PRAMILA GAJANAN BHOIR, THANE V. ITO (HQ) (CIB), MUMBAI

ITA 4041/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62276 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATBIER SINGH
• Assessee Lawyers: M N NANDGAONKAR
• Keywords: Capital asset; Gift; Cost of acquisition; Fair market value; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.4041/MUM/2010 (ASSESSMENT YEAR: 2005-06) ITA NO.4042/MUM/2010 (ASSESSMENT YEAR: 2005-06) ITA NO.4043/MUM/2010 (ASSESSMENT YEAR: 2005-06) ITA NO.4044/MUM/2010 (ASSESSMENT YEAR: 2005-06) ITA NO.4045/MUM/2010 (ASSESSMENT YEAR: 2005-06) ITA NO.4046/MUM/2010 (ASSESSMENT YEAR: 2005-06) ITA NO.4047/MUM/2010 (ASSESSMENT YEAR: 2005-06) PRAMILA GAJANAN BHOIR, PRAKASH GAJANAN BHOIR PRADEEP GAJANAN BHOIR PRATIBHA GAJANAN BHOIR DRAUPADIBAI GAJANAN BHOIR PRAMOD GAJANAN BHOIR PRASHANT GAJANAN BHOIR PRAKASH GAJANAN CHAWL, NEAR CHATTRI BUNGLOW, KALYAN ...... APPELLANT VS INCOME-TAX OFFICER WARD 3(2), RANI MANSION, MURBAD ROAD, KALYAN ..... RESPONDENT PAN: ANKPB 8877 D PAN: ANKPB 8963 C PAN: ANKPB 8970 H PAN: ANKPB 8870 E PAN: ANKPB 8964 F PAN: ANKPB 9862 D PAN: ANKPB 8961 A APPELLANT BY: SHRI M.N. NANDGAONKAR RESPONDENT-REVENUE BY: SHRI SATBIER SINGH DATE OF HEARING: 17.04.2012 DATE OF PRONOUNCEMENT: 25.04.2012 O R D E R ITA NOS.4041 TO 4047/MUM/2010 PRAMILA GAJANAN BHOIR AND SIX OTHERS 2 R.S. PADVEKAR, JM : THIS BATCH OF SEVEN APPEALS ARE FILED BY THE DIFFER ENT ASSESSES WHO ARE CO-OWNERS OF THE PROPERTY, HAVING EQUAL SHA RES AND HAVE CHALLENGED RESPECTIVE ORDERS OF THE LD. CIT (A)-I, THANE DATED 29.01.2010 AND ALL THE APPEALS RELATE TO ASSESSMENT YEAR 2005-06. AS THE FACTS AS WELL AS ISSUES ARE IDENTICAL IN ALL TH E APPEALS, THIS BATCH OF SEVEN APPEALS IS DISPOSED OF BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. THE GROUNDS IN ALL THESE APPEALS ARE VERBATIM , WHICH ARE AS UNDER: 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT & IN LAW THE ORDER OF THE ASSESSMENT DATE D 28/12/2007 PASSED U/S.143(3) OF THE ACT BY THE INCO ME TAX OFFICER (HQ)(CIB) PUNE IS PASSED WITHOUT JURISD ICTION AND IS AB INITIO VOIDE AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE OF THE APPELLANT & IN LAW IT BE HELD THAT THE APPELLANT HA D TRANSFERRED A CAPITAL ASSET FOR WHICH THERE WAS NO COST OF ACQUISITION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE OF THE APPELLANT & IN LAW IT BE HELD THAT TRANSFER OF DEVE LOPMENT RIGHTS BY AGREEMENT REGISTERED ON 10/02/2005 ARE NO T CHARGEABLE TO CAPITAL GAINS TAX AS THERE WAS NO COS T OF ACQUISITION FOR THE ASSET TRANSFERRED. 4. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT & IN LAW THE LEARNED AO HAS ERRED IN HOLD ING AND THE CIT (A) HAS ERRED IN CONFIRMING THAT THE APPELL ANT HAD TRANSFERRED DEVELOPMENT RIGHTS BY AGREEMENT REGISTE RED ON 10.02.2005 GIVING RISE TO LONG TERM CAPITAL GAIN IN A.Y. 2005-2006. ITA NOS.4041 TO 4047/MUM/2010 PRAMILA GAJANAN BHOIR AND SIX OTHERS 3 5. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT & IN LAW THE LEARNED AO HAS ERRED IN ADOP TING AND THE CIT (A) HAS ERRED IN CONFIRMING ` 33.00 LAC AS THE FULL VALUE OF CONSIDERATION OF 29% OF FSI IN THE FO RM OF SALABLE BUILT UP AREA I.E. THE FULL VALUE OF CONSID ERATION IN KIND. 6. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT & IN LAW THE LEARNED AO HAS ERRED IN ADOP TING AND THE CIT (A) HAS ERRED IN CONFIRMING THAT FMV @ ` 29/- PER SQ. MTR FOR WORKING OUT COST OF ACQUISITION ON 01.04.1981. 2. SO FAR AS GROUND NO.1 IS CONCERNED, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE ITO(HQ)(CIB)PUNE (IN SHORT AO) TO PASS THE ASSESSMENT ORDERS U/S.143(3) OF THE ACT WHICH ARE T HE SUBJECT MATTER OF THESE APPEALS. ON THE EARLIER DATES OF HEARING THE LD. D.R. WAS DIRECTED TO REPRODUCE THE RELEVANT EVIDENCE TO SHOW THAT THE CCIT(PUNE) BEING THE CADRE CONTROLLING AUTHORITY HA S PASSED THE ORDER GIVING JURISDICTION TO THE ITO(HQ)(CIB), PUNE TO PASS THE ASSESSMENT ORDERS IN THE CASES OF THESE ASSESSEES W HICH ARE DETECTED FROM THE INFORMATION RECEIVED FROM ANNUAL INFORMATI ON RETURNS UNDER SEC. 285BA OF THE ACT (IN SHORT AIR) . LD. D.R. FI LED COPY OF THE ORDER PASSED BY THE CCIT, PUNE U/S.120 OF THE INCOME-TAX ACT, 1961 DATED 1.8.2007, WHICH IS AS PER THE INSTRUCTION NO.6 OF 2 006 DATED 01.08.2006, GIVING JURISDICTION TO THE ITO(HQ)(CIB) PUNE AS DESIGNATED A.O. (DAOS) AND SAME IS PLACED ON RECORD. THE LD. COUNSEL SUBMITTED THAT ALL ASSESSEES ARE PRESSING GROUND NO .1 IN THEIR RESPECTIVE APPEALS. AS GROUND NO. 1 IS NOT PRESSED, SAME IS DISMISSED AS NOT PRESSED. 3. IN GROUND NOS.2, 3 & 4, THE ASSESSEE HAS TAKEN A PLEA THAT AS THERE WAS NO COST OF ACQUISITION FOR THE PROPERTY T RANSFER BY WAY OF THE DEVELOPMENT AGREEMENT REGISTER ON 10.02.2005, HENCE , THERE IS NO GAIN WITHIN THE MEANING OF SEC.45 AND HENCE, THERE IS NO TAXABLE ITA NOS.4041 TO 4047/MUM/2010 PRAMILA GAJANAN BHOIR AND SIX OTHERS 4 CAPITAL GAIN AT ALL. THE LD. COUNSEL FOR THE ASSES SEE SUBMITS THAT ALL THESE ASSESSES HAVE FILED THEIR RETURNS OF INCOME D ECLARING TAXABLE CAPITAL GAINS AND THOSE RETURNS WERE FILED IN RES PONSE TO NOTICES ISSUED U/S.142(1) DATED 24.08.2007 TO ALL THE ASSES SES. THE LD. COUNSEL SUBMITS THAT ALL THESE ASSESSES TOOK AN ADD ITIONAL GROUND BEFORE THE LD. CIT (A) THAT THE PROPERTY IN QUESTIO N WAS ACQUIRED BY THE GREAT GRANT FATHER OF THESE ASSESSES IN THE YEA R 1955 AS INAM AS PER PROVISIONS OF BOMBAY PERSONAL INAM ABOLITION AC T, 1952 AND HENCE, THERE WAS NO COST OF ACQUISITION IN RESPECT OF THE PROPERTY IN QUESTION TO PRESENT ASSESSES ARE CONCERNED AND THER E IS NO GAIN EVEN IF THERE IS A TRANSFER WITHIN MEANING OF SEC. 45 OF THE ACT. HE SUBMITS THAT IT WAS PURELY LEGAL ISSUE BUT THE LD. CIT (A) DID NOT ACCEPT THE PLEA OF THE ASSESSEE AND ADDITIONAL GROUND WAS DISM ISSED. 4. HE FURTHER SUBMITS THAT IF THE ASSESSEE FILES RE TURN DECLARING THE TAXABLE INCOME AND SUBSEQUENTLY IT IS FOUND THAT TH E ASSESSEE IS NOT LIABLE TO PAY ANY TAX THEN EVEN IF THE ASSESSEE HAS NOT FILED THE REVISED RETURN THE LD. CIT (A) WAS BOUND TO DECIDE THE ISSU E ALLOWING THE CONTENTION OF THE ASSESSEE. THE LD. COUNSEL RELIED ON THE DECISION IN THE CASE OF NIRMALA N. MEHTA VS. BALASUBRAMANIAM 26 9 ITR 1 (BOM). PER CONTRA, THE LD. D.R. SUBMITS THAT THE ASSESSEE HAS ALREADY CONSIDERED THE TAXABILITY IN RESPECT OF CAPITAL GAI N ON THE TRANSFER OF THEIR RESPECTIVE SHARES IN THE PROPERTY AND ALSO FI LED THE RETURNS OF INCOME. NOW, THERE IS ESTOPPELS AGAINST THESE ASSE SSEES TO TAKE DIFFERENT STAND TO AVOID TAX ON THEIR TAXABLE INCOM E AND THE LD. CIT (A) HAVE RIGHTLY DISMISSED THE ADDITIONAL GROUNDS RAISE D BY THE ASSESSEES. 5. I HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIE S AND PERUSED THE RECORDS. THERE IS NO DISPUTE IN ALL THESE APPE ALS THAT IN RESPONSE TO NOTICE U/S.142(1), THEY FILED THE RETURNS OF INC OME DECLARING THE TAXABLE CAPITAL GAINS IN RESPECT OF THEIR SHARES IN THE PROPERTY, WHICH WAS TRANSFERRED UNDER THE DEVELOPMENT AGREEMENT. I T IS ALSO NOT DISPUTED THAT THE ASSESSEE DID NOT FILE ANY REVISED RETURNS NOR THE CLAIM OF THE NON-TAXABILITY OF THE CAPITAL GAIN WAS RAISED WHICH MADE BEFORE THE A.O. THE ASSESSEE MADE THE CLAIM FOR TH E FIRST TIME BEFORE ITA NOS.4041 TO 4047/MUM/2010 PRAMILA GAJANAN BHOIR AND SIX OTHERS 5 THE LD. CIT (A) THAT ASSESSEES GREAT GRANT FATHER ACQUIRED THE PROPERTY IN QUESTION UNDER THE BOMBAY PERSONAL INAM ABOLITION ACT, 1952 AS THE INAMDARI WAS ABOLISHED AND RIGHTS OF THE OCCUPANTS OF THE INAM LAND WERE RECOGNISED AND THE PRESENT ASSESSES ARE T HE SUCCESSORS AND BY SUCCESSION/INHERITANCE THESE ASSE SSES GOT THE PROPERTY/LAND. THE ASSESSES TOOK THE PLEA THAT THE RE WAS NO COST OF ACQUISITION FOR ACQUIRING PRESENT PROPERTY AND HENC E, THERE IS NO GAIN EVEN PRESUMING THERE IS TRANSFER AND IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN SRINIVASA SHETTY 128 ITR 2 94, IF ASSESSEE IS NOT HAVING ANY COST OF ACQUISITION THEN NO GAIN IS TAXABLE IN THE HANDS OF THESE ASSESSES. 6. I FIND THAT WHEN THE SPECIFIC ADDITIONAL GROUND WAS TAKEN BY THE ASSESSEE, THE LD. CIT (A) DISMISSED THE ADDITIONAL GROUND ON THE FOLLOWING REASONS: 6.1 THE ADDITION GROUND IS ENTERTAINED AND CONSIDE RED. IN THE SUBMISSION, IS EXPLAINED BY THE APPELLANT THAT THE LAND IN QUESTION HAD BEEN ACQUIRED BY THE GREAT GRAND FATHE R OF THE APPELLANT IN THE YEAR 1955 AS GIFT / INAM ON ACCOUN T OF IMPLEMENTATION OF BOMBAY PERSONAL INAM ABOLITION AC T, 1952 AND HENCE THERE WAS NO COST TO THE APPELLANT. IN RESPECT OF THIS ARGUMENT, THE APPELLANT HAS PLACED RELIANCE ON THE FOLLOWING GROUNDS: I. NIRMALA L. MEHTA VS. BALASUBRAMANIAM CIT (2004) 269 ITR 1 (BOM) II. AMALGAMATED COALFIELDS LTD. VS. JANPADA SABHA AIR 1961 SC III. MAYANK PODDAR (HUF) VS. WTO (2003) 181 CTR (CAL) 262 : (2003) 262 ITR 633 (CAL.) 6.2 THE CASES ARE PERUSED AND CONSIDERED. I FIND THAT THE ADDITIONAL GROUND IS IN THE NATURE OF ALTERNATE PLE A. THE CASE REPORTED IN 128 TR 294 (SC) ARE NOT RELEVANT TO THE CASE OF THE APPELLANT. I HAVE ALREADY HELD THAT BY HANDING OVE R THE PROPERTY IN QUESTION FOR DEVELOPMENT WITH DEVELOPMENT RIGHTS THROUGH A ITA NOS.4041 TO 4047/MUM/2010 PRAMILA GAJANAN BHOIR AND SIX OTHERS 6 WRITTEN ARGUMENT AND HAVING AGREED TO RECEIVED 7200 SQ FT OF CONSTRUCTED AREA S CONSIDERATION IN LIEU OF THE TRA NSFER OF THE RIGHTS, TRANSFER WITHIN THE MEANING OF SECTION 2(47 ) R.W.S. 53A HAS TAKEN PLACE GIVING RISE TO LONG TERM CAPITAL GAIN. THE PLEA THAT THE PROPERTY IN QUESTION WAS ACQUIRED BY THE GREAT GRAN D FATHER FREE OF COST AND, THEREFORE, THE PROPERTY IS NOT LIABLE FOR CAPITAL GAINS AT ALL IS IRRELEVANT AND UNACCEPTABLE. THE FACTS IN T HIS CASE ARE DISTINGUISHABLE FROM THE CASES THAT ARE RELIED UPON BY THE APPELLANT. HOWEVER, THE ASSESSEE HIMSELF HAS WORKE D OUT THE COST ON THE BASIS OF A REPORT FROM A VALUER. ACCOR DINGLY, I HOLD THAT THE ACTION OF THE AO DOES NOT SUFFER FROM ANY INFIRMITY AND HENCE, I UPHOLD THE ACTION OF THE AO. THE GROUND I S, THEREFORE, DISMISSED. 7. THE LD. CIT (A) HAS NOT AT ALL EXAMINED THE PROV ISIONS OF THE BOMBAY PERSONAL INAMS ABOLITION ACT, 1952 AND MECHA NICAL DISMISSED THE ADDITIONAL GROUND TAKEN BY THESE ASSE SSES. BOTH THE PARTIES AGREED THAT AS THE LD. CIT (A) HAS NOT AT A LL CONSIDERED THE NATURE OF THE RIGHTS OF THESE ASSESSES IN THE SAID LAND/PROPERTY IN VIEW OF THE IMPLEMENTATION OF THE BOMBAY PERSONAL INAM A BOLITION ACT, 1952 AND THIS ISSUE MAY BE RESTORED TO THE FILE OF LD. CIT (A) WITH A DIRECTION TO DECIDE THE ADDITIONAL GROUND TAKEN BY THESE ASSESSEES AFRESH. 8. THE ONLY APPREHENSION OF THE LD. D.R. IS THAT IF THE ASSESSES CLAIM IS ACCEPTED THEN WHETHER THE ASSESSEES INCOME CAN GO BELOW THE RETURNED INCOME. IN MY OPINION, ULTIMATELY THE TAX IS TO BE RECOVERED AS PER THE PROVISIONS OF LAW. IN THE CASE OF NIRMA LA L. MEHTA (SUPRA) THE TAXABILITY OF THE WINNING LOTTERY AWARD OF THE GOVERNMENT OF SIKKIM WAS THE ISSUE. THE ASSESSEE OWN THE PRICE M ONEY OF ` 6,30,000/- AND FILED THE RETURN OF INCOME DECLARING THE SAID PRICE MONEY, AFTER DEDUCTING ` 5,000/- U/S.10(3) OF THE ACT. IT APPEARS THAT BEFORE THE CIT THE SAID ASSESSEE TOOK THE PLEA THAT THE PRICE MONEY RECEIVED FROM THE WINNING OF THE LOTTERY OF THE GOV ERNMENT OF SIKKIM WAS NOT TAXABLE UNDER THE INCOME-TAX ACT. THE CIT, MUMBAI REJECTED ITA NOS.4041 TO 4047/MUM/2010 PRAMILA GAJANAN BHOIR AND SIX OTHERS 7 THE CONTENTION OF THE ASSESSEES AGAINST THAT ASSESS ES FILED THE WRIT PETITION BEFORE THE HONBLE BOMBAY HIGH COURT. HON BLE HIGH COURT HAS ACCEPTED CONTENTION OF THE ASSESSES THAT INCOME -TAX ACT, 1961 WAS NOT APPLICABLE AT THE RELEVANT POINT OF TIME TO SIKKIM AND HENCE THE PRICE MONEY OWNED BY THE PETITIONER FROM THE LO TTERY OF GOVERNMENT OF SIKKIM COULD HAVE BEEN CHARGED TO TAX ONLY IN ACCORDANCE WITH THE THEN EXISTING INCOME-TAX LAWS I N THE STATE OF SIKKIM. THE HONBLE HIGH COURT ALSO HELD THAT MERE LY BECAUSE THE PETITIONER OFFERED THE PRICE MONEY OWNED FROM THE L OTTERY OF SIKKIM GOVT. TO TAX UNDER THE INCOME-TAX ACT THAT SHALL NO T TAKEAWAY HER RIGHT IN CONTENDING THAT THE SAID PRICE MONEY WAS N OT CHARGEABLE AND ASSESSABLE TO TAX UNDER THE INCOME-TAX ACT. 9. IN THE PRESENT CASE, IN MY OPINION, MERELY BECAU SE ALL THESE ASSESSES HAVE OFFERED THE CAPITAL GAIN FOR TAX THAT WILL NOT DEPRIVE THEM FROM RAISING THE PLEA FOR NON-TAXABILITY. I, THEREFORE, SET ASIDE ORDER OF THE LD. CIT(A) AND RESTORE GROUND NOS. 2 & 3 IN ALL THESE APPEALS TO THE FILE OF THE LD. CIT (A) FOR FRESH AD JUDICATION IN THE LIGHT OF THE ABOVE DISCUSSION AS ADMITTEDLY ISSUE ARISING FROM THOSE GROUNDS GOES TO ROOTS OF THE MATTER. CIT(A) IS DIRE CTED TO EXAMINE AND DECIDE CLAIM OF THESE ASSESSES AFTER CONSIDERING PR OVISIONS OF BOMBAY PERSONAL INAMS ABOLITION ACT, 1952. 10. SO FAR AS GROUND NO.4, 5 & 6 ARE CONCERNED, THE Y ARE KEPT OPEN. 11. IN THE RESULT, ALL THESE SEVEN APPEALS FILED BY THE ASSESSEES ARE ALLOWED FOR THE STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5TH APRIL, 2012. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 25TH APRIL, 2012 ITA NOS.4041 TO 4047/MUM/2010 PRAMILA GAJANAN BHOIR AND SIX OTHERS 8 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-I, THANE. 4) THE CIT II, THANE. 5) THE D.R. SMC BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN