LATE SHRI SATISH WAMAN BHIDE, MUMBAI V. ITO 18(2)(3), MUMBAI

ITA 559/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7780 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2015
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: AVINASH MEHTA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Period of limitation; Time period of passing order
• Section: 143(3); 148; 2

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER I.T.A. NO. 559/M/2015 (ASSESSMENT YEAR: 2006 - 2007 ) LATE SHRI SATISH WAMAN BHIDE THROUGH HIS LEGAL HEIR, SHRI SHANTANOO BHIDE, C/O. M/S. RAVI & DEV, CHARTERED ACCOUNTANTS, 601, A WING, AURUS CHAMBERS, BEHIND MAHINDRA TOWERS, S.S. AMRUTWAR MARG, WORLI, MUMBAI 400 013. / VS. INCOME TAX OFFICER - 18(2)(3), MUMBAI. ./ PAN : AAEPB0688H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AVINASH MEHTA / RESPONDENT BY : SHRI VISHWAS MUNDHE, DR / DATE OF HEARING : 02.03 .2017 / DATE OF PRONOUNCEMENT : 17 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 27.1.2015 IS AGAINST THE ORDER OF THE CIT (A) - 29, MUMBAI DATED 10.11.2014 FOR THE ASSESSMENT YEAR 2006 - 07. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. THE ORDER PASSED BY THE LD CIT (A) IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 OF THE ACT IS BOTH BAD - IN - LAW AND BAD - IN - FACTS. 2. THE LD CIT (A) ERRED IN LAW AS WELL AS IN FACTS IN REJECTING THE ASSESSEES CONTENTION THAT THE NOTICE ISSUED U/S 148 WAS BARRED BY LIMITATION AS IT WAS SERVED ON 1.4.2013 WHEREAS THE RE - ASSESSMENT PROCEEDINGS WERE GETTING BARRED BY LIMITATION ON 31.3.2013. 3. THE LD CIT (A) ERRED IN LAW AS WELL AS IN FACTS IN REJECTING THE ASSESSEES CONTENTION THAT LONG TERM CAPITAL GAINS ON SALE OF INDUSTRIAL UNIT DETERMINED U/S 50 WAS TAXABLE @ 20% AS PER SECTION 112 OF THE ACT AND NOT @ 30%. 4. THE LD CIT (A) ERRED IN LAW AS WELL AS IN FACTS IN N OT ALLOWING DEDUCTION OF BANK LOAN OF RS. 35,64,232/ - SECURED BY WAY OF CHARGE AGAINST THE PROPERTY IN DETERMINATION OF CAPITAL GAINS U/S 50C. 2 2. REFERRING TO THE GROUNDS RAISED BY THE ASSESSEE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NO.4 IS NOT PRESSED. AFTER HEARING THE LD DR, WE DISMISSED THE SAID GROUND NO.4 AS NOT PRESSED. 3. REFERRING TO GROUNDS NO.1 AND 2, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NOTICE U/S 148 DATED 25.3.2013 WAS SERVED ON THE ASSESSEE ONLY ON 1.4.2013 AGAI NST THE DUE DATE OF 31.3.2013. ACCORDING TO LD AR, SINCE THE SAID NOTICE SERVED A DAY AFTER THE DUE DATE IS A INVALID ONE THEREFORE, THE RE - ASSESSMENT PROCEEDINGS ARE BAD IN LAW. IN REPLY TO THE SAME, LD DR FOR THE REVENUE SUBMITTED THAT THE MANDATE OF T HE PROVISIONS OF SECTION 148 SUGGESTS THAT THE NOTICE MUST BE ISSUED BEFORE THE END OF THE LIMITATION PERIOD AND THE SAME WAS ISSUED ON 25.3.2013 IN THIS CASE. THEREFORE, THE DATE OF SERVICE OF NOTICE U/S 148 ON 1.4.2013 IS NOT BAD IN LAW. ON HEARING THE LD REPRESENTATIVES OF BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT PROVISIONS, WE FIND, THE LIMITATION IF ANY IS ON THE ISSUANCE OF NOTICE OF THE ACT AND THERE IS NO FETTERS ON THE SERVICE ASPECT OF THE SAID NOTICE. THEREFORE, WE PROCEED TO DISMISS TH IS LEGAL ISSUE RAISED IN GROUND NO.1 . ACCORDINGLY WE ORDER. 4. REFERRING TO GROUND NO.3, LD AR SUBMITTED THAT THE ASSESSEE OWNS A LONG TERM CAPITAL ASSET AND THE SAME WAS SOLD. ASSESSEE OFFERED THE RELEVANT GAINS U/S 50 OF THE ACT APPLYING THE TAX RATE O F 20% AS PER SECTION 112 OF THE ACT. HOWEVER, THE AO IS OF THE VIEW THAT THE TAX RATE OF 30%, WHICH IS APPLICABLE TO THE SHORT TERM CAPITAL GAINS SHOULD BE APPLIED. BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE DECISION OF THE TRIBU NAL IN THE CASE OF SMITA CONDUCTORS LTD VS. DCIT [2014] 41 TAXMANN.COM 514 (MUMBAI - TRIB), DATED 17.09.2013 LD COUNSEL FOR THE ASSESSEE READ OUT THE CONTENTS OF PARA 2.6 OF THE SAID ORDER OF THE TRIBUNAL. ON HEARING THE LD REPRESENTATIVES OF BOTH THE PARTI ES ON THIS ISSUE, WE PROCEED TO EXTRACT THE RELEVANT LINES FROM THE SAID PARA 2.6 OF THE SAID TRIBUNALS ORDER (SUPRA) AND THE SAME READS AS UNDER: - 2.6. WE, THEREFORE, HELD THAT, FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN, THE FLAT HAS TO BE TREATED AS SHORT TERM CAPITAL GAINS U/S 50 OF THE ACT, BUT FOR THE PURPOSE OF APPLICABILITY OF TAX RAT IT HAS TO BE TREATED AS LONG TERM CAPITAL GAIN IF HELD FOR MORE THAN THREE YEARS. WE ACCORDINGLY DIRECT THE AO TO COMPLETE THE CAPITAL GAIN FROM THE SALE OF FLA T AND APPLY THE APPROPRIATE TAX RATE AFTER NECESSARY VERIFICATION IN THE LIGHT OF THE OBSERVATIONS MADE IN THIS ORDER. 5. CONSIDERING THE ABOVE, LEGAL PROPOSITION, WE GRANT SIMILAR DIRECTIONS TO THE AO TO APPLY THE SAID LEGAL PROPOSITIONS TO THE FACTS OF THE CASE. AO SHALL GRANT A 3 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUST ICE A N D G R A N T R E L I E F A S P E R L A W . ACCORDINGLY, GROUND NO.3 IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOU NCED IN THE OPEN COURT ON 1 7 T H MARCH, 2017. S D / - S D / - (SANDEEP GOSAIN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17.03.2017 . . ./ OKK , 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI