ACIT 4(3)(1), MUMBAI V. THE NEW PIECE GOODS BAZAR CO. LTD, MUMBAI

ITA 5807/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7261 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 28-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: S SRIRAM
• Keywords: Capital asset
• Section: 143(3); 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5807/MUM/2016 ASSESSMENT YEAR: 2013 - 14 ACIT - 4(3)(1), R. NO. 649, 6 TH FLOOR AAYKAR BHAVAN, MUMBAI - 400020 VS. M/S THE NEW PIECE GOODS BAZAR CO. LTD. 2 ND FLOOR, OFFICE GALLY, M.J. MARKET, KALBADEVI ROAD, MUMBAI - 400002. PAN NO. AAACT1770F (APPELLANT) (RESPONDENT) REVENUE BY : MR. V. VIDHYADHAR, DR ASSESSEE BY : MR. S. SRIRAM , AR DATE OF HEARING : 04 /04/2018 DATE OF PRONOUNCEMENT: 26/04/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2013 - 14. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS) - 9 , MUMBAI [IN SHORT CIT(A) ] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE R EAD AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ASSESS PREMIUM OF RS.5,23,50,000/ - AS CAPITAL GAIN INSTEAD OF ASSESSING IT AS THE INCOME FROM OTHER SOURCES M/S THE NEW PIECE GOODS ITA NO. 5807/MUM/2016 2 WHEN THE OWNERSHIP OF THE PROP ERTY DOES NOT CHANGE FROM THE HANDS OF THE ASSESSEE. 2. THE LD. CIT(A) ERRED IN RELYING UPON THAT MERELY GIVING CONSENT TO CHANGE IN THE POSSESSION OF RENTED PERMISSION FROM OLD TENANT TO THE NEW TENANT DOES NOT CONSTITUTE THE CHANGE OF OWNERSHIP IN THE HAND S OF THE ASSESSEE AND THEREFORE PREMIUM RECEIVED ON PROPERTY IS NOT A CAPITAL GAIN. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2013 - 14 ON 28.09.2013 DECLARING TOTAL INCOME OF RS.5 ,20,16,940/ - . THE ASSESSEE IS AN OWNER AND THE LANDLORD OF SHETH MULJI JETHA CLOTH MARKET, MUMBAI. THE SHOPS IN THE SAID MARKET HAVE BEEN GIVEN ON RENT TO VARIOUS TENANTS. THE ASSESSING OFFICER (AO) OBSERVED THAT DURING THE FINANCIAL YEAR (FY) 2011 - 12, THE RE WAS A CHANGE IN TENANCY OF 17 SHOPS, WHEREIN SOME NEW TENANTS WERE INTRODUCED IN PLACE OF OLD ONES. THE ASSESSEE RECEIVED A PREMIUM OF RS.5,23,50,000/ - ON SUCH TRANSFERS. THE ASSESSEE REFLECTED THIS PREMIUM AMOUNT AS LONG TERM CAPITAL GAINS (LTCG) CHARG EABLE @ 20% IN ITS RETURN OF INCOME. FURTHER, IT CLAIMED AN EXEMPTION OF RS.50,00,000/ - U/S 54 EC AND DISCLOSED TAXABLE GAIN AT RS.4,73,50,000/ - . HOWEVER, THE AO MADE AN ADDITION OF RS.5,23,50,000/ - ON ACCOUNT OF PREMIUM RECEIVED ON TENANCY TRANSFER AS IN COME F ROM OTHER SOURCES. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) FOLLOWED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2009 - 10 AND DIRECTED THE AO TO TREAT THE PREMIUM RECEIVED ON TENANCY TRANSFER AS LTCG. M/S THE NEW PIECE GOODS ITA NO. 5807/MUM/2016 3 5. BEFORE US, THE LD. DR RELIES ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE ORDER PASSED BY THE ITAT B BENCH MUMBAI FOR AY 2009 - 10 (ITA NO. 6983/MUM/2012); FOR AY 2007 - 08 (ITA NO. 5234/MUM/2013) ; AY 2008 - 09 (ITA NO. 5235/MUM/2013) AND AY 2012 - 13 (ITA NO. 100/MUM/2016) IN ASSESSEES OWN CASE AND SUBMITS THAT THE PRESENT ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO - ORDINATE BENCH. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS A ND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE SAME ISSUE AROSE BEFORE THE ITAT B BENCH MUMBAI IN ASSESSEES OWN CASE AS MENTIONED HEREINBEFORE. WE MAY REFER HERE TO PARA 6 OF THE ORDER OF THE TRIBUNAL FOR THE AY 2007 - 08 (ITA NO. 5234/MUM/ 2013) AND AY 2008 - 09 (ITA NO. 5235/MUM/2013): 6. WE HAVE GONE THROUGH THE FINDINGS OF LD. CIT(A). WE AGREE WITH THE OBSERVATION OF THE LD. CLT(A) THAT DURING THE COURSE OF TIME THE ASSESSEE ACQUIRED BUNDLE OF RIGHTS WITH RESPECT TO THE IMPUGNED SHOPS. THESE RIGHTS INCLUDE INTER ALIA, RIGHTS OF POSSESSION IN TENANCY. AS PER SECTION 2(14) 'CAPITAL ASSET' MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION. A PERUSAL OF THIS DEFINITION SHOWS THAT THE LEG ISLATURE HAS INTENDED TO DEFINE THE TERM 'CAPITAL ASSET' IN THE WIDEST POSSIBLE MANNER. THIS DEFINITION HAS BEEN CURTAILED TO THE EXTENT OF EXCLUSIONS GIVEN IN SECTION 2(14) ITSELF WHICH INCLUDE STOCK - IN - TRADE AND PERSONAL EFFECTS. THE IMPUGNED ASSET DOES NOT CLEARLY FALL IN THE AFORESAID EXCLUSIONS GIVEN IN SECTION 2(14). THE BUNDLES OF RIGHT ACQUIRED BY THE ASSESSEE ARE UNDOUBTEDLY VALUABLE IN TERMS O F MONEY. IN OUR VIEW, THE SAID TENANCY RIGHTS SHALL FORM PART OF A CAPITAL ASSET IN THE HANDS OF THE ASSES SE E AND, THEREFORE, ANY GAINS ARISING THEREFROM WOULD BE ASSESSABLE UNDER THE HEAD INCOME FROM CAPITAL GAINS ELIGIBLE FOR DEDUCTION U/S S4EC OF THE ACT. UNDER THESE CIRCUMSTANCES WE FIND THAT THE FINDINGS OF THE ID. CIT(A) ARE M/S THE NEW PIECE GOODS ITA NO. 5807/MUM/2016 4 WELL REASONED AND IN ACCORD ANCE WITH L AW AND FACTS AND DO NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, THE ORDER OF ID. CIT(A) IS UPHELD. THE ABOVE ORDER HAS BEEN SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN AY 2012 - 13. 7. FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND DISMISS THE APPEAL. ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2018 . SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 26/04/2018 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