SUNIL KAMALKANT CHHEDA, MUMBAI V. JOINT COMMISSIONER OF INCOME TAX CIRCLE-32(3), MUMBAI

ITA 4563/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6622 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI AMARJIT SINGH, J M / I.T.A. NO. 4563 / MUM/ 2017 ( / ASSESSMENT YEARS: 201 2 - 1 3 ) SUNIL KAMALKANT CHHEDA A/3, KITKAR APARTMENT, CARTER ROAD NO . 1, BORIVALI EAST, MUMBAI - 400066 . / VS. JCIT CIRCLE 32(3) MUMBAI ./ ./ PAN/GIR NO. : AADPC 3306 N ( / APPELLANT ) .. ( / RESPONDENT ) / DAT E OF HEARING: 09 .01.2019 /DATE OF PRONOUNCEMENT: 27. 0 2 .2019 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED T HE PRESENT APPEAL AGAINST THE ORDER DATED 18 .0 4 .2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 44 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2012 - 1 3 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 44, MUMBAI [HEREINAFTER REFERRED TO AS 'THE LEARNED CIT(A) IS BAD IN LAW AND ON FACTS. 2. RE: DISALLOWANCE OF LONG TERM CAPITAL LOSS OF RS.6,49,958/ - ON SALE OF IMMOVABLE PROPERTY: 2.1 THE LEARNED CIT(A) GROSSLY ERRED IN FAILING TO CONSIDER THE SUBMISSIONS MADE BY APPELLANT THAT THE FLAT WAS ALLOTTED BY THE BUILDER IN LIEU OF INVESTMENT FOR COMMERCIAL SHOP ON THE SAME PIECE OF LAND. 2.2 THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH E FACT THAT THE RESIDENTIAL FLAT WAS ALLOTTED ON THE SAME PLOT OF LAND ON WHICH COMMERCIAL SHOPS WERE ALLOTTED TO THE APPELLANT AND REVENUE BY: SHRI CHAUDHARY ARUN KUMAR SINGH ASSES SEE BY : SHRI DEVENDRA JAIN ITA NO. 4563 /M/2017 A. Y. 2 012 - 13 2 CONSIDERATION GIVEN AT THE TIME OF ALLOTMENT OF COMMERCIAL SHOPS WAS CONSIDERED AS CONSIDERATION FOR RESIDENTIAL FLAT. T HUS, SUBSTANTIATING THAT THE PLANS OF THE VENDOR WITH RESPECT TO THE PROPERTY HAD CHANGED. HOWEVER, THERE WAS NO CHANGE OR CANCELLATION OF THE RIGHTS IN THE SAID PROPERTY AT ALL. 2.3 THE LEARNED CIT(A) GROSSLY ERRED, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN CONSIDERING GAINS ON SALE OF IMMOVABLE PROPERTY AS SHORT TERM CAPITAL GAIN WITHOUT APPRECIATING THE FACT THAT THE SAID RIGHT IN THE PROPERTY WAS HELD BY THE APPELLANT FOR A PERIOD OF 6 YEARS. I HENCE, THE TRANSFER OF THE SAID ASS ET RESULTED IN LONG - TERN; CAPITAL LOSS. 2.4 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE RIGHT IN THE PROPERTY WAS ALLOTTED TO THE APPELLANT ON 1M JANUARY, 2006 ITSELF. SINCE, THE RIGHT WAS TRANSFERRED IN F.Y. 2011 - 12, THE TOTAL PERI OD OF HOLDING OF THE PROPERTY BY THE APPELLANT WAS MORE THAN 36 MONTHS. 2.5 WITHOUT PREJUDICE TO THE ABOVE, EVEN IF TWO RIGHTS ARE CONSIDERED IN THE SAID TRANSACTION, THERE WOULD BE NO MAJOR IMPACT ON COMPUTATION AS THE FLAT WAS SOLD WITHIN 1 MONTH FR OM THE DATE OF EXECUTING PURCHASE AGREEMENT. THE CAPITAL GAIN ON THE SALE OF SECOND RIGHT IS DUE TO THE ORIGINAL RIGHTS AND THEREFORE GAIN IS LONG - TERM IN NATURE. 2.6 WITHOUT PREJUDICE TO THE ABOVE, THE NET IMPACT OF THE SAID DISALLOWANCE ON TOTAL IN COME OF APPELLANT IS ONLY RS.4,13,792/ - . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 30 .0 7 .201 2 DECLARING TOTAL INCOM E TO THE TUNE OF RS.73,24,930 / - AND CURRENT YEAR LONG TERM CAPITAL LOSS TO THE TUNE OF RS.6,49,9 58/ - . THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) . THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE ASSESSEE IS AN INDIVIDUAL AND EARNED HIS INCOME UNDER THE HEAD SALARY, INCOME FROM CAPITAL GAIN AND INCOME FROM OTHER SOURCES. THE ASSESSEE CLAIMED THE LONG TERM CAPITAL GAIN OF RS.6,49,958/ - ON SALE OF IMMOVABLE PROPERTY AND CARRY FORWARDED LOSS U/S 74 OF THE I.T. ACT. THE ASSESSEE CLAIM ED THE LONG TERM CAPITAL LOSS OF RS.6,49,958/ - ON SALE OF HIS SATA RA FLAT. THE ASSESSEE CLAIM LONG TERM CAPITAL LOSS ON THE BASIS OF THE ALLOTMENT LETTER ISSUED BY M/S. SATARA PROPERTY (INDIA) LTD. ON 01.01.2006. THE LETTER WAS ISSUED TO THE ASSESSEE AND OTHER FOR THE SHOP NO. LGF - 90B ADMEASURING 390 SQ. FT. IN DREAMS TH E MALL AT BORIVALI. THE LETTER CLEARLY ITA NO. 4563 /M/2017 A. Y. 2 012 - 13 3 SPEAKS THAT THE SAID LETTER WAS ISSUED FOR THE PURPOSE OF RESERVATION OF SAID SHOP AND THE POSSESSION OF THE SAID SHOP. THE ASSESSEE CLAIM ED THE LONG TERM CAPITAL LOSS ON THE PURCHASE OF THE FLAT ON 14.12.2011 AT 12 TH FLOOR OF A WING LOCATED SATARA PARK, BORIVALI (W) . T HE FLAT WAS SOLD ON 25.01.2012. SINCE THE CLAIM OF THE ASSESSEE WAS WRONG WHICH WAS RAISED ON THE BASIS OF THE ALLOTMENT OF THE SHOP WHEREAS THE CLAIM OF THE ASSESSEE WAS IN CONNECTION WITH THE FLAT, T HEREFORE, THE CLAIM OF THE ASSESSEE WAS DECLINED AND THE 1/4 TH GAIN IN SUM OF RS.4,13,792/ - WAS ASSESSED AS INCOME OF THE ASSESSEE . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) CONFIRMED THE ORDER OF THE AO , THEREFORE, T HE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO S .1 & 2 : - 4. ALL THE ISSUES ARE IN CONNECTION WITH THE DISALLOWANCE OF LONG TERM CAPITAL LOSS TO THE TUNE OF RS.6,49,958/ - ON SALE OF IMMOVABLE PROPERTY. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ALLOTMENT LETTER IS LIABLE TO BE CONSIDERED FOR ASSESSING THE LONG TERM CAPITAL GAIN/SHORT TERM CAPITAL GAIN, THEREFORE, THE CLAIM OF THE ASSESSEE IS LIABLE TO BE ALLOWED IN VIEW OF THE DECISION OF THE HONBLE ITAT IN THE CASE TITLED AS AC IT VS. KRISHNA PHARMACY IN ITA. NO. 3947/M/2016 DATED 19.04.2018 AND IN THE CASE OF TITLED AS ACIT VS. ANITA D KANJANI DATED 13.02.2017 . HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. BEFORE GOING FURT HER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 3.3 1 HAVE CONSIDERED THE RIVAL SUBMISSIONS AS ABOVE. FROM THE FACTS OF THE CASE, IT IS ABSOLUTELY CLEAR THAT THE CAPITAL ASSET LEADING TO CAPITAL GAIN IS A RESIDENTIAL FLAT. TH IS RESIDENTIAL FLAT HAS BEEN PURCHASED BY THE APPELLANT VIDE AGREEMENT DATED 14.12.2011 AND SO' I VIDE AGREEMENT DATED 25.01.2012. THE PROPERTY WHICH HAS BEEN SOLD BEARS NO RELATION TO THE INVESTMENT MADE BY THE APPELLANT IN THE FY 2005 - 06 BECAUSE THE APPE LLANT HAD MADE AN INVESTMENT FOR PURCHASE OF COMMERCIAL SHOPS IN A MALL. EVEN IF IT IS ACCEPTED THAT THE APPELLANT HAD BEEN GRANTED A RIGHT IN PROPERTY THE SAID RIGHT IN PROPERTY WAS FOR A COMMERCIAL ASSET AND NOT FOR A RESIDENTIAL ITA NO. 4563 /M/2017 A. Y. 2 012 - 13 4 FLAT. THE APPELLANT HAD NOT BEEN ABLE TO ESTABLISH THAT THE FLAT WAS ALLOTTED BY THE BUILDER IN LIEU OF HIS INVESTMENT FOR COMMERCIAL SHOP AFTER CONSIDERING THE TOTALITY OF FACTS I HAVE COME TO A CONCLUSION THAT THE AO HAS RIGHTLY ASSESSED THE SHORT - TERM CAPITAL GAIN ON SALE OF R ESIDENTIAL PROPERTY. THE GROUNDS OF APPEAL NO. 2 IS DISMISSED. 5. ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE ASSESSEE CLAIM ED THE CAPITAL GAIN ON ACCOUNT OF SALE OF RESIDENTIAL FLAT. THE RESIDENTIAL FLAT WAS PURCHASED BY ASSESSEE BY VIRT UE OF AGREEMENT DATED 14.12.2011 AND SOLD BY VIRTUE OF AGREEMENT DATED 25.01.2012. THE ALLOTMENT LETTER ON THE BASIS OF WHICH THE ASSESSEE RAISED THE CLAIM IS IN CONNECTION WITH THE PURCHASE OF COMMERCIAL SHOP IN THE MALL WHICH IS COMMERCIAL ASSET. THE CLA IM OF THE ASSESSEE IS THAT THE BUILDER IN FACT INITIALLY ALLOTTED THE SHOP BUT SUBSEQUENTLY THE CHANGED ITS OWN AND ALLOTTED THE FLAT ON 14.12.2011. THERE IS NOTHING ON RECORD TO SUBSTANTIATE THE CONTENTION OF THE ASSESSEE. THE BUILDER NOWHERE CONFIRMED TH E PLEA OF THE ASSESSEE TO THE FACT THAT THE RESIDENTIAL FLAT WAS GIVEN IN VIEW OF THE ALLOTMENT OF SHOP AT MALL. THE LETTER WHICH BELONGS TO THE ALLOTMENT OF SHOP NOWHERE LIABLE TO BE CONSIDERED FOR THE RESIDENTIAL PROPERTY WHICH WAS ALLOTTED BY VIRTUE OF LETTER AGREEMENT DATED 14.12.2011 AND SOLD BY VIRTUE OF AGREEMENT DATED 25.01.2012. THE LETTER RELIED UPON BY THE LD. REPRESENTATIVE OF THE ASSESSEE SPEAKS ABOUT CONSIDERING THE ALLOTMENT LETTER FOR CONSIDERING THE LONG TERM CAPITAL/SHORT TERM CAPITAL GAIN IN CONNECTION WITH SHOP BUT THE CLAIM RAISED BY THE ASSESSEE AGAINST THE OTHER PROPERTY I.E. IN LIEU OF SHOP. THE FACTS OF THE LAW RELIED UPON THE LD. REPRESENTATIVE OF THE ASSESSEE IS QUITE DISTINGUISHABLE AND IS NOT APPLICABLE TO THE FACTS OF THE PRESEN T CASE. TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE . ITA NO. 4563 /M/2017 A. Y. 2 012 - 13 5 6 . IN THE RESULT, THE APPEA L OF THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27. 02 .2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED 27. 02 .2019 V IJAY COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//