SUNITA HALWAN, MUMBAI V. ASST CIT CIR 18(1), MUMBAI

ITA 3181/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3651 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 04-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PVH
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 143(3)

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C. N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.3181 /MUM/2013 ( / ASSESSMENT YEAR : 2008-09) SMT. SUNITA HALWAN 14,MANAV MANDIR ACHARYA P K ATRE MARG WORLI HILL ROAD, WORLI,MUMBAI-400018 / V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 18(1) MUMBAI ./ PAN : ABYPV8150H ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI GOVIND JAVERI REVENUE BY : SH SUNIL KUMAR AGARWAL,DR / DATE OF HEARING : 09-08-2016 / DATE OF PRONOUNCEMENT : 09-08-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 3181/MUM/2013, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 04 TH JANUARY 2013 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 16, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2008- 09, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 03-12-2010 PASSED BY THE LEARNED ASSESSING OF FICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME TAX ACT,1961 (HE REINAFTER CALLED THE ACT). ITA 3181/MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEF ORE INCOME TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX(A) (CIT(A)) ERRED IN CON FIRMING THE AOS ORDER IN DISALLOWING AN AMOUNT OF RS.9,29,900/- BEIN G THE COST OF IMPROVEMENT INCURRED BY THE APPELLANT IN COMPUTING SH ORT TERM CAPITAL GAINS. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PRO PERTY WAS PURCHASED AND SOLD ALONG WITH FURNITURE AND THE APPE LLANT HAD INCURRED EXPENSES IN ONLY REFURBISHING THE FURNITUR E AND FIXTURE, WHICH IN TURN YIELDED A BETTER SALE VALUE OF THE CAPITAL ASS ET IN THE INSTANT CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE EARNED SHORT TERM CAPITAL GAINS OF RS.39,50,040/- ON SALE OF IMMOVABL E PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WI TH SECTION 143(2) OF THE ACT, THE ASSESSEE WAS ASKED BY THE AO TO SUBMIT SUP PORTING DOCUMENTS FOR PURCHASE AND SALE OF THE ASSET TO SUBSTANTIATE THE COMPUTATION OF SHORT TERM CAPITAL GAINS. THE ASSESSEE SUBMITTED THAT SHE PUR CHASED PREMISES AT SHOP NO. 201, ADMEASURING 785.59 SQUARE FEET BUILT UP AR EA ON 2 ND FLOOR OF C BUILDING , ANISH TOWER ,140 , SENAPATI BAPAT MARG, MATUNGA(WEST),MUMBAI- 400 016 FOR RS.45,00,000/- VIDE AGREEMENT DATED 20- 10-2006 AND SHE SOLD THE SAID SHOP/OFFICE AS PER SALE AGREEMENT DATED 05 -04-2007. THE ASSESSEE SUBMITTED THAT IT SPENT RS.24,94,160/- TOWARDS DEVE LOPMENT EXPENSES INCLUDING FURNITURE WHICH WAS REDUCED WHILE ARRIVIN G AT SHORT TERM CAPITAL GAINS. THE ASSESSEE SUBMITTED BILLS OF NIRMALA CONS TRUCTIONS OF RS.24,94,160/- BEFORE THE AO TOWARDS BILLS OF DEVEL OPMENT EXPENSES INCLUDING FURNITURE. THE SAME EXPENSES WERE SHOWN I N THE BALANCE SHEET BY THE ASSESSEE AS AT 31-03-2007. ON GOING THROUGH THE BILLS, THE AO OBSERVED THAT THE ASSESSEE HAS INCURRED RS.9,29,900/- TOWARD S FURNITURE VIDE BILLS DETAILED IN THE ASSESSMENT ORDER DATED 03-12-2010. THE ASSESSEE SUBMITTED ITA 3181/MUM/2013 3 THAT BY SPENDING THESE AMOUNTS SHE IS ABLE TO GET S IGNIFICANTLY HIGHER PRICE FOR HER SHOP AT RS.1,12,00,000/- AS AGAINST THE PRE VAILING MARKET PRICE OF RS.49,10,000/- AND HENCE THESE EXPENSES WERE CLAIME D AS COST OF IMPROVEMENT WHICH SHOULD BE ALLOWED AS DEDUCTION WH ILE COMPUTING SHORT TERM CAPITAL GAINS. THE AO ALLOWED RS.15,64,260/- T OWARDS EXPENSES INCURRED FOR CIVIL WORK BUT THE REST OF THE EXPENSE S TOWARDS FURNITURE AMOUNTING TO RS.9,29,900/- WAS DISALLOWED BY THE AO WHILE COMPUTING SHORT TERM CAPITAL GAIN ON SALE OF THE SHOP VIDE ASSESSME NT ORDER DATED 03-12-2010 PASSED U/S 143(3) OF THE ACT. THE ASSESSEE FILED FI RST APPEAL AGAINST THE ASSESSMENT ORDER WHICH WAS DISMISSED BY THE LEARNED CIT(A) VIDE APPELLATE ORDER DATED 04-01-2013 WHEREBY LEARNED CIT(A) HELD THAT THE ASSESSEE HAS INCURRED THESE EXPENSES FOR FURNITURE AND NOT TOWAR DS IMPROVEMENT OF THE ASSET SOLD. 4. THE ASSESSEE FILED SECOND APPEAL BEFORE THE TRIB UNAL AND THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT AS PER AGRE EMENT TO SALE DATED 05- 04-2007 VIDE CLAUSE (O) OF THE AGREEMENT , THE ASSE SSEE HAS CARRIED OUT ALTERATIONS AND MODIFIED THE SAID OFFICE PREMISES B Y INCURRING EXPENDITURE OF RS.25 LACS. IT WAS SUBMITTED THAT THE ASSESSEE WAS ABLE TO REALIZE GOOD PRICE FOR SALE OF THE SAID SHOP/OFFICE OF RS.1,12,00,000/ - IN SHORT SPAN OF TIME ONLY BECAUSE IT CARRIED OUT MODIFICATIONS WHEREBY THE SA ID AMOUNT WAS INCURRED WHICH LED TO HIGHER REALIZATION. IT WAS SUBMITTED T HAT STAMP DUTY VALUE AS DETERMINED BY STAMP DUTY VALUATION AUTHORITIES AS O N THE DATE OF SALE WAS ONLY RS.49,10,000/- WHILE THE ASSESSEE WAS ABLE TO GET SALE VALUE OF RS.1,12,00,000/- AND IT WAS MAINLY DUE TO THE SAID WORK DONE BY THE ASSESSEE IN THE SHOP/OFFICE AS PER AGREED TERM WITH THE BUYER . THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED AN APPLICATIO N FOR ADMISSION OF ADDITIONAL EVIDENCES WHICH CONTAINED COPY OF LETTER DATED 28-07-2015 ISSUED BY MAHAPALIKA KSHETRA MADHYAMIK SHIKSHAK SAHAKARI P ATSANSTHA LIMITED WHEREBY THEY HAVE CERTIFIED THAT NEGOTIATED CHANGES WERE DULY CARRIED BY THE ITA 3181/MUM/2013 4 ASSESSEE IN THE SAID SHOP/OFFICE PREMISES AS PER RE QUIREMENTS OF THE BUYER IN THE LAYOUT, DESIGN, INTERIOR, FIXED AND OTHER FURNI TURE ETC. WHICH FORMED PART OF THE SALE CONSIDERATION. THE ASSESSEE ALSO FILED AN AFFIDAVIT DATED 31-07- 2015 AS ADDITIONAL EVIDENCE. THE ASSESSEE SUBMITTED THAT THESE ADDITIONAL EVIDENCES ARE VITAL TO THE ADJUDICATION OF THE ISSU ES INVOLVED IN THIS APPEAL AS IT GOES TO THE ROOT OF THE MATTER. IT WAS ALSO SUBM ITTED THAT SIMILAR ISSUE WAS INVOLVED WITH RESPECT TO THE ADJOINING OFFICE/SHOP WHICH WAS BOUGHT BY CLOSE RELATIVE OF THE ASSESSEE MRS. ANITA SANTKUMAR VARMA ON 20-10-2006 AND WHICH WAS ALSO SOLD VIDE AGREEMENT DATED 05-04-2007 TO MAHAPALIKA KSHETRA MADHYAMIK SHIKSHAK SAHAKARI PATSANSTHA LIMI TED BY SAID MRS. ANITA SANTKUMAR VARMA ON IDENTICAL FACTS, IN ITA NO 3182/MUM/2013 FOR ASSESSMENT YEAR 2008-09 WHICH WAS ADJUDICATED BY IT AT, A BENCH, MUMBAI VIDE ORDERS DATED 16-03-2016 WHEREBY THE TRIBUNAL H AS ADMITTED THE ADDITIONAL EVIDENCES BY WAY OF CONFIRMATION LETTER OF THE BUYER AND THE AFFIDAVIT OF THE TAX-PAYER AND SET ASIDE THE ISSUES TO THE FILE OF AO FOR DECIDING AFRESH THE ISSUE ON THE BASIS OF THE MATERIAL ON RE CORD AS WELL AS ADDITIONAL EVIDENCES FILED BY THE TAX-PAYER AND DECIDE THE ISS UE ACCORDINGLY. THUS, IT WAS SUBMITTED THAT THE ISSUES IN THIS APPEAL ARE SQUARE LY COVERED BY THE DECISION OF THE TRIBUNAL IN ITA NO. 3182/MUM/2013 VIDE ORDER S DATED 16-03-2016 IN THE CASE OF CLOSE RELATIVE OF THE ASSESSEE ON IDENT ICAL FACTS THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE LEARNE D CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT THE ONLY ISSUE IN THIS APPEAL IS REGARDING INCURRING OF COST OF IMPROVEMENT OF RS.9,29,900/- WHICH HAS BEEN CLAIMED TO BE INCURRED BY THE ASSESSEE FOR MODIFICATIONS AND ALTERATIONS TOWARDS LAYOUT, DESIGN, INTERIOR, FIXED AND OTHER FURNITURE ETC. WHICH WAS STATED TO FORM PART OF THE CONSIDERATION AND WHICH WAS AGREED BY THE ASSESSEE TO BE INCURRED FOR IMPROVEMENT OF THE SAID SHOP/OFFICE WHILE NEGOTIATI NG SALE OF THE SAID SHOP/OFFICE WITH THE BUYER OF THE SAID PROPERTY AS PER THEIR REQUIREMENTS. THIS ITA 3181/MUM/2013 5 WAS STATED TO BE INCURRED AS PER AGREED TERMS WITH THE BUYER WHICH WAS STATED TO HAVE LED TO HIGHER PRICE REALIZATION. THE ASSESSEE HAS DULY SUBMITTED THE INVOICES FOR INCURRING OF THESE EXPENSES BEFORE THE AO/CIT(A) , WHICH THE REVENUE HAS NOT AGREED TO BE FOR ALTERATIONS AND MO DIFICATION TO THE TUNE OF RS.9,29,900/- BUT INCURRED FOR FURNITURE WHICH AS P ER REVENUE IS NOT ALLOWABLE WHILE COMPUTING CAPITAL GAINS AS PER SCHE ME OF THE ACT.THE ASSESSEE DULY POINTED OUT TO CLAUSE (O) IN AGREEMEN T TO SALE DATED 05-04-2007 WHEREBY IT IS MENTIONED THAT AROUND RS.25 LACS WAS SPENT BY THE ASSESSEE WHICH THE ASSESSEE ALSO CORROBORATED BY SUBMITTING ADDITIONAL EVIDENCES VIDE CONFIRMATION FROM THE PURCHASER OF THE PROPERTY VIZ . MAHAPALIKA KSHETRA MADHYAMIK SHIKSHAK SAHAKARI PATSANSTHA LIMITED AND ALSO SUPPORTED BY AFFIDAVIT OF THE ASSESSEE DATED 31-07-2015. IN THE SIMILAR FACTS, THE TRIBUNAL IN THE ASSESSEES RELATIVE MRS. ANITA SANTKUMAR VAR MAS APPEAL IN ITA NO. 3182/MUM/2013 VIDE ORDERS DATED 16-03-2016 HAS SET ASIDE THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION OF THE IS SUE AFTER CONSIDERING THE ADDITIONAL EVIDENCES FILED BY THE TAX-PAYER IN THE SAID APPEAL. IN OUR CONSIDERED VIEW, THE INTEREST OF JUSTICE WILL BE BE ST SERVED IF THE ADDITIONAL EVIDENCES SUBMITTED IN THE INSTANT CASE ARE ALSO AD MITTED AND THE ISSUES ARE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR FR ESH ADJUDICATION AFTER CONSIDERING THE ADDITIONAL EVIDENCES ON MERITS, AS IN OUR CONSIDERED VIEW THESE ADDITIONAL EVIDENCES HAVE VITAL BEARING ON TH E ADJUDICATION OF THE MATTER ON MERITS AND THESE ADDITIONAL EVIDENCES MAY REQUIR ES EXAMINATION AND ENQUIRY BY THE REVENUE TO ADJUDICATE THESE ISSUES O N MERITS. NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED BY THE AO TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA N0. 3181/MUM/2013 FOR THE ASSESSMENT YEAR 2008-09 IS AL LOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ITA 3181/MUM/2013 6 ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH AUGUST , 2016. # $% &' 09-08-2016 ( ) SD/- SD /- (C N PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 09-08-2016 [ !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. 9 / CIT- CONCERNED, MUMBAI 5. <=( >>?@ , ?@ , $ / DR, ITAT, MUMBAI D BENCH 6. (BC D / GUARD FILE. / BY ORDER, < > //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI