SHANTILAL H. KARANI, MUMBAI V. CIT 22, MUMBAI

ITA 6419/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2537 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 21-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: PRAVIN N SHAH
• Keywords: Fair market value
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE S HRI RAJENDRA , A CCOUNTANT MEMBER AND SHRI C.N. PRASAD, J UDICIAL MEMBER ITA NO. 6419 /MUM/20 1 3 ( ASSESSMENT YEAR: 20 0 9 - 1 0 ) SHANTILAL H. KARANI, PROP. M/S. MALDE CAPACITORS MFG. CO. 401, MADHAV APARTMENT, JAWAHAR ROAD, GHATKOPAR (EAST), MUMBAI . PAN : AACPK 5099 B VS. CIT - 22, MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAVIN N. SHAH - CA DEPARTMENT BY : SHRI MANJUNATHA SWAMY CIT - DR DATE OF HEARING : 21 / 1 0/2016 DATE OF PRONOUNCEMENT : 21 /10/2016 O R D E R PER C.N. PRASAD , J M TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF THE LD. CIT - 22, MUMBAI , DATED 12 /0 9 /2013 FOR THE A SSESSMENT Y EAR 20 0 9 - 1 0 PASSED UNDER SECTION 263 OF THE ACT . 2 . THE ASSESSEE CHAL LENGED THE ORDER OF THE LD. CIT ON TWO COUNTS: - ( 1) THE LD. CIT ERRED IN COMING TO THE CONCLUSION THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE; (2) THE LD. CIT ERRED IN DIRECTING THE INCOME TAX OFFICER FOR FURTHER VERIFICATION OF INCOME FROM TWO FLATS UNDER I NCOME FROM HOUSE PROPERTY , EVEN THOUGH, ASSESSEE AGREED FOR THE ADDITION . T HE LD. CIT DIRECTED THE ASSESSING OFFICER TO RESTRICT THE SET OFF OF LONG TERM CAPITAL L OSS OF 2 ITA NO. 6419/MUM/2013 ASSESSMENT YEAR: 20 0 9 - 1 0 RS. 3,81,404/ - AGAINST THE LONG TERM CAPITAL GAIN OF RS. 22,46,414/ - FOR THE ASSESSMENT YEAR 2009 - 10 . 3 . THE ASSESSEES SUBMISSIONS ARE IN TWO - FOLD. FIRSTLY, IT IS THE SUBMISSION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE ASSESSMEN T ORDER PASSED UNDER SECTION 143(3) OF THE ACT BY THE ASSESSING OFFICER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE REASON THAT THE ASSESSING OFFICER HAS EXAMINED THE DETAILS CALLED FOR DURING THE COUR SE OF ASSESSMENT PROCEEDING S . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE INVITED OUR KIND ATTENTION T O PAGE NO. 158 OF THE PAPER BOOK AND CLAUSES (E) & (F) THEREIN AND SUBMITTED THAT COPY OF RETURNS FOR THE PRECEDING YEARS WERE FILED BEFORE THE ASSESSING OFFICER. THE ASSESSEE A LSO FURNISHED ASSESSMENT ORDER S PASSED FOR THE ASSESSMENT YEAR S 2007 - 08 & 2008 - 09 BEFORE THE ASSESSING OFFICER. I NSOFAR AS SET OFF OF BROUGHT FORWARD LOSS ES ARE CONCERNED, IT IS THE SUBMISSION THAT THE REQUISITE DETAILS WERE FURNISHED DURING THE COURSE O F ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER AFTER EXAMINING THE SAME, SET OFF OF BROUGHT FORWARD LOSS AS CLAIMED BY THE ASSESSEE WAS ALLOWED. INSOFAR AS, INCOME FROM TWO FLATS ARE CONCERNED, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED T HAT IN THE COURSE OF P ROCEEDINGS BEFORE THE LD. CIT , ASSESSEE HAS ACCEPTED FOR ASSIGNING NOTIONAL RENT IN RESPECT OF ANY ONE OF THE FLATS AND WORKING WAS ALSO SUBMITTED TO THE LD. CIT . 4. COMING TO THE MERITS, THE AUTHORIZED REPRESENTATIVE OF THE ASSESS EE SUBMITTED THAT LOSSES RELATING TO ASSESSMENT YEARS 2007 - 08 & 2008 - 09 WERE CORRECTLY WORKED OUT AND ADJUSTED IN THE ASSESSMENT YEAR 2009 - 10 . IT IS SUBMITTED THAT ALL THE THREE ASSESSMENTS WERE SCRUTINY ASSESSMENTS . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT INCOME ON SALE OF SHARES IS COMPLETELY EXEMPT UNDER SECTION 10 (38), SO THE QUESTION OF SET OFF OF THE SAID INCOME AGAINST SALE OF LAND DOES NOT ARISE FOR ASSESSMENT YEAR 20 07 - 08 . REFERRING TO PAPER BOOK AT PAGE NOS. 46 & 47 , WHICH ARE THE 3 ITA NO. 6419/MUM/2013 ASSESSMENT YEAR: 20 0 9 - 1 0 DETAILS RELATING TO LONG TERM CAPITAL GAIN / LOSS FOR THE YEAR 2006 - 07 , T HE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IT WAS SPECIFICALLY SUBMITTED THAT LONG TERM CAPITAL GAIN OF RS. 5,35,375/ - ON SALE OF SHARES IN RESPECT OF WHICH SECURITY TRANSACTION TAX (STT) WAS PAID IS EXEMPT UNDER SECTION 10(38) OF THE ACT. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT THE INCOME IS COMPLETELY EXEMPT AND SUCH INCOME WILL NOT ENTER THE COMPUTATION OF INCOME. FOR T HIS PROPOSITION, HE PLACED RELIANCE ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ANG SECURITIES LTD. [ (2013) 217 TAXMAN 210 (P & H)(HC)] . 5. THE LD . DEPARTMENTAL REPRESENTATIVE BY SUPPORTING THE ORDER OF THE LD. CIT SUBMITS TH AT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND WHILE COMPLETING THE ASSESSMENT WITH REGARD TO NOTIONAL VALUE OF THE FLATS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND SIMILARLY WITH REGARD TO SET OFF OF CARRY FORWARD LOSSES. THUS, HE SUBMITTED THAT THE DIRECTION GIVEN BY THE LD. CIT IS APPROPRIATE AS THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE ASSESSING OFFICER HAS NOT VERIFIED THE CLAIMS, NOT APPLIED HIS MIND WHIL E COMPLETING THE ASSESSMENT. 6. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE - LAW RELIED ON. THE LD. CIT , INSOFAR AS THE ANNUAL RATABLE VALUE IN RESPECT OF ONE OF THE FLATS IS CONCERNED, DIRECTED THE ASSESSING OFFICER TO VERIFY AND CALCULATE THE FAIR MARKET VALUE OF ONE OF THE HOUSE PROPERTY OF THE ASSESSEE. WE ALSO FIND THE ASSESSEE HIMSELF AGREED THAT HE HAS NOT COMPUTED THE RENTED VALUE IN RESPECT OF ONE OF THE FLATS, BUT IN THE COURSE OF PROCEEDINGS BE FORE THE LD. CIT , THE ASSESSEE SUBMITTED STATEMENT COMPUTING THE NOTIONAL INCOME FROM ONE OF THE FLATS WHICH IS NOT SELF OCCUPIED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AT RS. 362/ - , WHICH ACCORDING TO THE ASSESSEE IS THE ANNUAL RATABLE VALUE. ON CAREFUL EX AMINATION , WE FIND THAT SINCE THE ASSESSING OFFICER HAS NOT EXAMINED THIS 4 ITA NO. 6419/MUM/2013 ASSESSMENT YEAR: 20 0 9 - 1 0 ASPECT OF THE MATTER NO R THE ASSESSEE HAS SHOWN THE RATABLE VALUE IN THE RETURN FILED , THE DIRECTION GIVEN BY THE LD. CIT IN THIS RESPECT IS AFFIRMED . 7 . COMING TO SET OFF OF BROUGH T FORWARD LOSSES OF RS. 9,16, 779/ - AGAINST THE LONG TERM CAPITAL GAIN OF RS. 22,46,414/ - , WE FIND THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS IN THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. WE ALSO FIND THAT SPECIFIC INFORMATION WAS CALLED FOR BY THE ASSESSING OFFICER TO FURNISH COPIES OF RETURNS, ASSESSMENT ORDERS TO VERIFY THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF SET OFF OF LOSS. WE ALSO FIND THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS GIVEN REPLY STATING AS UNDER: - AGAINST LONG TERM CAPITAL GAIN OF RS. 22,46,414/ - B/F LONG TERM CAPITAL LOSS RELATING TO ASSESSMENT YEAR 2008 - 09 OF RS.9,16,779/ - IS CLAIMED AND BALANCE LONG TERM CAPITAL GAIN OF RS. 13,29,635/ - IS SHOWN AS TAXABLE AS PER STATEMENT SUBMITTED EARLIER. THE COMMISSIONER DIRECTED THE ASSESSING OFFICER TO RESTRICT THE SET OFF OF LONG TERM CAPITAL LOSS OF RS. 3,81,404/ - AS AGAINST RS. 9,16,779/ - FROM LONG TERM CAPITAL GAIN OF RS. 22,46,414/ - . ACCORDING TO THE COMMISSIONER , THE TOTAL BROUGHT FORWA RD LOSSES FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 COMES TO RS. 95,529/ - AND RS. 2,85,875/ - RESPECTIVELY. WHILE COMING TO SUCH CONCLUSION, THE CIT COMPLETELY IGNORED THE SUBMISSIONS OF THE ASSESSEE THAT IN THE ASSESSMENT YEAR 2007 - 08 , ASSESSEE HAD INC URRED LONG TERM CAPITAL LOSS OF RS. 6,30,904/ - ON SALE OF LAND AND ALSO MADE LONG TERM CAPITAL GAIN OF RS. 5,35,397/ - . ON SALE OF SHARES THROUGH RECOGNIZED STOCK EXCHANGE AND PAYMENTS OF STT THEREON , IS TOTALLY EXEMPT FROM TAX UNDER SECTION 10(38) OF THE ACT . IN THE ASSESSMENT YEAR 2008 - 09, THE ASSESSEE HAS INCURRED LONG TERM CAPITAL LOSS OF RS. 2,85,875/ - ON MATURITY OF MUTUAL FUNDS AND SINCE THIS LOSS COULD NOT BE SET OFF OF AGAINST ANY OTHER INCOME , T HIS LOSS IS CARR IED FORWAR D ALONG WITH LONG TERM CA PITAL LOSS OF RS.6,30,904/ - RELATING TO ASSESSMENT YEAR 2007 - 08 . THUS, IT WAS THE CONTENTION THAT TOTAL 5 ITA NO. 6419/MUM/2013 ASSESSMENT YEAR: 20 0 9 - 1 0 LOSS CARR IE D FOR WAR D TO SUBSEQUENT YEAR I.E. ASSESSMENT YEAR 2009 - 10 WAS RS. 9,16,779/ - . THEREFORE, THE ASSESSEE CONTENDED THAT THE TOTAL LOSS TO BE S ET OFF OF IS RS. 9,16,779/ - AND NOT RS.3,81,404/ - AS ARRIVED AT BY THE CIT. THESE SUBMISSIONS HAVE NOT BEEN CONSIDERED BY THE CIT WHILE PASSING THE ORDER UNDER SECTION 263. WE F I ND THAT CIT SIMPLY GONE BY THE FIGURES , NEITHER APPLIED HIS MIND NOR CONSIDE RED THE SUBMISSIONS OF THE ASSESSEE. THE CIT HAS ALSO NOT SHOWN AS TO HOW THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . IN THESE CIRCUMSTANCES, WE REVERSE THE ORDER OF THE CIT IN RESPECT OF SET OFF OF CARRY FORWARDED LOSSES AND RESTORE THAT OF THE ASSESSING OFFICER AS THE COMPLETE DETAILS WERE AVAILABLE WITH THE ASSESSING OFFICER AND T HE ASSESSING OFFICER HAS EXAMINED THE ISSUE AND ALLOWED THE CLAIM OF THE ASSESSEE . THUS, WE REVERSE THE ORDER OF TH E CIT ON THIS ASPECT. 8 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2016 SD/ - SD/ - ( RAJENDRA ) ( C.N. PRASAD ) A CCOUNTANT M EMBER J UDICIAL M EMBER MUMBAI DATED: 21 / 1 0/2016 6 ITA NO. 6419/MUM/2013 ASSESSMENT YEAR: 20 0 9 - 1 0 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// ( ASSTT. REGISTRAR) ITAT, MUMBAI VR/ -