YOGESH SUNDERLAL SHAH, MUMBAI V. DCIT 24(1), MUMBAI

ITA 6093/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2777 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 22-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Benefit of exemption
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SANJAY ARORA , A M AND SHRI AMARJIT SINGH, JM ./ I.T.A. NO. 6093 /MUM/2014 ( / ASSESSMENT YEAR: 2008 - 09 ) YOGESH SUNDERL AL SHAH, F/107, SHREEPAL INDUSTRIAL ESTATE, NEW OSHIVARA BRIDGE, S. V. ROAD, JOGESHWARI (W), MUMBAI - 400 102 / VS. DY. CIT - 24(1), C/13, PRATYAKSHKAR BHAVAN, BKC, BANDRA (E), MUMBAI - 400 051 ./ ./ PAN/GIR NO. AAKPS 2779 L ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI K. GOPAL , ADV. / RESPONDENT BY : SHRI AIRIJU JAIKARAN / DATE OF HEARING : 22.6.2016 / DATE OF PRONOUNCEMENT : 30 .6.2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 34 , MUMBAI (CIT(A) FOR SHORT) DATED 06.8.2014 , CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C ) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2008 - 09 VIDE ORDER DATED 29.4.213 . 2. THE ISSUE IN THE INSTANT APPEAL IS THE SUSTAINAB ILITY OR OTHERWISE IN LAW OF THE PENALTY U/S. 271(1)(C) OF THE ACT, I.E., IN THE GIVE N FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO. 6093/MUM/2014 (A.Y. 2008 - 09) YOGESH SUNDERLAL SHAH VS. DY. CIT THE FACTS ARE ADMITTED AND UNDISPUTED. THE ASSESSEE - INDIVIDUAL SOLD HIS RESIDENTIAL PREMISES DURING THE YEAR, AND ACQUIRED ANOT HER ON TRANSFERRABLE TENANCY (FOR , AS STATED, 999 YEARS) BASIS, CLAIMING EXEMPTION U/S. 54 OF THE ACT ON THE CAPITAL GAINS ARISING ON THE SAID SALE IN RESPECT OF THE NEW RESIDENTIAL FLAT. THIS WAS DENIED BY THE REVENUE, WHOSE CASE STANDS UPHELD BY THE T RIBUNAL PER ITS DECISION DATED 21.9.2012 (IN ITA NO. 1876/MUM/2012/COPY ON RECORD). T HE TRIBU NAL DECIDED THE ISSUE AGAINST THE ASSESSEE HOLDING THAT THE WORD PURCHASE AS OCCURRING IN SECTION 54, HOWSOEVER W IDE , HAS ITS LIMITS IMPLICIT THEREIN, I.E., WOULD NOT EXTENT TO INCLUDE A CASE WHERE A PERS ON HOLDS TENANCY RIGHTS, EVEN IF FOR AN EXTENDED P ERIOD, AND WHICH IS OTHERWISE LIABLE TO BE CONSIDERED AS A CAPITAL ASSET (REFER : CIT VS. KHIMLINE PUMP S LTD. [ 2002 ] 258 ITR 459 (BOM) ; CADELL WEARING MILL CO. LTD. VS. UOI [2001] 249 ITR 265 (BOM) ). FURTHER, THAT THE EXTENDED MEANING OF THE WORD OWNER WOULD NOT INCLUDE A DEEMED OWNER, SO THAT REFERENCE BY THE ASSESS EE TO THE PROVISION S OF SECTION 27(IIIB) AND SECTION 269UA(F) WAS , IN ITS VIEW , OF NO MOMENT. RELIANCE STANDS PLACED BY IT ON THE DECISIONS IN THE CASE OF CIT VS. T. N. ARAVINDA REDDY [ 1979 ] 120 ITR 46 (SC) ; C IT V S. G OPALDAS H. HANSRAJANI [1 999 ] 239 ITR 52 3 (BOM); AND HAMEED JAFFERY VS. CIT [1997] 227 ITR 724 (BOM) , EACH EXPLAINING THE SCOPE OF THE WORD PURCHASE AND , FURTHER , ONLY IN THE CONTEXT OF SECTION 54 ITSELF. THE WELL - SETTLED PRINCIPLE OF INTERPRETATION OF STATUTE S , I.E., THAT W H ERE TWO VIEWS ARE P OSSIBLE, THE C OURT SHALL BE INCL INED TO FAVOUR ONE WHICH IS MORE BENEFICIAL TO THE SUBJECT (ASSESSEE), WAS ALSO FOUND BY IT AS INAPPLICABLE IN - AS - MUCH AS THERE WAS NO AMBIGUITY IN THE LANGUAGE OF THE PROVISION, EMPLOYING THE WORD PURCHASE AND CONSTRUCT ION QUA THE NEW CAPITAL ASSET, SO THAT THE BENEFIT OF EXEMPTION WAS ONLY WHERE THE SAME WAS ACQUIRED BY EITHER OF THE TWO SPECIFI ED MODES . FURTHER, THE SAID PRINCIPLE IS EVEN OTHERWISE NOT APPLICABLE IN CASE OF AN EXEMPTION PR O VISION, WHICH IS TO BE STRIC TLY CONSTRUED, ADVERTING TO THE DECISION BY THE A PEX C OURT IN NOVA PAN INDIA LTD. (REPORTED AT 3 SCR 549). THE PENALTY BEING LEVIED AND CONFIRMED ON THE SAME BASIS, THE ASSESSEE IS IN SECOND APPEAL. 3 ITA NO. 6093/MUM/2014 (A.Y. 2008 - 09) YOGESH SUNDERLAL SHAH VS. DY. CIT 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL O N RECORD. IN OUR VIEW, THE ASSESSEE STANDS TO SUCCEED. THAT A PLAUSIBLE VIEW SHALL SAVE PENALTY IS TRITE LAW , AND FOR WHICH CASE LAW IS LEGION , TO SOME OF WHICH WE MAY REFER TO , AS FOLLOWS: M AK DATA (P.) LTD. V S . CIT [2013] 358 ITR 593 (SC) ; UNION OF INDI A V. DHARMENDRA TEXTILE PROCESSORS [ 2008] 306 ITR 277 (SC); K.P. MADHUSUDHANAN VS. CIT [2001] 251 ITR 99 (SC); B.A. BALASUBRAMANIAM AND BROS V. CIT [ 1999 ] 236 ITR 977 (SC); ADDL. CIT VS. JEEVAN LAL SHAH [1994] 205 ITR 244 (SC); CIT VS. NATHULAL AGARWALA & SONS [1985] 153 ITR 292 (PAT)(FB) . WHAT THE ASSESSEE HA S ACQUIRED ( AT A COST OF RS.185 LACS, ALSO INCURRING THE OBLIGATION FOR A P EPPER CO R N RENT OF RS.500/ - PER MONTH) , IS AN INTEREST IN A RESIDENTIAL FLAT, WHICH CAN I TSELF BE TERMED AS A N IMMOVABLE PROPE RTY, WITH THE ACQUISITION THUS FURTHER QUALIFYING AS A TRANSFER U/S. 2(47) O F THE ACT. THE A PEX C OURT HA S CLARIFIED PER ITS DECISIONS IN THE CASE OF C IT VS. P ODAR CEMENT (P) L TD. [1 997 ] 226 ITR 0625 (SC) ; R. B. J ODHA MAL KUTHILAL VS. CIT [ 1971 ] 82 ITR 570 (SC) ; AS WELL AS THE HON'BLE JURISDICTIONAL HIGH COURT IN C IT VS. DR . L AXMICHAND NARPAL NAGDA [ 1995 ] 211 ITR 804 (B O M) , THAT AN OWNER IS A PERSON WHO EXERCISE S THE RIGHT S OF A N OWNER IN HIS OWN RIGHT , AND THE LEGAL TITLE TO THE PRO PERTY WAS NOT NECESSARY. THE QUESTION THAT THEREFORE ARISES FOR CONSIDERATION, AND AS RIGHTLY POINTED BY THE TRIBUNAL, IS IF S. 54 CONTEMPLATES OWNERSHIP BY OTHER THAN THE SPECIFIED MODES (OF PURCHASE AND CONSTRUCTION ), OR COULD INCLUDE OTHER MODES, AS BY TRANSFER OF PERPETU AL INTEREST THEREIN , AS WELL . CONSIDERED THUS, THE ASSESSEES CLAIM MAY PERHAPS EVEN NOT QUALIFY TO BE REGARDED AS WRONG PER SE , BUT ONLY A DIFFERENT, ALBEIT PLAUSIBLE , VIEW. W E HAVE, FURTHER, IN ARRIVING AT OUR FOREGOING DECISION, HOLDING NON - EXIGIBILITY TO PENA LTY IN THE PRESENT CASE, ALSO REFERRED TO AND CONSIDERED THE DECISIONS RELIED UPON BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS (REFER PARA 2) . NONE OF THEM PERTAIN TO A CASE OF PERPETUAL TENANCY, WHICH OBTAINS IN THE INSTANT CASE. THOUGH, SURELY, THE ASSESS EE OUGHT TO HAVE PER ITS RETURN OF INCOME (PB PGS. 2 - 3) CLARIFIED THIS ASPECT, STATING CLEARLY OF THE 4 ITA NO. 6093/MUM/2014 (A.Y. 2008 - 09) YOGESH SUNDERLAL SHAH VS. DY. CIT PURCHASE BEING ON TRANSFERABLE TENANCY BASIS, THE FACT OF THE MATTER IS THAT HE HAS TAKEN A CONSIDERED , POSSIBLE VIEW OF THE MATTER, ESTABLISHING HIS BO NA FIDES . WHY , THE TRIBUNAL HAS ITSELF IN ARCHANA PARASRAMPURIA V. ITO [2015] 68 SOT 550 (MUM) (COPY ON RECORD) UPH E LD THE CLAIM FOR EXEMPTION U/S. 54 ON A CLAIM MADE ON ACQUISITION OF RESIDENTIAL PROPERTY ON TRANSFERABLE TENANCY BASIS. FURTHER, THE FACT TH AT THE APPEAL AGAINST THE ORDER BY THE TRIBUNAL IN THE INSTANT CASE STANDS ADMITTED BY THE HONBLE COURT (PB PGS. 61 - 62) IS ALSO RELEVANT. EVEN THOUGH THE SAME MAY NOT BY ITSELF BE CONCLUSIVE OF THE MATTER, AS EXPLAINED IN CIT VS. DHARMSHI B. SHAH [2014] 3 66 ITR 140 (GUJ) AND CIT VS. SPLENDER CONSTRUCTION [2013] 352 ITR 588 (DEL), THE ASSESSEE IN THE PRESENT CASE HAS IN OUR VIEW, AS AFORE - STATED, ESTABLISHED TO HAVE AN ARGUABLE CASE. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED I N THE OPEN COURT ON JUNE 30 , 201 6 SD/ - SD/ - ( AMARJIT SINGH ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 30 . 0 6 .201 6 . . ./ ROSHANI , SR. PS / 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 ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI