PRAGATI KAWALI, MUMBAI V. ITO 25(1)(2), MUMBAI

ITA 4260/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3302 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALMAN KHAN
• Assessee Lawyers: MILIND V SAHASRABUDHE
• Keywords: Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4260/M/2014 ASSESSMENT YEAR: 2009-10 MRS. PRAGATI DILIP KAWALI, A-401 RADHA VILAS APARTMENTS, WAMANRAO BHOIR MARG, DAHISAR WEST, MUMBAI 400 068 PAN: AGHPK 7220M VS. INCOME TAX OFFICER 25(1)(2), ROOM NO.204, C-11 BUILDING, PRATYAKSHAKAR BHAVAN, BKC, BANDRA EAST, MUMBAI - 400051 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MILIND V. SAHASRABUDHE, A.R. REVENUE BY : SHRI SALMAN KHAN, D.R. DATE OF HEARING : 10.03.2016 DATE OF PRONOUNCEMENT : 16.03.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 15.01.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2009-10. 2. THIS APPEAL IS TIME BARRED BY 37 DAYS. THE ASSE SSEE/APPLICANT HAS FILED AN APPLICATION OF CONDONATION OF DELAY WHICH IS ACC OMPANIED WITH THE AFFIDAVIT OF THE ASSESSEE EXPLAINING THE REASONS FOR DELAY IN FILING THE APPEAL. CONSIDERING THE SAID EXPLANATION AS WELL AS THE SHO RTNESS OF THE PERIOD OF DELAY, THE DELAY IN FILING THE APPLICATION IS HEREB Y CONDONED. 3. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) 29, MUMBAI [HEREINAFTER REFERRED TO AS LD . CIT (A)], THE APPELLANTS SUBMIT THE FOLLOWING GROUNDS FOR YOUR SY MPATHETIC CONSIDERATION; WHICH IT IS PRAYED MAY BE CONSIDERED WITHOUT PREJUDICE ITA NO.4260/M/2014 MRS. PRAGATI DILIP KAWALI 2 TO EACH OTHER. 1. THE LD. ASSESSING OFFICER HAS ERRED IN TAXING THE C APITAL GAIN ON SALE OF RESIDENTIAL PROPERTY IN ASSESSMENT YEAR 2009- 10; WITHOUT RECOGNIZING THE FACT THAT THE APPELLANT HAS RECEIVED THE FINAL PAYMENT AND HANDED OVER THE POSSESSION OF THE PROPERTY IN SUBSEQUENT YEAR AND A CCORDINGLY THE SAID CAPITAL GAINS BEING TAXABLE IN ASSESSMENT YEAR 20 10-11 HAS DULY PAID TAXES THEREON IN THE ASSESSMENT YEAR 2010-2011. YOUR APPELLANT CRAVES FOR LEAVE TO ADD, ALTER, AMEN D, MODIFY, ANY OF THE GROUNDS OF APPEAL IF CONSIDERED NECESSARY AT AN Y TIME BEFORE HEARING. THE APPELLANT WISHES TO BE HEARD IN PERSON AND TO M AKE FURTHER DETAILED PRESENTATIONS AND TO PRODUCE FURTHER EVIDENCES IN T HE MATTER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD ENTERED INTO AN AGREEMENT FOR SALE OF THE IMMOVABLE PROPERTY ON 21. 01.09 WORTH RS.85,45,298/-, THE PROCEEDS OF WHICH WERE NOT FOUN D REFLECTED IN THE RETURN OF INCOME. ON BEING ASKED TO EXPLAIN, THE ASSESSEE RE PLIED THAT THE SALE TRANSACTION WAS NOT COMPLETED DURING THE YEAR UNDER CONSIDERATION I.E. FINANCIAL YEAR 2008-09 RELEVANT TO A.Y. 2009-10. I T WAS SUBMITTED THAT THE ACTUAL POSSESSION OF THE PROPERTY WAS GIVEN ON RECE IPT OF FULL CONSIDERATION FROM THE PURCHASER DURING THE SUBSEQUENT FINANCIAL YEAR. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO), HOWEVE R, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE PART P ERFORMANCE OF THE CONTRACT HAD HAPPENED ON THE REGISTRATION OF THE SALE AGREEM ENT ON 21.02.09 AND THEREFORE THE CAPITAL GAINS HAD ACCRUED TO THE ASSE SSEE DURING THE YEAR UNDER CONSIDERATION. HE ACCORDINGLY BROUGHT THE LONG TER M CAPITAL GAINS TO TAX DURING YEAR UNDER CONSIDERATION. BEING AGGRIEVED, T HE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 5. THE LD. CIT(A) ALSO HELD THAT SINCE THE AGREEMEN T TO SALE WAS REGISTERED ON 21.02.09, HENCE THE CAPITAL GAINS HAD ACCRUED TO THE ASSESSEE ON THE SAID DATE. BEING AGGRIEVED, THE ASSESSEE HAS COME IN AP PEAL BEFORE US. ITA NO.4260/M/2014 MRS. PRAGATI DILIP KAWALI 3 6. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATT ENTION TO THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) MADE IN THE IMPUGNED ORDER TO THE EFFECT THAT THOUGH THE AGREEMENT FOR SALE OF THE PROPERTY WAS R EGISTERED ON 21.01.09, HOWEVER, THE POSSESSION OF THE PROPERTY REMAINED WI TH THE ASSESSEE ONLY. EVEN, DURING THE YEAR, THE SAID PROPERTY HAD BEEN R ENTED OUT TO ANOTHER PARTY M/S. FUTURE METALS PVT. LTD. THE ASSESSEE RECEIVED RENT AMOUNTING TO RS.95,000/- PER MONTH TOTALING RS.10,45,000/- DURIN G THE YEAR UNDER CONSIDERATION. THE SAID RENT HAD ALSO BEEN OFFERED TO TAX IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE SAID INCOME HAS ALSO BEEN ACCEPTED BY THE AO IN THE ASSESSMENT ORDER. HE HAS CONTENDED THAT SINCE THE PROPERTY WAS ON RENT TILL MARCH 2009 AND THE ASSESS EE HAD NOT ONLY RECEIVED THE RENT BUT HAD OFFERED THE SAME IN THE RETURN OF INCOME, THAT FACT ITSELF PROVES THAT THE POSSESSION OF THE PROPERTY WAS NOT DELIVER ED TO THE PURCHASERS NAMELY MR. SURESH PANNALAL KANOJIA AND MRS. MEENALAL SURES H KANOJIA. THE THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO THE COPY OF THE SALE AGREEMENT WHEREIN AS PER CLAUSE 4 OF THE AGREEMENT IT HAS BEEN PROVID ED THAT THE TRANSFEREES HAVE APPROACHED AND APPLIED TO SARASWAT BANK FOR AVAILIN G A HOUSING LOAN TO PURCHASE AND ACQUIRE THE PROMISES IN QUESTION AND T HAT THE SAID BANK HAS AGREED TO CONSIDER THEIR REQUEST FOR ISSUANCE OF TH E SAID LOAN AND THE BANK HAS AGREED TO RELEASE THE AMOUNT OF RS.59,50,000/- WITH IN 30 WORKING DAYS TIME ON PRESENTING THE REGISTERED SALE AGREEMENT OF THE PRO PERTY IN QUESTION AND THAT THE AMOUNT WOULD BE DIRECTLY RELEASED IN THE ACCOUN T OF THE TRANSFERORS AND THE TRANSFERORS WILL NOT HAVE ANY LIABILITY TO PAY ANY INTEREST ON THE SAID AMOUNT. FURTHER, THE LD. A.R. HAS INVITED OUR ATTENTION TO CLAUSE 2 OF THE AGREEMENT WHEREIN THE TOTAL CONSIDERATION OF THE PROPERTY HAS BEEN SETTLED AT RS.70 LAKHS PAYABLE TO THE THREE CO OWNERS OF THE PROPERTY INCL UDING ASSESSEE. AS PER CLAUSE 3, A SUM OF RS.10,50,000/- HAS BEEN PAID BEF ORE THE EXECUTION OF THE AGREEMENT AND THE REMAINING AMOUNT OF RS.59,50,000/ - HAS TO BE PAID BY THE TRANSFEREES BY RAISING LOAN FROM THE BANK AS NARRAT ED ABOVE. THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO THE RELEVANT PART OF THE CLAUSE 4 WHEREIN IT HAS ITA NO.4260/M/2014 MRS. PRAGATI DILIP KAWALI 4 BEEN SPECIFICALLY MENTIONED THAT THE TRANSFERORS WI LL PUT THE TRANSFEREES IN VACANT POSSESSION OF THE HOUSE IN QUESTION ON THE T RANSFEREES DISCHARGING THE BALANCE CONSIDERATION AMOUNT OF RS.59,50,000/- ONLY . THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO CLAUSE 9 OF THE AG REEMENT, WHEREIN IT HAS BEEN AGAIN SPECIFICALLY MENTIONED THAT THE TRANSFERORS S HALL DELIVER VACANT POSSESSION OF THE SAID FLAT IN QUESTION TO THE TRANSFEREES ON THE TRANSFEREES DISCHARGING THE TOTAL CONSIDERATION AMOUNT OF RS.70 LAKHS IN THE MA NNER AS MENTIONED IN THE CLAUSES OF THE AGREEMENT. THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO PAGES 33 TO 39 OF THE PAPER BOOK TO SHOW THAT A SOM E OF RS.43,71,782/- WAS PAID BY THE BUYER DIRECTLY TO THE HSBC BANK TOWARDS THE HOUSING LOAN ACCOUNT OF THE SELLER/ASSESSEE ON 05.05.09. FURTHER, AN AM OUNT OF RS.3,61,371/- WAS PAID IN THE BANK OF BARODA ACCOUNT OF THE ASSESSEE ON THE SAME DATE VIDE CHEQUE NO.37203. THE ASSESSEE HAS PROVED BEYOND DOUBT THAT THE REMAI NING AMOUNT OF THE SALE CONSIDERATION AS AGREED BY THE SALE AGREEMENT WAS RECEIVED BY THE ASSESSEE DURING THE SUBSEQUENT YEAR AND NOT DURING THE YEAR UNDER CONSIDERATION. THE POSSESSION OF THE PROPERTY WAS NOT HANDED OVER BY THE ASSESSEE TO THE PURCHASER DURING THE YEAR UNDER CON SIDERATION. EVEN THE ASSESSEE HAS OFFERED THE RENTAL INCOME FOR THE YEAR UNDER CONSIDERATION WHICH HAS BEEN ACCEPTED BY THE AO. THE TERMS AND CONDITI ONS OF THE AGREEMENT ALSO REVEALS THAT THE SAID AGREEMENT WAS REGISTERED SO T HAT THE PURCHASER MAY BE ABLE TO OBTAIN THE HOUSING LOAN FROM THE BANK AND T HAT IT WAS AGREED THAT THE TRANSFER OF THE HOUSE IN QUESTION WILL TAKE PLACE O NLY AFTER THE TRANSFEREE WOULD PAY THE BALANCE AMOUNT OF CONSIDERATION, WHICH ACTU ALLY WAS RECEIVED BY THE ASSESSEE ON 05.05.09. UNDER SUCH CIRCUMSTANCES, TH E TRANSFER OF THE PROPERTY, IN OUR VIEW, WAS NOT COMPLETED IN THE YEAR UNDER CO NSIDERATION. IT IS AN ADMITTED FACT ON THE FILE THAT THE ASSESSEE HAS OFF ERED THE CAPITAL GAINS DURING THE SUBSEQUENT YEAR WHICH HAVE BEEN ACCEPTED BY THE AO. IN VIEW OF THIS, WE HOLD THAT NO CAPITAL GAINS SHOULD HAVE BEEN TAXED I N THE YEAR UNDER CONSIDERATION. ITA NO.4260/M/2014 MRS. PRAGATI DILIP KAWALI 5 7. BEFORE PARTING WITH THE ORDER, WE MAY CLARIFY TH AT THOUGH BOTH THE LD. REPRESENTATIVES OF THE PARTIES HAVE RELIED UPON CER TAIN CASE LAWS BUT WITHOUT GOING TO THE LEGAL ASPECT, WE FIND ON THE FACTUAL A SPECT THAT THE TRANSFER WAS NOT COMPLETED DURING THE YEAR UNDER CONSIDERATION. 8. THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED AND THE ADDITION OF CAPITAL GAINS BY THE AO RELATING TO THE SALE CONSID ERATION RECEIVED ON ACCOUNT OF TRANSFER OF PROPERTY IN QUESTION IS HEREBY ORDER ED TO BE DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.03.2016. SD/- SD/- (RAJESH KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.032016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.