DCIT CEN CIR 44, MUMBAI V. KANTABEN C. MEHTA, MUMBAI

ITA 2072/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3699 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR S CHOUHAN
• Assessee Lawyers: H P MAHAJANI
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Fair market value; Surrender of tenancy right
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI G.S.PANNU (AM) AND SHRI RAM LAL NEGI (J M) ITA NO 2072/MUM/2013 ASSESSMENT YEAR: 2008-09 THE DY. CIT CENTRAL CIRCLE - 44, ROOM NO. 656, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020. VS. SMT. KANTABEN C. MEHTA. 7-N, KEJRIWAL HOUSE, GAMADIA ROAD, PEDDER ROAD, MUMBAI- 400 026. PAN:- AAHPM6752A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. JASBIR S. CHOUHAN RESPONDENT BY : SHRI. H.P. MAHAJANI DATE OF HEARING: 18/03/2016 DATE OF PRONOUNCEMENT: 29/04/2016 O R D E R PER RAM LAL NEGI, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIR ECTED AGAINST ORDER DATED 24/12/2012 PASSED BY THE CIT (APPEALS)-36, MUMBAI P ERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 (IN SHORT, THE AC T) THE ASSESSEE FILED HER RETURN OF INCOME FOR THE A.Y. 2008-09 DECLARING THE TOTAL INCOME OF RS. 2,13,37,720/- DURING THE RELEVANT FINANCIAL YEAR, T HE ASSESSEE HAD SOLD HER FLAT AT TAKSHASHILA SOCIETY DADER, MUMBAI, FOR A TOTAL CONSIDERATION OF RS. 1,01,00,000/-, THE SAID FLAT HAD BEEN ACQUIRED BY H ER IN LIEU OF SURRENDER OF TENANCY RIGHTS. WHILE WORKING OUT THE TAXABLE GAINS THE ASSESSEE CALCULATED THE 2 ITA NO 2072/MUM/2013 ASSESSMENT YEAR: 2008-09 COST OF ACQUISITION OF THE FLAT AT RS. 54,72,000/- AS ON 30/10/1993, I.E., THE DATE WHEN THE ASSESSEE GOT POSSESSION OF THE FLAT I N THE RE-DEVELOPED BUILDING. AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE, THE AO MADE ADDITION OF THE ENTIRE AMOUNT OF RS 1,01,00,000/- AS LONG TERM CAPI TAL GAIN TREATING THE COST OF ACQUISITION OF THE TENANCY AS NIL AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.3,14,37,720/-AS AGAINST THE RETURNED INCOME OF RS. 2,13,37,720/-. 3. BEING AGGRIEVED BY THE ASSESSMENT ORDER THE ASSE SSEE FILED AN APPEAL BEFORE THE LD. CIT(A), MUMBAI ON THE GROUND THAT THE LD. A SSESSING OFFICER HAS WRONGLY COMPUTED THE TOTAL INCOME OF THE APPELLANT AT RS. 3,14,37,720/- .THE LD. CIT(A) AFTER HEARING THE ASSESSEE IN THE LIGHT OF THE CASES RELIED UPON BY THE ASSESSEE ALLOWED THE APPEAL HOLDING AS UNDER:- THE DECISION OF SPECIAL BENCH OF ITAT IN DR. D.A. IRANIS CASE IS AUTHORITY FOR THE PROPOSITION THAT THE SURRENDER OF TENANCY AMOUNTS TO TRANSFER OF CAPITAL ASSET AND THE CONSIDERATION WAS FAIR MARKET VALUE OF THE FLAT RECEIVED IN LIEU THEREOF. THIS VI EW HAS RECENTLY BEEN REITERATED BY THE TRIBUNAL IN ATUL PURANIKS CASE. IN THIS CASE, THE ITAT FURTHER HELD THAT CAPITAL GAIN ARISING ON SALE OF ASSET ACQUIRED(LEASEHOLD RIGHTS) IN LIEU OF THE ORIGINAL SURRENDERED ASSET WOULD BE COMPUTED BY REDUCING FROM THE SALE CONSIDE RATION THE FAIR MARKET VALUE OF THE PLOT ACQUIRED BY THE ASSESSEE O N SURRENDER OF ORIGINAL ASSETS. 4. DISSATISFIED WITH THE IMPUGNED ORDER PASSED BY THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE REVENUE HAS C HALLENGED THE IMPUGNED ORDER ON FOLLOWING EFFECTIVE GROUNDS:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN DELETING ADDITION MADE BY THE A.O UNDER TH E HEAD LONG 3 ITA NO 2072/MUM/2013 ASSESSMENT YEAR: 2008-09 TERM CAPITAL GAIN BY HOLDING THAT THE COST OF ACQU ISITION OF THE FLAT WHICH WAS ACQUIRED IN LIEU OF TENANCY, IS THE FAIR MARKET VALUE OF THE FLAT AS ON THE DATE OF ACQUISITION I.E. RS. 54,72,0 00/- AS AGAINST RS. NIL ADOPTED BY THE A.O WITHOUT APPRECIATING THE FAC T THAT THE ASSESSEE FAILED TO PROVE THE ACQUISITION COST OF TH E SURRENDER OF TENANCY RIGHTS WITH CORROBORATIVE EVIDENCE AT THE T IME OF POSSESSION OF FLAT GIVEN ON 30/10/1993. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN DELETING ADDITION MADE BY THE A.O UNDER TH E HEAD LONG TERM CAPITAL GAIN BY ADMITTING ADDITIONAL EVIDENCE REGARDING COST OF ACQUISITION AT RS. 54,72,000/- WITHOUT GIVING OP PORTUNITY TO THE A.O AS PER RULE 46A OF THE I.T.RULES. 5. BEFORE US THE LD. DR HEAVILY RELYING UPON THE AS SESSMENT ORDER SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO PROVE THE COS T OF ACQUISITION OF THE FLAT IN QUESTION, THE LD. CIT(A) HAS WRONGLY ALLOWED THE C ONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE AO. THE CASES REFERRED BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS AND AS SUCH THE SAME A RE NOT APPLICABLE TO THE ASSESSEES CASE. SINCE THE COST OF TENANCY TO THE ASSESSEE WAS NIL, THE ENTIRE SALE VALUE OF SAID FLAT WAS REQUIRED TO BE TAKEN AS CAPITAL GAIN OF THE ASSESSEE, THEREFORE, THE AO HAS RIGHTLY ADDED THE ENTIRE AMOU NT OF SALE CONSIDERATION TO THE INCOME OF THE ASSESSEE UNDER THE HEAD LONG TERM CAPITAL GAIN. THEREFORE, THE IMPUGNED ORDER IS BAD IN LAW AND LIABLE TO BE S ET ASIDE. 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO IN THE LIGHT OF THE DECISION RENDERED BY THE MUMBAI BENCH OF ITAT IN T HE CASE OF SHRI. G. ATUL PURONIK VS. ITO, ITA NO. 3051/M/2010 AND LAW LAID D OWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN NILA PRODUCTS LTD. 148 ITR 99 AND SHIRIBAI 4 ITA NO 2072/MUM/2013 ASSESSMENT YEAR: 2008-09 PUNDOLE 129 ITR 448(BOM). THE ASSESSEE WAS A TENANT IN FLAT NO. 283, FIRST FLOOR, VINCENT TERRACE, GOCULDAS PAST ROAD, DADAR, MUMBAI. ON 20/12/1984 THE ASSESSEE, ENTERED INTO AN AGREEMENT WITH THE LA NDLADY TO SURRENDER HER TENANCY RIGHTS, IN LIEU OF GETTING OWNERSHIP OF A F LAT, AS THE LANDLADY WANTED TO RECONSTRUCT THE WHOLE BUILDING WHICH WAS IN DILAPID ATED CONDITION. ACCORDINGLY, UNDER THAT AGREEMENT ASSESSEE WAS ALLO TTED FLAT NO. 2 IN NEWLY CONSTRUCTED BUILDING TAKSHASHILA GOCULDAS & MADHA VDAS PASTA ROAD, DADAR ON SURRENDER OF TENANCY RIGHTS IN 1984-85, THE ASSE SSEE BECAME OWNER OF THE SAIOD FLAT. THE ASSESSEE HAS RIGHTLY CALCULATED THE COST OF ACQUISITION OF THE FLAT AT RS. 54,72,000/- AS ON 30/10/1993, I.E., THE DATE WHEN SHE GOT POSSESSION OF THE FLAT. HENCE THE IMPUGNED ORDER DOES NOT SUFF ER FROM ANY LEGAL INFIRMITY. THEREFORE, THE APPEAL FILED BY THE REVENUE HAS NO M ERIT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES REFERRED BY THE PARTIES IN SUPP ORT OF THEIR CONTENTIONS. IN THE CASE OF ATUL G.PURNAIK VS. ITO (SUPRA) THE ASSE SSEE WAS ALLOTTED A PLOT OF LAND TO THE ASSESSEE AS COMPENSATION IN LIEU OF AGR ICULTURAL LAND ACQUIRED BY THE GOVERNMENT UNDER 12.5% EXPANSION SCHEME AND TH E ISSUE WAS DETERMINATION OF COST OF ACQUISITION OF THE SAID PL OT OF LAND FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. IT WAS HELD THAT MARKET VAL UE OF THE PLOT OF LAND ON THE DATE OF ALLOTMENT SHALL BE THE COST OF ACQUISITION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. FOLLOWING THE AFORESAID VIEW, THE CO -ORDINATE BENCH OF THE MUMBAI TRIBUNAL HAS DECIDED THE SIMILAR ISSUE IN TH E CASE OF SHRI RAMESH ABAJI WALAVALKAR VS. ACIT ITA NOS. 852/MUM/2009 & 1 534/MUM/2010 FOR THE ASSESSMENT YEARS 2005-06 AND 2003-04 RESPECTIVE LY. THE OPERATIVE PART OF THE ORDER READS AS UNDER:- WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THA T THE COST OF ACQUISITION OF SANPADA LAND WAS TAKEN BY THE ASSESS EE AT 5 ITA NO 2072/MUM/2013 ASSESSMENT YEAR: 2008-09 RS.1,07,90,000/- BEING 83% OF THE MARKET VALUE OF RS.1,30,00,000/- OF THE ENTIRE LAND ON THE DATE OF ALLOTMENT AS VALUED BY THE REGISTERED VALUER. THE AO, HOWEVER, TOOK THE SAME AS NIL RELYING ON THE PROVISIONS OF SEC. 45(5), WHI LE THE LD. CIT(A) TOOK THE SAME AT RS.52,000/-, BEING THE PREMIUM PAID BY THE ASSESSEE FOR OBTAINING THE SAID LAND. AS RIGHTLY SUBMITTED B Y THE LD. COUNSEL FOR THE ASSESSEE, A SIMILAR ISSUE HAD COME UP FOR C ONSIDERATION BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ATUL G. PURANIK VS. ITO (132 ITD 499) WHEREIN A SIMILAR PL OT OF LAND WAS ALLOTTED TO THE ASSESSEE AS COMPENSATION IN LIEU OF AGRICULTURAL LAND ACQUIRED BY THE GOVERNMENT UNDER THE SAME SCHEME CA LLED 12.5% SCHEME AND THE ISSUE WAS DETERMINATION OF COST OF ACQUISITION OF THE SAID PLOT OF LAND FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. IN THIS REGARD, THE TRIBUNAL NOTED THAT THE MARKET VAL UE OF THE PLOT OF LAND AS ON THE DATE OF ALLOTMENT IS TO BE CONSIDERE D AS FULL VALUE OF CONSIDERATION AT THE TIME OF COMPUTING CAPITAL GAIN ON THE FIRST TRANSACTION. IT WAS HELD THAT ONCE A PARTICULAR AMO UNT WAS CONSIDERED AS FULL VALUE OF CONSIDERATION AT THE TI ME OF ITS PURCHASE, THE SAME SHALL AUTOMATICALLY BECOME THE COST OF ACQ UISITION AT THE TIME WHEN SUCH CAPITAL ASSET IS SUBSEQUENTLY TRANSF ERRED. IT WAS HELD THAT THE MARKET VALUE OF THE PLOT OF LAND ON T HE DATE OF ALLOTMENT THUS SHALL CONSTITUTE THE COST OF ACQUISITION FOR T HE PURPOSE OF COMPUTING CAPITAL GAIN WHEN IT WAS SUBSEQUENTLY SOL D OR TRANSFERRED. THE RATIO OF THE DECISION OF THE TRIBU NAL IN THE CASE OF ATUL G. PURANIK IS THUS SQUARELY APPLICABLE TO THE ISSUE INVOLVED IN THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE SAM E, WE DIRECT THE AO TO TAKE THE COST OF ACQUISITION OF THE LAND OF T HE ASSESSEE FOR THE PURPOSE OF COMPUTING CAPITAL GAIN AT RS.1,07,90,000 /-, BEING THE 6 ITA NO 2072/MUM/2013 ASSESSMENT YEAR: 2008-09 MARKET VALUE OF THE SAID LAND ON THE DATE OF ALLOTM ENT. GROUND NO. 3 OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 8. IN OUR CONSIDERED OPINION THE ISSUE IN DISPUTE IN THE PRESENT CASE IS SIMILAR TO THE ISSUE DECIDED BY THE CO-ORDINATE BENCH OF TH E MUMBAI TRIBUNAL IN THE AFORESAID CASE. NO CASE LAW CONTRARY TO THE FINDING S OF THE CO-ORDINATE BENCH WAS BROUGHT TO OUR NOTICE BY EITHER OF THE PARTIES. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDER IS NEITHER CONTRARY TO THE EXPRESSED PROVISIONS OF LAW NOR CONTRARY TO THE SETTLED PRINC IPLES OF LAW. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) TO INT ERFERE WITH. HENCE, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE CO-ORD INATE BENCHES IN ATUL G.PURNAIK VS. ITO AND SHRI RAMESH ABAJI WALAVALKAR VS. ACIT (SUPRA), WE UPHOLD THE ORDER DATED 30.1.2012 PASSED OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A .Y. 2008-09 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016 SD/- SD/- ( G.S.PANNU ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:29/04/2016 7 ITA NO 2072/MUM/2013 ASSESSMENT YEAR: 2008-09 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA