DHARAMPAL BROTHERS PVT. LTD., Mumbai V. DY. CIT 9(3)(1), Mumbai

ITA 1946/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4938 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 03-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHEKAR GUPTA
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Question of law; Set aside; Capital Gains
• Section: 50C; 142(1); 143(1); 143(2); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , A M AND SHRI AMARJIT SINGH, J M / I.T.A. NO. 1946 /MUM/201 9 ( / ASSESSMENT YEARS: 20 1 5 - 1 6 ) DHARAMPAL BROTHERS PVT. LTD. MEHRA INDUSTRIAL COMPOUND, SAKINAKA, ANDHERI KURLA ROAD, MUMBAI - 400072. / VS. DCIT - 9(3)(1) ROOM NO.215, 2 ND FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAACD4297R ( / APPELLANT ) .. ( / RESPONDENT ) / DAT E OF HEARING: 05 / 01 / 20 2 1 /DATE OF PRONOUNCEMENT: 01 /04 / 2021 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 2 8 . 02 .201 9 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 16 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 15 - 1 6 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 50C DO NOT APPLY TO A LEASEHOLD LAND. 2. THE LD. CIT(A) HAS FAILED TO CONSIDER THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS GREENFIELD HOTELS AND ESTATES (P) LTD. 389 ITR 68 (BOMBAY) WHEREIN THE HONBLE BOMBAY HIGH COURT HELD THAT SECTION 50C DOES NOT APPLY TO LEASEHOLD LAND. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTA INING THE ADDITION OF AN AMOUNT OF RS.40,87,381/ - AS SHORT TERM CAPITAL GAIN AND RS.1,6 5,91,485/ - AS LONG TERM CAPITAL GAINS. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE FILED ITS RETURN OF INCOME AT LOSS TO THE TUNE OF RS.43,49,504/ - ON 27.09. 2015 FOR THE A.Y.2015 - 16. THE RETURN WAS PROCESSED U/S 143(1) OF THE I. T. ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY. ASSESSEE BY: SHRI SHEKAR GUPTA REVENUE BY : SHRI BHARAT ANDHALE ( D R) ITA NO. 1946 /M/201 9 A. Y. 2 0 15 - 16 2 NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING I N FABRICS. ON VERIFICATION, IT WAS FOUND THAT THE ASSESSEE BY VIRTUE OF AGREEMENT DATED 10.12.2014 HAS SOLD LEASEHOLD LAND AND BUILDING SITUATED AT PLOT NO. B - 1, MAHAD INDUSTRIAL AREA, MAHARASHTRA TO ONE M/S. LAXMI ORGANIC INDUSTRIAL LIMITED. THE ASSESSEE HAD SHOWN THE SALE CONSIDERATION OF THE SAID PROPERTY TO THE TUNE OF RS. 1,17,82,000/ - AS AGAINST THE MARKET VALUE OF RS.2,41,87,000/ - TAKEN BY THE STAMP VALUATION AUTHORITIES . THE ASSESSEE WORKED OUT THE SHORT TERM CAPITAL GAIN (STCG) ON SALE OF BUILDING A T RS.25,60,259/ - AND LONG TERM CAPITAL GAIN (LTCG) ON LEASEHOLD LAND AT RS.2,48,640/ - RESPECTIVELY. THE STATEMENT OF SHORT TERM CAPITAL GAIN ON DEPRECIATION ASSETS AS UNDER.: - NAME OF ASSETS DATE OF SALE SALES CONSIDERATION WDV AT BEGINNING OF THE YEAR ADD ITION DURING THE YEAR TRANSFER EXPENSES CAPITAL GAIN 23 10.12.2014 67,82,000 26,94,619 15,26,922 0 25,60,459 TOTAL 67,82,000 26,94,619 15,26,922 0 25,60,459 STATEMENT OF LONG TERM CAPITAL GAIN PARTICULAR SALES PRICE/YEAR INDEXED COST/YEAR TRANSFER EXPE NSES INDEXED COST OF IMPROVEMENT EXEMPT CAPITAL GAIN LAND 50,00,000 10.12.2014 47,51,360 (03.07.1984) 0 0 0 2,48,640 TOTAL 50,00,000 47,51,360 0 0 0 2,48,640 THE ASSESSEE ALSO EXPLAINED THAT THE LAND FAILED TO FETCH THE PRICE TO THE TUNE OF RS. 2,41,87, 000/ - (STAMP VALUATION AUTHORITY) ON ACCOUNT OF PROLONGED LITIGATIONS IN CIVIL COURT, MAHAD AND HONBLE BOMBAY HIGH COURT. IT WAS ALSO EXPLAINED THAT THE SECTION 50C WOULD NOT APPLY TO THE LEASEHOLD LAND. THE CONTENTION OF THE ASSESSEE WAS DECLINED AND SHO RT TERM CAPITAL GAIN WAS ASSESSED TO THE TUNE OF RS.67,82,000/ - - 26,94,619/ - = RS.40,87,381/ - LONG TERM CAPITAL GAIN WAS ASSESSED TO THE TUNE OF RS.1,74,05,000/ - - 2,23,240/ - * 1024/281= 1,74,05,000/ - - 8,13,515/ - = RS.1,65,91,485/ - . THE TOTAL LOSS WAS AS SESSED TO THE TUNE OF RS.1,35,20,260/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ITA NO. 1946 /M/201 9 A. Y. 2 0 15 - 16 3 ISSUE NO S . 1 TO 3 4 . ALL THE ISSUES ARE INT ER - CONNECTED, THEREFORE, ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. IN BRIEF, THE CONTENTION OF THE ASSESSEE IS THAT THE PROVISIONS OF SECTION 50C WILL NOT APPLY TO THE LEASEHOLD LAND AN D IN SUPPORT OF THIS CONTENTION, T HE LD. REPRESENTATIVE OF THE ASSE SSEE HAS PLACED RELIANCE UPON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT, CENTRAL - II, MUMBAI VS. GREENFIELD HOTELS & ESTATE (P) LTD. (2017) 77 TAXMANN.COM 308 (BOM) & ITAT PUNE BENCH A IN THE CASE OF KANCAST (P) LTD. ITO (2015) 5 5 TAXMANN.COM 171 (PUNE - TRIB) . HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION . UNDISPUTEDLY FACTS ARE THAT THE APPELLANT WAS NOT THE OWNER OF THE LEASEHOLD LAND AND BUILDING M/S. LAXMI ORGANIC INDUSTRIA L LIMITED WHICH WAS LEASE OUT IN SUM OF RS.1,17,82,000/ - . T HE MARKET VALUE IN ACCORDANCE WITH THE STAMP VALUATION AUTHORITIES WAS IN SUM OF RS.2,41,87,000/ - . HOWEVER, THE ASSESSEE EXPLAINED THAT THE SAME WAS ON ACCOUNT OF LITIGATION IN THE LOWER COURTS AS WELL AS IN THE HONBLE BOMBAY HIGH COURT . ANYHOW, IT IS TO BE SEEN WHETHER THE PROVISIONS U/S 50C IS APPLICABLE ON THE TRANSFER OF THE LEASEHOLD RIGHTS OR NOT. THE ISSUE HAS BEEN SETTLED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF GREENFIELD HOTELS & ESTATE (P) LTD. (SUPRA). THE RELEVANT FINDING IS HEREBY REPRODUCED AS UNDER.: - 3. THE IMPUGNED ORDER OLDIE TRIBUNAL HAS DISMISSED THE REVENUE'S APPEAL FROM THE ORDER DATED 15 JUNE 2012 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ISSUE BEF ORE THE TRIBUNAL WAS WHETHER SECTION 50C OF THE ACT COULD HE APPLICABLE TO TRANSFER OF LEASEHOLD RIGHTS IN LAND AND BUILDINGS. THE IMPUGNED ORDER OF THE TRIBUNAL FOLLOWED ITS DECISION IN ATUL G. PURANIK V. ITO (2011) 132 ITD 499/11 TAXMANN.COM 92 (MUM. ) WHICH HELD THAT SECTION 50C IS NOT APPLICABLE WHILE COMPUTING CAPITAL GAINS ON TRANSFER OF LEASEHOLD RIGHTS IN LAND AND BUILDINGS. 4. MR. KOTANGALE. LEARNED COUNSEL FOR THE REVENUE, STATES THAT THE REVENUE HAS NOT PREFERRED ANY APPEAL AGAINST THE DEC ISION OF THE TRIBUNAL IN THE CASE OF ATUL G. PURANIK (SUPRA). THUS, IT COULD BE INFERRED THAT IT HAS BEEN ACCEPTED. OUR COURT IN DIT V. CREDIT ITA NO. 1946 /M/201 9 A. Y. 2 0 15 - 16 4 AGRICOLE INDOSUEZ (2015) 377 ITR 102/(2016) 69 TAXMANN.COM 285 (BOM) (DEALING WITH TRIBUNAL ORDER) AND THE AP EX COURT IN UOI V. SWISH P. SHAH (2001) 249 ITR 221/117 TAXMAN 373 (SC) (DEALING WITH HIGH COURT ORDER) HAS LAID DOWN THE SALUTARY PRINCIPLE THAT WHERE THE REVENUE HAS ACCEPTED THE DECISION OF THE COURT/TRIBUNAL ON AN ISSUE OF LAW AND NOT CHALLENGED I T IN APPEAL, THEN A SUBSEQUENT DECISION FOLLOWING THE EARLIER DECISION CANNOT BE CHALLENGED. FURTHER, IT IS NOT THE REVENUE'S CASE BEFORE US THAT THERE ARE ANY DISTINGUISHING FEATURES EITHER IN FACTS OR IN LAW IN THE PRESENT APPEAL FROM THAT ARISING IN THE CASE OF ATUL G. PURANIK (SUPRA). 5. IN THE ABOVE VIEW, THE QUESTION AS FRAMED BY THE REVENUE DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. 6. APPEALS DISMISSED. NO ORDER AS TO COSTS. 5 . THE LEGAL POSITION IS QUITE CLEAR IN THE ABOVE MENTIONED AUTHORITY. THE ISSUE HAS DULY BEEN COVERED BY THE DECISION OF HIGH COURT OF BOMBAY AS WELL AS ITAT PUNE BENCH IN THE CASE OF GREENFIELD HOTELS & ESTATE (P) LTD. (SUPRA) & IN THE CASE OF KANCAST (P) LTD. (SUPRA) , THEREFORE, WE A RE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE, HENCE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOWED THE CLAIM OF THE ASSESSEE. ACCORDINGLY, WE DECIDE THESE ISSUES IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN TH E RESULT, THE APPEA L OF THE ASSESSEE IS HEREBY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 01 /04 /202 1 SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 01 / 04 /202 1 VIJAY PAL SINGH/SR. PS ITA NO. 1946 /M/201 9 A. Y. 2 0 15 - 16 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE A PPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, // TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI