SUNSTAR TRADING & INVESTMENT FINANCE P.LTD, MUMBAI V. ITO WD 4(3)(4), MUMBAI

ITA 3018/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4267 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-04-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NITESH JOSHIAR

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI E BENCH BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANDEEP GOSAIN,JUDICIAL MEMBER /.ITA NO.3018/M/2011, /ASSESSMENT YEAR-2001-02 SUNSTAR TRADING & INVESTMENTS FINANCE PVT. LTD. 428, KALBADEVI ROAD ABHAY HOUSE, 1 ST FLOOR MUMBAI-400 002. PAN:AADCS 1013 P VS INCOME TAX OFFICER WARD-4(3)(4) AAYAKAR BHAVAN MAHARSHI KARVE MARG MUMBAI-400 020. ( / APPELLANT) ( / RESPONDENT) /ASSESSEE BY : SHRI NITESH JOSHI-AR / REVENUE BY : SHRI AARSI PRASAD (DR) / DATE OF HEARING : 19-11 -2015 / DATE OF PRONOUNCEMENT : 01.01.2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) !# $% PER RAJENDRA, AM - CHALLENGING THE ORDER 01.03.2011 OF CIT-8,MUMBAI,TH E ASSESSEE HAS FILED THE PRESENT APPEAL. ASSESSEE-COMAPNY,DERIVING INCOME FROM BUSINESS OF TEXTILE AND RENT, FILED ITS RETURN OF INCOME ON 29.10.2001,DECLARING INCOME OF RS.65,120/-.THE A SSESSING OFFICER(AO)COMPLETED THE ASSESSMENT ON 29.11.2006,U/S.143(3) R.W.S.147 OF TH E ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS.3,44,320/-. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT ADDITION OF RS .3,15,387/- AS DEEMED RENT.DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASS ESSEE WAS OWNER OF 51 SHOPS AND HAD TO PAY TAX ON DEEMED RENT.HE REJECTED THE CLAIM OF THE ASS ESSEE THAT DURING THE AY.UNDER APPEAL IT HAD NEITHER MADE ANY PAYMENT FOR THE SHOPS NOR HAD RECE IVED THE POSSESSION OF THE PREMISES.THE ASSESSEE ALSO ARGUED THAT PAYMENT OF RS.1.37 CRORES WAS MADE BETWEEN 31.03.2003 AND 04.02.2204,THAT AGREEMENT FOR SALE OF SAID SHOPS WA S EXECUTED ON 25.03.2004.HOWEVER,AS STATED EARLIER,THE AO REJECTED THE CLAIM MADE BY THE ASSES SEE. 2.1. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS CONTENDED THAT CON SIDERING THE DATES OF PAYMENT AND DATE OF EXECUTION OF SALE DEED THE ASSESSEE COULD NOT BE AS SESSED FOR DEEMED RENT FOR THE YEAR UNDER APPEAL. AFTER CONSIDERING THE SUBMISSION OF THE ASS ESSEE AND THE ASSESSMENT ORDER,THE FAA HELD THAT THE ASSESSEE AND PIONEER HOLDING PVT.LTD.(PHPL )WERE CONFIRMING PARTIES TO THE TRANSACTION, THAT THE PREMISES WERE LIKELY TO BE READY FOR DELIV ERY OF POSSESSION BY 30.06.1998,THAT THE BUILDER MAYURESH REAL ESTATE MANAGEMENT PVT.LTD.(MR EMPL)HAD INFORMED THE ASSESSEE THAT THE PROPERTY WAS READY FOR POSSESSION,THAT THE ASSE SSEE HAD NOT DENIED THE COMMUNICATION OF THE 3018/M/11SUNSTAR TRADING & INVESTMENT-01-02 2 BUILDER,THAT PHPL WAS THE JOINT HOLDER OF THE PROPE RTY,THAT PHPL HAD SHOWN THE HALF OF THE PROPERTY AS FIXED ASSETS IN ITS BALANCE SHEET,THAT OWNERSHIP OF THE PROPERTY WAS TRANSFERRED TO THE JOINT OWNERS BY THE BUILDER IN THE AY.2001-02,THAT SUBSEQUENT PAYMENT BY THE ASSESSEE WAS DEFERMENT OF PAYMENT ON PART OF THE ASSESSEE,THAT P AYMENT DID NOT AFFECT THE TITLE OF THE ASSESSEE.HE FURTHER HELD THAT THERE WAS NO SUBSTANC E IN THE ASSESSEES CONTENTION THAT THE POSSESSION OF THE PROPERTY WAS NOT ACQUIRED DURING THE YEAR UNDER APPEAL AND THAT NO INCOME FROM SUCH PROPERTY WAS ASSESSABLE IN ITS HANDS,THAT IT HAD ACQUIRED THE OWNERSHIP AND POSSESSION OF THE PROPERTY DURING THE YEAR UNDER CONSIDERATION .FINALLY,HE UPHELD THE ORDER OF THE AO. 2.2. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)CONTENDE D THAT THE ASSESSEE WAS JOINT OWNER OF THE PROPERTY,THAT PHPL HAD MADE PAYMENT TO THE BUIL DER BETWEEN 19.08.1997 TO 22.08.2000, THAT THE ASSESSEE HAD NOT MADE ANY PAYMENT AND HAD NOT R ECEIVED THE POSSESSION OF THE PROPERTY,THAT AFTER THE POSSESSION OF THE PROPERTY IT HAD RENTED IT OUT AND SHOWN RENTAL INCOME FROM IT.HE REFERRED TO THE PAGE NO.20 OF THE PAPER BOOK.THEDEP ARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO AND THE FAA HAD MADE THE ADDITION ON ACCOUNT OF DEE MED RENT AS THEY WERE OF THE OPINION THAT THE PROPERTY WAS READY FOR POSSESSION DURING THE YE AR UNDER CONSIDERATION AND THE ASSESSEE SHOULD HAVE SHOWN DEEMED RENT FROM THE SAME,THAT AS PER THE RECEIPT OF PAYMENTS,ISSUED BY BUILDER, THE OTHER JOINT OWNER HAD MADE PAYMENT BY 22.08.2000,THAT THE ASSESSEE MADE THE PAYMENT OF HIS SHARE ON 31.03.2003,06.12.2003,4.02. 2004,THAT THE SALE DEED WAS EXECUTED 25. 03.2004.IN OUR OPINION,IF A BUILDER INFORMS THE PUR CHASER THAT PROPERTY IS READY FOR POSSESSION IT WOULD NOT LEAD TO THE AUTOMATIC CONCLUSION THAT THE ASSESSEE HAD TAKEN OVER THE POSSESSION OF THE SAID PROPERTY.UNTIL AND UNLESS LEGAL FORMALITIES RE LATED WITH PURCHASE OF PROPERTY ARE NOT COMPLETED NO FINAL CONCLUSION CAN BE DRAWN.WE FIND THAT THE JOINT OWNER HAD TAKEN POSSESSION OF HALF OF THE PROPERTY EARLIER THAN THE ASSESSEE.BUT, IT CANNOT BE THE BASIS TO HOLD THAT THE ASSESSEE HAD ALSO BECOME THE OWNER OF THE PROPERTY IN THE SA ME YEAR.DOCUMENTARY EVIDENCES CLEARLY PROVE THAT THE ASSESSEE HAD NOT TAKEN OVER THE POSS ESSION OF THE PROPERTY ALONG WITH THE CO- OWNER. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTA NCES OF THE CASE,WE ARE OF THE OPINION THAT THERE WAS NO JUSTIFICATION IN HOLDING THAT THE ASSE SSEE HAD BECOME OWNER OF THE PROPERTY DURING THE YEAR UNDER APPEAL.THEREOFORE,REVERSING THE ORDE R OF THE FAA,WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST JANUARY, 2016. 01 , 2016 SD/- SD/- ( / SANDEEP GOSAIN) ( / RAJENDRA) / JUDICIAL MEMBER !# / ACCOUNTANT MEMBER /MUMBAI, /DATE: 01.01.2016 . . . .. . JV.SR.PS. 3018/M/11SUNSTAR TRADING & INVESTMENT-01-02 3 & ' / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ $ & , 4. THE CONCERNED CIT / $ & 5. DR A BENCH, ITAT, MUMBAI / ') , E , . . . 6. GUARD FILE/ (, //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.