ITO 18(2)(4), MUMBAI V. RAMESH B PATIL HUF, MUMBAI

ITA 4032/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92385 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: K K LALKAKA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) . . , , ./ I.T. A. NO. 4032 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 0 5 - 06 ) INCOME TAX OFFICER, 18(2)(4), ROOM NO.109, 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012 / VS. SHRI RAMESH B PATIL HUF, 101, GANESH M PATIL ROAD, PATIL WADI, DADAR, MUMB AI - 400028 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAJHR5443K / APPELLANT BY SHRI LOVE KUMAR / R ESPONDENT BY SHRI K K LALKAKA / DATE OF HEARING : 19 .3 . 201 5 / DATE OF PRONOUNCEMENT : 17. 4 . 201 5 / O R D E R PER B.R. BASKARAN (AM) THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 21.2.2013 PASSED BY LD CIT(A) - 16 , M UMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2005 - 06 . THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54EC OF THE INCOME TAX ACT, 1961 (THE ACT) FROM THE LONG TERM CAPITAL GAIN (LTCG). 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE FACTS RELATING TO THE ISSUE ARE STATED IN BRIEF. THE ASSESSEE , ALONG WITH HIS BROTHERS , HA D INHERITED AN ANCESTRAL PROPERTY FROM HIS FATHER NAMED SHRI BALARAM PATIL . THE ASSESSEES TWO BROTHERS HAD ALREAD Y EXPIRED AND HENCE THE PROPERTY WAS INHERITED BY LEGAL HEIRS OF HIS BROTHERS, SOME OF WHOM WERE MINOR. SUBSEQUENTLY, A DEVELOPMENT AGREEMENT WAS ENTERED BY ALL THE CO - OWNERS I.T.A. NO. 4032 / MUM/201 3 2 WITH A PERSON NAMED M/S SHREEJI HOMES (CALLED DEVELOPERS). SHRI RAMMOHAN GOPALR AO KALLIANPUR AND OTHERS WERE OCCUPYING THE PROPERTY AS TENANTS AND HENCE THEY ALSO JOINED THE DEVELOPMENT AGREEMENT AS CONFIRMING PARTIES. THE DEVELOPMENT AGREEMENT WAS EXECUTED ON 27.7.2004 AND ACCORDING TO THE PARTIES, THE SAME WAS REGISTERED ON 29.7. 2004. THE ASS ESSEE SUBSEQUENTLY, INVESTED HIS SHARE OF SALE CONSIDERATION ON 13.6.2005 IN NABARD CAPITAL GAINS BOND AND CLAIMED DEDUCTION AGAINST LONG TERM CAPITAL GAIN U/S 54EC OF THE ACT. ACCORDING TO THE ASSESSEE, THE DEVELOPER INSISTED FOR SANCTION O R ORDER FROM HONBLE HIGH COURT, SINCE SOME OF THE CO - OWNERS HAPPENED TO BE MINORS. ACCORDINGLY A PETITION WAS MOVED BY THE PARTIES AND THE HONBLE HIGH COURT APPROVED THE DEVELOPMENT AGREEMENT ON 17.2.2005. 3. UNDER THE PROVISIONS OF SEC. 54EC OF THE ACT, THE INVESTMENT IN CAPITAL GAINS BONDS IS REQUIRED TO BE MADE WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF TRANSFER. THE ASSESSEE TOOK THE STAND THAT THE DATE OF COURT ORDER SHOULD BE TAKEN AS THE DATE OF TRANSFER, SINCE ONLY AFTER THE REC EIPT OF THE ORDER OF HIGH COURT, EFFECTIVE TRANSFER HAS TAKEN PLACE. HOWEVER, T HE AO TOOK THE VIEW THAT THE TRANSFER HAS TAKEN PLACE ON THE DA T E OF ENTERING OF DEVELOPMENT AGREEMENT I.E. ON 27.7.2004 AND SINCE THE INVESTMENT IN NABARD BOND WAS MADE ON 13. 6.2005 , THE SAME WOULD FALL BEYOND THE PRESCRIBED PERIOD OF SIX MONTHS AS PROVIDED U/S 54EC OF THE ACT . ACCORDINGLY, THE AO HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION UNDER SECTION 54EC OF THE ACT. 4 . IN THE APPELLATE PROCEEDINGS, THE LD. CI T( A) NOTICED THAT IDENTICAL ISSUE WAS CONSIDERED BY THE LD. CIT(A) - 29, MUMBAI IN ONE OF THE CO - OWNERS I.E. SMT. SHUBHADA NAROTTAM PATIL IN APPEAL NO. CIT(A) - 29/RG - 18/73/11 - 12 AND THE LD. CIT(A) , VIDE HIS ORDER DATED 18.5.2012 , HAS HELD THAT THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE DEVELOPER ONLY AFTER RECEIPT OF THE ORDER OF HONBLE HIGH COURT ON 25.3.2005 . ACCORDINGLY, THE LD CIT(A), IN THE ABOVE I.T.A. NO. 4032 / MUM/201 3 3 SAID CASE HELD THAT INVESTMENT MADE IN NABARD BOND WOULD FALL WITHIN THE TIME LIMIT OF SIX MONTHS . ACCORDINGLY T HE LD. CIT(A) HAD ALLOWED THE DEDUCTION U/S 54EC OF THE ACT TO MRS. SHUBHADA PATIL. BY FOLLOWING THE SAID DECISION, THE LD CIT(A) HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54EC OF THE ACT. AGGRIEVED, THE REVENUE HAS FILED THI S APPEAL BEFORE US. 5. WHILE THE LD D.R PLACED STRONG RELIANCE ON THE ASSESSMENT ORDER, THE LD A.R PLACED STRONG RELIANCE ON THE ORDER PASSED BY LD CIT(A). HOWEVER A PERUSAL OF THE BOTH THE ORDERS WOULD SHOW THAT THE TAX AUTHORITIES HAVE PROCEEDED ON THE PRESUMPTION THAT THE AGREEMENT ENTERED BY THE PARTIES ARE SALE AGREEMENT, WHEREAS THE FACT REMAINS THAT IT WAS ONLY A DEVELOPMENT AGREEMENT. THE TAX LIABILITY ARISING OUT OF DEVELOPMENT AGREEMENT HAS BEEN DEALT WITH BY THE HONBLE JURISDICTIONAL BO MBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARAKADAS KAPADIA VS. CIT (260 ITR 491)(BOM). A PERUSAL OF THE ORDER PASSED BY THE LD CIT(A) WOULD SHOW THAT HE HAS FOLLOWED THE DECISION RENDERED BY HIS COUNTERPART IN THE CASE OF MRS. SHUBHADA PATIL, WHEREIN TH E LD CIT(A) HAS HELD THAT THE POSSESSION OF THE PROPERTY WAS GIVEN ONLY AFTER RECEIPT OF THE COURT ORDERS. HOWEVER, IN THE INSTANT CASE, THE QUESTION RELATING TO HANDING OVER OF THE POSSESSION OF PROPERTY WAS NOT EXAMINED AT ALL. FURTHER, THE DECISION OF THE JURISDICTIONAL HIGH COURT REFERRED ABOVE WAS ALSO NOT CONSIDERED. SINCE, THE ISSUE BEFORE US REVOLVES AROUND DATE OF TRANSFER OF PROPERTY; WE ARE OF THE VIEW THE SAME HAS TO BE EXAMINED BY DULY CONSIDERING THE DEVELOPMENT AGREEMENT, CONDUCT OF PART IES AND THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE SAID CASE. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A ) AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO RE - EXAMINE THIS ISSUE IN THE LIGHT OF DISCUSSIONS MADE SUPRA. I.T.A. NO. 4032 / MUM/201 3 4 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE AB OVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17TH APR , 2015 . 17TH APR , 2015 SD SD ( / AMIT SHUKLA ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 17TH APR ,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4 . / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI