A.C.I.T.C.C.47, MUMBAI V. MAYURI HARRESH MEHTA, MUMBAI

ITA 4551/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5745 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Search and seizure; Salary income; Cost of acquisition
• Section: 143(3); 50C; 2(14)

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI .. , , BEFORE SHRI P.M. JAGTAP, AM AND SHRI AMIT SHUKLA, J M ./ I.T.A. NO. 4551/MUM/ ( / ASSESSMENT YEAR : ASSTT. COMMISSIONER OF INCOME TAX, CENT. CIR. 47, ROOM NO. 658, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. / VS. SMT. MAYURI HARRESH MEHTA, 2601, SHIV TAPI, 26 TH FLOOR, HARISHCHANDRA GOREGAONKAR MARG, GAMDEVI, MUMBAI 400 007. . / PAN :AAMPM5569P ( # / APPELLANT ) .. ( $%# / RESPONDENT ) APPELLANT BY SHRI PREETAM SINGH RESPONDENT B Y : SHRI VIJAY MEHTA ) * / DATE OF HEARING : 13-1-2014 ) * / DATE OF PRONOUNCEMENT : 31-1-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) 36, MUMBAI DATED 23-4-2012 WHEREBY HE RESTR ICTED THE ADDITION OF RS. 2,64,31,800/- MADE BY THE A.O. ON ACCOUNT OF SH ORT TERM CAPITAL GAIN TO RS. 38,21,000/- HOLDING THAT THE AMOUNT ONLY TO THA T EXTENT IS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AS BENEFIT ACCRUIN G OR ARISING AS A RESULT OF PERMANENT ALTERNATE ACCOMMODATION AGREEMENT ENTERED INTO BY THE ASSESSEE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO DERIVES INCOME FROM SALARY AND OTHER SOURCES. THE RETURN OF INCOME FOR THE YEAR UNDER ITA 4551/M/12 2 CONSIDERATION WAS FILED BY HER DECLARING TOTAL INCO ME OF RS. 5,16,060/-. A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE CASES BELONGING TO ROHAN GROUP ON 10-8-2006. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT M/S ROHAN DEVEL OPERS PVT. LTD., A FLAGSHIP COMPANY OF ROHAN GROUP, HAD PURCHASED THE LEASE RIG HTS OF PLOT OF LAND FROM ONE MRS. FATIMA GANDHI FOR DEVELOPMENT. IT WAS ALS O FOUND THAT THE PORTION OF THE EXISTING BUILDING ON THE SAID PLOT CALLED FA ZILLAH HOUSE WAS SEPARATELY PURCHASED BY THE ASSESSEE FROM MRS. FATIMA GANDHI O N 3-3-2006 FOR AN AMOUNT OF RS. 1.08 CRORES. THEREAFTER M/S ROHAN DEV ELOPERS PVT. LTD. PROVIDED THE ASSESSEE OWNERSHIP RIGHTS IN OFFICE NO . 1 & 2 OF THEIR PROJECT CALLED RUSHABH APARTMENT ON 28-3-2006 IN LIEU OF TH E ASSESSEES SURRENDERING HER RIGHTS OVER THE PORTION OF FAZILLA H HOUSE OWNED BY IT. AS NOTED BY THE A.O. FROM THE PREVAILING SELLING RATES , THE MARKET VALUE OF THE BUILDING PROVIDED TO THE ASSESSEE BY M/S ROHAN DEVE LOPERS PVT. LTD. WAS RS. 3.74 CRORES. ACCORDING TO THE A.O., THE DIFFERENCE OF RS. 2.64 CRORES THUS WAS LIABLE TO TAX IN THE HANDS OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153-A OF THE ACT, THE ASSESSEE THEREFORE WAS CALLED UPON BY THE A.O. TO EXPLAIN AS TO WHY THE SAID DIFFERENCE SHOULD NOT BE TREATED AS SH ORT TERM CAPITAL GAIN. IN REPLY, THE FOLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE VIDE LETTER DATED 17-12-2003:- I HAD PURCHASED PREMISES ON THE 1 ST FLOOR, UNIT NO.1 IN FAZILLAH HOUSE FROM ONE MRS. FATIMA GANDHI FOR A CONSIDERATION OF RS.1,00,00,000/-. THE SAID PREMISES WAS RENTED OUT TO BANK OF BARODA BY MRS. FATIMA GANDHI VIDE INDENTURE DATED 3 RD MAY, 1999 FOR A PERIOD OF 5 YEARS COMMENCING FROM 1 ST JANUARY, 1999 TILL 31 ST DECEMBER, 2004 AND WITH AN OPTION OF RENEWAL FOR FURTHER PERIOD OF 5 YEARS. IT MAY BE NOTED THAT THE SAID TERMS WERE FURTHER RENEWED VIDE LEASE DATE D 1 ST JANUARY, 2005 TILL 31 ST DECEMBER,2008. AFTER THE PURCHASE OF PREMISES FRO M MRS. FATIMA GANDHI, THE SAID PREMISES WAS CONTINUED TO B E RENTED OUT TO BANK OF BARODA. ITA 4551/M/12 3 SUBSEQUENT TO THE PURCHASE OF THE PREMISES, ROHAN D EVELOPERS PVT. LTD. APPROACHED ME FOR THE PROPOSAL OF REDEVEL OPMENT OF FAZILLAH HOUSE AND REQUESTED ME FOR THE SURRENDER OF THE OWN ERSHIP PREMISES IN FAZILLAH HOUSE IN LIEU OF ALLOTMENT OF OFFICE PR EMISES IN RUSHABH APARTMENT. ACCORDINGLY, THE AGREEMENT WAS ENTERED I NTO WITH ROHAN DEVELOPERS PVT. LTD. ON 28 TH MARCH, 2006, UNDER WHICH THE COMPANY HAS AGREED TO PROVIDE PERMANENT ALTERNATE ACCOMMODA TION BEING OFFICE NO.1 AND 2 IN RUSHABH APARTMENT IN LIEU OF SURRENDE RING OF MY OLD PREMISES IN FAZILLAH HOUSE. IT IS SUBMITTED THAT ON ENTERING INTO AN AGREEMENT ON 28 TH MARCH, 2006 WITH ROHAN DEVELOPERS PVT. LTD. I HAD T RANSFERRED MY RIGHT IN IMMOVABLE PROPERTY BEING OWNERSHIP PREMISE S IN FAZILLAH HOUSE. THE STAMP AUTHORITY VALUED THE SAID DOCUMENT FOR ALTERNATE ACCOMMODATION AT RS.38,21,000/- BEING THE MARKET VA LUE FOR PROVIDING ALTERNATE ACCOMMODATION AS PER THE BOMBAY STAMP ACT . AS PER THE DEFINITION PROVIDED IN SECTION 2(14) OF THE INCOME TAX- ACT, PREMISES IN FAZILLAH HOUSE IS A CAPITAL ASSET. ON ENTERING OF THE REDEVELOPMENT AGREEMENT WITH ROHAN DEVELOPERS PVT. LTD. WITHIN THE MEANING OF SECTION 2(47) OF THE INCOME TAX ACT. THE TRANSFER OF THE OWNERSHIP PREMISES ATTRACTS THE CAPITAL GAIN UNDER SECTION 45 OF THE INCOME TAX ACT READ WITH SECTION 50C OF THE INCOME TAX ACT. SECTION 50 OF THE INCOME TAX ACT PROVIDES FOR DEEMI NG CONSIDERATION BEING THE STAMP DUTY VALUATION FOR TH E PURPOSE OF COMPUTATION OF THE CAPITAL GAIN IN RESPECT OF TRANS FER OF THE CAPITAL ASSET BEING LAND OR BUILDING OR BOTH. IN MY CASE, A N OWNERSHIP PREMISE IS A CAPITAL ASSET WITHIN THE MEANING OF THE INCOME TAX ACT. ACCORDING TO THE SECTION 50 C OF THE INCOME TAX ACT, THE SALE CONSIDERATION IN RESPECT OF TRANSFER OF OWNERSHIP PREMISES WILL BE D EEMED TO BE THE VALUATION PROVIDED BY THE STAMP AUTHORITIES FOR ALT ERNATE ACCOMMODATION I.E. RS.38,21,000/-. WE ENCLOSE HEREW ITH THE COPY OF THE REGISTERED AGREEMENT OF ALTERNATE ACCOMMODATION FOR YOUR READY REFERENCE. IT IS FURTHER SUBMITTED THAT SECTION 50C PROVIDES F OR SUCH A STAMP DUTY VALUATION AS DEEMED CONSIDERATION IN CAS E THE AGREEMENT VALUE IS LESS THAT THE STAMP DUTY VALUATION. IN CAS E OF ALTERNATE ACCOMMODATION AGREEMENT ENTERED INTO BY ME, THERE I S NO QUESTION OF ANY AGREEMENT VALUE AS THE OFFICE PREMISES IN RUSHA BH APARTMENT WAS ALLOTTED IN LIEU OF SURRENDER OF OWNERSHIP PREMISES IN FAZILLAH HOUSE. THEREFORE, DEEMED CONSIDERATION FOR THE TRANSFER OF OWNERSHIP PREMISES IN FAZILLAH HOUSE IS RS.38,21,000/- BEING THE VALUA TION ADOPTED FOR THE STAMP DUTY PURPOSE. IN THIS REGARD, YOUR GOOD SELF INTEND TO LEVY OF CA PITAL GAIN TAX ON RS.2,65,63,500/- BY ADOPTING THE MARKET VALUE OF TH E PREMISE IN RUBHABH APARTMENT AS A CONSIDERATION AT RS.3,74,44, 000/-, WHICH IS ITA 4551/M/12 4 WITHOUT ANY BASE AND AGAINST THE LAW AS PROVIDED IN SECTION 50C OF THE INCOME TAX ACT. AS REFERRED EARLIER, THERE IS NO ME NTION OF MARKET VALUE OF THE PROPERTY IN SECTION 50C OF THE INCOME TAX AC T. IN THE LIGHT OF THE ABOVE EXPLANATION, IT WAS CONTE NDED ON BEHALF OF THE ASSESSEE BEFORE THE A.O. THAT THERE WAS NO CASE OF MAKING ANY ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN ARISING AT THE R ESULT OF AGREEMENT DATED 28-3-2006 ENTERED INTO BY HER WITH M/S ROHAN DEVELO PERS PVT. LTD. FOR PROVIDING PERMANENT ALTERNATE ACCOMMODATION. 4. THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE A.O. ACCORDING TO HIM, M/S ROHAN DEVELOPERS PV T. LTD. WAS SIPHONING AWAY ITS STOCK IN TRADE OF A VERY HIGH VALUE IN RUS HABH APARTMENTS UNDER THE GUISE OF ALTERNATIVE ACCOMMODATION TO THE ASSESSEE, WHO IS THE WIFE OF ONE OF ITS DIRECTORS. HE HELD THAT THE ENTIRE TRANSACTION WAS NOT ONE OF PROVIDING ALTERNATIVE ACCOMMODATION BUT THE SAME WAS THE EXCH ANGE OF PROPERTY AS THE ASSESSEE WAS THE OWNER OF THE BUILDING AND NOT A TE NANT. HE HELD THAT THE MARKET VALUE OF BUILDING PROVIDED BY M/S ROHAN DEVE LOPERS PVT. LTD. TO THE ASSESSEE WAS RS. 3.74 CRORES AND THE SAME BEING CON SIDERATION RECEIVED BY THE ASSESSEE FOR TRANSFER/EXCHANGE OF HER CAPITAL A SSET HELD FOR SHORT TERM, THE DIFFERENCE OF RS. 2,64,31,800/- WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN. ACCORDINGLY, ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN TO THAT EXTENT WAS MADE BY THE A. O. TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 153-A OF THE ACT VIDE AN ORDER DATED 29-12-2008. 5. AGAINST BY THE ORDER PASSED BY THE A.O. U/S 143( 3) R.W.S. 153-A OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CHALLENGING THE ADDITION MADE THEREIN BY THE A.O. ON ACCOUNT OF SHORT TERM CAPITAL GAIN. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASS ESSEE HAD PURCHASED A PROPERTY ADMEASURING 3652 SQ. FT. BEING UNIT NO. 1 ON THE FIRST FLOOR OF FAZILLAH HOUSE, PLOT NO. 35, ESTATE OF THE IMPROVEM ENT TRUST, SANDHURST ITA 4551/M/12 5 ROAD (W) FROM SMT. FATIMA GANDHI FOR A TOTAL CONSID ERATION OF RS. 1,08,00,000/-. IT WAS SUBMITTED THAT THE SAID PROPE RTY WAS RENTED TO BANK OF BARODA AND UNDER THE AGREEMENT BETWEEN THE ASSESSEE AND SMT. FATIMA GANDHI, THE LATER HAD SOLD, TRANSFERRED AND CONVEYE D HER OWNERSHIP RIGHTS IN RESPECT OF THE SAID PROPERTY TO THE ASSESSEE. IT WA S SUBMITTED THAT M/S ROHAN DEVELOPERS PVT. LTD. WAS THE OWNER OF THE LEASE HOL D LAND AS WELL AS THE DWELLING HOUSE STANDING THEREON ADMEASURING 672.14 SQ. METERS EXCEPT THE FIRST FLOOR OF THE BUILDING. IT WAS SUBMITTED THAT AFTER THE ASSESSEE ACQUIRED THE OWNERSHIP OF FIRST FLOOR, M/S ROHAN DEVELOPERS PVT. LTD. APPROACHED HER WITH A PROPOSAL OF REDEVELOPMENT OF FAZILLAH HOUSE WITH AN OFFER TO THE ASSESSEE TO GET THE ALLOTMENT OF OFFICE PREMISES IN THE PROPOSED BUILDING IN LIEU OF HER OWNERSHIP RIGHTS IN THE FIRST FLOOR OF FAZILLAH HOUSE. IT WAS CONTENDED THAT THE AGREEMENT FOR PERMANENT ALTERNAT E ACCOMMODATION ACCORDINGLY WAS ENTERED INTO BETWEEN THE ASSESSEE A ND M/S ROHAN DEVELOPERS PVT. LTD. ON 28-3-2006 UNDER WHICH M/S R OHAN DEVELOPERS PVT. LTD. HAD AGREED TO PROVIDE PERMANENT ALTERNATE ACCO MMODATION BEING OFFICE NO. 1 & 2 IN RUSHABH APARTMENT, ADMEASURING 3404.49 SQ. FT. IN PLACE OF OLD PREMISES IN FAZILLAH HOUSE ADMEASURING 3652 SQ. FT. IT WAS POINTED OUT THAT THE STAMP VALUE OF THE PERMANENT ALTERNATE ACCOMMOD ATION SO PROVIDED WAS DETERMINED BY THE CONCERNED AUTHORITY AT RS. 38,21, 000/- AND THERE BEING NO CAPITAL GAIN ARISING AS A RESULT OF PERMANENT ALTER NATE ACCOMMODATION AGREEMENT ENTERED INTO BY THE ASSESSEE, THE ADDITIO N MADE BY THE A.O. WAS NOT SUSTAINABLE. THE ASSESSEE ALSO MADE ELABORATE S UBMISSION TO MEET THE VARIOUS OBJECTIONS RAISED BY THE A.O. WHILE MAKING THE IMPUGNED ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN. 6. KEEPING IN VIEW THE SUBMISSIONS MADE BY THE ASSE SSEE, THE MATTER WAS REMANDED BY THE LD. CIT(A) TO THE A.O. TO ASCERTAIN THE EXACT MARKET VALUE OF THE PROPERTY FOR THE STAMP DUTY PURPOSES FROM THE C ONCERNED AUTHORITIES. ALONG WITH THE REMAND REPORT SUBMITTED TO THE LD. C IT(A), THE A.O. ALSO ITA 4551/M/12 6 SUBMITTED THE LETTER RECEIVED FROM ASST. SUB REGIST RAR, MUMBAI REGARDING THE VALUATION OF PROPERTY WHEREIN IT WAS STATED THAT TH E STAMP DUTY VALUE OF THE PROPERTY WAS DETERMINED AT RS. 38,21,000/- BY APPLY ING THE RATE OF COST OF CONSTRUCTION FOR THE YEAR 2006. RELYING ON THE SAI D LETTER, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) THA T THE VALUE ADOPTED FOR STAMP DUTY PURPOSE SHOULD BE DEEMED TO BE FULL VALU E OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER/EXCHAN GE OF PROPERTY AND NOT THE MARKET VALUE AS PURPORTEDLY TAKEN BY THE A.O. 7. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS MATERIAL AVAILABLE ON RECORD INCLUDING THE REMAND REPORT SUBMITTED BY THE A.O., THE LD. CIT(A) DECIDED THE ISSUE VIDE PAR A NO. 6.2 OF HIS IMPUGNED ORDER AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF THE AO. THE APPELLANT HAD ACQUIRED THE PROPERTY BE ING OFFICE PREMISES ADMEASURING 3,652 SQ. FT. IN MARCH, 2006 AT A VALUE OF RS. 1,08,00,000/-. THE APPELLANT PAID STAMP DUTY ON TH E SAID PURCHASE AND THE STAMP DUTY VALUE WAS ASSESSED AT THE SAME R S. 1,08,00,000/- FOR THE OFFICE PREMISES ADMEASURING 3,652 SQ. FT. THE APPELLANT ENTERED INTO A PERMANENT ALTERNATE ACCOMMODATION AGREEMENT AND RECEIVED OFFICE PREMISES IN THE NEW BUILDING ADMEASURING 340 4.49 SQ. FT. WHICH IS LITTLE LESS THAN THE AREA OCCUPIED BY THE APPELL ANT IN THE OLD PREMISES. THE APPELLANT COMPUTED CAPITAL GAINS BY ADOPTING S TAMP DUTY VALUE OF RS. 38,21,000/- AND REDUCING THEREFROM COS T OF THE PREMISES AND VARIOUS OTHER EXPENSES. THE APPELLANT CLAIMED THE ENTIRE COST OF ACQUISITION OF RS. 1,00,00,000/- AS DEDUCTION FROM THE STAMP DUTY VALUE OF RS. 38,21,000/- THEREBY RESULTING INTO LOS S UNDER THE HEAD CAPITAL GAINS IN THE RETURN OF INCOME. AT THIS JUNCTURE, IT IS WORTHWHILE TO ASCERTAIN WH ETHER THE APPELLANT HAS SOLD THE PREMISES AND WHETHER THE COS T OF PREMISES CAN BE ALLOWED AS A DEDUCTION. FROM THE ABOVE, IT IS C LEAR THAT THE APPELLANT HAS NOT SOLD HIS PREMISES AND THE ENTIRE AREA IS AVAILABLE WITH THE APPELLANT IN THE NEW BUILDING. THUS, THE CLAIM OF THE APPELLANT FOR DEDUCTION OF COST OF THE RS. 1,00,00,000/- CANNOT B E ALLOWED WHILE COMPUTING CAPITAL GAINS. IT MAY BE NOTED THAT SINC E THE APPELLANT HAD ITA 4551/M/12 7 ACQUIRED THE PROPERTY IN A SHORT SPAN OF 6 MONTHS B EFORE REDEVELOPMENT THE SAME AMOUNT IS ALSO THE STAMP DUTY VALUE OF THE PREMISES. IT IS ALSO WORTHWHILE TO MENTION THAT THE APPELLAN T ACQUIRED THE 3652 SQ. FT. OFFICE PREMISES IN MARCH, 2006. THE A PPELLANT HAS PAID STAMP DUTY ON THE SAID PURCHASE AGREEMENT AND THE S TAMP DUTY VALUE OF THE PREMISES WAS ARRIVED AT RS. 1,08,00,000/- BY THE STAMP VALUATION AUTHORITIES. THEREAFTER, THE AGREEMENT F OR PERMANENT ALTERNATE ACCOMMODATION WAS ENTERED INTO A IN A SHO RT SPAN OF TIME. THE ASSESSING OFFICER ADOPTED THE VALUE FOR THIS PU RPOSE AT RS. 3,74,44,000/-. THE ASSESSING OFFICER IN THE ASSESS MENT ORDER HAS STATED THAT IT WAS PERPLEXING AS TO HOW A PROPERTY WHEN ACQUIRED ON 3 RD MARCH, 2006 WAS VALUED FOR STAMP DUTY PURPOSES AT RS. 1,08,00,000/- AND JUST THREE WEEKS LATER ON 28 TH MARCH, 2006 IT GOT VALUED AT RS. 38,21,000/-. HOWEVER, WHILE MAKING SUCH COMMENT THE ASSESSING OFFICER HIMSELF ADOPTS THE VALUE OF PROPE RTY AT RS. 1,08,00,000/-. THUS, THE VALUE OF RS. 3,74,44,000/ - ADOPTED BY THE ASSESSING OFFICER IS WITHOUT ANY BASIS AND IS THE N OT THE STAMP DUTY VALUE OF THE PREMISES. IT IS ALSO NOTEWORTHY TO MENTION HERE THAT IF THE REDEVELOPMENT WAS NOT CARRIED OUT BY ROHAN DEVELOPERS PVT. LTD., THE APPELLANT WAS REQUIRED TO SPEND ON THE CONSTRUCTION COST FOR GETT ING THE NEW PREMISES. BY GETTING THE PERMANENT ALTERNATE ACCOM MODATION IN THE NEW BUILDING, THE APPELLANT HAS OBTAINED BENEFIT IN THE FORM OF SAVING THE CONSTRUCTION COST FOR GETTING THE NEW PREMISES. THE STAMP DUTY AUTHORITIES HAVE RIGHTLY VALUED SUCH BENEFIT AT RS. 38,21,000/- WHICH IS EQUIVALENT TO THE PROPORTIONATE CONSTRUCTION COST O F THE NEW PREMISES. FURTHER, THE APPELLANT HAS NOT SPENT ANY MONEY FOR OBTAINING SUCH NEW PREMISES AND THEREFORE NO ALLOWANCE IN THE FORM OF DEDUCTION CAN BE GRANTED FROM SUCH BENEFIT OBTAINED BY THE AP PELLANT. IN THE RESULT, I AM OF THE OPINION THAT THE AMOUNT OF RS.3 8,21,000/- SHOULD BE TAXED IN THE HANDS OF THE APPELLANT AS BENEFIT ACCR UING OR ARISING AS A RESULT OF ENTERING INTO THE PERMANENT ALTERNATE AGR EEMENT AND NO DEDUCTION OF COST CAN BE GIVEN THERE FROM AS DISCUS SED ABOVE. THE LD. CIT(A) THUS RESTRICTED THE ADDITION OF RS. 2,64,31,800/- MADE BY THE A.O. ON ACCOUNT OF SHORT TERM CAPITAL GAIN TO RS. 3 8,21,000/- HOLDING THAT THE AMOUNT TO THAT EXTENT ONLY SHOULD BE TAXED IN THE H ANDS OF THE ASSESSEE AS BENEFIT ACCRUING OR ARISING AS A RESULT OF PERMANEN T ALTERNATE ACCOMMODATION AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S ROH AN DEVELOPERS PVT. LTD. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. ITA 4551/M/12 8 8. THE LD. D.R. SUBMITTED THAT THE AGREEMENT ENTERE D INTO BY THE ASSESSEE WITH M/S ROHAN DEVELOPERS PVT. LTD. FOR ACQUISITION OF PERMANENT ALTERNATE ACCOMMODATION IN RISHABH APARTMENT WAS NOT THE AGRE EMENT FOR ALTERNATE ACCOMMODATION IN STRICT SENSE. HE SUBMITTED THAT TH E VERY PURPOSE OF PURCHASE OF PROPERTY WAS TO GET THE NEW PREMISES AT FREE OF COST AND THE WHOLE TRANSACTION WAS SO ARRANGED TO GET A HIGH VAL UED PREMISES IN NEW BUILDING WITH A LOW COST PAID FOR THE OLD PREMISES. HE SUBMITTED THAT THE ASSESSEE IS WIFE OF ONE OF THE DIRECTORS OF M/S ROH AN DEVELOPERS PVT. LTD. AND THE ACQUISITION OF THE PORTION OF BUILDING JUST BEF ORE THE DEVELOPMENT AND SUBSEQUENT AGREEMENT FOR PROVIDING PERMANENT ALTERN ATE ACCOMMODATION IN LIEU OF THE OLD PREMISES WAS NOTHING BUT AN ARRANGE MENT IN THE FORM OF JOINT VENTURE BUSINESS IN ORDER TO GAIN SUBSTANTIAL MONET ARY BENEFIT. HE CONTENDED THAT THE ASSESSEE THUS WAS GIVEN A NEW PREMISES HAV ING MARKET VALUE OF 3.74 CRORES IN LIEU OF OLD PREMISES PURCHASED FOR RS. 1. 08 CRORES IN A SHORT PERIOD AS A RESULT OF THIS ARRANGEMENT AND THE DIFFERENCE THEREFORE WAS RIGHTLY BROUGHT TO TAX BY THE A.O. IN THE HANDS OF THE ASSE SSEE AS SHORT TERM CAPITAL GAIN. HE CONTENDED THAT THE LD. CIT(A), HOWEVER, D ID NOT APPRECIATE THE CASE MADE OUT BY THE A.O. AND ALLOWED SUBSTANTIAL RELIEF TO THE ASSESSEE BY ADOPTING THE STAMP DUTY VALUATION WHICH WAS NOTHING BUT ONLY THE COST OF CONSTRUCTION OF A NEW PREMISE. HE CONTENDED THAT T HE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS IS SUE THUS IS LIABLE TO BE SET ASIDE AND THAT OF THE A.O. DESERVES TO BE RESTORED. 9. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT THE ASSESSEE WAS THE OWNER OF BUILDING ADMEASURING 3652 SQ.FT. AND WHAT SHE WAS ALLOTTED BY THE DEVELOPER IN LIEU OF THE SAID O LD BUILDING WAS THE CONSTRUCTED AREA OF 3404 SQ. FT. IN THE NEW BUILDIN G. HE SUBMITTED THAT THERE WAS NO TRANSFER OF OWNERSHIP OF THE BUILDING BY THE ASSESSEE AS A RESULT OF PERMANENT ALTERNATE ACCOMMODATION AGREEMENT WHEREBY THE ASSESSEE ALLOWED ITA 4551/M/12 9 ONLY THE CONSTRUCTION OF NEW BUILDING IN PLACE OF O LD BUILDING. HE FILED WRITTEN SUBMISSIONS IN THE TABULAR FORM IN ORDER TO MEET EA CH AND EVERY OBJECTION RAISED BY THE A.O. AND SUBMITTED THAT THE SAME IS S UFFICIENT TO MEET ALL THE IRRELEVANT OBJECTIONS RAISED BY THE A.O. HE CONTEN DED THAT WHAT THE ASSESSEE GOT AS A RESULT OF THE AGREEMENT WAS ONLY THE NEW C ONSTRUCTION OF 3404 SQ. FT. AND THE BENEFIT RECEIVED BY THE ASSESSEE IN THE FOR M OF SUCH NEW CONSTRUCTION WAS DULY RECOGNIZED BY THE STAMP DUTY AUTHORITY BY ADOPTING THE COST OF CONSTRUCTION OF THE NEW BUILDING AT MARKET VALUE. HE CONTENDED THAT THERE WAS NO NEW BENEFIT THAT HAD ARISEN OR ACCRUED TO TH E ASSESSEE AS A RESULT OF THE AGREEMENT EXCEPT THE NEW CONSTRUCTION AND IT WA S THUS A CASE LIKE ANY REDEVELOPMENT PROJECT WHEREIN SAME AREAS ARE GIVEN TO THE EXISTING OWNERS/OCCUPANTS IN THE NEW BUILDING. HE SUBMITTED THAT IN CASES OF SUCH REDEVELOPMENT PROJECT, ONLY CONSTRUCTION COST IS AD OPTED AS THE VALUATION FOR STAMP DUTY PURPOSE AND THE SAME BASIS IS REQUIRED T O BE ADOPTED IN THE CASE OF THE ASSESSEE AS RIGHTLY DONE BY THE LD. CIT(A). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT T HE SHORT TERM CAPITAL GAIN OF RS. 2,64,31,800/- WAS BROUGHT TO TAX BY THE A.O. IN THE HANDS OF THE ASSESSEE AS A RESULT OF PERMANENT ALTERNATE ACCOMMODATION AG REEMENT ENTERED INTO WITH M/S ROHAN DEVELOPERS PVT. LTD. ON THE BASIS OF VARIOUS OBJECTIONS RAISED AND ALLEGATIONS MADE IN THE ASSESSMENT ORDER. BEFOR E THE LD. CIT(A), ELABORATE SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEE TO MEET THE SAID OBJECTIONS RAISED BY THE A.O. AND AFTER HAVING SATISFIED WITH THE SAID SUBMISSIONS, THE LD. CIT(A) FOUND THAT THE OBJECTIONS RAISED BY THE A.O. WERE UNSUSTAINABLE. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED A TABULAR CHART GIVING ASSESSEES SUBMISSIONS IN RESP ECT OF EACH AND EVERY OBJECTION RAISED BY THE A.O. AS UNDER:- ITA 4551/M/12 10 ITA 4551/M/12 11 11. AFTER HAVING CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE, WE FIND THAT THE OBJECTIONS RAISED BY THE A.O. WERE BASED O N SURMISES AND CONJUNCTIONS AND EVEN THE ALLEGATION MADE BY HIM RE GARDING M/S ROHAN DEVELOPERS PVT. LTD. WAS SIPHONING AWAY ITS STOCK I N TRADE OF A VERY HIGH VALUE IN RUSHABH APARTMENTS UNDER THE GUISE OF ALTERNATIV E ACCOMMODATION TO THE ITA 4551/M/12 12 ASSESSEE AT LOWER COST WAS BASELESS. AS A MATTER OF FACT, ALTHOUGH M/S ROHAN DEVELOPERS PVT. LTD. HAD ACQUIRED THE LEASE RIGHTS OVER THE LAND WAY BACK IN 2001, THE OWNERSHIP OF THE FIRST FLOOR OF THE BUILD ING STANDING ON THE SAID LAND CONTINUED TO BE HELD BY MRS. FATIMA GANDHI AS IT WA S GENERATING RENTAL INCOME FROM THE BANK. MRS. FATIMA GANDHI FINALLY D ECIDED TO SELL THE SAID PREMISES IN THE YEAR 2006 WHEN THE ASSESSEE PURCHAS ED IT AT THE MARKET VALUE BY INVESTING S SUM OF RS. 1.08 CRORES. THE T RANSACTION OF PURCHASE OF THE PROPERTY BY THE ASSESSEE FROM MRS. FATIMA GANDH I THUS WAS A SEPARATE TRANSACTION INDEPENDENTLY DONE BY THE ASSESSEE BY I NVESTING HER OWN FUNDS. 12. AFTER THE ASSESSEE BECAME OWNER OF THE PREMISES , M/S ROHAN DEVELOPERS PVT. LTD. SOUGHT HER CONSENT TO DEVELOP THE PROPERTY BY DEMOLISHING THE EXISTING BUILDING AND CONSTRUCTING A NEW BUILDING. THIS CONSENT WAS GIVEN BY THE ASSESSEE SUBJECT TO M/S RO HAN DEVELOPERS PVT. LTD. AGREEING TO GIVE HER ALMOST SAME AREA IN THE NEW BU ILDING. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, THE BENEFIT THAT ACTUALLY ACCRUED TO THE ASSESSEE AS A RESULT OF PERMANENT AL TERNATE ACCOMMODATION AGREEMENT ENTERED INTO WITH M/S ROHAN DEVELOPERS PV T. LTD. WAS ONLY TO THE EXTENT OF NEW CONSTRUCTION AND THE VALUE OF SUCH BE NEFIT TO THE EXTENT OF COST OF SUCH NEW CONSTRUCTION WAS RS. 38,21,000/- AS VAL UED BY STAMP DUTY AUTHORITIES. IT WAS THUS A SITUATION SIMILAR TO ANY REDEVELOPMENT PROJECT WHEREIN THE EXISTING OWNERS/OCCUPANTS OF THE OLD BU ILDING ARE GIVEN THE SAME AREA OF CONSTRUCTION OF THE NEW BUILDING GIVING BEN EFIT OF ONLY NEW CONSTRUCTION TO THE OWNERS/OCCUPANTS WHICH IS VALUE D AT COST OF CONSTRUCTION AT THE PREVAILING RATE EVEN FOR THE STAMP DUTY PURP OSE. THE SHORT TERM CAPITAL GAIN COMPUTED BY THE A.O. BY TAKING MARKET VALUE OF THE NEW PREMISES AS SALE CONSIDERATION AND REDUCING THERE FROM THE COST OF PURCHASE AMOUNTING TO RS. 1.08 CRORES THUS WAS TOTALLY UNJUSTIFIED AS THE SAID MARKET VALUE ADOPTED BY THE A.O. WAS NEVER RECEIVED BY THE ASSESSEE AND EVEN THERE WAS NO TRANSFER OR SALE OF HES PREMISE BY THE ASSESSEE TO M/S ROHAN DEVELOPERS PVT. ITA 4551/M/12 13 LTD. THE ONLY BENEFIT THE ASSESSEE RECEIVED WAS IN THE FORM OF NEW BUILDING OF ALMOST SAME AREA AND THE VALUE OF SUCH BENEFIT WAS ONLY TO THE EXTENT OF COST OF SUCH NEW CONSTRUCTION AS VALUED FOR STAMP DUTY P URPOSE AT RS. 38,21,000/-. AS SUCH CONSIDERING ALL THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE LD. CIT(A) IS FULLY JUSTIFIED IN RESTRICTI NG THE ADDITION OF RS. 2,64,31,800/- MADE BY THE A.O. ON ACCOUNT OF SHORT TERM CAPITAL GAIN TO RS. 38,21,000/- BEING THE BENEFIT ACCRUED OR ARISING AS A RESULT OF PERMANENT ALTERNATE ACCOMMODATION AGREEMENT ENTERED INTO BY T HE ASSESSEE WITH M/S ROHAN DEVELOPERS PVT. LTD. IN THAT VIEW OF THE MATT ER, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) AND DISMISS THIS A PPEAL FILED BY THE REVENUE. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2014. . ) / 0 31-1-2014 ) SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 0 DATED 31-1-2014 .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. () / THE CIT(A)36, MUMBAI. 4. / CIT CENTRAL IV,, MUMBAI 5. 5 $7 , * 7 , / DR, ITAT, MUMBAI B BENCH 6. : / GUARD FILE. / BY ORDER, %5 $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI