DCIT 12(2), MUMBAI V. RAJESH GUPTA, MUMBAI

ITA 350/MUM/2011

• Counselvise Citation: 35019914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARIGOVIND SINGH
• Assessee Lawyers: HARDIK T MISTRY
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation
• Section: 6; 50C

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. . .. . , !' !' !' !' # # # # $%&' $%&' $%&' $%&' , % () % () % () % () BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT & RAJENDR A,ACCOUNTANT MEMBER ./ ././ ./ ITA NO.350/MUM/2011 , + + + +/ // / ASSESSMENT YEAR-2006-07 DCIT 12(2), R.NO. 114, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS. RAJESH GUPTA 404, JOLLY BHAVAN, NO. 2, 7 NEW MARINE LINES MUMBAI- 400020 PAN: AACPK5613K ( ,- / // / APPELLANT ) ( ./,- / RESPONDENT ) ,- ,- ,- ,- 0 0 0 0 % %% % / APPELLANT BY : SHRI HARIGOVIND SINGH ./,- 1 0 % / RESPONDENT BY : SHRI HARDIK T. MISTRY 1 11 1 2 2 2 2 / DATE OF HEARING : 03/09/2013 3+ 1 2 / DATE OF PRONOUNCEMENT : 06/09/2013 , 1961 1 11 1 254(1) % %% % &242 &242 &242 &242 (%5 (%5 (%5 (%5 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M: CHALLENGING THE ORDER DT.18-10-2010 OF THE CIT(A)-2 3,MUMBAI ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING EXEMPTION U/S. 54EC ON ACCOUNT OF INVESTMENT IN ELI GIBLE BONDS OUT OF THE SALE PROCEEDS OF THE TRANSFE R OF CAPITAL ASSET WITHOUT CONSIDERING THE FACT THAT THE ASSET SOLD IS DEPRECIABLE ASSET AND AS PER SECTION 50 THE CAPITAL GAIN IS SHORT TERM CAPITAL GAIN AND THE EXE MPTION U/S. 54EC IS AVAILABLE ONLY ON LONG TERM CAPITAL GAIN. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF TH E ASSESSING OFFICER BE RESTORED. 3.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE,AN INDIVIDUAL,FILED HIS RETURN OF INCOME O N 31.10.2006 DECLARING TOTAL INCOME AT RS. 24. 68 LACS.ASSESSMENT WAS FINALISED BY THE AO U/S. 143 (3) OF THE ACT ON 26.11.2008 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 45.34 LACS. 2. ONLY EFFECTIVE GROUND OF APPEAL IS ABOUT ALLOWING E XEMPTION U/S.54EC ON ACCOUNT OF INVEST - MENT MADE BY THE ASSESSEE.DURING THE ASSESSMENT PRO CEEDINGS,AO FOUND THAT ASSESSEE, VIDE AGREEMENT FOR SALE DATED 25.01.2006,SOLD FLAT NO. 6 OF THE 1 ST FLOOR IN THE BUILDING KNOWN AS MOUNT UNIQUE ALONG WITH A CAR PARKING SPACE,THAT THE FLAT WAS OWNED BY THE ASSESSEE AND WAS USED FOR BUSINESS OF HIS PROPRIETARY CONCERN,THAT T HE FLAT HAD BEEN APPEARING IN THE BALANCE-SHEET OF THE SAID CONCERN, THAT THE ASSESSEE HAD BEEN CLA IMING DEPRECIATION ON IT, THAT THE SALE PRICE OF THE FLAT WAS 1.26 CRORES, THAT ASSESSEE HAD REDUCE D WDV OF RS. 92.50 LACS, THAT HE HAD CLAIMED A TRANSFER FEES OF RS. 1.74 LACS, THAT THE BALANCE AMOUNT WAS RS. 32.01 LACS, THAT THE ASSESSEE HAD 2 ITA NO. 350/MUM/2011 AY- 2006-07 RAJESH GUPTA BEEN CLAIMING DEPRECIATION ON THE ASSETS SOLD SO TH E PROFIT HAD TO BE TAKEN AS SHORT TERM CAPITAL GAIN (STCG).INVOKING THE PROVISIONS OF SECTION50C O F THE ACT,HE HELD THAT VALUE OF THE PROPERTY HAD TO BE ADOPTED AS PER THE STAMP DUTY VALUATION A T RS. 1.73 CRORES. HE CALCULATED STCG AT RS. 19,63,892/- AND HELD THAT THE ASSESSEE HAD NOT OFFE RED THE SAID STCG FROM THE SALE OF FLAT TO TAX. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA) AND SUBMITTED THAT HE HAD INVESTED A SUM OF RS. 33 LACS IN THE BONDS O F NATIONAL HIGHWAY AUTHORITIES THAT HE WAS ENTITLED TO CLAIM EXEMPTION U/S.54EC OF THE ACT, TH AT PROFIT HAD ARISEN ON ACCOUNT OF SALE OF A LONG TERM ASSET,THAT PROVISIONS OF SECTION 50C COUL D NOT BE EXTENDED TO SECTION 54EC OF THE ACT, THAT THE FLAT WAS PURCHASED IN DECEMBER, 2002 AND W AS SOLD IN JANUARY,2006, THAT THE FLAT WAS HELD FOR MORE THAN 36 MONTHS AND WAS A LONG TERM CA PITAL ASSET.AFTER CONSIDERING THE SUBMISSION -NS OF THE ASSESSEE AND THE ASSESSMENT ORDER, FAA H ELD THAT ASSESSEE HAD CLAIMED DEPRECIATION ON THE SAID PREMISES,THAT THE PROVISIONS OF SECTION 50 WERE APPLICABLE, THAT THE FLAT WAS TRANSFERRED AFTER A PERIOD OF 36 MONTHS, THAT THE ASSESSEE HAD INVESTED A SUM OF RS. 33 LACS IN SPECIFIED ASSETS WITHIN THE STIPULATED TIME. FAA RELIED UPON THE ORD ER OF ITAT, MUMBAI DELIVERED IN THE CASE OF DR.(MRS.) SUDHA S.TRIVEDI (31 SOT 38) AND DIRECTED THE AO TO ALLOW EXEMPTION U/S. 54EC ON ACCOUNT OF INVESTMENT MADE IN ELIGIBLE BONDS OUT OF THE SALE PROCEEDS FROM THE LONG TERM CAPITAL ASSET,AFTER VERIFICATION. 2.2 .BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTE D THAT THE SALE WAS DEPRECIABLE ASSET, THAT EXEMPTION U/S. 54EC WAS AVAILABLE ONLY ON LTCG AND NOT ON STCG.AUTHORISED REPRESEN - TATIVE(AR)SUBMITTED THAT SECTION 50C AND 54ECOPERAT ED IN SEPARATE FIELDS,THAT PROVISIONS OF SECTION 50C COULD NOT BE APPLIED WHILE DECIDING THE ISSUE OF EXEMPTION ALLOWABLE U/S.54 EC. 2.3 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE CASE OF DR.(MRS.)SUDHA S. TRIVEDI (SUPRA) ISSUE WAS DECIDED AS UNDER: SECTION 54EC IS AN INDEPENDENT PROVISION NOT CONTR OLLED BY SECTION 50.IF THE CAPITAL ASSET IS HELD FOR MORE THAN 36 MONTHS THE BENEFIT OF SECTION 54EC CANNOT BE SNATCHED AWAY BECAUSE SECTION 50 IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CA PITAL GAIN CONTAINED IN SECTION 48 AND 49 AND THIS FICTION CANNOT BE EXTENDED BEYOND THAT FOR DEN YING THE BENEFIT OTHERWISE AVAILABLE TO THE ASSESSEE U/S/.54EC OF THE ACT, IF THE OTHER REQUISI TE CONDITIONS OF THE SECTION ARE SATISFIED. OUR VIEW IS ALSO FORTIFIED BY CIT V/S ASSAM PETROLEUM I NDUSTRIES(P) LTD. (2003) 262 ITR 587 (GAU).WE, THEREFORE, OVERTURN THE IMPUGNED ORDER AN D DIRECT THAT THE EXEMPTION UNDER THIS SECTION BE ALLOWED TO THE ASSESSEE BECAUSE OF HER H AVING MADE INVESTMENT IN ELIGIBLE BONDS OUT OF THE SALE PROCEEDS FROM THE TRANSFER OF LONG TERM CA PITAL ASSET. SECTION 54EC WAS INTRODUCED WITH A SPECIFIC PURPOSE IN THE ACT.AS PER THE PROVISIONS OF SAID SECTION IF ANY ASSESSEE MAKES INVESTMENT IN SPECIFI ED ASSETS WITHIN A FIXED TIME FRAME ON SALE OF LONG TERM ASSETS, EXEMPTION HAS TO BE ALLOWED. WE F IND THAT FAA HAS GIVEN A DIRECTION TO THE AO TO VERIFY THE CLAIM MADE BY THE ASSESSEE OF MAKING INVESTMENT IN THE SPECIFIED ASSETS WITHIN THE STIPULATED TIME. IN OUR OPINION A DIRECTION OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. WE FIND THAT ASSET-IN-QUESTION,SOLD BY THE ASSESSEE ,WAS HELD BY HIM FOR MORE THAN A PERIOD OF 36 MONTHS AND AS SUCH HAD TO BE TREATED AS LONG TERM C APITAL ASSET FOR THE PURPOSE OF SECTION 54EC OF THE ACT.THEREFORE, UPHOLDING THE ORDER OF THE FA A AND FOLLOWING THE ORDER OF DR.(MRS.)SUDHA S.TRIVEDI (SUPRA),WE DECIDE THE EFFECTIVE GROUNDS O F APPEAL AGAINST THE AO. 3 ITA NO. 350/MUM/2011 AY- 2006-07 RAJESH GUPTA AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . 6 )7 62 8 ( 9 6$ 1 $ 2 :. ORDER PRONOUNCED IN THE O PEN COURT ON 06 TH SEPTEMBER, 2013 (%5 1 3+ % & ; <( 6, 2 2013 1 4 = SD/- SD/- ( . / D. MANMOHAN ) ( $%&' $%&' $%&' $%&' / RAJENDRA) !' !' !' !' / VICE-PRESIDENT % % % % () () () () /ACCOUNTANT MEMBER / MUMBAI, <( /DATE: 06.09 . 2013 SK (%5 (%5 (%5 (%5 1 11 1 .2> .2> .2> .2> ?%>+2 ?%>+2 ?%>+2 ?%>+2 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / ,- 2. RESPONDENT / ./,- 3. THE CONCERNED CIT(A)/ @ A , 4. THE CONCERNED CIT / @ A 5. DR D BENCH, ITAT, MUMBAI / >B 4 .2 . , . . & . 6. GUARD FILE/ 4 C / >2 .2 //TRUE COPY// (%5 / BY ORDER, / $ DY./ASST. REGISTRAR , /ITAT, MUMBAI