Smt. Asha H. Gundesha, Pune V. Deputy Commissioner of Income-tax, Circle - 7, Pune

ITA 380/PUN/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9557 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 22-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V L JAIN
• Keywords: Sale consideration of property below Jantri Value; Business income; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.380/PUN/2018 / ASSESSMENT YEAR : 2013-14 SMT. ASHA H. GUNDESHA, 803/804,, KUMAR PLATINUM, SYNAGOUGE STREET, NR. GEETA SOC., CAMP, PUNE-411 001. PAN : ADMPG8051G .... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, PUNE. / RESPONDENT ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 20.12.2018 / DATE OF PRONOUNCEMENT : 20.12.2018 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF CIT(APPEALS), PUNE-5, PUNE DATED 20.11.2017 FOR THE ASSESSM ENT YEAR 2013- 14 AS PER FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF REFUNDABLE ADVANCES OF RS.50,00,000/- A S BUSINESS INCOME. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL OR ADD TO THE SAME, IF DEEMED NECESSARY. 2 ITA NO.380 /PUN/2018 A.Y.2013-14 2. THE FACTS OF THIS CASE APPEARS IN THE ORDER OF CIT(APP EALS) WHICH ARE AS FOLLOWS: 5. GROUND NO.2, THE APPELLANT AGITATES THE ACTION O F THE AO IN TREATING THE ADVANCES OF RS. 50,00,000/- AS BUSINESS INCOME. 5.1 THE ISSUE FINDS MENTION AT PARA 4 OF THE ASSESSMENT ORDER.' THE AO OBSERVED THAT, THE ASSESSEE HAD PURCHASED A PLOT OF LAND AT WAGHOLI ON 27.12.1997 WITH TWO OTHERS VIZ., SHRI. BHARAT CHAND ANMAL KOTHARI AND SHRI. SURENDRA SOHANRAJ OSWAL FOR RS.26,74,500/- WH EREIN THE ASSESSEE HAD 1/3 RD SHARE IN LAND AND THEREFORE, HER SHARE OF COST WAS RS.8,91,500/-. THE ASSESSEE ALONG WITH THE OTHER CO -OWNERS ENTERED INTO A JOINT VENTURE AGREEMENT WITH M/S. SUYOG DEVELOPME NT CORPORATION LTD ON 16.12.2009. THE AO STATES THAT THE STAMP DU TY VALUATION OF THE ENTIRE PROPERTY ON 16.12.2009 WAS RS.2,02,21,110/- WHEREAS, THE ASSESSEE'S SHARE IN THE STAMP DUTY VALUATION WAS RS .67,40,670/-. THE ASSESSEE RECEIVED A CONSIDERATION OF RS.4,58,68,673 /- FROM HER JV PARTNER TILL 31.03.2013. THE ASSESSING OFFICER GIVE S THE DETAILS OF THIS CONSIDERATION RECEIVED BY THE ASSESSEE AS UNDER: SR. NO. A.Y. CONSIDERATION RECEIVED 1 2010-11 47,00,000/- 2 2011-12 3,00,000/- 3 2012-13 50,71,403/- 4 2013-14 3,57,97,270/- 5.2 THE ASSESSING OFFICER ALSO OBSERVED/HAT THE ASS ESSEE HAD ALSO OFFERED A RECEIPTS OF ONLY RS.4,08,68,673/- TO TAX, WHEREAS, RS. 50,00,000/- RECEIVED BY THE ASSESSEE DURING A.V .2010-11 AND 2011- 12 HAD NOT BEEN OFFERED TO TAX ON THE PL EA THAT RS.20,00,000/ - WAS AN INT E REST FREE DEPOS I T AS PER THE JV AGREEMENT WI T H M/S.SUYOG DEVELOPMENT CORPORATION AND RS.30 , 00,000/- WAS AN ADDITIONAL INTEREST FREE ADVANCE G I VEN BY THE JV PARTNER . THE ASSESSING OFF I CER STATES THAT BOTH THESE AMOUNTS HAVE B EE N TAKEN TO THE BALANCE SHEET WITHOUT OFFERI N G THE SAME TO TAX . 5.3 THE APPELLANT HAS COMPUTED THE CAPITAL GAINS FO R A.Y. 2010-11 ON ACCOUNT OF THE JV AGREEMENT AFTER CLAIMING INDEX COS T OF ACQUISITION OF RS.17,02,199/- AS A DEDUCTION AGAINST COST OF ACQUISITION OF RS.8,91,500/-. THE ASSESSEE CLAIMED A CAPITAL GAIN OF RS.50,38,171/- FOR A.Y.2010-11 FOR WHICH SHE HAS ALSO CLAIMED A DE DUCTION OF RS.21,93,054/- U/S.54F OF THE I.T. ACT AND ACCORDIN GLY, NET CAPITAL GAIN OF RS. 28,45,117/- WAS OFFERED TO TAX BY HER DURING A.Y.20 10-11. THE ASSESSING OFFICER OPINED THAT, AS PER THE PROVISION S OF SEC. 51 OF THE I. T. ACT, THE ASSESSEE SHOULD HAVE OFFERED TO TAX AN AMO UNT OF RS.3,91,28,303/- FOR A.Y.2013-14 AS AGAINST RS.3,41 ,28,303/- OFFERED TO TAX BY HER. ON BEING QUERIED THE AR OF THE ASSESSEE STATED THAT, RS.50,00,000/- WAS AN ADVANCE/ADDITIONAL ADVANCE RE CEIVED BY THE ASSESSEE FROM THE JV PARTNER AND THEREFORE, NOT TAX ABLE. THE ASSESSING OFFICER STATES THAT AS PER THE JV AGREEMENT, THE RE CEIPTS RECEIVABLE BY THE ASSESSEE TILL 31.03.2013 WERE MORE THAN THE ACTUAL RECEIPT OF RS.4,58,68,673/- WORKED OUT BY THE ASSESSEE. THE AS SESSING OFFICER HAS 3 ITA NO.380 /PUN/2018 A.Y.2013-14 REPRODUCED THE RELEVANT PORTION OF THE NOTICE U/S.1 42(1) DATED 19.11.2015 IN THE ASSESSMENT ORDER WHICH IS NOT BEE N REPEATED HERE FOR THE SAKE OF BREVITY.' SUFFICE IT TO SAY THAT, THE A SSESSEE CONTEND E D TH AT , HER JV P A RTNER HAD SHOWN R S. 20 , 00 , 000/- AS AN A DVANCE AND RS . 30 , 0 0 , 000 / - AS A DDITIONAL A DV A NCE I N H E R BOOKS AND ON THE BA SI S OF TH I S RS . 50 , 00 , 000 / - R E CEIV E D BY H E R W A S NOT T A X ABL E. 5.4 THE AO STATES THAT IT WAS AN AD MITTED FACT THAT, T HE ASSESSEE HAD GIVEN HER LAND FOR DEVELOPMENT TO THE JV PARTNE R AND WAS IN RECEIPT OF PERCENTAGE OF HER SHARE OF SALE CONSIDER ATION RECEIVED ON ACCOUNT OF SALE OF FLATS SOLD BY THE JV PARTNER. TH E AO ALSO NOTES THAT IN A NORMAL SITUATION, THE ASSESSEE WOULD BE TAX AC CORDING TO THE DUES TO BE RECEIVED BY THE ASSESSEE AS PER THE JOIN T VENTURE AGREEMENT. THE AO NOTES THAT, THE PAYMENT DUE TO TH E ASSESSEE FROM THE JV PARTNER ON THE BASIS OF RECEIPT OF SALES PRO CEEDS AS ON 31.03.2013 AS PER THE JV AGREEMENT WAS MORE THAN RS.4,58,68,673/- RECEIVED BY HER. THE ASSESSEE AND HER JV PARTNER COULD NOT PROVE THIS FACT TO BE INCORRECT. THE ASSE SSING OFFICER ALSO OBSERVED THAT, THE CONSIDERATION PAID BY THE JV PAR TNER TO TWO OTHER CO-OWNERS OF THE LAND HOLDING EQUAL SHARE IN LAND W AS ALSO NOT UNIFORM. HE THEREFORE, OPINED THAT, IT WAS VERY CLE AR THAT THE PAYMENTS WERE NOT STRICTLY IN ACCORDANCE WITH THE T ERMS OF THE JV AGREEMENT. UNDER THESE CIRCUMSTANCES, ACCORDING TO THE ASSESSING OFFICER, THE ENTIRE RECEIPT OF THE ASSESSEE, RECEIV ED FROM THE JV PARTNER PARTOOK THE NATURE OF TAXABLE RECEIPT, IRRE SPECTIVE OF THE NOMENCLATURE OF THE PAYMENT /RECEIPTS IN THE BOOKS OF THE JV PARTNER AND THE ASSESSEE. THE AO HELD THAT, MERELY BECAUSE THE ASSESSEE AND HER JV PARTNER HAD SHOWN THE RECEIPTS/PAYMENT A S ADVANCE IN THEIR RESPECTIVE BOOKS COULD NOT BE, A LEGITIMATE R EASONS FOR EXCLUDING THE RECEIPTS FROM THE TAXABLE RECEIPTS. HE OPINED, IN THIS MANNER ANY ASSESSEE COULD DIFFER HIS TAX LIABILITY AT HIS SWEE T WILL BY HAVING AN ARRANGEMENT WITH THE JOINT VENTURE PARTNER BY MEREL Y CHANGING THE NOMENCLATURE OF THE PAYMENT. HOLDING THAT THIS WAS NOT AS PER THE INTENTION OF THE LEGISLATURE, THE ASSESSING OFFICER STATED THAT THERE WAS NO MERIT IN THE ASSESSEE'S CONTENTION. REPRODUC ING SEE. 51 OF THE I.T. ACT, THE ASSESSING OFFICER HELD THAT, FOR TAXI NG CAPITAL GAINS THE ACTUAL RECEIPT OF SALE CONSIDERATION WAS NOT NECESSARY. NEVERTHELESS, TO BE JUDICIOUS, THE ASSESSING OFFICER GAVE THE ASSESS EE THIS BENEFIT AND ALLOWANCE OF RS. 67,40,670/- HAD ALREADY BEEN GIVEN OUT OF THE TOTAL RECEIPTS. WHILE COMPUTING THE CAPITAL GAINS, KEEPIN G IN VIEW THE RATIOS OF PROVISIONS OF SEE. 51 OF THE I.T. ACT, THE ASSESSIN G OFFICER HELD THAT, THE ADVANCE AND ADDITIONAL ADVANCE RECEIVED OF RS. 50,0 0,000/- WAS OBVIOUSLY A PART OF RS.67,40,670/- ALLOWED TO THE A SSESSEE .. ANY RECEIPT IN EXCESS OF RS.67,40,670/- NEEDED TO BE TAXED IN T HE HANDS OF THE ASSESSEE AS HER BUSINESS INCOME IRRESPECTIVE OF NOM ENCLATURE GIVEN TO THE RECEIPT. THE ASSESSING OFFICER STATES THAT TILL 31.03.2013, THE ASSESSEE HAD RECEIVED RS.4,58,68,673/- WHICH WAS LE SS THAN THE AMOUNT THAT SHE SHOULD HAVE RECEIVED AS PER THE JV AGREEMENT. OF THIS RS.67,40,670/- WAS OFFERED TO TAX WHILE COMPUTING T HE CAPITAL GAINS FOR A.Y.2010-11. THE ASSESSING OFFICER HELD THAT, THE A SSESSEE SHOULD HAVE THEREFORE, OFFERED RECEIPTS OF RS.3,91,28,303/-(RS. 4,58,68,673 - RS.67,40,370/-) TO TAX FOR THE YEAR UNDER CONSIDERA TION AGAINST RS.3,41,28,303/- OFFERED BY HER. IN VIEW OF THESE F ACTS, THE ASSESSING OFFICER HELD .THAT THERE WAS SUPPRESSION OF RECEIPT S TO THE TUNE OF RS.50,00,000/- AND TAX THE SAME IN THE YEAR UNDER C ONSIDERATION. IN ABSENCE OF ANY SATISFACTORY EXPLANATION FROM THE AS SESSEE, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S .271(1)(C) OF THE I.T. ACT. 4 ITA NO.380 /PUN/2018 A.Y.2013-14 3. THEREAFTER, THE ASSESSEE TOOK THE MATTER BEFORE THE LD. CIT(A) AND DETAILED WRITTEN SUBMISSION WAS MADE BEFORE THE FIRST APPE LLATE AUTHORITY. THE RELEVANT PARTS ARE REPRODUCED BELOW: ASSESSEE ALONG WITH BHARAT C. KOTHARI & SURENDRA S. OSWAL HAS ENTERED IN JOINT DEVELOPMENT AGREEMENT (JDA) WITH S UYOG DEVELOPMENT CORPORATION LTD. (SUYOG) ON 16.12.2009. AS PER JDA ASSESSEE RECEIVED 11% OF SALE RECEIPTS F ROM SUYOG AFTER COMMENCEMENT OF CONSTRUCTION ( AS PER PAGE 9 OF AGR EEMENT REFERRED AS ANNEXURE-1) ASSESSEE HAS ALSO PAID LONG TERM CAPITAL GAIN (LTCG ) IN FY 2009-10 (AY 2010-11) ON STAMP DUTY VALUE OF RS. 67,40,370/- AFTER DEDUCTING COST OF LAND (REFER ANNEXURE 2 I.E. LNDEX II & ANNE XURE 3 I.E. COPY OF INCOME TAX RETURN ALONG WITH COMPUTATION OF TOTAL I NCOME, CAPITAL ACCOUNT & BALANCE SHEET). ASSESSEE HAS RECEIVED RS. 20,00,000/- AS REFUNDABLE DEPOSIT TO BE REFUNDED AFTER COMPLETION OF PROJECT AS PER JDA (RE FER ANNEXURE 1 & 4) AND RS. 30,00,000/- AS REFUNDABLE ADVANCE IN FY 200 9-10 & FY 2010- 11 I.E. BEFORE COMMENCEMENT OF PROJECT (REFER ANNEX URE 4 I.E. CONFIRMATION LETTER FROM SUYOG & RELEVANT SCHEDULES OF BALANCE SHEET OF SUYOG FOR FY 2011-12 & FY 2012-13). ABOVE MENTIONED AMOUNT OF RS.20,00,000/- & RS. 30,0 0,000/- WERE SHOWN CONTINUOUSLY AS LIABILITY IN BALANCE SHEET OF ASSESSEE TILL FY 2016-17 (REFER ANNEXURE 5 I.E. BALANCE SHEET AS AT 31/03/2011 & 31/03/2012) AND ANNEXURE 6 I.E. COPY OF INCOME TAX RETURN ALONG WITH COMPUTATION OF TOTAL INCOME, PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF AY 2013-14(FY 2012-13). WE ARE ALSO ATTACHING REPLY GIVEN TO ASSESSING AUTH ORITY AT THE TIME OF ASSESSMENT OF AY 2013-14 (REFER ANNEXURE 7). REPLY TO PARA 4.6 & 4.7 OF ASSESSMENT ORDER AS PER JDA ASSESSEE IS ENTITLED TO 11% OF SALE RECE IPTS AFTER AMOUNT RECEIVED BY SUYOG. ASSESSEE HAS RECEIVED UPTO 31/03/2013 (11% OF SALE RECEIPT) RS.4,08,68,673/- (-) STAMP DUTY VALUE OF LAND ON WHICH LTCG IS PAID IN AY 2010-11 RS.67,40,370/- PROFIT SHOWN IN A.Y.2013-14 ( F.Y.2012-13) BESIDES THIS ASSESSEE HAS RECEIVED RS.50,00,000/- A S REFUNDABLE DEPOSIT AND ADVANCE AS MENTIONED ABOVE TO BE REFUND ED AFTER COMPLETION OF PROJECT WHICH IS NOT TAXABLE IN SECTION 51 AS ME NTIONED IN PARA 4.6 AND 4.7 OF ASSESSMENT ORDER. 5 ITA NO.380 /PUN/2018 A.Y.2013-14 4. THE LD. CIT(A) AFTER CONSIDERING THE ASSESSMENT ORDER, FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE UPHELD THE ADDITION MA DE BY THE ASSESSING OFFICER AS PER REASONS IN HIS ORDER WHICH IS ON RECORD. 5. AT THE TIME OF HEARING, LD. AR OF THE ASSESSEE VEHEM ENTLY ARGUED THAT THE AMOUNT OF RS.50,00,000/- WERE RECEIVED AS REFUNDABLE A DVANCES AND IT CANNOT BE TAXED AS BUSINESS INCOME. IN SUPPORT OF HIS CONTENTION, THE LD. AR PLACED BEFORE US, IN THE PAPER BOOK, THE CONFIRMATION FROM S UYOG DEVELOPMENT CORPORATION LTD. OF DEPOSIT AND ADVANCES GIVEN AND E XTRACT FROM BALANCE SHEET OF SUYOG DEVELOPERS WHICH ARE PLACED IN PAG E 2 AND 3 OF THE PAPER BOOK. THE ARGUMENTS OF THE LD. AR WAS WHEREIN IN TH E BOOKS OF ACCOUNT, ASSESSEE HAS DISCLOSED THE AMOUNT AS ADVANCE AND PERSONS FROM WHOM ADVANCES HAVE BEEN TAKEN, THEY HAVE ALSO GIVEN CO NFIRMATION WHICH IS PLACED BEFORE REVENUE AUTHORITY THAT THE AMOUNT IS IN TH E NATURE OF ADVANCE, THEN WITHIN NO PURVIEW OF TAXING STATUTES, IT CAN BE TAXED AS BUSINESS INCOME. 6. ON THE OTHER HAND, LD. DR FOR THE REVENUE PLACED STRO NG RELIANCE ON THE FINDINGS OF SUB-ORDINATE AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSED THE MATERIALS ON RECORD. WE FIND THAT IN THE PAPER BOOK FILED BEFORE US, THE CONCERNED COMPANY I.E. SUYOG DEVELOPMENT CORPORATION LTD. HAS GIVEN CONFIRMATION IN THE NAME OF ASSESSEE THAT AMOUNT OF RS.50,00,000/- IS INTEREST FREE DEPOSIT GIVEN TO THE ASSESSEE BY THE COMPANY AND IN THE CORRESPONDING PAGE BREAK UP IS ALSO GIVEN. WE WOULD MAKE THE TWO DOCUMENTS PLACED IN THE PAPER BOOK AS PART OF THE ORDER ANNEXED AS ANNEXURE 1 AND ANNEXURE-2. 6 ITA NO.380 /PUN/2018 A.Y.2013-14 ANNEXURE -1 7 ITA NO.380 /PUN/2018 A.Y.2013-14 ANNEXURE-2 8. THE LD. DR WAS CONFRONTED WITH THESE DOCUMENTS AND HE COULD NOT BRING ANY OTHER MATERIAL OR EVIDENCE ON RECORD WHICH CAN CONTROVERT THESE FACTS ON RECORD. WE FIND THAT THE ASSESSEE IN HER BOOKS MAINTAINED THE AMOUNT AS DEPOSITS/ADVANCES RECEIVED. SIMILARLY PERSONS FR OM WHOM 8 ITA NO.380 /PUN/2018 A.Y.2013-14 ADVANCES HAVE BEEN TAKEN, THEY HAVE ALSO GIVEN CONFIRMAT ION TO THE EXTENT THAT AMOUNTS WERE GIVEN AS DEPOSITS/ADVANCES AND HAVE MADE SAME TREATMENT IN THEIR BOOKS OF ACCOUNTS. 9. IN SUCH CIRCUMSTANCES, ADDITION IN THE HANDS OF THE AS SESSEE IS NOT WARRANTED. IN VIEW OF THE AFORESAID DISCUSSION AND EXAMINAT ION OF THE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF CIT(APPEALS) AND ALLOWED THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 20 TH DAY OF DECEMBER, 2018. SD/- SD/- R.S. SYAL PARTHA SARAT HI CHAUDHURY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 20 TH DECEMBER, 2018. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS), PUNE-5, PUNE. 4. THE PR. CIT, PUNE-4, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 9 ITA NO.380 /PUN/2018 A.Y.2013-14 DATE 1 DRAFT DICTATED ON 20 .12.2018 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 20 .12.2018 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER