ITO 21(2)(4), MUMBAI V. SALIL GOVIND SHETTY, MUMBAI

ITA 4925/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4948 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 31-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABHAT JHA IZRFKHZ DH LS
• Keywords: Sale consideration of property below Jantri Value; Transactions in derivatives; Cost of acquisition
• Section: 50C; 69

Judgement Text

SHRI SALIL GOVIND SHETTY - 1 - VK;DJ VIHYH; VF/KDJ.K BZ U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI JH JKTSUNZ FLAG YS[KK LNL; ,OA JH VFER 'KQDYK] U;KF ;D LNL; DS LE{K BEFORE SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SH RI AMIT SHUKLA JUDICIAL MEMBER VK;DJ VIHY LA[;K /ITA NO. 4925/MUM/2012 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2009-10 INCOME TAX OFFICER-21(2)(4), ROOM NO. 503, 5 TH FLOOR, C- 10, PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051. CUKE@ VS. SHRI SALIL GOVIND SHETTY E-72, NORTH BOMBAY SOCIETY, JUHU, MUMBAI400 049. PAN:- AAUPS1571L VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VIHYKFKHZ DH VKSJ LS @ APPELLANT BY SHRI PRABHAT JHA IZR;FKHZ DH VKSJ LS @ RESPONDENT BY SHRI HITESH P. SHAH VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER RAJENDRA SINGH, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 28.5.2012 OF CIT(A) FOR THE ASSESSMENT YEAR 2009-10. THE REVENUE I N THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GROUNDS. 2. THE FIRST DISPUTE RAISED IS REGARDING ADDITION OF RS. 24, 19,500/- MADE BY AO U/S 69 OF THE INCOME TAX ACCOUNT. AO RECEIVED AIR IN FORMATION SHOWING SHARE LQUOKBZ DH RKJH[K @ DATE OF HEARING 16-09-2013 ?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT 16-09-2013 SHRI SALIL GOVIND SHETTY - 2 - TRANSACTIONS WORTH RS. 24,19,500/- BY THE ASSESSEE THROU GH BOMBAY STOCK EXCHANGE (BSE) WHICH WAS NOT DISCLOSED IN THE INCOME TAX RETURN FILED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT IT HAD ENTERED IN TO SHARE TRANSACTIONS IN FUTURE & OPTIONS (F&O) IN WHICH THE ASSESSEE HAD EARNE D PROFIT OF RS. 9904.62 DETAILS OF WHICH WERE GIVEN BY THE ASSESSEE. THE ASSE SSEE ALSO SUBMITTED THE COPY OF D-MAT ACCOUNT MAINTAINED WITH ICICI BANK FOR THE PER IOD 1.4.2008 TO 31.3.2009 ALONG WITH COPY OF LEDGER ACCOUNT OF ICICI BANK. IT WA S POINTED OUT THAT ALL THE TRANSACTIONS WERE DONE THROUGH WITH ICICI BANK JUHU, BR ANCH. THE ASSESSEE DENIED ANY SHARE TRANSACTIONS AS MENTIONED IN THE AIR INFORMAT ION. THE AO HOWEVER DID NOT ACCEPT THE EXPLANATION GIVEN. IT WAS OBSERVED BY HIM THAT THE ASSESSEE HAD SUBMITTED DETAILS OF TRANSACTIONS ROUTED THROUGH NSE BUT TH E TRANSACTIONS DETAILS ROUTED THROUGH BSE WERE NOT SUBMITTED. AO THEREFORE REJEC TED THE EXPLANATION GIVEN BY THE ASSESSEE THAT IT HAD NOT DONE ANY TRANSACTIO N THROUGH BSE AS REPORTED IN THE AIR. AO ACCORDINGLY TREATED THE SUM OF RS. 24,1 9,550/- AS INCOME OF THE ASSESSEE U/S 69 OF THE INCOME TAX ACT. 2.1 THE ASSESSEE DISPUTED THE DECISION OF AO, BEFORE CIT(A) AND REITERATED THE SUBMISSIONS EARLIER MADE THAT THE ASSESSEE HAD NOT ENTER ED INTO SHARE TRANSACTIONS OF RS. 24,19,550/- THROUGH BSE AS MENTIONED IN THE A IR INFORMATION. THE ASSESSEE HAD GIVEN COMPLETE DETAILS OF D-MAT ACCOUNT MAINTAINED WITH ICICI BANK IN WHICH NO SUCH TRANSACTIONS WERE REFLECTED. IT WAS ALSO POINT ED OUT THAT THE ASSESSEE HAD REQUESTED THE AO TO GIVE COMPLETE DETAILS OF TRANSACTIONS IN THE AIR INFORMATION BUT NO SUCH DETAILS WERE GIVEN THE AO WHO HAD SIMPLY INFORMED THAT THERE WERE TRANSACTIONS OF RS. 14,59,500/- AND RS. 9,60,000/- IN SHARE MARKET THROUGH BSE ON 7 TH APRIL 2008. THE ASSESSEE HAD GIVEN COMPLETE DETAILS OF THE D-MAT ACCOUNT AND ALSO SUBMITTED BEFORE AO THAT THE ASSESSEE HAD NOT MADE ANY PAYMENT OF RS. 14,59,500/- AND 460000/- ON 7.4.2008. THE ADDITION MADE BY AO WAS, THEREFORE, PURELY ON PRESUMPTIVE BASIS WHICH SHOULD BE DELETED. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO HAD N OT GIVEN DETAILS OF THE TRANSACTIONS SUCH AS NAME OF SECURITY, DATE OF TRANSACTIO NS AND OTHER DETAILS TO SHRI SALIL GOVIND SHETTY - 3 - REBUT THE CLAIM OF THE ASSESSEE THAT NO SUCH TRANSACTION WERE ENTERED INTO. THE ASSESSEE HAD DISCHARGED ITS BURDEN BY GIVING FULL D ETAILS OF D-MAT ACCOUNT AS WELL AS LEDGER ACCOUNT OF ICICI BANK THROUGH WHICH THE ASS ESSEE HAD DONE SHARE TRANSACTIONS. THE CLAIM OF THE AO THAT THE ASSESSEE DID N OT GIVE DETAILS OF BSE ACCOUNT WAS ALSO NOT CORRECT, AS COPY OF THE ICICI BANK ACCOUNT SHOWED THAT THE ASSESSEE HAD DONE FOUR TRANSACTIONS THROUGH BSE IN RES PECT OF SHARES OF RITESH PROPERTIES AND ORISSA SPONGE IRON AND STEEL INDUSTRIES LTD WHICH WERE APPEARING IN THE SAID ACCOUNT. THE ASSESSEE HAD THUS DISCHARGED THE ONUS BY SUBMITTING NECESSARY DETAILS AND EVIDENCE AND THE ONUS WAS ON THE AO TO BRING ON RECORD THE NECESSARY MATERIAL OR SPECIFIC DETAILS IN SUPPORT OF A LLEGATION THAT THE ASSESSEE HAD ENTERED INTO TRANSACTIONS AS MENTIONED IN THE AIR. CIT (A), THEREFORE, DIRECTED THE AO TO DELETE THE ADDITION MADE, AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE TRIBUNAL. 2.2 BEFORE US THE LEARNED AR FOR THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES WHEREAS THE LEARNED DR PLACE D RELIANCE ON THE ORDER OF AO. 2.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ADDITION MADE BY AO OF RS. 2419 500/- ON ACCOUNT OF ALLEGED SHARE TRANSACTIONS MADE BY THE ASSESSEE THROUGH BSE AS MENTIONED IN THE AIR INFORMATION. THE ASSESSEE HAD DENIED UNDERTAKEN ANY SUCH TRANSACTIONS. THE ASSESSEE HAD GIVEN COMPLETE DETAILS OF D-MAT ACCOUNT A S WELL AS THE COPY OF THE BANK ACCOUNT IN WHICH OTHER TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAD BEEN DULY RECORDED INCLUDING SOME TRANSACTIONS WITH BSE. IN SUCH A SITUATION BURDEN WAS ON THE AO TO PLACE DETAILS OF THE SHARE TRANSACTIONS ON RECORD AS MENTIONED IN THE AIR INFORMATION. THE AO HOWEVER HAS NOT GIVEN ANY SU CH DETAILS OF TRANSACTION. AO ONLY MENTIONED THAT THERE WERE TRANSACTIONS OF RS. 14,5 5,000/- AND 9,60,000/- IN SHARE MARKET THROUGH BSE ON 7.4.2008 BUT NO DETAILS OF SECURITY, DATE AND TIME OF TRANSACTION ETC WERE GIVEN. IN THE ABSENCE OF SUCH DETAI LS ADDITION COULD NOT BE SHRI SALIL GOVIND SHETTY - 4 - SUSTAINED MERELY ON THE BASIS OF GENERAL INFORMATION. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF CIT (A) DELETING THE ADDITION AND THE SAME IS, THEREFORE, UPHELD. 3. THE SECOND DISPUTE IS REGARDING ADDITION OF RS.7,6 2,003 MADE BY AO ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE AO NOTED FROM THE AIR INFORMATION THAT THE ASSESSEE HAD PURCHASED INDUSTRIAL GALA NO. 5 ON THE F IRST FLOOR MEASURING 56.86 SQ. METER IN PATEL INDUSTRIAL ESTATE NO. 3, AT VILLAGE NAVGA RH, VASAI ON 1.10.1988 FOR A TOTAL CONSIDERATION OF RS.1,24,000/- AND INCURRED EXPE NSES ON STAMP DUTY AT RS. 4,340/-. THE TOTAL COST OF ACQUISITION OF THE PROPERTY WAS RS. 1, 28,340/-. THE PROPERTY HAD BEEN SOLD VIDE AGREEMENT DATED 27.3.2009 FOR A SUM OF RS. 15,00,000/- TO M/S REMEDIA PHARMACEUTICALS PVT. LTD. T HE AGREEMENT WAS NOT REGISTERED NOR ANY STAMP DUTY WAS PAID. THE AO, THERE FORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE SALE CONSIDERATION SHOULD NOT BE TAKEN AS THE STAMP DUTY VALUATION U/S 50C OF THE INCOME TAX ACT. THE ASSESSE E MADE NO SUBMISSIONS. AO, THEREFORE, DETERMINED THE MARKET VALUE OF THE PROPERTY AS PER STAMP DUTY VALUATION OF RS.27,25,940/- AND THE LONG TERM CAPITAL GAIN WAS COMPUTED AFTER DEDUCTING THE INDEXED COST OF ACQUISITION OF RS. 4,63, 937/- AT RS. 22,62,003/- AND AFTER ALLOWING EXEMPTION OF RS. 15,00,000/- U/S 54EC IN RESPECT OF INVESTMENT IN NHAI BONDS, THE AO COMPUTED THE TAXABLE LONG TERM CAPITAL GAIN AT RS. 7,62,003/-. 3.1 THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBM ITTED BEFORE CIT(A) THAT THE PROVISIONS OF SECTION 50C WAS NOT APPLICABLE AS THE PROPERTY WAS NOT REGISTERED AND NO STAMP DUTY VALUATION HAD BEEN MADE. I T WAS ALSO POINTED OUT THAT AMENDMENT MADE TO SECTION 50C BY FINANCE ACT 1.10.20 09 MAKING PROVISIONS FOR THE ASSESSABLE VALUE OF STAMP DUTY AS THE SALE CO NSIDERATION WAS NOT APPLICABLE IN CASE OF THE ASSESSEE AS THE TRANSACTION IN CASE OF THE ASSESSEE HAD BEEN ENTERED INTO ON 27.3.2009 BEFORE THE DATE OF AMENDMENT. THE A SSESSEE ALSO SUBMITTED COMPARATIVE DETAILS OF GALA NO. 104 ON FIRST FLOOR PATE L INDUSTRIAL ESTATE NO.1 WITH AREA OF 118.66 SQ. MT. WHICH HAD BEEN SOLD FOR RS, 2 6,00,000/- AT THE RATE OF SHRI SALIL GOVIND SHETTY - 5 - RS.21,911/- PER SQ METER. THE SAID SALE DEED WAS REG ISTERED ON 18.08.2008. SIMILARLY IT WAS ALSO POINTED OUT THAT ANOTHER INDUSTRIA L GALA NO. 105 ON FIRST FLOOR ON PATEL INDUSTRIAL ESTATE NO. 1 WITH AREA OF 135.89 SQ. MT. WAS SOLD FOR RS, 28,00,000/- AND THE MARKET VALUE FOR THE PURPOSE OF R EGISTRATION WAS RS. 29,35,000/- AT THE RATE OF RS 21600/- PER SQ. MT. THE M ARKET VALUE IN CASE OF THE ASSESSEE WAS 26,381 WHICH WAS HIGHER THAN THE ABOVE C OMPARATIVE CASES. IT WAS, THEREFORE, SUBMITTED THAT THE ADDITION MADE BY THE AO TO THE SALE CONSIDERATION WAS NOT JUSTIFIED. CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE OBSERVED THAT IN CASE THE ASSESSEE DID NOT ACCEPT THE STAMP DUTY VA LUATION, THE AO HAD BEEN GIVEN POWERS TO REFER THE MATTER TO THE DVO. THEREFORE, ACTION OF THE AO FOR VALUING THE PROPERTY ON THE BASIS OF READY RECKNOR VAL UE WITHOUT MAKING ANY REFERENCE TO THE DVO WAS LEGALLY INCORRECT. MOREOVER THE SALE PRICE SHOWN BY THE ASSESSEE WAS MORE THAN THE COMPARABLE CASES CITED. CIT (A), THEREFORE, OBSERVED THAT EVEN IF SECTION 50C WAS APPLICABLE IN CASE OF UN REGISTERED DOCUMENTS, THE SALE CONSIDERATION SHOWN BY THE ASSESSEE WAS HIGHER AND, THEREFORE, THE ADDITION MADE BY AO WAS NOT CORRECT. ACCORDINGLY HE DIRECTED THE AO TO DELETE THE ADDITION, AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE T RIBUNAL. 3.2 BEFORE US THE LEARNED AR FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES WHEREAS THE LEARNED DR PLACED RELIANCE ON THE ORDERS OF AO. 3.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ADDITION ON ACCOUNT OF SALE CONSI DERATION OF INDUSTRIAL GALA SOLD BY THE ASSESSEE. THERE IS NO DISPUTE THAT THE SALE WAS NOT REGISTERED AND NO STAMP DUTY HAD BEEN PAID. THEREFORE, IT IS CLEAR THAT THE STAMP DUTY AUTHORITY HAD NOT VALUED THE PROPERTY FOR THE PURPOSE OF LEVY OF STAM P DUTY. THEREFORE, THE ISSUE IS WHETHER IN SUCH A SITUATION, THE ASSESSABLE VALUE OF STAMP DUTY CAN BE ADOPTED BY AO FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN U /S 50C OF THE INCOME TAX ACT. IN TERMS OF SECTION 50C, THE VALUE ADOPTED OR ASSES SED BY THE STAMP DUTY SHRI SALIL GOVIND SHETTY - 6 - AUTHORITIES HAS TO BE TAKEN AS SALE CONSIDERATION. B UT IN THIS CASE THERE HAS BEEN NO ASSESSMENT OF STAMP DUTY VALUE BY STAMP DUTY AUTHORITIES . THE AMENDMENT TO SECTION 50C BY THE FINANCE ACT 2009 MAKING THE PROVISIO NS FOR ADOPTING THE ASSESSABLE VALUE OF STAMP DUTY FOR THE PURPOSE OF COMP UTATION OF LONG TERM CAPITAL GAIN IS EFFECTIVE FROM 1.9.2010. THE LEARNED AR FOR T HE ASSESSEE HAS REFERRED BEFORE US THE JUDGMENT OF HONBLE HIGH COURT OF MADRAS IN CA SE OF CIT VS. R. SUGANTHA RAVINDRAN (260 CTR 412) IN WHICH IT HAS BEEN HELD THA T AMENDMENT MADE BY THE FINANCE ACT 2009 IS APPLICABLE ONLY W.E.F 1.10.2009 AND, THEREFORE, WILL APPLY ONLY IN RELATION TO TRANSACTIONS UNDERTAKEN ON OR AFTER THE S AID DATE. THE BOARD HAS ALSO ISSUED CIRCULAR NO 5 OF 2010 DATED 3 RD JUNE 2010 CLARIFYING THE ABOVE POSITIONS. THE TRANSACTION IN CASE OF THE ASSESSEE HAD BEEN ENTERED I NTO ON 27.3.2009 WHICH IS PRIOR TO THE DATE OF AMENDMENT. THEREFORE, THE AMENDED PROVISIONS WILL NOT APPLY IN CASE OF THE ASSESSEE AND AS PER THE PRE AMENDED P ROVISIONS, NO ADDITION COULD BE MADE IN CASE OF THE ASSESSEE AS THE PROPERTY WAS NO T REGISTERED AND NO STAMP DUTY VALUATION HAD BEEN MADE BY THE STAMP DUTY AUTHORITY. THE SALE RATE DECLARED BY THE ASSESSEE IS HIGHER THAN THE COMPARABLE CASES. W E, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO AND THE SAME IS, THEREFORE, UPHELD. 4. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 16-9-2013 SD/- SD/- (AMIT SHUKLA) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SKS SR. P.S, MUMBAI DATED 16.9.2013 SHRI SALIL GOVIND SHETTY - 7 - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI