GUJU ADS P.LTD, MUMBAI V. DCIT 10(3), MUMBAI

ITA 4002/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5558 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CIRCUMSTANCES OF CASE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Principle of natural justice
• Section: 50C; 142(1); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 4002 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 2010 - 11 ) GUJU ADS PVT. LTD. GR. FLOOR, MIRANI NAGAR, GANESH GAWDE ROAD, MUL UND WEST, MUMBAI - 400080. / VS. CIT(A) - 24 MUMBAI NO. CIT(A) - 22/DCIT - 10(3)/IT - 175/2013 - 14. ./ ./ PAN/GIR NO. : AAACG 7965 M ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 31 .0 5 .2018 / DATE OF PRONOUNCEMENT : 09 .07 . 201 8 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 01 .0 3 .201 6 , PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 24 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE AY. 2010 - 11 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 8. ON FACTS AND CIRCUMSTANCES O F THE CASE AND IN INTEREST OF NATURAL JUSTICE MATTER BE REMANDED BACK TO LEARNED ASSESSING OFFICER FOR ASSESSMENT DE NOVO GIVEN THAT AUTHORIZED REPRESENTATIVE DID NOT APPEAR BEFORE LEARNED ASSESSING OFFICER AND LEARNED CIT(A) IN ABSENCE OF ASSESSEE KNOWLED GE. REVENUE BY: S HRI ARJU GARAURIA ( DR ) ASSESSEE BY : SHR I BHAUMIK GODA (AR) ITA. NO.4002 /M/1 6 A.Y.2010 - 11 2 9. ON FACTS AND CIRCUMSTANCES OF THE CASE LEARNED CIT(A) ERRED IN REJECTING SALES AGREEMENT OF FLAT NO 618 AND FLAT NO 2803 AND THEREBY ADOPTED HIGHER SALES CONSIDERATION THAN WHAT HAS BEEN ACTUALLY RECEIVED BY THE APPELLANT COMPANY. 10. ON FACTS AND CIRCUMSTANCE OF THE CASE LEARNED CIT(A) ERRED IN NOT GRANTING INDEXATION BENEFIT ON SALE OF FLAT NO 317 WHICH WAS A LONG TERM CAPITAL ASSET SOLD BY THE APPELLANT COMPANY. 11. ON FACTS AND CIRCUMSTANCES OF THE CASE LEARNED CIT(A) ERRED IN CONSIDERING FLAT NO 317 AS SHORT - TERM CAPITAL ASSET AND TAXED THE SAME AT HIGHER RATE AS AGAINST RATE OF 20% APPLICABLE ON SALE OF LONG TERM CAPITAL ASSET 12. ON FACTS AND CIRCUMSTANCES OF THE CASE LEARNED CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF INTEREST OF INR 3,32,174 IN RESPECT OF INTEREST FREE LOAN GIVEN TO SHAREHOLDER OUT OF TOTAL FINANCE EXPENSES INCURRED WITHOUT APPRECIATING THAT APPELLANT COMPANY HAD SURPLUS INTEREST FREE FUNDS AVAILABLE. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF IN COME ON 18.10.2010 DECLARING TOTAL INCOME TO THE TUNE OF RS.80,44,677/ - . THE RETURN WAS PROCESS U/S 143(2 ) OF THE I.T. ACT, 1961. THEREAFTER, NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 29.08.2011 WHICH WAS SERVED UPON THE ASSESSEE. SUBSEQUENTLY, FRESH NOTI CE U/S 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. NOTICE U/S 142(1) OF THE ACT DATED 13.08.2012 WAS ALSO ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY WAS IN THE BUSINESS OF ADVERTISEMENT AGENCY. THE ASSESSEE HAS SHOWN THE DEBIT ED AMOUNT OF RS.41,50,081/ - UNDER THE HEAD LOSS ON SALE OF ASSETS. ACCORDING TO SECTION 50 OF THE ACT , THE SAID LOSS WAS NOT ALLOWABLE, THEREFORE, AN AMOUNT OF RS.41,50,081/ - WAS ADDED TO THE INCOME OF THE ASSESSEE . THE ASSESSEE ALSO SOLD THE 6 PROPERTY WH OSE DESCRIPTION ARE HEREBY MENTIONED BELOW .: - SR. NO. PROPERTY DESCRIPTION SALE PRICE (RS.) MUNICIPAL VALUE(RS.) DIFFERENCE (RS.) ITA. NO.4002 /M/1 6 A.Y.2010 - 11 3 1 OFFICE NO. 317A, CORP, CENTRE, NIRMAL LIFE STYLE 22,00,000 21,98,700 - 2 OFFICE NO. 317, CORP, CENTRE, NIRMAL LIFE STYLE 82,62,000 82,65,450 450 3 OFFICE NO. 609, VASUDEO CHAMBERS 8,00,000 8,12,360 12,360 4 OFFICE NO. 322, NIRMAL LIFESTYLE 20,00,000 22,96,950 - 5 OFFICE NO. 601, VASUDEO CHAMBERS 52,00,000 76,52,560 24,52,560 6 OFFICE NO. 817, CORPORATE CENTRE, NIRMAL LI FE STYLE 60,00,000 76,52,560 - TOTAL 2,47,62,000 24,65,370 4. THE PROPERTY MENTIONED AT SERIAL NOS. 2, 3, & 5 WAS SOLD BELOW THE MUNICIPAL VALUE. THEREFORE, THE TRANSACTION WAS LIABLE TO BE RE - VIEWED IN VIEW OF PROVISION OF SECTION 50C OF THE ACT. THER EFORE, NOTICE WAS GIVEN AND AFTER GETTING THE REPLY , THE DIFFERENCE TO THE TUNE OF RS.24,65,370/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. IN CONNECTION WITH THE FLAT AT RUNWAL NO SALE AGREEMENT WAS FURNISHED, T HEREFORE, THE COST WAS TAKEN TO THE TUNE OF R S. 79,93,151/ - AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. THE SALE AGREEMENT IN CONNECTION WITH THE OFFICE NO. 618 AT NIRMAL CORPORATE PARK TO THE TUNE OF RS.86,75,000/ - WAS NOT PRODUCED, THEREFORE, THE SAID COST WAS ALSO ADDED TO THE INCOME OF T HE ASSESSEE. THEREFORE, THE TOTAL SHORT TERM CAPITAL WAS ASSESSED TO THE TUNE OF RS.49,12,491/ - . THE ASSESSEE HAS ALSO GIVEN THE LOAN TO SMT. JAYABEN BHINDE OF RS.20,67,555/ - AND ON THE SA ID LOAN NO INTEREST WAS CHARGED, T HEREFORE, THE COMPARABLE ITA. NO.4002 /M/1 6 A.Y.2010 - 11 4 INTEREST TO THE TUNE OF RS.3,32,174/ - WAS DISALLOWED U/S 36(1)(III) R.W.S. 37(1) OF THE ACT ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.58,65,777/ - . FEELING AGGRIEVED, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) HAS CONFIRMED THE ORDER OF THE AO , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 5 . AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY IN THE ABSENCE OF THE ASSESSEE , T HEREFORE, IN THE SAID CIRCUMSTANCES, THE ORDER IN QUESTION IS NOT JUSTIFIABLE AND IS LIABLE TO BE SET ASIDE. IT IS ALSO ARGUED THAT THE ASSESSEE WANT S TO REPRESENT HIS CASE BEFORE THE CIT(A) AND WANT S TO ADDUCTED THE ADDITIONAL EV IDENCE IN SUPPORT OF HIS CLAIM, T HEREFORE, AN OPPORTUNITY OF BEING HEARD IS REQUIRED TO BE GIVEN IN ACCORDANCE WITH LAW. ON APPRAISAL OF THE ORDER DATED 01.03.2016 PASSED BY THE CIT(A) - 25 MUMBAI, WE NOTICED THAT THE SAID ORDER HAS BEEN PASSED BY THE CIT(A ) IN ABSENCE OF BOTH THE PARTIES AND THE ASSESSEE NOWHERE GOT ANY OPPORTUNITY TO ADDUCE THE EVIDENCE OF ANY KIND IN SUPPORT OF HIS CLAI M . IT IS CLEARLY VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE. THEREFORE, IN THE SAID CIRCUMSTANCES, WE SET ASIDE THE FI NDING OF THE CIT(A) ON ALL THE ISSUES AND REMAND THE CASE BEFORE THE CIT(A) TO DECIDE THE MATTER AFRESH BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ITA. NO.4002 /M/1 6 A.Y.2010 - 11 5 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HERE BY ORDERED T O BE ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 09. 07 .2 01 8 . SD/ - SD/ - ( RAJENDRA ) ( AMARJIT SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 09. 0 7 . 201 8 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI