Shri Babubhai S.Patel, Baroda V. The Dy.CIT.,Circle-4(1), Baroda

ITA 236/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60334 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-05-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 27-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SAPORKAR
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER I.T.A. NO.236/AHD/2009 A.Y. 2001-02 BABUBHAI S PATEL 16,MONALI SOCIETY NO.4 NR. SARGAM APARTMENT KARELIBAUG, BOARDA APPELLANT VS. DCIT CIRCLE-4(1), BARODA RESPONDENT DEPARTMENT BY :SHRI VINOD TANWANI, SR. D.R. ASSESSEE BY :SHRI S.N. SAPORKAR, A.R. ---------------- DATE OF HEARING : 03.05.2012 DATE OF PRONOUNCEMENT : .05.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 1 0.11.2008, PASSED BY LD. CIT(A)-III, BARODA IN APPEAL NO.CAB/III-272/ 06-07. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APP EAL:- (1) THE LD. CIT(A) ERRED IN HOLDING THAT THE SHORT REPAYMENT OF DEPOSIT OF RS.8,86,098/- WAS NOTHING BUT COMPENSATION FOR L OSS OF REVENUE. (2) THE LD. CIT(A) ERRED IN HOLDING THAT THE AMO UNT RETAINED OUT OF SECURITY DEPOSIT ON TERMINATION OF THE LEASE AGREEM ENT IS A REVENUE RECEIPT TAXABLE AS INCOME FROM OTHER SOURCES. (3) THE LD. CIT(A) ERRED IN HOLDING THAT THE AMOU NT OF RS.8,86,098/- WAS THE COMPENSATION FOR LOSS OF REVENUE AND FURTHE R ERRED IN CONFIRMING ADDITION OF RS.8,86,098/-. ITA NO.236/AHD/2009 , A. Y. 2001-02 2 3. BRIEF FACTS OF THE CASE ARE THAT THE A.O. NOTIC ED THAT THE ASSESSEE HAS RECEIVED RS.8,86,098/- ON ACCOUNT OF TERMINATION OF LEASE DEED OF ICICI LTD. AND THE AMOUNT WAS TREATED AS CAPITAL RECEIPT OF THE AS SESSEE. THE ASSESSEE WAS ASKED TO JUSTIFY THE TREATMENT OF THIS CONSIDERATIO N RECEIVED BY HIM AS CAPITAL. IT WAS STATED THAT THE ASSESSEE HAD GIVEN LAND ON LEAS E TO ICICI LTD. AGAINST THE SAID LEASE THE ASSESSEE RECEIVED RS.40,00,000/-. THE LE SSEE REQUESTED FOR TERMINATION OF THE SAID DEED AND THE SAME WAS TERMINATED. THE ASSESSEE HAD RETURNED OUT OF SECURITY DEPOSIT, RECEIVED BY HIM RS.31,31,902/- AS REFUND OF THE SAID DEPOSIT AND BALANCE AMOUNT OF RS.8,86,098/- WAS TREATED AS CAPI TAL RECEIPT. THE A.O. WAS OF THE OPINION THAT SINCE THERE WAS NO INJURY TO THE C APITAL ASSET I.E. LAND, THE RECEIPT BY THE ASSESSEE WAS REVENUE RECEIPT. ACCORDINGLY, THE A.O. TREATED THE DIFFERENTIAL AMOUNT OF RS.8,86,098/- AS REVENUE RECEIPT IN THE H ANDS OF THE ASSESSEE AND TAXED ACCORDINGLY. IN APPEAL LD. CIT(A) ALSO CONFI RMED THIS ACTION OF THE A.O. 4. AFTER HEARING BOTH THE PARTIES, WE FIND THAT ON THE IDENTICAL FACTS IN THE CASE OF ASSTT. COMMISSIONER OF INCOME TAX VS. SHRI RAJESH N PATEL, ITA NO.2596/AHD/2009 WE HAVE HELD AS UNDER:- AFTER HEARING BOTH THE PARTIES AND PERUSING THE RE CORD WE FIND FORCE IN THE CONTENTION OF LD. COUNSEL OF THE ASSESSEE THAT ISSUE INVOLVED IN THIS APPEAL IS COVERED BY THE DECISIONS OF THE TRIBUNAL AT MUMBAI BENCH IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN THE CASE OF AS STT. CIT V. DAS & CO.(MUM.) REPORTED IN [2010] 133 TTJ 542 (MUM.) IN WHICH THE HONBLE TRIBUNAL HAS HELD AS UNDER:- HELD THAT A PERUSAL OF THE TERMS OF AGREEMENT S HOWED THAT THE SECURITY DEPOSIT WAS A CAPITAL RECEIPT AND WAS TREA TED AS SUCH FROM THE YEAR 1999 ITA NO.236/AHD/2009 , A. Y. 2001-02 3 BOTH, BY THE ASSESSEE AND BY THE REVENUE. THE DEPO SIT WAS NEITHER IN THE NATURE OF ADVANCE FOR GOODS OR SERVICES NOR COULD IT BE QU ALIFIED AS IN RELATION TO THE RENTAL COMPONENT. IT WAS IN THE NATURE OF LOAN AND WAS IN CAPITAL FIELD. IF THE INITIAL RECEIPTS OF A BUSINESS ARE NOT TRADING RECEIPTS IN THE HANDS OF THE RECIPIENT, SUBSEQUENT OPERATIONS CANNOT TURN THEM INTO TRADING RECEIPTS. THEREFORE, THE ADDITION ON ACCOUNT OF FORFEITURE OF SECURITY DEPOS IT WAS TO BE DELETED. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRI BUNAL, WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT(A) AN D THE SAME IS HEREBY UPHELD. 5. IN VIEW OF THE ABOVE, THE ADDITION MADE BY LD. A.O. AND LD. CIT(A) IS HEREBY DELETED. 6. IN THE RESULT, THE ASSESSEE APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 11 /05/2012 . SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER JU DICIAL MEMBER N.K. CHAUDHARY, SR. P.S. - 11/05/2012 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. !' / CONCERNED CIT 4. !' - / CIT (A) 5. #$% , & , / DR, ITAT, AHMEDABAD 6. %'( )* / GUARD FILE. BY ORDER/ , + / , & ,