BALAJI VISHWANATHAN SWAMINATHAN, MUMBAI V. DCIT 22(2), NAVI MUMBAI

ITA 5790/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9069 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALB BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.5790/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) BALAJI VISHWANATHAN SWAMINATHAN FLAT NO.33B, MAHINDRA PARK, LBS MARG, GHATKOPAR (W) MUMBAI 400086 / VS. DY. CIT 22(2) 4 TH FLOOR, TOWER NO.6, VASHI RLY. STATION BLDG, COMPLEX , VASHI, NAVI MUMBAI - 410703 ./ ./ PAN/GIR NO. AAHPS6764Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING:06.10.2016 /DATE OF PRONOUNCEMENT:06.01.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 11.07.2012 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-33, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2009- 10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HON.CIT(A) ERRED IN TREATING GAIN ON SALE OF RIGHTS IN IMMOVABLE PROPERTY AS STCG INSTEAD OF LTCG. THEREBY CONVERTING THE LTCG OF RS.2,46,33,724/- ASSESSEE BY: SHRI G. P. MEHTA DEPARTMENT BY: SHRI B. SATYANARAYANA RAJU ITA NO.5790.M.12 A.Y. 2009-10 2 OFFERED BY THE ASSESSEE INTO STCG OF RS.3,17,31,060/- SHE FAILED TO UNDER THAT: A) THE ASSESSEE HAD ENTERED INTO A VALID CONTRACT WITH THE BUILDER WHICH IS EVIDENCED BY THE LETTER OF ALLOTMENT ISSUED BY THE BUILDER AND ACCEPTED BY THE ASSESSEE IN ALL CASES. B) IN ALL THE THREE CASES THE ASSESSEE HAD HELD THE ASSET FOR A PERIOD OF MORE THAN 36 MONTHS. C) THE ASSESSEE NEVER TOOK POSSESSION OF THE FLATS THAT HE HAD BOOKED WITH THE BUILDER AND WHAT HE SOLD WAS ONLY THE RIGHT TO OCCUPY AT LATER DATE. D) THE HON CIT(A) HAS ALTHOUGH APPLIED THE CORRECT LEGAL POSITION BUT HAS NOT CORRECTLY UNDERSTOOD THE FACTS OF THE CASE AND HAS THUS ARRIVED AT WRONG DECISION. E) THE ASSESSEE CASE IS VERY WELL SUPPORTED IN FACTS AND LEGAL POSITION BY A CATRINA OF CASES AND BOARD CIRCULARS. THE CONVERSION OF GAIN ON SALE OF RIGHTS IN IMMOVABLE PROPERTY FROM LTCG TO STCG DESERVED TO BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.07.2007 DECLARING TOTAL INCOME TO THE TUNE OF RS.3,58,89,646/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S.143(2) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 17.08.2010 WHICH WAS DULY SERVED UPON THE ASSESSEE ON 13.09.2010. THEREAFTER, THE NOTICE U/S.142(1) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE SHOWED THE LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAINS ON HIS IMMOVABLE PROPERTY. DETAILS OF WHICH HAS BEEN MENTIONED BELOW:- ITA NO.5790.M.12 A.Y. 2009-10 3 LONG TERM CAPITAL GAINS 1 ASHOK TOWER PROPERTY 2,89,01,925 2 ASHOK GARDEN PROPERTY 46,44,500 3,35,46,425 SHORT TERM CAPITAL GAINS 1 ORLOV PROPERTIES 9,00,000 2 DURSHIT PROPERTY 3,00,000 12,00,000 SHORT TERM CAPITAL GAINS ON MUTUAL FUNDS 4,63,303 TOTAL 3,52,09,728 4. THE ASSESSEE CONSIDERED THE FIRST INSTALLMENT OF PAYMENT FOR THE PURPOSE OF ACQUISITION OF THE PROPERTY AND ASSESSED THE LONG TERM CAPITAL GAIN ACCORDINGLY WHEREAS THE ASSESSING OFFICER CONSIDERED THE DATE OF THE REGISTERED SALE OF THE PROPERTY FOR THE COMPUTATION OF LONG TERM CAPITAL GAIN, THEREFORE, THE ASSESSING OFFICER CONSIDERED THE SALE OF THE FLATS OF ASHOK TOWER PROPERTY AND ASHOK GARDEN PROPERTY AND ORLOV PROPERTIES AS SHORT TERM CAPITAL GAIN AND ACCORDING ASSESSED THE SHORT TERM CAPITAL GAIN TO THE TUNE OF RS.3,52,09,728/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1:- 5. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUTSET THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE DATE OF ALLOTMENT OF THE ITA NO.5790.M.12 A.Y. 2009-10 4 PROPERTY OF ASHOK TOWER, ASHOK GARDEN AND ORLOV PROPERTIES IS REQUIRED TO BE CONSIDER TO ASSESS THE CAPITAL GAIN AND ACCORDINGLY THE INCOME ACCRUED ON THE ACCOUNT OF THE SALE OF THE SAID PROPERTY IS LIABLE TO BE CONSIDERED AS LONG TERM CAPITAL GAIN SPECIFICALLY IN THE CIRCUMSTANCES WHEN THE DATE OF THE ALLOTMENT LETTER ISSUED IN CONNECTION WITH THE ASHOK TOWER IS 2 ND MARCH 2005 AND THE DATE OF SALE OF THE FLAT IS 1 ST MAY 2008 AND DATE OF THE ALLOTMENT OF THE PROPERTY OF ASHOK GARDEN IS 22 ND AUGUST 2005 AND DATE OF SALE OF FLAT IS 7 TH OCTOBER 2008 AND THE DATE OF ALLOTMENT OF FLAT OF ORLOV PROPERTY IS 23 RD APRIL 2005 AND DATE OF SALE OF THE FLAT IS 1 ST MAY 2008. IN SUPPORT OF THESE CONTENTIONS THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN MADHU KAUL VS COMMISSIONER OF INCOME TAX AND ANOTHER SETTLED BY THE HONBLE PUNJAB AND HARYANA HIGH COURT AND THE ITO 8(3)(1) VS. SHANGRILA GOLF & HEALTH RESORTS PVT. LTD. SETTLED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH AND (2016) 70 (I) ITCL 162 (BOM-HC) SETTLED BY THE HONBLE BOMBAY HIGH COURT IN CASE TITLED AS COMMISSIONER OF INCOME TAX VS. GIRISH L. RAGHA. HOWEVER, ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANCE UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. BY GIVING THE CAREFUL THOUGHTS TO THE ARGUMENT ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES, IT CAME INTO THE NOTICE THAT THE MAIN CONTROVERSY IS IN CONNECTION WITH THE TAKING INTO CONSIDERATION OF THE DATE ON WHICH THE LONG TERM CAPITAL GAIN IS REQUIRED TO BE CALCULATED. WHILE FURNISHING THE RETURN OF INCOME INITIALLY THE ASSESSEE CONSIDERED THE DATE OF FIRST INSTALLMENT PAID TO THE BUILDER FOR CALCULATING THE LONG TERM CAPITAL GAIN. HOWEVER, AFTER THE SELECTION OF THE CASE IN SCRUTINY, THE ASSESSING OFFICER TAKEN INTO THE ITA NO.5790.M.12 A.Y. 2009-10 5 CONSIDERATION THE DATE ON WHICH THE SALE WAS EXECUTED AND ACCORDINGLY THE ASSESSING OFFICER ASSESSED THE SHORT TERM CAPITAL GAIN. THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED IN CASE CITED AS MADHU KAUL VS COMMISSIONER OF INCOME TAX AND ANOTHER BY THE HONBLE PUNJAB AND HARYANA HIGH COURT WHEREIN THE DATE OF THE ALLOTMENT WAS TAKEN INTO CONSIDERATION WHILE ASSESSING THE LONG TERM CAPITAL GAIN. WE ALSO FOUND SUPPORT OF THE OTHER LAW RELIED BY THE LEARNED REPRESENTATIVE OF THE ASSESSEE I.E. THE ITO 8(3)(1) VS. SHANGRILA GOLF & HEALTH RESORTS PVT. LTD. DECIDED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH AND (2016) 70 (I) ITCL 162 (BOM-HC) DECIDED BY THE HONBLE BOMBAY HIGH COURT IN CASE TITLED AS COMMISSIONER OF INCOME TAX VS. GIRISH L. RAGHA. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IN QUESTION ON THIS ISSUE IS WRONG AGAINST LAW AND FACTS BECAUSE THE CIT(A) HAS CONSIDERED THE DATE OF THE EXECUTION OF THE SALE DEED FOR THE PURPOSE OF ASSESSING THE LONG / SHORT TERM CAPITAL GAIN. ACCORDINGLY, SPECIFICALLY IN VIEW OF THE ABOVE MENTIONED LAW, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RECONSIDER THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE ALLOTMENT LETTER FOR THE PURPOSE OF ASSESSING THE LONG / SHORT TERM CAPITAL GAIN IN ACCORDANCE WITH LAW. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2017. SD/- SD/- (D.KARUNAKARA RAO) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED :6 TH JANUARY, 2017 MP ITA NO.5790.M.12 A.Y. 2009-10 6 / 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