ITO 5(2)(1), MUMBAI V. INDERLOK INFRA - AGRO P.LTD, MUMBAI

ITA 3719/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3477 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A H DALAL
• Keywords: Sale consideration of property below Jantri Value; Business income
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, M UMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND RAJENDRA (AM) . . , , ./I.T.A. NO.3719/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER 5(2)(1), ROOM NO.567, 5 TH FLOOR, AYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S INDERLOK INFRA - AGRO PVT. LTD., SOHNI MANSION, BLOCK NO.3, GROUND FLOOR, GOWALIA TANK ROAD, AUGUST KRANTI MARG, MUMBAI-400026. ./ ./PAN/GIR NO. : AAACI2899A ( ( / APPELLANT) .. ( ) ( / RESPONDENT) ( / APPELLANT BY : MS.NEERAJA PRADHAN ) ( + /RESPONDENT BY : SHRI A.H.DALAL + - / DATE OF HEARING : 19.6.2013 + - /DATE OF PRONOUNCEMENT : 19.6.2013 / O R D E R PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSME NT YEAR 2009-10 AGAINST ORDER OF LD. CIT(A)-IX, MUMBAI DATED 5.03.2012 ON THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW., THE CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO DE LETE THE ADDITION OF RS.26,18,410/- HOLDING THAT THE SALE OF THE FLATS I S TREATED AS THE BUSINESS INCOME AND NOT AS CAPITAL GAIN, HENCE THE PROVISION OF SE CTION 50C IS NOT APPLICABLE IN CONTRARY TO THE SALE AGREEMENT WHEREIN THE PROPERTY HELD BY THE ASSESSEE IS NOTHING BUT THEIR INVESTMENTS FORMING THE CAPITAL A SSETS OF THE ASSESSEE THAT ARE NOTHING TO DO WITH THE REGULAR BUSINESS OF THE ASSE SSEE 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.26,18,410/- WITHOUT APPRECIATING THAT THE AO HAS NOT APPLIED T HE PROVISIONS OF SECTION 50C OF THE IT ACT BUT ONLY UTILIZED THE SAME AS BASIS F OR SALE CONSIDERATION PRICE? I.T.A. NO.3719/MUM/2012 2 2. THE ASSESSEE-COMPANY IS CARRYING ON THE BUSINE SS OF DEVELOPMENT OF RESIDENTIAL BUILDING KNOWN AS INDER TOWER ANNEX A & B AND ALSO EARNING RENTAL INCOME FROM THE TENANTS OF ITS EXISTING OLD BUILDIN G. 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E SOLD THREE FLATS AND ONE CAR PARKING IN ITS RESIDENTIAL BUILDING KNOWN AS INDER TOWER ANNEX A AND B. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS SHOWN VALUE OF STAMP DUTY MORE THAN THE SALE VALUE. THE AO ASK ED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE VALUE OF THE STAMP DUTY SHOULD NOT BE A DOPTED INSTEAD OF SALE VALUE AS SHOWN. IN REPLY, THE ASSESSEE CONTENDED THAT SIMIL AR EXPLANATION WAS CALLED FOR BY THE AO IN THE EARLIER ASSESSMENT YEAR AND HENCE THE REP LY GIVEN TO THE SHOW CAUSE NOTICE FOR THAT ASSESSMENT YEAR MAY BE TREATED AS REPLY T O THIS ASSESSMENT YEAR ALSO. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION ON THE G ROUND THAT MATTER IS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT. THE AO WAS OF THE OPINION THAT SINCE THIS BUILDING IS SITUATED IN THE PRIME LOCATION IN MUMBAI, THE SALE PRICE CANNOT BE LESS THAN THE STAMP DUTY VALUATION. AO STATED THAT IT COULD FETCH A PRI CE MUCH HIGHER THAN THE STAMP DUTY VALUATION RATE. THEREFORE, CONSIDERING DIFFERENCE BETWEEN SALE VALUE AND VALUE AS PER STAMP DUTY OF THREE BUILDINGS AND CAR PARKING AMOUN TING TO RS.7,87,500/-, RS.6,21,634/-, RS.10,37,276/- AND RS.1,72,000/- AGG REGATING TO RS.26,18,410/-, HE TREATED IT CONCEALED INCOME ON SALE OF FLATS AND A DDED TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED, ASSESSEE FILED APPE AL BEFORE THE LD. CIT(A). 4. BEFORE THE LD. CIT(A), THE ASSESSEE STATED THAT THE AO ERRED IN APPLYING THE PROVISIONS OF 50C OF THE INCOME TAX ACT, 1961(THE A CT). THE ASSESSEE STATED THAT SECTION 50C IS APPLICABLE ONLY FOR COMPUTATION OF CAPITAL GAIN AS INDICATED BY ITS PLACEMENT IN CHAPTER IV OF THE ACT. COMPUTATION OF INCOME FROM CAPITAL GAINS AND THE SAID SECTION 50C OF THE ACT CANNOT BE INVOKED WHIL E COMPUTING BUSINESS INCOME EARNED FROM SALE OF FLATS IN THE HANDS OF THE BUILDERS DEV ELOPER. IN SUPPORT OF THIS SUBMISSION THE ASSESSEE RELIED ON THE DECISION OF THE MUMBAI B ENCH OF THE TRIBUNAL IN ITS OWN CASE IN ITA NO.6034/MUM/2009 (AY-2006-07) AND ITA NO.5428/MUM/2010 (AY-2007- 08) DATED 31.05.2010 AND 23.09.2011 RESPECTIVELY. T HE ASSESSEE ALSO RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CAS E OF CIT V/S THIRUVENAGADM INVESTMENT PRIVATE LIMITED REPORTED IN 320 ITR 345 (MAD). IT WAS CONTENDED THAT NO ADDITION COULD BE SUSTAINED AS NEITHER THERE WAS ANY INVESTIGATION WHATSOEVER MADE BY THE AO NOR WAS ANY EVIDENCE GATHERED BY HIM. THE A O NEITHER FOUND ANY DEFECTS IN THE BOOKS OF ACCOUNTS NOR HAS REJECTED THE SAME. THE AS SESSEE STATED THAT THE CASE OF THE I.T.A. NO.3719/MUM/2012 3 ASSESSEE STANDS COVERED BY THE DECISION OF THE MUMB AI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA). 5. LD.CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO. LD.CIT(A) AFTER CONSIDERING THE FACT OF THE CASE, REMAND REPORT OF THE AO AN D DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR THE ASSES SMENT YEARS 2006-07 AND 2007- 08(SUPRA) VIDE PARAGRAPHS 5.2 AND 5.3 ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PARAGRAPHS 5.2 AND 5.3 OF THE ORDER OF LD . CIT(A) ARE AS UNDER : 5.2 THE LAR HAS ARGUED THAT THIS MATTER IS A COVER ED MATTER IN FAVOUR OF THE APPELLANT BY THE HONBLE ITAT I BENCH, MUMBAIS D ECISIONS IN THE APPELLANTS OWN CASE FOR THE AY 2006-07 (ITA NO.6034/M/2009) A ND FOR AY 2007-08 (ITA NO.5428/MUM/2011) DATED 31.5.2010 AND 23.09.2011 RE SPECTIVELY. 5.3 THE OPERATIVE PARA NO.5 FROM THE HONBLE ITAT, I BENCHS DECISION IN ITA NO.5428/M/2009 FOR THE AY 2007-08 MAY BE REPRO DUCED AS UNDER: IN OUR CONSIDERED THE OPINION, NO ADDITIO N CAN BE SUSTAINED IN THIS CASE, AS NEITHER THERE IS ANY INVESTIGATION WHATSOE VER MADE BY THE ASSESSING OFFICER NOR WAS ANY EVIDENCE GATHERED BY HIM. MERELY BECAUSE THE MARKET VALUE AS PER THE STAMP VALUATION AUTHORI TIES AND THE SAID PRICE ARE AT VARIANCE, NO ADDITION CAN BE MADE TO THE BUS INESS INCOME. THE AO OUGHT TO HAVE ADDUCED EVIDENCE TO PROVE THAT THE SA LE CONSIDERATION WAS, IN FACT, GREATER THAN THAT WHICH WAS MENTIONED IN T HE REGISTERED DOCUMENTS. THE AO NEITHER FOUND ANY DEFECTS IN THE BOOKS OF ACCOUNT NOR HAS REJECTED THE SAME. AS ALREADY HELD, PROVISI ONS OF SECTION 50C ARE NOT APPLICABLE TO CASES WHERE INCOME IS COMPUTED UN DER THE HEADS PROFITS AND GAINS UNDER BUSINESS OR PROFESSION. I N VIEW OF THESE DISCUSSIONS, WE ALLOW THE GROUNDS RAISED BY THE ASS ESSEE.. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. HENCE, THIS APPEAL BY THE DEPARTMENT. 6. AT THE TIME OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO. 7. HOWEVER, LD. AR REITERATED HIS SUBMISSIONS AS M ADE BEFORE THE LD. CIT(A) AND RELIED ON THE ORDER OF LD.CIT(A) AS WELL AS THE DE CISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 (SUPRA). HE SUBMITTED THAT THE ORDER OF THE LD.CIT(A) BE CO NFIRMED. 8. WE HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSI ONS OF THE LD. REPRESENTATIVES OF THE PARTIES. WE HAVE ALSO CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND THE EARLIER ORDERS OF THE TRIBUNAL DATED 31.05.2010 AN D 23.9.2011 (SUPRA) PASSED IN ASSESEES OWN CASE. WE FIND THAT THE FACTS OF THE PRESENT CASE AND DECISION OF THE TRIBUNAL RELIED ON BY THE LD.AR ARE IDENTICAL. WE F IND THAT THE ISSUE RAISED IN THIS APPEAL I.T.A. NO.3719/MUM/2012 4 STANDS COVERED BY THE ABOVE ORDER OF THE TRIBUNAL ( SUPRA). IN VIEW OF ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT( A). ACCORDINGLY, WE CONFIRM THE SAME AND DISMISS THE GROUND TAKEN BY THE DEPARTMENT. 9. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED AFTER HEARING LD. REPRESENTATIVE OF THE PARTIES IN THE OPEN COURT ON 19 TH JUNE, 2013 + 1 2 19TH JUNE, 2013 + SD/- SD/- ( /RAJENDRA ) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 2 DATED 19/ 06/2013 . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. ( / THE APPELLANT 2. ) ( / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 8 ): , - : , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, $ //TRUE COPY// (ASSTT. REGISTRAR) - : , /ITAT, MUMBAI