SAHIL SHAILESH KUMAR GOSALIA, MUMBAI V. ITO 32(3)(2), MUMBAI

ITA 5898/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 3795 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 12-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C S SHARMA
• Assessee Lawyers: REEPAL TRALSHAWALA
• Keywords: Capital Gains
• Section: 13

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI S . RIFAUR RAHMAN , AM & SHRI RAM LAL NEGI, JM ./ I.T.A. NO . 5898 / MUM/ 2018 ( / ASSESSMENT YEAR: 2014 - 15 ) SAHIL SHAILESH KUMAR GOSALIA, 1205, PRATHMESH TOWER, NEW LINK ROAD, OPP DON BOSCO SCHOOL, BORIVALI (W), MUMBAI 400 092 / VS. ITO 32(3)(2), ROOM NO. 106, C - 11, 1 ST FLOOR, BKC, M UMBAI - 400 051 ./ ./ PAN NO. AGUPG 9179 N ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHR I REEPAL TRALSHAWALA, AR / RESPONDENTBY : SHRI C. S. SHARMA , DR / DATE OF HEARING : 26.09 .201 9 / DATE OF PRONOUNCEMENT : 30.10.2019 / O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) - 44 IN 2 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR SHORT REFERRED AS LD. CIT(A) , MUMBAI, DATED 10.08.18 FOR A SSESSMENT YEAR (IN SHORT A Y ) 2014 - 15 . 2 . THE BRIEF FACTS OF THE CASE ARE, ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014 15 ON 13.02.2015 DECLARING TOTAL INCOME OF RS. 5 , 92 , 290/ - . THE RETURN WAS PROCESSE D UNDER SECTION 143 (1) OF THE INCOME TAX A CT 1961 (IN SHORT A CT ). THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. ACCORDINGLY NOTICES UNDER SECTION 143 (2) AND UNDER SECTION 142 (1) OF THE A CT WERE ISSUED AND SERV ED ON THE ASSESSEE. IN RESPONSE, AR OF THE ASSESSEE AND FATHER OF THE ASSESSEE APPEARED AND FILED THE RELEVANT INFORMATION AS CALLED FOR. 3. ASSESSEE IS A PARTNER IN THE FIRM M/S SIDHDHI VINAYAK ENTERPRISE, A RETAIL BUSINESS DEALING IN CA R ACCESSORIES. DURING THIS YEAR, ASSESSEE DERIVED INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES. DURING THE ASSESSMENT PROCEEDINGS , AO NOTICED FROM THE AIR INFORMATION THAT THE ASSESSEE HAD PUR CHASED IMMOVABLE PROPERTY AT FLAT NUMBER 1203, A WING, ORCHID S UBURBIA ON 21.10.2013 FOR RS. 6 0,14,280/ - A ND SOLD THE SAME FLAT ON 28.10. 2013 FOR A CONSIDERATION OF RS . 80 LAKHS. IN 3 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR COMPUTATION OF INCOME , ASSESSEE HAD CLAIMED LONG - TERM CAPITAL LOSS ON SALE OF THE ABOVE FLAT. IN ORDER TO VERIFY THE ABOVE CLAIM ASSESSEE WAS CALLED UPON TO EXPLAIN HOW ASSESSEE CAN CLAIM LONG - TERM CAPITAL GAIN/LOSS WHEN THE AS SET WAS HELD B Y ASSESSEE LESS THAN 12 MONTHS. IN RESPONSE , THE ASSESSEE SUBMITTED THAT THE FLAT WAS ORIGINALLY PURCHASED ON 18 NOVEMBER 2008 AND ASSESSEE HAS MADE THE PAYMENT AND SUBMITTED THE RELEVANT PROOF BEFORE THE ASSESSING O FFICER , HOWEVER ASSESSEE ACCEPTED THAT A CTUAL REGISTRATION WAS CARRIED ON 21.10.2013. FURTHER ASSESSEE SUBMITTED THE CALCULATION OF LONG - TERM CAPITAL LOSS BASED ON THE YEAR OF PAYMENT AND APPLIED THE INDEXATION COST OF THE RELEVANT YEAR OF PAYMENT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE , ASSESSING O FFICER REJECTED THE CONTENTION OF THE ASSESSEE AND OBSERVED THAT ASSESSEE CAN CLAIM LONG - TERM LOSS OR GAIN BASED ON THE PERIOD OF HOLDING THAT IS ASSESSED SHOULD HELD MORE THAN 36 MONTHS FROM THE DATE OF REGISTRATION . BY RELYING ON THE DECIS IONS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VERSUS DR D . A . IRANI 111 TAXMANN.COM 600 (BOM) AND DECISIONS OF JURISDICTIONAL ITA T MUMBAI. ACCORDINGLY, ASSESSING O FFICER DETERMINED THE CAPITAL GAINS EARNED BY THE ASSESSEE IN THIS 4 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR TRANSACTION AND TREA TED THE GAIN OF RS. 14,60, 056/ - AS SHORT - TERM CAPITAL GAINS. 4. AG GRIEVED WITH THE ABOVE ORDER , ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AND LD . CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. AGGRIEVED WITH THE ABOVE ORDER , ASSESSEE PREFERRED AN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: - 1. IN LAW AND IN THE FACTS & CIRCUMSTANCES OF THE APPELLANT'S CASE, THE HON'BLE C.I.T.(A) ERRED IN RELYING ON AND MISINTERPRETING THE DECI SION OF THE HON'B LE BOMBAY HIGH COURT IN THE CASE OF COM. OF INCOME TAX - 2 V/S MILLENIUN ESTATES PRIVATE LIMITED FOR DETERMINING THE PERIOD OF HOLDING OF THE ASSET BY THE APPELLANT AND THUS THE ADDITION MADE DESERVES TO BE DELETED. 2. IN LAW AND IN THE F ACTS & CIRCUMSTANCES OF THE APPELLANT'S CASE, THE HON'B LE C.I.T.(A) ERRED IN APPLYING THE RATIO OF THE ABOVE JUDGMENT WHICH IS ON TIME O F RECOGNITION OF REVENUE IN THE CASE OF BUILDER / DEVELOPER VIZ. DATE O F POSSESSION, AND LINKING IT TO THE PERIOD OF HOL DING FOR DENYING THE CLAIM INDEXATION 5 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR FROM THE DATE OF ALLOTMENT AND CONSEQUENTIA L CLAIM OF THE EXEMPTION TO THE APPELLANT. 3. IN LAW AND IN THE FACTS & CIRCUMSTANCES OF T HE APPELLANT'S CASE, THE HON'BLE C.I.T.(A) ERRED IN NOT DEALING WITH THE DECISIONS R ELIED UPON BY THE APPELLAN T INCLUDING DECISIONS OF THE JURISDICTIONAL TRIBUNA LS AND THEREBY NOT FOLLOWING THE PRINCIPLE OF JUDICIAL DISCIPLINE AND THUS THE ORDER IS BAD IN LAW AND DESERVES TO B QUASHED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR MODIFY ANY OF THE GROUNDS C APPEAL BEFORE OR AT THE TIME OF THE HEARING. 6. BEFORE US, LD. AR BROUGHT TO OUR NOTICE THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE LD . CIT(A) AND SUBMITTED THAT IN THE CASE OF PCIT VS VEMBU VAITHYANATHAN, THE H ONBL E JURISDICTIONAL HIGH COURT CONSIDERED THE FACT THAT THE ASSESSEE ACQUIRED THE RESIDENTIAL UNIT ON WHICH THE ALLOTMENT LETTER WAS ISSUED BY THE BUILDER WHICH IS ON 31 ST DECEMBER 2004 , BUT THE AGREEMENT OF SALE WAS EXECUTED ON 17 TH MAY 2008. THE HONORABLE C OURT HELD THAT THE DATE OF SUCH ALLOTMENT WOULD BE RELEVANT DATE FOR THE PURPOSE OF CAPITAL GAIN TAX AS A DATE OF ACQUISITION. IT WAS NOTED THAT SUCH ALLOTMENT IS FINAL UNLESS IT IS 6 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR CANCELLED OR ALLOTTEE WITHDRAW FROM THE SCHEME AND SUCH ALLOTMENT WOULD BE CANCELLED ONLY UNDER EXCEPTIONAL CIRCUMSTANCES. FURTHER HE BROUGHT TO OUR NOTICE THE CIRCULAR NUMBER 672 DATED 16 TH DECEMBER 1993. FURTHER LD. AR RELIED ON THE DECISION OF COORDINATE B ENCH OF ITAT IN THE CASE OF ACIT VERSUS SHRI KEYUR HEMANT SHAH. HE SUBM ITTED THAT SIMILAR VIEW WAS CONSIDERED BY THE HONORABLE BENCH BY RELYING ON BOMBAY HIGH COURT DECISION IN THE ABOVE SAID CASE OF VEMBU VAITHYANATHAN(SUPRA). FURTHER LD. AR SUBMITTED THAT LD CIT(A) RELIED IN THE DECISION OF CIT VS MILLENIUM AND HE SUBMITTED THAT THE ABOVE DECISION IS DISTINGUISHABLE AS THE ABOVE CASE IS RELATING TO BUILDER WHEREAS IN THE CASE OF ASSESSEE, IS THE BUYER. 7. ON THE OTHER HAND , LD. DR SUBMITTED THAT THIS I NFORMATION WAS RECEIVED BY THE ASSESSING O FFICER THROUGH THE AAR AND SUBMI TTED THAT THE FACTS IN THE GIVEN CASE ARE NOT SIMILAR TO THE FACTS RELIED ON BY THE ASSESSEE AND HE SUPPORTED THE FINDINGS OF LD . CIT(A). 8. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL PLACED ON RECORD, WE NOTICE THAT ASSESSEE HAS SOLD THE PROPERTY WHICH IS IN 7 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR ORCHID S UBURBIA FLATS, DURING THIS ASSESSMENT YEAR. THE ASSESSEE PURCHASE THIS FLAT FROM THE DEVELOPER WHO HAS ALLOTTED THIS FLAT TO THE ASSESSEE BY THE ALLOTMENT LETTER DATED 18 TH NOVEMBER 2008 , HOWEVER ASSESSEE PREFERRED TO REGIST ER THE ABOVE DOCU MENT ON 21.10. 2013. NOW ASSESSEE CLAIMS THAT THE ABOUT TRANSACTIONS FALLS UNDER LONG - TERM CAPITAL GAINS BECAUSE THE ASSESSEE GOT THE ALLOTMENT LETTER IN THE ASSESSMENT YEAR 2008 - 09. ON CAREFUL OBSERVATION WE NOTICE THAT ASSESSEE HAS PAID RS. 5.71 LAKHS IN THE ASSESSMENT YEAR 2008 - 09, 12.1 7 LAKHS IN ASSESSMENT YEAR 2010 - 11, 21 .20 LAKHS IN ASSESSMENT YEAR 20 11 - 12, 15.03 LAKHS IN ASSESSMENT YEAR 2012 - 13 AND BALANCE IN THE ASSESSMENT YEAR 2013 - 14. BEFORE US ASSESSEE HAS NOT FILED ANY SALE DOCUMENT OR PURCHASE D OCUMENT IN SUPPORT OF THE ABOVE CLAIM , HOWEVER ASSESSEE RELIES HEAVILY ON THE JURISDIC TIONAL HIGH COURT DECISION AND COORDINATE BENCH OF THIS T RIBUNAL. THE HONORABLE HIGH COURT IN THE CASE OF VEMBU VAITHYANATHAN(SUPRA), OBSERVED THAT CBDT IN ITS CIRCULAR NUMBER 672 DATED 16 TH OF DECEMBER 1993 HAS CLARIFIED THAT IN CASES OF ALLOTMENT OF FLATS OR HOUSES BY COOPERATIVE SOCIETIES OR OTHER INSTITUTIONS WHOSE SCHEME OF ALLOTMENT AND CONSIDERATION ARE SIMILAR TO THOSE OF DDA, THE DATE 8 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR OF ALLOTMENT WOULD BE DATE O N WHICH THE PURCHASER OF A RESIDENTIAL UNIT CAN BE STATED TO HAVE ACQUIRED THE PROPERTY. WE RESPECTFULLY AGREE WIT H THE ABOVE OBSERVATION OF THE HONBLE HIGH C OURT. BUT IN THE GIVEN CASE , THE ASSESSEE HAS PURCHASED THE ABOVE FLAT FROM THE BUILDER WHO IS NO T SIMILAR TO DDA OR ANY COOPERATIVE SOCIETY AS CLARIFIED BY CBDT. AT LEAST , ASSESSEE HAS NOT BROUGHT ON RECORD ANY AGREEMENT TO SHOW THAT THIS FLAT WAS P URCHASED FROM SUCH COOPERATIVE S OCIETY. IN OUR CONSIDERED VIEW, IN ORDER TO TAKE ADVANTAGE OF THE ABOVE CIRCULAR OR THE DECISION OF THE HONORABLE HIGH COURT, ASSESSEE HAS TO FIRST SUBSTANTIATE THAT THE FLAT WAS P URCHASED FROM SUCH COOPERATIVE SOCIETY. SINCE THERE IS NO RECORD SUBMITTED BEFORE US, WE ARE NOT IN A POSITION TO APPRECIATE AT PRESENT. ASSESSEE H EAVILY RELIES ON THE D ECISION OF HONORABLE HIGH COURT, BUT THE FACTS ARE NOT SIMILAR TO THE FACTS IN THE CASE OF VEMBU VAIDHRANATHAN (SUPRA). 9. WE FURTHER OBSERVED THAT EVEN THOUGH ASSESSEE HAS THE LETTER OF ALLOTMENT BUT ASSESSEE HAS NOT MADE SUBSTANTIAL AMOUNT TO THE BUILDER AND ALSO NOT SUBMITTED ANY AGREEMENT OF SALE IN ORDER TO APPRECIATE WHETHER THE ASSESSEE HAS GOT THE RIGHT TO TRANSFER THE PROPERTY AT THE STAGE OF ALLOTMENT OF LETTER. EVEN 9 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR ASSESSEE HAS NOT BROUGHT ON RECORD ANY ALLOTMENT LETTER TO SUPPORT THAT ASSESSEE HAS ACTUALLY HAVE A RIGHT TO TRANSFER THE PROPERTY ON THE DATE OF RECEIPT OF ALLOTMENT LETTER. IN THE ABSENCE OF A BOVE SUCH DOCUMENTS OF EVIDENCE, ASSESSEE HAS MERELY RELIES ON THE CASE LAW. 10. THE MODUS OPERANDI OF THE SMALL - TIME IN VESTORS WHO INVEST IN THE REAL ESTATE AND THEY GET THE ALLOTMENT LETTER AND THEY MAKE THE SETTLEMENT TO THE BUILDER IN THE INSTALMENTS. AS SOON AS THE BUILDING IS COMPLETE , THEY RESORT TO SELL THE PROPERTY TO THE NEW PROSPECTIVE BUYERS AND MAKES A PROFIT. IN THIS TRANSACTION, THE BUILDER WILL NOT GIVE THE RIGHT TO TRANSFER THE PROPERTY UNLESS THEY GET A FULL SETTLEMENT. SINCE THE SETTLEMENT OF THE PAYMENT TO THE BUILDER INDICATES THAT ASSESSEE HAS PAID THE COST OF THE FLAT SPREAD OVER IN FIVE ASSESSMENT YEA RS. THEREFORE , IN OUR CONSIDERED VIEW, THE FACTS IN THIS CASE ARE SIMILAR AS PER OUR ABOVE OBSERVATION , THEREFORE UNLESS ASSESSEE ESTABLISHES THAT THE ASSESSEE HAS PURCHASED THE ABOVE FLATS FROM A COOPERATIVE SOCIETY THEN ONLY THE ASSESSEE CAN TAKE THE ADV ANTAGE OF THE CIRCULAR ISSUED BY CBDT OR THE RATIO OF THE VEMBU VAITHYANATHAN CASE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10 I.T.A. NO. 5898 /MUM/201 8 SAHIL SHAILESH KUMAR 1 1 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCT 20 19 . SD/ - SD/ - ( RAM LAL NEGI ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 30 . 10 .201 9 SR.PS . DHANANJAY / 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 F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI