ARUN D. TEJUJA, MUMBAI V. ITO 18(1)(2), MUMBAI

ITA 6061/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1796 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice; Cost of acquisition
• Section: 143(3); 50C; 54F; 139

Judgement Text

D A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.6061 /MUM/2013 ( / ASSESSMENT YEAR : 2005-06) MR. ARUN D. TEJUJA, 17, RISHIKESH CO-OP HSG SOC., PLOT NO. 63, WORLI HILL ROAD, WORLI, MUMBAI 400 018. / V. I.T.O. 18(1)(2), 1ST FLOOR, PIRAMAL CHAMBER, MUMBAI 400 012. ./ PAN : AAEPT6984C ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY MS. DINKLE HARIYA REVENUE BY : SHRI A. RAMACHANDRAN / DATE OF HEARING : 20-10-2016 / DATE OF PRONOUNCEMENT : 06-12-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 6061/MUM/2013, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 15 TH JULY 2013 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 29, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2005-06, THE APPE LLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDE R DATED 28 TH DECEMBER, 2007 PASSED BY THE LEARNED ASSESSING OFFICER (HEREI NAFTER CALLED THE AO) U/S 143(3) OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALL ED THE ACT). ITA 6061/MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN TAKING THE SALE CONSIDERATION OF TWO FLAT AT RS. 59 ,64,200/- AS VALUED BY D.V.O. INSTEAD OF RS. 53,40 600/- AS PER STAMP DUTY READY RECKONER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN TAKING THE REINVESTMENT IN FLAT AT RS, 25,00,000/- INSTEAD OF RS 30,51,846/- (I.E. RS. 5,51,846/- IS STAMP DUTY, REG ISTRATION CHARGES & OTHER MISCELLANEOUS EXPENSES.) 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONCLUDING AT PARAGRAPH NO. 21 OF ORDER THAT TAXABL E CAPITAL GAIN IS RS. 5,91,414/- IN THE HANDS OF APPELLANT WITHOUT CONSIDERING THE STAMP DUTY, REGISTRATION CHARGES & OTHER EXPENS ES. 4. THE LEARNED ASSESSING OFFICER AND THE COMMISSION ER OF INCOME TAX (APPEAL) ERRED IN TAXING THE CAPITAL GAI N OF RS. 3,21,183/- ON SALE OF JEWELLERY THOUGH THE SAID CAP ITAL GAIN WAS RE-INVESTED IN PURCHASE OF FLAT ALLOWABLE U/S 54F. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FROM BUSINESS,CAPITAL GAINS AND OTH ER SOURCES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS EARNED L ONG TERM CAPITAL GAIN ON SALE OF TWO FLATS AND JEWELLERY. THE CAPITAL GAIN WORKED OUT BY THE ASSESSEE ARE AS UNDER:- (A) CAPITAL GAIN ON SALE OF FLATS SALE CONSIDERATION RS. 42,00,000 LESS: INDEXED COST ACQUISITION RS. 28,72,586 RS. 13,27,414 (B) CAPITAL GAIN ON SALE OF JEWELLERY SALE CONSIDERATION RS. 7,88,000 LESS: INDEXED COST OF ACQUISITION RS. 4,61,761 RS. 3,21,183 ITA 6061/MUM/2013 3 GROSS LONG TERM CAPITAL GAIN RS. 16,48,597 LESS: DEDUCTION U/S 54F ON PURCHASE OF FLAT RS. 1 6,48,597/- ON 14.09.2005 FOR RS. 25 LACS DEDN. IS RESTRICTED TO CAPITAL GAIN ------------------- - LONG TERM CAPITAL GAIN RS. NIL ________________ THE ASSESSEE HAD SOLD TWO FLATS. THE ASSESSEE WAS ASKED TO FURNISH THE DOCUMENTS RELATING TO THE SALE INCLUDING REGISTRATI ON DOCUMENTS. ON PERUSAL OF THE AGREEMENT AND REGISTRATION DOCUMENTS SUBMITT ED BY THE ASSESSEE, IT WAS OBSERVED BY THE AO THAT IN RESPECT OF FLAT NO. 101,SUN MIST C CHS LTD, PLOT NO. 284, CTS 1435(PART) SHERLEY RAJAN ROAD, BA NDRA(WEST), MUMBAI- 400050 , THE MARKET VALUE DETERMINED BY THE STAMP A UTHORITIES WAS RS. 20,23,483/- AS AGAINST RS. 16 LACS SHOWN BY THE ASS ESSEE , WHILE IN RESPECT OF FLAT NO. 102,SUN MIST C CHS LTD, PLOT NO. 284, CT S 1435(PART) SHERLEY RAJAN ROAD, BANDRA(WEST), MUMBAI-400050 , THE STAMP AUTHORITIES HAVE DETERMINED THE MARKET VALUE AT RS. 33,11,148/- AS A GAINST 26 LACS SHOWN BY THE ASSESSEE. THUS IN RESPECT OF BOTH THESE FLATS T HE MARKET VALUE WORKED OUT TO RS. 53,40,611/- AS AGAINST RS.42 LACS SHOWN BY T HE ASSESSEE AND HENCE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN, THE VAL UE DETERMINED BY THE STAMP AUTHORITIES WAS ADOPTED U/S 50C OF THE ACT. T HE A.O. ACCORDINGLY COMPUTED THE CAPITAL GAIN BY INVOKING THE PROVISION S OF SECTION 50C OF THE ACT AT RS. 53,40,611/- AS AGAINST RS. 42 LACS SHOWN BY THE ASSESSEE. THE ASSESSEE SUBMITTED COPIES OF PURCHASE AGREEMENTS OF THESE FLATS AND ALSO SUBMITTED THAT THE ASSESSEE HAD NOT RECEIVED ANY AM OUNT MORE THAN THE AMOUNT DECLARED TO BE ACTUAL SALE CONSIDERATION . T HE ASSESSEE REQUESTED AO THAT THE AN APPROVED VALUER MAY BE APPOINTED TO VAL UE THE SAID PROPERTY AS IN THE OPINION OF THE ASSESSEE, THE AMOUNT TAKEN BY TH E STAMP AUTHORITIES WAS ARBITRARY. THE AO REJECTED THE CONTENTION OF THE AS SESSEE AS THE ASSESSEE DID NOT CHALLENGE THE VALUATION MADE BY THE STAMP AUTHO RITIES WHILE PAYING STAMP DUTY. THUS, THE AO REJECTED THE DEMAND OF THE ASSESSEE TO REFER THE ITA 6061/MUM/2013 4 MATTER TO THE VALUATION OFFICER. FURTHER, WITH RESP ECT TO THE CLAIM OF DEDUCTION U/S 54/54F OF THE ACT BY THE ASSESSEE, THE A.O. OBS ERVED THAT ASSESSEE HAS FILED RETURN OF INCOME ON 17 TH OCTOBER, 2005 WHILE DUE DATE FOR FILING RETURN OF INCOME WAS ON 31 ST JULY, 2005 AS PROVIDED U/S 139(1) OF THE ACT BUT C BDT EXTENDED TIME U/S. 139(1) OF THE ACT UPTO 31 AUGUS T, 2005 VIDE CIRCULAR NO.220/1/2005 DATED 27.07.2005. THE AO OBSERVED THA T THE ASSESSEE HAS NEITHER UTILIZED THE CAPITAL GAIN FOR THE PURPOSE O F PURCHASE OF RESIDENTIAL HOUSE ON OR BEFORE THE DATE FOR FILING OF RETURN NO R HAS DEPOSITED THE SAME WITH SPECIFIED CAPITAL GAIN ACCOUNT WITH BANK , HEN CE DEDUCTION U/S 54/54F OF THE ACT WAS NOT ALLOWED AND CAPITAL GAIN WAS COM PUTED BY THE AO , VIDE ASSESSMENT ORDER DATED 28.12.2007 PASSED U/S 143(3) OF THE ACT, AS UNDER:- SALE CONSIDERATION OF FLATS (AS DISCUSSED ABOVE) FLAT NO. 101 RS. 20,24,463 FLAT NO. 102 RS. 26,00,000 RS. 53,40,611 LESS: INDEXED COST OF ACQUISITION (AS PER ASSESSEES OWN WORKING) RS. 28,72,586 RS.24,68,025 LESS: EXEMPT U/S 54/54F RS. NIL ------------------ LONG TERM CAPITAL GAIN RS.24,68,025 4.AGGRIEVED BY THE ASSESSMENT ORDER DATED 28.12.200 7 PASSED BY THE A.O. U/S 143(3) OF THE ACT, THE ASSESSEE FILED FIRST AP PEAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A) , THE ASSESSEE CONTENDED T HAT THE MATTER SHOULD BE REFERRED TO THE DVO AS THE A.O. HAS ADOPTED THE VAL UATION AS PER THE STAMP AUTHORITIES I.E. RS. 53,40,611/- AS AGAINST ACTUAL SALE CONSIDERATION OF RS. 42 LACS. IT WAS SUBMITTED THAT STAMP DUTY VALUE IS ARB ITRARY AND WITHOUT ANY BASIS. THE MATTER WAS REMANDED BY LEARNED CIT(A) TO THE A.O. TO GET THE PROPERTY VALUED BY DVO , AND THE DVO DETERMINED THE VALUATION OF THESE ITA 6061/MUM/2013 5 PROPERTIES AT RS. 22,66,000/- AND RS. 36,98,000/- , TOTALING RS. 59.64 LACS FOR TWO FLATS INSTEAD OF RS. 53,40,611/- AND ACCORDINGL Y THE A.O. IN HIS REMAND REPORT WORKED OUT THE CAPITAL GAIN AT RS. 30,91,414 /- , INSTEAD OF RS. 24,68,025/- AS WAS DONE BY THE AO IN THE ASSESSMENT ORDER. WITH RESPECT TO DEDUCTION UNDER SECTION 54/54F OF THE ACT , THE SAM E WAS ALLOWED TO THE ASSESSEE BY THE LEARNED CIT(A) TO THE EXTENT OF RS. 25,00,000/- WHICH WAS INVESTED BY THE ASSESSEE ON 23-09-2005 FOR ACQUIRIN G NEW ASSET BEFORE FILING OF RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATIO N ON 17-10-2005, AS THE SAME WAS INVESTED WITHIN EXTENDED TIME FOR FILING R ETURN OF INCOME US 139(4) OF THE ACT . HOWEVER, THE A.O. WAS DIRECTED BY LEAR NED CIT(A) TO TAX THE BALANCE CAPITAL GAINS AMOUNTING TO RS. 5,91,414/- I N THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, VIDE APP ELLATE ORDERS DATED 15-07- 2013 PASSED BY LEARNED CIT(A). 6.AGGRIEVED BY THE APPELLATE ORDERS DATED 15-07-201 3 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED SECOND APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE MARKET VALUE OF THE PROPERTY SHOULD BE ADOPTED AS PER THE VALUE ADOPTED BY THE STAMP AUTHORITIES WHICH WAS DETERMINED AT RS. 53,40,611/- INSTEAD OF RS. 59,64,000/-ADOPTED BY THE DVO, AS AGAINST ACTUAL SALE CONSIDERATION OF RS. 42 LACS FOR BOTH THE FLATS. IT WAS CONTENDED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS INVESTED RS. 30,51,846/- IN THE NEW FLAT INSTEA D OF RS. 25 LACS I.E RS. 5,51,846 FOR STAMP DUTY, REGISTRATION CHARGES AND O THER MISCELLANEOUS EXPENSES, WHICH HAS NOT BEEN ALLOWED BY LEARNED CIT (A). IT WAS SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN NOT ALLOWI NG INVESTMENT OF RS. 5,51,846/- WHILE COMPUTING DEDUCTION U/S 54/54F OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE HAD ALSO EARNED LONG TE RM CAPITAL GAIN ON SALE OF JEWELLERY THOUGH THE SAID CAPITAL GAIN WAS REINVE STED IN PURCHASE OF FLAT AND THE SAME IS NOT CONSIDERED FOR THE PURPOSES OF DEDU CTION U/S 54F OF THE ACT. ITA 6061/MUM/2013 6 THE ASSESSEE HAS MADE INVESTMENT IN THE NEW PROPERT Y ON 23-09-2005 I.E. BEFORE THE FILING OF RETURN OF INCOME ON 17 TH OCTOBER, 2005. IT WAS SUBMITTED THAT THE DVO VALUATION IS HIGHER THAN THE STAMP DUT Y VALUATION. STAMP DUTY VALUATION IS TO BE ADOPTED AS PER PROVISIONS OF SEC TION 50C(3) OF THE ACT , AS AGAINST WHICH THE ACTUAL CONSIDERATION RECEIVED WAS RS. 42 LACS. 8. THE LD. D.R. RELIED ON THE ORDER OF THE LD. CIT (A). 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASS ESSEE HAS SOLD TWO FLATS FOR A TOTAL CONSIDERATION OF RS. 42 LACS. STAMP DUTY A UTHORITIES HAVE VALUED THE TWO FLATS AT RS. 50,40,611/- WHILE THE DVO HAS DETE RMINED THE VALUE OF THE TWO FLATS AT RS. 59,64,000/-. THE DVO VALUATION IS HIGHER THAN THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES. THE STAMP DU TY AUTHORITIES HAVE ADOPTED THE FULL VALUE OF THE TWO FLATS AT RS. 50,4 0,611/- AND IN VIEW OF PROVISIONS OF SECTION 50C(3) OF THE ACT, THE VALUE AS ADOPTED BY STAMP DUTY AUTHORITIES SHALL HAVE TO BE ADOPTED TO BE FULL VAL UE OF CONSIDERATION OF THE PROPERTY FOR COMPUTING CAPITAL GAINS UNDER PROVISIO NS OF THE ACT , AS THE VALUATION ADOPTED BY DVO IS HIGHER THAN STAMP DUTY AUTHORITIES VALUATION. THE ASSESSEE IS ENTITLED FOR THE DEDUCTION U/S 54/5 4F OF THE ACT IN ACCORDANCE WITH LAW FOR ALL THE INVESTMENT MADE IN THE NEW ELIGIBLE BEFORE THE DATE OF FILING OF RETURN OF INCOME AS PROVIDED U/S 139 OF THE ACT OR WHEREIN THE AMOUNT IS DEPOSITED IN SPECIFIED CAPITAL GAINS ACCOUNT MAINTAINED WITH BANK BEFORE THE TIME STIPULATED U/S 139(1) OF THE A CT . THE ASSESSEE HAS STATED TO HAVE INVESTED IN THE NEW RESIDENTIAL PROP ERTY ON 23 SEPTEMBER, 2005 WHILE THE DUE DATE OF FILING RETURN AS EXTENDE D BY CBDT WAS 31.08.2005 BUT THE SAID INVESTMENT WAS MADE BEFORE THE EXPIRY OF DATE OF FILING OF RETURN OF INCOME AS STIPULATED U/S 139(4) OF THE ACT AND T HE ASSESSEE HAD DILED RETURN OF INCOME ON 17-10-2005 WHEREIN THE INVESTME NT WAS MADE PRIOR TO FILING OF RETURN OF INCOME WITH THE REVENUE, AND HE NCE THE ASSESSEE WILL BE ITA 6061/MUM/2013 7 ENTITLED FOR THE DEDUCTION. THE LD. CIT(A), ON APP EAL ALLOWED THE DEDUCTION TO THE TUNE OF RS. 25 LACS WHILE IT IS THE CLAIM OF TH E ASSESSEE THAT THE ASSESSEE HAS FURTHER SPENT AN AMOUNT OF RS. 5,51,846/- TOWAR DS STAMP DUTY, REGISTRATION CHARGES AND OTHER MISCELLANEOUS EXPENS ES IN THE NEW HOUSE PROPERTY. IN OUR VIEW, THIS CLAIM OF THE ASSESSEE F OR BEING ELIGIBLE FOR HIGHER DEDUCTION U/S 54/54F OF THE ACT ON THE GROUNDS THAT THE SAID SUM WAS SPENT BEFORE THE FILING OF RETURN OF INCOME ON 17.10.2005 WITHIN TIME STIPULATED U/S 139(4) OF THE ACT REQUIRED VERIFICATION BY THE AO A ND HENCE WE ARE INCLINED TO SET ASIDE AND RESTORE THIS ISSUE TO THE FILE OF TH E A.O. WITH DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE OF HAVING SPENT THE AMOUN T OF RS. 5,51,846/- TOWARDS STAMP DUTY, REGISTRATION AND OTHER MISCELLA NEOUS EXPENSES WITH RESPECT TO THE ACQUISITION OF ELIGIBLE NEW ASSET, P RIOR TO THE FILING OF RETURN OF INCOME ON 17.10.2005. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE ALL NECESSARY AND RELEVANT EVIDENCES AND EXPLANATION BEFORE THE A .O. WHICH SHALL BE ADMITTED BY THE A.O. FOR HIS VERIFICATION. THE ASSE SSEE CLAIM OF ALLOWABILITY OF DEDUCTION U/S 54F OF THE ACT WITH RESPECT TO SALE O F JEWELLARY U/S 54F OF THE ACT ALSO NEEDS TO BE SET ASIDE AND RESTORED TO THE FILE OF THE A.O. FOR VERIFICATION WITH A DIRECTION TO DECIDE THE ISSUE I N ACCORDANCE WITH THE PROVISIONS OF SECTION 54/54F OF THE ACT AND COMPUTE THE DEDUCTION ON MERITS, KEEPING IN VIEW THE INVESTMENT MADE IN NEW ELIGIBLE ASSET AS PROVIDED U/S 54/54F OF THE ACT BY 17-10-2005 I.E. BEFORE THE DAT E OF FILING OF RETURN OF INCOME WITH REVENUE, AS HELD TO BE ALLOWABLE BY REC ENT JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HUMAYUN SULEMAN ME RCHANT V. CCIT , (2016) 387 ITR 421(BOM.). NEEDLESS TO SAY THAT THE A.O. SHALL PROVIDE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE AS SESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W. WE ORDER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 6061/MUM/2013 FOR THE ASSESSMENT YEAR 2005-06 IS AL LOWED FOR STATISTICAL PURPOSES. ITA 6061/MUM/2013 8 11. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2016. # $% &' 06-12-2016 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 06 -12-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI