PRAVIN GANPAT KADU, RAIGAD V. ITO WD 4, PANVEL

ITA 4165/MUM/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5560 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition; Set aside; Capital Gains
• Section: 50C; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 4165 /MUM/2015 ASSESSMENT Y EAR: 2011 - 12 MR. PRAVIN GANPAT KADU, HOUSE NO. 480 AT NAVGHAT, JNPT TOWNSHIP, TALUKA URAN, DISTR ICT RAIGAD PAN: AMHPK6351M VS. THE ITO WARD 4, PANVEL (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAKASH PANDIT ( AR ) REVENUE BY : SHRI S.K. BEPARI ( SR. D R) DATE OF HEARING: 16 /08 /201 8 DATE OF PRONOUNCEMENT: 09 / 11 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 24.03.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 (FOR SHORT THE CIT(A) , THANE , FOR THE ASSESSME NT YEAR 2011 - 12 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3 ) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN EMPLOYEE OF JNP T, NAVI MUMBAI, FILED E - RETURN OF HIS INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 6,74,356/ - . SINCE, THE CASE WAS SELECTED FOR SCRUTINY, THE AO ISSUED NOTICES U/S 143 (2) AND 142 (1). IN RESPONSE TO THE SAID NOTICES , THE AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE APPEARED BEFORE THE AO, DISCUSSED THE CASE AND FURNISHED THE DETAILS CALLED FOR. IT WAS NOTICED THAT THE ASSESSEE WAS ALLOTTED 2.5 PLOTS UNDER 12.5% SCHEME 2 ITA NO. 4165 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 BY CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LTD. ( CIDCO ) AS A LEGAL HEIR AND AGREEMENT WAS EXECUTED BETWEEN CIDCO LTD. AND THE ASSESSEE AND OTHERS, WHICH WAS DULY REGISTERED WITH THE REGISTRAR OF ASSURANCES AFTER PAYING A LEASE PREMIUM OF RS. 1,26,650/ - . T HE LAND OWNERS AGREED TO TRAN SFER THE SAID LEASE RIGHTS TO SH. DILIP GANGA RAM PATIL, PROPRIETOR OF M/S RAHUL BUILDERS AND DEVELOPERS . HOWEVER, THE LEASE RIGHTS OF THE SAID PLOT WERE NOT TRANSFERRED BY THE ASSESSEE AND OTHERS TO DILIP GANGA RAM PATIL. SUBSEQUENTLY, SH. DILIP GANGA RAM PATIL SOLD THE SAID RIGHTS TO A PARTNERSHIP FIRM FOUNTAINHEAD FOR RS. 2,00,00,000/ - . SINCE, THE LEASE RIGHTS OF THE SAID PLOT WERE NOT TRANSFERRED FROM ORIGINAL LICENSEE AND OTHERS, THEY TRANSFERRED THE RIGHTS TO THE SAID FIRM BY EXECUTING A TRIPARTITE AGREEMENT AMONG CIDCO LTD, THE ORIGINAL LICENSEES AND FOUNTAINHEAD ON 31.12.2010. DURING THE ASSESSMENT PROCEEDINGS, THE AR WORKED OUT THE TOTAL TAXABLE INCOME AT RS. 7,40,961/ - AFTER MAKING ADDITION OF RS. 66,605/ - AS SHORT TERM CAPITAL GAIN FROM SALE OF PLOT . HOWEVER, THE AO REJECTED THE SAME AND COMPUTED THE CAPITAL GAIN OF THE ASSESSEE AT RS., 42,57,310/ - AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 4 9 ,32,270/ - . THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). T HE LD. CIT (A) DISMISSED THE APPEAL FILED BY THE ASSESSEE AND CONFIRMED THE ASSESSMENT ORDER PASSED BY THE AO. 3 . AGGRIEVED BY THE ORDER OF LD. CIT (APPEAL S ), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUND S : - 1. IN THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE A.O. OF ADOPTING THE VALUE OF THE ASSET SOLD, BEING A LEASEHOLD RIGHT CIDCO PLOTS, AT RS. 4,74,30,000/ - BY APPLYING THE PROVISIONS OF SECTION 50C OF INCOME TAX ACT 1961 FOR THE PURPOSE OF COMPUTING ASSESSEES SHARE IN CAPITAL GAINS. 2. THE REASONS GIVEN BY THE CIT (A) FOR CONFIRMING THE ORDER OF THE A.O. OF ADOPTING THE VALUE OF THE ASSET SOLD, BEING A LEASEHOLD RIGHT CIDCO PLOTS, AT RS. 4,74,30,000/ - BY APPLYING THE P ROVISIONS OF 3 ITA NO. 4165 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 SECTION 50C OF INCOME TAX ACT 1961 FOR THE PURPOSE OF COMPUTING ASSESSEES SHARE IN CAPITAL GAINS, ARE WRONG, INSUFFICIENT AND CONTRARY TO FACTS AND EVIDENCE ON RECORD. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE A.OS ACTION OF DETERMIN IN G THE ASSESSEES SHARE IN THE CONSIDERATION RECEIVED AT RS. 18,00,000/ - AS AGAINST THE ASSESSEES SHARE AT 1/7 TH OF RS. 18,00,000/ - . 4. THE REASONS GIVEN BY THE CIT (A) FOR CONFIRMING THE A.O S ACTION OF DETER MINING THE ASSESSEES SHARE IN THE CONSIDERATION RECEIVED AT RS. 18,00,000/ - AS AGAINST THE ASSESSEES SHARE AT 1/7 TH OF RS. 18,00,000/ - , ARE WRONG, INSUFFICIENT AND CONTRARY TO FACTS AND EVIDENCE ON RECORD. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE A.OS ACTION OF TREATING COST OF ACQUISITION OF LEASEHOLD RIGHTS IN THE PLOTS ALLOTTED BY CIDCO AT RS. 11.390/ - AS AGAINST MARKET VALUE OF THE SAID LEASEHOLD RIGHT AT THE 1 ST LEASE AGREEMENT BETWEEN AND TH E ALLOTTEES OF THE PLOTS. 6. THE REASONS GIVEN BY THE CIT (A) FOR CONFIRMING THE A.OS ACTION OF TREATING COST OF ACQUISITION OF LEASEHOLD RIGHTS IN THE PLOTS ALLOTTED BY CIDCO AT RS. 11.390/ - AS AGAINST MARKET VALUE OF THE SAID LEASEHOLD RIGHT AT THE 1 ST LE ASE AGREEMENT BETWEEN AND THE ALLOTTEES OF THE PLOTS, ARE WRONG, INSUFFICIENT AND CONTRARY TO FACTS AND EVIDENCE ON RECORD. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED A.O. SHOULD HAVE REFERRED THE MATTER TO THE VALUATION OFFICER AS P ER THE PROVISIONS OF SECTION 50C(2) OF THE INCOME TAX ACT, 1961. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS WRONGLY ASSESSED THE VALUE OF THE RIGHT SOLD AT RS. 4,74,30,000/ - BY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT FOR THE PURPOSE OF COMPUTING ASSESSEES SHARE IN THE CAPITAL GAIN WHICH IS CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. SINCE, THE AO HAD WRONGLY APPLIED THE PROVIS IONS OF SECTION 50C OF THE ACT , T HE LD. CIT (A) OUGHT TO HAVE SET ASIDE THE ASSESSMENT ORDER . THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY CONFIRMED THE AOS ACTION OF DETERMINING OF THE ASSESSEES SHARE IN THE CONSIDERATION AT RS. 18,00,000/ - AS AGAINST THE ASSESSEES SHARE AT 1/7 TH OF THE SAID AMOUNT. 4 ITA NO. 4165 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 FURTHER, THE LD. CIT (A) HAS WRONGLY DETERMINED THE COST OF ACQUISITION AT RS. 11.390/ - AS AGAINST THE MARKET VALUE OF THE SAID LEASE HOLD RIGHT, WHICH IS INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. THE LD. CIT (A) OUGHT TO HAVE DIRECTED THE AO TO REFER THE MATTER TO VALUATION OFFICER AS PER THE PROVISIONS OF SECTION 50C(2) OF THE ACT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE DIRECTED THE AO TO DETERMINE THE SHARE OF THE CONSIDERATION ON THE BASIS OF LEGAL HEIRS HAVING INTEREST IN THE PROPERTY. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT SINCE THE AO HAD COMPUTED THE CAPITAL GAIN ARISING OUT OF THE SALE OF PLOT AS PER THE PROVISIONS OF LAW, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE ASSESSMENT ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELOW IN THE LIGHT OF THE CONTENTIONS OF THE PARTIES. WE NOTICE THAT THE AO H AS TAKEN THE TOTAL CONSIDERATION OF THE ASSETS SOLD BY THE ASSESSEE VIDE TRIPARTITE AGREEMENT DATED 31.12.2010 AT RS. 2,00,00,000/ - AND COMPUTED THE CONSIDERATION AS PER SECTION 50C OF THE ACT AT RS. 4,74,30,000/ - AND ACCORDINGLY DETERMINED THE SHARE OF TH E ASSESSEE AT RS. 42,68,700/ - I.E. 9% OF THE AFORESAID AMOUNT AND AFTER DEDUCTING 9% OF THE PREMIUM PAID BY THE ASSESSEE DETERMINING THE NET SHORT TERM CAPITAL GAIN AT RS. 42,57,310/ - . THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE AO SHOUL D HAVE BIFURCATE D THE SHARE OF THE ASSESSEE ON THE BASIS OF LEGAL HEIRS AS MENTIONED IN THE TRIPARTITE AGREEMENT DATED 31.12.2010. WE NOTICE THAT THE AO HAS CALCULATED THE ASSESSEES SHARE WITHOUT TAKING INTO CONSIDERATION, THE NUMBER OF LEGAL HEIRS MENTIO NED IN THE SAID AGREEMENT. HENCE, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. IN OUR CONSIDERED VIEW, THE AO SHOULD HAVE CALC U LATE THE SHARE OF THE PLOT AS PER THE NUMBER OF THE LEGAL HEIRS/PARTIES, WHO HAVE SOLD THEIR RIGHTS IN TH E SAID PLOT TO M/S FOUNTAINHEAD, A PARTNERSHIP FIRM. SINCE, THE LD. CIT (A) HAS CONFIRMED THE ASSESSMENT ORDER WITHOUT TAKING INTO CONSIDERATION, 5 ITA NO. 4165 / MUM/2015 ASSESSMENT YEAR: 2011 - 12 THE CONTENTION OF THE ASSESSEE, THE LD. CIT(A) SHOULD HAVE REMANDED THE MATTER FOR FRESH CONSIDERATION . HENCE, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) AND REMIT THE APPEAL BACK TO THE AO FOR PASSING ASSESSMENT ORDER AFRESH AFTER TAKING INTO CONSIDERATION, THE PLEA OF THE LD. COUNSEL THAT THE SHARE OF THE ASSESSEE SHOULD BE DETERMINED ON THE BASIS OF LEGAL HEIRS HAVING INTEREST IN THE PROPERTY IN THE TRIPARTITE AGREEMENT EXECUTED ON 31.12.2010. WE FURTHER DIRECT THE AO AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 2012 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2018. SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTAN T MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 09 / 11 / 201 8 ALINDRA, PS / 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