ITO 1(2)(3), MUMBAI V. MAHESH CONBUILD P.LTD, MUMBAI

ITA 5808/MUM/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0901 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR SINGH LD
• Assessee Lawyers: HIRO RAI LD
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 131

Judgement Text

ITA.NOS.4382 & 5808/MUM/2016 ASSESSMENT YEAR-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI MANOJ KUMAR AGGARWAL, AM AND SHRI RAVISH SOOD, JM I.T.A. NO.4382/MUM/2016 ( ASSESSMENT YEAR: 2012-13) INCOME TAX OFFICER - 1(2)(1) ROOM NO.536, AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020 VS. JAS PROPBUILD PRIVATE LIMITED MARATHON INNOVA, 1 ST FLOOR B-1/101 OPP. PENINSULA CORPORATE PARK OFF. GANPATRAO KADAM MARG LOWER PAREL(W)MUMBAI-400 013 PAN/GIR NO. AACCJ-5258-N ( APPELLANT ) : ( !' RESPONDENT ) & I.T.A. NO.5808/MUM/2016 ( ASSESSMENT YEAR: 2012-13) INCOME TAX OFFICER - 1(2)(3) ROOM NO.527,5 TH FLOOR AAYKAR BHAVAN M.K. ROAD MUMBAI-400 020 VS. MAHESH CONBUILD PRIVATE LIMITED MARATHON INNOVA, 1 ST FLOOR B-1/101 OPP. PENINSULA CORPORATE PARK OFF. GANPATRAO KADAM MARG LOWER PAREL(W)MUMBAI-400 013 PAN/GIR NO. AAHCM-0052-G ( APPELLANT ) : ( !' RESPONDENT ) ASSESSEE BY : HIRO RAI, LD. AR REVENUE BY : MANOJ KUMAR SINGH, LD. SR. DR #$ DATE OF HEARING : 19/09/2018 %&'$ / DATE OF PRONOUNCEMENT : 05/10/2018 ITA.NOS.4382 & 5808/MUM/2016 ASSESSMENT YEAR-2012-13 2 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR [AY] 2012-13 ASSAILS ORDER OF LD. FIRST APPELLATE AUTHORITY ON S IMILAR GROUNDS OF APPEAL. SINCE THE COMMON ISSUES ARE INVOLVED, WE DISPOSE-OF F THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST WE TAKE UP ITA NO. 4382/MUM/2016 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-2 [CIT(A)], MU MBAI, APPEAL NO.CIT(A)-2/IT/328/2014-15 DATED 22/03/2016 ON FOLLOWING SOLE GROUND OF APPEAL:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.98,88,000/- AS ADDITIONAL INVESTMENT IN TENANCY RIGHT, WITHOUT APPRECIATING THE ASSESSING OFFICERS FINDINGS THAT THE ASSESSEE HAS MADE INVESTMENT IN TENANCY RIGHT WHICH EXCEEDS THE AMOUNT RECORDED IN BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND EXPLANATION OFFERED IS NOT SATISFACTORY IN NATURE CONSIDERING THE FACT THAT THE SALE OF TENANC Y RIGHT TO OTHER PERSONS/COMPANIES IS AS PRICE HIGHER THAN MARKET PRICE DETERMINED BY STAMP DUTY AUTHORITIES WHILE IN THE CASE OF THE ASSESSEE THE TENANCY RIGHTS WERE SO LD AT LESS THAN MARKET PRICE. THE REGISTRY NOTED A DELAY OF 425 DAYS IN FILING TH E APPEAL. HOWEVER, THE REVENUE HAS FILED REVISED FORM NO. 36 TO RECTIFY TH E DATE OF COMMUNICATION OF THE ORDER APPEALED AGAINST. COUNTING FROM THIS DATE, THE APPEAL IS WITHIN TIME AND THEREFORE, FINDING TH E SAME IN ORDER, WE PROCEED TO DISPOSE-OFF THE APPEAL AS ARGUED BEFORE US. 2.1 THE ASSESSEE BEING RESIDENT CORPORATE ENTITY HAS BEEN ASSESSED U/S 143(3) ON 25/02/2015 VIDE ORDER PASSED BY LD. I NCOME TAX OFFIER- 1(2)(1), MUMBAI [AO] WHEREIN THE INCOME OF THE ASSE SSEE HAS BEEN DETERMINED AT RS.98.35 LACS AFTER CERTAIN ADDITIONS AS AGAINST RETURNED ITA.NOS.4382 & 5808/MUM/2016 ASSESSMENT YEAR-2012-13 3 LOSS OF RS.0.52 LACS E-FILED BY THE ASSESSEE ON 28/09/2012. THE SOLE SUBJECT MATTER OF THIS APPEAL IS ADDITION OF RS.98. 88 LACS U/S 69B. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE PURCHASED CERTAIN TENANCY RIGHTS IN PROPERTIES SITU ATED AT GALA NO.50B TO 54B, SURVEY NO. 3428 & C.S. NO. 2020, DELILE ROAD, BYCULLA, MUMBAI FROM AN ENTITY NAMELY LOMBARD PRIVATE LIMITED FOR CONSIDERATION OF RS.219.60 LACS. HOWEVER, THE STAMP DUTY VALUE OF THE STATED PROPERTIES WAS RS.302.88 LACS, WHICH LED THE LD. AO TO BELIEVE THAT THE ASSESSEE UNDERVALUED THE INVESTMENT BY RS.98.88 LACS. THE LD . AO FORTIFIED ITS STAND BY COMPARING THE SIMILAR INVESTMENTS MADE BY ASSESSEES ASSOCIATED CONCERNS IN SIMILAR PROPERTIES, THE DETA ILS OF WHICH ARE EXTRACTED AT PARA-2 OF THE QUANTUM ASSESSMENT ORDER. TO VERIFY THE FACTS, A SUMMON WAS ISSUED TO THE PRINCIPAL OFFICER OF M/S LOMBARD PRIVATE LIMITED ON 29/12/2014 AND HIS STATEMENT WAS RECORDED U/S 13 1 ON 16/01/2015, WHICH IS ALSO EXTRACTED AT PARA-5 OF THE QUANTUM ASSESSMENT ORDER. A PERUSAL OF THE SAME REVEALS THA T THE SELLER DENIED HAVING RECEIVED ANY ADDITIONAL COMPENSATION AGAINST THE SALE OF THE STATED RIGHTS. HOWEVER, NOT CONVINCED LD. AO OPINED THAT THE SELLER COULD NOT SELL TENANCY RIGHTS FOR PRICE LESS THAN THE MAR KET PRICES AND THEREFORE, INVOKING THE PROVISIONS OF SECTION 69B, THE DIFFERE NTIAL AMOUNT OF RS.98.88 LACS WAS ADDED TO THE INCOME OF THE ASSESS EE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 22/03/2016 WHE REIN THE ASSESSEE, INTER-ALIA, CONTENDED THAT MERELY BECAUSE THE STAMP DUTY VALUE WAS HIGHER THAN AGREED CONSIDERATION, THE SAME COULD NO T BE THE BASIS FOR INVOKING THE PROVISIONS OF SECTION 69B UNLESS THE S AME IS CORROBORATED ITA.NOS.4382 & 5808/MUM/2016 ASSESSMENT YEAR-2012-13 4 WITH EVIDENCES. RELIANCE WAS PLACED ON SEVERAL JUDI CIAL PRONOUNCEMENTS IN SUPPORT OF VARIOUS SUBMISSIONS. AFTER DUE CONSID ERATION, LD. CIT(A) CONCURRED WITH THE STAND OF THE ASSESSEE BY MAKING FOLLOWING OBSERVATIONS:- DECISION: 3.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER DATED 25.02.2015, WHEREIN THE AO HAS ADDED A SUM OF RS.98,88,000/- U/S.69B AS THE FULL AMOUNT IS NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNTS, AS PER PARA 12 OF THE ORDER, BY APPLYING THE PROVISION OF SECTION 50C FOR THE TRANSFER FOR TENAN CY RIGHTS BY THE APPELLANT COMPANY. THE AO HAS OPINED THAT THE APPELLANT HAS A DMITTED CONSIDERATION FOR THE TRANSFER OF TENANCY RIGHTS OF GALA NO. 50B TO 5 4B SITUATED AT 556, N.M. JOSHI MARG BYCULLA (W), MUMBAI 400 001 AT RS.2,19,60,19. HOWEVER, AS PER THE STAMP DUTY AUTHORITIES, THE VALUE WAS CALCULATED AT RS.3,02,88,000/. ACCORDINGLY, THERE WAS A DIFFERENCE OF RS.98,88,000 /- WHICH IS UNDERVALUED BY THE APPELLANT. ACCORDINGLY, AO HAS ADDED RS.98,88,0 00/- ALONG WITH RETURN OF INCOME. HOWEVER, THE AR OF THE APPELLANT ARGUES THA T SECTION 50C WILL NOT APPLY FOR TRANSFER OF TENANCY RIGHTS ON RELYING ON THE FO LLOWING JUDICIAL DECISIONS: A) TEJINDER SINGH V. DY. CIT 19 TAXMANN.COM 4 (KOL) B) SMT. KISHORISHARAD GAITONDE VS. ITO (IT APPEAL N O. 1561 (MUM) C) SHRI ATUL G. PURANIK, C/O VS. ITO 11 TAXMANN.COM 92 (MUM) D) M/S. MUNSONS TEXTILES VS. ASST.COMMISSIONER OF I NCOME-TAX (ITA NO. 6320/MUM/2010) 3.5 I HAVE GONE THROUGH THE ABOVE SUBMISSIONS, ASSE SSMENT ORDER AND THE JUDICIAL DECISIONS RELIED BY THE AR OF THE APPELLAN T. THE HONBLE ITAT IN THE CASE OF KISHORISHARAD GAITNODE VS ITO, SHRI ATUL G. PURA NIK, C/O VS ITO AND M/S. MUNSONS TEXTILES VS. ACIT HAS GIVEN THE FINDING THA T SECTION 50C WILL NOT BE APPLICABLE IN CASE OF TRANSFER OF TENANCY RIGHTS IN RESPECT OF LAND OR BUILDING OR BOTH. 3.6 RESPECTFULLY FOLLOWING THE JUDICIAL DECISION OF ITAT AS STATED ABOVE, I AM OF THE CONSIDERED OPINION THAT APPLICATION OF SECTION 50C FOR THE TRANSFER OF TENANCY RIGHTS MAY NOT BE APPLICABLE AND THEREFORE, I DIREC T THE AO TO DELETE THE ADDITION MADE OF RS.98,88,000/- 4. IN THE RESULT, THE APPEAL IS ALLOWED. THE PERUSAL OF THE SAME REVEALS THAT THE IMPUGNED A DDITIONS HAVE PRIMARILY BEEN DELETED ON THE REASONING THAT THE PR OVISIONS OF SECTION 50C DID NOT APPLY TO TENANCY RIGHTS. AGGRIEVED BY T HE STAND OF FIRST APPELLATE AUTHORITY, THE REVENUE IS IN FURTHER APPE AL BEFORE US. 4. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. UPON DUE CONSIDERATION, WE FIND THAT THE ADDITION OF ITA.NOS.4382 & 5808/MUM/2016 ASSESSMENT YEAR-2012-13 5 THE DIFFERENTIAL AMOUNT [STAMP DUTY VALUE VS. AGREE D CONSIDERATION] HAS BEEN MADE BY LD. AO BY APPLYING THE PROVISIONS OF S ECTION 69B ON THE PREMISE THAT NO SELLER COULD SELL THE PROPERTIES AT LESS THAN THE FAIR MARKET PRICES. HOWEVER, IN SUPPORT, NO CORROBORATIV E EVIDENCES HAVE BEEN BROUGHT ON RECORD AND NOTHING ON RECORD SUGGES T CONTRARY. NOTHING HAS BEEN SHOWN TO DEMONSTRATE THAT ANY ADDITIONAL C ONSIDERATION FLEW FROM ASSESSEE TO THE SELLER AND EVEN THE SELLER DEN IED HAVING RECEIVED ANY CONSIDERATION OVER AND ABOVE THE AGREED CONSIDE RATION. IT IS TRITE LAW THAT ADDITIONS COULD NOT BE MADE MERELY ON THE BASI S OF SUSPICION, CONJECTURES OR SURMISES. THE LD. CIT(A) PROVIDED RE LIEF TO THE ASSESSEE ON THE REASONING THAT THE PROVISIONS OF SECTION 50C DO NOT APPLY TO TENDENCY RIGHTS. HOWEVER, IN OUR OPINION, THE ADDIT IONS, BY INVOKING THE DEEMING FICTION CREATED BY SECTION 50C, COULD BE MA DE IN THE HANDS OF THE SELLER ONLY AND NOT IN THE HANDS OF THE PURCHAS ER UNLESS CONTRARY IS DEMONSTRATED. THEREFORE, THE IMPUGNED ADDITIONS, TH OUGH ON DIFFERENT REASONING AS APPLIED BY LD.CIT(A), COULD NOT BE SUS TAINED. HENCE, VIEWED FROM ANY ANGLE, WE FIND NO REASON TO INTERFE RE WITH THE IMPUGNED ORDER. THE APPEAL STANDS DISMISSED. ITA NO.5808/MUM/2016 : MAHESH CONBUILD PRIVATE LIMI TED 5. THE ASSESSEE, IN SIMILAR MANNER, HAS BEEN SADDLE D WITH ADDITIONS OF RS.79.50 LACS U/S 69B AND THE SAME HAS BEEN DELE TED BY LD. CIT(A) ON SIMILAR REASONING. SINCE THE FACTS AND CIRCUMSTA NCES ARE PARI-MATERIA THE SAME, OUR OBSERVATIONS, CONCLUSIONS AND DECISIO N ETC. MUTATIS MUTANDIS APPLY TO THIS APPEAL ALSO. BY CONFIRMING THE STAND OF LD. CIT(A), WE DISMISS THE APPEAL. ITA.NOS.4382 & 5808/MUM/2016 ASSESSMENT YEAR-2012-13 6 CONCLUSION 6. BOTH THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH OCTOBER, 2018. SD/- SD/- (RAVISH SOOD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED 05.10.2018 SR.PS:-THIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / THE CIT(A) 4. / CIT CONCERNED 5. !'#$ %& '%&( / DR, ITAT, MUMBAI 6. $)*+ GUARD FILE / BY ORDER, (DY./ASSTT.REGISTRAR) !'#$ / ITAT, MUMBAI