MANIBEN LAXMICHAND DEDHIA (LEGAL HEIR OF LAXMICHAND M. DEDHIA), MUMBAI V. ITO 25 (3)(4), MUMBAI

ITA 5975/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3332 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 17-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKTHAR H ANSARI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Valuation report; Surrender of tenancy right; Capital Gains
• Section: 43CA; 143(3); 50C; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER ./ I.T.A. NO. 597 5 / MUM /201 8 ( / ASSESSMENT YEAR S : 20 11 - 12 ) MANIBEN LAXMICHAND DEDHIA (LEGAL HEIR OF LAXMICHAND M. DEDHIA) C - WING, 303, KAMAL APARTMENT, NEELAM, BHUJ, SHANKAR LANE, KANDIVALI (W) MUMBAI. / VS. ITO 25(3)(4) 3 RD FLOOR, C - 11, PRATYAKSHAR BHAVAN, BKC, BANDRA (E), MUMBAI. ./ ./ PAN/GIR NO. : AAJPD0418J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DEVENDRA JAIN, AR / RESPONDENT BY : SHRI AKTHAR H ANSARI , DR / DATE OF HEARING 04/11 /2019 / DATE OF PRONOUNCEMENT 1 3 /11 /201 9 / O R D E R PER R.C. SHARMA (AM) : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) FOR THE A.Y 2009 - 10 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE ACT. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO. 597 5 / /MUM/2018. MANIBEN LAXMICHAND DEDHIA , MUMBAI. - 2 - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE A.O IN CONSIDERING THE FULL VALUE OF CONSIDERATION OF SHOP SOLD WITH REFERENCE TO VALUE FOR STAMP DUTY PURPOSE AS ON 05.02.2011 AS AGAINST THE VALUE FOR STAMP DUTY PURPOSE AS ON 07.12.2010 AS CLAIMED BY THE APPELLA NT. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF A.O IN CONSIDERING COST OF ACQUISITION OF SHOP SOLD AT RS. NIL AS AGAINST THE MARKET VALUE OF SHOP ACQUIRED BY SURRENDER OF TENANCY RIGHT IN THE YEAR 2004. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM HOUSE PROPERTY, INTEREST INCOME, AND INCOME FROM CAPITAL GAINS FOR THE YEAR. ASSESSEE FILED ITS RETURN OF INCOME ON 28.07.2011 DECLARING A TOTAL INCOME OF RS. 2,30,909/ - . DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE SOLD A PROPERTY BEING A SHOP AT PADMAVATI DARSHAN NM JOSHI MAR, MUMBAI ON 05.02.2011 FOR A TOTAL SALE CONSIDERATION OF RS. 75,07,000/ - AND DECLARED AN LTCG OF RS. 93,992/ - AFTER TAKING COST OF ACQUISITION OF SHOP NIL AS THE SAME WAS ACQUIRED BY SURRENDERING TENANCY RIG HTS AND INVESTING THE MAJOR PORTION OF SALE CONSIDERATION IN REC BONDS AND ALSO ITA NO. 597 5 / /MUM/2018. MANIBEN LAXMICHAND DEDHIA , MUMBAI. - 3 - IN A RESIDENTIAL FLAT. AO NOTICED THAT THE STAMP DUTY VALUATION OF THE PROPERTY SOLD BY THE ASSESSEE WAS RS. 1,00,89,765/ - AS ON 05.02.2011, ON WHICH STAMP DUTY WAS COLLECTED BY THE REGISTRATION DEPARTMENT. AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE STAMP DUTY SHOULD NOT BE ADOPTED FOR WORKING OF CAPITAL GAINS AS PER SECTION 50C OF THE ACT. 3. A.O DID NOT ACCEPT THE ASSESSEES CONTENTIONS AND MADE ADDITION AS PER THE VALU E DETERMINED U/S 50C . H OWEVER A.O REJECTED ASSESSEES PROPOSAL TO ADOPT STAMP VALUE AUTHORITY VALUE OF F.Y 2009 - 10, ON THE GROUND THAT PROPERTY WAS TRANSFERRED IN THE A.Y 2010 - 11 AND CAPITAL GAIN WAS TAXABLE IN A.Y 2010 - 11. HOWEVER, BOTH A.O AND CIT(A) D ECLINED THE ASSESSEES CLAIM. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND FOUND THAT BUYER APPROACHED TO ASSESSEE FOR NEGOTIATION OF PROPERTY ON 12 TH OCT 2010. THE FINAL AGREEMENT BETWEEN THE PARTIES WAS MADE ON 07 TH DECEMBER 2010 IDENTIFYING PROPERTY, PAR TIES AND CONSIDERATION. ALSO RS. 5,00,000/ - AND RS. 2,07,000 WAS RECEIVED AS ADVANCE VIDE CHEQUE DATED 07 TH DECEMBER ITA NO. 597 5 / /MUM/2018. MANIBEN LAXMICHAND DEDHIA , MUMBAI. - 4 - 2010 HAVING CHEQUE NUMBER 000604 AND 26 TH DECEMBER 2010 HAVING CHEQUE NUMBER 000605 RESPECTIVELY, AS AGREED BETWEEN THE PARTIES IN AGREEME NT DATED 07 TH DECEMBER, 2010. THE FINAL AGREEMENT BETWEEN THE PARTIES WAS REGISTERED WITH AUTHORITIES ON 05 TH DECEMBER 2011. 5. THE FOLLOWING DOCUMENTARY EVIDENCE WAS FIL ED BEFORE THE LOWER AUTHORITIES: 1. THE AGREEMENT BETWEEN BUYER AND SELLER IDENTIFYING PROPERTY, PARTIES TO AGREEMENT AND AMOUNT OF SALE CONSIDERATION DATED 07 TH DECEMBER 2010. 2. SALE DEED REGISTERED WITH AUTHORITIES DATED 05 TH FEBRUARY 2011. 3. RELEVANT PAGE OF STAMP DUTY VALUE OF YEAR 2010 ARRIVING AT RS. 72,03,771/ - . 4. RELEV ANT PAGE OF STAMP DUTY VALUE OF YEAR 2011 ARRIVING RS. 1,00,89,765/ - . 5. STAMP DUTY VALUATION REPORT BY VALUATION OFFICER OF RS. 85,58,000/ - . 6. LETTER OF AUTHORITY. 6. THE PROVISIONS OF SEC. 43CA OF IT ACT WHICH WAS NEWLY INTRODUCED IN FINANCE ACT 2013 S HALL BE APPLICABLE IN CASE OF TRANSFER OF OWNERSHIP OF PROPERTY BY ANY MODE. IN CASE, TRANSFER OF IMMOVABLE PROPERTY TAKES PLACE WITHOUT ITA NO. 597 5 / /MUM/2018. MANIBEN LAXMICHAND DEDHIA , MUMBAI. - 5 - REGISTRATION OF SALE DEED BUT BY WAY OF EXECUTION OF SALE AGREEMENT / POWER OF ATTORNEY OR BY WAY OF TRANSFER WITH THE REGULATORY AUTHORITY OR IN ANY OTHER MANNER, PROVISIONS OF SEC. 43CA SHALL BE APPLICABLE. THE PROVISO TO SUBSECTION (1) OF SEC. 43CA STATES THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF AN ASSET (OTHER T HAN A CAPITAL ASSET), BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES OF COMPUTING PROFITS AND GAINS FROM TRANSFER OF SUCH ASSET, BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A R ESULT OF SUCH TRANSFER. 6.1 FURTHER, SUBSECTION (3) & (4) OF SEC. 43CA PROVIDE TO ADO PT STAMP DUTY VALUE OF THE PROPERTY ASSESSABLE AS ON THE DATE OF ENTERING INTO SALE AGREEMENT INSTEAD OF THE VALUE ASSESSED AS ON THE DATE OF TRANSFER OF THE PROPERTY. SUB. SEC (3) AND SUB SEC. (4) OF SEC. 43CA READ AS UNDER: ITA NO. 597 5 / /MUM/2018. MANIBEN LAXMICHAND DEDHIA , MUMBAI. - 6 - WHERE THE DATE OF AGREEMENT FIXING THE VALUE OF CONSIDERATION FOR TRANSFER OF THE ASSET AND THE DATE OF REGISTRATION OF SUCH TRANSFER OF ASSET ARE NOT THE SAME, THE VALUE REFERRED TO IN SUB SECTION (1) MAY BE TAKEN AS THE VALUE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT FOR TH E PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ON THE DATE OF AGREEMENT FOR TRANSFER OF THE ASSET . 6.2 THUS, THE PROVISION OF NEW SEC. 43CA UNDER THE ACT INTRODUCING THE PROVISIONS FOR TAXABILITY OF TRANSFER OF IMMOVABLE PROPERTY (LAND OR BUILDING OR BOTH) HELD IN THE NATURE OF STOCK IN TRADE, IS ALSO APPLICABLE ON THE SIMILAR LINES WHICH ARE APPLICABLE FOR IMMOVABLE PROPERTY HELD IN THE NATURE OF CAPITAL ASSET UNDER SECTION 50C OF THE ACT. THUS, THE STAMP DUTY VALUE AS ON DATE OF INITIA L AGREEMENT IN THE YEAR 2010 CAN BE ADOPTED FOR THE PURPOSE OF SALE CONSIDERATION . 7 . IN VIEW OF THE ABOVE DISCUSSION, I DIRECT THE A.O TO COMPUTE CAPITAL GAIN BY TAKING STAMP DUTY VALUE AS ON DATE ENTERING AGREEMENT IN THE YEAR 2010, IN SO FAR AS IN THE YEAR OF ENTERING INTO AGREEMENT ASSESSEE HAD RECEIVED PART PAYMENT OF RS. 7,07,000/ - BY ACCOUNT PAYEE CHEQUE. A.O IS LIBERTY TO VERIFY THE FACT OF PAYMENT RECEIVED BY ACCOUNT PAYEE CHEQUE, I DIRECT ACCORDINGLY. ITA NO. 597 5 / /MUM/2018. MANIBEN LAXMICHAND DEDHIA , MUMBAI. - 7 - 8 . IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS INCLUDED HEREIN ABOVE. THIS ORDER PRONOUNCED IN OPEN COURT ON 13/ 11 /201 9 SD/ - ( R.C. SHARMA ) ACCOUNTANT MEMBER MUMBAI, DATED 13 /11 /20 1 9 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// 1 . / ( ASST. REGISTRAR) , / ITAT, MUMBAI 2 . OTHER MEMBER ON WHICH THE APPROVED DRAFT COMES