BHAGYSHALI TEXTILES MILLS P.LTD, MUMBAI V. ITO WD 4(10(3), MUMBAI

ITA 3474/MUM/2012

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7409 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMATHA MULLAMUDI LD
• Assessee Lawyers: HARI S RAHEJA LD
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Fair market value; Capital Gains
• Section: 143(3); 50C

Judgement Text

1 ITA NO.3474/MUM/2012 M/S. BHAGYASHALI TEXTILES MILLS PVT. LTD. ASSESSMENT YEAR-2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.3474/MUM/2012 ( / ASSESSMENT YEAR:2007-08) M/S. BHAGYASHALI TEXTILES MILLS PVT . LTD. 134/140, GOVARDHAN NIKETAN CAVEL ST. GROUND FLOOR BEHIND SWADESHI MARKET KALBADEVI ROAD, MUMBAI-400 002. / VS. INCOME TAX OFFICER WARD NO.4(1)(3) MUMBAI. ! ./ ./PAN/GIR NO. AAACB-5864-E ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : SHRI HARI S. RAHEJA-LD. AR REVENUE BY : MS. SAMATHA MULLAMUDI-LD. DR / DATE OF HEARING : 18/10/2019 / DATE OF PRONOUNCEMENT : 24/10/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2007-08 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-8, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO.CIT(A)-8/CIR-4/204/2010-11 2 ITA NO.3474/MUM/2012 M/S. BHAGYASHALI TEXTILES MILLS PVT. LTD. ASSESSMENT YEAR-2007-08 DATED 29/02/2012ON CERTAIN GROUNDS OF APPEAL. ALTHO UGH THE ASSESSEE HAS RAISED AS MANY AS 5 GROUNDS OF APPEAL ALONG WITH FO RM NO. 36, HOWEVER, LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR], SH RI HARI. S. RAHEJA, SUBMITTED THAT ONLY GROUND NO. 2 IS BEING PRESSED I N THE APPEAL WHICH READS AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADOPTING THE FAIR MARKET VALUE A T RS.38,75,000/- ON ACCOUNT OF THE ASSIGNMENT OF LEASEHOLD RIGHT FOR THE PURPOSE OF CO MPUTING CAPITAL GAINS. AT THE SAME TIME, LD. AR PLEADED FOR ADMISSION OF A DDITIONAL GROUNDS OF APPEAL FILED ON 01/09/2017 AND 25/07/2018 WHICH ARE STATED TO BE CONNECTED WITH ABOVE GROUND OF APPEAL. THESE GROUND S BEING CONNECTED GROUNDS AND HENCE, TAKEN ON RECORD AS PER THE JUDGM ENT OF HON'BLE SUPREME COURT IN NATIONAL THERMAL POWER CO LTD. VS. CIT [229 ITR 383 ] . THESE GROUNDS ARE RE-NUMBERED AS GROUNDS NOS. 2 TO 5 WHICH READ AS UNDER: - 2. THE LD. ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPLICABLE IN RESPECT OF LEASEHOLD RIGHTS IN FORESHORE LAND 3. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT BIFURCATING TH E SALE CONSIDERATION IN THE RATIO OF 80:20 BETWEEN LAND AND BUILDING RESPECTIVELY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT GIVING ADEQUAT E DIRECTIONS WITH RESPECT TO COMPUTATION OF LONG-TERM CAPITAL GAIN ON LAND AFTER GRANTING BENEFIT OF INDEXATION AS PER 2 ND PROVISO TO SECTION 48 OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT GIVING ADEQUATE DIRECTIO NS WITH RESPECT TO COMPUTATION OF TAX ON TRANSFER OF LONG-TERM CAPITAL ASSET @ 20% THEREO F EVEN THOUGH THE GAIN/(LOSS) IS TO BE ASSESSED UNDER THE HEAD SHORT TERM CAPITAL GAINS . 3 ITA NO.3474/MUM/2012 M/S. BHAGYASHALI TEXTILES MILLS PVT. LTD. ASSESSMENT YEAR-2007-08 THE LD. DR SUBMITTED THAT ADDITIONAL GROUNDS WERE N OT RAISED BY THE ASSESSEE BEFORE LOWER AUTHORITIES AND THEREFORE, TH E SAME MAY BE REMITTED BACK TO THE FILE OF LD. AO FOR RECONSIDERATION. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ASSESSED FOR YEAR UNDER CONS IDERATION U/S. 143(3) R.W.S 147 ON 28/12/2010 WHEREIN INCOME OF THE ASSES SEE WAS DETERMINED AT RS.42.06 LACS AS AGAINST NIL RETURN FILED BY THE ASSESSEE ON 28/03/2009. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE CEASED ITS BUSINESS OPERATIONS AND SOLD-OFF THE FAC TORY PREMISES ALONG WITH PLANT & MACHINERY AND CLAIMED A LOSS OF RS.1.53 LAC S & RS.10.04 LACS RESPECTIVELY. THE SUBJECT MATTER OF PRESENT APPEAL BEFORE US IS COMPUTATION OF GAINS / LOSS ON LAND & BUILDING. 2.3 IT TRANSPIRED THAT THE SALE CONSIDERATION OF TH E PREMISES, WHICH CONSISTED OF LAND AND CONSTRUCTED SHED, WAS REFLECT ED AS RS.9.51 LACS AS AGAINST MARKET / STAMP DUTY VALUE OF RS.49.54 LACS. THE WRITTEN DOWN VALUE (WDV) OF THE PREMISES WAS RS.11.04 LACS AND A CCORDINGLY, AFTER REDUCING APPARENT SALE CONSIDERATION OF RS.9.51 LAC S, THE ASSESSEE HAD REFLECTED LOSS OF RS.1.53 LACS. THE AFORESAID FACTS LED LD. AO TO INVOKE THE PROVISIONS OF SEC.50C AGAINST THE SALE OF PREMISES. THE OPENING WDV OF THE PREMISES WAS SHOWN TO BE RS.5.77 LACS AND THE A SSESSEE CLAIMED IMPROVEMENTS THEREUPON FOR RS.4.45 LACS WHICH WAS A LSO DENIED SINCE THERE WAS NO LOGIC OF CARRYING OUT ANY IMPROVEMENT. CONSEQUENTLY, THE GAIN WAS WORKED OUT TO BE RS.43.77 LACS I.E. RS.49.54 LA CS (STAMP DUTY 4 ITA NO.3474/MUM/2012 M/S. BHAGYASHALI TEXTILES MILLS PVT. LTD. ASSESSMENT YEAR-2007-08 VALUATION) LESS RS.5.77 LACS (OPENING WDV) AND ADDED TO THE INCOME OF THE ASSESSEE. 3. BEFORE LD. FIRST APPELLATE AUTHORITY, IT WAS, INTER-ALIA, CONTENDED THAT THE PROVISIONS OF SECTION 50C WOULD NOT APPLY TO DE PRECIABLE ASSET. THE LD. FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE VA LUATION WORKED OUT BY DEPARTMENTAL VALUATION OFFICER (DVO), DIRECTED LD. AO TO ADOPT THE SALE VALUE OF RS.38.75 LACS. AGGRIEVED, THE ASSESSEE IS UNDER APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED RELE VANT MATERIAL ON RECORD. THE PRIME ARGUMENT OF LD. AR REVOLVES AROUN D THE FACT THAT THE LAND BEING LEASEHOLD ASSET, THE PROVISIONS OF SEC. 50C WOULD NOT APPLY TO THE SAME. THE LD. DR ASSERTED THAT THE PROVISIONS W OULD CERTAINLY APPLY TO THE CONSTRUCTED BUILDING. 5. UPON DUE CONSIDERATION, WE FIND THAT THE ADDITIO NAL GROUNDS HAVE BEEN RAISED BY THE ASSESSEE FOR THE FIRST TIME AND THE SAME WERE NEVER IN CONTEMPLATION OF LD. FIRST APPELLATE AUTHORITY. FUR THER, FOR PROPER ADJUDICATION OF THE MATTER, THE TRUE NATURE OF PROP ERTY BEING SOLD BY THE ASSESSEE NEED TO BE ASCERTAINED. THEREFORE, AFTER C ONSIDERATION OF FACTUAL MATRIX, THE BENCH DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF LD. CIT(A) TO RE-APPRECIATE THE FACTUAL MATRIX AND ADJU DICATE UPON ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE. THE LD. C IT(A) IS DIRECTED TO RE- ADJUDICATE THE ISSUE DE-NOVO AFTER AFFORDING REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WHO, IN TURN, IS DIRECTED TO SUBSTANTIATE HIS CLAIM, IN THIS REGARD. 5 ITA NO.3474/MUM/2012 M/S. BHAGYASHALI TEXTILES MILLS PVT. LTD. ASSESSMENT YEAR-2007-08 6. ACCORDINGLY, THE APPEAL STANDS PARTLY ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24/10/2019 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + , $ - , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.