BONAFIDE EXPORTERS, MUMBAI V. ITO 13(2)(1), MUMBAI

ITA 5817/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2739 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 23-02-2016
• Assessment Year: misc
• Appeal Filed On: 17-08-2011
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGH
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER I.T.A. NO. 5817/M/2011 (ASSESSMENT YEAR :2008 - 2009 ) M/S. BONAFIDE EXPORTERS, 52, PATWA CHAMBERS, L.L.MARG, CLIVE ROAD, DANA BUNDER, MUMBAI 400009. / VS. INCOME TAX OFFICER, 13(2)(1), MUMBAI. ./ PAN : AAAFB1752C ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HARESH P. SHAH / RESPONDENT BY : MISS ANUPAMA SINGH, DR / DATE OF HEARING : 08.09 .2016 / DATE OF PRONOUNCEMENT : 23 .09 .2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 17.8.2011 IS AGAINST THE ORDER OF THE CIT (A) - 24, MUMBAI DATED 28.6.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, ASSESSEE RAISED FIVE GROUNDS IN TOTO. 2. THE ONLY ISSUE INVOLVED IN THE GROUNDS RAISED BY TH E ASSESSEE RELATES TO THE CORRECT HEAD OF INCOME FOR TAXING THE COMPENS ATION RECEIVED BY THE ASSESSEE IN VIEW OF THE CANCELLATION OF THE FLAT AT BORIVALI. THERE IS A PURCHASE AGREEMENT, CANCELLATION AGREEMENT PLACED IN THE PAPER BOOK. NARRATING THE FACTS , LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE PAID A SUM OF RS. 12.50 LAKHS IN THE YEAR 1998 AND BOOKED A FLAT AT BORIVALI. IN THE YEAR 2007, ASSESSEE RECEIVED THE REFUND OF THE ENTIRE AMOUNT OF RS. 12.50 LAKHS ALONG WITH THE COMPENSATION OF R S. 9,43,000/ - . ASSESSEE OFFERED THE SAID AMOUNT AS CAPITAL GAINS IN THE RETURN OF INCOME FURNISHED BY THE ASSESSEE FOR THE AY 2008 - 2009. DURING THE ASSESSMENT PROCEEDINGS, AO HELD THAT THE SAID AMOUNT OF RS. 9.43 LAKHS CONSTITUTES REVENUE RECEIPT FOR T HE REASON THAT THE SAID AMOUNT IS IN THE NATURE OF INTEREST ACCRUED OVER THE YEARS ON THE INITIAL PAYMENT OF RS. 12.5 LAKHS. FOR THIS PROPOSITION, AO RELIED ON THE CLAUSE - 14 OF THE PURCHASE AGREEMENT. ACCORDINGLY, HE TREATED THE SAME AS REVENUE RECEIP T AND TAXED THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 2 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE, CIT (A) CONFIRMED THE DECISION OF THE AO. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VIJAY FLEXIBLE CONTAINERS (186 ITR 693) (BOM.). 5. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIJAY FLEXIBLE CONTAINERS (SUPRA). ON PERUSAL OF T HE SAID JUDGMENT, WE FIND, THE RECEIPTS FOR GIVING UP THE RIGHT TO OBTAIN THE CONVEYANCE OF IMMOVABLE PROPERTY RELATES TO THE TRANSFER OF CAPITAL ASSETS AND THE SAID AMOUNT RECEIVED IN TERMS OF CONSENT AGREEMENT IS ASSESSABLE AS CAPITAL GAINS. RELEVANT LINES FROM THE HELD PORTION OF THE SAID JUDGEMENT ARE EXTRACTED AS UNDER: - HELD, THAT THE AGREEMENT TO PURCHASE THE PROPERTY, THE ASSESSEE HAD ACQUIRED THE RIGHT TO HAVE THE IMMOVABLE PROPERTY CONVEYED TO HIM. HE WAS, UNDER THE LAW, ENTITLED TO EXERCISE THAT RIGHT NOT ONLY AGAINST HIS VENDORS BUT ALSO AGAINST A TRANSFEREE WITH NOTICE OR A GRATUITOUS TRANSFEREE. HE COULD ASSIGN THAT RIGHT. WHAT HE ACQUIRED UNDER THE SAID AGREEMENT FOR SALE WAS, THEREFORE, PROPERTY WITHIN THE MEANING O F THE INCOME TAX AC T, 1991, AND , CONSEQUENTLY A CAPITAL ASSET...... 7. CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR RELIEF. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. WE ORDER ACCORDI NGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 2 3 R D SEPTEMBER, 2016. S D / - S D / - ( RAVISH SOOD ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 3 .9 .2016 . . ./ OKK , SR. PS 3 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI