SURAJ PACKAGING P.LTD, MUMBAI V. ACIT CEN CIR 29, MUMBAI

ITA 635/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7989 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-04-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 23-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: ASHOK J PATIL
• Keywords: Capital asset; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI R C SHARMA , ACCOUNTANT MEMBER & SHRI SANDEEP GOSAIN , J UDICIAL M EMBER IT A NO. 63 5 / MUM/ 20 1 3 ASSESSMENT YEAR : 20 05 - 06 SURAJ PACKAGING PVT LTD., 50, BHATIA NIWAS, GROUND FLOOR, BABUGENU ROAD, MUMBAI 400 002. PAN AAACS7454D VS. ASST. CIT CENTRAL CIRCLE 29, MUMBAI ( APPELLANT ) (RESPONDENT) APPELLANT BY : S HRI ASHOK J PATIL RESPONDENT BY : SHRI V JUSTIN DATE OF HEARING : 0 5 .09 .2017 DATE OF PRONOUNCEMENT : 20 . 1 2 .2017 O R D E R PER R C SHARMA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A) - 4 0 , MUMBAI , DATED 2 6 . 11 . 201 2 , FOR A.Y.20 05 - 06 , IN THE MATTER OF ORDER PASSED U/S. 143(3) R.W.S. 147 OF THE IT ACT. 2. THE FOLLOWING GROUND HAS BEEN TAKEN BY THE ASSESSEE : - ' 1. THE LEARNED COMMISSIONER OF INCOME (APPEALS) HAS ERRED IN TREATING THE PROFITS AND GAINS ON TRANSFER OF LAND AS SHORT TERM CAPITAL GAINS. ' 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, A SSESSING O FFICER NOTED THAT THE ASSESSEE HAD BEEN ALLOTTED A PLOT OF LAND BY MADRAS ITA NO . 635 /MUM/201 3 SURAJ PACKAGING PVT. LTD. 2 METROPOLITAN DEVELOPMENT AUTHORITY (MMDA) , VIDE LETTER DATED 29.08.1979 , FOR WHICH THE SALE DEED WAS EXECUTED ON 04.04.20 03 , CONVEYING THE SAID PROPERTY TO THE ASSESSEE FOR A CONSIDERATION OF RS.12,58,422/ - . THE A SSESSING O FFICER FURTHER NOTED THAT PRIOR TO 04.04.2003, THE ASSESSEE IS HAVING ONLY ALLOTMENT LETTER WITHOUT ANY LEGAL RIGHTS OF OWNERSHIP. SUBSEQUENTLY, WHEN THE LAND WAS SOLD ON 09.12.2004 BY THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, T HE CAPITAL GAIN WAS TREATED AS S HORT TERM CAPITAL GAIN BY A SSESSING O FFICER AS AGAINST L ONG TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE. AGGRIEVED THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. HOWEVER, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THR O UGH THE ORDERS OF THE AU THORITIES BELOW AND FOUND FROM THE RECORD THAT FACTORY LAND WAS ALLOTTED BY MMDA VIDE LETTER DATED 29.08.1979. THE ASSESSEE HAS ALSO CONSTRUCTED FACTORY BUILDING THEREON. THE VALUATION REPORT WITH RESPECT TO THE BUILDING CONSTRUCTED IN 1980 WAS ALSO PLAC ED ON RECORD, VALUING THE SAME AT ` 10,27,716/ - . MERELY BECAUSE SALE DEED WAS EXECUTED BY MMDA ON 4.04.2003, THE ASSESSING OFFICER HAS TAKEN THE DATE OF ACQUISITION AS ON 04.02.2003 AND COMPUTED CAPITAL GAIN IN RESPECT OF THE PROPERTY SO SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. SECTION 2(47 ) DEFINES THE WORD 'TRANSFER' IN RELATION TO CAPITAL ASSET WHICH INCLUDES A TRANSACTION AS PER ITA NO . 635 /MUM/201 3 SURAJ PACKAGING PVT. LTD. 3 SECTION 53A OF TRANSFER OF PROPERTY ACT , W HERE POSSESSION OF IMMOVABLE PROPERTY WAS TAKEN BY THE ASSES SEE IN PART PERFORMANCE OF THE CONTRACT THAT AMOUNTS TO TRANSFER AND SINCE SUCH TRANSFER TOOK PLACE IN 1979 AND NOT IN 2003, THE GAIN IS TO BE TREATED AS LONG TERM CAPITAL . 5. IN VIEW OF THE OVERWHELMING EVIDENCE PLACED ON RECORD IN THE FORM OF ALLOTMENT L ETTER BY MMDA AND VALUATION REPORT HAVING BEEN MADE OF THE CONSTRUCTION ON THE PLOT OF LAND, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE ASSESSING OFFICER FOR IGNORING THE DATE OF ALLOTMENT , WHICH IS 29.08.1979 AND FURT HER CONSTRUCTION THEREON IN 198 0 , A ND COMPUTING CAPITAL GAIN IN RESPECT OF THE PROPERTY SOLD DURING THE YEAR UNDER CONSIDERATION AS A SHORT TERM CAPITAL GAINS . THE ASSESSING OFFICER IS DIRECTED TO COMPUTE CAPITAL GAIN TREATING THE SAME AS LONG TERM IN VIEW OF THE FACT THAT ALLOTMENT WAS IN THE YEAR 1979. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE TERMS AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH D AY OF DECEMB ER , 2017 . SD/ - SD/ - ( SANDEEP GOSAIN ) ( R C SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 20 TH DECEMB ER , 2017 SA ITA NO . 635 /MUM/201 3 SURAJ PACKAGING PVT. LTD. 4 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR I NCOME T AX A PPELLATE T RIBUNAL , MUMBAI