DCIT 20(2), MUMBAI V. RAJESH POPATLAL JAIN, MUMBAI

ITA 6450/MUM/2013

• Counselvise Citation: 645019914 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA P YADAV
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 2; 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , !' # $, % & BEFORE SHRI B.R. BASKARAN, AM AND SHRI AMIT SHUKLA, JM . / ITA NO. 6450/MUM/2013 ( / ASSESSMENT YEAR : 2009-10 ) DCIT 20(2) 612 PIRAMAL CHAMBER, LALBAUG MUMBAI-400012 .. / APPELLANT V/S RAJESH POPATLAL JAIN, EXCELLANCY, 4 TH CROSS LANE, LOKHANDWALA COMPLEX, ANDHERI (E) MUMBAI-400053 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AACPJ4374Q REVENUE BY : SHRI AKHILENDRA P. YADAV (DR) RESPONDENT BY : SHRI SUBODH RATNAPARKHI (AR) ! ' # $% / DATE OF HEARING 24.03.2015 &' () # $% / DATE OF ORDER 31 .03.2015 # / ORDER !' # $, % ' / PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE A GAINST ORDER DATED 7 TH AUGUST 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS)31, MUMBAI, FOR THE QUANTUM OF ASSESSMENT P ASSED UNDER MR. RAJESHPOPATLAL JAIN 2 SECTION 143(3), FOR THE ASSESSMENT YEAR 2009-10, ON THE FOLLOWING GROUNDS OF APPEAL:- THE LD. CIT(A) HAS ERRED ON THE FACTS AND CIRCUMST ANCES OF THE CASE IN HOLDING THAT ASSESSEE WAS NOT OWNER OF PROPERTY IN INDIVIDUAL CAPACITY IGNORING THE FACTS OF DEED OF CONVEYANCE D ATED 25.04.2007 AND 14.03.2008 AND ALSO STATEMENT RECORDED ON 13.12 .2011 U/S.131 OF IT ACT. AND RELYING ONLY ON DEED OF TRANSFER CUM CONVEYANCE EXECUTED IN NOVEMBER 2009. 2. THE LD. CIT(A) ERRED ON THE FACTS AND CIRCUMSTAN CES OF THE CASE IN HOLDING THAT CAPITAL GAIN IS NOT ATTRACTED. 3. THE LD. CIT(A) ERRED ON THE FACTS AND CIRCUMSTAN CES OF THE CASE IN HOLDING THAT THIS PROVISIONS OF SECTION 50C IS NOT ATTRACTED AS HE WAS NOT OWNER OF THE PROPERTY AS THERE WAS NO TRANSFER OF LAND & BUILDING. 2. THE BRIEF FACTS OF THE ISSUE INVOLVED ARE THAT, DU RING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R NOTED THAT THE ASSESSEE HAS PURCHASED A PROPERTY KNOWN AS, DWARKA ASHISH JAMBULWADI, KALBADEVI ROAD, MUMBAI, VIDE DEED OF CO NVEYANCE DTD. 25.04.2007 AND 14.03.2008 FOR SUM OF RS.31,00,000/- . THE SAID PROPERTY WAS A TENANTED PROPERTY HAVING 18 TENANTS IN THE TOTAL AREA ADMEASURING 8436 SQ. FT. HE FURTHER OBSERVED THAT THE ASSESSEE HAD ENTERED INTO A MOU WITH M/S. AMAZING DEAL PROPERTY DEV ELOPERS PVT. LTD. ON 14.7.2008, FOR THE CONVERSION OF TENANCY RI GHT TO OWNERSHIP RIGHT. THIS MOU WAS REGISTERED WITH THE REGISTRAR WH ICH EVALUATED THE MARKET VALUE OF ASSESSEES PROPERTY AT RS.89,13,828/- FOR THE PURPOSE MR. RAJESHPOPATLAL JAIN 3 PAYMENT OF STAMP DUTY. AO FURTHER NOTED THAT THE ASSESS EE HAS NOT OFFERED ANY INCOME ON SALE OF PROPERTY UNDER THE HEA D CAPITAL GAIN IN THIS YEAR. IN RESPONSE TO THE SHOW CAUSE NOTICE AS TO W HY SECTION 50C SHOULD NOT BE INVOKED WHICH CALCULATING THE TAXABLE S HORT TERM CAPITAL GAIN, THE ASSESSEE SUBMITTED AS UNDER:- AS EXPLAINED IN THE EARLIER PARAGRAPH, THAT THERE IS A MEMORANDUM OF UNDERTAKING BETWEEN THE ASSESSEE AND M/S. AMAZING D EAL PROPERTY DEVELOPERS PVT. LTD. THE VALUE ADOPTED IN THE SAID MEMORANDUM OF UNDERTAKING IS DETERMINED AT SALE OF PROPERTY INSTE AD OF DETERMINING THE SAME AT CONVERSATION OF TENANCY TO OWNERSHIP. T HEREFORE, THE VALUE AS DETERMINED IN THE SAID CASE DOES NOT WARRA NT TO EVOKE THE PROVISION OF U/S.50C OF I.T. ACT. HOWEVER, THE LEARNED ASSESSING OFFICER HELD THAT SAL E VALUE SHOULD BE ADOPTED AS PER SECTION 50C AND HENCE, ADD ED THE SHORT TERM CAPITAL GAIN OF RS.82,46,255/-. 3. BEFORE THE CIT(A), AFTER FURNISHING VARIOUS DOCUM ENTS AND EVIDENCES, THE ASSESSEE SUBMITTED THAT HE HAD SOLD TH E PROPERTY, AS A CHIEF PROMOTER OF THE COOPERATIVE HOUSING SOCIETY AND NOT IN THE INDIVIDUAL CAPACITY. FURTHER THE MOU DATED 14.07.2008 WAS NOT AN AGREEMENT FOR SALE AND THEREFORE, THE PROVISION OF S ECTION 50C WILL NOT BE APPLICABLE AT ALL. THE CONVEYANCE DEEDS WERE SIG NED BETWEEN THE ASSESSEE AND THE LANDLORD AS WELL AS DEEDS OF ALLOTME NT OF OWNERSHIP RIGHTS WITH THE VARIOUS TENANTS. THE LEARNED CIT(A) RE FERRED THE MATTER MR. RAJESHPOPATLAL JAIN 4 TO THE AO TO SUBMIT HIS REMAND REPORT IN LIGHT OF THE EVIDENCES FILED BY ASSESSEE. THE ASSESSING OFFICER IN HIS REMAND REPOR T, ADMITTED FACT THAT THE ASSESSEE HAS EXECUTED THE DOCUMENTS AS A PROM OTER OF THE SOCIETY AND NOT IN HIS INDIVIDUAL CAPACITY. THE LD. CI T(A), AFTER RECORDING HIS DETAILED REASON, DELETED THE SAID ADDITI ON AND FURTHER HELD THAT THE ASSESSEE IS NOT BEING THE OWNER OF THE P ROPERTY IN QUESTION AND THERE BEING NO TRANSFER OF LAND, THEREF ORE, SECTION 50C HAS NO APPLICABILITY. 4. BEFORE US, THE LD. COUNSEL SUBMITTED THAT IN THE REM AND REPORT, THIS VITAL FACT HAS BEEN ACCEPTED BY THE AO THAT THE AS SESSEE HAD ENTERED INTO MOU NOT IN HIS INDIVIDUAL CAPACITY BUT A S A CHIEF PROMOTER OF THE HOUSING SOCIETY AND THEREFORE, NO ADDITION CAN BE SUSTAINED IN THE HANDS OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY AND FURTHER THERE IS NO APPLICABILITY OF SECTION 50C. ON THE OTHER HAND, L D. DR RELIED UPON THE ORDER OF THE AO. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PE RUSAL OF THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER, WE F IND THAT IN THE REMAND REPORT, THE ASSESSING OFFICER VIDE PARA 4 & 5 OF HIS REMAND REPORT HAS STATED AS UNDER:- 4. BEFORE YOUR HONOUR, THE ASSESSEE HAD PLEADED TH AT HE HAD ENTERED INTO THE AGREEMENT FOR PURCHASE OF DWARKA ASHISH BU ILDING AND ALL OTHER DOCUMENTS IN HIS RULE AS THE PROMOTER OF THE TENANTS COOPERATIVE SOCIETY. IT IS THE CLAIM OF THE ASSESSEE THAT HE HA S NOT ENTERED INTO MR. RAJESHPOPATLAL JAIN 5 THESE AGREEMENTS IN HIS INDIVIDUAL CAPACITY. IN SUP PORT OF THE SAID CLAIM, THE ASSESSE HAS FILED COPY OF REGISTERED TRA NSFER-CUM- CONVEYANCE DOCUMENTS DATED NOVEMBER, 2009 (AT PAGE NOS.10 TO 105 OF THE PAPER BOOK ) AS WELL AS THE REGISTERED DEEDS OF ALLOTMENT WITH VARIOUS TENANTS (AT PAGE NOS.106 TO 275 OF THE PAPE R BOOK). THE ASSESSEE HAS SUBMITTED THAT HE HAS EXECUTED THE ABO VE DOCUMENTS AS PROMOTER OF THE TENANTS COOPERATIVE SOCIETY AND T HAT THESE DOCUMENTS WERE NOT EXECUTED IN HIS INDIVIDUAL CAPA CITY. 5. I HAVE EXAMINED THE DOCUMENTS CONCERNED AND IT I S CORRECT THAT THE ASSESSEE HAS EXECUTED THE ABOVE DOCUMENTS AS A PROMOTER OF DWARKA ASHISH COOPERATIVE HOUSING SOCIETY. THE ASSE SSEE HAS NOT EXECUTED THESE DOCUMENTS IN HIS INDIVIDUAL CAPACITY . HOWEVER, IT IS ALSO TRUE THAT THE ASSESSEE FAILED TO EXPLAIN THIS POSITION OF FACT IN THE COURSE OF ASSESSMENT PROCEEDINGS IN A COGENT MANNER . THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS WAS GIVEN A DEQUATE OPPORTUNITY TO EXPLAIN HIS CASE BY THE AO. THIS INC LUDED HIS PERSONAL EXAMINATION IN THE COURSE OF ASSESSMENT PROCEEDINGS . HOWEVER, THE ASSESSEE FAILED TO EXPLAIN HIS STATUS IN SPITE OF A DEQUATE OPPORTUNITY GIVEN IN ASSESSMENT PROCEEDINGS. YOUR HONOUR MAY TA KE THE DECISION ON THE ISSUE AS MAY BE DEEMED FIT. 6. THIS FACT IS ALSO BORNE OUT FROM THE DOCUMENTS SUBM ITTED BEFORE US. THUS, ON THESE FACTS, WE UPHOLD THE ORDER OF THE CIT(A) THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, B ECAUSE THE ASSESSEE WAS ACTING AS A CHIEF PROMOTER OF THE SOCIETY . REGARDING APPLICABILITY OF SECTION 50C ALSO, THERE IS A SPECIFIC FINDING OF THE LD. CIT (A) WHICH HAS NOT BEEN REBUTTED BEFORE US, THAT, THERE IS NO TRANSFER OF ANY CAPITAL ASSET BEING LAND OR BUILDING, BECAUSE TENANTS MR. RAJESHPOPATLAL JAIN 6 WERE IN THE POSSESSION OF THE PROPERTY AND AFTER THE PR OCESS OF NEGOTIATION, TENANTS GOT RIGHTS IN THE SAID PROPERTY AND NO TITLE OF THE PROPERTY WAS CONVEYED. SUCH A FINDING OF CIT(A) IS F ACTUAL AND LEGALLY CORRECT AND THEREFORE, NO INTERFERENCE IS CALLED FOR . ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF MARCH 2015. SD/- SD/- SD/ - . . B.R. BASKARAN ACCOUNTANT MEMBER SD/ - !' # $ % AMIT SHUKLA JUDICIAL MEMBER MUMBAI, () DATED: 31.03.2015 PATEL &' # $*+ ,+$ / COPY OF THE ORDER FORWARDED TO : (1) -$ / THE ASSESSEE; (2) . / THE REVENUE; (3) ! /$( ) / THE CIT(A); (4) ! /$ / THE CIT, MUMBAI CITY CONCERNED; (5) +2 $3, % 3, ! ' / THE DR, ITAT, MUMBAI; (6) 2 5' / GUARD FILE. +$ $ / TRUE COPY &' ! / BY ORDER 6 / 7 . / (DY./ASSTT. REGISTRAR) % 3, ! ' / ITAT, MUMBAI