TINA KAPOOR, MUMBAI V. ITO 26(2)(1), MUMBAI

ITA 5663/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0648 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 03-10-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 20-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5663/MUM/2016 ASSESSMENT YEAR: 2011 - 12 MS. TINA KAPOOR FLAT NO. 4, SANGHI HOUSE, 94, NEPEAN SEA ROAD, MUMBAI - 400006 VS. ITO - 26(2)(1) AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400020. PAN NO. AELPK9444F APPELLANT RESPONDENT ASSESSEE BY : MR. N ITESH JOSHI , AR REVENUE BY : MR. V. JUSTIN , SR. DR DATE OF HEARING : 16/11/2017 DATE OF PRONOUNCEMENT : 09/02/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 46 [ IN SHORT CIT(A)] , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND RAISED BY THE APPELLANT IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN (I) ENHANCING THE ASSESSMENT, (II) HOLDING THAT THE GAINS OF RS.1,76,84,336/ - (BEFORE INDEXED COST OF ACQUISITION) ARISING ON TRANSFER OF RESIDENTIAL PROPERTIES AT STERLING WHITEFIELDS, HYDERABAD AND MS. TINA KAPOOR ITA NO. 5663/MUM/2016 2 1/3 RD SHARE IN RNA MIRAGE, WORLI, MUMBAI DURING THE PREVIOUS YEAR RELEVANT TO AY 2011 - 12 ARE SHORT TERM CAPITAL GAINS (STCG) AS AGAINST LONG TERM CAPITAL GAINS (LTCG) AS CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME AND ACCEPT ED BY THE ASSESSING OFFICER (AO) DURING THE COURSE OF ASSESSMEN T U/S 143(3), AND (III) HOLDING THAT FOR THE PURPOSE OF SECTIONS 2(29A) & 2(42A), THE PERIOD OF HOLDING IS TO BE RECKO NED FROM THE DATE OF POSSESSION. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) OBSERVED THAT DURING YEAR U NDER CONSIDERATION, THE APPELLANT HAD SOLD TWO HOUSE PROPERTIES VIZ. (1) FLAT NO. 404 AT STERLING WHITEFIELD, HYDERABAD FOR RS.54,00,000/ - ON 14.03.2011 AND (2) FLAT NO. 2902 AT R NA MIRAGE, WORLI , MUMBAI FOR RS.7,00,00,000/ - ON 10.03.2011 AND EARNED CAPITAL GAINS OF RS.1,37,84,998/ - . OUT OF THE ABOVE SUM, SHE HAD DEPOSITED RS.1,33,02,998/ - IN CAPITAL GAIN ACCOUNT SCHEME (CGAS) ON 05.09.2011 AND CLAIMED DEDUCTION U/S 54 IN THE RETURN OF INCOME FILED U/S 139(4) OF THE ACT . THE AO DENIED THE CLAIM OF THE APPE LLANT ON THE GROUND THAT THE DEPOSIT MADE IN CGAS ON 05.09.2011 WAS AFTER THE DUE DATE OF FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT. FURTHER THE AO OBSERVED THAT THE APPELLANT INVESTED THE AMOUNT OF CAPITAL GAINS IN AN UNDER - CONSTRUCTION PROPERT Y OF M/S RUSTOMJJEE REALITY PVT. LTD. BY WAY OF ALLOTMENT LETTER DATED 08.03.2013. HE FURTHER FOUND THAT (I) THE SAME WAS A PROPOSAL, (II) THE APPELLANT HAD NOT ENTERED INTO ANY LEGAL AGREEMENT WHICH WAS NOT REGISTERED. MS. TINA KAPOOR ITA NO. 5663/MUM/2016 3 IN VIEW OF THE ABOVE, THE AO DENIED THE CLAIM OF EXEMPTION U/S 54 AND BROUGHT TO TAX RS.1,37,84,998/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE APPELLANT FILED AN APPEAL BEFORE THE LD. CIT(A). ONE OF THE GROUNDS OF APPEAL WAS THAT THE AO HAD ERRONEOUSLY HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 54 AS THE RETURN OF INCOME WAS FILED U/S 139(4) OF THE ACT. THE LD. CIT(A) RELYING ON THE CASE - LAWS ALLOWED THE APPEAL ON THE ABOVE GROUND OF THE ASSESSEE . HOWEVER, T HE LD. CIT(A) OBSERVED IN RESPECT OF F LAT 2902 AT RNA MIRAGE, WORLI, MUMBAI, THE POSSESSION LETTER BY THE BUILDER WAS GIVEN TO THE APPELLANT ON 20.04.2010. THEREFORE, HE COMPUTED THE HOLDING PERIOD FROM APRIL 2010 TO MARCH 2011 AND THIS BEING LESS THAN 36 MONTHS , TREATED THE GAINS AS STCG. SIMILARLY, IN THE CASE OF FLAT NO. 404 AT STERLING WHITEFIELDS, HYDERABAD , T HE LD. CIT(A) OBSERVED THAT THE SAME WAS HELD BY THE ASSESSEE ONLY ON 19.09.2010 AND SINCE THE PROPERTY WAS HELD BETWEEN 19.09.2010 AND 14.03.2011, HE HELD THE GAINS ARISING OUT OF THE SALE AS ST CG. THE LD. CIT(A) THUS DIRECTED THE AO TO COMPUTE THE GAINS OF RS.1,76,84,336/ - AS STCG. 5. BEFORE US, THE LD. COUNSEL OF THE APPELLANT SUBMITS THAT THE DATE OF PURCHASE AGREEMENT AND DATE OF REGISTRATION AND PAYMENT OF STAMP DUTY FOR FLAT 2902 AT RNA MIRAGE, WORLI, MUMBAI IS 27.02.2007. MS. TINA KAPOOR ITA NO. 5663/MUM/2016 4 IT IS ALSO SUBMITTED BY HIM THAT THE DATE OF PURCHASE AGREEMENT AND DATE OF REGISTRATION AND PAYMENT OF STAMP DUTY FOR FLAT NO. 404 AT STERLING WHITE FIELDS, HYDERABAD IS 29.03.2007. IN VIEW OF THE ABOVE, THE LD. COUNSEL SUBMITS THAT IT IS A CASE OF LTCG. RELIANCE IS PLACED BY HIM ON THE DECISION IN (I) ANITA D. KANJANI V. ACIT [(2017) 49CCH 0043], (II) RICHA BAGRODIA V. DCIT [ITA NO. 3601/M/2012 ] D ATED 22.04.2014, (III) MEENA A HEMNANI V. ITO [ITA NO. 5998/M/2010 ] DATED 17.01.2014], (IV) ACIT V. SMT. VANDANA RANA ROY [ITA NO. 6173/M/2011 ] DATED 07.11.2012], (V) CIT V. VIMAL LALCHAND MUTHA 187 ITR 613 (BOM.) AND CBDT CIRCULAR NO. 471 DATED 15.10. 1986 . 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER OF THE LD. CIT(A) AND RELIES ON THE ORDER OF THE TRIBUNAL IN ITO V. SHRI SUSHIL KUMAR AGGARWAL (ITA NO. 5720/MUM/2010) - ITAT MUMBAI, ACIT V. SHRI JAIMAL K. SHAH (ITA NO. 6966/MUM/2010) - ITAT MUMBAI AND THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. DR. D.A. IRANI (1998) 234 ITR 850 (BOM) . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN B ELOW. THERE ARE TWO ASPECTS IN THE INSTANT CASE. THE 1 ST ONE IS WHETHER IT IS CASE OF STCG OR LTCG. THE 2 ND ISSUE IS WHETHER THE APPELLANT CONSTRUCTED ONE RESIDENTIAL HOUSE PROPERTY IN INDIA WITHIN THREE YEARS AFTER THE DATE OF SUCH TRANSFER. MS. TINA KAPOOR ITA NO. 5663/MUM/2016 5 WE BEGIN WI TH THE 1 ST ISSUE. WE ARE OF THE CONSIDERED VIEW THAT IMMOVABLE PROPERTY IS NOT CONVEYED BY DELIVERY OF POSSESSION , BUT BY A DULY REGISTERED DEED. FURTHER, IT IS THE DATE OF EXECUTION OF REGISTERED DOCUMENT, NOT THE DATE OF DELIVERY OF POSSESSION OR THE DAT E OF REGISTRATION OF DOCUMENT WHICH IS RELEVANT. ONCE THE EXECUTED DOCUMENTS ARE REGISTERED, THE TRANSFER WILL TAKE PLACE ON THE DATE OF EXECUTION OF DOCUMENTS AND NOT ON THE DATE OF REGISTRATION OF DOCUMENTS. IT HAS BEEN HELD SO IN ALAPATI VENKATARAMIAH V. CIT (1965) 57 ITR 185 (SC), CIT V. PODAR CEMENTS PVT. LTD . (1997) 226 ITR 625 (SC) AND CIT V. VISHNU TRADING & INVESTMENT CO . (2003) 259 ITR 724 (RAJ) . WE FIND THAT IN THE INSTANT CASE THE DATE OF REGISTRATION AND PAYMENT OF STAMP DUTY IN RESPECT OF F LAT 2902 AT RNA MIRAGE, WORLI, MUMBAI IS 27.02.2007. THE SALE AGREEMENT IS 10.03.2011. THE DATE OF REGISTRATION AND PAYMENT OF STAMP DUTY IN THE CASE OF FLAT 404 AT STERLING WHITEFIELDS, HYDERABAD IS 29.03.2007. THE SALE AGREEMENT IS 14.03.2011 THUS, FOLLO WING THE DECISIONS MENTIONED HEREINBEFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) THAT IT IS A CASE OF STCG AND WE HOLD THAT IT IS A CASE OF LTCG. THUS THE 1 ST ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. 7.1 NOW WE ARRIVE AT THE 2 ND ISSUE. AS PER THE A CT, CAPITAL GAIN ARISING ON THE TRANSFER OF A RESIDENTIAL HOUSE IS EXEMPT U/S 54 IN THE FOLLOWING CIRCUMSTANCES: (I) THE ASSET TRANSFERRED IS A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY; MS. TINA KAPOOR ITA NO. 5663/MUM/2016 6 (II) THE ASSET TRANSF ERRED IS A LONG - TERM CAPITAL ASSET AND HENCE THERE IS A LONG - TERM CAPITAL GAIN; (III) THE ASSET HAS BEEN TRANSFERRED BY AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; (IV) THE ASSESSEE HAS, PURCHASED ONE RESIDENTIAL HOUSE PROPERTY IN IN D I A WITHIN ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE OR CONSTRUCTED THE SAME WITHIN 3 YEARS AFTER THE DATE OF SUCH TRANSFER. IF ALL THESE FOUR CONDITIONS ARE SATISFIED THE ASSESSEE CAN CLAIM THE EXEMPTION U/S 54. WE FIND THAT IN THE INSTANT CASE, THE APPELLANT HAS NOT FILED THE RELEVANT DOCUMENTS/EVIDENCE IN RESPECT OF ITS PROPERTY IN M/S RUSTOMJJEE REALITY PVT. LTD. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO EXAMINE THE CONDITION TO BE FULFILLED FOR CLAIMING EXEMPTION U/S 54 DELINEATED ABOVE AND THEN PASS AN ORDER AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE APPELLANT TO FILE THE RELEVANT DOCUMENTS/EVIDENCE ON THE ABOVE SUBJECT BEFORE THE AO. THE 2 ND ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. AS THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO, WE ARE NOT ADVERTING TO THE CASE LAWS RELIED ON BY THE LD. COUNSEL AND LD. DR. MS. TINA KAPOOR ITA NO. 5663/MUM/2016 7 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/02/2018 SD/ - SD/ - ( D.T. GARASIA) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 09/02/2018 RAHUL SHARMA, SR. P.S. 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