SALE OF LAND DURING THE YEAR NOR RECEIVABLE FROM ASSESSEE WAS SHOWN AS ON 31/03/2010. A.O. HAS THUS CONCLUDED THAT THE SAID PROPERTY IS TRANSFERRED TO ASSESSEE WITHOUT ANY CONSIDERATION AND IS TREATED AS INCOME FROM OTHER SOURCES. THE HO N'BLE CIT(A) HAS UPHELD THE ADDITION AS A CCORDING TO HIM INCOME IS ASSESSABLE U/S 56(2)(VII) (B) OF I . T. ACT 1961. THE PERUSAL OF PURCHASE DEED CLEARLY INDICATES THAT PURCHASE IS AS PER CONSIDERATION PROVIDED IN THE REGISTERED DOCUMENTS AND THUS OBSERVATION OF A.O. THAT IT IS WITHOUT CONSIDERATION IS CONTRARY TO LEGAL EVIDENCE ON RECORD. C) NON PRESENTATION OF CHEQUE AT BEST WOULD RESULT INTO AMOUNT BEING PAYABLE BY ASSESSEE TO SELLER AND RECEIVABLE BY HIM FROM ASSESSEE. THIS CAN NEVER RESULT INTO TRANSFER OF PROPERTY WITHOUT CONSIDERATION. D) PURCHASE DEED CLEARLY INDICATES THAT THE TRANSACTION IS EXECUTED ON 06/06/2009 AND THE PROVISIONS OF SECTION 56(2)(VII) HAVE BEEN BROUGHT TO STATUTE BY FINANCE (NO.2) ACT 2009 FOR THE TRANSACTION UNDERTAKEN ON AFTER 0 1/10/2009 AND THUS PROVISION OF SECTION 56(2)(VII) WERE INAPPLICABLE IN CASE OF ASSESSEE AS REGISTERED PURCHASE DEED IS EXECUTED ON 06/06/2009. IN VIEW OF ABOVE LEGALLY THERE IS NO SCOPE FOR ASSESSING ANY SUM U/S 56(2)(VII)OF I . T. ACT 1961. RELIANCE ON: I ) CIRCULAR NO.05/2010 DATED 03/06/2010. E) AFORESAID REGISTERED SALE DEED WAS EXECUTED WITH AN INTENT TO OBTAIN FINANCE BY MORTGAGING OF PROPERTY AS FINANCERS WERE NOT READY TO PROVIDE FINANCE IN SINGLE NAME FOR MORE THAN RS.1 CRORE. 6 SHRI SHAILENDRA KAMALKISHORE JAISWAL VERIFICATION MADE BY A.O. FROM THE AUDITED FINANCIAL STATEMENT OF COMPANY CORROBORATED THE SUBMISSION THAT THERE IS NO TRANSACTION OF PURCHASE OF LAND BY ASSESSEE AS IN THE COMPANY SAID LAND IS SHOWN AS ITS STOCK IN TRADE IN WIP IN BALANCE SHEET. 5 . PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE AUTHORITIES BELOW . 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT THE ADDITION IN THIS CASE HAS BEEN MADE UNDER SECTION 56(2 )(VII) (B) OF THE ACT. PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT BRING INTO THE AMBIT OF INCOME FROM OTHER SOURCES , OF AN IMMOVABLE PROPERTY TO THE TRANSFEREE , WHICH IS RECEIVED WITHOUT CONSIDERATION . THIS WAS BROUGHT INTO STATUTE BOOK BY FINANCE ACT, 2010, W.E.F. 1 ST OCTOBER 2009. HENCE, PRIOR TO TH IS DATE SUCH TRANSACTIONS WERE NOT COMING UNDER INCOME UNDER SECTION 2(24) OF THE ACT. FROM THE ABOVE, IT IS EVIDENT THAT THE ABOVE SAID PROVISIONS OF THE ACT ARE APPLICABLE TO TRANSACTIONS WHIC H ARE ENTERED INTO AFTER 1 ST OCTOBER 2009. IN THIS REGARD, ASSESSEES COUNSEL HAS ALSO PLACED RELIANCE UPON CIRCULAR NO.5/2010 ISSUED BY THE CBDT WHEREIN IT HAS BEEN CLEARLY MENTIONED THAT THESE AMENDMENTS HAVE BEEN MADE APPLICABLE W.E.F. 1 ST OCTOBER 2009 AND WILL ACCORDINGLY APPLY FOR TRANSACTION UNDERTAKEN ON/OR AFTER SUCH DATE. HENCE, FROM THE ABOVE PROVISIONS OF LAW AND CBDT CIRCULAR, IT IS CLEAR THAT TRANSFER OF IMMOVABLE PROPERTY WITHOUT CONSIDERATION WILL BE TAXABLE IN THE HANDS 7 SHRI SHAILENDRA KAMALKISHORE JAISWAL OF TRANSFEREE IF TH E TRANSACTION TOOK PLACE AFTER 1 ST OCTOBER 2009. THERE WAS NO PROVISION OF LAW TO TAX SUCH TRANSACTION PRIOR TO 1 ST OCTOBER 2009. THE IMPUGNED TRANSACTION WAS ENTERED INTO ON 6 TH JUNE 2009, AS PER REGISTERED SALE DEED. HENCE, THERE IS NO DISPUTE THAT THE IMPUGNED TRANSACTION IS NOT HIT BY THE PROVISIONS OF SECTION 52(6)(VII)(B) OF THE ACT. IT IS SETTLED LAW THAT CBDT CIRCULARS ARE BINDING UPON REVENUE AUTHORITIES. NO CONTRARY DECI SION HAS BEEN BROUGHT TO OUR NOTICE THAT THE SAID AMENDMENT IS APPLICABLE RETROSPECTIVELY. HENCE, IN OUR CONSIDERED OPINION, THE ASSESSEE SUCCEEDS ON THIS GROUND ITSELF. THE OTHER LIMBS OF ARGUMENT CANVASSED BY THE ASSESSEE ARE NOW ONLY FOR ACADEMIC INTERE ST, HENCE, WE ARE NOT ADJUDICATING THE SAME. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7 . IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.05.2018 SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR , DATED : 11.05.2018 8 SHRI SHAILENDRA KAMALKISHORE JAISWAL COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, NAGPUR CITY CONCERNED; ( 5 ) THE DR, ITAT, NAGPUR ; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ( SR. P.S. / P.S. ) ITAT, NAGPUR