C. Doctor & Co. Pvt. Ltd., Ahmedabad V. The ACIT, -10(1), Mumbai

ITA 5287/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0909 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.5287/MUM /2012 / ASSTT. YEAR: 2009-2010 C. DOCTOR & CO. P.LTD. S/36, 1 ST FLOOR COTTON EXCHANGE BUILDING COTTON GREEN MUMBAI 400 033. PAN : AAACC 2362 G VS ACIT, CIR.10(1) AYKAR BHAVAN M.K.ROAD, MUMBAI PIN 400 020. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI TUSHAR HEMANI, AR REVENUE BY : SHRI PRASOON KABRA, SR.DR / DATE OF HEARING : 10/06/2016 / DATE OF PRONOUNCEMENT: 05/08/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE A SSESSEE AGAINST THE ORDER OF THE LD.CIT(A)-21, MUMBAI DATED 16.5.2012 P ASSED FOR THE ASSTT.YEAR 2009-10. 2. THIS APPEAL HAS COME TO AHMEDABAD BY TRANSFER OR DER OF THE PRESIDENT, ITAT DATED 8.12.2014, WHICH IS AVAILABLE ON THE FIL E. 3. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) R ULES, 1963 - THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. ITA NO.5287/MUM/2012 2 4. ASSESSEE IN THE FIRST FOLD OF GRIEVANCE BEFORE U S, HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.6,89,746/-. THE ASSESSEE FAILED TO MAKE PAYMENTS OF EMPLOYEES CONT RIBUTION TO PF AND ESI ACCOUNT WITHIN THE DUE DATE OF RESPECTIVE ACTS. TH EREFORE, THE LD.AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE. ON APPEAL, T HE LD.CIT(A) HAS CONFIRMED THE DISALLOWANCE. 5. BEFORE US, IT HAS BEEN AGREED THAT THIS ISSUE IN DISPUTE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRA NSPORT CORPORATION, REPORTED IN 366 ITR 70. THE HONBLE HIGH COURT HA S HELD THAT IF THE ASSESSEE FAILED TO MAKE PAYMENTS OF EMPLOYEES CONTRIBUTION TO PF AND ESI ACT, WITHIN THE TIME LIMIT PROVIDED IN THESE ACTS, THE A SSESSEE IS NOT ENTITLED TO DEDUCTION OF SUCH AMOUNTS. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT, THIS GROUND IS APPEAL I S REJECTED. 6. IN THE NEXT FOLD OF GRIEVANCE, IT HAS BEEN PLEAD ED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF R S.54,27,649/- OUT OF TOTAL ADDITION OF RS.85,23,590/-. 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ELECTRONICALLY ON 30.9.2009 DECLARING TOTAL INCOME AT RS.2,03,61,617/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THA T THE ASSESSEE HAS DISCLOSED LONG TERM CAPITAL GAIN OF RS.54 LAKHS. THE ASSESS EE WAS TENANT OF MUMBAI BOMBAY PORT TRUST IN RESPECT OF GODOWN PREMISES KNO WN AS P.T. SHED. IT WAS SITUATED IN MAZGAON, SEWREE BOMBAY PORT TRUST, MUMBAI. THE ASSESSEE HAS SOLD ITS TENANCY RIGHT TO CHANDULAL T. PARIKH F OR A CONSIDERATION OF RS.54 ITA NO.5287/MUM/2012 3 LAKHS VIDE AGREEMENT DATED 24.6.2008. ON PERUSAL O F THE AGREEMENT, IT REVEALED TO THE AO THAT SHRI CHANDULAL T. PARIKH H AD ALSO AGREED TO BEAR AND PAY ALL ARREARS OF RENT AND OTHER DUES PAYABLE BY T HE ASSESSEE TO THE BOMBAY PORT TRUST. THESE DUES HAVE BEEN WORKED OUT AT RS. 85,23,590/-. THE LD.AO HAS CONSTRUED THAT THIS PAYMENT BY M/S.CHANDULAL T. PARIKH WAS NOTHING BUT AKIN TO CONSIDERATION FOR ACQUISITION OF TENANCY RI GHT. IN OTHER WORDS, THE VENDEE HAS DISCHARGED STATUTORY LIABILITY OF THE VE NDOR FOR PURCHASING OF THE TENANCY RIGHT, IS TO BE TREATED AS CONSIDERATION FO R TENANCY RIGHTS. IN THIS WAY, THE LD.AO HAS MADE ADDITION OF RS.85,23,590/-. 8. ON APPEAL, THE LD.CIT(A) HAS PARTLY DELETED THE ADDITION. THE LD.CIT(A) MADE ANALYSIS OF ALL THE DUES AND ARRIVED AT A CONCLUSION THAT CERTAIN AMOUNTS WERE NOT PAYABLE BY THE ASSESSEE TO BOMBAY PORT TRUST, AND THEREFORE, THEY CANNOT BE CONSIDERED EQUIVALENT TO THE CONSIDERATION RECEIVED FOR SALE OF TENANCY RIGHT. ACCORDINGLY, THE LD.CIT (A) HAS CONFIRMED THE ADDITION OF RS.54,27,649/-. 9. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TENANCY RIGHT IS CAPITAL ASSET IN THE HANDS OF THE ASSESSEE. ON SALE OF TENANCY RIGHT, ASSESSEE HAS OFFERED CAPITAL GAIN. DISPUTE BETWEEN THE PARTIES RELATE TO QUANTIFICATION OF CAPITAL GAIN AND ITS COMPUTATION. SECTION 48 CONTEMPLATES THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN SHALL BE COMPUTED BY DEDUCTING FROM THE VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE AMOUNTS, VIZ. (I) EXPENDITURE INC URRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER, AND (II) THE COST OF ACQUISITION ASSET AND THE COST OF ANY IMPROVEMENT THERETO. TO OUR MIND, THE REVENUE AUTHORITIES HAVE ITA NO.5287/MUM/2012 4 FAILED TO APPRECIATE THE CONTROVERSY IN RIGHT PERSP ECTIVE. THE AMOUNT OF RS.85,23,590/- WAS ARREARS OF RENT AND OTHER STATUT ORY CHARGES WHICH BOMBAY PORT TRUST MADE RECOVERY FROM THE ASSESSEE. HAD TH E ASSESSEE NOT PAID THESE AMOUNTS, THEN, PROBABLY, IT WOULD NOT BE IN A POSIT ION TO SAFEGUARD ITS TENANCY RIGHTS. NON-PAYMENT OF RENT WOULD BE A REASON FOR EJECTING OF THE ASSESSEE FROM THE PREMISES. IN OTHER WORDS, IT IS AN ENCUMB RANCE ON THE ALLEGED TENANCY RIGHT. BY DISCHARGING OF THIS ENCUMBRANCE, THE ASSESSEE HAS IMPROVED ITS TITLE QUA TENANCY RIGHT. AS PER THE TERMS OF AGREEMENT, SUC H ARREARS WERE REQUIRED TO BE PAID BY THE VENDEE. EV EN IF FOR THE SAKE OF ARGUMENTS, IT IS CONSTRUED THAT SUCH PAYMENT IS AKI N TO SALE CONSIDERATION OF THE TENANCY RIGHT THEN, THE RIGHT TO RECEIVE SUCH C ONSIDERATION WAS NOT MENTIONED IN THE SALE AGREEMENT. IT WAS AN OBLIGAT ION WHICH IS TO BE DISCHARGED BY THE VENDEE ON BEHALF OF THE ASSESSEE. THUS, WITHOUT GIVING CORRESPONDING DEDUCTION OF THE EXPENDITURE, WHICH O THERWISE, OUGHT TO HAVE BEEN INCURRED BY THE ASSESSEE, THE CONSIDERATION SIMPLICITOR CANNOT BE ADDED IN THE VALUE OF SALE CONSIDERATION FOR SALE OF TENA NCY RIGHT. IN OTHER WORDS, IT IS A REVENUE NEUTRAL ITEM. EITHER ASSESSEE HAD PAI D IT, AND THEN CLAIMED THE SET OFF AGAINST THE SALE CONSIDERATION, WHILE COMPUTING THE LONG TERM CAPITAL GAIN OR TO SHOW NET AMOUNT FOR THE PURPOSE OF COMPUTING THE LONG TERM CAPITAL GAINS. WE ALLOW GROUND OF APPEAL AND DELETE THIS A DDITION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH AUGUST, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 05/08/2016