ITO 22(2)(2), NAVI MUMBAI V. PARUL VIJAY SHAH, MUMBAI

ITA 5300/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92697 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Capital asset

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 5300/MUM/2012 ( / ASSESSMENT YEAR : 2009 - 10 THE ITO 22(2)(2), 4 TH FLOOR, TOWER NO. 6, ROOM NO. 20, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI / VS. MS PARUL VIJAY SHAH, 201, 2 ND FLOOR, EKTA EXOTICA, UNION PARK, CHEMBUR, MUMBAI - 400 071 ./ ./ PAN/GIR NO. : AAPPS 3272H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI PREMANAND J / RESPONDENT BY : SHRI BHUPENDRA KARKHANIS / DATE OF HEARING : 0 2 . 0 6 .2015 / DATE OF PRONOUNCEMENT : 0 2 .0 6 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 33 , MUMBAI DT. 2 5 . 6 .2012 PERTAINING TO ASSESSMENT YEAR 2009 - 10. ITA. NO. 5300/M/2012 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERR ED IN HOLDING THAT RIGHT ON THE PROPERTY CAME INTO EXISTENCE ON THE DATE OF ALLOTMENT OF LETTER. 3. THE ASSESSEE IS A RESIDENT INDIVIDUAL DERIVING INCOME FROM COMMISSION, BROKERAGE AND OTHER SOURCES. THE RETURN FOR THE YEAR WAS SELECTED FOR SCRUTINY ASSE SSMENT. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL GAINS ON SALE OF OFFICE. ON FURTHER VERIFICATION, THE AO CAME TO KNOW THAT THE ASSESSEE HAS COMPUTED THE LONG TERM CAPITAL GA INS BY TAKING THE DATE OF ALLOTMENT LETTER AS THE DATE OF ACQUISITION. THE AO DID NOT ACCEPT THIS LETTER OF ALLOTMENT AND WAS OF THE FIRM VIEW THAT THE ASSESSEE HAS COOKED UP THE ENTIRE STORY WITH THE CONNIVANCE WITH THE BUILDER AND INVENTED THE SAID LETTE R OF ALLOTMENT DT. 22.11.2004. THE AO WAS OF THE VIEW THAT THE LETTER OF ALLOTMENT IS NOT LEGALLY ENFORCEABLE SINCE NEITHER IT IS REGISTERED NOR NOTARIZED ON OFFICIAL STAMP PAPER. THE AO DISMISSED THE LETTER OF ALLOTMENT AND RECOMPUTED THE CAPITAL GAINS BY TREATING THE SAID GAINS AS SHORT TERM CAPITAL GAINS. 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED THAT THE LETTER OF ALLOTMENT SHOULD BE TAKEN AS THE DATE OF ACQUISITION AS THE ASSESSEE HAS ACQ UIRED RIGHTS ON THE OFFICE PREMISES IN THE FAIR LINK CENTRE. THE ASSESSEE HAS SOLD THE RIGHT WHICH HAS RESULTED INTO CAPITAL GAINS. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND RELYING UPON CERTAIN JUDICIAL DECISIONS, THE LD. CIT(A) OBSERVED THAT THE AO HAS NOT DISPUTED THAT ALLOTMENT LETTER WAS NOT ISSUED ON 24.11.2004. THE LD. CIT(A) FURTHER OBSERVED THAT MERELY BECAUSE THE SAID LETTER OF ALLOTMENT WAS NOT REGISTERED WOULD NOT DIS ENTITLE THE ASSESSEE TO CLAIM THE DATE OF ALLOTMENT AS THE DATE OF ACQUISITION OF THE ITA. NO. 5300/M/2012 3 RIGHT IN PROPERTY. ACCORDING TO THE LD. CIT(A), THIS VERY RIGHT I.E. RIGHT TO PURCHASE AND TAKE POSSESSION WAS TRANSFERRED AND THE RIGHT WAS IN EXISTENCE FOR MORE THAN 3 YEARS, THE RIGHT WAS A LONG TERM CAPITAL ASSETS, THE TRANSFER OF W HICH HAS GIVEN RISE TO LONG TERM CAPITAL GAINS. THE LD. CIT(A) ACCORDINGLY DIRECTED THE AO TO TREAT THE GAINS AS LONG TERM CAPITAL GAINS. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. REFERRING TO THE ALLOTMENT LETTER, THE LD. DEPARTMENTAL REPRESENTA TIVE STRONGLY CONTENDED THAT BY MERELY PAYING RS. 11,000/ - , THE ASSESSEE ACQUIRED RIGHT IN PROPERTY WORTH LACS. THE LD. DR FURTHER POINTED OUT THAT THE ASSESSEE HAS MADE THE PAYMENT MUCH LATER ON THEREFORE BY MERELY PAYING RS. 11,000/ - , THE ASSESSEE COULD NOT HAVE ACQUIRED THE PROPERTY. REFERRING TO THE PAYMENT SCHEDULE, THE LD. DR POINTED OUT THAT THE PAYMENTS HAVE BEEN MADE IN THE MONTH OF MARCH AND MAY, 2008 WHICH WAS THE PERIOD WHEN WHICH THE ASSESSEE ACTUALLY ACQUIRED THE PROPERTY AND THEREFORE THE A O HAS RIGHTLY TREATED IT AS A SHORT TERM CAPITAL GAIN. 6. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL RELIED UPON CERTAIN DECISIONS OF THE TRI BUNAL. 7. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDICIAL DECISIONS RELIED AND BROUGHT TO OUR NOTICE. THE UNDISPUTED FACT IS THAT THE LETTER OF ALLOTMENT DT. 22.11.2004 IDENTIFIED THE PR OPERTY PURCHASED BY THE ASSESSEE. IT CANNOT BE DISPUTED THAT ON 22.11.2004 ON THE IDENTIFIED PROPERTY, THE ASSESSEE ACQUIRED A RIGHT. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT HONOURED THE MANDATORY CONDITIONS OF THE ALLOTMENT LETTER, AT THE SA ME ITA. NO. 5300/M/2012 4 TIME IT IS ALSO AN ADMITTED FACT THAT THE BUILDER HAS NOT CANCELLED THE ALLOTMENT. THESE CONDUCTS OF BOTH THE PARTIES SHOW THAT THE RIGHT ACCRUED TO THE ASSESSEE CONTINUED TILL THE RIGHT WAS TRANSFERRED. THUS, IT CAN BE SAFELY CONCLUDED THAT THE RIGHT IN PROPERTY ACCRUED TO THE ASSESSEE ON THE DATE OF ALLOTMENT. THE TRANSFER OF SUCH RIGHT HAS UNDOUBTEDLY GIVEN RISE TO LONG TERM CAPITAL GAINS. WE, THEREFORE, DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE , 2015 SD/ - SD/ - ( JOGINDER SING H ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 ND JUNE , 2015 . . ./ RJ , SR. PS / 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