ASST CIT 20(1), MUMBAI V. KANTIDEVI AGARWAL, MUMBAI

ITA 5641/MUM/2010

• Counselvise Citation: 564119914 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: SHRI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI B.R. MITTAL, J.M. AND SHRI RAJENDRA SI NGH, A.M. ITA NO. 5641/M/2010 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX -20(1) ROOM NO.603, 6 TH FLOOR PIRAMAL CHAMBER, LALBAUG, PAREL MUMBAI-400 012. MRS. KANTIDEVI AGARWAL E-402, SPRING FIELD SWAMI SAMARTH NAGAR, OSIWARA ANDHERI(W) MUMBAI-400 053. PAN NO. ABZPA 2117 J (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI P.K.B. MENON RESPONDENT BY : SHRI PANKAJ TOPRANI DATE OF HEARING : 28.5.2012 DATE OF PRONOUNCEMENT : 6.6.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 29.4.2010 FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DI SPUTE RAISED IN THIS APPEAL IS REGARDING NATURE OF INCOME FROM SALE OF FLATS. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE WHO WAS HAVING INCO ME FROM INTEREST, DIVIDEND AND CAPITAL GAIN HAD DECLARED LONG TERM CAPITAL GAINS OF RS.5,81,102/- FROM SALE OF THREE FLATS BEING THE FL AT NOS. B-104, B- 304 AND B-501 LOCATED IN GREEN ARCH, KANDIVILI. THE A O NOTED THAT THE ASSESSEE HAD 13 FLATS BOOKED IN YEARS 1994-97 OUT OF WHICH 3 FLATS WERE SOLD DURING THE RELEVANT ASSESSMENT YEAR WITHOUT TA KING DELIVERY OR POSSESSION OF THE FLATS. THE AO FURTHER OBSERVED THAT THESE FLATS ITA NO.5641/M/10 A.Y.06-07 2 WERE CONSTRUCTED BY THE HUSBAND OF THE ASSESSEE WHO WAS A B UILDER AND RESPECTIVE FLATS WERE BOOKED IN THE NAMES OF VARIOU S FAMILY MEMBERS. THEREAFTER, AFTER THE DEATH OF HER HUSBAND S HRI JAGDISHNARAIN AGARWAL IN JANUARY 2004, THE ASSESSEE INHE RITED THESE FLATS AND SOLD THE SAME IN VARIOUS ASSESSMENT YEARS. THE AO THEREFORE, HELD THAT THE FLATS SOLD WERE PART OF STOCK IN TRADE OF HUSBAND OF THE ASSESSEE, WHICH WERE INHERITED BY THE ASSE SSEE AND THEREFORE, INCOME HAS TO BE ASSESSED AS BUSINESS INCOME AND NO T AS CAPITAL GAIN AS DECLARED BY THE ASSESSEE. 3. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED B EFORE CIT(A) THAT THE ASSESSEE NEVER DID ANY BUSINESS OF PURCHASE AND SALE OF FLATS. THE FLATS UNDER CONSTRUCTION WERE ACQUIRED BY THE ASSESSEE AS A RESULT OF FAMILY SETTLEMENT DATED 26.5.2001 AND NOT INHERITED ON THE DEATH OF HER HUSBAND AS HELD BY AO. THE ASSESSEE HAD NOT MADE ANY INVESTMENT IN THESE FLATS. IT WAS BECAUSE OF FAMILY SETTLE MENT THAT THE FLATS HAD BEEN RECEIVED AND THE ASSESSEE HAD NOT MADE ANY FURTHER INVESTMENT IN THE FLATS AND RATHER SOLD THE FLATS IN ASSE SSMENT YEARS 2004-05 AND 2005-06. THE ASSESSEE ALSO SUBMITTED THAT INCO ME FROM SALE OF FLATS IN THE EARLIER YEARS, HAD ALSO BEEN CONSID ERED BY THE AO AS BUSINESS INCOME BUT THE ORDER OF AO HAD BEEN SET ASIDE BY CIT(A). CIT(A) HELD THAT THE INCOME HAD TO BE ASSESSED AS CAPITAL GAIN. CIT(A) WAS SATISFIED BY THE EXPLANATION GIVEN BY THE ASSESSEE AND ACCEPTED THE CLAIM THAT FLATS WERE NOT ACQUIRED AS PART OF STOCK I N TRADE BUT HAD BEEN RECEIVED AS A RESULT OF FAMILY SETTLEMENT AND INCOM E FROM SALE OF SOME OF THESE FLATS HAD ALREADY BEEN ACCEPTED AS CAPITAL G AIN BY CIT(A) IN ASSESSMENT YEAR 2004-05 AND 2005-06. CIT(A) T HEREFORE, DIRECTED THE AO TO ASSESS INCOME FROM SALE OF FLATS AS CAPITA L GAIN AGGRIEVED BY WHICH REVENUE IS IN APPEAL BEFORE THE TR IBUNAL. ITA NO.5641/M/10 A.Y.06-07 3 4. WE HAVE HEARD BOTH PARTIES, PERUSED THE RECORDS AND CONSIDERED THE MATERIAL CAREFULLY. WE FIND THAT THE ISSUE IS COVERE D BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2004 -05, IN WHICH YEAR ALSO THE INCOME HAD BEEN ASSESSED AS BUSINESS INCOM E BY THE AO. BUT CIT(A) HAD ACCEPTED THE CLAIM OF THE ASSESSEE TO ASSESS THE SAME AS CAPITAL GAIN. THE DECISION OF CIT(A) HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ITA NO.7040/M/20 08 FOR ASSESSMENT YEAR 2004-05 AND THE TRIBUNAL IN THE ORDER D ATED 27.8.2010 OBSERVED THAT THE LOWER AUTHORITIES DID NOT EXAMINE THE MATTER IN THE LIGHT OF THE FACT THAT THE FAMILY OF T HE ASSESSEE WAS HAVING 62.5% SHARE IN SHANKAR PARK DEVELOPED BY M/S. PUNIT CONSTRUCTION CO. AND SHARE WAS ALLOTTED TO THE ASSESSEE UND ER FAMILY SETTLEMENT DATED 26.5.2001. THE TRIBUNAL NOTED THAT THE FAMILY SETTLEMENT DATED 26.5.2001 WAS EFFECTIVE FROM 1.6.199 8 AND IT WAS THUS NOT CLEAR AS TO IN WHAT CAPACITY THESE FLATS WERE HEL D BY THE FAMILY OF THE ASSESSEE WHEN THEY HAD 62.5% SHARE IN THE PROJECT. THE TRIBUNAL FURTHER OBSERVED THAT SALE AGREEMENT BETWEEN M/S. PUNIT CONSTRUCTION CO. AND FAMILY OF THE ASSESSEE FOR THE PURC HASE OF FLATS WERE NOT ON RECORD. THEREFORE, IN THE ABSENCE OF RELEV ANT MATERIAL, IT WAS NOT POSSIBLE TO DECIDE THE QUESTION REGARDING NATUR E OF HOLDING OF THE FLATS. THE TRIBUNAL ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND RESTORED THE MATTER TO THE FILE OF AO FOR PASSING A FR ESH ORDER AFTER NECESSARY EXAMINATION OF THE RELEVANT RECORDS. THE FACTS I N THIS YEAR ARE IDENTICAL AS CIT(A) HAS ALLOWED THE CLAIM OF THE ASSE SSEE FOLLOWING THE DECISION IN ASSESSMENT YEAR 2004-05, WHICH HAS BEEN SET ASIDE BY THE TRIBUNAL. THEREFORE, RESPECTFULLY FOLLOWING THE D ECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 (SUPRA), WE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO F OR PASSING A FRESH ITA NO.5641/M/10 A.Y.06-07 4 ORDER AFTER NECESSARY EXAMINATION IN THE LIGHT OF OBSER VATIONS MADE ABOVE AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6.6.2012 SD SD (B.R. MITTAL ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 6.6.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.