Sri Ashish Todi, Kolkata V. ITO, Ward-34(2), Kolkata, Kolkata

ITA 2231/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9306 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-12-2014
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Assessee Lawyers: A K TULSYAN
• Keywords: Capital asset

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL KOLKATA B ENCH, KOLKATA (BENCH- D) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANET HRA RAVI, JUDICIAL MEMBER I.T. A. NO. 2231/KOL/2014 ASSESSMENT YEARS: 2010-11 FOR THE APPELLANT A.K. TULSYAN, CA FOR THE RESPONDENT RAJENDRA PRASAD, JCIT DATE OF HEARING 11.01 .2017 DATE OF PRONOUNCEMENT .03. 2017 ORDER PER WASEEM AHMED, AM 1. THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF THE LD. CIT(A)-XX, KOLKATA, DT. 17.09.2014 FOR ASSESSMENT YEAR 2010-11 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I. THAT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN TREATING A SUM OF RS.15,63,394/- AS SHORT TERM CAPI TAL GAIN FROM SALE OF FLATS FOR THE YEAR UNDER CONSIDERATION. THE SALE DEED ALTHOUG H EXECUTED IN ASST. YEAR 2010-11 BUT THE SALE PROCEEDS WERE FINALLY RECEIVED IN THE NEXT YEAR. THUS, THE ASSESSEE OFFERED THE CAPITAL GAIN FOR TAXATION IN A SST. YEAR 2010-11 AND CONFIRMED BY THE CIT(A) IS UNJUSTIFIED AND NEEDS TO BE DELETED. II. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DIS ALLOWANCE OF BROKERAGE PAID FOR SALE OF THE FLATS. IF THE SALE OF THE FLATS NEEDS T O BE ALLOWED IN COMPUTING CAPITAL GAIN. SRI ASHISH TODI 22, MADAN MOHAN TALLA STREET, KOLKATA-700005. [PAN :ABTPT2735P] -VS- I.T.O. WARD - 34(2), KOLKATA AAYAKAR BHAWAN POORVA, 110, SHANTIPALLI, KOLKATA-700107. (APPELLANT) (RESPONDENT) 2 I.T. A. NO. 2231/KOL/2014 SRI ASHISH TODI ASSESSMENT YEARS: 2010-11 2 3. THE FIRST ISSUE RAISED BY THE REVENUE IN THIS A PPEAL IS THAT, THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO BY TREATING THE GAIN FROM THE SALE OF FLATS AS SHORT-TERM CAPITAL, IGNORING THE FACTS THAT THE SAME GAIN WAS OFFERED T O TAX IN THE SUBSEQUENT ASSESSMENT YEAR. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE, AN INDIVID UAL IS DERIVING ITS INCOME UNDER THE HEAD SALARY AND OTHER SOURCES. THE ASSESSEE WAS THE OW NER OF 2 FLATS LOCATED AT MUMBAI WHICH WERE PURCHASED IN THE F.Y. 2008-09. BOTH THE FLATS WERE SOLD BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION FOR A SUM OF RS.46,50,000/- & RS,34,6 8,237/- RESPECTIVELY. THE CONVEYANCE DEED WAS ALSO REGISTERED IN THE CURRENT YEAR IN FAVOUR O F THE TRANSFEREE. HOWEVER, THE ASSESSEE DID NOT OFFER THE GAIN IN THE CURRENT YEAR ON THE GROUND TH AT PART PAYMENT FROM THE TRANSFEREE WAS RECEIVED IN THE SUBSEQUENT YEAR. THEREFORE, THE IMP UGNED SALE OF FLATS WAS COMPLETED IN THE SUBSEQUENT F.Y. I.E. 2010-11. SO, THE CAPITAL GAIN WAS OFFERED IN THE SUBSEQUENT 2010-12 RELEVANT TO THE A.Y. 2011-12. HOWEVER, THE AO DISRE GARDED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE TRANSFER OF FLAT HAS TAKEN PLACE IN THE YEAR UNDER CONSIDERATION AS THE CONVEYANCE DEED WAS REGISTERED IN FAVOUR OF THE TRA NSFEREE IN THE F.Y. 2009-10. ACCORDINGLY THE AO TREATED THE SAME AS CURRENT YEARS INCOME AN D ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A). 5. THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED TH AT THE CONSIDERATION WAS RECEIVED IN THE F.Y. 2010-11 AND, THEREFORE, THE SAME SHOULD BE TAXED IN THE A.Y. 2011-12. HOWEVER, LD. CIT(A) DISREGARDED THE PLEA OF THE ASSESSEE AND CON FIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: 4- GROUND NO. (I) RELATES TO CONTENTION OF THE APP ELLANT AGAINST CHARGING OF SHORT TERM CAPITAL GAIN ON SALE OF FLATS. THE FACT OF THE CASE IS THAT THE APPELLANT PURCHASED TWO 3 I.T. A. NO. 2231/KOL/2014 SRI ASHISH TODI ASSESSMENT YEARS: 2010-11 3 PROPERTIES (FLATS) IN FY 2008-09. IN FLAT NO. 701, SAGAR HEIGHTS, ANDHERI (E), MUMBAI, THE APPELLANT WAS HAVING 50% SHARE BUT IN FLAT NO. 702 IN THE SAME BUILDING, HE WAS HAVING 100% SHARE. THE FIRST FLAT I.E. FLAT NO. 701 WAS SO LD AS PER CONVEYANCE DEED DATED 18.02.2010 FOR A CONSIDERATION OF RS.42,31,500/- IN THE FLAT NO. 702 WAS SOLD VIDE CONVEYANCE DEED DATED 14.12.2009 FOR A CONSIDERATIO N OF RS.46,50,000/-. SINCE BOTH THE FLATS WERE SOLD AS AGREEMENT/CONVEYANCE DEED SIGNED DURING THE FY 2009-10, THE AO CONCLUDED THAT THE SHORT TERM CAPITAL GAIN WAS CHAR GEABLE ON BOTH THE FLATS DURING THE FY 2009-10 ONLY WHEREAS THE APPELLANT HAD SHOWN CAPITA L GAIN ON THE SAME FOR THE AY 2011- 12 ON THE GROUND THAT ON BOTH THE FLATS RS.25,00,00 0/- EACH WAS RECEIVED DURING THE FY 2010-11. ON PERUSAL OF THE FACTS, IT IS GATHERED TH AT SALE AGREEMENTS/CONVEYANCE DEED FOR BOTH THE FLATS WERE SIGNED DURING THE AY 2010-11. F OR THE FLAT NO. 701, RS.17,31,500/- WAS RECEIVED AND FOR FLAT NO. 702, RS.21,50,000/- WAS R ECEIVED DURING THE YEAR UNDER CONSIDERATION ITSELF. THERE WAS NO DISPUTE AROSE WI TH THE PURCHASERS WITH REGARD TO SALE, AGREEMENT/CONVEYANCE DEED, SALE CONSIDERATION, MODE OF PAYMENT ETC., THEREFORE, AS PER DEFINITION OF TRANSFER AS PROVIDED U/S 2(47) OF THE I.T. ACT, 1961, THE APPELLANT HAD RELINQUISHED HIS RIGHT ON THE SAID PROPERTIES AS BO TH THE FLATS WERE SOLD AS PER AGREEMENT/ CONVEYANCE DEED SIGNED WITH THE PURCHASER. UNDER TH ESE CIRCUMSTANCES, THE AO WAS JUSTIFIED TO TAX THE SAME AS SHORT TERM CAPITAL GAI N DURING THE YEAR UNDER CONSIDERATION. FURTHER, THE CASE LAW CITED BY THE APPELLANT IN THE CASE OF CIT VS NAJOO DARA DEBOO (2013) 218 TAX MAN 473 (ALL) WHEREIN THE HON'BLE HI GH COURT OF ALLAHABAD HAS HELD THAT THE CAPITAL GAIN CAN BE CHARGED ONLY ON RECEIPT OF SALE CONSIDERATION AND NOT OTHERWISE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE NOT IDEN TICAL WITH THE FACTS OF THE CASE LAW RELIED UPON BY THE APPELLANT. IN THE PRESENT CASE, THE APPELLANT HAD ALREADY RECEIVED PART OF SALE CONSIDERATION DURING THE YEAR ITSELF. 6. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 7. THE LD. AR BEFORE US FILED A PAPER BOOK WHICH IS RUNNING FROM PAGES 1 TO 255 AND SUBMITTED THAT AS PER THE AGREEMENT FOR SALE, THE A SSESSEE WAS ENTITLED TO RECEIVE RS.25,00,000/- FROM THE TRANSFEREE ONLY AFTER OBTAINING NO OBJECTI ON CERTIFICATE (NOC) FROM THE DEVELOPER. NOC FROM THE DEVELOPER WAS RECEIVED IN THE SUBSEQUE NT F.Y. AND CONSEQUENTLY THE PAYMENT OF RS.25,00,000/- WAS RECEIVED BY THE ASSESSEE. 8. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE TRANSFER OF IMPUGNED FLAT HAS TAKEN PLACE IN THE CURRENT YEAR WITHIN THE MEANING OF THE PROVISIONS OF SEC. 2(47) OF THE ACT. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIE S BELOW. THE LD. AR IN ITS REJOINDER SUBMITTED THAT THE AGREEMENT FOR SALE WILL BE ENFOR CEABLE ONLY AFTER OBTAINING THE NOC FROM THE DEVELOPER. 4 I.T. A. NO. 2231/KOL/2014 SRI ASHISH TODI ASSESSMENT YEARS: 2010-11 4 9. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO THE YEAR IN WH ICH THE CAPITAL GAIN IS TO BE TAXED. THE LOWER AUTHORITIES HAVE TREATED THE TRANSFER OF THE IMPUGN ED FLATS IN THE YEAR UNDER CONSIDERATION ON THE GROUND THAT THE CONVEYANCE DEED WAS REGISTERED IN F AVOUR OF THE ASSESSEE TO THE TRANSFEREE BY REGISTERING THE SALE DEED IN FAVOUR OF THE ASSESSEE . SUCH SALE HAS BEEN TREATED AS TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT WHICH READS AS UNDER: 'TRANSFER' 79 , IN RELATION TO A CAPITAL ASSET, INCLUDES, ( I ) THE SALE 79 , EXCHANGE 79 OR RELINQUISHMENT 79 OF THE ASSET ; OR ( II ) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN 79 ; OR ( III ) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR ( IV ) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN- TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERS ION OR TREATMENT ;] 80 [OR] 81 [( IVA ) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; O R] 82 [( V ) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSE SSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A 83 OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR ( VI ) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBE R OF, OR ACQUIRING SHARES IN, A CO- OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, ANY IMMOV-ABLE PROPERTY. 84 [ EXPLANATION 1 ]. FOR THE PURPOSES OF SUB - CLAUSES ( V ) AND ( VI ), 'IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA .] 85 [ EXPLANATION 2. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED T HAT 'TRANSFER' INCLUDES AND SHALL BE DEEMED TO HAVE ALWAYS INCLUDED DISPOSI NG OF OR PARTING WITH AN ASSET OR ANY INTEREST THEREIN, OR CREATING ANY INTEREST IN ANY ASSET IN A NY MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTELY OR CONDITIONALLY, VOLUNTARIL Y OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENTERED INTO IN INDIA OR OUTSIDE INDIA) OR OTHERWISE, NOTWITHSTANDIN G THAT SUCH TRANSFER OF RIGHTS HAS BEEN CHARACTERISED AS BEING EFFECTED OR DEPENDENT UPON OR FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPANY REGI STERED OR INCORPORATED OUTSIDE INDIA;] 10. A PLAIN READING OF THE ABOVE PROVISIONS CLEARLY REVEALS THAT THE ASSESSEE IN THE INSTANT CASE HAS RELINQUISHED ITS RIGHT BY EXECUTING THE SA LE DEED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE TRANSACTIO N HAS TAKEN PLACE, THEREFORE, THE GAIN IS LIABLE TO THE TAXED IN THE YEAR UNDER CONSIDERATION. AS SU CH, WE FIND NO INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES. 5 I.T. A. NO. 2231/KOL/2014 SRI ASHISH TODI ASSESSMENT YEARS: 2010-11 5 11. HENCE THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 12. THE SECOND ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO BY SUSTAINING THE DI SALLOWANCES OF BROKERAGE EXPENSES FOR RS.6,00,000.00. THE ASSESSEE BEFORE THE LD. CIT(A) HAS CLAIMED BROK ERAGE EXPENSES FOR RS. 6,00,000.00 WHICH WERE INCURRED IN CONNECTION WITH THE TRANSFER OF IM PUGNED FLATS. HOWEVER, LD. CIT(A) DISALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING A S UNDER:- 5- GROUND NO. (II) RELATES TO CONTENTION OF THE A PPELLANT FOR NOT ALLOWING EXPENDITURE OF RS.6,00,000/- CLAIMED ON ACCOUNT OF BROKERAGE. THE APPELLANT SUBMITTED THAT BROKERAGE OF RS.4,00,000/- EACH WAS PAID FOR THE SALE OF THE FLA TS, THEREBY, THE APPELLANT'S SHARE IN THE ONE FLAT WAS OF RS.2,00,000/- AND IN OTHER FLAT IT WAS FOR RS.4,00,000/- AND THE TOTAL BROKERAGE WAS CLAIMED FOR RS.6,00,000/-. THE APPELLANT SUBMITTED THAT TWO BROKERS WERE ENGAGED BY THE APPELLANT FOR SALE OF TWO FLATS, NAMELY M/S KRITIKA PROPERTIES & M/S ACHIVERS PROPERTIES. M/S KRITIKA PROPERTIES WAS PAID A SUM OF RS.4,00,000/- BY M/S MMP FILTERATION PVT LTD. A SUM OF RS.2, 00,000/- WAS PAID ON 14.06.2010 AND THE BALAN CE AMOUNT OF RS.2, 00,000/- WAS PAID ON 15.07.2010. AS SUCH, A SUM OF RS.4,00,000/- WAS SHO WN IN THE BALANCE SHEET OF THE APPELLANT AS ON 31.03.2011 AS UNSECURED LOAN TAKEN FROM M/S MMP FILTERATION PVT LTD. THE BROKERAGE OF RS.4, 00,000/- TO M/S ACHIVERS PROPERTIES IS YET TO BE PAID. FROM THE FACTS, IT IS NOTICED THAT NO PAYMENT TO M/S ACHIVERS PROPERTIES WAS MADE SO FAR. M/S KRITIKA PROPERTIES WAS MADE PAYMENT ONLY IN THE AY 2011-12 AND THAT TO BY M/S MMP FILTE RATION PVT LTD AND NOT BY THE APPELLANT. IT IS NOT UNDERSTOOD WHY M/S MMP FILTERATION PVT LTD H AD MADE PAYMENT TO THE IMPUGNED BROKER. AFTER GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS NOTICED THAT THE CLAIM OF EXPENDITURE MADE ON ACCOUNT OF BROKERAGE WAS AN AFT ERTHOUGHT AND THE SAME IS APPEARED TO BE A COLORABLE DEVICE ADOPTED BY THE APPELLANT TO REDU CE HIS TAX LIABILITY. IN THIS REGARD RELIANCE IS PLACED ON THE JUDGMENT OF SUMATI DAYAL VS. CIT REPO RTED IN 214 ITR 801 (SC) IN WHICH THE HON'BLE APEX COURT HAS DISCUSSED THE ISSUE OF HUMAN PROBABILITY AND SURROUNDING CIRCUMSTANCES. IT HAS BEEN HELD THAT THE TAXING AUT HORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY A ND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. IN VIEW O F THE ABOVE, THE CLAIM OF BROKERAGE IS NOT FOUND TO BE ALLOWABLE. 13 . BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 14. AT THE OUTSET, IT WAS OBSERVED THAT THE CLAIM O F BROKERAGE EXPENSES IS NOT ARISING FROM THE ORDER OF THE AO AND THE LD. CIT(A) HAS DISREGAR DED THE CLAIM OF THE ASSESSEE WITHOUT REFERRING THE SAME TO THE AO. THUS FROM THE ABOVE I T IS CLEAR THAT THE ISSUE OF BROKERAGE HAS NOT BEEN ADJUDICATED BY THE AO. THEREFORE, IN VIEW OF T HE ABOVE AND IN THE INTEREST OF JUSTICE, WE 6 I.T. A. NO. 2231/KOL/2014 SRI ASHISH TODI ASSESSMENT YEARS: 2010-11 6 ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF T HE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 15. HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOES. ORDER PRONOUNCED IN THE COURT ON 2017. [S.S.VISWANETHRA RAVI] [SHRI WASSEM AHMED] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : . 03.2017 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ASSESSEE SRI ASHISH TODI,. 22,MADAN MOHAN TALLA STREET, KOLK ATA-700 005. 2. RESPONDENT I.T.O. WARD-34(2), KOLKATA. 3. CIT(A)- KOLKATA. 4. CIT , KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER AS STT.REGISTRAR, ITAT, KOLKATA BENCHES