ITO--19(2)(1), MUMBAI V. JAYNTILAL BHERCHAND GANDHI, MUMBAI

ITA 2102/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3737 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 05-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K SINGH
• Keywords: Additional evidence; Tax effect; Set aside
• Section: 56(2)(vii)(b)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 2102/MUM/2019 (ASSESSMENT YEAR 2014-15) ITO-19(2)(1) ROOM NO. 217 INCOME TAX OFFICE MATRU MANDIR TARDEO, GRANT ROAD MUMBAI-400 007. VS. JAYANTILAL BHERCHAND GANDHI 06, GROUND FLOOR, 47/49 PRABHU SHREE RAM MANDIR 4 TH KUMBHARWADA MUMBAI-400 004. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 1926/MUM/2019 (ASSESSMENT YEAR 2014-15) JAYANTILAL BHERCHAND GANDHI 06, GROUND FLOOR, 47/49 PRABHU SHREE RAM MANDIR 4 TH KUMBHARWADA MUMBAI-400 004. VS. ITO-19(2)(1) ROOM NO. 217 INCOME TAX OFFICE MATRU MANDIR TARDEO, GRANT ROAD MUMBAI-400 007. (APPELLANT) (RESPONDENT) PAN :ABNPG1894J ASSESSEE BY SHRI R.K. SINGH DEPARTMENT BY MS. USHA GAIKWAD DATE OF HEARING 20.01.2021 DATE OF PRONOUNCEMENT 01 . 0 3 . 20 2 1 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE CROSS APPEALS BY THE ASSESSEE AND REVENU E ARISING OUT OF THE ORDER OF LEARNED CIT(A) DATED 28.1.2019 AND PERTAIN S TO A.Y. 2014-15. 2. GROUNDS OF APPEAL RAISED IN ASSESSEES APPEAL RE AD AS UNDER :- THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW ID. CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE U/S. 56(2)(VI I)(B) AT RS. 35,33,499/- BEING THE DIFFERENCE BETWEEN ACTUAL CONSIDERATION PAI D AND VALUE DETERMINED BY STAMP VALUATION AUTHORITY IN RESPECT OF A RESIDENTIA L FLAT PURCHASED UNDER CONSTRUCTION WITHOUT PROPERLY APPRECIATING THAT THERE WA S GAP OF MORE THAN 3 YEARS BETWEEN THE DATE OF ALLOTMENT DULY BACKED BY W RITTEN ALLOTMENT LETTER JAYANTILAL BHERCHAND GANDHI 2 AND OFFER LETTER CONTAINING ALL VITAL TERMS & CONDITI ONS AGREED BETWEEN APPELLANT AND DEVELOPER INCLUDING PURCHASE CONSIDERA TION TO BE PAID FOR PURCHASE OF FLAT NO. 2401 IN ORION BUILDING AND REGI STRATION DATE OF AGREEMENT OF THE SAID FLAT THUS NO SUCH ADDITION WAS WARRANTED IN VIEW OF THE SPECIFIC PROVISO TO SECTION 56(2)(VII)(B) OF THE I.T . ACT, 1961. 3. GROUNDS OF APPEAL RAISED IN REVENUES APPEAL REA D AS UNDER :- 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT AS PER EXPLANATION (D )(I) TO THE SECTION 56(2)(VII)(B) OF THE I.T. ACT, 1961, PROPERTY DOESN'T MEAN TENANCY RIGHTS?' 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT( A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4. AT THE OUTSET, IN THIS CASE LEARNED COUNSEL OF T HE ASSESSEE SUBMITTED THAT THE TAX EFFECT OF REVENUES APPEAL IS LESS THA N THE LIMIT FIXED BY THE CBDT IN FILING THE APPEAL BEFORE THE ITAT. LEARNED DEPAR TMENTAL REPRESENTATIVE DID NOT CONTROVERT THE SAME. HE COULD NOT POINT OUT TH AT THE APPEAL FALLS IN ANY OF THE EXCEPTIONS CARVED IN THE SAID CBDT CIRCULAR. AC CORDINGLY REVENUES APPEAL STANDS DISMISSED AS BELOW TAX EFFECT, HENCE, NOT MA INTAINABLE. ASSESSEES APPEAL :- 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. RAJENDRA METALS SUPPLY CORPORATION AND DEALS IN FER ROUS AND NON-FERROUS METALS. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT DT. 24.03.2014 FOR PURCHASE OF FLAT NO. 2401, 24TH FLOOR, ORION TOWER , RAJARAM MOHAN ROY ROAD, MUMBAI 400 007, FOR A CONSIDERATION OF RS.1,52,00,0 00/- AGAINST MARKET VALUE OF RS.1,87,33,499/- FOR WHICH HE PAID A STAMP DUTY OF RS.9,37,000/-. IN REPLY TO SHOW CAUSE NOTICE AS TO WHY THE DIFFERENCE ON ST AMP DUTY VALUE AND AGREEMENT VALUE (AS GIVEN IN AGREEMENT DT. 24.03.20 14) SHOULD NOT BE DISALLOWED, THE ASSESSEE SUBMITTED AS FOLLOWS:- PROPERTY WAS BOOKED ON 06.08.2010. AS THE CONSTRUCTION WAS SLOW, THE ASSESSEE REG ISTERED IT AT A LATER DATE 24.03.2014. AS THE TIME GAP BETWEEN ALLOTMENT AND REGISTRA TION WAS MORE THAN THREE YEARS, THE RATES OF THE PROPERTY AS PER THE S TAMP VALUATION AUTHORITIES INCREASED. JAYANTILAL BHERCHAND GANDHI 3 THEREFORE, THE DIFFERENCE IN RATE CANNOT BE CO NSIDERED AS INCOME OF THE ASSESSEE. 6. THE AO DID NOT ACCEPT THIS EXPLANATION THAT AS P ER SEC. 56(2)(VII)(B) IF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION FOR TH E TRANSFER OF IMMOVABLE PROPERTY IS DONE BEFORE REGISTRATION, THE STAMP DUT Y VALUE SHOULD BE TAKEN ON THE DATE OF THE AGREEMENT. IN THE INSTANT CASE THE ASSESSEE HAD CONSIDERED THE ALLOTMENT LETTER DT. 06.08.2010 AS AGREEMENT FOR FI XING THE CONSIDERATION FOR PURCHASE OF FLAT. THE AO FURTHER OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT THE ALLOTMENT LETTER DT. 06.08.2010, ISSUED BY THE BUILDER, BE TAKEN AS AGREEMENT FOR PURCHASE OF FLAT, WAS NOT ACCEPTABLE IN AS MUCH AS :- IN THE ALLOTMENT LETTER THERE IS NO MUTUAL CONSENT OF BOTH THE PARTIES, AS IS REQUIRED OF IN AN AGREEMENT THE LETTER OF ALLOTMENT BEARS ONLY THE SIGNATU RE OF THE SELLER NO SPECIFIC MENTION THAT THE PURCHASER WILL AGRE E TO THE PRICE THE LETTER OF ALLOTMENT DOES NOT MENTION THE CO NFIGURATION OF THE FLAT TO BE PURCHASED ALLOTMENT LETTER IS ADDRESSED TO PERSON/S OTHE R THAN THE ASSESSEE PRICE OF THE FLAT AND TERMS OF PAYMENT IS NOT QUOTED IN THE ALLOTMENT LETTER 7. FOR THE AFORESAID REASONS, THE AO PROCEEDED TO A DD RS. 35,33,499/- BEING THE NOTIONAL DIFFERENCE IN THE AMOUNT OF STAM P DUTY VALUE AND THE ACTUAL CONSIDERATION PAID FOR PURCHASING THE FLAT |TO THE TOTAL INCOME OF THE ASSESSEE U/S 56(2)(VII(B) OF THE I.T.ACT, 1961 UNDER THE HEA D INCOME FROM OTHER SOURCES. 8. UPON ASSESSEES APPEAL LEARNED CIT(A) NOTED THAT THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE. LEARNED CIT(A) CONSIDERED THE SAME. LEARNED CIT(A) REJECTED THE ASSESSEES CONTENTION THAT STAMP VALUE AS ON DATE OF ALLOTMENT SHOULD BE TAKEN AS HE FOUND THAT THE ASSESSEE HAS F AILED TO ADDUCE SATISFACTORY EVIDENCE THAT THE DATE OF AGREEMENT IS 6.8.2010. THEREAFTER HE HELD THAT THE PROVISO TO SECTION 56(2)(VII)(B) IS THERE FORE NOT ATTRACTED. ACCORDINGLY, THE ORDER OF THE LEARNED ASSESSING OFFICER IS UPHEL D AND THE GROUND OF APPEAL IS DISMISSED. 9. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. JAYANTILAL BHERCHAND GANDHI 4 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS DULY ENTERED INTO AN AGREEMENT WHICH NEED NOT BE IN WRITING. HE SAID THA T IN ACCORDANCE WITH THE AGREEMENT THE ASSESSEE HAS BEEN GIVEN ALLOTMENT LET TER. THAT THE ASSESSEE HAS ALREADY PAID PART OF THE CONSIDERATION AT THE TIME OF ALLOTMENT HENCE HE SUBMITTED THAT THE SAME SHOULD BE TAKEN INTO ACCOUN T. IN THIS REGARD HE PLACED RELIANCE UPON CERTAIN CASE LAWS FOR THE PROP OSITION THAT ALLOTMENT LETTER ISSUED AND PART OF THE CONSIDERATION PAID SHOULD BE CONSIDERED AS SUFFICIENT COMPLIANCE FOR TAKING THE DATE OF ALLOTMENT AS THE DATE OF AGREEMENT FOR THE PURPOSE OF COMPUTATION. 11. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. UPON CAREFUL CONSIDERATION WE FIND OURSELVES IN AGREEMENT WITH LEARNED COUNSEL OF THE ASSESSEE. THE ASSESSEE HAS ENTERED I NTO AN AGREEMENT AND CONSEQUENTLY ASSESSEE HAS BEEN DULY GIVEN ALLOTMENT LETTER AND ASSESSEE HAS ALSO PAID PART OF THE CONSIDERATION AT THAT TIME, H ENCE, THERE IS NO INFIRMITY IN THE ASSESSEES REQUEST THAT THE DATE OF ALLOTMENT S HOULD BE CONSIDERED AS DATE OF AGREEMENT. HON'BLE SUPREME COURT DECISION IN THE CASE OF SANJEEV LAL VS. CIT (CIVIL APPEAL NO. 5899-5900 OF 2014 VIDE ORDER DATED 1.7.2014) IN THIS REGARD SUPPORTS THE ABOVE PROPOSITION. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOU R OF THE ASSESSEE. 13. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D AND ASSESSEES APPEAL STANDS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 1.3.2021. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 01/03/2021 JAYANTILAL BHERCHAND GANDHI 5 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// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI