MRS. MANJULA SUDARSHAN DOTIYA, MUMBAI V. ITO 15(1)(4), MUMBAI

ITA 2169/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9451 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M SUBRAMANIUM
• Keywords: Capital asset; Cost of acquisition
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHRI I. B. BANSAL, J.M. AND SHRI SANJAY AROR A, A.M. ITA NO. : 2169/MUM/2011 ASSESSMENT YEAR : 2006-07 MANJULA SUDARSHAN DOTIYA, FLAT NO.601, SURYA DARSHAN, S. V. ROAD, PAI NAGAR, BORIVALI (W), MUMBAI-400 092 [ PAN NO: AAAPD 7324 F ] VS. THE INCOME TAX OFFICER, WARD NO.15(1)(4), MATRU MANDIR, TARDEO, MUMBAI-400 007 (APPELLANT) (RESPONDENT) & ITA NO. : 2170/MUM/2011 ASSESSMENT YEAR : 2006-07 SUDARSHAN S. DOTIYA FLAT NO.601, SURYA DARSHAN, S. V. ROAD, PAI NAGAR, BORIVALI (W), MUMBAI-400 092 [ PAN NO: AAAPD 7323 F ] VS. THE INCOME TAX OFFICER, WARD NO.15(1)(4), MATRU MANDIR, TARDEO, MUMBAI-400 007 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M. SUBRAMANIUM RESPONDENT BY : SHRI MOHIT JAIN & SHRI RAKESH RANJAN DATE OF HEARING : 26.11.2012 DATE OF PRONOUNCEMENT : 05.12.2012 ORDER PER SANJAY ARORA, AM : THESE ARE A SETS OF TWO APPEALS BY TWO ASSESSEES, BEING HUSBAND AND WIFE, ARISING OUT OF SEPARATE ORDERS OF EVEN DATE (01.02. 2011) BY THE COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI (CIT(A) FOR SHORT ), PARTLY ALLOWING THEIR APPEALS CONTESTING THEIR RESPECTIVE ASSESSMENTS FOR THE ASS ESSMENT YEAR (A.Y.) 2006-07, VIDE ITA NOS: 2169 & 2170/MUM/2011 2 ORDERS U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), AGAIN, OF EVEN DATE, I.E., 12.11.2008. 2. THE APPEALS RAISING A COMMON ISSUE, BEARING IDEN TICAL GROUNDS, WERE TAKEN UP FOR HEARING TOGETHER, AND ARE BEING DISPOSED OF BY A COMMON, CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE APPEALS RAISE A SINGLE ISSUE, I.E., THE REDU CTION OF RENT RECEIVABLE FROM THE SALE CONSIDERATION ON THE TRANSFER OF HOUSE PROPERT Y (LAND AND BUILDING) BY THE APPELLANTS AS CO-OWNERS THEREOF (WITH EQUAL SHARE). THE REVENUE HAS REJECTED THE ASSESSEES CLAIM ON THE PREMISES THAT THE RENT RECE IVABLE IS NOT AN ELEMENT WHICH HAS TO BE CONSIDERED FOR DEDUCTION FROM THE SALE CONSIDERA TION OF A CAPITAL ASSET. THE CAPITAL GAINS UNDER THE ACT HAS TO BE COMPUTED IN THE MANNE R PROVIDED THEREUNDER, I.E., PER SECTION 48, SO THAT THE FIGURES BEING NOT IN DISP UTE - THE ASSESSMENT HAS BEEN CORRECTLY FRAMED BY ASSESSING CAPITAL GAINS BY REDU CING FROM THE SALE CONSIDERATION (RS. 97,00,000/-) ONLY THE INDEXED COST OF ACQUISIT ION (RS. 3,69,833/-), I.E., AT RS. 93,30,167/-, WHICH IS SPREAD OVER THE TWO CO-OWNERS , OR AT RS.46,65,084/- EACH. AGGRIEVED, THE ASSESSEES ARE IN SECOND APPEAL BEFOR E US. 4.1 BEFORE US, THE LD. AR, THE ASSESSEES COUNSEL, PLACING A COPY OF THE CONVEYANCE DEED DATE 01/6/2006 ON RECORD, WOULD SUBMIT THAT TH E ASSESSEE HAD RENT RECOVERABLE IN RESPECT OF ITS TRANSFERRED HOUSE PROPERTY. AS THE P ROPERTY, KNOWN AS GOGATE MANSION WAS SOLD ALONG WITH THE MESSUAGES, TENEMENTS, DWELL ING HOUSES THEREON, ETC, TO THE PURCHASER AS AN ABSOLUTE OWNER THEREOF, THE ASSESSE E ALSO RELINQUISHED HIS RIGHT TO COLLECT THE ARREARS OF RENT IN FAVOUR OF THE PURCHA SER, ADVERTING TO SECOND PARA AT PAGE 11 OF THE SAID DEED. THE TOTAL RENT RECEIVABLE, WH ICH WORKS TO RS.9.43 LAKHS, HAD ALREADY BEEN SUBJECTED TO TAX AS INCOME FROM HOUSE PROPERTY FOR THE RELEVANT YEARS ON THE BASIS OF ACCRUAL. AS SUCH, WHAT HE STANDS T O RECEIVE IN RESPECT OF THE SAID LAND ITA NOS: 2169 & 2170/MUM/2011 3 AND THE BUILDING ON ITS TRANSFER, PER SE , IS AT RS. 9.43 LAKHS LESS, WHICH WOULD NOW BE RECOVERABLE BY THE PURCHASER. THIS IS THE BASIS FOR REDUCTION OF THE TRANSFER CONSIDERATION BY THE AMOUNT OF RENT RECEIVABLE, WHI CH STANDS ALSO TRANSFERRED ALONG WITH. 4.2 THE LD. DR, ON THE OTHER HAND, RELIED ON THE OR DERS OF THE AUTHORITIES BELOW, STATING THAT THE TERMS OF THE CONTRACT AS WELL AS T HE LAW ARE CLEAR AND UNAMBIGUOUS, AND THAT THERE WAS, THEREFORE, NO SCOPE FOR REDUCTION O F ANY AMOUNT DUE AS RENT FOR AN EARLIER PERIOD FROM THE TRANSFER CONSIDERATION ON T HE SALE OF THE PROPERTY. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 5.1 AS WOULD BE APPARENT FROM THE FOREGOING, WH ILE THE ASSESSEE MAKES OUT A CASE ON FACTUAL BASIS, THE REVENUE RESTS ITS CASE ON THE LEGAL ASPECT OF THE MATTER. SECTION 48 OF THE ACT, WHICH PROVIDES FOR THE MANNER OF COMPUT ATION OF CAPITAL GAINS CHARGEABLE U/S.45, PROVIDES FOR DEDUCTION OF THE FOLLOWING SUM S FROM THE VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF A CAPITAL ASSET: I) THE EXPENSES INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; AND II) THE COST OF ACQUISITION OF THE ASSET AND COST O F ANY IMPROVEMENT THERETO. THE RENT RECEIVABLE ADMITTEDLY FALLING UNDER NEITHE R OF THE SPECIFIC CLAUSES (I) AND (II) (SUPRA) TO SECTION 48, THE ASSESSEES CLAIM IN ITS RESPECT IS NOT MAINTAINABLE. HOWEVER, AGAIN AS WOULD BE APPARENT FROM THE STATEMENT OF TH E ASSESSEES CASE, AS MADE BY THE LD. AR BEFORE US, HE SEEKS DEDUCTION UNDER NEITHER OF THE SAID CLAUSES, BUT CLAIMS THAT THE ACTUAL CONSIDERATION IN RESPECT OF THE CAPITAL ASSET, I.E., THE HOUSE PROPERTY TRANSFERRED, IS ONLY RS.87.57 LAKHS , I.E., THE BALANCE OUT THE TOTAL AMOUNT OF RS. 97 LAKHS RECEIVABLE FROM THE PURCHASER LESS THAT ON AC COUNT OF ARREARS OF RENT FROM THE TENANTS (AT RS. 9.43 LACS), ALSO TRANSFERRED ALONG WITH. THE SAME HAVING BEEN ALREADY BROUGHT TO TAX IN THE YEAR OF ACCRUAL, WOULD NOT ST AND TO BE ASSESSED TO TAX AGAIN ON ITA NOS: 2169 & 2170/MUM/2011 4 RECEIPT IN THE CURRENT YEAR. THE STATEMENT, WHERE V ALID, CANNOT BE DISPUTED, INASMUCH AS THE ASSESSEE ONLY SEEKS THE MODIFICATION OF THE APPARENT CONSIDERATION TO ITS ACTUAL VALUE, I.E., TO THE EXTENT IT IS TOWARD AND IN RESP ECT OF THE CAPITAL ASSET, I.E., THE LAND AND BUILDING TRANSFERRED. THE ASSESSEES CASE, EVEN AS INDICATED BY THE BENCH DURING HEARING, IS THUS ACCEPTABLE IN PRINCIPLE. THE FACTS , HOWEVER, WOULD NEED TO BE CONCLUSIVELY ESTABLISHED. WE MAY ALSO AT THE OUTSE T CLARIFY THAT EVEN IF WE FIND THE FACTS TO BE IN AGREEMENT WITH THE ASSESSEES CLAIM, THE MATTER WOULD NECESSARILY HAVE TO GO BACK TO THE ASSESSING OFFICER (A.O.) FOR A FA CTUAL VERIFICATION INASMUCH AS HIS ORDER CONTAINS NO REFERENCE TO THE AMOUNT OF RENT R ECEIVABLE OR OF IT HAVING BEEN BROUGHT TO TAX IN THE YEAR OF ITS ACCRUAL. 5.2 TOWARD THIS, I.E., VERIFICATION OF THE ASSESSEE S CLAIM, WE HAVE CAREFULLY PERUSED THE DEED OF CONVEYANCE ADDUCED. THOUGH NOT CERTIFIE D TO BE A TRUE COPY NOR ACCOMPANIED BY A CERTIFICATE AS TO IT HAVING BEEN S UBMITTED BEFORE THE AUTHORITIES BELOW (AS REQUIRED BY THE APPELLATE TRIBUNAL RULES, 1963, FOR IT TO BE CONSIDERED AS A PART OF THE TRIBUNALS RECORD), WE, FOR THE MOMENT PROCEED ON THE BASIS OF IT BEING A VALID DOCUMENT, ONLY TO FIND THE ASSESSEES CASE AS WHOLLY UNTENABLE. IT IS NOT A CASE OF ASSIGNMENT OF DEBT, AS STATED AND MADE OUT TO BE BE FORE US BY THE LD. AR. THERE IS NO REFERENCE TO THE AMOUNT OF DEBT OR THE RENT RECEIVA BLE IN THE DEED, WHICH IS UNCONCEIVABLE IF IT WERE TO BE A CASE OF ASSIGNMENT OR TRANSFER OF A DEBT, LEAVE ALONE THE CONSIDERATION IN ITS RESPECT. COULD AN AMOUNT BE TRANSFERRED THUS, I.E., WITHOUT ITS FULL DETAILS, MUCH LESS THE QUANTUM OF THE AMOUNT I TSELF, BESIDES THE CONSIDERATION FOR WHICH IT STANDS TRANSFERRED ? THE PROPERTY, AND THE ONLY PROPERTY, THAT STANDS CONVEYED OR TRANSFERRED VIDE THE SAID DEED FOR THE SAID CONS IDERATION OF RS.97 LAKHS, IS THE LAND, HEREDITAMENTS AND PREMISES FOR FEE SIMPLE FREE FROM ALL ENCUMBRANCES, MORE PARTICULARLY SET OUT IN FIRST SCHEDULE TO THE DEED. THE LIST OF THE TENANTS AND OCCUPANTS IS SPECIFIED IN THE SECOND SCHEDULE TO THE DEED. S CHEDULE 3 ENLISTS THE VARIOUS (EIGHT IN NUMBER) SUITS PENDING WITH DIFFERENT TENANTS/OCC UPANTS. THE FOURTH SCHEDULE DETAILS ITA NOS: 2169 & 2170/MUM/2011 5 THE PAYMENTS RECEIVED BY THE VENDORS UNDER THE AGRE EMENT. THOUGH NOT CLEAR, WE CAN REASONABLY INFER THAT THE ARREARS OF RENT ARE IN RE SPECT OF, OR INCLUDE, TENANCIES QUA WHICH THE DISPUTES ARE SUBJUDICE. THE SAME ARE THUS IN LITIGATION . FURTHER, WHAT IS THE PERIOD FOR WHICH THESE ARE IN ARREARS ? ALL THIS IS RELEVANT INFORMATION, TO WHICH THE L D. AR COULD NOT PROVIDE ANY ANSWER DURING HEARING. THE ASSESSEES CASE, AS IT TURNS OUT, IS FOR TRANSFER OF AN UNSPECIFIED AMOUNT FOR AN UNS PECIFIED CONSIDERATION . 5.3 NO DOUBT, THE ASSESSEE-APPELLANTS RELINQUI SHED THEIR RIGHT TO RECEIVE THE ARREARS OF RENT IN FAVOUR OF THE PURCHASER, BUT IS NOT THE SAME INCIDENTAL AND CONCOMITANT TO RELINQUISHING ALL THE RIGHTS IN THE PROPERTY IN FAV OUR OF THE LATTER, AND ONLY OBLIGATORY ON THEM ONCE THE ASSESSEE-VENDOR/S CONVENANTS TO GI VE LETTERS OF ATTORMENT TO THE TENANTS/OCCUPANTS OF ATTORNING THE RIGHTS OF THE VE NDORS IN FAVOUR OF THE PURCHASER ? THE RELINQUISHING OF THE SAID RIGHTS IS, THUS, ONLY INCIDENTAL, AND A PART OF THE TRANSFER OF THE PROPERTY, WHICH IS SUBJECT TO THE RIGHTS OF THE TENANTS AND OCCUPANTS AND THE SAID LITIGATIONS. TRUE, IT WAS OPEN FOR THE ASSESSEE TO HAVE RESERVED THE RIGHT TO COLLECT THE ARREARS OF RENT, I.E., AS ACCRUED UP TO THE DATE OF THE CONVEYANCE, AND TRANSFER HIS PROPERTY SANS THAT RIGHT. IT WAS EQUALLY OPEN FOR THE PARTIES TO AGREE TO AND, ACCORDINGLY, SPECIFY SOME CONSIDERATION IN ITS RESP ECT, TRANSFERRING IT, THUS, SEPARATELY. BUT THAT BEING NOT THE CASE; THE MATTER BEING CLEAR LY FACTUAL, AND SUBJECT TO A CONTRACT, THE SAME CANNOT BE INFERRED OR SO CONCLUDED BY DRAW ING A PRESUMPTION IN ITS RESPECT. THERE IS NOTHING TO SHOW THAT ANY PART OF THE CONSI DERATION OF RS. 97 LAKHS IS IN LIEU OF THE RIGHT TO RECOVER ARREARS OF RENT, WHICH, RATHER , WE HAVE FOUND, ON A READING OF THE DEED AS A WHOLE, TO BE NOT A SEPARATE RIGHT BUT A P ART OF THE VARIOUS RIGHTS IN THE PROPERTY RELINQUISHED BY THE ASSESSEE-VENDORS. IN F ACT, AS QUERIED BY THE BENCH DURING THE HEARING - TO NO ANSWER BY THE LD. AR, AND WHICH QUERY, WE MAY CLARIFY WAS ONLY ON THE BASIS OF THE UNDERSTANDING OF IT BEING A CASE O F TRANSFER OF A SEPARATE ASSET, I.E., AS PER THE ASSESSEES CASE AS PROJECTED BEFORE US, THA T WHY WOULD ANYONE PAY AN EQUAL AMOUNT WHEN BOTH THE TIME AND QUANTUM OF RECOVERY I S UNCERTAIN ? RATHER, WHAT WE ITA NOS: 2169 & 2170/MUM/2011 6 DISCOVER, ON A PERUSAL OF THE DEED, IS THAT THE MAT TERS ARE UNDER LITIGATION, APPARENTLY SINCE LONG, WHICH FURTHER COMPOUND THE ATTENDANT UN CERTAINTY. THE ASSESSEES CASE IS UNFOUNDED, AND COMPLETELY FAILS THE TEST OF EXAMINA TION ON FACTS. WE, THEREFORE, HAVE NO HESITATION IN UPHOLDING THE IMPUGNED ORDERS. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMIS SED. ORDER PRONOUNCED ON THIS05TH DAY OF DECEMBER, 2012 SD/- - SD/- ( I. P. BANSAL ) ( SANJAY ARORA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 05/12/2012 COPY FORWARDED TO: 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C.I.T. CONCERNED 4. CIT (A) 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI