I.T.O., 3(4), Lucknow V. Shri Sunil Kumar Soi, Lucknow

ITA 6/LKW/2012

• Counselvise Citation: 623714 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-06-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Capital asset; Revision of order
• Section: 147; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 0 6/LKW/2012 ASSESSMENT YEAR: 2006 - 07 INCOME TAX OFFICER 3(4) LUCKNOW V. SHRI. SUNIL K UMAR SOI S - 7, BASERA PLASH NEW HYDERABAD LUCKNOW PAN: ADBPS1523M (APP ELL ANT) (RESPONDENT) ITA NO. 07/LKW/2012 ASSESSMENT YEAR: 2006 - 07 INCOME TAX OFFICER 3(4) LUCKNOW V. SHRI. ANIL SOI S - 7, BASERA PLASH NEW HYDERABAD LUCKNOW PAN: ADBPS1524 (A PP ELL ANT) (RESPONDENT) ITA NO. 08/LKW/2012 ASSESSMENT YEAR: 2006 - 07 INCOME TAX OFFICER 3(4) LUCKNOW V. SHRI. BRIGITTA SOI S - 7, BASERA PLASH NEW HYDERABAD LUCKNOW PAN: APXPS0895R (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. ALOK MITRA, D.R. R ESPONDENT BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 13 0 6 2014 DATE OF PRONOUNCEMENT: 23 0 6 2014 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEES AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A) ON COMMON GROUNDS. FOR THE SAKE OF REFERENCE, THE GROUNDS OF APPEAL RAISED IN THE CASE OF SHRI. SUNIL KUMAR SOI IN ITA NO. 06/LKW/2012 ARE REPRODUCED AS UNDER: - 1 . THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN TREATING THE CAPITAL GAINS ON SALE OF PROPERTY NO 36, AMRITA S HERGILL MARG, NEW DELHI ON 09 - 11 - 2005 AS LONG TERM CAPITAL GAINS IGNORING THE FACT THAT THE SAID PROPERTY WAS CONVERTED INTO FREE HOLD PROPERTY ONLY ON 09 - 08 - 2005 AND WAS SOLD AS FREE HOLD PROPERTY WITHIN 3 MONTHS ON 09 - 11 - 2005. 2 . THE LD. CIT (A) HAS ERRED O N FACTS AND IN LAW IN NOT FOLLOWING THE JUDGMENT OF THE KARNATAKA HIGH COURT DELIVERED IN THE CASE OF CIT VS DR. V.V. MODY 218 ITR 001 WHEREIN THE FACTS AND ISSUE INVOLVED ARE SIMILAR TO THAT OF INSTANT CASE. 3 . THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW I N TREATING THE CAPITAL GAINS ON PROPERTY SOLD AS LONG TERM CAPITAL GAIN ONLY ON THE GROUND THAT IT WAS SO ASSESSED IN THE CASE OF CO - SHARER SH. VIJAY KUMAR SOI WITHOUT APPRECIATING THAT THE CASE OF SH. VIJAY KUMAR SOI HAS BEEN REOPENED U/S 147 OF THE IT AC T ON THIS ISSUE AND RE - ASSESSMENT PROCEEDINGS ARE PENDING THEREIN. 2 . THE LD. D.R. PLACED RELIANCE UPON THE ORDERS OF THE ASSESSING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDERS OF THE LD. CIT(A) AND SUBMITTED THAT AN ID ENTICAL ISSUE WAS RAISED IN ITA NO.278/LKW/2014 IN THE CASE OF LATE VIJAY KUMAR SOI THROUGH L/H SHRI. SUNIL KUMAR SOI FOR ASSESSMENT YEAR 2006 - 07 AND THE FINDINGS OF THE TRIBUNAL IN THAT CASE MAY BE APPLIED TO THESE CASES ALSO. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : 3 . HAVING GIVEN A THOUGHTFUL C ONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT AN IDENTICAL ISSUE WAS RAISED IN ITA NO.278/LKW/2014 IN THE CASE OF LATE VIJAY KUMAR SOI THROUGH L/H SHRI. SUNIL KUMAR SOI FOR ASSESSMENT YEAR 2006 - 07 AND THE TRIBUNAL VIDE ITS ORDER DATED 13.6.2014 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: - 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THI S ISSUE HAS BEEN DECIDED BY CIT(A) AS PER PARAS 6, 6.1 AND 6.2 OF HIS ORDER AND FOR THE SAKE OF READY REFERENCE, THE SAME ARE REPRODUCED BELOW: 6. I HAVE CONSIDERED THE MATTER. IT IS NOTED THAT THE HON'BLE ITAT WHILE QUASHING THE ORDER U/S 263 OF THE C IT - I, LUCKNOW PASSED IN THE CASE OF THE APPELLANT, SH. VIJAY KUMAR SOI HELD THAT THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS ON THE FACTS OF THE CASE AND THE PROVISIONS OF SECTION 263 ARE NOT APPLICABLE. THE SAME ISSUE WAS CONSIDERED BY MY PREDECESSOR IN TH E CASE OF OTHER THREE CO - OWNERS SH. SUNIL KUMAR SOI (SON), SH. ANIL KUMAR SOI (SON) AND SMT. BRIGITTA SOI (WIFE). VIDE APPELLATE ORDERS A.NO. CIT(A) - I/LKO/10 - LL/204 TO 206 DATED 07.10.2011 THE OT(A) HAS DECIDED THE ISSUE IN FAVOUR OF OTHER THREE CO - OWNERS. 6.1 THE HON'BLE ALLAHABAD HIGH COURT RECENTLY IN CASE OF RAMA RANI KALIA, 358 ITR 499 HAS HELD THAT CONVERSION OF LEASEHOLD PROPERTY TO FREEHOLD PROPERTY AMOUNTS TO IMPROVEMENT OF TITLE SINCE THE LESSEE HAS RIGHTS AS OWNER OF THE PROPERTY SUBJECT TO LEA SE COVENANTS, EVEN PRIOR TO SUCH CONVERSION. ACCORDINGLY, SUCH CONVERSION WOULD NOT HAVE ANY IMPACT ON DETERMINATION OF HOLDING PERIOD FOR CLASSIFYING THE CAPITAL ASSET AS LONG TERM CAPITAL ASSET OR SHORT TERM CAPITAL ASSET. THE HIGH COURT WHILE DECIDING T HE ISSUE MADE REFERENCE TO THE DECISION OF THE SUPREME COURT IN THE CASE OF NARANG DAIRY PRODUCTS, 219 ITR 478 RELIED PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : ON BY THE CIT(A) / WHEREIN THE SUPREME COURT OBSERVED THAT THE DEFINITION OF TRANSFER U/S 2(47) OF THE ACT IS AN INCLUSIVE DEFINITION AND D OES NOT RULE OUT OTHER MODE OF TRANSFERS. THE HIGH COURT ALSO REFERRED TO THE DERISION, OF THE KARNATAKA HIGH COURT IN THE CASE OF V.V. MODI (SUPRA). THE HIGH COURT REFERRED TO THE DEFINITION OF THE SHORT TERM CAPITAL ASSET AND LONG TERM CAPITAL ASSET UNDER THE ACT AND POINTED OUT THE DIFFERENCE BETWEEN TWO IS THE PERIOD OVER WHICH THE PROPERTY IS HELD AND NOT THE NATURE OF THE TITLE OVER THE PROPERTY AND THAT THE LESSEE OF THE PROPERTY HAS RIGHTS AS OWNER OF THE PROPERTY SUBJECT TO COVENANTS OF THE LEA SE, FOR ALL PURPOSES. HE MAY SUBJECT TO COVENANTS OF THE LEASE DEED TRANSFER THE LEASEHOLD RIGHTS OF THE PROPERTY WITH THE CONSENT OF THE LESSER. THE CONVERSION OF THE RIGHTS OF THE LESSEE IN THE PROPERTY FROM HAVING LEASEHOLD TO FREEHOLD IS ONLY BY WAY OF IMPROVEMENT OF HER RIGHTS OVER THE PROPERTY WHICH SHE ENJOYED. IT WAS FINALLY HELD THAT THE CONVERSION OF THE RIGHTS OF THE LESSEE IN THE PROPERTY FROM LEASEHOLD TO FREEHOLD IS ONLY BY WAY OF IMPROVEMENT OF HER RIGHTS OVER THE PROPERTY THAT SHE ENJOYED ; WHICH WOULD NOT HAVE ANY EFFECT ON THE PERIOD OF HOLDING WHICH WOULD RUN FROM THE ORIGINAL DATE OF ACQUIRING THE LEASEHOLD PROPERTY. RESPECTFULLY FOLLOWING THE JUDGMENT I HOLD THAT THE GAIN ARISING ON SALE OF PROPERTY IS LONG TERM CAPITAL GAINS AND THE APPELLANT IS ENTITLED FOR DEDUCTION U/S 54 WHICH HAS BEEN DENIED BY THE AO TREATING THE CAPITAL GAINS AS SHORT TERM. GROUND NOS. 3 & 4 ARE DECIDED IN FAVOUR OF THE APPELLANT. 6.2 IN GROUND NOS. 1 & 2 THE APPELLANT OBJECTED TO THE INITIATION OF PROCEEDINGS U/S 147 AND SUBMITTED THAT THE SAME BEING WITHOUT JURISDICTION IS VOID AB - INITIO, BAD IN LAW AND THE RE - ASSESSMENT ORDER SO FRAMED BE ANNULLED. SINCE THE APPELLANT HAS BEEN ALLOWED RELIEF ON MERITS WHILE DECIDING GROUND NOS. 3 & 4, GROUND NOS. 1 & 2, ARE NOT BEING ADJUDICATED. 4.1 FROM THE ABOVE PARAS OF CIT(A), IT IS FOUND THAT THE CIT(A) HAS FOLLOWED THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS SMT. RAMA RANI KALIA [2013] 358 ITR 499 (ALL), WHE REIN IT WAS HELD THAT CONVERSION OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : LEASEHOLD PROPERTY TO FREEHOLD PROPERTY AMOUNTS TO IMPROVEMENT OF TITLE AND THEREFORE, SUCH CONVERSION COULD NOT HAVE ANY IMPACT ON DETERMINATION OF HOLDING PERIOD FOR QUALIFYING LONG TERM CAPITAL GAIN OR SHORT TERM CAPI TAL GAIN. SINCE THE ORDER OF CIT(A) IS BY FOLLOWING THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 4 . RESPECTFULLY FOLLOWING THE SAME, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDERS OF THE LD. CIT(A) IN DECIDING THE IMPUGNED ISSUE IN FAVOUR OF THE ASSESSEE, AS THE SAME IS SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SMT. RAMA RANI KALIA (SUPRA) . 5 . IN THE RESULT, APPEAL S OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.6.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD JUNE , 2014 JJ: 1306 COPY FORWARDED TO: 1 . APPELLANT 2 . RESP ONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )