BIMLA DEVI D SHAH, MUMBAI V. ITO 24(1)(3), MUMBAI

ITA 2270/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2073 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 07-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-03-2013
• Court: TRIBUNAL
• Assessee Lawyers: JAYESH KAKE
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.2270/M/2013 (AY: 2006 - 2007 ) BIMLA DEVI D SHAH, 301, JAIN APARTMENT, MAMLEDAR WADI, MALAD (W), MUMBAI 400064. / VS. ITO 24(1)(3), MUMBAI. ./ PAN : AYSPS6957Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI JAYESH KAKE / RESPONDENT BY : SHRI AARSI PRASAD, DR / DATE OF HEARING : 15.09.2016 / DATE OF PRONOUNCEMENT : 11 .11.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 213.2013 IS AGAINST THE ORDER OF THE CIT (A) - 34, MUMBAI DATED 9.1.2013 FOR THE ASSESSMENT YEAR 2006 - 07. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD AO ERRED IN NOT ALLOWING THE EXEMPTION U/S 5 4 OF THE ACT AMOUNTING TO RS. 3,85,476/ - WITHOUT UNDERSTANDING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG & CONTRARY TO THE PROVISIONS OF THE INCOME TAX ACT AND THE RULES MADE THERE UNDER. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME CLAIMING DEDUCTION U/S 54 OF THE ACT IN RESPECT OF THE CAPITAL GAINS EARNED ON SALE OF FLAT. ASSESSEE SOLD A FLAT ON 24.3.2006 AND PURCHASED THREE DIFFERENT PROPERT IES IE FLATS NO. 202; 203 AND 204 IN NEELKANTH APARTMENT, MALAD (W), MUMBAI. AS PER THE PROVISIONS, ASSESSEE IS EXPECTED TO INVEST THE CAPITAL GAINS ONE YEAR PRIOR TO THE TRANSFER OF OLD ASSET OR TWO YEARS LATER TO THE DATE OF TRANSFER OF ASSETS. ASSESSE E CLAIMED DEDUCTION U/S 54 OF THE ACT IN RESPECT OF THE FLAT NO.204, WHOSE PURCHASE VALUE IS RS. 18.25 LAKHS EXCLUDING OTHER INCIDENTAL CHARGES SUCH AS STAMP DUTY, REGISTRATION AND OTHER CHARGES. FLAT NO. 204 , WHICH IS THE SUBJECT MATTER OF DEDUCTION U/S54, WAS PURCHASED BY THE ASSESSEE VIDE PURCHASE AGREEMENT DATED 2 30.9.2004. IN THE PROCEEDINGS U/S 143(3) R.W.S 263 OF THE ACT (THERE IS NO DISPUTE ABOUT THE VALIDITY OF THE PROCEEDINGS U/S 263 OF THE ACT), THE ASSESSING OFFICER FOUND THE SAID DATE OF 30.9.2004 FALLS OUTSIDE THE PERIOD OF ONE YEAR FROM THE DATE OF SALE OF OLD ASSET IE 24.3.2006. ACCORDINGLY, AO DENIED THE BENEFIT OF DEDUCTION U/S 54 OF THE ACT. ASSESSEE ARGUED BEFORE THE AO THAT THE SAID FLAT NO. 204 WAS GIVEN POSSESSION TO THE ASSESSEE ONLY ON 20.1.2006 AND IN THAT CASE IE CONSIDERING THE DATE OF POSSESSION, THE CONDITION RELATING TO THE PERIOD OF ONE YEAR SPECIFIED IN SECTION 54 OF THE ACT IS MET. ASSESSEE ALSO SUBMITTED THAT THE MAJOR PAYME NT TO THE BUILDER WAS MADE IN THE SAID PERIOD OF ONE YEAR AND THEREFORE, ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION. HOWEVER, AO DID NOT APPRECIATE THE SAME. RESULTANTLY, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 6,36,720/ - AFTER DENYING TH E DEDUCTION U/S 54 OF THE ACT . AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND RELIED HEAVILY ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT (260 ITR 491) (BOM.) AND ANOTHER DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GEETADEVI PASARI (2009) (17 DTR 280) (BOM.) APART FROM MANY OTHER DECISIONS WHICH ARE R ELEVANT FOR THE PROPOSITION THAT THE DATE OF POSSESSION OF THE PROPERTY IS RELEVANT. ASSESSEE ALSO ARGUED THAT THE MAJOR PORTION OF THE PAYMENT IE 80% WAS ALREADY PAID IN THE PERIOD ONE YEAR FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. AFTER CONSIDER ING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) VIDE PARAS 2.3.2 AND 2.3.3 OF HIS ORDER DISMISSED THE APPEAL OF THE ASSESSEE. IN THE SAID PARAS, CIT (A) NOTED THAT THE ASSESSEES ARGUMENT THAT THE RIGHTS ON THE FLAT REGISTERED ON 30.9.3004 ARE CREATED ONLY O N 30.1.2006 ON WHICH DATE THE MAJOR PAYMENT IS MADE TO THE EXTENT OF 82% OF THE AGREEMENT VALUE. CIT (A) ALSO REJECTED THE ABOVE CITED JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT (SUPRA) AND SUMMARISED THE ISSUE TO BE DECIDED IS WHETHER THE DATE OF AGREEME NT OR DATE OF POSSESSION IS TO BE CONSIDERED FOR COMPUTING THE PERIOD OF ONE YEAR CONSIDERING THE 82% OF THE PAYMENT MADE DURING THE SAID PERIOD OF ONE YEAR IE ONE YEAR BEFORE THE DATE OF TRANSFER OF THE ORIGINAL ASSET. HOWEVER, CIT (A), IN PARA 2.3.2 OF HIS ORDER, MESSED UP THE DETAILS OF VARIOUS PAYMENT S OF THE FLATS NO.202; 203 AND 204 AND CAME TO THE 3 ERRONEOUS CONCLUSION RELATING TO THE QUANTUM OF PAYMENT QUA THE FLAT NO.204. EVENTUALLY, CIT (A) CONCLUDED THAT THE FULL AND FINAL SETTLEMENT WAS COMPLETED ON 15.3.2005, WHICH FELL OUTSIDE THE PERIOD OF ONE YEAR (PARA 2.3.3 OF THE CIT (A) ORDER IS RELEVANT). CIT (A) LINKED UP THE PAYMENTS OF SOME OTHER FLAT TO THE FLAT NO.204 ERRONEOUSLY. THIS CONCLUSION , BEING CONNECTED TO THE EXTENT OF PAYMENT 8 2% FOR PURCHASE OF FLAT NO.204 , IS IMPORTANT AND THAT REQUIRES CLARIFICATION AND VERIFICATION. EVENTUALLY, CIT (A) CONFIRMED THE AOS CONCLUSION DENYING THE DEDUCTION U/S 54 OF THE ACT ON THE ERRONEOUS REASONING AS DISCUSSED ABOVE. 4. DURING THE PROCEEDIN GS BEFORE US, LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AND THE ARGUMENTS MADE BEFORE THE LOWER AUTHORITIES. HE HEAVILY RELIED ON THE CITED JUDGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF DWARAKADAS KAPADIA (SUPRA) AND GEET ADEVI PASARI (SUPRA). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE JUDGMENTS CITED BEFORE US. THE LIMITED ISSUE IE TO BE DECIDED BY US TODAY RELATES TO THE RELEVANCE OF DATE OF THE POSSESSION OF THE F LAT NO.204 AND THE EXTENT OF PAYMENT FOR PURCHASING IT . TO START WITH, WE HAVE PERUSED THE CITED DECISIONS AND THEIR APPLICABILITY TO THE FACTS OF THE PRESENT CASE IE DWARAKADAS KAPADIA (SUPRA) AND GEETADEVI PASARI (SUPRA) AND THEY ARE RELEVANT FOR THE PR OPOSITION THAT THE RELEVANT ASSESSMENT YEAR FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS WILL BE THE ASSESSMENT YEAR IN WHICH THE ASSESSEE WAS ACTUALLY PHYSICALLY PUT IN POSSESSION. AFTER CONSIDERING THE CONTENTION OF THE LD COUNSEL FOR THE ASSESSEE, W HICH REVOLVES AROUND THE ERRORS CREPT IN THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND MERIT IN THE SAME AS DISCUSSED IN THE ABOVE PARAS AND FIND NEED FOR APPRECIATING RELEVANT TO THE FACTS OF THE CASE AND THE SETTLED LEGAL PROPOSITIONS ON THIS ISSUE . TH EREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER IS REQUIRED TO BE REMANDED TO THE FILE OF THE CIT (A). WE ORDER ACCORDINGLY. IN THE REMANDING PROCEEDINGS, CIT (A) IS EXPECTED TO PASS A SPEAKING ORDER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 250(6) OF THE ACT ON THE APPLICABILITY OF THE ABOVE CITED DECISIONS IE DWARAKADAS KAPADIA (SUPRA) AND GEETADEVI PASARI (SUPRA) AND THEIR APPLICABILITY TO THE FACTS OF THE PRESENT CASE. HE ALSO DIRECTED TO APPLY THE ABOVE CITED JUDGMENTS TO THE FACTS OF T HE PRESENT CASE . CIT (A) IS DIRECTED TO DECIDE THE 4 ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOS ES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNC ED IN THE OPEN COURT ON 1 1 T H NOVEMBER, 2016. S D / - S D / - ( JOGINDER SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 11.11.2016 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI