ITO - 16(1)(1), MUMBAI V. ASHWIN M. SAVANI, MUMBAI

ITA 6143/MUM/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4174 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RUPAL VORA
• Keywords: Gift
• Section: 56(2); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 6143/MUM/2016 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 16(1)(1) ROOM NO. 436A, 4TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 VS. SHRI ASHWIN M. SAVANI 5B FELTHAM HOUSE 10 JN HEREDIA ROAD, BALLARD PIER, MUMBAI 400001 PAN AAFPS1656P APPELLANT RESPONDENT APPELLANT BY: MS. NEHA THAKUR RESPONDENT BY: MS. RUPAL VORA DATE OF HEARING: 08.10.2018 DATE OF PRONOUNCEMENT: 12.10.2018 O R D E R PER RAJESH KUMAR, AM THIS APPEAL FILED BY REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-4, MUMBAI DATED 20.07.2016 AND IT RELATES TO A.Y. 2006-07. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT THE IND IAN MILLENNIUM DEPOSIT (IMD) BONDS WOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE WITHOUT APPRECIATING THAT THE EXPRESSION ' SUM OF MONEY' AS USED IN SECTION 56(2) OF THE ACT WOULD ALSO INCL UDE IMD DEPOSITS AS THEY COULD BE CONVERTED INTO CASH ON RE DEMPTION. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT THE IND IAN MILLENNIUM DEPOSIT (IMD) BONDS WOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE WITHOUT APPRECIATING THAT HE EXPRESSION 'S UM OF MONEY AS USED IN SECTION 56(2) OF THE ACT NEED NOT BE ONL Y CASH IN HAND BUT ALSO THOSE INSTRUMENTS WHICH COULD EASILY BE CO NVERTED INTO CASH ON REDEMPTION. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD.CIT(A) WAS JUSTIFIED IN RELYING ON THE ORDER OF HON'BLE ITAT IN THE CASE OF ACIT VS. HARESH N. MEHTA (ITA NO. 68 04/MUM/ ITA NO. 6143/MUM/2016 SHRI ASHWIN M. SAVANI 2 2010 DT. 31.10.2010) IN VIEW OF THE FACTS THAT THE SAID DECISION IS ALREADY CONTESTED BY THE DEPARTMENT BEFORE THE HON' BLE HIGH COURT MUMBAI ON 02.07.2012 VIDE APPEAL NO. ITXA 116 9 OF 2012. 4) THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS RECEIVED GIFTS OF INDIAN MILLENNIUM DEPOSIT (IMD( BONDS FROM SHRI K.L . NARAYANSA, NRI AMOUNTING TO US$2,00,000 ON 03.06.2005 AND US$50,00 0/- ON 27.09.2008, RESPECTIVELY. THE SAID IMD BONDS WERE A LSO CONFIRMED BY LETTER NO. IMD/2012-13/10 DATED 01.08.2012 OF STATE BANK O F INDIA , COPY OF WHICH IS ON RECORD. THE SAID TWO IMD BONDS WERE MAT URED ON 29.12.2005 AND THE MATURITY VALUE INCLUDING INTEREST WAS PUT I N THE FIXED DEPOSIT BY THE ASSESSEE IN INDUSTRIAL BANK ON 26.04.2007. WHIL E VERIFYING THE BALANCE SHEET THE AO NOTICED THAT THE THERE WAS AN INCREASE IN THE FDR WHICH WERE ADDED TO THE INCOME OF THE ASSESSEE UNDER SECT ION 69 OF THE ACT ON ACCOUNT OF NON FURNISHING OF DETAILS AND EVIDENCES DURING ASSESSMENT PROCEEDINGS. THE MATTER TRAVELLED UP TO ITAT AND TH E ITAT SET ASIDE THIS ISSUE TO THE FILE OF THE CIT(A). THEREFORE THIS IS THE SECOND ROUND OF APPEAL. THE LEARNED CIT(A) SOUGHT A REMAND REPORT FROM THE AO WHO HAVE VERIFIED THE GENUINENESS OF THE TRANSACTIONS, IDENTITY OF SH RI K.L. NARAYANSA, VERACITY OF THE LETTER OF SBI AND REMITTANCES OF IM D BONDS. THE LEARNED CIT(A), AFTER CONSIDERING ALL THE FACTS AND REPORT OF THE AO AND ALSO THE DECISION OF THE ITAT AND VARIOUS OTHER JUDGEMENTS, DELETED THE ADDITION OF PRINCIPAL AMOUNT OF ` 1,12,52,500/- AND INTEREST OF ` 15,72,151/-. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. AT THE OUTSET THE LEARNED A.R. OF THE ASSESSEE POIN TED OUT THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE SEVERAL DECISIONS OF THE COORDINATE BENCHES HOLDING THAT TH E GIFT OF INDIAN MILLENNIUM DEPOSIT (IMD( BONDS IS VALID GIFT AND TH EREFORE THE SAME SHOULD BE DECIDED BY FOLLOWING THESE DECISIONS. THE ASSESS EE RELIED ON THE FOLLOWING DECISIONS:- I) ACIT VS. ANJU AGARWAL, ITA NO. 4945/MUM/2008 DATED 14.10.2009 ITA NO. 6143/MUM/2016 SHRI ASHWIN M. SAVANI 3 II) ACIT VS. HARRESH N. MEHTA, ITA NO. 6805/MUM/2010 DA TED 31.01.2012 III) SHARAT KUMAR BABULAL JAIN VS. INCOME TAX OFFICER, I TA NO. 29/VIZAG/2011 DATED 11.08.2011 IV) CIT VS. KASTURI AND SONS LTD., SUPREME COURT DATED 06.03.1999 V) H.H. SRI RAMA VERMA VS. CIT, 187 ITR 308 (SC) VI) HATKESH CO. OP. HSG. SOCIETY LTD. VS. ACIT, ITA NO. 328 OF 2014 AND OTHER (BOM) DATED 22.08.2016. VII) ACIT VS. ANJU JITENDRA MEHTA, ITA NO. 6399/MUM/2010 DATED 05.09.2012 VIII) ACIT VS. ROHAN JITENDRA MEHTA, ITA NO. 6398/MUM/201 0 DATED 18.04.2012 5. THE LEARNED D.R., ON THE OTHER HAND, OPPOSED THE C ONTENTIONS RAISED BY THE LEARNED A.R. ON THE GROUND THAT THE G ENUINENESS AND IDENTITY OF THE PERSON WHO GIFTED THE MONEY IS NOT ADEQUATEL Y ESTABLISHED AND MOREOVER THE ASSESSEE IS NOT IN BLOOD RELATION OF T HE DONOR. THEREFORE THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THE APPE AL OF THE REVENUE SHOULD BE ALLOWED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DECISIONS CITED BY THE LEARNED A.R. AFTER PERUSAL OF THE VARIOUS CASE LAWS CITED BY THE LEARNED A.R. WE FIND THAT THE ISSUE OF GIFT OF INDIAN MILLENNIUM DEPOSIT CERTIFICATE IS NOT TAXABL E IN THE HANDS OF THE ASSESSEE WHO RECEIVED THE SAME UPON GIFT AND ALSO UNDER THE TERMS AND CONDITIONS AS STIPULATED IN THE INDIAN MILLENNIUM D EPOSIT CERTIFICATE. IT WAS PROVIDED THAT THE SAID CERTIFICATES CAN BE GIFT ED BY NIR/BANKS ONLY ONCE TO ANY PERSON RESIDENT IN INDIA BUT THE IMD BO NDS WILL BE PASSED ON TO THE DONEE INCLUDING THE GIFT FOR PREMATURE ENCAS HMENT. HOWEVER, NON RESIDENT ONLY WILL BE ENTITLED TO TRANSFER THE SAID IMD CERTIFICATES. IN THE CASE OF SHRI SARAD KUMAR BABULAL JAIN VS. INCOME TA X OFFICER THE COORDINATE BENCH HAS HELD AS UNDER: - 7. IN THE INSTANT CASE, THE ASSESSEE HAS RECEIVED IMD BONDS. THERE CANNOT BE ANY DOUBT THAT IMD BONDS FALLS IN THE C ATEGORY OF SECURITIES. HENCE THE RECEIPT OF SECURITIES WITHO UT ADEQUATE CONSIDERATION, I.E. GIFTS IN KIND, IS SUBJECTED TO TAX, ONLY IF IT IS RECEIVED ONLY ON OR AFTER 1.10.2009. IN THE INSTANT CASE, THE IMPUGNED ITA NO. 6143/MUM/2016 SHRI ASHWIN M. SAVANI 4 IMD AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE PRIOR TO 1.10.2009. HENCE, THE PROVISIONS OF SECTION 56(2)(V), WHICH WA S INVOKED BY LD. CIT IS NOT APPLICABLE TO THE IMPUGNED TRANSACTION. WE NOTICE THAT SIMILAR VIEW HAS BEEN EXPRESSED BY MUMBAI BENCH OF ITAT IN THE CASE OF ANUJ AGARWAL, SUPRA. HENCE, THE DIRECTIONS ISSUED BY LD. CIT TO TAX THE RECEIPT OF IMD BONDS U/S 56(2)(V) OF THE ACT IN THE INSTANT CASE DO NOT HAVE LEGAL SANCTITY AND ACCORDINGLY THE SAID DIRECTION IS LIABLE TO BE SET ASIDE. ACCORDINGLY, WE SET ASIDE T HE IMPUGNED ORDER OF THE LD. CIT ON THIS ISSUE. 7. FURTHER WE ALSO PERUSED VARIOUS DECISIONS RELIED U PON BY THE ASSESSEE AND FIND THAT THE IMD BONDS FALLS UNDER TH E CATEGORY OF SECURITIES AND THEREFORE IT DOES NOT FALL WITHIN THE MEANING O F ANY SOME OF MONEY. WE, THEREFORE, AFTER CONSIDERING THE FACTS OF THE C ASE OF THE ASSESSEES CASE IN THE LIGHT OF THE VARIOUS DECISIONS AS CITED SUPR A COME TO THE CONCLUSION THAT THE ORDER PASSED BY THE CIT(A) IS QUITE REASON ED AND THEREFORE WE DO NOT FIND ANY REASON TO DEVIATE FROM THE SAME AS IT HAS ELABORATELY DISCUSSED VARIOUS CASE LAWS AND THE FACTUAL ASPECT OF THE MATTER AND THE CONCLUSION OF THE LD CIT(A) APPEARS TO BE CORRECT. ACCORDINGLY WE DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2018. SD/ - SD/ - (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12 TH OCTOBER, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -4, MUMBAI 4. THE PR.CIT-16, MUMBAI 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.