ASGARD PROPERTIES P. LTD, MUMBAI V. ITO 10(1)(2), MUMBAI

ITA 3493/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9334 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 02-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOPAK KUMAR
• Assessee Lawyers: ARTI VISSANJI
• Keywords: Cost of acquisition; Fair market value

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI . . , BEFORE SHRI R. K. GUPTA, JM ./ ITA NO.3493/MUM/2011 ( ! ! ! ! / ASSESSMENT YEAR :2005-2006) M/S ASGARD PROPERTIES PVT. LTD., UNIT NO.25, NIRAJ INDL. PREMISES, CO-OP, SOCIETY LTD., PLOT NO.16-B, MAHAL INDL. ESTATE OFF MAHAKALI ROAD, ANDHERI ( EAST ), MUMBAI-400 093 VS. ITO 9(1)(1), MUMBAI ' # ./ $% ./ PAN/GIR NO. : AAACA 6740 J ( '& / APPELLANT ) .. ( '('& / RESPONDENT ) )* + , /ASSESSEE BY : SMT. ARTI VISSANJI $ + , /REVENUE BY : MR. ROOPAK KUMAR + *-# / DATE OF HEARING : 20 TH NOV., 2012 ./! + *-# / DATE OF PRONOUNCEMENT : 23 RD NOV.,2012 0 / O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 1-2-2011 OF LEANED CIT(A)-19, MUMBAI RELATING TO TH E ASSESSMENT YEAR 2005-06. 2. THE FIRST ISSUE RELATES TO ALLOWING THE INDEXATION FROM 24-02-1994 OR FROM 14-02-1999. 3. BRIEF FACTS IN THIS REGARD ARE THAT THE ASSESSEE RE QUESTED THE BUILDER M/S THE GREAT EASTERN SHIPPING COMPANY LIMI TED FOR ALLOTMENT OF FLAT AT FOURTH FLOOR BEARING FLAT NO.401. THE BU ILDER M/S GREAT EASTERN 2 ITA NO.3493/2011 SHIPPING COMPANY ISSUED A LETTER DATED 24-2-1994, B Y WHICH IT WAS AGREED TO ALLOT FLAT NO.401 ON THE FOURTH FLOOR OF THE PROPOSED RESIDENTIAL BUILDING NAMED, THE GREAT EASTERN SHOR ES, AT SHANTI PATH, OFF. GANDHI GRAM ROAD, JUHU, BOMBAY. THEY HAVE GIVE N A SCHEDULE OF PAYMENT ALSO (COPIES OF LETTER DATED 24-2-1994 A ND SCHEDULE OF PAYMENT HAVE BEEN PLACED IN THE PAPER BOOK AT PAGES 9 TO 12). THEREAFTER THE ASSESSEE MADE PAYMENT TO THE BUILDER IN INSTALLMENTS (COPY OF PAYMENT THROUGH INSTALLMENTS HAS BEEN PLAC ED IN PAPER BOOK AT PAGE 8). AS PER THE DETAIL OF INVESTMENTS, THE M AJOR PAYMENTS HAVE BEEN MADE IN THE YEAR 1993 TO 1995. INTEREST OF RS. 2,04,000/- HAS ALSO BEEN PAID IN THE YEAR 1996. THE TOTAL AGGREGATING V ALUE OF THE FLAT, WHICH WAS AGREED AT RS.94,40,000/- WAS PAID IN INST ALLMENTS IN THE YEAR BETWEEN 1993 TO 1995 AND LAST INSTALLMENT OF R S.9,44,000/- WAS PAID ON 9-12-1996. IN THIS WAY, TOTAL PAYMENTS OF R S.94,40,000/- WAS PAID. BESIDES THESE PAYMENTS, THE ASSESSEE HAS ALSO PAID BROKERAGE OF RS.94,400/- ON 2-9-1994 AND STAMP DUTY AS WELL A S REGISTRATION FEES OF RS.7,14,000/- AND 20,130/- RESPECTIVELY AT THE TIME OF EXECUTION OF FINAL AGREEMENT, WHICH WAS REGISTERED ON 19-3-1999. THE PHYSICAL POSSESSION OF THE FLAT WAS GIVEN ON 14-2-1 999. 4 . THE ASSESSEE SOLD THIS FLAT ON 28-3-2005 FOR A CO NSIDERATION OF RS.91,00,000/- AND CLAIMED LONG TERM CAPITAL LOSS O F RS.1,16,03,050/-. THE LOSS WAS WORKED OUT BY CLAIMING INDEXATION FROM 1994 AND EXPENDITURE ON ACCOUNT OF INTEREST ON DELAYED PAYME NT OF INSTALLMENT, BROKERAGE, STAMP DUTY AND REGISTRATION CHARGES AND SOCIETY DEPOSIT. 3 ITA NO.3493/2011 AS AGAINST LONG TERM LOSS OF RS.97,03,641/- CLAIMED BY THE ASSESSEE, THE ASSESSING OFFICER COMPUTED LOSS AT RS.37,21,902 /- BY RESTRICTING INDEXATION FROM 1999 I.E. THE DATE OF POSSESSION 14 -2-1999. THE ASSESSING OFFICER DISALLOWED ALL OTHER EXPENSES ALS O. 5. THE CIT(A) CONFIRMED THE ACTION OF THE ACTION OF T HE ASSESSING OFFICER BY GIVING HIS FINDING IN PARA 5.1 OF THE AP PELLATE ORDER. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6 . THE CONTENTION RAISED BEFORE THE LOWER AUTHORITIE S WAS REITERATED HERE BEFORE THE TRIBUNAL. RELIANCE WAS PLACED ON VA RIOUS CASE LAWS. A BRIEF WRITTEN NOTE WAS ALSO FILED, WHICH IS PLACED ON RECORD. 7 . ON THE OTHER HAND, LEARNED DR STRONGLY PLACED REL IANCE ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE ORDER OF THE CIT(A). 8 . AFTER CONSIDERING THE SUBMISSIONS AND PERUSING TH E MATERIAL ON RECORD, I FOUND THAT THE ASSESSEE DESERVES TO SUCCE ED ON THIS ISSUE. I NOTED THAT EVEN THE CIT(A) HAS ACCEPTED THIS CONTEN TION THAT THE ALLOTMENT OF THE FLAT WAS GIVEN ON 24-2-1994, HOWEV ER, THE AGREEMENT WAS ENTERED INTO ON 14-2-1999. THERE IS NO DISPUTE THAT THE REQUEST OF THE ASSESSEE FOR ALLOTTING THE FLAT NO.401 AT FOURT H FLOOR IN PROPOSED RESIDENTIAL COMPLEX, WAS ACCEPTED BY THE BUILDER AN D A CONSENT LETTER WAS GIVEN, SUBJECT TO MAKING THE PAYMENTS IN INSTAL LMENTS. THE ASSESSEE HAD PAID FULL AMOUNT OF CONSIDERATION IN T HE YEAR OF 1994, 1995 AND 1996. THE MAJOR PAYMENTS HAVE BEEN MADE UP TO THE FINANCIAL YEAR 1995. ONLY A PAYMENT OF RS.9,44,000/ - WAS MADE IN THE 4 ITA NO.3493/2011 YEAR 1996. VARIOUS BENCHES OF THE TRIBUNAL HAVE HEL D THAT IF ALLOTMENT HAS BEEN DONE, THEN THE RIGHT OF THE PERSON IN THE ALLOTTED FLAT IS ACCRUED. IN THIS CASE, THERE IS NO DISPUTE THAT BUI LDER CONSENTED TO ALLOT THE FLAT AS PER THE REQUEST OF THE ASSESSEE, HOWEVE R, WHEN THE FLAT WAS CONSTRUCTED THEN THE AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN TO THE ASSESSEE. THERE IS NO DISPUTE IN THESE FACTS. IN THE CASE OF PRAVEEN GUPTA VS. ACIT, [(2011) 137 TTJ 307 (DEL)], THE DELHI BENCH OF THE TRIBUNAL HAS HELD THAT AN ASSESSEE CAN BE SA ID TO HAVE HELD THE FLAT WHEN HE MADE THE PAYMENT TO THE BUILDER AND RE CEIVED THE ALLOTMENT LETTER AND, THEREFORE, THE BENEFIT OF IND EXATION OF COST OF ACQUISITION OF THE FLAT HAS TO BE GRANTED FROM THE DATE OF PAYMENTS WHEN HE STARTED MAKING PAYMENTS TO THE BUILDER AND NOT FROM THE DATE OF EXECUTION OF CONVEYANCE DEED. WHILE HOLDING SO, THE TRIBUNAL HAS TAKEN INTO CONSIDERATION VARIOUS CASE LAWS REPORTED IN 119 ITR 372(AP); IN CASE OF CREDIT RATING INFORMATION SERVICES OF INDIA LIMITED, DECIDED IN ITA NO.9396/M/2004 , DATED 30 TH APRIL, 2008 AND IN THE CASE OF CIT VS. ANILABEN UPENDRA SHAH [(2003) 262 ITR 657 AND MANY OTHER MENTIONED IN THE ORDER. THE RATIO OF THE DECISION IS CLEARLY APPLICABLE ON THE FACTS OF THE PRESENT CASE FOR THE SIMPLE REASON THAT THE ASSESSEE REQUESTED TO ALLOT THE FLAT AND T HE BUILDER CONSENTED TO ALLOT THE SAME VIDE LETTER DATED 24-2-1994, COPY OF WHICH HAS BEEN PLACED AT PAGE 9 OF THE PAPER BOOK. THE PAYMENTS HA VE BEEN MADE BY THE ASSESSEE REGULARLY FROM 1993 TO 1996. THEREFORE , IN MY CONSIDERED VIEW, THE ASSESSEE DESERVES TO SUCCEED ON THIS ISSU E AND ELIGIBLE FOR 5 ITA NO.3493/2011 INDEXATION FROM THE RESPECTIVE DATES OF PAYMENTS MA DE AGAINST THE PURCHASE OF FLAT AS THE ASSESSEE GOT RIGHTS IN THE FLAT FROM THE FIRST DATE OF PAYMENT MADE AS PER THE SCHEDULE GIVEN BY THE BU ILDER. I FURTHER CLARIFY THAT THE ASSESSEE IS ENTITLED FOR INDEXATIO N OF THE PAYMENTS MADE ON RESPECTIVE DATES. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO ALLOW INDEXATION TO THE ASSESSEE OF RESPECTIVE AMOU NTS FROM THE DATE OF WHICH THEY HAVE BEEN PAID. THIS ISSUE IS DECIDED ACCORDINGLY . 9 . SECOND ISSUE RELATES TO NOT ALLOWING THE COST BEN EFIT ON ACCOUNT OF STAMP DUTY, REGISTRATION CHARGES, BROKERAGE PAID AND INTEREST ON DELAYED PAYMENTS. 10 . THE ASSESSING OFFICER DISALLOWED THE AFORESAID CL AIM BY OBSERVING THAT THESE ARE NOT PART OF THE COST OF AC QUISITION OF THE SAID FLAT. 11 . THE CIT(A) ALLOWED ONE OF THE EXPENSES AS COST OF FLAT I.E. SOCIETY DEPOSITS OF RS.96,000/- AND OTHER EXPENSES I.E. ON ACCOUNT OF BROKERAGE, STAMP DUTY, REGISTRATION FEES AND INTERE ST ON DELAYED PAYMENTS WERE NOT ALLOWED. THESE EXPENSES WERE NOT ALLOWED BY THE CIT(A) BY OBSERVING THAT THE COST OF ACQUISITION OF RS.94,44,000/- IS MENTIONED IN THE AGREEMENT AND, THEREFORE, NO OTHER AMOUNT CAN BE ALLOWED IN VIEW OF THE JUDGMENT OF THE HONBLE BOMB AY HIGH COURT IN THE CASE OF CIT VS. R.R.SOOD (1986) 161 ITR 92 (BOM) . 12 . LEARNED COUNSEL REITERATED THE CONTENTION RAISED BEFORE THE AUTHORITIES BELOW. FURTHER, IT WAS STATED THAT THE DECISION OF THE HONBLE 6 ITA NO.3493/2011 BOMBAY HIGH COURT IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE AT ALL, BECAUSE IN THAT CASE, THE HONBLE HIGH COURT H ELD THAT THE FAIR MARKET VALUE OF THE LAND ON THE DATE OF CONVEYANCE SHOULD BE ADOPTED AS THE COST FOR THE PURPOSE OF DETERMINING THE CAPI TAL GAIN. IT WAS FURTHER SUBMITTED THAT THE HONBLE HIGH COURT WAS C ONCERNED WITH THE QUESTION WHETHER THE FAIR MARKET VALUE OF THE LAND AS ON THE DATE OF CONVEYANCE OR THE PRICE MENTIONED IN THE DEED OF CO NVEYANCE WAS TO BE ADOPTED. THE HONBLE HIGH COURT WAS NOT CONCERNE D WITH THE QUESTION ARISING IN THE PRESENT CASE THAT WHETHER O THER EXPENSES INCURRED IN ADDITION TO THE PRICE OF THE PREMISES S HOULD BE INCLUDED IN THE COST. ACCORDINGLY, IT WAS SUBMITTED THAT THE DE CISION OF THE HONBLE HIGH COURT IS NOT APPLICABLE ON THE FACTS OF THE PR ESENT CASE. IT WAS SUBMITTED THAT THE COST OF ACQUISITION OF FLAT IS N OT CONFINED TO THE PURCHASE PRICE ONLY AS ANY OTHER EXPENDITURE INCURR ED SUBSEQUENTLY TOWARDS FLAT MUST ALSO BE INCLUDED I.E. INTEREST PA ID SUBSEQUENTLY ON DELAYED PAYMENT AS HELD ALLOWABLE IN THE CASE OF CIT VS. MITHILESH KUMAR, REPORTED IN 92 ITR 9 . SIMILARLY, THE OTHER EXPENSES ON ACCOUNT OF BROKERAGE, STAMP DUTY ALSO HAVE TO BE CONSIDERED AS PART OF COST. 13 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 14 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THE ASSESSEE DESERVES TO SUCCE ED ON THIS ISSUE ALSO. WHATEVER THE EXPENDITURE HAS BEEN INCURRED ON ACCOUNT OF 7 ITA NO.3493/2011 PURCHASE OF FLAT THAT HAS TO BE TREATED AS COST OF FLAT. THERE IS NO DISPUTE THAT INTEREST, STAMP DUTY, REGISTRATION FEE S AND OTHER EXPENSES INCLUDING BROKERAGE, HAVE BEEN INCURRED ON ACCOUNT OF PURCHASE OF THIS FLAT. THEREFORE, THESE EXPENSES CANNOT BE SEGREGATE D FROM THE COST OF FLAT. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER T O TREAT ALL THESE EXPENSES AS COST OF FLAT THEN CALCULATE THE GAIN OR LOSS ON ACCOUNT OF SALE OF FLAT. I ORDER ACCORDINGLY. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D . ) *1 )* + 2* + $* 34 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF NOV.2012. 0 + ./! # 5 61 23 RD NOV., 2012 / + SD/- ( . . ) (R.K.GUPTA) / JUDICIAL MEMBER MUMBAI ; 6 DATED : 23 RD NOV./ 2012 . ' . . /PKM , . / PS 0 0 0 0 + ++ + '*7 '*7 '*7 '*7 87!* 87!* 87!* 87!* / COPY OF THE ORDER FORWARDED TO : 1. '& / THE APPELLANT 2. '('& / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)-X, MUMBAI. 4. 9 / CIT 5. 7 : '* , , / DR, ITAT, MUMBAI 6. ; < / GUARD FILE. (7* '* //TRUE COPY// 0 0 0 0 / BY ORDER, = == = / 3 3 3 3 $ $ $ $ ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI