LATE VADILAL C. DESAI, MUMBAI V. ITO 13(3)(2), MUMBAI

ITA 478/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0265 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP ITA NO M A Y
• Assessee Lawyers: B V ZHAVERI
• Keywords: Sale consideration of property below Jantri Value; Audit objection; Tax effect
• Section: 50C; 142(1); 12A; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 2127 /M/ 20 1 6 ASSESSMENT YEAR : 2008 - 09 ITO 17(3)(5), ROOM NO. 137, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI - 400020 VS. LATE SHRI. VADILAL C DESAI FLAT NO. 402, 4 TH FLOOR, GAMDEVI DEEPAK COOPERATIVE HOUSING SOCIETY LTD. 44 KASHIBAI NAVRANGE ROAD, GAMDEVI, MUMBAI - 400007 ./ ./ PAN/GIR NO. : AABPD 1382 P (APPELLANT ) .. (RESPONDENT ) I.T.A. NO. 478 /M/201 6 ASSESSMENT YEARS : 2008 - 09 LATE SHRI. VADILAL C DESAI FLAT NO. 402, 4 TH FLOOR, GAMDEVI DEEPAK COOPERATIVE HOUSING SOCIETY LTD. 44 KASHIBAI NAVRANGE ROAD, GAMDEVI, MUMBAI - 400007 VS. ITO 17(3)(5), ROOM NO. 137, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AABPD 1382 P ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 22.11.2017 DATE OF PRONOUNCEMENT : 14 .0 2 .2018 ASSESSEE BY: SHRI B. V. ZHAVERI DEPARTMENT BY: MS. POOJA SWAROOP ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 2 O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE AS WELL AS THE REVENUE HAVE FILED THE ABOVE MENTIONED APPEA LS AGAINST THE ORDER DATED 15.01 .201 6 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 46 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR S 2008 - 09 . ITA NO.2127 /M/201 6 : - 2. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 15.01.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 46, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEARS 2008 - 09. 3 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD./CIT(A) ERRED IN HOLDING THAT THE PROPERTY TRANSFERRED IN THE CASE IS TENANCY RIGHT AND SECTION 50C CANNOT BE INVOKED WITHOUT APPRECIATING T HE FACT THAT THE LANGUAGE OF THE DEED OF ASSIGNMENT MISUNDERSTOOD AND TENANCY RIGHT AND BUSINESS OF THE ASSESSEE ARE INDEPENDENT TO EACH OTHER AND THE PROVISIONS OF SECTION 50C ARE APPLICABLE EVER ON TENANCY RIGHT AS IN TRANSFER HIS RIGHT OF TENANT AT HIS WILL ALONGWITH THE OCCUPATION OR POSSESSION OF LAND OR BUILDING AND EXTINGUISHES HIS RIGHT OF TENANT IN THE PROPERTY, WHICH IN THE CASE OF ASSESSEE IS SHOP. THE APPELLANT PRAYS THAT THE ORDER OF THE AO SHOULD BE RESTORED AND ORDER OF THE CIT(A) SHOULD BE SET ASIDE. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 3 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 29 .0 7 .20 0 0 8 DECLARING TOTAL I NCOME TO THE TUNE OF RS. 1,85,186/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) OF THE ACT DATED 04.08.2009 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 12.08.2010. THEREAFTER, NOTICE U/S 142(1) WAS ALSO ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS AN INDIVIDUA L AND DERIVED INCOME FROM BUSINESS ON ACCOUNT OF FUTURE TRADING IN SHARES, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. ON VERIFICATION , IT WAS FOUND THAT THE ASSESSEE HAS MADE TRANSACTION OF IMMOVABLE PROPERTY DURING THE PREVIOUS YEAR RELEVANT TO ASSESSME NT YEAR UNDER CONSIDERATION AMOUNTING TO RS.96,00,266/ - . THE ASSESSING OFFICER APPLIED THE PROVISION U/S 50C OF THE ACT AND LONG TERM CAPITAL GAIN ON SALE OF TENANCY RIGHT WAS ASSESSED TO THE TUNE OF RS.96,00,266/ - AND SHORT TERM CAPITAL GAIN WAS ASSESSED 69,176/ - AND THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.97,85,450/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 5 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE APPEAL OF THE REVENUE IS BARRED BY MONETARY LIMIT. THE CBDT VIDE CIRCULAR NO.21/2015 DATED 10/12/2015 HAS REVISED THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE TRIBUNAL ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 4 RETROSPECTIVELY. THE TAX EFFECT IN DISPUTE IN THE CAPTIONED APPEAL IS STATED TO BE BELOW THE MONETARY LIMIT OF RS.10.00 LACS SPECIFIED IN THE CBDT CIRCULAR DATED 10/12/2015 (SUPRA). 6 . IN THIS BACKGROUND, LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE WAS REQUIRED TO STATE HIS POSITION. HE HAS NOT BROUGHT OUT ANY MATERIAL TO SUGGEST THAT THE CAPTIONED APPEAL IS PROTECTED BY ANY OF THE CIRCUMSTANCES PRESCRIBED IN PARA - 8 OF THE CI RCULAR DATED 10/12/2015 (SUPRA) AND AS A CONSEQUENCE SUCH APPEAL IS LIABLE TO BE TREATED AS WITHDRAWN/NOT PRESSED. THE RELEVANT PORTION OF THE CIRCULAR DATED 10/12/2015 (SUPRA) IS REPRODUCED BELOW: - 3. HENCEFORTH APPEALS/SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - SL. NO. APPEALS IN INCOME - TAX MATTERS MONETARY LIMITS (IN RS.) 1. BEFORE APPELLATE TRIBUNAL 10,00,000 2. BEFORE HIGH COURT 20,00,000 3. BEFORE SUPREME COURT 25,00,000 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTE NDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AM OUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 5 PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDU CED IN THE ORDER TO BE APPEALED AGAINST. . 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE RE VENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/ BANK ACCOUNTS. 9. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF STATUTE & RULES. FURTHER, FILING OF APPEAL IN CASES OF INCOME TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 10. THIS INST RUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED . APPEALS BEFORE THE SUPREME COURT WILL BE GOVER NED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 6 (UNDERLINED FOR EMPHASIS BY US) 7 . WITHOUT GOING INTO THE MERIT OF THE ISSUES RAISED IN THE CAPTIONED APPEAL, THIS APPEAL IS DEEMED TO BE WITHDRAWN/NOT PRESSED AS ITS FILING IS IN CONTRAVENTION OF THE CBDT CIRCULAR DATED 10/12/2015(SUPRA). 8 . IN CONCLUSION, BY APPLYING THE CBDT CIRCULAR DATED 10/12/2015(SUPRA), THE CAPTIONED APPEAL OF THE REVENUE IS DISMISSED AS WITHDRAWN/NOT PRESSED. I TA NO.478 /M/201 6 : - 9. THE ASSE SSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 15.01.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 46, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEARS 2008 - 09. 10 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - . THE COMMISSIONER (APPEALS) ERRED IN HOLDING THAT TRANSFER OF THE TENANCY RIGHTS OF THE ASSESSES WERE EFFECTED IN THE PREVIOUS YEAR RELEVANT TO A,Y. 2008 - 09 EVEN THOUGH THE ASSESSEE HAD ASSIGNED THE TENANCY RIGHT IN THE SHOP PREMISES AT NARSHINATH STREET, MUMBAI - 400 009 TO SHRI KUSHAL NILESH SANGOI ON 3 RJ MAY, 2006 WHEN HE HAD PAID FULL CONSIDERATION OF RS.4,00,000/ - AND THE ASSESSEE HAD HANDED OVER POSSESSION OF THE SAID SHOP PREMISES TO HIM ON 3 R MAY, 2006 AND THE ASSESSEE HAD MADE INV ESTMENT IN REC BONDS ON 8 1H FEBRUARY, 2007. 2. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT EXECUTION AND REGISTRATION OF THE DEED OF ASSIGNMENT ON 17' ' OCTOBER. 2007 HAD NO RELEVANCE FOR TRANSFER OF THE TENANCY RIGHTS BY THE ASSESSEE AS THE ASSES SEE HAD HANDED OVER VACANT AND ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 7 PEACEFUL POSSESSION OF THE SAID SHOP PREMISES TO THE ASSIGNEE ON 3 RD MAY, 2006. 3. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE SUM OF RS. 4, 00, 000' - RECEIVED BY THE ASSESSEE ON TRANSFER OF TENANCY RIGHTS IN THE SHOP PREMISES WAS OFFERED TOR TAXATION IN THE A.Y. 2007 - 08 AND THEREFORE, THE SAID SUM OF RS,4.00,000/ - CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE IN A.Y. 2008 - 09. 4, THE COMMISSIONER (APPEALS) ERRED IN OBSERVING: ' THE COMPUTATION OF LONG - TE RM CA PITAL GAIN IS RESTRICTED TO CONSIDERING THE ACTUAL SALE CONSIDERATION OF RS.4,00,OJO/ - . THE COST BEING 5. THE COMMISSIONER ( APPEALS) ERRED IN NOT CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE TILED ON I5 L!L JANUARY, 2016. 6. YOUR APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR DELETE ANY OF THE FOREGOING GROUNDS OF APPEAL. 1 1 . THE FACTS OF THE PRESEN T CASE ARE QUITE SIMILAR TO THE FACTS OF THE CASE AS NARRATED IN TH E ABOVE MENTIONED APPEAL BEARING NO . 2127 /M/201 6 , THEREFORE, THERE IS NO NEED TO REPEAT THE SAME. ISSUE NO 1 TO 4: - 12 . ALL THE ISSUE S ARE INTER - CONNECTED THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. THE CONTENTION OF THE ASSESSEE IS THAT THE SUM OF RS.4,00,000/ - RECEIVED BY ASSESSEE ON TRANSFER OF TENANCY RIGHTS IN THE SHOP PREMISES WAS OFFERED FOR TAXATION IN THE A.Y. 2007 - 08 , THEREFORE, THE SAID INCOME CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE FOR THE A.Y. 2008 - 09. IN BRIEF, THE ASSESSEE SOLD THE TENANCY RIGHT FOR A SUM OF RS.4,00, 000/ - TO ONE SHRI KUSHAL NILESH SANGOI . THE ASSESSING OFFICER APPLIED THE PROVISION OF SECTION 50C OF THE ACT AND ASSESSED THE LONG TERM CAPITAL GAIN AS PER THE VALUE OF STAMP DUTY ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 8 AUTHORITIES TO THE TUNE OF RS.96,00,266/ - . THE CIT(A) HAS HELD THAT THE PRO VISION OF SECTION 50C OF THE ACT WAS NOT APPLICABLE IN VIEW OF THE DECISION OF THE HONBLE ITAT IN THE CASE OF MS. FLEURETTE MARINE NOVELLE HATAM VS. THE ITO (INTERNATIONAL TAXATION) ITA. NO. 7468/M/2013 AND ARRIVED AT THIS CONCLUSION THAT THE PROVISION OF SECTION 50C OF THE ACT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HOWEVER, IT IS HELD THAT THE LONG TERM CAPITAL GAIN IS RESTRICTED TO THE CONSIDERATION OF RS.4,00,000/ - . THE REVENUE PLEAD ED THAT THE PROVISION OF SECTION 50C OF THE ACT IS APPLICA BLE. THE APPEAL OF THE REVENUE IS HEREBY ORDERED TO BE DISMISSED ABOVE. THE QUESTION ARISE IN THIS APPEAL IS IN CONNECTION WITH CONSIDERATION OF LONG TERM CAPITAL GAIN TO THE TUNE OF RS. 4,00,000/ - . THE CONTENTION OF THE ASSESSEE IS THAT THE INCOME OF THE A SSESSEE HAS ALREADY BEEN ASSESSED IN THE A.Y. 2007 - 08. THE COPY OF THE RETURN OF INCOME AND COMPUTATION OF INCOME FOR THE A.Y. 2 007 - 08 HAS BEEN FILED BEFORE US WHICH LIES AT PAGE NO. 67 TO 68 IN THE PAPER BOOK. THE ASSESSEE HAS CLAIMED THE EXEMPTION U/S 54 EC OF THE ACT ON CONSIDERATION OF RS.4,00,000/ - . MEANING THEREBY THE SAID INCOME HAS ALREADY BEEN ASSESSED FOR THE A.Y. 2007 - 08, THEREFORE, THE SAME IS NOT LIABLE TO BE ASSESSED IN THE SUBSEQUENT YEAR UNDER CONSIDERATION. ACCORDINGLY, WE ARE OF THE VIEW T HAT THE SAID CAPITAL GAIN TO THE TUNE OF RS.4,00,000/ - IS NOT LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE IN THIS Y EAR WHICH HAS BEEN ASSESSED IN THE EARLIER YEAR . ACCORDINGLY, WE DECIDE THESE ISSUE S IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA. NO. 2127, 478/M/2016 A.Y. 2008 - 09 9 13 . IN THE RESULT , THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMI SSED AND APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 1 4 .02 . 2018 SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 14. 02 . 2018 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI