ITO 20(1)(3), MUMBAI V. INTECH CORPORATION, MUMBAI

ITA 2009/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92453 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 05-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Capital asset; Fair market value
• Section: 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JM AND RAJENDRA, AM ./ I.T.A. NO.2009/MUM/2011 ( / ASSESSMENT YEAR : 2005-06 THE ITO 20(1)(3), ROOM NO.607, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012. / VS. M/S. INTECH CORPORATION, C/O. SURESH SHAH, 40, VEER NARIMAN ROAD, 8/A, HASHIM BUILDING, FORT, MUMBAI 400 001. ./ ./ PAN/GIR NO. : AAAFI 1299P ( / APPELLANT ) .. ( / RESPONDENT ) C.O.NO.215/MUM/2013 (ARISING OUT OF ITA NO. I.T.A. NO.2009/MUM/2011,A.Y .2005-06) M/S. INTECH CORPORATION, C/O. SURESH SHAH, 40, VEER NARIMAN ROAD, 8/A, HASHIM BUILDING, FORT, MUMBAI 400 001. / VS. THE ITO 20(1)(3), ROOM NO.607, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012. ./ ./ PAN/GIR NO. : AAAFI 1299P ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI SANJAY PUNGLIA ASSESSEE BY SHRI SANJAY R . PARIKH ' #$ / DATE OF HEARING : 05/05/2015 ' #$ / DATE OF PRONOUNCEMENT : 05/05/2015 / O R D E R PER I.P.BANSAL, J.M: THE APPEAL AS WELL AS THE CROSS OBJECTIONS ARE DI RECTED AGAINST ORDER PASSED BY LD. CIT(A)-31,MUMBAI DATED 24/1/2011 FOR ASSESSMENT YEAR 2005-06. GROUNDS OF APPEAL READ AS UNDER: ./ I.T.A. NO.2009/MUM/2011 ( / ASSESSMENT YEAR : 2005-06 CO NO.215/MUM/2013 2 GROUNDS OF REVENUES APPEAL: 1. THE LD. CIT(A) HAS ERRED ON AND IN LAW AND IN TH E CIRCUMSTANCES OF THE CASE IN ALLOWING THE CLAIM BY THE ASSESSEE U/S.54EC OF T HE I.T.ACT, 1961 OF RS. 64,79,647/- ON ACCOUNT OF INVESTMENT OF RS.66,OO,OO OJ- BEING ENTIRE CAPITAL GAINS IN THE TAX SAVING BONDS OF NATIONAL HOUSING B ANK CAPITAL GAINS BONS. II. THE LD. CIT(A) HAS ERRED IN LAW AND IN THE CIRC UMSTANCES OF THE CASE IN REJECTING THE REFERENCE MADE BY THE A.O. TO THE DEP ARTMENTAL VALUER (DVO) U/S.55A OF THE I.T.ACT, 1961. III. THE LD. CIT(A) HAS ERRED IN LAW AND IN THE CIR CUMSTANCES OF THE CASE IN NOT APPRECIATING THE PROVISIONS U/S 55A(B)(II) APPLIED BY THE A.O. IV. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT( APPEALS) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORE D. GROUNDS OF ASSESSEES CROSS OBJECTION: 1. VALIDITY OF REOPENING PROCEEDINGS: ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT{A} ERRED IN HOLDING THAT THE REOPENING OF THE A SSESSMENT U/S. 147 IS FULLY JUSTIFIED. 2. REFERENCE TO APPROVED VALUER AND COMPUTATION OF LONG TERM CAPITAL GAINS: ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT{A} ERRED IN HOLDING THAT THE VALUE DETERMINED B Y THE APPROVED VALUER IS PURELY ON SUBJECTIVE PARAMETERS , INSPITE OF THE APPELLANT'S REPLIES DTD 13/1/2011 AND 13/12/2010 WHICH WERE GIV EN TO HIM BASED ON THE LEAFLET PUBLISHED BY MIDC WHICH IN TUR N WAS GIVEN TO THE APPELLANT BY THE CIT{A)' BASED ON WHICH LONG TERM C APITAL GAIN WAS WORKED OUT AT RS. 1,82,296., WHICH COULD NOT HAVE BEEN IGNORED. 2. THE ISSUE RAISED IN GROUND NO.I BY THE REVENUE R ELATES TO CAPITAL GAIN ARISING OUT OF FACTORY BUILDING WHICH WAS TREATED A S SHORT TERM CAPITAL GAIN AS PER SECTION 50 OF THE INCOME TAX ACT, 1961(THE A CT). A CAPITAL GAIN OF RS.64,79,647/- WAS COMPUTED ON THE SALE OF FACTORY BUILDING AND THE SAME WAS CONSIDERED TO BE SHORT TERM CAPITAL GAIN AS PER PROVISIONS OF SECTION 50 OF THE ACT. AGAINST THE SAID GAIN THE ASSESSEE INV ESTED A SUM OF RS.66.00 LACS IN THE SAVINGS BONDS ISSUED BY NATIONAL HOUSIN G BANK, ELIGIBLE FOR EXEMPTION UNDER SECTION 54EC OF THE ACT. SUCH EXEM PTION UNDER SECTION 54EC WAS DENIED TO THE ASSESSEE ON THE GROUND THAT GAIN WAS RELATING TO SHORT TERM CAPITAL GAIN AND EXEMPTION UNDER SECTION 54EC CAN BE GRANTED ON LONG TERM CAPITAL GAIN. ./ I.T.A. NO.2009/MUM/2011 ( / ASSESSMENT YEAR : 2005-06 CO NO.215/MUM/2013 3 3. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND WE FOUND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. ACE BUILDERS PVT. LTD.,281 ITR 210 (BOM) , WHEREIN IT HAS BEEN HELD THAT FICTION CREATED IN SUB-SECTION(1) & (2)OF SECTION 50 IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CAPITAL GAIN CONTAINE D IN SECTION 48 & 49 AND IT IS NOT APPLIED TO OTHER PROVISIONS AND THEREFORE , THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 54E,IN RESPECT OF CAPITAL G AIN ARISING ON THE TRANSFER OF LONG TERM CAPITAL ASSET ON WHICH DEPREC IATION HAS BEEN ALLOWED. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE A SSET ON WHICH CAPITAL GAIN AROSE IS LONG TERM CAPITAL ASSET AND THE GAIN HAS B EEN TREATED AS SHORT TERM CAPITAL GAIN BECAUSE OF APPLICATION OF SECTION 50 O F THE ACT. 4. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, WE FOUND NO INFIRMITY IN THE ORDER PASSED BY LD. CIT(A)VIDE WHICH ASSESSEE HAS BEEN HELD TO BE ENTITLED FOR EXEMPTION UNDER SECTION 5 4EC. WE DISMISS GROUND NO.1 OF REVENUES APPEAL. 5. APROPOS GROUND NO.II & III, THE ASSESSEE TOOK TH E VALUE OF LAND AS ON 1/4/1981 AT A SUM OF RS.25.00 LACS. HOWEVER, AO RE FERRED THE ISSUE OF VALUATION TO DVO, WHO VALUED THE LAND AT RS.3,22,92 0/- AS ON 1/4/1981 AND COMPUTED CAPITAL GAIN ACCORDINGLY. THE ACTION OF THE AO WAS AGITATED IN AN APPEAL BEFORE LD. CIT(A) WHO HAS HELD THAT AO CO ULD NOT REFER THE MATTER TO DVO. AGAINST SUCH DECISION GIVEN BY LD. CIT(A) , THE REVENUE IS AGGRIEVED, HENCE, HAS FILED THESE GROUNDS. 6. IT WAS SUBMITTED BY LD. AR THAT THIS ISSUE IS A LSO COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. POOJA PRINTS, 360 ITR 697(BOM), WHEREIN THEIR LORDSHIPS HAVE CONS IDERED THE PROVISIONS OF SECTION 55A(A), 55A(B) AND 55AB(II). THEIR LORD SHIPS HAVE ALSO CONSIDERED THE CBDT CIRCULAR DATED 25/11/1972 AND AFTER CONSI DERING THESE SECTION THEIR LORDSHIPS HAVE HELD THAT REFERENCE TO DVO CA N BE MADE WHEN VALUE OF PROPERTY DISCLOSED BY THE ASSESSEE IS LESS THAN FAIR VALUE AND NOT VISE- ./ I.T.A. NO.2009/MUM/2011 ( / ASSESSMENT YEAR : 2005-06 CO NO.215/MUM/2013 4 VERSA. SINCE IN THAT CASE THE VALUE ADOPTED BY THE ASSESSEE OF THE PROPERTY WAS MUCH MORE THAN FAIR MARKET VALUE AND WAS EVEN M ORE THAN VALUE DETERMINED BY THE DVO AND IT WAS HELD THAT REFEREN CE TO DVO WAS NOT VALID. IT WAS FURTHER HELD THAT AMENDMENT TO SECTI ON 55A(A) WAS NOT RETROSPECTIVELY APPLICABLE AS THE AMENDMENT WAS MAD E EFFECTIVE ONLY FROM 1/7/2012. THUS, IT WAS HELD THAT THE REFERENCE MAD E BY THE DVO WAS BAD IN LAW. THUS, IT WAS SUBMITTED BY LD. AR THAT THE DECISION OF LD. CIT(A) IS IN ACCORDANCE WITH THE LAW EXPLAINED BY HONBLE BOMBAY HIGH COURT IN THE AFOREMENTIONED CASE. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY AO. 8. AFTER HEARING BOTH THE PARTIES, RESPECTFULLY FOL LOWING THE AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS. POOJA PRINTS(SUPRA), WE DECLINE TO INTERFERE IN THE RELIEF GRANTED BY LD. CIT(A), WHICH HAS BEEN AGITATED BY REVENUE IN GROUN D NO.II & III. THESE GROUNDS ARE DISMISSED. 9. IT MAY BE MENTIONED HERE THAT LD. AR DID NOT PRE SS GROUNDS RAISED IN THE CROSS OBJECTION AS DEPARTMENTAL APPEAL IS BEING DISMISSED ON THE RELIEF GIVEN BY LD. CIT(A) TO THE ASSESSEE. THEREFORE, C ROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED BEING NOT PRESSED. 10. TO SUM UP REVENUES APPEAL IS DISMISSED IN THE MANNER AFORESAID AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISM ISSED BEING NOT PRESSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/05/2015 ' + ,- 05/05/2015 ' SD/- SD/- (RAJENDRA) . . (I.P.BANSAL) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; , DATED 05/05/2015 ./ I.T.A. NO.2009/MUM/2011 ( / ASSESSMENT YEAR : 2005-06 CO NO.215/MUM/2013 5 !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 0# ( ) / THE CIT(A)- 4. 0# / CIT 5. 12 #34 , $ 34 , / DR, ITAT, MUMBAI 6. 5 / GUARD FILE. / BY ORDER, 1# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . .VM , SR. PS