ADDL CIT 3(1), MUMBAI V. SANDEEP SHRIVASTAVA, MUMBAI

ITA 6409/MUM/2012

• Counselvise Citation: 640919914 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income
• Section: 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./ I.T .A. NO. 6 409 / MUM/20 1 2 ( / ASSESSMENT YEAR : 200 9 - 10 ) THE ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 3(1), ROOM NO.607, 6 TH FLOOR, A A YAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 / VS. M/S SANDEEP SHRIVASTAVA, 31, ASHUTOSH, 3 RD FLOOR, NA PEANSEA ROAD, MUMBAI - 400036 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AKYPS581 6 N / APPELLANT BY SHRI NEIL PHILIP / RSPONDENT BY SHRI J P BAIRAGRA / DATE OF HEARING : 8. 7 . 201 5 / DATE OF PRONOUNCEMENT : 8 . 7. 201 5 / O R D E R PER B.R. BASKARAN (AM) THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 06 - 06 - 2012 PASSED BY L D CIT(A) - 7, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE ADDITION OF RS.96.26 LAKHS MADE BY THE ASSESSING OFFICER U/S 17(2)(III)/28(IV) OF THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE STATED IN BRIEF. THE ASSESSEE IS A DIRECTOR AND SHARE HOLDER IN A PRIVATE LIMITED COMPANY NAMED M/S CHAMPION INDIA IT A NO .64 09 /MUM/201 2 2 INDUSTRIES PVT. LTD. THE AO NOTICED THAT THE ASSESSEE HAS PURCHASED A PROPERTY FROM THE ABOVE SAID COMPANY ON 17.7.2008 FOR AN AGREED CONSIDERATION OF RS.40.00 LAKHS. THE AO NOTICED THAT THE STAMP DUTY AUTHORITIES HAD VALUED THIS PROPERTY AT RS.1,36,26,528/ - . HENCE THE AO TOOK THE VIEW THAT THE DIFFERENCE BETWEEN THE STAMP DUTY VALUATION AND SALE CONSIDERATION AMOUNTING TO RS.96,26,528/ - CONSTITUTES INCOME IN THE HANDS OF THE ASSESSEE AND ACCORDINGLY ASSESSED THE SAME AS INCOME OF THE ASSESSEE U/S 17(2)(III) /28(IV) OF THE ACT. 3. THE LD CIT(A) NOTICED THAT THE ASSESSEE HA S BEEN DECLARING INCOME FALLING UNDER THE HEADS INCOME FORM HOUSE PROPERTY, INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES, I.E., THE ASSESSEE DID NOT RECEIVE/DECLARE ANY SALARY INCOME. THE PROVISIONS OF SEC. 17(2)(III) ARE APPLICABLE FOR COMPUTING I NCOME FROM SALARY. THE LD CIT(A) NOTICED THAT THE ASSESSEE WAS NOT AN EMPLOYEE OF THE ABOVE SAID COMPANY AND HENCE HE WAS NOT RECEIVING ANY SALARY FORM IT. HENCE THERE WAS NO EMPLOYER - EMPLOYEE RELATIONSHIP BETWEEN THE ABOVE SAID COMPANY AND THE ASSESSEE. THE LD CIT(A) ALSO RELIED UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF EMEL WEBBER VS. CIT (1993)(200 ITR 483), WHEREIN THE HONBLE APEX COURT HAS HELD THAT THE EXISTENCE OF EMPLOYER - EMPLOYEE RELATIONSHIP IS PREREQUISITE FOR APPLI CATION OF SEC. 15 TO 17 OF THE ACT, WHICH RELATES TO THE COMPUTATION OF INCOME FROM SALARY. ACCORDINGLY THE LD CIT(A) HELD THAT THE AO CANNOT ASSESS AMOUNT OF RS.96.26 LAKHS AS TAXABLE PERQUISITE U/S 17(2)(III) OF THE ACT, IN THE ABSENCE OF EMPLOYER - EMPL OYEE RELATIONSHIP. THE LD CIT(A) FURTHER NOTICED THAT THE PROVISIONS OF SEC. 28(IV) ARE APPLICABLE TO THE VALUE OF ANY BENEFIT OR PERQUISITE ARISING FROM BUSINESS OR EXERCISE OF PROFESSION. HENCE, THE LD CIT(A) ALSO HELD THAT THE PROVISIONS OF SEC. 28(I V) OF THE ACT ALSO CANNOT ALSO BE INVOKED, SINCE THERE WAS NO BENEFIT THAT AROSE FROM BUSINESS OR EXERCISE OF IT A NO .64 09 /MUM/201 2 3 PROFESSION. ACCORDINGLY, HE DELETED THE ADDITION MADE BY THE AO. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. THE LD D.R STRON GLY PLACED RELIANCE ON THE ORDER PASSED BY THE ASSESSING OFFICER. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE ASSESSEE IS NOT AN EMPLOYEE OF THE ABOVE SAID COMPANY AND HENCE THE PROVISIONS OF SEC. 17(2)(III), WHICH IS APPLICABLE FOR COMPUTATION OF SALA RY INCOME, CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. THE LD A.R FURTHER SUBMITTED THAT THE PROVISIONS OF SEC. 28(IV), RELATING TO THE VALUE OF ANY BENEFIT OR PERQUISITE ARISING FROM BUSINESS OR THE EXERCISE OF PROFESSION IS ALSO NOT APPLICABLE T O THE FACTS OF THE INSTANT CASE, SINCE IT WAS A CASE OF PURCHASE OF PROPERTY. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE IMPUGNED PROPERTY AT THE PRICE AGREED BETWEEN THE BUYER AND SELLER. HE FURTHER SUBMITTED THAT THE VALUE DETERMINED BY T HE STAMP DUTY AUTHORITIES CANNOT BE CONSIDERED IN THE INSTANT CASE, SINCE THE SAID AUTHORITIES DETERMINE THE VALUE OF PROPERTY ON THE BASIS OF READY RECKONER RATES PRESCRIBED BY THE STATE GOVERNMENT. ACCORDINGLY HE SUBMITTED THAT THE VALUE DETERMINED BY T HE STAMP AUTHORITIES IS ONLY AN ESTIMATE AND THE SAME COULD NOT HAVE BEEN ADOPTED BY THE AO. 5. WE HAVE EARLIER NOTICED THAT THE ASSESSING OFFICER HAS TREATED THE DIFFERENCE BETWEEN THE AGREED VALUE AND THE VALUE DETERMINED FOR STAMP DUTY PURPOSES AS INCOME OF THE ASSESSEE. WE NOTICE THAT IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS PAID ANY MONEY OVER AND ABOVE THE CONSIDERATION STATED IN THE SALE AGREEMENT. SINCE THE ASSESSEE HAPPENED TO BE THE SHARE HOLDER AND DIRECTOR OF THE COMPANY, WHICH SOLD THE PROPERTY, THE ASSESSING OFFICER HAS PRESUMED THAT THE ASSESSEE HAS DERIVED BENEFIT FROM THE TRANSACTION OF PURCHASE OF PROPERTY FOR THE REASON THAT THERE WAS A DIFFERENCE BETWEEN THE SALE CONSIDERATION AND THE VALUE DETERMINED FOR STAMP DUTY PURPO SES. ACCORDINGLY, THE AO PROCEEDED TO IT A NO .64 09 /MUM/201 2 4 ASSESS THE DIFFERENCE AMOUNT OF RS.96.26 LAKHS AS INCOME OF THE ASSESSEE. HOWEVER, THE AO WAS NOT SURE AS TO THE SECTION UNDER WHICH THE SAID DIFFERENCE IS ASSESSABLE. HENCE HE HAS QUOTED BOTH SEC. 17(2)(III) AND SE C. 28(IV) OF THE ACT. WE HAVE NOTICED THAT THE LD CIT(A) HAS GIVEN PROPER REASONING THAT THE ABOVE SAID DIFFERENCE CANNOT BE ASSESSED AS INCOME OF THE ASSESSEE UNDER BOTH THE SECTIONS. DURING THE COURSE OF HEARING, THE LD D.R ALSO COULD NOT CONTROVERT TH E REASONING GIVEN BY LD CIT(A). 6. WE FURTHER NOTICE THAT THE PROVISIONS OF SEC. 56(2)(VII), WHICH PROVIDE FOR ASSESSING DIFFERENCE BETWEEN THE STAMP DUTY VALUATION AND THE SALE CONSIDERATION IN THE HANDS OF THE BUYER, HAS BEEN INSERTED BY THE FINANCE ACT, 2010 W.R.E.F FROM 1.10.2009. IN THE INSTANT CASE, THE IMPUGNED TRANSACTION HAS TAKEN PLACE ON 17 - 7 - 2008 AND HENCE THE DEEMING PROVISIONS OF SEC. 56(2)(VII) ARE ALSO NOT APPLICABLE TO IT. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE ASSESSIN G OFFICER HAS MADE THE IMPUGNED ADDITION ONLY ON SURMISES. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE IMPUGNED ADDITION AND ACCORDINGLY UPHOLD HIS ORDER. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMI SSED. PRONOUNCED ACCORDINGLY ON 8TH JULY , 2015. 8 TH J ULY , 2015 SD SD ( / SANJAY GARG ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 8TH JULY ,2015 . . . ./ SRL , SR. PS IT A NO .64 09 /MUM/201 2 5 / COPY OF THE ORDER FORWA RDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI