I.T.O. 17(1)(1), MUMBAI V. SAM P. TODDYWALLA, MUMBAI

ITA 4518/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3624 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 10-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Capital asset
• Section: 147; 148

Judgement Text

1 , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , BEFORE SHRI C.N. PRASAD , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO 4518 /MUM/201 2 ( / ASSESSMENT YEAR: 200 7 - 08 ) INCOME TAX OFFICER 17(1)(1), 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012 / VS. SAM P TODDYWALLA, FLAT NO.2, 802 - B, DEDHIA HOUSE, DR. AMBEDKAR ROAD, DADAR (E), MUMBAI - 400014. ./ ./ PAN : A AAPT9498D ( / APPELLANT) : ( / RESPONDENT ) CROSS - OBJECTION NO 129/MUM/2013 ARISING OUT OF I.T.A. NO .4518/ MUM/ 2012 ( / ASSESSMENT YEA R : 2007 - 08 ) SAM P TODDYWALLA, FLAT NO.2, 802 - B, DEDHIA HOUSE, DR. AMBEDKAR ROAD, DADAR (E), MUMBAI - 400014 / VS. INCOME TAX OFFICER 17(1)(1), 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO 6703 /MUM/201 3 ( / ASSESSMENT YEAR: 200 7 - 08 ) INCOME TAX OFFICER 14(3)(3), 606, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400021 / VS. MR. MUNCHERSHAW P TODDYWALLA, 2 ND FLOOR,, NASEERWANJI HOUSE, 13,15, DHUSWADI, DHOBI TALAO, MUMBAI - 400002 ./ ./ PAN : AAAPT7896F 2 ITA NO.4518/M/2012 - CO - 16 - ITA NO.6703/M/13 AND CO - 16/M/15 ( / APPELLANT) : ( / RESPONDENT ) CROSS - OBJECTION NO 16 /MUM/201 5 ARISING OUT OF I.T.A. NO . 6703 / MUM/ 201 3 ( / ASSESSMENT YEA R : 2007 - 08 ) MR. MUNCHERSHAW P TODDYWALLA, 2 ND FLOOR,, N ASEERWANJI HOUSE, 13,15, DHUSWADI, DHOBI TALAO, MUMBAI - 400002 / VS. INCOME TAX OFFICER 14(3)(3), 606, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400021 ( / APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY : SHRI MANJUNATHA SWAMY / ASSESSEE BY : SHRI VIMAL PUNAMIYA / DATE OF HEARING : 1 2 .02.2016 / DATE OF PRONOUNCEMENT : 14. 0 3 .2016 / O R D E R PER RAJESH KUMAR, A. M: TH ESE ARE THE CROSS - APPEALS AND THESE ARE DIRECTED AGAINST THE ORDERS DATED 19.4.2012 AND 8.8.2013 PASSED BY THE RESPECTIVE CIT(A) AND THESE RELATE TO THE ASSESSMENT YEAR 2007 - 08. SINCE ISSUE INVOLVED IN ALL THESE CASES IS COMMON AND THEREFORE, THESE APPEALS ARE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. WE SHALL TAKE UP THE GROUNDS AS RAISED IN ITA NO.4518/MUM/2012 WHICH ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE L D.CIT(A) HAS ERRED IN DIRECTING TO CONSIDER THE NON REFUNDABLE DEPOSIT OF RS. 6.25 LAKHS RECEIVED BY THE ASSESSEE AS COST OF CONSIDERATION INSTEAD OF CONSIDERING RS.2,47,60,250 / - PAID BY FLAT 3 ITA NO.4518/M/2012 - CO - 16 - ITA NO.6703/M/13 AND CO - 16/M/15 OWNERS TO THE VENDORS I.E. ASSESSEE AND HIS BROTHER AS PER THE AGREEMENT BETWEEN VENDOR S, FLAT OWNERS AND BUILDER IN WHICH THE BUILDER IS ONLY THE CONFIRMING PARTY AND VENDORS HAVE RECEIVED THE ENTIRE SUM. 2 . THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2.1 THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME AT RS. 1,64,451/ - ON 12TH JULY 2007 WHICH WAS REVISED BY THE HIM ON 26TH JULY 2007 BY DECLARING AN INCOME OF 1,64,651/ - . THE ASSESSEE AND HIS BROTHER WERE CO - OWNERS OF LAND ADMEASUR ING 54198 SQ METRES HAVING SHARE OF 50% EACH WHICH WAS LEASED OUT BY THEM FOR 999 YEARS VIDE AGREEMENT DATED30.03.1979 TO A BUILDER NAMELY DARYANI (INDO SAIGON) C ONSTRUCTION PVT.LTD. FOR A SUM OF RS. 12,50,000/ - WHICH WAS NON - REFUNDABLE. THE SAID LAND WAS PURCHASED BY THEM FOR A SUM OF RS. 1,00,000/ - IN THE YEAR 1951 AND WAS TRANSFERRED IN THE NAME OF ASSESSEE AND HIS BROTHER IN 1957 AND TILL THE YEAR OF SALE THE ASSESSEE AND HIS BROTHER CARRIED ON AGRICULTURE OPERATION ON THE SAID LAND. CONS EQUENTLY THE POSSESSION OF THE PROPERTY WAS HANDED OVER AND GIVEN ON 18.3.1979 TO THE SAID BUILDER COMPANY. THE SAID LAND WAS DEVELOPED AND FLATS WERE CON STRUCTED BY THE BUILDER. ON 13 TH OF NOVEMBER 2006 A DEED OF CONVEYANCE WAS REGISTERED BETWEEN THE ASS ESSEE , HIS BROTHER (OWNERS), THE DARYANI (INDO SAIGON) CONSTRUCTION PVT. LTD., AND THE FLAT BUYERS REPRESENTED BY DEEPTI SHAKTI MUKTI C O - OPERATIVE HSG.SOC.LTD. FOR A CONSIDERATION OF RUPEES 2,47,60,250/ - WHICH WAS RECEIVED BY THE BUILDER COMPANY DIRECTLY . THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 READ WITH SECTION 148 OF THE A CT TO ASSESS THE LONG - TERM GAIN ARISING OUT OF THE SAID TRANSACTION. THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 1 ST MAY 2009 IN RESPONSE TO WHICH THE ASSESS EE FILED HIS RETURN OF INCOME ON 28 APRIL 2010 AT RS. 164 , 451/ - . 4 ITA NO.4518/M/2012 - CO - 16 - ITA NO.6703/M/13 AND CO - 16/M/15 3. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING SUBMITTED BEFORE THE AO THAT HE WAS NOT GIVEN ANY CONSIDERATION OR PART THEREOF AND THE ENTIRE CONSIDERATION UNDER THE CONVEYA NCE DEED WAS RECEIVED BY THE DEVELOPER M/S DCPL. THE ASSESSEE SUBMITTED BEFORE THE AO THAT RS. 2,47,60,250/ - REPRESENTED THE TOTAL PRICE PAID BY THE FLAT OWNERS FOR THE FLATS PURCHASED AND CAR PARKING AREA TO THE BUILDER AND HE HAD NOT RECEIVED ANYTHING OUT OF THE SAID CONSIDERATION. THE SAID BUILDER HAD DULY PAID THE INCOME TAX ON THE PROFITS ON THE SALE OF FLATS. THE AO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE PROPERTY WAS LEASED OUT TO DCPL ON 30 MARCH 1979 . THE ASSESSEE HOWEVER ADMITTED THAT HE HAD NOT PAID ANY TAX ON THE MONEY RECEIVED UPON GRANTING OF LEASE THESE FOR 999 YEARS IN THE FINANCIAL YEAR 1979 - 80 WHICH WAS AS GOOD AS SALE HOWEVER THE ASSESSEE CONTINUED TO BE THE REGISTERED OWNER OF THE PROPERTY . THE AO THEREAFTER COMPUTED THE IN COME FROM LONG T ERM GAIN AT RS. 99,24,008/ - AND ASSESSED THE ASSESSEE ACCORDINGLY. 4. BEING AGGRIEVED BY THE ORDER OF AO , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER: I HAVE GONE THRO UGH THE ABOVE WORKING. IN ABSENCE OF ANY MENTION ABOUT THE VALUE OF THE LAND IN THE DOCUMENTS PRODUCED THERE IS NO WAY TO FIND OUT THE ACTUAL COST OF THE LAND. THE ABOVE WORKING GIVEN BY THE APPELLANT OF RS.2,40,975/ - APPEARS TO BE REASONABLE. HOWEVER THE A BOVE WORKING WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDING. IN FACT THE APPELLANT TOGETHER WITH HIS BROTHER HAS RECEIVED RS. 12 , 50 , 000/ - WHICH WAS NON - REFUNDABLE DEPOSIT FROM THE LESSOR OF LAND FOR 999 YEARS. I FEEL THIS SH OULD BE THE ACTUAL CONSIDERATION RECEIVED. 50% OF THIS RS. 6 . 25 / - WOULD BE THE CO ST OF CONSIDERATION RECEIVED BY THE APPELLANT. APPELLANT HAS SHOWN DIFFERENT VALUES AT DIFFERENT STAGES AS PROPORTIONATE CONSIDERATION OF PIECE OF LAND ADMEASURING 7253 SQ.MT R TRANSFERRED TO THE COMPANY. IN VIEW OF THIS THE ASSESSING OFFICER IS NOW DIRECTED TO VERIFY THE ABOVE WORKING AND WORK OUT THAT 5 ITA NO.4518/M/2012 - CO - 16 - ITA NO.6703/M/13 AND CO - 16/M/15 APPELLANT. SUBJECT TO THIS DIRECTION THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. THE DR SUBMITTED BEFORE US THAT THE ASSESSEE HAD NOT PAID ANY CAPITAL GAIN TAX ON THE LONG - TERM CAPITAL GAIN ACCRUING FROM THE CONVEYANCE DEED. THE DR FURTHER SUBMITTED THAT THE ASSESSEE DID NOT PAY ANY TAX IN THE FINANCIAL YEAR 1979 - 80.THE ASSESSEE WAS PARTY TO THE SAID CONVEYANCE DEED THEREFORE T HE AO HAD RIGHTLY ASSESSED THE CAPITAL GAIN ARISING OUT OF SALE OF LAND THROUGH THE CONVEYANCE DEED. 6. PER CONTRA , THE AR SUBMITTED BEFORE US THAT THOUGH THE ASSESSEE HAD NOT PAID ANY TAX ON THE NON - REFUNDABLE COMPENSATION/LEASE MONEY RECEIVED FOR LEASI NG OUT THE LAND IN THE AY 19 79 - 80 . THE ASSESSEE DID NOT RECEIVE ANYTHING OUT OF THE SALE CONSIDERATION WHICH ACCRUE D DIRECTLY TO THE BUILDER M/S DCPL FROM THE SALE OF FLATS AND PARKING AREA THROUGH THE COOPERATIVE SOCIETY AND THE SAID BUILDER HAD ALREADY BEEN ASSESSED TO TAX ON THE ON THE PROFIT RESULTING FROM THE SALE OF SAID FLATS. THE AR FINALLY PRAYED THAT THE ORDER OF CIT BE UPHELD BY DISMISSING THE APPEAL OF THE REVENUE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE MATERIAL ON RECO RD. WE FIND THAT THE ASSESSEE HAD LEASED OUT THE LAND FOR 999 YEARS FOR A LUMP SUM COMPENSATION OF RS. 12,50,000/ - WHICH WAS NON - REFUNDABLE AND ALSO HANDED OVER THE POSSESSION OF THE LAND TO BUILDER. THEREAFTER THE ASSESSEE HAD NO CONTROL OVER THE SAID PROP ERTY. WE FURTHER NOTE THAT IT CONVEYANCE DEED WAS