Smt. Padmabai Bansilal Sakhala, Nashik V. ITO,

ITA 422/PUN/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66966 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: V L JAIN
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER. ITA.NO.422/PN/2009 (ASSTT. YEAR : 2004-05) SMT. PADMABAI B. SAKHALA, 158, SARDA SANKUL, M.G. ROAD, NASHIK. .. APPELLANT PAN NO.APDPS 7988H VS. INCOME TAX OFFICER, WARD-2(1), WANI HOUSE, MUMBAI AGRA ROAD, NASHIK. .. RESPONDENT ASSESSEE BY : SHRI V.L. JAIN RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 22-04-2013 DATE OF PRONOUNCEMENT : 30-04-2013 ORDER PER G.S. PANNU, AM : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-II, NASHIK DATED 30-01-2009 WHICH IN TURN HAS ARISEN FR OM THE ORDER OF THE AO PASSED U/S.143(3) OF THE ACT DATED 28-08-2006 PE RTAINING TO A.Y. 2004-05. 2. IN THIS APPEAL THE PERTINENT DISPUTE IS AS TO WH ETHER THE FLAT SOLD BY THE ASSESSEE ON 11-06-2003 WOULD CONSTITUTE SALE OF A LONG TERM CAPITAL ASSET, AS CONTENDED BY THE ASSESSEE, OR SALE OF A S HORT TERM CAPITAL ASSET, AS CONTENDED BY THE REVENUE. 3. BEFORE PROCEEDING TO ADJUDICATE THE CONTROVERSY, IT WOULD BE APPROPRIATE TO OBSERVE THAT ON AN EARLIER OCCASION THE APPEAL OF THE ASSESSEE WAS DISPOSED OF BY THE TRIBUNAL VIDE ITS ORDER DATE D 24-02-2012, WHICH HAS 2 SINCE BEEN RECALLED VIDE ORDER IN M.A. NO.104/PN/20 11 DATED 24-02-2012. IN TERMS OF THE ORDER OF THE TRIBUNAL DATED 24-02-2 012 (SUPRA) THE CAPTIONED PROCEEDINGS HAVE BEEN LISTED AND THE APPE AL IS BEING DISPOSED OF AFTER HEARING THE PARTIES. 4. IN BRIEF, THE FACTS ARE THAT ASSESSEE IS AN INDI VIDUAL DERIVING INCOME FROM HOUSE PROPERTY, SHARE PROFIT FROM A PARTNERSHI P FIRM ETC. FOR THE A.Y. 2004-05, SHE FILED A RETURN OF INCOME DECLARING A T OTAL INCOME OF RS.1,22,725/- WHICH INTER-ALIA, INCLUDED INCOME ON ACCOUNT OF SALE OF A FLAT AT PUNE FOR A TOTAL CONSIDERATION OF RS.12,26,000/- . ASSESSEE DECLARED LONG TERM CAPITAL GAIN ON SUCH SALE AMOUNTING TO RS.11,1 2,000/-, WHICH WAS CLAIMED AS EXEMPT IN VIEW OF SECTION 54F OF THE ACT ON ACCOUNT OF INTENDED INVESTMENT IN PURCHASE OF A NEW RESIDENTIAL UNIT. THE ASSESSING OFFICER, HOWEVER, HAS DENIED THE CLAIM OF EXEMPTION U/S.54 O F THE ACT ON THE GROUND THAT THE SALE OF THE FLAT RESULTED IN A SHOR T TERM CAPITAL GAIN AS PRIOR TO SALE, THE SAID ASSET WAS HELD BY THE ASSESSEE FO R A PERIOD OF LESS THAN 36 MONTHS AND THEREFORE THE EXEMPTION U/S.54F WAS NOT AVAILABLE. THE CIT(A) ALSO UPHELD THE STAND OF THE ASSESSING OFFIC ER, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. AFTER HAVING PERUSED THE ORDERS OF THE AUTHORITI ES BELOW AND HEARING THE RIVAL PARTIES THE FOLLOWING FACTS EMERGE. ASSES SEES LATE HUSBAND SRI BANSILAL PURCHASED A PLOT OF LAND AT MUNJERI, PUNE FOR RS. 38,000/- ON 06- 08-1983. THE SAID SRI BANSILAL ALONG WITH OTHER PLO T OWNERS JOINED TOGETHER AND FORMED A SOCIETY NAMELY KHANDESHWAR COOPERATIVE HOUSING SOCIETY LTD. WITH THE INTENTION OF DEVELOPING THE PLOTS. O N 08-05-90 THE SOCIETY 3 ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S. NIRM ITI DEVELOPERS PVT. LTD. WHEREBY THE SAID DEVELOPER WAS TO DEVELOP THE PLOTS AND UNDERTAKE CONSTRUCTION THEREON AND THE ASSESSEE, BEING MEMBER OF THE SOCIETY WAS ALLOTTED 1000SQ.FT. BUILT UP AREA OF RESIDENTIAL FL AT IN LIEU OF THE PLOT. AS M/S. NIRMITI DEVELOPERS COULD NOT COMPLETE THE WORK , THE SOCIETY MADE ANOTHER AGREEMENT ON 03-10-1999 JOINTLY WITH M/S.NI RMITI DEVELOPERS PVT. LTD. AND M/S.GOEL GANGA ASSOCIATES TO UNDERTAKE THE PLOT DEVELOPMENT. THE DEVELOPMENT OF THE SAID PLOT WAS COMPLETED AND THE ASSESSEE WAS GIVEN POSSESSION OF THE FLAT ON 12-12-2002. THE SA ID FLAT HAS SINCE BEEN SOLD BY THE ASSESSEE ON 11-06-2003 AND IT HAS BEEN CONTENDED THAT THE GAIN ON SUCH SALE WAS A LONG TERM CAPITAL GAIN SINCE THE ASSESSEE HELD THE ASSET FOR A PERIOD EXCEEDING 36 MONTHS. AS PER THE ASSES SEE THE RIGHT IN THE FLAT WAS CONFERRED ON 08-05-1990 ITSELF AND IN ANY CASE SUCH RIGHT ACCRUED ON 03-10-1999 WHEN THE DEVELOPMENT AGREEMENT WAS ENTER ED INTO BETWEEN THE SOCIETY, M/S. NIRMITI DEVELOPERS PVT. LTD. AND M/S. GOEL GANGA ASSOCIATES. THE PLEA OF THE ASSESSEE IS THAT THE P ERIOD OF HOLDING OF THE FLAT IS TO BE RECKONED IN THE BACKGROUND THAT THE PLOT W AS ACQUIRED BY HER LATE HUSBAND ON 06-08-1983, IT WAS TRANSFERRED TO THE SO CIETY FOR DEVELOPMENT AND ON 08-05-1990 OR ON 03-10-1999, THE RIGHT TO FL AT ACCRUED TO THE ASSESSEE. AS PER THE ASSESSEE, CONSIDERED FROM 08-0 5-1990 OR 03-10-1999, THE PERIOD OF HOLDING EXCEEDS 36 MONTHS TILL THE DA TE OF SALE ON 11-06-2003. 6. THE LD. COUNSEL APPEARING BEFORE US FURTHER CONT ENDED THAT EVEN IF THE DATE OF 08-05-1990 IS IGNORED YET THE DATE OF 0 3-10-1999 IN TERMS OF WHICH THE SOCIETY ENTERED INTO A JOINT DEVELOPMENT AGREEMENT WITH M/S.NIRMITI DEVELOPERS PVT. LTD. AND M/S. GOEL GANG A ASSOCIATES SHOULD 4 BE CONSIDERED AS THE DATE ON WHICH THE RIGHT IN THE FLAT ACCRUED TO THE ASSESSEE IN AS MUCH AS IN TERMS OF THE AGREEMENT TH E ASSESSEE WAS ALLOTTED THE FLAT IN QUESTION. EVEN RECKONED FROM 03-10-199 9 THE PERIOD OF HOLDING EXCEEDS 36 MONTHS QUA THE DATE OF SALE, I.E.11-06-2 003. THE LD. COUNSEL VEHEMENTLY SUBMITTED THAT THE DATE OF HANDING OVER POSSESSION OF FLAT TO THE ASSESSEE, I.E.12-12-2002 WAS NOT RELEVANT IN AS MUC H AS THE ASSESSEE HELD THE RIGHTS IN THE FLAT IN QUESTION SINCE 1990. IN SUPPORT OF HIS CONTENTION THE LD. COUNSEL HAS RELIED UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VIMAL LALCHAND MUTHA 187 ITR 613 AS WELL AS THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VINOD KUMAR JAIN VS. CIT & OTHERS 46 DTR 185 (P&H). 7. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE APPEARING FOR THE REVENUE SUBMITTED THAT IT WAS ONLY ON 12-12-200 2 THAT ASSESSEE BECAME THE OWNER OF THE FLAT AND THEREFORE THE PERIOD OF H OLDING HAS TO BE RECKONED FROM SUCH DATE AND IN THIS LIGHT THE PERIOD OF HOLD ING TILL THE DATE OF SALE WAS LESS THAN 36 MONTHS. IT WAS ALSO SUBMITTED THA T PRIOR TO 12-12-2002 THE ASSESSEE HAD ONLY A RIGHT IN THE FLAT AND THAT IT W AS NOT THE SAME THING AS THE FLAT WHICH IS THE SUBJECT MATTER OF SALE. IN THIS MANNER, THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VIMAL LALC HAND MUTHA (SUPRA) IS SOUGHT TO BE DISTINGUISHED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE FACTUAL MATRIX OF THE CASE IS NOT IN DISPUTE. THE LATE HUS BAND OF THE ASSESSEE HAD ACQUIRED A PLOT OF LAND ON 06-08-1983. THE LATE H USBAND OF THE ASSESSEE ALONG WITH OTHER PLOT HOLDERS, TRANSFERRED THE PLOT TO A COOPERATIVE HOUSING 5 SOCIETY ON 08-05-1990 AND SIMULTANEOUSLY THE SAID S OCIETY ENTERED INTO AN AGREEMENT WITH M/S. NIRMITI DEVELOPERS PVT. LTD. TO UNDERTAKE DEVELOPMENT AND IN TURN THE ASSESSEE WAS TO BE ALLO TTED 1000 SQ.FT. RESIDENTIAL BUILT-UP AREA IN LIEU OF THE SAID PLOT. THE PLEA OF THE ASSESSEE IS THAT ON 08-05-1990 THE RIGHT TO FLAT ACCRUED AND UL TIMATELY THE FLAT WAS GIVEN OVER TO THE ASSESSEE AND REGISTERED IN THE NA ME OF THE ASSESSEE ON 12- 12-2002. AS PER THE ASSESSEE THE PERIOD OF HOLDING HAS TO BE RECKONED ON 08-05-1990. IT IS CLAIMED THAT THE DEVELOPMENT AGR EEMENT WITH M/S. NIRMITI DEVELOPERS PVT. LTD. DID NOT FRUCTIFY AND O N 03-10-1990 SOCIETY ENTERED INTO A JOINT AGREEMENT WITH M/S. NIRMITI D EVELOPERS PVT. LTD. AND M/S.GOEL GANGA ASSOCIATES TO CARRY OUT THE INTENDED DEVELOPMENT. THE ASSESSEE ULTIMATELY RECEIVED THE POSSESSION OF THE FLAT ON 12-12-2002. IN TERMS OF THE SAID DEVELOPMENT AGREEMENT, THE ASSESS EE CONTENDS THAT THE RIGHT TO THE FLAT ACCRUED ON 03-10-1999, IF NOT ON 08-05-1990 AND THE PERIOD OF HOLDING BEFORE THE SALE ON 11-06-2003 WOULD EXCE ED 36 MONTHS. 9. IN THE CASE OF VIMAL LALCHAND MUTHA (SUPRA) BEFO RE THE HONBLE BOMBAY HIGH COURT, THE ASSESSEE THEREIN HAD ENTERED INTO AN AGREEMENT ON NOVEMBER 8 TH 1997 FOR PURCHASE OF A FLAT AND A FORMAL AGREEMENT WAS MADE ON 04-12-1978. THE ASSESSEE OBTAINED POSSESSION OF THE FLAT IN JUNE 1981. ON 28-04-1983 THE ASSESSEE TRANSFERRED HIS RIGHT, T ITLE AND INTEREST IN THE SAID FLAT AND OFFERED THE SAME TO CAPITAL GAINS CON SIDERING IT TO BE A LONG TERM CAPITAL GAIN. THE REVENUE CONTENDED THAT BY V IRTUE OF TAKING THE POSSESSION OF THE FLAT IN JUNE 1981, THE PERIOD OF HOLDING PRIOR TO SALE WAS LESS THAN 36 MONTHS AND HENCE IT WAS A SHORT TERM C APITAL GAIN. THE AFORESAID STAND OF THE REVENUE WAS NEGATED BY THE H ONBLE HIGH COURT AND 6 IT UPHELD THE STAND OF THE ASSESSEE BY OBSERVING TH AT WHAT THE ASSESSEE HAD TRANSFERRED WAS THE RIGHTS ACQUIRED IN TERMS OF TH E AGREEMENTS OF 1977/1978 AND THEREFORE THE PERIOD OF HOLDING OF TH E ASSET EXCEEDED 36 MONTHS PRIOR TO SALE AND ACCORDINGLY THE CAPITAL GA INS WAS LONG TERM GAIN. 10. IN OUR CONSIDERED OPINION, THE PARITY OF REASON ING UPHELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VIMAL LALC HAND MUTHA (SUPRA) SQUARELY COVERS THE CONTROVERSY BEFORE US. THE ASS ESSEE ACQUIRED THE RIGHTS IN THE IMPUGNED FLAT IN TERMS OF THE DEVELOPMENT AG REEMENTS MADE BY KHANDESHWAR COOPERATIVE HOUSING SOCIETY (OF WHICH S HE WAS A MEMBER ON THE DEATH OF HER HUSBAND) WITH M/S. NIRMITI DEVE LOPERS PVT. LTD. AND M/S. GOEL GANGA ASSOCIATES AND CONSIDERED FROM SUCH DATE, THE PERIOD OF HOLDING PRIOR TO SALE IS MORE THAN 36 MONTHS, AND T HEREFORE THE ASSESSEE IS JUSTIFIED IN CLAIMING THE CAPITAL GAIN AS LONG TERM GAIN. THEREFORE, IN THE AFORESAID LIGHT WE SET-ASIDE THE ORDER OF THE CIT(A ) AND DIRECT THE ASSESSING OFFICER TO TREAT THE CAPITAL GAIN ON SALE OF THE FLAT AT PUNE AS A LONG TERM CAPITAL AGAIN AND RECOMPUTE THE TOTAL INC OME ACCORDINGLY AS PER LAW. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF APRIL, 2013. SD/- SD/- ( SHAILENDRA KUMAR YADAV) ( G.S.PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED THE 30 TH APRIL 2013. 7 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.