ZAKIRALI ASGARLI KHAN, MUMBAI V. ACIT 20(3), MUMBAI

ITA 6230/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59669 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: PANKAJ TOPRANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RA O, J.M. ITA NO. 6230/MUM/2010 ASSESSMENT YEAR: 2006-07 ZAKIRALI ASGARALI KHAN, APPELLANT 603/A, AAKANKSHA TOWER, PANCH MARG, OFF YARI ROAD, VERSOVA, ANDHERI (W), MUMBAI 400 061. (PAN AIOPG 9523 G) VS. ASSTT. COMMISSIONER OF INCOME-TAX-20(3), RES PONDENT PIRAMAL CHAMBER, 5 TH FLOOR, MUMBAI. APPELLANT BY : MR. PANKAJ TOPRANI RESPONDENT BY : MR. A.K. NAYAK DATE OF HEARING : 29/11/2011 DATE OF PRONOUNCEMENT : /01/2012 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-31, MUMBAI, PASSED ON 29/04/2010 FOR THE ASS ESSMENT YEAR 2006-07. 2. GROUND NO. 1 TO 3 READ AS UNDER:- 1) THE LEARNED CIT(A) HAS GROSSLY ERRED BOTH IN LAW AND AS WELL AS ON THE FACTS IN INVOKING THE PROVISIONS OF SEC 5 0 C IN RESPECT OF SALE OF INDUSTRIAL GALA WHICH WAS DEPRECIABLE ASSET . 2) THE LEARNED CIT(A) FURTHER ERRED IN SUSTAINING T HE ADDITIONS OF RS. 19,18,000/- AS CAPITAL GAIN U/S 50 C ON THE BAS IS OF VALUATION FOR THE PURPOSE OF STAMP DUTY PAID BY THE BUYER WITHOUT APPRECIATING THE FACT THAT THE SUBJECT MATT ER WAS DEPRECIABLE BUSINESS ASSET AND NOT CAPITAL ASSET TH EREFORE ITA NO. 6230/MUM/10 SHRI ZAKIRALI ASGASALI KHAN 2 APPLYING THE PROVISIONS OF 50 C IS COMPLETELY UNJU STIFIED AND UNCALLED FOR. 3) THE LEARNED CIT(A) HAS FURTHER FAILED TO APPRECI ATE THAT THE ASSET SOLD WAS PART OF BLOCK OF ASSET ON WHICH DEPR ECIATION WAS CLAIMED AND ALLOWED THEREFORE THE PROVISIONS OF SEC . 50 C HAS NO APPLICATION ON SUCH ASSET. HENCE ADDITIONS SUSTAINE D TO RS. 19,18,000/- IS COMPLETELY UNJUSTIFIED. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO N OTED THAT THE ASSESSEE HAD DEBITED TO ITS P&L A/C BY SUM OF RS. 1 7,99,999/- ON ACCOUNT OF SALE GAURIPADA GALA. ON VERIFICATION OF THE DETAILS SUBMITTED BY THE ASSESSEE, THE AO HAD OBSERVED THAT THE SALE CONSIDERATION OF THE SAID CAPITAL ASSET WAS SHOWN F OR RS. 18,00,000/- IN HIS SALE DEED WHICH WAS EXECUTED AT THE VALUE OF RS. 37,18,000/- BY THE SUB-REGISTRAR AS PER THE VALUE DETERMINED BY THE STAMP VALUE AUTHORITY. ON BEING ASKED BY THE AO TO SHOW CAUSE A S TO WHY THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY MAY NOT B E ADOPTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN AS REQUIRED U/S 50C OF THE ACT, THE AR OF THE ASSESSEE SUBMITTED THAT THE PROPERTY IN QUESTION WAS A DEPRECIABLE ASSET HAVING OF RS.1/- ON THE DATE OF S ALE AND ACCORDINGLY THE ENTIRE DIFFERENCE BETWEEN THE SALE PROCEEDS AND WDV OF RS. 17,99,9990/- WAS DISCLOSED AS ITS SHORT TERM CAPITA L GAIN U/S 50 OF THE ACT. HOWEVER, THE AO HAD NOT ACCEPTED THE SAID SUBMISSION, AND HELD THAT THE AMOUNT OF RS. 19,18,000/- BEING THE A MOUNT OF DIFFERENCE BETWEEN THE VALUATION OF THE PROPERTY SO LD BY THE ASESSSEE DURING THE YEAR UNDER CONSIDERATION, AS ADOPTED BY THE STAMP VALUATION AUTHORITY AND THE AMOUNT OF THE VALUE AT WHICH THE DOCUMENT HAD BEEN EXECUTED BY THE ASSESSEE FOR THE PURPOSE OF SUCH SALE OF THE PROPERTY WAS ADDED TO THE RETURNED INCO ME OF THE ASSESSEE. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE A O. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 6230/MUM/10 SHRI ZAKIRALI ASGASALI KHAN 3 4. BEFORE US, THE LEARNED DR SUBMITTED THAT THE ISS UE UNDER CONSIDERATION IS COVERED AGAINST THE ASSESSEE BY VA RIOUS DECISIONS OF THE TRIBUNAL/HIGH COURT INCLUDING THE SPECIAL BENCH DECISION OF ITAT MUMBAI BENCH F, MUMBAI IN THE CASE OF ITO VS. UNI TED MARINE ACADEMY, [2011] 130 ITD 113. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, CONCEDED THE SUBMISSION MADE BY THE LEARNED DR. 6. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSING THE RECORD AS WELL AS THE ORDERS OF THE AU THORITIES BELOW, WE FIND THAT THE ISSUE IS COVERED BY THE SPECIAL BENCH DECISION OF ITAT, MUMBAI IN THE CASE OF UNITED MARINE ACADEMY (SUPRA) WHEREIN THE SPECIAL BENCH HAS HELD AS UNDER:- THE MAIN ISSUE FOR CONSIDERATION IN THE INSTANT CAS E WAS AS TO WHETHER IN A CASE WHERE CAPITAL GAIN ARISING FROM T HE TRANSFER OF DEPRECIABLE ASSET IS COMPUTED AS PER THE SPECIAL PR OVISIONS CONTAINED IN SECTION 50, THE PROVISIONS OF SECTION 50C CAN BE APPLIED SO AS TO ADOPT THE VALUE ASSESSED FOR THE P URPOSE OF PAYMENT OF STAMP DUTY TO BE THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THERE ARE TWO DEEMING FICTIONS CREATED IN SECTION 5 0 AND SECTION 50C. THE FIRST DEEMING FICTION MODIFIES THE TERM C OST ACQUISITION USED IN SECTION 48 FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS ARISING FROM TRANSFER OF DEPRECIABLE ASSETS WHERE A S THE DEEMING FICTION CREATED IN SECTION 50C MODIFIES THE TERM F ULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF THE CAPITAL ASSET USED IN SECTION 48 FOR THE PURPOSE O F COMPUTING THE CAPITAL GAINS ARISING FROM THE TRANSFER OF CAPITAL ASSET BEING LAND OR BUILDING OR BOTH. THE DEEMING FICTION CREATED IN SECTION 50C THUS OPERATES IN A SPECIFIC FIELD WHICH IS DIFFEREN T FROM THE FIELD IN WHICH SECTION 50 IS APPLICABLE. IT WAS THUS NOT A CASE WHERE ANY SUPPOSITION HAD BEEN SOUGHT TO BE IMPOSED ON OT HER SUPPOSITION OF LAW. THERE ARE TWO DIFFERENT FICTION S CREATED INTO TWO DIFFERENT PROVISIONS AND GOING BY THE LEGISLATI VE INTENTIONS TO CREATE THE SAID FICTIONS, THE SAME OPERATE IN DIFFE RENT FIELDS. THE HARMONIOUS INTERPRETATION OF THE RELEVANT PROVISION S MAKES IT CLEAR THAT THERE IS NO EXCLUSION OF APPLICABILITY O F ONE FICTION IN A ITA NO. 6230/MUM/10 SHRI ZAKIRALI ASGASALI KHAN 4 CASE WHERE OTHER FICTION IS APPLICABLE. AS A MATTER OF FACT, THERE IS NO CONFLICT BETWEEN THESE TWO LEGAL FICTIONS WHI CH OPERATE IN DIFFERENT FIELDS AND THEIR APPLICATION IN A GIVEN C ASE SIMULTANEOUSLY DOES NOT RESULT IN IMPOSITION OF SUP POSITION ON OTHER SUPPOSITION OF LAW. THE AO THUS WAS RIGHT IN APPLYING THE PROVISION OF SECTION 50C TO THE TRANSFER OF DEPRECI ABLE CAPITAL ASSETS COVERED BY SECTION 50 AND IN COMPUTING THE C APITAL GAIN ARISING FROM THE SAID TRANSFER BY ADOPTING THE STAM P DUTY VALUATION. 7. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY TH E SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF ITO VS. UNITED MA RINE ACADEMY (SUPRA), WE UPHOLD THE FINDING OF THAT THE CIT(A) T HAT THE AO IS FULLY JUSTIFIED IN CONSIDERING THE FULL CONSIDERATION AS PER THE VALUE DETERMINED BY STAMP VALUE AUTHORITY U/S 50C FOR THE COMPUTATION OF DEEMED SHORT TERM CAPITAL GAIN U/S 50 OF THE ACT, A ND ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS COUNT. THUS , THE GROUND NOS. 1 TO 3 ARE DISMISSED. 8. GROUND NO. 4 IS DIRECTED AGAINST THE ACTION OF T HE CIT(A) IN SUSTAINING THE DISALLOWANCES, A) OUT OF TELEPHONE E XPENSES @ 10% AMOUNTING TO RS. 13,981/- AND B) OUT OF DEPRECIATIO N AND VEHICLE EXPENSES @ 10% AMOUNTING TO RS. 36,276/-. THE LEAR NED COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THIS GROUND AT THE TIM E OF HEARING, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF JANUARY, 2011. SD/- SD/- (P.M. JAGTAP) (V. DURGA R AO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13 TH JANUARY, 2011. KV ITA NO. 6230/MUM/10 SHRI ZAKIRALI ASGASALI KHAN 5 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.