CRIMSON PROPERTY PVT. LTD., MUMBAI V. ITO 5(1)(3), MUMBAI

ITA 2867/MUM/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1721 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR KESHERI
• Assessee Lawyers: BHAVIN PAREKH
• Keywords: Business income; Depreciation; Business expenditure; Proportionate interest; Cost of acquisition; Corroborative evidences

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 2867/MUM/2016 (ASSESSMENT YEAR 2008-09 ) ITA NO. 2859/MUM/2016 (ASSESSMENT YEAR 2012-13 ) CRIMSON PROPERTY PVT. LTD. 3 RD FLOOR, SUNAMA HOUSE, KEMPS CORNER, OPP. SHALIMAR HOTEL, MUMBAI- 400036. PAN: AAACC2206R VS. ITO WARD-5(1)(3), 5 TH FLOOR, ROOM NO. 569, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400050. APPELLANT RESPONDE NT APPELLANT BY : SHRI BHAVIN PAREKH (AR) RESPONDENT BY : SHRI AJAY KUMAR KESHERI ( SR. DR) DATE OF HEARING : 30.04.2019 DATE OF PRONOUNCEMEN T : 31.05.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO APPEAL BY ASSESSEE UNDER SECTION 253 OF I NCOME-TAX ACT (ACT) ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-10, MUMBAI [HEREINAFTER REFERR ED AS LD. CIT(A)] DATED 21.12.2015 FOR ASSESSMENT YEAR 2008-09 & 2012 -13. BOTH THE APPEALS WERE LISTED TOGETHER AND RELATES TO THE SAM E ASSESSEE. THEREFORE, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DECIDE D BY A CONSOLIDATED ORDER. IN APPEAL FOR ASSESSMENT YEAR 2008-09, THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL , THE COMMISSIONER OF INCOME TAX, APPEALS - 10, MUMBAI, HEREINAFTER REFER RED TO AS THE, LD. CIT ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 2 (A). HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DISALLOWING THE BUSINESS LOSS-OF RS.9,08,549/-. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN NOT ALLOWING CLAIM OF INTEREST U/S. 24 (B) FROM THE DATE OF PAYMENT AND HAS ALLOWED IT FROM THE DATE OF THE AGR EEMENT. INTEREST CLAIM HAS TO BE ALLOWED FROM THE DATE OF PAYMENT AND NOT FROM THE AGREEMENT DATE. WE REQUEST YOUR HONOR TO KINDLY ALLOW THE CLA IM OF INTEREST FROM THE DATE OF PAYMENT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND ALLEGEDLY ENGAGED IN THE BUSINESS OF LEASING OUT OF PROPERTY, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 30.09.2018 DE CLARING TOTAL INCOME AT RS. 3,22,161/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER WHILE PASSING THE A SSESSMENT ORDER BESIDES THE OTHER ADDITION/DISALLOWANCE DISALLOWED THE BUSINESS LOS OF RS. 9,08,549/- AND DEDUCTION ON INTEREST UNDER SECT ION 24(B). ON APPEAL BEFORE THE LD. CIT(A), BOTH THE ADDITION/DISALLOWAN CES WERE CONFIRMED. THEREFORE, FURTHER AGGRIEVED BY THE ORDER OF LD. CI T(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENT REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUN D NO.1 RELATES TO DISALLOWANCE OF BUSINESS LOSS OF RS. 9,08,549/-. TH E LD. AR OF THE ASSESSEE SUBMITS THAT DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE INCURRED EXPENSES FOR DEVELOPMENT OF ANOTHER PROPE RTY. THE VENTURE ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 3 OF PROPERTY DEVELOPMENT WAS NOT SUCCESSFUL AND AMOU NT INCURRED BY ASSESSEE ON THE BUSINESS VENTURE WAS CLAIMED AS BUS INESS LOSS WHICH CONSIST OF DEPRECIATION, SALARY AND PURCHASE OF MO TOR VEHICLE USED BY OFFICER FOR CARRYING OUT NEW VENTURE. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT THERE WAS NO BUSINESS DURING THE YEAR. THE ASSESSEE HAS NOT PROV ED THE EXPENDITURE THAT THE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIV ELY FOR THE PURPOSE OF BUSINESS AND NO DOCUMENTARY EVIDENCES WAS FURNI SHED BY THE ASSESSEE. THE ASSESSEE HAS SHOWN THE INCOME UNDER T HE HEAD INCOME FROM HOUSE PROPERTY AND INCOME UNDER THE HEAD INC OME FROM OTHER SOURCES. THE ASSESSEE HAS ALREADY CLAIMED STANDARD DEDUCTION UNDER SECTION 24(A) WHICH COVERS ALL THE EXPENDITURE UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS CLAIMED L OSS FROM BUSINESS OF RS. 9,08,549/- WHICH CONSIST OF THE FOLLOWING EXPE NSES: PARTICULARS AMOUNT (RS.) DEPRECIATION 3,34,574 REMUNERATION 3,60,000 APPEAL FEES 1,000 AUDIT FEES 50,000 PROFESSIONAL FEES 38,000 TELEPHONE EXPENSES 42,725 SALARY TO STAFF 82,250 TOTAL 9,08,549 ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 4 6. HOWEVER, IN THE RETURN OF INCOME THE ASSESSEE HAS S HOWN THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND UND ER THE HEAD INCOME FROM OTHER SOURCES IN ITS PROFIT & LOSS A/ C. THE ASSESSEE HAS CLAIMED SLANDERED DEDUCTION UNDER SECTION 24(A) WHI CH COVERS ALL THE EXPENSES. THE ASSESSING OFFICER ISSUED SHOW-CAUSE N OTICE TO THE ASSESSEE TO SUBSTANTIATE THE CLAIM. THE ASSESSEE FI LED ITS REPLY DATED 21.12.2012 STATING THEREIN THAT ASSESSEE WAS INTEND ING TO DEVELOP ANOTHER PROPERTY AS A BUSINESS OF PROPERTY DEVELOPM ENT. HOWEVER, THE JOINT VENTURE WAS NOT SUCCESSFUL, THEREFORE, THE AS SESSEE CLAIMED EXPENSES AND THE HEAD BUSINESS EXPENSES. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT THE CLAI M OF ASSESSEE IS NOT SUPPORTED WITH DOCUMENTARY EVIDENCE. THE ASSESSEE W AS AGAIN ASKED TO FURNISH THE DOCUMENTARY EVIDENCE IN SUPPORT OF CLAI M. THE ASSESSEE VIDE ITS REPLY DATED 30.01.2013 STATED THAT THE NEW BUSI NESS VENTURE UNDERTAKEN BY ASSESSEE WAS WITH REFERENCE TO NEW PR OJECT FOR CONSIDERATION AND SALE. THE ASSESSEE-COMPANY IS IN THE REAL ESTATE BUSINESS SINCE 1995 AND THE DIRECTOR AND STAFF HAVE GOOD KNOWLEDGE OF REAL ESTATE BUSINESS. THE ASSESSEE DECIDED TO PURCH ASE NEW PLOT WITH INTENTION OF MAKING CONSTRUCTION ON THIS PLOTS AND THEREAFTER, EITHER SALE OR LEASED THE SAID UNIT. IN THIS CONNECTION, THE AS SESSEE INCURRED EXPENSES. THE ASSESSEE-COMPANY DID NOT RECEIVE ANY RESPONSE FROM NEW ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 5 BUSINESS AND CONTINUED THE SAME. THE EXPLANATION FU RNISHED BY ASSESSEE WAS AGAIN NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT NO SUPPORTING EVIDENCE IS FURNISHED BY ASSESSEE. THE ASSESSING OF FICER CONCLUDED THAT ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO PROVE TH AT ASSESSEE CARRIED OUT ANY NEW BUSINESS ACTIVITY DURING THE YEAR DESPI TE ISSUING VARIOUS SHOW-CAUSE NOTICES AS THE ASSESSEE HAS NOT SUPPORTI NG EVIDENCE TO PROVE THE CLAIM OF BUSINESS ACTIVITIES. THE ASSESSEE HAS ALREADY ALLOWED THE DEDUCTION UNDER SECTION 24(A) WHICH COVERS ALL THE EXPENSES FOR EARNING THE RENTAL INCOME. HENCE, THE ASSESSING OFFICER DIS ALLOWED THE CLAIM OF BUSINESS LOSS. 7. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OF FICER ALMOST ON SIMILAR LINE HOLDING THAT THE ADJUSTMENT OF ADDITIO N AND DISALLOWANCE OF LOSS OF RS. 9,08,549/- WAS CLAIMED AFTER CLAIMING E XPENSES LIKE DEPRECIATION, REMUNERATION TO DIRECTORS, APPEAL FEE S, AUDIT FEES, PROFESSIONAL FEES AND TELEPHONE EXPENSES. AS PER PR OFIT & LOSS A/C, THE ASSESSEE OFFERED INCOME UNDER TWO HEADS ONLY (I) IN COME FROM HOUSE PROPERTY AND (II) INCOME FROM OTHER SOURCES. IN THE PROFIT & LOSS A/C, NO BUSINESS INCOME WAS SHOWN. AS THE ASSESSEE IS AL READY ALLOWED THE BENEFIT UNDER SECTION 24(A). THEREFORE, THE LD. CIT (A) CONCURRED WITH THE FINDING OF ASSESSING OFFICER. 8. BEFORE US THE ASSESSEE HAS NEITHER FURNISHED ANY DO CUMENTARY EVIDENCE NOR DISCLOSED THE DETAILS PARTICULARS OF NEW BUSINE SS VENTURE WHICH WAS ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 6 UNDERTAKEN BY THE ASSESSEE. NO NAME OR MUNICIPAL NU MBER OF PROPERTY IN CONNECTION OF WHICH THE ASSESSEE ALLEGEDLY SELEC TED FOR SUCH BUSINESS VENTURE. MOREOVER, WHILE PERUSAL OF DETAILS OF EXP ENSES, WE HAVE NOTED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION, REMUNER ATION TO DIRECTORS, APPEAL FEES, AUDIT FEES, PROFESSIONAL FEES AND TELE PHONE EXPENSES. ALL THE EXPENSES WERE INCLUDED IN THE STANDARD DEDUCTION CL AIMED BY THE ASSESSEE. IN OUR VIEW, THE ASSESSEE FAILED TO SUBST ANTIATE THE BUSINESS ACTIVITIES AS NO DETAILS PARTICULARS REGARDING THE ALLEGED NEW BUSINESS VENTURE UNDERTAKEN BY ASSESSEE IS FURNISHED. THEREF ORE, WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL RAISED BY ASSESSE E. 9. IN THE RESULT, GROUND NO.1 OF THE APPEAL IS DISMISS ED. 10. GROUND NO.2 RELATES TO DISALLOWANCE OF CLAIM OF INT EREST UNDER SECTION 24(B). THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSEE PURCHASED A PROPERTY KNOWN AS DHANWATAY HOUSE. THE ACQUISITION AND PAYMENTS MADE FOR ACQUISITION OF PROPERTY WAS MADE FROM BORR OWED FUNDS ARE NOT IN DISPUTE, THE ONLY QUESTION IN DISPUTE IS FROM WH ICH DATE, THE ASSESSEE IS ELIGIBLE TO CLAIM INTEREST ON THE LOAN. DURING T HE PERIOD UNDER CONSIDERATION, THE ASSESSEE MADE A PAYMENT OF RS. 5 .28 CRORE TO VEDANT PROPERTY P. LTD. FOR ACQUISITION OF DHANWATAY HOUSE . THE ASSESSEE PURCHASED THE SAID PROPERTY VIDE AGREEMENT TO SALE DATED 31.03.2008. THE ASSESSING OFFICER CONSIDERED THE INTEREST EXPEN SES FROM THE DATE OF AGREEMENT AND NOT FROM THE DATE OF PAYMENT. THE DAT E OF PAYMENT WAS ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 7 ON 14.02.2008. THERE IS NO DISPUTE THAT THE PROPERT Y WAS PURCHASED / ACQUIRED FROM THE BORROWED FUNDS AND THE ASSESSEE I S ENTITLED FOR INTEREST FROM THE DATE OF BORROWING. THE LD. AR OF THE ASSES SEE FURTHER SUBMITS THAT THE OWNERSHIP OF THE PROPERTY IS NOT A CRITERI A FOR CLAIMING DEDUCTION UNDER SECTION 24(B). 11. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. IT WAS SUBMITTED THAT THE ASSESS EE ACQUIRED PROPERTY ON THE LAST DATE OF FINANCIAL YEAR AS PER AGREEMENT DATED 31.03.2008. AS THERE WAS NO EXISTENCE OF PROPERTY WITH THE ASSESSE E, THEREFORE, NO BORROWED LOANS WERE ATTRIBUTED TO THIS PROPERTY DUR ING THE RELEVANT FINANCIAL YEAR. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT ASSESSEE ACQUIRED A PA RT OF DHANWATAY HOUSE ON THE LAST DATE OF FINANCIAL YEAR I.E. ON 31 .03.2008. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE INTEREST EXPENSE S FOR WHOLE YEAR WERE CLAIMED. THE ASSESSEE FILED ITS REPLY DATED 18.02.2 013. IN THE REPLY, THE ASSESSEE STATED THAT THE AGREEMENT DATED 31.03.2008 WAS EXECUTED AFTER A TERM OF THE DEAL WAS COMPLETED. THE ASSESSEE HAS PA ID ADVANCES TOWARDS THE ACQUISITION PRIOR TO THE EXECUTION OF THE AGREE MENT. THE INTEREST CLAIMED IS APPLICABLE FROM THE PAYMENT OF ACQUISITI ON OF THE SAID PROPERTY. THE CONTENTION OF ASSESSEE WAS NOT ACCEPT ED BY ASSESSING ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 8 OFFICER HOLDING THAT SHARE OF PROPERTY WAS ACQUIRED ON THE LAST DAY OF THE YEAR. NO INCOME UNDER THE HEAD INCOME FROM HOUSE P ROPERTY IS TAXABLE FROM SUCH PROPERTY DURING THE YEAR. THEREFO RE, THE INTEREST EXPENSES UNDER SECTION 24(B) ARE NOT ALLOWABLE DURI NG THE YEAR ON THIS PROPERTY. THE CONTENTION OF ASSESSEE IS THAT INTERE ST EXPENSES ON ADVANCE PAYMENT ARE ALLOWABLE UNDER SECTION 24(B) WAS ALSO NOT ACCEPTED HOLDING THAT AS PER EXPLANATION 24(B) THE INTEREST EXPENSES OF PRIOR PERIOD TO ACQUISITION OF PROPERTY HAS TO BE ALLOWED IN FIVE EQUAL INSTALLMENTS FROM THE YEAR IN WHICH THE INCOME FROM THE SAID PROPERTY IS OFFERED FOR TAXATION. THE ASSESSING OFFICER FURTHER CONCLUDED THAT THE INTEREST PAYABLE ON BORROWED CAPITAL IS TO BE ALLOW ED ONLY WHEN THE ASSESSEE FURNISHES A CERTIFICATE FROM THE PERSON TO WHOM THE INTEREST IS PAYABLE, SPECIFYING THE AMOUNT OF INTEREST PAYABLE ON THE LOAN UTILIZED FOR ACQUIRING OF THE PROPERTY AND THAT THE ASSESSEE HAS NOT FURNISHED SUCH CERTIFICATE. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER HOLDING THAT THE PROPERTY WAS NOT IN THE OWNERSHIP OF THE ASSESSEE TILL 31 ST MARCH 2008. THUS, THERE IS NO ACQUISITION OF ATTRI BUTING ANY BORROWED LOAN AND INTEREST THEREON. 13. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THA T DURING THE YEAR, THE ASSESSEE MADE PAYMENT OF RS. 5.28 CRORE TO VEDANT P ROPERTY PVT. LTD. ON 14.02.2008. THERE IS NO DISPUTE THAT THE AGREEME NT FOR ACQUISITION OF PART OF DHANWATAY HOUSE WAS EXECUTED ONLY ON 31.03. 2008. THERE IS NO ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 9 DISPUTE THAT DURING THE RELEVANT PERIOD THAT THE AS SESSEE HAS OFFERED THE RENTAL INCOME OF PART OF DHANWATAY HOUSE. THE INTEN TION OF ASSESSEE WAS FURTHER TO LET OUT THE PROPERTY AND TO EARN THE RENTAL INCOME. IN OUR VIEW, WHEN THE AVAILING OF FINANCE AND PAYMENT INTE REST THEREON IS NOT IN DISPUTE THE ASSESSEE IS ENTITLED FOR INTEREST ALLOW ANCE IRRESPECTIVE OF FACT THAT FINALLY AGREEMENT TO SALE FOR CHANGE OF OWNERS HIP WAS EXECUTED SUBSEQUENTLY. THEREFORE, IN OUR CONSIDERED VIEW, TH E ASSESSEE IS ENTITLED FOR PROPORTIONATE ALLOWANCE OF INTEREST ON THE PAYM ENTS OF RS. 5.28 CRORE PAID TO VEDANT PROPERTY PVT. LTD. HENCE, THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE INTEREST ALLOWANCE FROM THE DATE OF PAYMENT I.E. ON 14.02.2008. IN THE RESULT, THIS GROUND OF APPEAL IS ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. IN ITA NO. 2859/MUM/2016 FOR A.Y. 2012-13 15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A)- 10 HAS ERRED IN LAW AND ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT(A) & LD. AO HAS ERRED IN DE TERMINING CAPITAL GAINS OF RS. 61,68,015/- AS AGAINST THE NIL RETURNED BY T HE APPELLANT. 16. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSM ENT PROCEEDING FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER NOT ED THAT FROM THE STATEMENT OF INVESTMENT IN THE BALANCE-SHEET AS ON 31.03.2011, THE ASSESSEE HAS SHOWN RS. 9.63 CRORE AS INVESTMENT IN PROPERTY. IT WAS FURTHER NOTED THAT ON 31.03.2012, THE ASSESSEE HAS SHOWN RS. 5.46 CRORE ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 10 AS INVESTMENT IN PROPERTY. THERE BEING A DEDUCTION IN VALUE OF PROPERTY, THE ASSESSEE WAS ASKED TO EXPLAIN THE FACT. THE ASS ESSEE VIDE REPLY DATED 29.04.2014 STATED THAT DURING THE YEAR, THE ASSESSE E SURRENDERED PART OF THE PROPERTY WHICH WAS PURCHASED FROM VEDANT PROPER TY P. LTD. BACK TO VEDANT PROPERTY, HENCE, THE INVESTMENT HAS BEEN RED UCED BY RECEIVING CONSIDERATION FROM THE VEDANT PROPERTY P. LTD. THER EFORE, NET INVESTMENT OF RS. 5.46 CRORE IS REFLECTED IN THE BA LANCE-SHEET. AND ACCORDINGLY, THE SHARE OF ASSESSEE IN DHANWATAY HOU SE WHICH WAS ORIGINAL RS. 52.79% HAS NOW BEEN REDUCED TO 31.07%. ON THE DIRECTION OF ASSESSING OFFICER, THE ASSESSEE FURNISHED THE BA NK STATEMENT SHOWING RECEIPT FROM VEDANT PROPERTY P. LTD. OF RS. 2.56 CR ORE AS ON 13.03.2012, RS. 39 LAKH ON 27.12.2012 AND RS. 2.23 LAKH ON 28.0 3.2012 I.E TOTAL OF RS. 4.97 CRORE IN RESPECT OF TRANSFER/SURRENDER OF 41.70 PIES. ON THE BASIS OF STATEMENT FURNISHED BY THE ASSESSEE, THE A SSESSING OFFICER TOOK HIS VIEW THAT ASSESSEE HAS TRANSFERRED/ SURRENDERE D THE PART OF DHANWATAY HOUSE FOR A CONSIDERATION OF RS. 4.97 CRO RE, WHICH IS NOT OFFERED FOR ANY CAPITAL GAIN. THE ASSESSEE WAS ASKE D TO EXPLAIN WHY THE PURCHASE AND SALE PRICE SHOULD NOT BE TREATED AS CA PITAL GAIN. THE ASSESSEE VIDE REPLY DATED 09.12.2014 FURNISHED CALC ULATION OF CAPITAL GAIN IN THE FOLLOWING MANNER: ACQUISITION COST FOR 34.277 PIES IN A Y 2009-10 RS. 3,20,00,000 ACQUISITION COST FOR 07.427 PIES IN A Y 2010-11 R S. 73,00,000 ADD: INTEREST CAPITALIZED FOR THE ABOVE ACQUISITION IN A Y 2011-12 RS. 42,20,619 ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 11 A Y 2012-13 RS. 62,02,916 TOTAL ACQUISITION COST RS. 4,97,23,535 AMOUNT RECEIVED RS. 4,97,23,535 AS SUCH EXCESS RECEIVED RS. 0 17. THE ASSESSEE ALSO SUBMITTED THAT THERE IS NO CAPITA L GAIN AS CAPITALIZATION OF INTEREST OF THE SAID PROPERTY WAS DULY DISCUSSED AT THE TIME OF ASSESSMENT PROCEEDING FOR ASSESSMENT YEAR 2011-12 A ND THERE IS NO CHANGE IN THE CURRENT YEAR. THE CONTENTION OF ASSES SEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER ON THE BASIS OF TOTAL INTEREST CAPITALIZED AND CALCULATING THE WORKING OF TOTAL VA LUE OF PROPERTY, CALCULATED SHORT TERM CAPITAL GAIN OF RS. 61,68,015 /- BY HOLDING AS UNDER: 7.6 IT IS NOTICED FROM THE BALANCE SHEET THAT THE ASSESSEE HAS CAPITALIZED THE INTEREST IN RESPECT OF THE INVESTMENT IN PROPERTY A ND THE ENTIRE PROPERTY OF 101.365 PIES WAS ACQUIRED WITH THE BORROWED CAPITAL THEREFORE, THE INTEREST IS ALLOWED TO BE CAPITALIZED ON PROPORTIONATE BASIS. T HE SAME IS CALCULATED AS UNDER; TOTAL INTEREST CAPITALIZED RS. 1,22,47,918/- TOTAL VALUE OF THE PROPERTY OF 101.365 PIES RS. 9 ,21,00,000/- PROPORTIONATE INTEREST = 1,22,47,918 X 3,93,00,000 = RS. 42,55,520/- 9,21,00,00 0 THEREFORE, THE PROPORTIONATE INTEREST OF RS. 42,55, 520/- IS ALLOWED TO BE CAPITALIZED TO THE VALUE OF THE PROPERTY OF 41.704 PIES. CONSIDERING THE ABOVE THE COST OF ACQUISITION OF THE PROPERTY 41.704 PIES IS TREATED AT RS. 4,35,55,520/- (3,93,00,000 + 42,55,520). IN THIS RESPECT THE CAPI TAL GAIN ON ACCOUNT OF TRANSFER/SURRENDER OF THE PROPERTY IS CALCULATED AS UNDER; SALE CONSIDERATION (AMOUNT RECEIVED ON ACCOUNT OF T RANSFER) RS. 4,97,23,535 LESS: COST OF ACQUISITION RS. 4,35,55,520 CAPITAL GAIN RS. 61,68,015/- ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 12 18. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSE SSING OFFICER WAS CONFIRMED. THE LD. CIT(A) WHILE CONFIRMING THE ACTI ON OF ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS NOT FURNISH ED THE COPY OF AGREEMENT OR ANY DOCUMENT IN RESPECT OF TRANSFER OF PROPERTY. THEREFORE, ON THE BASIS OF RECEIPT OF SUBSTANTIAL PAYMENT ON A CCOUNT OF SURRENDER/TRANSFER PART OF PROPERTY, IT IS CONSIDER ED THAT PROPERTY WAS TRANSFERRED WITHIN THE PERIOD OF THREE YEARS; HENCE , CAPITAL GAIN WAS RIGHTLY TREATED AS SHORT TERM CAPITAL GAIN. FURTHER , AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRE SENT APPEAL BEFORE US. 19. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENT REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE SUBMITS THAT ASSESSEE PURCHASED A DHANWATAY HOUSE F OR A TOTAL AMOUNT OF RS. 9.21 CRORE, OUT OF WHICH RS. 5.28 CRORE WAS PAID DURING THE ASSESSMENT YEAR 2008-09, RS. 3.20 CRORE IN ASSESSME NT YEAR 2009-10 AND RS. 73 LAKH IN ASSESSMENT YEAR 2010-11. THE EN TIRE COST OF ACQUISITION IS OUT OF BORROWED FUND. THE ASSESSEE C APITALIZED INTEREST OF RS. 42.20 LAKH IN ASSESSMENT YEAR 2011-12 AND RS. 6 2.02 LAKH IN ASSESSMENT YEAR 2012-13. NO INTEREST WAS CAPITALIZE D IN ASSESSMENT YEAR 2009-10 AND 2020-11 AS INITIALLY THE SAID ACQU ISITION WAS MADE FROM INTEREST FREE FUND, SHARE RECEIPTS BY INTEREST BEARING LOAN IN ASSESSMENT YEAR 2011-12. THE ONLY POINT TO DISPUTE BETWEEN THE ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 13 ASSESSEE AND ASSESSING OFFICER IS WITH REGARD TO TH E AMOUNT OF INTEREST CAPITALIZED PERTAINING TO THE PROPERTY SOLD DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER MADE DISALLOWA NCE UNDER SECTION 24(B) IN RESPECT OF LOAN OF RS. 5.28 CRORE, WHICH I S NOT A ISSUE AND PART OF PRESENT APPEAL. THE ACTION OF ASSESSING OFFICER IN CAPITALIZING THE INTEREST IS NOT PROPER. THE INTEREST CAPITALIZED PE RTAINS FULLY AND TOTALLY IN RESPECT OF PROPERTY SURRENDERED DURING THE YEAR AND THE ASSESSEE IS ENTITLED FOR FULL CLAIM OF DEDUCTION ON SUCH INTERE ST. 20. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT, THE ASSESSING OFFICER ON SCRUTINY OF INVESTMENT IN PROP ERTY, THE ASSESSING OFFICER NOTED THAT THERE WAS A DIFFERENCE IN INVEST MENT IN PROPERTY. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE FACT. ON PERUSAL OF SUBMISSION OF ASSESSEE, THE ASSESSING OFFICER NOTED THAT ASSESSEE SURRENDERED 41.704 PIES OF DHANWATAY HOUSE TO VEDAN T PROPERTY P. LTD. FOR RS. 4.97 CRORE BUT NOT OFFERED ANY AMOUNT FOR C APITAL GAIN. THE ASSESSEE WAS ASKED AS TO WHY THE SALE PRICE SHOULD NOT BE TREATED AS CAPITAL GAIN. THE ASSESSEE FURNISHED CALCULATION OF CAPITAL GAIN AND CLAIMED THAT THERE IS NIL EXCESS RECEIVED AND THAT NO CAPITAL GAIN WAS EARNED. THE ASSESSEE ALSO FURNISHED WORKING OF THE CAPITALIZATION OF ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 14 INTEREST. ON THE BASIS OF DETAILS OF INVESTMENT IN ACQUISITION OF PROPERTY, THE ASSESSING OFFICER CALCULATED THE CAPITAL GAIN O F RS. 61,68,015/- AND TREATED THE SAME AS SHORT TERM CAPITAL GAIN IN ABSE NCE OF ANY DOCUMENTARY EVIDENCE REGARDING TRANSFER/SURRENDER O F THE PROPERTY. BEFORE THE LD. CIT(A), THE ASSESSEE AGAIN NOT FURNI SHED ANY DOCUMENTARY EVIDENCE IN RESPECT OF TRANSFER/SURRENDER OF PROPER TY. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER HOLDING T HAT IN ABSENCE OF ANY DOCUMENTARY EVIDENCE AND ON THE BASIS OF RECEIPT ON SUBSTANTIAL PAYMENT, THE TRANSFER WAS WITHIN THE PERIOD OF THRE E YEARS. THE LD. AR OF THE ASSESSEE VEHEMENTLY ARGUED BEFORE US THAT VARIA TION IS ONLY ON ACCOUNT OF CAPITALIZATION OF INTEREST. BEFORE US, T HE ASSESSEE FAILED TO DISCLOSE THE DATE OF ACQUISITION OF DIFFERENT SHARE OF DHANWATAY HOUSE IN EARLIER ASSESSMENT YEAR I.E. 2008-09, 2009-10 OR 20 10-11. IN ABSENCE OF ANY DOCUMENTARY EVIDENCE, WE ARE UNABLE TO CONVINCE OURSELVES ABOUT THE ALLOWANCE OF CAPITALIZATION OF INTEREST FOR ASS ESSMENT YEAR 2010-11 & 2011-12. IN THE RESULT, GROUND OF APPEAL RAISED B Y ASSESSEE IS DISMISSED. 22. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/ 2019. SD/- SD /- /- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 31.05.2019 SK ITA NO. 2867 & 2859 MUM 2016-CRIMSON PROPERTY PVT. LTD. 15 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI