BHAGTWATIDEVI ROSHANLAL JHINGAN ESTATE LEGAL HEIR ASHOK JHINGAN, MUMBAI V. ACIT 19(3), MUMBAI

ITA 2897/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1405 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 14-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: S M AGRAWAL
• Keywords: Share purchase agreement
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI G S PANNU, AM, & SHRI SAKTIJIT DEY, JM ITA NOS. 2897/MUM/2015 ASSESSMENT YEAR 2011-12 BHAGWATIDEVI ROSHANLAL JHINGAN ESTATE LEGAL HEIR ASHOK JHINGAN 23, HAPPY HOME ST. MARTIN ROAD, BANDRA (W), MUMBAI 400 050 PAN AAEPJ9860D VS. ACIT 19(3) MUMBAI (APPELLANT) (RESPONDENT) & ITA NOS. 2898/MUM/2015 ASSESSMENT YEAR 2011-12 ASHOK JHINGAN 23, HAPPY HOME ST. MARTIN ROAD, BANDRA (W), MUMBAI 400 050 PAN AABPJ9962B VS. ITO 14(3)(1) MUMBAI (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI S M AGRAWAL RESPONDENT BY : SHRI RAJAT MITTAL (CIT-DR) DATE OF HEARING : 22 .03.2017 DATE OF PRONOUNCEMENT : 05.04 .2017 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THE AFORESAID APPEALS RELATING TO TWO DIFFERENT AS SESSEES ARE AGAINST SEPARATE ORDERS OF THE FIRST APPELLATE AUTHORITY FO R A.Y. 2011-12. SINCE THE ISSUE INVOLVED IN THESE APPEALS ARE INTER-CONNECTED /OVERLAPPING, THEY ARE ITA NO 2897/MUM//2012 BHAGWATIDEVI ROSHANLAL JHINGAN ESTATE 2898/MUM/2012- ASHOK JHINGAN 2 CLUBBED TOGETHER AND DISPOSED OF VIDE THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE CORE ISSUE INVOLVED IN THE PRESENT APPEALS R ELATES TO ADDITION MADE ON ACCOUNT OF CAPITAL GAIN ON SALE OF IMMOVABLE PRO PERTY. 3. BRIEFLY, THE FACT ARE ONE SHRI ROSHANLAL JHINGAN , HUSBAND OF ONE OF THE ASSESSEE BEFORE US VIZ. LATE SMT. BHAGWATIDEVI JHIN GAN, WAS OWNER OF FLAT NO.41 IN BUILDING NO.8B, NAVJEEVAN SOCIETY ALONG WI TH GARAGE NO.12, SINCE THE YEAR 1962. SHRI ROSHANLAL JHINGAN DIED ON 17.0 8.1980. AFTER HIS DEATH THE OWNERSHIP OF THE FLAT WAS TRANSFERRED BY THE SO CIETY IN THE NAME OF SMT. BHAGWATIDEVI JHINGAN ON 08.12.1988. AS IT APPEARS FROM THE MATERIAL ON RECORD, PRIOR TO HER DEATH, ON 25.10.2008 LATE SMT. BHAGWATIDEVI JHINGAN FILED A FORM OF NOMINATION IN FAVOUR OF HER SON SHR I ASHOK JHINGAN, THE OTHER ASSESSEE BEFORE US. LATE SMT. BHAGWATIDEVI JHINGAN EXPIRED ON 14.11.2009 LEAVING BEHIND HER THREE SONS AND ONE DAUGHTER AS L EGAL HEIRS. AFTER THE DEATH OF SMT. BHAGWATIDEVI JHINGAN, THE SAID FLAT W AS TRANSFERRED TO THE NAME OF SHRI ASHOK JHINGAN. SUBSEQUENTLY, THE SAID FLAT ALONG WITH THE GARAGE WAS SOLD FOR A TOTAL SALE CONSIDERATION OF R S.1.30 CRORES, VIDE SALE DEED DATED 06.12.2010. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, FOR THE IMPUGNED ASSESSMENT YEAR IN THE CASE OF SHRI AS HOK JHINGAN, THE AO HAVING NOTICED THAT HE HAS NOT OFFERED CAPITAL GAIN ARISING OUT OF THE SALE OF ITA NO 2897/MUM//2012 BHAGWATIDEVI ROSHANLAL JHINGAN ESTATE 2898/MUM/2012- ASHOK JHINGAN 3 FLAT AS INCOME, PROCEEDED TO COMPUTE CAPITAL GAIN A T THE HANDS OF SHRI ASHOK JHINGAN AT RS.1,29,06,400/- AFTER ALLOWING COST OF TRANSFER OF RS.93,600/-. ON THE BASIS OF ASSESSMENT MADE IN CASE OF SHRI ASH OK JHINGAN AS AFORESAID, THE AO RE-OPENED THE ASSESSMENT IN CASE OF LATE SMT . BHAGWATIDEVI JHINGAN U/S. 147 OF THE ACT. IN RESPONSE TO THE NOTICE ISS UED, U/S. 148 OF THE ACT THE LEGAL HEIR OF LATE SMT. BHAGWATIDEVI JHINGAN FILED RETURN OF INCOME ON 11.9.2013 SHOWING INCOME OF RS.74,16,398/-, WHICH I NCLUDED LONG TERM CAPITAL GAIN FROM SALE OF FLAT NO.41 AT NAVJEEVAN S OCIETY. IN THE COURSE OF ASSESSMENT PROCEEDINGS IN CASE OF LATE SMT. BHAGWAT IDEVI JHINGAN, AO OBSERVED THAT AFTER THE DEATH OF SMT. BHAGWATIDEVI JHINGAN THE SUBJECT FLAT WAS TRANSFERRED IN THE NAME OF SHRI ASHOK JHINGAN A S OWNER OF THE PROPERTY HENCE, THE CAPITAL GAIN WAS ASSESSED AT THE HANDS O F SHRI ASHOK JAIN ON SUBSTANTIVE BASIS. HE, THEREFORE, PROCEEDED TO COM PLETE THE ASSESSMENT IN THE CASE OF LATE SMT. BHAGWATIDEVI JHINGAN BY COMPU TING CAPITAL GAIN AT RS.1,29,06,400/-, AS WAS DONE IN THE CASE OF SHRI A SHOK JHINGAN, ON PROTECTIVE BASIS AFTER DISALLOWING CLAIM OF INDEXAT ION. BEING AGGRIEVED OF THE RESPECTIVE ASSESSMENT ORDERS PASSED ASSESSING CAPIT AL GAIN, BOTH THE ASSESSEES PREFERRED APPEAL BEFORE THE CIT(A). 4. WHILE DECIDING THE APPEAL IN THE CASE OF LATE SM T. BHAGWATIDEVI JHINGAN, LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE ITA NO 2897/MUM//2012 BHAGWATIDEVI ROSHANLAL JHINGAN ESTATE 2898/MUM/2012- ASHOK JHINGAN 4 AND PERUSING THE MATERIAL ON RECORD FOUND THAT LAT E SMT. BHAGWATIDEVI JHINGAN WAS OWNER OF THE FLAT AFTER THE DEATH OF HE R HUSBAND. PRIOR TO HER DEATH, SHE EXECUTED A NOMINATION IN FAVOUR OF HER S ON SHRI ASHOK JHINGAN IN RESPECT OF THE SAID FLAT. HE FOUND THAT AFTER THE DEATH OF SMT. BHAGWATIDEVI JHINGAN, THE SHARE CERTIFICATE OF THE SOCIETY IN RE SPECT OF THE SAID FLAT WAS TRANSFERRED IN THE NAME OF SHRI ASHOK JHINGAN ON 30 .06.2010 AS NOMINEE OF ALL THE LEGAL HEIRS. HE THEREFORE, CONCLUDED THAT SHRI ASHOK JHINGAN DID NOT INHERIT THE PROPERTY AS AN OWNER BUT AS A NOMINEE O F ALL THE LEGAL HEIRS. HE ALSO FOUND THAT, THOUGH, THE SALE DEED EXECUTED ON 6.12.2010 WAS BETWEEN SHRI ASHOK JHINGAN AND THE BUYERS, HOWEVER, THE SAL E PROCEEDS WERE ULTIMATELY TRANSFERRED TO THE BANK ACCOUNT OF ESTAT E OF LATE SMT. BHAGWATIDEVI JHINGAN. HE THEREFORE, HELD THAT THE CAPITAL GAIN HAS TO BE ASSESSED AT THE HANDS OF ESTATE OF LATE SMT. BHAGWA TIDEVI JHINGAN AND NOT SHRI ASHOK JHINGAN. HAVING HELD SO, HE ALSO EXAMINE D ASSESSEES CLAIM OF INDEXATION ON THE BASIS OF VALUATION MADE BY THE AS SESSEE AND ULTIMATELY ACCEPTED THE CAPITAL GAIN SHOWN IN THE RETURN OF IN COME FILED ON BEHALF OF LATE SMT. BHAGWATIDEVI JHINGAN. AS FAR AS THE APPE AL FILED BY SHRI ASHOK JHINGAN AGAINST THE ASSESSMENT OF CAPITAL GAIN FROM SALE OF THE VERY SAME FLAT AT HIS HANDS, THE LEARNED CIT(A) WHILE DECIDING THE APPEAL UPHELD THE DECISION OF THE AO IN ASSESSING THE CAPITAL GAIN ON SUBSTANTIVE BASIS IN HIS ITA NO 2897/MUM//2012 BHAGWATIDEVI ROSHANLAL JHINGAN ESTATE 2898/MUM/2012- ASHOK JHINGAN 5 HANDS. BEING AGGRIEVED OF THE DECISIONS OF THE LEA RNED CITA(), THE PRESENT APPEALS HAVE BEEN FILED BEFORE US. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN, THE ISSUE IN DISPUTE ARISING IN THE PRESENT APPEALS IS, IN WHOSE HAND THE CAPITAL GAIN ARISING FROM SALE OF FLAT NO.41 B AT BUILDING 8B OF NAVJEEVAN SOCIETY IS TO B E ASSESSED. THE AO HAS ASSESSED THE CAPITAL GAIN ON SUBSTANTIVE BASIS AT T HE HANDS OF SHRI ASHOK JHINGAN WHILE ASSESSING THE SAME ON PROTECTIVE BASI S AT THE HANDS OF LATE SMT. BHAGWATIDEVI JHINGAN. HOWEVER, WHILE DECIDING THE APPEAL OF LATE SMT. BHAGWATIDEVI JHINGAN, THE CIT(A) HAS RECORDED A CAT EGORICAL FINDING OF FACT THAT LATE SMT. BHAGWATIDEVI JHINGAN HAS LEFT BEHIND THREE SONS AND A DAUGHTER AS LEGAL HEIR AND SHARE CERTIFICATE RELATI NG TO THE FLAT WAS TRANSFERRED IN THE NAME OF SHRI ASHOK JHINGAN ONLY AS A NOMINEE ON BEHALF OF ALL THE LEGAL HEIRS BY VIRTUE OF A NOMINATION FORM FILED WITH THE SOCIETY BY LATE SMT. BHAGWATIDEVI JHINGAN PRIOR TO HER DEATH. THE LEARN ED CIT(A) THEREFORE, HELD THAT SHRI ASHOK JHINGAL IS NOT THE OWNER OF THE FLA T BUT THE ESTATE OF LATE SMT. BHAGWATIDEVI JHINGAN IS THE OWNER AND, HENCE, ACCEP TED THE INCOME DECLARED FROM CAPITAL GAIN ARISING OUT OF THE SALE OF FLAT A T THE HANDS OF ESTATE OF LATE SMT. BHAGWATIDEVI JHINGAN. AS SUBMITTED BY THE LEA RNED COUNSELS APPEARING FOR BOTH PARTIES, THE AFORESAID DECISION OF THE CIT (A) RENDERED IN THE CASE OF ITA NO 2897/MUM//2012 BHAGWATIDEVI ROSHANLAL JHINGAN ESTATE 2898/MUM/2012- ASHOK JHINGAN 6 LATE SMT. BHAGWATIDEVI JHINGAN HAS NOT BEEN CHALLEN GED BY THE DEPARTMENT. THUS, ONCE CAPITAL GAIN FROM SALE OF FLAT HAS BEEN HELD TO BE ASSESSABLE ON SUBSTANTIVE BASIS AT THE HANDS OF LATE SMT. BHAGWAT IDEVI JHINGAN, THE SAME INCOME CANNOT AGAIN BE ASSESSED AT THE HANDS OF SHR I ASHOK JHINGAN. THEREFORE, THE ADDITION OF CAPITAL GAIN AT THE HAND S OF SHRI ASHOK JHINGAN DESERVES TO BE DELETED. THUS, THE ORDER PASSED B Y THE CIT(A) IN THE CASE OF ESTATE OF LATE SMT. BHAGWATIDEVI JHINGAN IS UPHELD AND THE FIRST APPELLATE ORDER PASSED IN THE CASE OF OTHER ASSESSEE SHRI ASH OK JHINGAN IS HEREBY SET ASIDE. 6. IN THE RESULT, THE APPEAL IN ITA 2897/MUM/2015 I S DISMISSED AND THAT IN ITA 2898/MUM/2015 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DAY OF APRIL 2017. SD/- SD/- (G S PANNU) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI; DATED : 5 TH APRIL, 2017 SA ITA NO 2897/MUM//2012 BHAGWATIDEVI ROSHANLAL JHINGAN ESTATE 2898/MUM/2012- ASHOK JHINGAN 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A),MUMBAI 4. THE CIT 5. DR, C BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI