SHAILENDER H. BHATIA, MUMBAI V. ITO 22(2)(4), NAVI MUMBAI

ITA 5653/MUM/2012

• Counselvise Citation: 565319914 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 02-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: VIMAL PUNMIYA
• Keywords: Capital asset
• Section: 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & MS. SUSHMA CHOWLA , J M ./ I TA NO. 5653 / MUM/20 1 2 ( / ASSESSMENT YEAR S : 200 9 - 10 ) SHAILENDRA H.BHATIA, 14, INDIRA APARTMENT, OPP.USV LIMITED, GOVANDI STATION ROAD, GOVANDI, MUMBAI - 400088 VS. ITO 22(2) - 4, NAVI MUMBAI ./ ./ PAN/GIR NO. : A ACPB 5434 D ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI VIMAL PUNMIYA /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 0 2 /0 6 / 2015 / DATE OF PRONOUNCEMENT 10 /06 /2015 / O R D E R PER R.C.SHARMA (A.M) : BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER CIT (A), FOR THE ASSESSMENT YEAR S 200 9 - 2010 , IN THE MATTER OF ORDER PASSED U/S.1 43 (3) OF THE INCOME TAX ACT, ON THE FOLLOWING GR OUNDS : - THE FOLLOWING ARE THE GROUND OF APPEAL, WHICH ARE WITHOUT PREJU DICE TO ONE OTHER: - 1. SALE OF POSSESSION RIGHT OF FLAT: - RS 47,00,000/ - THE LEARNED CIT( A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING GAIN FROM SALE OF PROPERTY AS INCOME FROM OT HER SOURCES INSTEAD OF LONG-TERM CAPITAL GAIN. 2. THE LEARNED CIT CA) HAS ERRED IN LAW AND IN FACT BY NOT ALLOWING DEDUCTION OF RS. 69,050 / - BEING STAMP DUTY PAID ON PURCHASE OF PROPERTY. . ITA NO. 5 65 3 /1 2 2 3. THE LEARNED CIT CA) HAS ERRED IN LAW AND IN FACT BY NOT ALL OWING DEDUCTION OF RS. 75,000/ - PAID AS BROKERAGE ON SALE OF PROPERTY. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUND OF APPEAL ON OR BEFORE THE FINAL HEARING, IF NECESSITY SO ARI SES. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DECLARED INCOME U/S.44A E OF THE ACT ON TANKER TRANSPORT BUSINESS @RS.3500/ - PER MONTH I.E RS.42,000/ - . APART FROM THE ABOVE, THE ASSESS EE OFFERED REMUNERATION INCOME FROM SIDDHIVINAYAK LPG CARRIERS, REMUNERATION FROM BHATIA TYRES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD IMMOVABLE PROPERTY BEING FLAT NO. 389, 6 TH FLOOR, OSHIWARA TARAPORE TOWERS, NEW LINK ROAD, ANDHERI WEST, MUMBAI - 53 FOR AN AMOUNT OF RS.60,00,000/ - ON 20 - 6 - 2008. THE SAID TRANSACTION WAS ALSO REPORTED IN ITS DETAILS FOR THE SAME AMOUNT. HOWEVER, ON VERIFICATION OF THE RETURN OF INCOME, NO CAPITAL GAINS INCOME WAS OFFERED FOR TAXATION. THE ASSESSEE WAS ASKED TO FURNISH COPY OF PURCHASE AND SALE AGREEMENT OF THE FLAT AND TO EXPLAIN WHY LONG TERM CAPITAL WAS NOT OFFERED FOR TAXATION. HOWEVER, THE AO DID NOT CONVINCE WITH THE EXPLANATION OF THE ASSESSEE AND COMPUTED THE INCOME UNDER THE HEAD INCOME FROM OTHER SOUR CES AT RS.47,00,000/ - . 3. IN APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE AO, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. LD. AR BEFORE US SUBMITTED THAT CLAUSE 14B OF THE AGREEMENT TO SALE DATED 5 - 9 - 1995 HAS NOT BEEN CONSIDERED BY THE AO , AS THE FLAT IN ITA NO. 5 65 3 /1 2 3 QUESTION IS ALREADY SOLD AND ALL THE ORIGINAL DOCUMENTS WERE HANDED OVER TO THE ASSESSEE. THE ENTIRE PAYMENT MADE IN THIS REGARD ARE AS UNDER : - CHEQUE NO. DATE AMOUNT 229679 07 - 09 - 1995 2,00,000 229680 11 - 09 - 1995 2,00,000 192543 14 - 09 - 1995 9,00,000 TOTAL 13,00,000 LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS TRANSFERRED THE OWNERSHIP RI GHT OF THE PROPERTY, AS HE WAS HAVING THE OWNERSHIP RIGHT OVER THE FLAT, WHICH IS A CAPITAL ASSET, THEREFORE, QUESTION OF ASSESSING THE IN COME UNDER THE HEAD INCOME FROM OTHER SOURCES DOES NOT ARISE AT ALL. HE FURTHER SUBMITTED THAT THE PERSON WHO HAS THE RIGHT TO RECEIVE THE INCOME FROM PROPERTY IN HIS OWN RIGHT IS THE OWNER FOR T HE PURPOSE OF ASSESSMENT OF TAX AND AS PER THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF PODAR CEMENT PVT. LTD., 92 TAXMAN 541(SC), IF THE ASSESSEE IS NOT THE LEGAL OWNER, THE GAIN WILL BE TAXED AS CAPITAL GAINS. HOWEVER, WITHOUT CONSIDERING THE SAME, THE AO ADDED THE IMPUGNED AMOUNT IN THE INCOME OF THE ASSESSEE. LD. AR ALSO PLACED RELIANCE ON THE FOLLOWING JUDGMENTS : - I) SURESHCHANDRA AGARWAL VS. ITO, 15 TAXMANN.COM 115(MUM); II) CIT VS. HORMASJI MANCHARJI VAID, 118 TAXMAN 276; AND III) ASIAN PPG INDUSTRIES LTD. VS. DCIT, 1 TAXMANN.COM 94 HE FURTHER SUB MITTED THAT AS PER CLAUSE (V) OF SECTION 2(47), PROPERTY WILL BE TRANSFERRED WHEN THE POSSESSION WAS GIVEN UNDER PART PERFORMANCE OF AGREEMENT. IN PRESENT CASE AS PER PURCHASE AGREEMENT THE ASSESSEE PAID RS.13,00,000/ - TO VENDOR AND IN PART PERFORMANCE VEN DOR HANDOVER THE POSSESSION OF THE PROPERTY. THEREFORE, AS PER CLAUSE (V) OF SECTION ITA NO. 5 65 3 /1 2 4 2(47), ASSESSEE ACQUIRED THE CAPITAL ASSET AND SAME IS REQUIRED TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN. 5. LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES. 6. WE HA VE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE AO HAS BASICALLY DECLINED THE CLAIM OF ASSESSEES LONG TERM CAPITAL GAIN ON THE PLEA THAT THE ORIGINAL SALE DEED WAS NOT FILED BEFORE HIM. THE CI T(A) HAS CONFIRMED THE ACTION OF THE AO MAINLY ON THE GROUND THAT VIDE AGREEMENT DATED 7 - 9 - 1995 ASSESSEE WAS GIVEN ONLY POSSESSION O F THE SAID PREMISES ON LIVE AND LICENSE BASIS FOR A PERIOD OF 33 MONTHS AND SINCE SALE AGREEMENT WAS EXECUTED ON 20 - 6 - 2008, T HE PERIOD OF 33 MONTHS WAS ALREADY OVER, THEREFORE, ASSESSEE HAD NOT SOLD ANY PROPERTY, THE INCOME ARISING OUT OF THE TRANSACTION WAS LIABLE TO BE TAXED AS INCOME FROM OTHER SOURCES. 7. F ROM THE RECORD WE FOUND THAT ASSESSEE HAD PURCHASED FLAT FROM MR. VI JAY KUMAR, AN EX - ARMY OFFICIAL FOR RS. 13,00,000/ - VIDE AGREEMENT OF PURCHASE DATED 7 - 9 - 1995 WHICH IS REGISTERED ON 28 - 12 - 1998 AND STAMP DUTY OF RS.69,500/ - WAS ALSO PAID. POSSESSION WAS ALSO OBTAINED. THE ASSESSEE SOLD ABOVE FLAT VIDE AGREEMENT DATED 11 - 6 - 2008 REGISTERED ON 20 - 6 - 2008 FOR RS.60,00,000/ - AND BROKERAGE OF RS.75,000/ - WERE ALSO PAID. THE CONTENTION OF LOWER AUTHORITIES WAS THAT THE ASSESSEE WAS HAVING ONLY POSSESSION BUT NOT THE OWNER SHIP OF THE PREMISES AS THE FLAT WAS NOT CONVEYED IN THE NAME OF THE ASSESSEE. THEREFORE, IT IS NOT A CAPITAL ASSET AND GAIN ARISING ON ITS SALE IS LIABLE TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. AS PER CLAUSE 14(B) OF THE PURCHASE ITA NO. 5 65 3 /1 2 5 AGREEMENT DATED 7 - 9 - 1995, THE SELLER HAS TRANSFERRED ALL HIS RIGHTS, O RIGINAL DOCUMENTS WERE ALSO HANDED OVER TO THE ASSESSEE. THERE WAS A PAYMENT OF RS.13 LAKHS BY ACCOUNT PAYEE CHEQUE, DETAILS OF WHICH ARE AS UNDER : - CHEQUE NO. DATE AMOUNT 229679 07 - 09 - 1995 2,00,000 229680 11 - 09 - 1995 2,00,000 192543 14 - 09 - 1995 9 ,00,000 TOTAL 13,00,000 IT IS WELL ESTABLISHED LAW THAT PERSON CAN TRANSFER THE RIGHT WHICH HE HAS. IN THE PRESENT CASE, ASSESSEE HAS TRANSFERRED THE OWNERSHIP RIGHT OF THE PROPERTY. HENCE, ASSESSEE HAD OWNERSHIP RIGHT OF FLAT WHICH IS A CAPITAL ASSET . THEREFORE, QUESTION OF ASSESSING THE INCOME UNDER OTHER SOURCE HEAD NOT ARISES AT ALL. UNDER THE INCOME TAX ACT, THERE IS NO CONDITION THAT THE PROPERTY SHOULD BE REGISTERED IN NAME OF THE ASSESSEE. EVEN IF THE ASSESSEE IS BENEFICIAL OWNER OR HAVING RIGH T IN PROPERTY TH E N SAME WILL BE ASSESSED IN THE HANDS OF THE ASSESSEE. THE ABOVE VIEW IS CONFIRMED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PODAR CEMENT PVT. LTD., 92 TAXMAN 541(SC) . A S PER CLAUSE (V) OF SECTION 2(47), PROPERTY WILL BE TRANSFERRED WHEN THE POSSESSION WAS GIVEN UNDER PART PERFORMANCE OF AGREEMENT. IN PRESENT CASE AS PER PURCHASE AGREEMENT THE ASSESSEE PAID RS.13,00,000/ - TO VENDOR AND IN PART PERFORMANCE VENDOR HAND ED OVER THE POSSESSION OF THE PROPERTY. THEREFORE, AS P ER CLAUSE (V) OF SECTION 2(47), ASSESSEE ACQUIRED THE CAPITAL ASSET AND SAME IS REQUIRED TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN. 8. WITH REGARD TO FURNISHING OF SALE DEED DATED 11 - 6 - 2008 IS CONCERNED, THE SAME WAS FILED FIRST TIME BEFORE US. THE CONTEN TION OF LD. ITA NO. 5 65 3 /1 2 6 AR WAS THAT SINCE FATHER OF THE ASSESSEE W AS BED RIDDEN AT THE TIME OF ASSESSMENT PROCEEDINGS AND THEREAFTER EXPIRED, THE ORIGINAL SALE DEED COULD NOT BE TRACED OUT. AS THE SALE DEED GOES TO THE ROOT OF THE ISSUE, WE RESTORE THE ENTIRE APPEAL BA CK TO THE FILE OF THE AO FOR DECIDING AFRESH IN TERMS OF OUR OBSERVATION. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10 /06 / 201 5 . SD/ - SD/ - ( ) ( SUSHMA CHOWLA ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10 /06 /201 5 . . /PKM , . / PS / COP Y OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE. //TRUE COPY/