SANJAY SUDHIR KAMBLI, MUMBAI V. ITO 21(3)(2), MUMBAI

ITA 6466/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79373 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L PADHADE
• Assessee Lawyers: PRAMOD KUMAR PARIDA
• Keywords: Sale consideration of property below Jantri Value; Business income
• Section: 54; 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.6466/MUM/2012 ( / ASSESSMENT YEAR :2009-10 ) SMT.SANJAY SUDHIR KAMBLI RED HOUSE, OPP. IIT MARKET, PADMAVATI SOCIETY, POWAI, MUMBAI-400076. / VS. INCOME TAX OFFICER, WARD 21 (3)(2), MUMBAI ( / APPELLANT) .. ( !' / RESPONDENT) ./ #$ ./PAN/GIR NO. : AAAPPK3272R % / APPELLANT BY : SHRI PRA MOD KUMAR PARIDA !' & % /RESPONDENT BY : SHRI PRAKASH L PADHADE ' & ( ) / DATE OF HEARING : 10.7.2014 *+ & ( ) /DATE OF PRONOUNCEMENT : 10. 7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.07.2012 PASSED BY LD CIT(A)-32, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS IN APPEAL BEFORE US IN RESPE CT OF THE FOLLOWING ISSUES:- (A) REJECTION OF CLAIM OF LONG TERM CAPITAL GAIN ARISING ON SALE OF A HOUSE AND CONSEQUENTIAL REJECTION OF CLAIM FOR DE DUCTION U/S 54 OF THE ACT. (B) DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. (C) VALIDITY OF CHARGING INTEREST. I.T.A. NO.6466/MUM/2012 2 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRIEF. THE ASSESSEE SOLD FLATS LOCATED AT NO.201 & 202, B-WING, BLDG. NO.4, LAKE P ALACE CHS, POWAI (HEREINAFTER ORIGINAL ASSET) AND CLAIMED THE CAPI TAL GAIN ARISING THEREON AS LONG TERM CAPITAL GAINS. THE ASSESSEE HAD PURCHASE D A NEW HOUSE AND CLAIMED THE COST OF NEW HOUSE AS DEDUCTION U/S 54 OF THE AC T. THE AO NOTICED THAT THE ORIGINAL ASSET WAS PURCHASED ON 12.09.2005 AND THEY WERE SOLD ON 16.07.2008. THUS THE AO NOTICED THAT THE ASSESSEE HAD HELD THE ORIGINAL ASSET FOR A PERIOD OF 2 YEARS AND 10 MONTHS ONLY, I.E., LESS THAN THREE Y EARS AND ACCORDINGLY HELD THAT THE GAIN ARISING ON SALE OF FLATS SHALL CONSTITUTE SHORT TERM CAPITAL GAINS ONLY. ACCORDINGLY, HE ASSESSED THE GAINS ARISING ON SALE OF FLATS AS SHORT TERM CAPITAL GAIN AND ACCORDINGLY REJECTED THE CLAIM FOR DEDUCTI ON U/S 54 OF THE ACT, SINCE THE SAID DEDUCTION IS AVAILABLE AGAINST LONG TERM CAPIT AL GAIN. 3.1 THE ASSESSEE WAS AN EMPLOYEE OF A FOREIGN C OMPANY NAMED M/S EGYPTIAN INTERNATIONAL FREE ZONE CO., ALEXANDRIA FROM WHICH HE RECEIVED SALARY. HE WAS ALSO THE PROPRIETOR OF A CONCERN NAMED M/S TRIDENT MARKETING DOING BUSINESS IN MUMBAI. IN THE PROFIT AND LOSS ACCOUNT, HE CLAIMED A SUM OF RS.6,66,592/- AS FOREIGN TRAVEL EXPENSES FROM EGYPT TO INDIA AND VIC E VERSA ON SEVERAL OCCASIONS. THE AO TOOK THE VIEW THAT THE ASSESSEE HAS INCURRED FOREIGN TRAVEL EXPENSES FOR VISITING HIS FAMILY IN INDIA AND ACCORDINGLY TREATE D THE FOREIGN TRAVEL EXPENSES AS PURELY PERSONAL IN NATURE. ACCORDINGLY, HE DISALLO WED THE SAID EXPENSES. I.T.A. NO.6466/MUM/2012 3 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BY FILING APPEAL BEFORE LD CIT(A), BUT COULD NOT SUCCEED. AGGRIEVED, THE ASSE SSEE HAS FILED THIS APPEAL BEFORE US. 5. THE LD COUNSEL APPEARING FOR THE ASSESSEE SH RI PRAMOD KUMAR PARIDA SUBMITTED THAT THE TAX AUTHORITIES HAVE TAKEN THE V IEW THAT THE ASSESSEE HAS HELD THE ASSET FOR LESS THAN THREE YEARS BY RECOGNI ZING THE DATE OF SALE AGREEMENT. HE SUBMITTED THAT THE ASSESSEE DID NOT HAND OVER THE POSSESSION OF THE PROPERTY ON THE DATE OF AGREEMENT AND HE HANDED OVER THE SAME ONLY ON 22.9.2008 AFTER RECEIPT OF FULL AMOUNT OF CONSIDERA TION AND ALSO AFTER COMPLETION OF ALL FORMALITIES. ACCORDINGLY HE SUBMITTED THAT THE TAX AUTHORITIES HAVE WRONGLY RECOGNIZED THE DATE OF AGREEMENT AS THE DATE OF SAL E / DATE OF HANDING OVER OF POSSESSION, WHICH IS AGAINST THE FACTS PREVAILING I N THE INSTANT CASE. HE SUBMITTED THAT THE ASSESSEE HAS GATHERED CERTAIN AD DITIONAL EVIDENCES TO SUPPORT ITS STAND AND ACCORDINGLY PRAYED THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO PRODUCE THE SAME BEFORE THE TAX AUTHORITIES. WI TH REGARD TO THE FOREIGN TRAVEL EXPENSES, THE LD A.R SUBMITTED THAT THE ASSESSEE WA S WRONG IN PRESUMING THAT THE ASSESSEE HAS INCURRED THOSE EXPENSES IN CONNECT ION WITH FAMILY TRIPS. HE SUBMITTED THAT THE ASSESSING OFFICER HAS IGNORED TH E FACT THE ASSESSEE HAS CARRIED ON BUSINESS IN INDIA AND HAS DECLARED INCOME FROM T HERE FROM. HE SUBMITTED THAT THE AO, WHILE ACCEPTING THE BUSINESS INCOME, S HOULD NOT HAVE SINGLED OUT THE FOREIGN TRAVEL EXPENSES ALONE TO TAKE ADVERSE D ECISION AGAINST THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE MAY BE GIVEN ONE MOR E OPPORTUNITY TO MAKE ITS SUBMISSIONS ON THIS ISSUE ALSO. WITH REGARD TO THE GROUND RELATING TO CHARGING OF I.T.A. NO.6466/MUM/2012 4 INTEREST, THE LD A.R ADMITTED THAT THE CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE. 6. ON THE CONTRARY, THE LD D.R OBJECTED TO THE PLEA MADE BY THE COUNSEL FOR THE ASSESSEE AND STRONGLY SUPPORTED THE ORDER PASSE D BY LD CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. WITH REGARD TO THE FIRST ISSUE RELATING TO THE NATURE OF CAPITAL GAIN ARISING ON SALE OF FLATS, WE NOTICE THAT THE TAX AUTHORITIES HAVE RECO GNIZED THE DATE OF SALE AGREEMENT FOR DETERMINING THE NATURE OF CAPITAL GAI N. IT IS PERTINENT TO NOTE THAT THE SALE CONSIDERATION WAS FIXED BY THE STAMP AUTHO RITIES AT RS.73,68,800/- AS AGAINST THE VALUE OF RS.50.00 LAKHS SHOWN IN THE SA LE AGREEMENT. HENCE, THE AO HAS ADOPTED THE SALE CONSIDERATION AT RS.73,68,800/ - IN TERMS OF SEC. 50C OF THE ACT. HOWEVER, IT APPEARS THAT THE TAX AUTHORITIES HAVE NOT CONSIDERED THE COVENANTS OF THE SALE AGREEMENT. ACCORDING TO LD A .R, THE ASSESSEE DID NOT HAND OVER THE POSSESSION ON THE DATE OF EXECUTION O F THE SALE AGREEMENT, BUT HAS GIVEN THE SAME ONLY SUBSEQUENTLY. IN THIS REGA RD THE LD A.R SUBMITTED THAT THE ASSESSEE IS GATHERING CERTAIN ADDITIONAL EVIDEN CES INCLUDING CONFIRMATION FROM THE PURCHASERS TO PROVE THIS FACT AND ACCORDIN GLY SOUGHT AN OPPORTUNITY. A PERUSAL OF THE COVENANTS OF AGREEMENT PRIMA FACIE S UPPORTS THE SUBMISSIONS MADE BY THE LD A.R. HOWEVER, IN OUR VIEW, THE SAID SUBMISSIONS REQUIRE PROPER VERIFICATION. ACCORDINGLY, WE FIND MERIT IN THE PL EA MADE BY LD A.R. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE A ND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAM INE THIS MATTER AFRESH BY DULY CONSIDERING THE MATERIALS AND EXPLANATIONS THAT MAY BE FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANC E WITH THE LAW. I.T.A. NO.6466/MUM/2012 5 8. IN RESPECT OF THE FOREIGN TRAVEL EXPENSES, T HE CONTENTION OF THE LD A.R WAS THAT THE TAX AUTHORITIES HAVE MADE THE DISALLOWANCE ON PRESUMPTIONS. ACCORDING TO THE COUNSEL, THE ASSESSEE WOULD BE IN A POSITION TO PROVE THE BUSINESS EXIGENCIES IN UNDERTAKING THE TRAVEL IF ONE MORE OP PORTUNITY IS GIVEN TO THE ASSESSEE. ON THIS ISSUE ALSO, WE ARE OF THE VIEW T HAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY IN THE INTEREST OF NATURAL JUS TICE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE TH E SAME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THIS MATTER AFRESH BY DULY CONSIDERING THE MATERIALS AND EXPLANATIONS THAT MAY BE FURNISHED BY THE ASSES SEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 10TH JULY, 2014 . *+ ' , -. / 0 10TH JULY, 2014 + & 2 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER - ' MUMBAI: 10 TH JULY,2014. . . ./ SRL , SR. PS I.T.A. NO.6466/MUM/2012 6 ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ' 5( ( ) / THE CIT(A)- CONCERNED 4. ' 5( / CIT CONCERNED 5. 67 2 !(8 , ) 8 , - ' / DR, ITAT, MUMBAI CONCERNED 6. 2 9 : / GUARD FILE. ; ' / BY ORDER, TRUE COPY < # (ASSTT. REGISTRAR) ) 8 , - ' /ITAT, MUMBAI