SHAILAJA GANESH TANDEL, NAVI MUMBAI V. ITO WD 4, PANVEL

ITA 3845/MUM/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 6011 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Keywords: Capital asset; Cost of acquisition; Reasonable cause; Fair market value; Assessment record; Condonation of delay; Capital Gains
• Section: 54F; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 3 8 45/MUM/2015 ASSESSMENT YEAR : 201 1 - 1 2 MRS. SHAILAJA GANESH TANDEL, CHANDAN RESIDENCY, BLOCK NO. 401, PLOT NO. 33, SECTOR - 44A, SEAWOOD NERUL, NAVI MUMBAI [PAN : A CPPT 6011 K ] VS. INCOME TAX OFFICER , WARD - 4, PANVEL (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH PANDIT , A R RESPONDENT BY : SHRI SA T I SHCHANDRA RAJORE , DR DATE OF HEARING : 11 - 12 - 201 8 DATE OF PRONOUNCEMENT : - 31 - 12 - 201 8 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , THANE , DATED 2 4 - 0 3 - 201 5 . ITA NO. 3 8 45/MUM/2015 : 2 : 2. ASSESSEE FILED THIS APPEAL WITH A DELAY OF (03) THREE DAYS. FOR THAT A SSESSEE HAS FILED A CONDONATION PETITION ALONG WITH AN AFFIDAVIT, STATING THE REASONS FO R DELAY IN FILING OF THE APPEAL, BELATEDLY. 2.1. CONSIDERING THE PETITION FOR CONDONATION OF DELAY OF THE ASSESSEE AND EXPLANATION OFFERED BY THE ASSESSEE FOR THE DELAY , WE ARE SATISFIED WITH THE REASONABLE CAUSE FOR THE DELAY AND WE CONDONE THE DELAY IN FILING THE APPEAL AND THE SAME IS ADMITTED TO BE HEARD ON MERITS. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING SHORT TERM CAPITAL GAIN COMPUTED BY THE A.O. AT RS. 85,82,500/ - . 2. REASON GIVEN BY LEARNED CIT(A) FOR CONFIRMING SHORT TERM CAPITAL GAIN COMPUTED BY THE A.O. AT RS. 85,82,500/ - , ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE COST OF ACQUISITION COMPUTED BY THE A.O. AT RS. 17,500/ - . 4. REASONS GIVEN BY LEARNED CIT(A) FOR CONFIRMING THE COST OF ACQUISITION COMPUTED BY THE A.O. AT RS. 17,500/ - ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVI DENCE ON RECORD . GROUND NO. 5 IS GENERAL IN NATURE. ITA NO. 3 8 45/MUM/2015 : 3 : 3.1. THE ASSESSEE ALSO RAISED ADDITIONAL GROUND , VIDE LETTER DT. 06 - 0 2 - 2017, WHICH IS AS UNDER : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE GAIN ON SALE OF LEASEHOLD RIGHT AMOUNTING TO RS. 85,82,500/ - IS A LONG TERM CAPITAL GAIN AND ACCORDINGLY THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 54F OF THE ACT AS THE ENTIRE CONSIDERATION WAS INVESTED IN BUYING A RESIDENTIAL HOUSE. GROUND NO. 2 IS GENERAL IN NATURE. 4 . THE MAI N ISSUE CHALLENGED BY THE ASSESSEE IN TH E MAIN GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF SHORT TERM CAPITAL GAIN OF RS. 85,82,500/ - BY CIT(A) AS COMPUTED BY THE ASSESSING OFFICER (AO) AND ALSO CONFIRMING THE COST OF ACQUISITION TAKEN BY THE AO AT RS. 17,500/ - WHEREAS THE ISSUE RAISED IN ADDITIONAL GROUND IS AS REGARDS THE GAIN ON LEASEHOLD RIGHT AMOUNTING TO RS. 85,82,500/ - BEING LONG TERM CAPITAL GAIN AND ACCORDINGLY, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 54F OF THE INCOME TAX ACT (ACT) . 5 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A LEGAL HEIR OF LATE SHRI DA MODAR A LIAS DAMU MHADEO ALIAS MAHADU MHATRE . THE GOVT . OF MAHARASHTRA V IDE NOTIFICATION DT. 03 - 02 - 1970 AND 28 - 12 - 1972, AC QUIRED THE LAND FOR NEW BOMBAY PROJECT CONSISTING OF 96 VILLAGES , WHICH RESULTED IN ACQUISITION OF ITA NO. 3 8 45/MUM/2015 : 4 : INDEPENDENT AND JOINT LAND OWNED BY THE ASSESSEES PARENTS. AFTER ACQUISITION, THE ASSESSEE GOT COMPENSATION FOR ACQUISITION OF LAND AS PER THE LAND ACQUISITION ACT. THEREAFTER, GOVT . OF MAHARASHTRA VIDE NOTIFICATION NO. LQN/1985/1710CR - 217/NAVI 10 DATED 06 - 03 - 1990 AND CID/1094/287/NAVI - 10 DATED 2/8 - 10 - 1994 DECLARED THAT LAND OWNERS WOULD GET COMPE NSATION BY WAY OF 12.5% OF THE TOTAL LAND ACQUIRED FOR NEW BOMBAY PROJECT AND THUS, THE ASSESSEE GOT RIGHTS EQUAL TO 12.5% LAND IN SCHEME BROUGHT OUT BY THE GOVERNMENT OF MAHARASHTRA. M/S. C IDCO LTD., [CIDCO THE TOWN PLANNING AUTHORITY OF NAVI MUMBAI] VIDE INTENT LETTER DT. 15 - 07 - 200 7 , ALLOTTED PLOT IN PLOT NO. 95 SECTOR 21 AND ON 12.01.2011 A LEASE AGREEMENT WAS ENTERED BETWEEN CIDCO AND JANADAN TRIMBAK MHATRE AND OTHERS INCLUDING SMT SHAILJA GANESH THE ASSESSEE AND DULY REGISTERED WITH THE REGISTRAR O F ASSURANCES AFTER PAYING LEASE PREMIUM OF RS. 17,500 / - . ASSESSEE VIDE MOU, ENTERED AN AGREEMENT IN SEPTEMBER, 2010, AGREED TO TRANSFER THE SAID LEASE RIGHTS IN LAND TO M/S. VISHNU E NTERPRISES AND M/S. A.M. ASSOCIATES . TO PUT IT IN SIMPLE TERMS, THE ASSESSEE RECEIVED RIGHT TO PLOT IN LIEU OF ACQUISITION OF LAND BY THE GOVT . OF MAHARASHTRA AND THE ITA NO. 3 8 45/MUM/2015 : 5 : VALUE OF RIGHTS IN THE PLOT , C ONSIDERATION FOR ACQUISITION OF LAND FROM ASSESSEES FATHER IN THE PAST , WAY BACK 1972 . ASSESSEE COMPUTED THE LONG TERM CAPITAL GAIN ON THE SAID SALE OF PLOT AT RS. 59,67,623/ - , AFTER INDEXING BY TAKING THE MARKET RATE OF THE LAND IN THE YEAR 2007 AND INDEXING THE SAME TO THE CURRENT YEAR. FROM THE CAPITAL GAIN SO COMPUTED, THE ASSESSEE CLAIM ED EXEMPTION U/S. 54F OF THE ACT TO RS. 59,23,200/ - IN RESPECT OF THE INVESTMENT IN RESIDENTIAL HOUSE IN THE VILLAGE OF THE ASSESSEE AND RETURNED THE NET REMAINING CAPITAL GAIN OF RS. 44,423/ - . AO WAS NOT SATISFIED WITH THE TREATMENT GIVEN TO THE GAIN ON S ALE OF PLOT AND ACCORDINGLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE LONG TERM CAPITAL GAIN SHOULD NOT BE TRE ATED AS SHORT TERM CAPITAL GAIN, WHICH WAS REPLIED BY THE LD. COUNSEL FOR THE ASSESSEE OF THE ASSESSEE VIDE LETTER DT. 09 - 01 - 2014, FU RTHER STATED BY SUBMITTING AS UNDER: I) LETTER OF ALLOTMENT FROM CIDCO IS ATTACHED HEREWITH. II) COPY OF INDER - II OF FLAT PURCHASE FOR EXEMPTION OF 54F AND WORKING OF LONG TERM CAPITAL GAIN. IN RESPECT OF COST OF ACQUISITION FOR THE PURPOSE OF CALCULATION OF CAPITAL GAINS, GOVERNMENT VALUE AS ON DATE OF ALLOTMENT OF ADJACENT PLOT IS TAKEN OF SECTION 18. III) TRIPARTITE AGREEMENT BETWEEN CIDCO LTD., VILLAGER AND PRATIK CONSTRUCTION IS ALREADY SUBM ITTED. ITA NO. 3 8 45/MUM/2015 : 6 : IV) ALLOTMENT OF THESE PLOTS WERE MADE ON 15/07/2007 AND THE SALE OF THESE PLOTS WAS ON 23/02/2011. HENCE, THE SALE TRANSACTION OF PLOTS IS LONG TERM IN NATURE. ALSO, ASSESSEE HAS PURCHASE RESIDENTIAL FLAT ON 10.08.2011 WHICH QUALIFIES FOR DEDUCTION U/S. 54F. COPY OF INDEX - II OF FLAT PURCHASE FOR EXEMPTION OF 54F IS ATTACHED. 5 .1. FINALLY, THE AO REJECTED THE CONTENTION OF ASSESSEE AND RE - COMPUTED THE GAIN AS SHORT TERM CAPITAL GAIN AT RS. 85,82,500/ - BY TAKING THE SALE CONSIDERATION AT RS. 86 LAKHS AND ALLOWING THE DEDUCTION IN RESPECT OF PREMIUM PAID BY ASSESSEE OF RS. 17,500/ - . 6 . IN THE A PPELLATE PROCEEDINGS, CIT(A) UPHELD THE ORDER OF AO BY OBSERVING THAT THE LETTER OF INTENT DT. 15 - 07 - 2007 CANNOT BE CONSIDERED AS DATE OF TRANSFER AND TREATED THE DATE OF TRANSFER OF LEASEHOLD RIGHT TO BE THE DATE OF LEASE AGREEMENT BETWEEN CIDCO AND ASSESSEE DT. 12 - 01 - 2011. LD. CIT(A) ALSO OBSERVED THAT THE COST OF ACQUISITION IS THE LEASE PREMIUM PAID OF RS. 17,50 0/ - ON 21 - 01 - 2011 WHEN A LEASE AGREEMENT WAS ENTERED INTO BETWEEN CIDCO AND ASSESSEE AND NOT PRIOR TO THAT AS AFTER ACQUISITION OF LAND, THE FARMERS WERE COMPENSATED FOR ACQUISITION OF LAND AS PER THE LAND ACQUISITION ACT AND IN MOST OF THE CASES, THEY HAVE GIVEN ITA NO. 3 8 45/MUM/2015 : 7 : INTEREST OR SOME SORT OF COMP ENSATION FROM THE GOVERNMENT SIDE DURING THE PERIOD FROM 1970 TO 1972. 7 . AT THE OUTSET, LD. AR SUBMITTED FOR THE B ENCH THAT THE ISSUE IN THE PRESENT CASE OF ASSESSEE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE FOLLOWING DECISION S OF CO - ORDINATE BENCH ES OF THE TRIBUNAL AND ALSO THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT : I. ATUL G. PURANIK VS. ITO [132 ITD 499] (MUMBAI)/[11 TAXMANN.COM 92] (MUMBAI - TRIB.); II. CIT VS. GREENFIELD HOTELS & ESTATES PVT. LTD., IN INCOME TAX APPEAL NO. 735 OF 2014 , DT. 24 - 10 - 2016 ; (HON'BLE HIGH COURT OF BOMBAY); III. PANDHARINATH BALKRISHNA GHARAT VS. ITO IN ITA NO. 186/MUM/2016. DT. 21 - 08 - 2018; IV. ITO VS. HEMANT R. TANDEL IN ITA NOS. 1934, 1935, 1941, 1835 TO 1837/MUM/2012; 7 .1. LD. AR ALSO SUBMITTED THAT IN VIEW OF THE RATIO LAID DOWN BY THE VARIOUS JUDICIAL FORUMS, THE COST OF ACQUISITION AND PERIOD OF HOLDING SHOULD BE COMPUTED AS FROM T HE DATE WHEN ITA NO. 3 8 45/MUM/2015 : 8 : THE ASSESSEES INTEREST WAS CREATED IN THE PROPERTY, THE MOMENT THE LAND OF THE ASSESSEE WAS ACQUIRED BY THE GOVERNMENT OF MAHARASHTRA. LD.AR SUBMITTED THAT THE LEASE AGREEMENT BETWEEN CIDCO AND ASSESSEE OR ITS REGISTRAR HAS NO BEARING O R SIGNIFICANCE ON THE COMPUTATION OF CAPITAL GAIN FROM THE SALE OF RIGHTS OF ASSESSEE. FINALLY, LD.AR PRAYED FOR THE BENCH THAT THE OWNERSHIP OF ASSESSEE, RELATES BACK TO THE DATE OF ACQUISITION BY THE GOVERNMENT OF MAHARASHTRA AND ACCORDINGLY, THE CAPITA L GAIN SHOULD BE COMPUTED BY TAKING THE COST TO THE PARENTS OF ASSESSEE IN 1970 TO 1972 AND RIGHTLY SO BY TAKING THE FMV AS ON 0 1 - 0 4 - 1981. 8 . LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 9 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL ON RECORD, INCLUDING THE IMPU GNED DECISIONS. THE UNDISPUTED FACTS ARE THAT THE GOVT OF MAHARASHTRA ACQUIRED THE LAND OF 96 VILLAGES FOR NAVI MUMBAI PROJECT IN 1972 IN THE LAND BELONG TO THE ASSESSEES FATHER WAS ALSO ACQUIRED. THEREAFTER, THE ASSESSEE WAS ALLOTTED RIGHTS EQUAL TO 12.5% OF THE LAND ACQUIRED V IDE NOTIFICATION DT. 06 - 03 - 1990 FOR WHICH ITA NO. 3 8 45/MUM/2015 : 9 : LETTER OF INTENT WAS DATED 15 - 07 - 2007 WAS GIVEN BY CIDCO WHICH WAS FINALLY REGISTERED IN FAVOUR OF THE ASSESSEE VIDE AGREEMENT DAT ED 12 - 01 - 2011 . U LTIMATELY THE ASSESSEE TRANSFERRED THESE LEASEHOLD RIGHTS FOR A CONSIDERATION OF RS. 86 LAKHS IN THE CURRENT YEAR. IN OUR CONSIDERED VIEW, THE COST OF ACQUISITION OF THE LAND SHOULD BE DETERMINED ON THE BASIS OF RIGHTS OF ASSESSEE ON THE D ATE OF FIRST NOTIFICATION IN 1970 AND THE NOTIFICATION S THEREAFTER AND LEASE AGREEMENT ENTERED INTO WITH CIDCO ARE NOT MATERIAL SO FAR AS THE DETERMINATION OF DATE AND COST ACQUISITION ARE CONCERNED. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF P ANDHARINATH BALKRISHNA GHARAT VS. ITO IN ITA NO. 186/M UM/2016, DT. 21 - 08 - 2018 HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE, UNDER THE SIMILAR FACTS AND CIRCUMSTANCES . THE OPERATIVE PART OF THE SAID DECISION IS REPRODUCED HERE UNDER: 5. IN THE GIVEN FACTS, IT IS CLEAR THAT THIS PLOT OF LAND IS ALLOTTED IN LIEU OF AGRICULTURAL LAND IN VILLAGE NAGAON, TALUKA URAN, DISTRICT RAIGAD DISTRICT BY THE C I DCO VIDE GOVERNMENT OF MAHARASHTRA VIDE NOTIFICATION NO. LQN/1985/191 0 CR27/NAVI - 1Q DATED 06 .03.1990 AND CID/1 0 94/287/NAVI - 1Q DATED 18.10.1994 DECLARED THAT THE LAND OWNERS WHOSE LAND WAS ACQUIRED BY C I DCO WILL GE T 12 . 5% OF THE AREA OF THE LAND ACQUIRED IN T HE FORM OF PLOTS. THE FACT THAT THIS PLOT WAS ALLOTTED TO ASSESSEE VIDE LEASE AGREEMENT DATED 14.07.2010 AS ENTERED INTO BETWEEN C I DCO AND THE ASSESSEE. THE COST OF ACQUISITION OF THIS PLOT IN TERM OF THE SECTION 48 OF THE ACT I.E. FULL VALUE OF CONSIDERATION AS RECEIVED OR ACCRUE AS A RESULT OF ACQUISITION ITA NO. 3 8 45/MUM/2015 : 10 : BY THE GOVERNMENT IS THE AMOUNT GIV EN AS CONSIDERATION FOR SUCH ACQUISITION OR IN THE ALTERNATIVE THE MARKET VALUE OF ANOTHER CAPITAL ASSET GIVEN TO THE ASSESSEE AGAINST SUCH ACQUISITION. IN THIS CASE, THIS PLOT WAS GIVEN ON 14.07 . 2010 . HENCE , IN OUR VIEW, THE MATTER SHOULD GO BACK TO THE FILE OF THE A O , OUT THE FAIR MARKET VALUE AS ON 14 . 07.2010 AND WILL DETERMINE THE SHORT TERM CAPITAL GAIN ACCORDINGLY. THIS ISSUE OF ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES WITH THE ABOVE DIRECTIONS. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSES IS AGAINST THE ORDER OF C I T(A) I N NOT ADJUDICATING THE ADDITIONAL GROUND NO. 2 WHICH IS RAISED BY WAY OF GROUND NO. 4, BEFORE US WHICH READS AS UNDER: - '4. THE LD. C I T(A) HAS E RR ED IN NOT ADJUDICATING UPON THE ADDITIONAL GROUND NO 2 WHICH STATES THAT; AS THE L EASE AGREEMENT WAS ENTERED INTO BETWEEN C I DCO AND THE APPELLANT IN RESPECT OF SAID P L OT ONLY ON 141 JULY. 2010, THE DATE OF ACQUISITION OF PLOT BE ADOPTED AS 14 TH JULY, 2 010. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, SUPPLEMENT, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL.' 7. WE DIRECT THE AO, AS WE HAVE ALREADY ADJUDICATED THE FIRST ISSUE, THE DATE OF ACQUISITION OF PLOT SHOULD BE ADOPTED AS ON 14 . 07.2010 AND HENCE, DECIDED THE ISSUE ACCORDINGLY. THIS ISSUE IS ALSO SENT BA CK TO THE FILE OF THE ASSESSING OFFICER. THIS ISSUE OF ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . 9 .1. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL, WE HOLD THAT THE CAPITAL GAIN RESULTING FROM TRANSFER OF LEASE RIGHTS IS A LONG TERM CAPITAL GAIN AND DIRECT THE AO TO TAKE THE COST OF ACQUISITION AS ON 01 - 04 - 1981 AS THE FIRST NOTIFICATION ACQUIRING THE LAND WAS BROUGHT IN 1970 . ITA NO. 3 8 45/MUM/2015 : 11 : 10 . AFTER HEARING BOTH THE PARTIES ON THE ADMISSION O F ADDITIONAL GROUND OF APPEAL, WE OBSERVE THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS ARISING OUT OF ASSESSMENT RECORDS AND IN FACT WAS CLAIMED BEFORE THE AO AND DOES NOT REQUIRE ANY FRESH VERIFICATION OF FACTS. THEREFORE WE ARE INCLINED THE ADMIT TH E SAME FOR ADJUDICATION. 11. ON THE ISSUE OF INVESTMENT U/S. 54F O F THE ACT, WE ARE OF THE VIEW THAT ONCE THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN AS HAS BEEN DECIDED BY US SUPRA AND RE - INVESTED THE SAME IN THE CONSTRUCTION OF HOUSE PROPERTY, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 54F OF THE ACT. ACCORDINGLY, WE DIRECT THE AO TO ALLOW THE DEDUCTION U/S 54F OF THE ACT AND CONSEQUENTLY THE ADDITIONAL GROUND S RAISED BY THE ASS A RE ALLOWED. 1 2 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF DECEMBER, 2018 SD/ - SD/ - (MAHAVIR SINGH) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI; / DATED : 31 ST DECEMBER, 2018 TNMM ITA NO. 3 8 45/MUM/2015 : 12 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) , MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI