ACIT CIR 19(2), MUMBAI V. AUROVLILLA CO-OP HSG. SOCIETY, MUMBAI

ITA 6256/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55991 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2004-2005
• Appeal Filed On: 19-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIWAS RAO
• Assessee Lawyers: PARESH VAKHARIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI R.K. PANDA (A M) I.T.A. NO.6256/MUM/2010 (A.Y. 2004-05) ASSTT. COMMR. OF INCOME-TAX-19(2), R.NO. 315, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400 012. VS. AUROVILLA CO-OP. HSG. SOCIETY LTD., 26-B, 1 ST ANDREWS ROAD, SANTACRUZ (W), MUMBAI-400 054. PAN: AAATA0868Q APPELLANT RESPONDENT APPELLANT BY SHRI GOLI SRINIWAS RAO . RESPONDENT BY SHRI P ARESH VAKHARIA. DATE OF HEARING 14 - 11 - 2011 DATE OF PRONOUNCEMENT 18 - 11 - 2011 O R D E R PER D.K. AGARWAL, JM : THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 30-06-2010 PASSED BY THE LD. CIT(A) FOR THE ASSESSM ENT YEAR 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE, A CO-OP. HOUSING SOCIETY, FILED RETURN DECLARING TOTAL INCOME AT NIL WHICH WAS SUBSEQUENTLY REVISED AT AN INCOME OF RS.11,56,540/- WHEREIN THE ASSESSEE HAS OFFERED CONSIDERATION RECEIVED FROM DEVELOPERS AS INCOME FROM OTHER SOUR CES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT AS PER AG REEMENT DATED 15-02-2004 ENTERED INTO BETWEEN THE ASSESSEE, ITS MEMBERS AND SARANGA ESTATES PV. LTD., THE SOCIETY ALLOWED THE DEVELOPERS TO CONSTRUCT AN ADDITIONAL AREA AGGREGATING ITA NO.6256/M/10 AUROVILLA CHS LTD. 2 APPROXIMATELY 30,000 SQ. FT. FOR A CONSIDERATION OF RS.10,41,00,000/-. OUT OF IT, AN AMOUNT OF 15 LAKHS WAS RETAINED BY THE SOCIETY A ND THE BALANCE AMOUNT WAS DISTRIBUTED AMONGST THE MEMBERS IN PROPORTION TO AR EA OF THE FLAT. ACCORDING TO THE AO, THE ASSESSEE SOCIETY IS LIABLE FOR LONG-TER M CAPITAL GAINS. THE AO, AFTER CONSIDERING THE ASSESSEES EXPLANATION, HELD THAT T HE ASSESSEE IS THE RIGHTFUL OWNER OF THE LAND AND THE LEGAL OWNERSHIP IS VESTED WITH IT AND, THEREFORE, AS A CONSEQUENCE, THE ASSESEE IS THE LEGAL AND RIGHTFUL OWNER OF EXCESS TDR/FSI. HE FURTHER HELD THAT ANY GAIN ARISING FROM SALE/TRANSF ER OF SUCH TDR/FSI WOULD BE FULLY ATTRIBUTABLE TO LONG-TERM CAPITAL GAIN AND, A CCORDINGLY, HE COMPUTED LONG- TERM CAPITAL GAIN ON THE COMPENSATION RECEIVED RS.1 0,41,00,000/- AMOUNTING TO RS.9,28,87,374/-. ON APPEAL, THE LD. CIT(A) CONFIRM ED THE STAND TAKEN BY THE AO. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE TRIB UNAL, WHILE OBSERVING THAT THE BENEFIT OF ADDITIONAL TDR WAS DERIVED AND ENJOYED B Y THE MEMBERS OF THE ASSESSEE SOCIETY AND HENCE NO INCOME HAS ACCRUED TO THE ASSESSEE, RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF JETHALAL D. MEHTA V. DCIT (MUM.) AND DELETED THE ADDITION OF CAPITAL GAIN MADE BY THE AO . IN THE MEANTIME, THE AO, ON THE ADDITION OF CAPITAL GAIN, LEVIED PENALTY U/S.27 1(1)(C) AMOUNTING TO RS.2,75,21,211/- VIDE ORDER DATED 30-03-2009. ON AP PEAL, THE LD. CIT(A) OBSERVED THAT SINCE THE QUANTUM ADDITION ON WHICH T HE PENALTY WAS LEVIED BY THE AO HAS BEEN DELETED BY THE TRIBUNAL, THERE IS N O CASE FOR LEVYING PENALTY AND HENCE HE DELETED THE PENALTY. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF APPEAL : 1) ON THE FACTS AND I THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE P ENALTY OF RS.2,75,21,211/- LEVIED U/S.271(1)(C) BY THE AO AS THE QUANTUM ADDITION ON WHICH PENALTY WAS LEVIED HAS BE EN DELETED BY THE HONBLE ITAT IGNORING FACT THAT THE DEPARTMENT HAS PREFERRED APPEAL U/S.260A TO THE HON BLE ITA NO.6256/M/10 AUROVILLA CHS LTD. 3 HIGH COURT AGAINST THE DELETION OF QUANTUM ADDITION BY THE HONBLE ITAT. 2) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RES TORED. 4. AT THE TIME OF HEARING, THE LD. D.R. SUPPORTS TH E ORDER OF THE AO. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE, WHILE RELYING ON THE ORDER OF THE LD. CIT(A), SUBMITS THAT SINCE THE ADD ITION ITSELF HAS BEEN DELETED IN THE QUANTUM APPEAL BY THE TRIBUNAL, THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE AO. 6. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE, WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE QUANTUM APPEAL THE TRIBUNAL HA S DELETED THE ADDITION OF CAPITAL GAIN BY HOLDING THAT THERE IS NO MERIT IN C OMPUTING ANY CAPITAL GAIN ON THE SALE OF SAID TDR IN THE HANDS OF THE ASSESSEE SOCIE TY. IN VIEW OF THE FACT THAT THE QUANTUM APPEAL HAS BEEN DECIDED IN FAVOUR OF THE AS SESSEE, VIRTUALLY, THE BASIS FOR IMPOSITION AND LEVY OF PENALTY U/S.271(1)(C) I S NOT AVAILABLE. WHEN SUCH IS THE POSITION, THE IMPOSITION OF PENALTY IS NOT IN A CCORDANCE WITH LAW. HENCE, WE ARE INCLINED TO UPHOLD THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE PENALTY IMPOSED BY THE AO. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 7. IN THE RESULT, THE REVENUES APPEAL STANDS DISMI SSED. ORDER PRONOUNCED ON THE 18TH DAY OF NOVEMBER, 2011. SD/- SD/- (R.K. PANDA) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 18TH NOVEMBER , 2011. ITA NO.6256/M/10 AUROVILLA CHS LTD. 4 NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-30,MUMBAI. 4 CIT,CITY-19,MUMBAI. 5.DR,H BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.6256/M/10 AUROVILLA CHS LTD. 5 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 14-11-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 15-11-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER