KAJAL PARITOSH PARLEKAR, MUMBAI V. ITO WD 21(1)(2), MUMBAI

ITA 5614/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8549 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 50C; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.5614/M/2016 (AY 2006 - 2007) KAJAL PARITOSH PARELKAR, PLOT NO.123, FLAT NO.2, ASHISH BUILDING, JVPD SCHEME, GULMOHAR CROSS ROAD NO.10, JUHU, MUMBAI 400 049. / VS. THE INCOME TAX OFFICER, WARD 21(1)(2), C - 10, R.NO.604, 6 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 051. ./ PAN : AFKPP0058E ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI K. GOPAL / RESPONDENT BY : MS. BEENA SANTOSH, DR / DATE OF HEARING : 06.02.2017 / DATE OF PRONOUNCEMENT : 06 .02.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 16.9.2016 IS AGAINST THE ORDER OF THE CIT (A) - 37, MUMBAI DATED 2.6.2016 FOR THE ASSESSMENT YEAR 2006 - 07. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN NOT HOLDING THAT THE ASSESSMENT ORDER WAS ILLEGAL AND WHOLLY WITHOUT JURISDICTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE NOTICE U/S 148 AND RE - ASSESSMENT PROCEEDINGS ARE WHOLLY WITHOUT JURISDICTION AND VOID AB INITIO. THE RECORDED REASONS FOR REOPENING DO NOT INDICATE ANY TANGIBLE MATERIAL OR ANY FAILURE TO MAKE FULL AND TRUE DISCLOSURE BY THE ASSESSEE. THERE IS NO REASON TO BELIEVE TH AT INCOME HAS ESCAPED ASSESSMENT, AND THE REOPENING IS ON A MERE CHANGE OF OPINION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT (A) ERRED IN UPHOLDING APPLICATION OF SECTION 50C OF THE INCOME TAX ACT, 1961 ON THE BASIS THAT THE ASSESSEE HAD TRANSFERRED A CAPITAL ASSET. THE LD CIT (A) FAILED TO APPRECIATE THAT SECTION 50C APPLIES ONLY TO LAND OR BUILDING OR BOTH AND THE ASSESSEE HAD TRANSFERRED NEITHER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) OUGHT TO HAVE FOLLOWED THE DECISIONS OF THE JURISDICTIONAL ITAT BENCHES HOLDING THAT TENANCY RIGHTS ARE NOT COVERED WITHIN THE SCOPE OF SECTION 50C. 2. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT MY ATTENTION TO THE ABOVE GROUNDS AND MENTIONED TH AT ASSESS EE RAISED A LEGAL ISSUE RELATING TO THE PROVISIONS 2 OF SECTION 50C OF THE ACT IF THESE PROVISIONS ATTRACT THE TRANSACTIONS OF TRANSFER OF TENANCY RIGHTS FOR THE AY 2006 - 07. THE PROVISIONS OF SECTION 50C OF THE ACT DEALS WITH THE TRANSACTIONS INV OLVING LAND OR BUILDING OR BOTH AND NOT THE RIGHTS IN SUCH ASSETS. AO , IN THE RE - ASSESSMENT PROCEEDINGS INVOKED THE PROVISIONS OF SECTION 148 OF THE ACT FOR TAXING THE TENANCY RIGHTS IN THE CASE OF THE ASSESSEE. ON THIS ISSUE, ON FINDING THAT T HE CIT (A) CONFIRMED THE ADDITION, ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 3. DURING THE PROCEEDINGS BEFORE ME , LD COUNSEL FOR THE ASSESSEE MENTIONED THE AUTHORITIES CONSIDERED THAT THE TENANCY RIGHTS ATTRACT THE PROVISIONS OF SECTION 50C OF T HE ACT. IN GROUND NO.4 OF THE APPEAL, ASSESSEE MENTIONED FAVOURABLE DECISIONS OF THE TRIBUNAL ON THIS ISSUE WERE IGNORED BEFORE INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. 4. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE ME , I FIND, ASSESSEE SURRENDERED THE TENANCY RIGHTS AND EARNED CAPITAL GAINS. HOWEVER, ASSESSEE RELIED ON THE BINDING C OORDI NATE BENCH DECISION OF THE TRIBUNAL IN THE CASE OF ATUL G. PURANIK VS. ITO [2011] (132 ITD 499) (BOM.) WHEREIN , THE TRIBUNAL HELD THAT THE LEASE RIGHT IN A PLOT CANNOT BE CONSIDERED AS LAND OR BUILDING OR BOTH . THEREFORE, THE PROVISIONS OF SECTION 5 0C CANNOT BE APPLIED IN THE CASE OF LEASE HOLDING RIGHTS IN LAND. FURTHER, IN THE CASE OF ACIT VS. M/S. MUNSONS TEXTILES IN ITA NO.6329/M/2010, DATED 3.2.2012 THE TRIBUNAL GAVE RELIEF TO THE ASSESSEE RELYING ON THE ABOVE REFERRED DECISION , WHEREIN THE COR E ISSUE INVOLVED RELATES TO THE TRANSFER OF TENANCY RIGHTS. THUS, IT IS A CONSISTENT VIEW OF THE TRIBUNAL THAT LEASE RIGHTS AND TENANCY RIGHTS ARE OUTSIDE THE SCOPE OF THE PROVISIONS OF SECTION 50C OF THE ACT. CONSIDERING THE ABOVE , I FIND, THE FAA HAS A VIEW WHICH IS UNFAVOURABLE TO THE ASSESSEE. THIS APPROACH OF THE CIT (A) IS HIGHLY DEPLORABLE AND CONTRARY TO THE JUDICIAL DISCIPLINE. THE AUTHORITIES UNDER OUR JURISDICTI ON ARE BOUND TO FOLLOW THE DECISIONS OF THE ITAT, MUMBAI BENCH. THEREFORE, I AM O F THE OPINION, THE ORDER OF THE CIT (A) IS REQUIRED TO BE REVERSED AND THE CLAIM MADE BY THE ASSESSEE IN THE RETURN IS REQUIRED TO BE ACCEPTED WITHOUT ANY CHANGES. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 3 5. IN THE RESULT, APPEAL OF THE AS SESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT O N 0 6 T H FEBRUARY, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 06.02.2017 . . ./ 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