EXECUTED IN FAVOUR OF THE PURCHASERS OF FLATS THROUGH THE COOPERATIVE SOCIETY TO WHICH THE ASSESSEE WAS ALSO CONFIRMING PARTY AND A SUM OF 2,47,60,250/ - WAS PAID BY THE FLAT OWNERS TO THE BUILDERS M/S DC PL AND THE ASSESSEE DID NOT GET ANYTHING OUT OF THE SALE CONSIDERATION. THE DEVELOPER DC PL HAD PAID THE INCOME TAX ON THE INCOME 6 ITA NO.4518/M/2012 - CO - 16 - ITA NO.6703/M/13 AND CO - 16/M/15 RESULTING FROM THE CONSIDERATION OF RS. 2,47,60,250/ - . SO FAR AS THE ASSESSMENT BY THE AO O F LONG TERM CAPITA L GAIN BASED ON T HE SALE CONSIDERATION RECEIVED BY THE M/S DCPL IS CONCERNED , THE ACTION OF AO IS TOTALLY WRONG AND UNACCEPTABLE ESPECIALLY WHEN THE CONSIDERATION FLOWED DIRECTLY TO THE BUILDER FROM THE PURCHASERS OF THE FLATS AND NOTHING WAS RECEIVED BY THE ASSESSEE. IT IS ALSO AN UNDISPUTED FACT THAT THE BUILDER HAD PAID THE DUE TAXES ON THE PROFITS EARNED BY IT AND INCOME FROM THE SAME TRANSACTION COULD NOT BE TAXED TWICE FIRSTLY IN THE HANDS OF DEVELOPERS M/.S DCPL WHO RECEIVED THE CONSIDERATION ACTUALLY AND SECOND IN THE HANDS OF THE ASSESSEE WHO WAS JUST CONFIRMING PARTY TO THE CONVEYANCE DEED. IN OUR OPINION THE ASSESSEE MUST BE TAXED ONLY IN RESPECT OF THE LONG - TERM GAIN ON THE LUMP SUM COMPENSATION RECEIVED AT THE TIME OF LEASING OF THE LAND RS. 6,25,000/ - BEING 50 % OF TOTAL COMPENSATION RECEIVED I.E RS.12,50,000/ - IN 1979. THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDERE OF CIT(A) AND UPHOLD THE SAME. WE THEREFORE , DIRECT THE AO TO TAKE THE SALE CONSIDERATION AT RS. 6,25,000/ - IN THE HANDS OF THE ASSESSEE AN D TAX THE LONG TERM GAIN ACCORDINGLY IF ANY. THE APPEAL OF THE REVENUE IS DISMISSED. CO NO 129/MUM/2013 8. WE HAVE ALREADY DIRECTED THE AO TO TREAT THE 50% COMPENSATION AS CONSIDERATION FOR TRANSFER OF LAND IN THE HANDS OF ASSESSEE IN ITA NO 4518/M UM/2012 AND TAX THE ASSESSEE ON THE CAPITAL GAIN ACCORDINGLY BY UPHOLDING THE ORDER OF LD.CIT(A). THEREFORE THE CROSS OBJECTION AS RAISED BECOMES INFRUCTUOUS AND IS DISMISSED. 9. ITA NO:6703/MUM/2013 AND CO NO:16/MUM/2015: 10. THE ISSUE INVOLVED IN THE ITA NO:6703/MUM/2013 AND CO NO16/MUM/2015 HAS BEEN DECIDED BY US IN ITA NO 4518/MUM/2012 AND 7 ITA NO.4518/M/2012 - CO - 16 - ITA NO.6703/M/13 AND CO - 16/M/15 CO NO 129/MUM/2013 UNDER THE IDENTICAL FACTS AND THEREFORE OUR DECISION WOULD APPLY MUTATIS MUTANDIS TO THIS APPEAL AND CROSS OBJECTION AS WELL. THE AO IS DIRECTE D ACCORDINGLY. 10 . IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE CROSS - OBJECTIONS OF THE ASSESSEE STAND DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH MARCH , 201 6 SD SD ( C.N. PRASAD ) ( RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 14. 3 .201 6 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI