PRADIP KUNJBEHARILAL DAROOKA, MUMBAI V. ITO (IT) 1(1), MUMBAI

ITA 3975/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0437 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGESHEN
• Assessee Lawyers: HITESH T

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'H' BENCH, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 3975/MUM/2016 (ASSESSMENT YEAR: 2011-12) SHRI PRADIP K. DAROOKA C/O. G.M. KAPADIA & CO. 1007, REHEJA CHAMBERS 213, NARIMAN POINT MUMBAI 400021 VS. INCOME TAX OFFICER (INTERNATIONAL TAXATION)-1(1) SCINDIA HOUSE, BALLARD PIER MUMBAI 400038 PAN ADXPD3562C APPELLANT RESPONDENT APPELLANT BY: SHRI MADHUR AGARWAL & HITESH T RESPONDENT BY: SHRI M.C. OMI NINGESHEN DATE OF HEARING: 03.02.2018 DATE OF PRONOUNCEMENT: 13.02.2018 O R D E R PER RAJESH KUMAR, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-57, MUMBAI DATED 12.02.2016 FOR A.Y. 2011-12 . 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST UP HOLDING THE ORDER OF THE AO BY THE CIT(A) IN DISALLOWING A LOSS OF ` 21,72,891/- ARISING ON SALE OF AGRICULTURAL LAND AND RESIDENTIAL BUILDING THERE IN. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 28.07.2011 DECLARING TOTAL INCOME OF ` 6,17,549/-. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE IS SUED AND SERVED UPON THE ASSESSEE. IN THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN (LOSS) OF ` 21,72,891/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A REVISED WORK ING WAS CALLED FOR BY THE AO AND WAS ACCORDINGLY FILED CALCULATING A LOSS OF ` 81,72,891/-. THE AO DISALLOWED THE LOSS BY OBSERVING AND HOLDING AS UNDER: - ITA NO. 3975/MUM/2016 SHRI PRADIP K. DAROOK 2 18.1 THE ASSESSEE HAS SHOWN THE MAGNANIMITY IN NOT CLAIMING THE C/F. OF SUCH LOSS FOR SET OF FOR SUBSEQUENT ASS ESSMENT YEARS, BUT FOR THE REASON NOTED AS THE BIFURCATION OF SALE CO NSIDERATION IS NOT AVAILABLE BETWEEN LAND AND BUILDING. 18.2 THE FACT IS THAT THE ASSESSEE HAS COMPUTED THE LOSS OF CURRENT ASSESSMENT YEAR AND PROVIDING THE REASON TH AT THE BIFURCATION OF SALE CONSIDERATION IS NOT AVAILABLE BETWEEN LAND AND BUILDING, WHILE THE SALE AGREEMENT IN ITSELF IS FOR LAND ONLY . CONSIDERING THE FACTS, CIRCUMSTANCES AND THE POSITION OF LAW AS DIS CUSSED ABOVE IN THE ORDER, IT IS CLEAR THAT ASSESSEE HAS SOLD AND T RANSFERRED THE AGRICULTURE LAND ONLY. THEREFORE, THE LONG TERM CAP ITAL LOSS OF RS.21,72,891/- (REVISED WORKING FOR LONG TERM CAPIT AL LOSS AT RS.81,72,891/-) COMPUTED BY THE ASSESSEE IS DISALLO WED. ACCORDINGLY, THE CARRY FORWARD OF SUCH LONG TERM CA PITAL LOSS IS DISALLOWED. THE AO ALSO INITIATED PENALTY PROCEEDINGS UNDER SEC TION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). AGGRI EVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT THE A CTION OF THE AO IN DISALLOWING LOSS OF ` 21,72,891/- ARISING ON SALE OF AGRICULTURAL LAND AN D RESIDENTIAL BUILDING THEREIN WAS WRONG AND AGAINST THE FACTS OF THE CASE. THE ASSESSEE FURTHER SUBMITTED THAT IN A.Y. 2011-12 THE ASSESSEE SOLD AGRICULTURAL LAND ALONG WITH BUILDING FOR A CONSIDE RATION OF ` 1.80 CRORES. THE ASSESSEE SUBMITTED THAT HE HAS NO INTENTION OF SETTING OF THE LOSS AGAINST CURRENT YEAR INCOME OR CARRYING FORWARD THE SAID TO THE SUBSEQUENT YEARS FOR SETTING OFF THE SAME AGAINST ANY INCOME I N SUBSEQUENT ASSESSMENT YEARS. THE INTENTION OF THE ASSESSEE NOT TO CLAIM SET OFF OR CARRY FORWARD OF THE LOSS IS APPARENT FROM THE COMP UTATION OF INCOME, RETURN OF INCOME FILED AND SUBMISSION OF THE ASSESS EE DURING APPELLATE PROCEEDINGS IN WHICH HE CATEGORICALLY SUBMITTED HIS INTENTION WAS NOT TO SET OFF AGAINST THE CURRENT YEARS INCOME OR CARRY FORWARD THE LOSS TO SUBSEQUENT YEARS FOR SETTING OFF AGAINST THE FUTURE INCOME. HOWEVER, THE CIT(A) BRUSHED ASIDE THE CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL ON THE ISSUE BY OBSERVING AND HOLDING AS UND ER: - I HAVE CONSIDERED THE ISSUE. THE BRIEF FACTS ARE T HAT THE ASSESSEE BOUGHT AN AGRICULTURAL PIECE OF LAND FOR RS. 30 LAC S IN AY 2007-08 AND ITA NO. 3975/MUM/2016 SHRI PRADIP K. DAROOK 3 WHICH WAS SOLD IN THE PRESENT YEAR FOR RS. 1.80 CR. THE APPELLANT HAS CLAIMED DEDUCTION OF RS. 1,06,04,342/- ON ACCOUNT O F CONSTRUCTION OF A RESIDENTIAL HOUSE ON THE SAID PLOT AND A FURTHER EX EMPTION U/S 54 OF RS. 24,31,451/-. THE SAID WAS THE AMOUNT INVESTED I N THE CAPITAL GAINS ACCOUNT SCHEME FROM THE SALE OF FLAT MADE IN AY 2007-08. AS FOR THE COST OF CONSTRUCTION THE AO HAS HELD THAT THE F ACTS OF THE CASE DO NOT SHOW THAT THE ASSESSEE HAD CONSTRUCTED RESIDENT IAL HOUSE. FROM THE DRAWINGS SUBMITTED BEFORE THE SARPANCH THE PLAN IS OF A SCHOOL, DORMITORY, COWSHEDS, LAUNDRY, TOOL SHED ETC. THERE IS NO NA FROM THE MUNICIPAL AUTHORITIES TO SHOW THAT THE ASSESSEE HAD THE REQUISITE APPROVAL FOR CONSTRUCTION OF A RESIDENTIAL PROPERTY ; NATURALLY CONSEQUENTIALLY THERE IS NO COMPLETION CERTIFICATE. THE APPELLANT ON THE OTHER HAND HAS TRIED TO SUBMIT THAT HE HAD THE APPR OVALS FROM THE SARPANCH. BUT THEN HE HAS NOT BEEN ABLE TO SHOW THE DRAWINGS OF A RESIDENTIAL HOUSE HAVING BEEN APPROVED NOR HAS HE B EEN ABLE TO SHOW ANY RECEIPTS FOR THE EXPENDITURE ON CONSTRUCTION. A LL THIS ASSUMES EVEN MORE SIGNIFICANCE IN LIGHT OF THE AO'S FINDING THAT THE AGREEMENT TO SELL IN 2010 ONLY TALKS OF THE LAND HAVING BEEN SOLD; THERE IS NO MENTION OF ANY BUILDING. IN LIGHT OF THESE FINDINGS I AM IN AGREEMENT WITH THE AO THAT THE APPELLANT DOES NOT SATISFY THE CONDITIONS AS LAID DOWN IN SECTION 54. THE LOSS CALCULATED ON THE SALE THEREBY IS TO BE DISALLOWED. THE ACTION OF THE AO IS UPHELD. IT IS A LSO OBSERVED THAT THOUGH THE ORIGINAL CLAIM WAS RS. 21,72,891/- IT WA S REVISED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT TO RS. 81 ,72,891/- WHICH IS WHAT THE AO HAS DISALLOWED. CAPITAL GAIN IS TO B E CALCULATED WITHOUT FACTORING IN THE LOSS/ DEDUCTION U/S 54. TH E ACTION OF THE AO IS UPHELD. THE GROUND IS REJECTED. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL PLACED BEFORE US FROM WHICH WE FIND THAT T HE LOSS INCURRED BY THE ASSESSEE ON SALE OF AGRICULTURAL LAND AND RESIDENTI AL BUILDING LOCATED THEREIN TO THE EXTENT OF ` 21,72,891/- WAS NEITHER CLAIMED FOR SET OFF AGAINST ANY OTHER INCOME IN THE CURRENT YEAR NOR THE SAME W AS CLAIMED TO BE CARRIED FORWARD TO THE SUBSEQUENT YEARS FOR BEING S ET OFF. AFTER EXAMINING THE RECORD CAREFULLY WE FIND THAT THE ORDER OF THE CIT(A) IS NOT CORRECT AND CANNOT BE SUSTAINED AS AN ITEM OF LOSS WHICH IS NEV ER SET OFF OR CLAIMED IN THE CURRENT YEAR OR CARRY FORWARD TO THE SUBSEQUENT YEARS FOR BEING SET OFF AGAINST FUTURE INCOME CANNOT BE DISALLOWED. ACCORDI NGLY WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE AS THE SAME IS NOT CLAIMED BY THE ASSESSEE AS HAS BEEN DIS CUSSED HEREINABOVE. ITA NO. 3975/MUM/2016 SHRI PRADIP K. DAROOK 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY, 2018. SD/ - SD/ - (D.T. GARASIA) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 13 TH FEBRUARY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -57, MUMBAI 4. THE CIT (IT)-1, MUMBAI 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.