BIDDLE INTERMEDIATES P. LTD, AHEMEDABAD V. DCIT CIR 3(1), MUMBAI

ITA 4093/MUM/2011

• Counselvise Citation: 409319914 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIP C MAURYA
• Assessee Lawyers: PRAKASH D SHAH
• Keywords: Sale consideration of property below Jantri Value
• Section: 2; 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI RAJENDRA (ACCOUNTANT MEMBER) ITA NO.4093/MUM/2011 ASSESSMENT YEAR: 2005 -06 BIDDLE INTERMEDIATES P. LTD., C/O. MEHTA LODHA & CO., CHARTERED ACCOUNTANTS, 105, SAKER-1, ASHRAM R.D. AHEMEDABA- 380009 PAN: AAACB 2231 R VS. DCIT, CIRCLE 3(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH D SHAH RESPONDENT BY: SHRIP.C.MAURYA DATE OF HEARING: 27.6.2012 DATE OF PRONOUNCEMENT: 25.7.2012 ORDER PER RAJENDRA,AM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE CIT(A)-7, MUMBAI (DATED 17.2.2011) FOR THE ASSESSMENT YEAR 2005-06 . 2. THE ONLY EFFECTIVE GROUND TAKEN BY THE ASSESSEE READS AS UNDER: THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT(A) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE ADDITION OF SHORT TERM CAPITAL GAIN OF RS.6,79,482 AND, THEREFORE, THE LD AO SHOULD BE DIRECTED TO DELETE T HE SAID ADDITION AND THE LD AO SHOULD BE DIRECTED TO COMPUTE LONG TERM CAPITAL GAI N OF RS.5590/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THAT ASSESSEE HAD DECLARED CONSIDERATION ON LAND AN D BUILDING AT RS.26,00,000. THE AO DIRECTED THE ASSESSEE TO FURNISH VALUE OF LAND AND BUILDING AS ADOPTED BY THE STAMP DUTY AUTHORITIES. HE FOUND THAT THE MARKET VALUE AS ASS ESSED IN RESPECT OF LAND AND BUILDING WAS RS.35.00,000 AS PER THE ADJUDICATION MADE BY THE ST AMP AUTHORITY. THE AO WAS OF THE VIEW THAT THE SAID SALE CONSIDERATION WAS MORE THAN WHAT WAS DECLARED BY THE ASSESSEE, HENCE, PROVISIONS OF SECTION 50C OF THE ACT WERE APPLICABL E. BY APPLYING PROVISIONS OF SECTION 2 ITA NO.4093/MUM/2011 M/S. BIDDLE INTERMEDIATES P. LTD. 50C, HE RECALCULATED THE CAPITAL GAIN WITH REGARD T O LAND AND FACTORY BUILDING. THE SHORT TERM CAPITAL GAIN ON DEPRECIABLE ASSETS WORKED OUT BY THE AO WAS AS UNDER: SALE CONSIDERATION OF LAND AND BUILDING AS PER STAMP VALUATION : RS.35,00,000 ADD: SALE CONSIDERATION OF OTHER ASSETS (50,09,000 -26,00,000) : RS.24,09,000 RS.59,09,000 LESS: W.D.V. AS ON 31.3.2004 RS.23,50,815 STCG RS.35,58,185 FINALLY, HE HELD THAT THE SHORT TERM CAPITAL GAIN O N DEPRECIABLE ASSET WAS TO BE TAKEN AT RS.35,58,185 AS AGAINST RS.28,78,703 DECLARED BY TH E ASSESSEE. THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA), WHO UPHELD THE ORDER OF THE AO. 4. BEFORE US AUTHORISED REPRESENTATIVE (AR) SUBMITT ED THAT ENHANCEMENT OF AMOUNT OF SHORT TERM CAPITAL GAIN BY RS.6.79 LAKHS BY THE AO ON THE GROUND THAT THE ADJUDICATION MADE BY THE STAMP AUTHORITIES WAS NOT TAKEN INTO CONSIDE RATION BY THE ASSESSEE WAS FACTUALLY INCORRECT, THAT THE ASSESSEE HAD TAKEN THE VALUE OF THE ASSET AT RS.35,00,000, THAT THE DETAILED WORKING FOR THE CAPITAL GAIN, SALE VALUE, AS PER BO OKS AND ACCOUNT WAS PRODUCED BEFORE THE LOWER AUTHORITIES, THAT WHILE COMPUTING CAPITAL GAI N, THE AO HAD ADOPTED THE OPENING WRITTEN DOWN VALUE AND SAME WAS INCLUSIVE OF OPENIN G WDV OF OFFICE BUILDING ALSO, THAT OUT OF RS.35,00,000, RS.26,00,000 FOR THE FACTORY B UILDING, THAT BALANCE RS.9,00,000 WERE RECEIVED BY THE ASSESSEE FOR THE PLOT OF LAND. ON THE OTHER HAND, LD D.R. RELIED ON THE ORDERS OF AUTHORITIES BELOW. 5. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND THA T THE FAA HAD NOT CONSIDERED THE FACT THAT WHILE COMPUTING THE CAPITAL GAINS, AO HAD ADOP TED OPENING WDV AS ON 01-04-2004 AT RS. 23.5 LAKHS AND SAME WAS INCLUSIVE OF OPENING WD V OF OFFICE BUILDING OF RS. 2.20 LAKHS. FROM THE MATERIAL AVAILABLE, IT IS CLEAR THAT TOTAL CONSIDERATION RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE LAND AND BUILDING WAS RS. 35 LACS ( RS. 9 LACS FOR LAND AND RS. 26 LACS FOR BUILDING).BUILDING WAS TAKEN OUT OF THE BLOCK BY TH E ASSESSEE AND SHORT TERM CAPITAL GAIN WAS OFFERED CONSIDERING THE FACTORS LIKE DEPRECIATI ON, WDV AND SALE VALUE. IN THE SALE DEED, LAND AND BUILDING HAVE BEEN MENTIONED SEPARATELY AN D AS PER THE STAMP DUTY AUTHORITIES, TOTAL CONSIDERATION FOR LAND AND BUILDING WAS OF RS .35 LAKHS FOR REGISTRATION PURPOSES. IN 3 ITA NO.4093/MUM/2011 M/S. BIDDLE INTERMEDIATES P. LTD. THESE CIRCUMSTANCES, THE ASSESSEE HAD RIGHTLY SHOWN THE SAID SUM IN ITS BOOKS OF ACCOUNTS AS CONSIDERATION ON SALE OF LAND AND BUILDING. 6. AFTER GOING THROUGH THE DETAILED WORKING OF CAP ITAL GAINS, SALE VALUE AS PER THE BOOKS OF ACCOUNTS AND AS PER INCOME, SUBMITTED BY THE ASSESSEE, WE ARE OF THE OPINION THAT ADDITION MADE BY THE AO WAS RESULT OF NOT APPRECIAT ING THE FACTS OF THE CASE IN PROPER PERSPECTIVE. IN OUR OPINION CALCULATION SUBMITTED B Y THE ASSESSEE DURING APPELLATE PROCEEDINGS SHOULD BE ADOPTED TO DETERMINE TAX LIAB ILITY OF THE ASSESSEE COMPANY. 7. REVERSING THE ORDER OF THE FAA,WE DECIDE GROUND NO.1 IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2012 SD/- (B.R.MITTAL) JUDICIAL MEMBER SD/- (RAJENDRA) ACCOUNTANT MEMBER MUMBAI, DATED 25 TH JULY, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),, MUMBAI 4. COMMISSIONER OF INCOME TAX, , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH B MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI