MANEET J SHAH L/H. OF LATE SHRI JAIMAL SHAH, MUMBAI V. ASST CIT RG 19(2), MUMBAI

ITA 2485/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8179 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , , , BEFORE SHRI RAJENDRA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.2485/MUM/2013 ( / ASSESSMENT YEAR: 2006-07) SHRI MANEET J. SHAH L/H OF LATE SHRI JAIMAL SHAH 901, PRITIKA APARTMENT, SARASWATI ROAD, SANTACRUZ(WEST) MUMBAI - 400054 / VS. THE ASSTT. COMM. OF INCOME TAX RANGE 19(2) MUMBAI ./ ./PAN/GIR NO. : AIFPS4804F ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 28.11.2016 /DATE OF PRONOUNCEMENT: 15.02.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 18.02.2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 30, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: SHRI HARESH PURUSHOTTAMDAS SHAH REVENUE BY: SHRI SAURABH K. RAI ITA NO.2485/M/2013 A.Y. 20 06-07 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ADJUDICATING ON THE VARIOUS GROUNDS OF APPEAL AND THE SUBMISSIONS MADE FOR THE REASON THAT THE ISSUES RAISED IN APPEAL WERE CATEGORICALLY DECIDED BY THE CIT IN THE ORDER PASSED U/S.263 AND WHILE DOING SO HE AMONGST OTHERS FAILED TO APPRECIATED: A. THE COMMISSIONER OF INCOME TAX VIDE HIS ORDER U/S.263 HAD ONLY GIVEN A FINDING ON THE PERIOD OF HOLDING OF THE SUPER STRUCTURE AND NOT ON THE PERIOD OF HOLDING OF THE LAND; B. THE AO IN THE ORDER GIVING EFFECT TO THE ORDER OF CIT U/S.263, HAD ASSESSED THE ENTIRE CAPITAL GAIN ARISING ON TRANSFER OF LAND AS ALSO THE SUPER STRUCTURE AS SHORT TERM CAPITAL GAINS. C. THE COMMISSIONER OF INCOME TAX IN HIS ORDER U/S.263 HAD SET ASIDE THE ASSESSMENT ORDER ONLY ON THE ISSUE OF COMPUTATION OF CAPITAL GAINS ON TRANSFER OF RESIDENTIAL FLAT AND CORRESPONDING CLAIM OF DEDUCTION U/S.54EC. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE DECISION OF THE HONBLE ITAT IN APPELLANTS OWN CASE AND ON IDENTICAL FACTS (ORDER FOR A.Y.2007-08 IN ITA NO.6966/MUM/2010 DATED 30.05.2012) WHEREIN IT WAS HELD THAT WHAT WAS TRANSFERRED WAS LAND AND SUPERSTRUCTURE THEREON AND THE GAINS ARISING ON : A. TRANSFER OF LAND WAS ASSESSABLE AS LONG TERM CAPITAL GAINS AND B. TRANSFER OF SUPERSTRUCTURE (RESIDENTIAL FLAT) WAS ASSESSABLE AS SHORT TERM CAPITAL GAINS 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.03.2007 DECLARING TOTAL INCOME TO THE TUNE OF RS.1,00,97,185/-. SCRUTINY ASSESSMENT WAS COMPLETED VIDE ORDER DATED 08.12.2008 ASSESSING THE INCOME AT RS.1,06,60,700/- BY MAKING ADDITION ON ACCOUNT OF CAPITAL GAINS ON SALE OF FLAT AND ADDITION ON ACCOUNT OF BANK CHARGES AND INTEREST. THE ASSESSEE WAS MANAGING WOOD BASED INDUSTRY AT DADAR IN THE NAME OF M/S.ACME BOBBIN & SHUTTLES PVT. LTD. AFTER DISPOSING OF THE BUSINESS, HE WAS IN THE ITA NO.2485/M/2013 A.Y. 20 06-07 3 BUSINESS OF MONEY LENDING. THE CIT-(19) HAS PASSED THE ORDER U/S.263 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) STATING THEREIN THAT THE ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN ON TRANSFER OF RESIDENTIAL FLAT WAS ACCEPTED, WHEREIN THE INDEXATION CLAIMED FROM 21.02.2001 WAS ALLOWED, EVEN THOUGH THE FLAT CAME INTO EXISTENCE ONLY DURING THE A.Y.2004-05. THEREFORE, ASSESSMENT ORDER WAS PREJUDICIAL TO THE INTEREST OF REVENUE AND WAS SET ASIDE ON THIS ISSUE AS WELL AS CORRESPONDING CLAIM OF DEDUCTION U/S.54EC OF THE ACT. THEREAFTER, THE NOTICE WAS GIVEN TO THE ASSESSEE AND THE SALE RECEIPT TO THE TUNE OF RS.4,95,00,000/- WAS TREATED AS SHORT TERM CAPITAL GAIN AND TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.5,01,01,470/-. FEELING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE CIT(A), THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 TO 2:- 4. ISSUE NO.1 AND 2 ARE INTERCONNECTED, THEREFORE, ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. HOWEVER, BOTH THE ISSUES LEADS TO THE CONTROVERSY THAT HOW THE TRANSACTION OF THE SALE OF THE ASSESSEE IS LIABLE TO BE TREATED. THE ASSESSING OFFICER HAS TREATED THE GAIN ON THE SALE OF FLAT AS SHORT TERM CAPITAL GAIN. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE WAS HOLDING THE LAND SINCE 1962 WHICH IS NOT IN DISPUTE AND THEREAFTER, THE ASSESSEE CONSTRUCTED THE FLAT THEREON, THEREFORE, IN THE SAID CIRCUMSTANCES THE LAND AS WELL AS SUPERSTRUCTURE ITA NO.2485/M/2013 A.Y. 20 06-07 4 ARE LIABLE TO BE TREATED SEPARATELY SPECIFICALLY THE GAIN ON ACCOUNT OF THE LAND IS LIABLE TO BE TREATED AS LONG TERM CAPITAL GAIN AND THE GAIN ON ACCOUNT OF SALE OF THE SUPERSTRUCTURE WAS LIABLE TO BE TREATED AS SHORT TERM CAPITAL GAIN. IT IS ALSO SPECIFICALLY ARGUED THAT IN THIS REGARD THE MATTER OF CONTROVERSY HAS ALSO BEEN ADJUDICATED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.6966/MUM/2010 DATED 30.05.2012 FOR A.Y.2007-08. THEREFORE, ON THE SIMILAR LINES THE ASSESSMENT IS LIABLE TO COMPLETED. HOWEVER, ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. THE ORDER DATED 30.05.2012 PASSED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.6966/MUM/2010 DATED 30.05.2012 FOR A.Y.2007-08 IS ON THE FILE IN WHICH THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED AND IT IS SPECIFICALLY DIRECTED THAT THE GAIN ON ACCOUNT OF SALE OF THE LAND AS WELL AS SUPERSTRUCTURE ARE LIABLE TO BE TREATED A SEPARATELY IN VIEW OF THE JUDGMENT PASSED BY THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. CITIBANK N.A. (261 ITR 570). THE ORDER PASSED BY THE CIT(A) NOWHERE SPEAKS ABOUT THE ASSESSMENT ON THE BASIS OF GAIN ON ACCOUNT OF THE SALE OF LAND AS WELL AS SALE OF SUPERSTRUCTURE SEPARATELY. IN VIEW OF THE SAID CIRCUMSTANCES, WE SET ASIDE THE ORDER PASSED BY THE CIT(A) IN QUESTION AND DIRECT THE ASSESSING OFFICER TO PASSED THE ORDER IN VIEW OF THE ORDER PASSED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.6966/MUM/2010 DATED 30.05.2012 FOR A.Y.2007-08 IN THE ITA NO.2485/M/2013 A.Y. 20 06-07 5 ASSESSEES OWN CASE BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, BOTH THE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2017 . SD/- SD/- (RAJENDRA) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 15 TH FEBRUARY, 2017 MP / 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// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI