KSHAMA VIPUL CHOKSI, MUMBAI V. ASST CIT 21(1), MUMBAI

ITA 657/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3329 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURLIDR
• Assessee Lawyers: DHIRENDRA M SHAH
• Keywords: Capital receipt; Surrender of tenancy right

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.657/MUM/2013 ASSESSMENT YEAR-2009-10 KSHAMA VIPUL CHOKSI C/O- MANGALDAS D. SHAH & CO., 506, LOTUS HOUSE, 5 TH FLOOR, NEW MARINE LINES, MUMBAI-400020 / VS. ACIT - 21(1), C-10, ROOM NO.600, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 PAN NO. ACTPC4351K ( / APPELLANT) ( / RESPONDENT) ! / ASSESSEE BY SHRI DHIRENDRA M. SHAH ' / REVENUE BY SHRI M.MURLI-DR # '$ % !& / DATE OF HEARING : 16/03/2016 % !& / DATE OF ORDER: 16/03/2016 ITA NO.657/MUM/2013 KSHAMA VIPUL CHOKSI 2 / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 23/10/2012 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE AMOU NT OF RS.6,50,000/- RECEIVED AS CAPITAL RECEIPT WAS DIREC TED TO BE TAXED AS CAPITAL GAIN. 2. DURING HEARING, IT WAS NOTED BY THE BENCH THAT THERE IS DELAY OF TWO DAYS IN FILING THE APPEAL BY THE ASSESSEE BEFORE THIS TRIBUNAL, THEREFORE, BEFORE AD VERTING FURTHER, FIRST WE SHALL DECIDE THE ISSUE OF LATE FI LING THE APPEAL BY TWO DAYS . CONSIDERING THE TOTALITY OF FACTS, NO DOUBT FILING OF AN APPEAL IS A RIGHT GRANTED UNDER THE STATUTE TO THE ASSESSEE AND IS NOT AN AUTOMATIC PRI VILEGE, THEREFORE, THE ASSESSEE IS EXPECTED TO BE VIGILANT IN ADHERING TO THE MANNER AND MODE IN WHICH THE APPEAL S ARE TO BE FILED IN TERMS OF THE RELEVANT PROVISIONS OF THE ACT. NEVERTHELESS, A LIBERAL APPROACH HAS TO BE ADOPTED BY THE APPELLATE AUTHORITIES, WHERE DELAY HAS OCCURRED FOR BONA FIDE REASONS ON THE PART OF THE ASSESSEE OR THE RE VENUE IN FILING THE APPEALS. IN MATTERS CONCERNING THE FILI NG OF APPEALS, IN EXERCISE OF THE STATUTORY RIGHT, A REFU SAL TO CONDONED THE DELAY CAN RESULT IN A MERITORIOUS MATT ER BEING THROWN OUT AT THE THRESHOLD, WHICH MAY LEAD T O ITA NO.657/MUM/2013 KSHAMA VIPUL CHOKSI 3 MISCARRIAGE OF JUSTICE. THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHN ICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUS TICE AND IS EXPECTED TO DO SO. 2.1. THE HONBLE APEX COURT IN A CELEBRATED DECISI ON IN COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. 1 67 ITR 471 OPINED THAT WHEN TECHNICAL CONSIDERATION AND SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS ARE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JU STICE. THIS IS FOR THE REASON THAT AN OPPOSING PARTY, IN A DISPUTE, CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON- DELIBERATE DELAY. THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE CONDONATION OF DELAY, JUDICIOUS AND LIBERAL APPROACH IS TO BE ADOPTED. I F SUFFICIENT CAUSE IS FOUND TO EXIST, WHICH IS BONA -FIDE ONE, AND NOT DUE TO NEGLIGENCE OF THE ASSESSEE, THE DELA Y NEEDS TO CONDONED IN SUCH CASES. THE EXPRESSION SUFFICI ENT CAUSE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS T O APPLY LAW IN A MEANINGFUL MANNER, WHICH SUB-SERVES THE EN D OF JUSTICE- THAT BEING THE LIFE PURPOSE OF THE EXISTEN CE OF THE INSTITUTION OF THE COURTS. WHEN SUBSTANTIAL JUSTIC E AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTH ER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERR ED. THIS MEANS THAT THERE SHOULD BE NO MALAFIDE OR DILATORY TACTICS. SUFFICIENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCTIO N TO ADVANCE SUBSTANTIAL JUSTICE. THE HONBLE APEX COUR T IN ITA NO.657/MUM/2013 KSHAMA VIPUL CHOKSI 4 COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. ( 167 ITR 471) OBSERVED AS UNDER:- 3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 196 3 IN ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO P ARTIES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY EL ASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT I S COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFI ABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COUR T. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHERS COURTS IN THE HIERARCHY. 2.2. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL V S. SHANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE C OURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION SUFFICIENT CAUSE, THE PRINCIPLE OF ADVANCING SUBS TANTIAL JUSTICE IS OF PRIME IMPORTANCE. THE COURT HELD THAT THE EXPRESSION SUFFICIENT CAUSE SHOULD RECEIVE LIBERA L CONSTRUCTION. HAVING MADE THE AFORESAID OBSERVATION AND CONSIDERING THE MATERIAL FACTS AVAILABLE ON RECORD AND MORE SPECIFICALLY THE REASON OF DELAY, SUPPORTED BY AN A FFIDAVIT, ITA NO.657/MUM/2013 KSHAMA VIPUL CHOKSI 5 AS MENTIONED IN THE APPLICATION, WE ARE SATISFIED T HE DELAY WAS WITH BONA-FIDE REASONS AND THE ASSESSEE HAS SATISFACTORILY EXPLAINED THE REASONS OF DELAY, THER EFORE, THE DELAY OF TWO DAYS IS CONDONED. 3. SO FAR AS, CONSIDERING THE AMOUNT OF RS.6,50,000/-, RECEIVED BY THE ASSESSEE, WHICH WAS DECIDED AS INCOME FROM OTHER SOURCES BY THE LD. ASSESSING OFFICER AND TAXABLE U/S 45 OF THE ACT BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS), IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT, THE AMOUNT WAS RECEIVED IN TERMS OF REDEVELOPMENT OF AGREEMENT IN LIEU OF SURRENDER OF TENANCY RIGHTS IN THE OLD FLAT, DURING THE PERIOD O F STAY OUTSIDE, THUS, IN FACT, THERE WAS NO GAIN TO THE AS SESSEE AS THE AMOUNT WAS RECEIVED ON ACCOUNT OF HARDSHIP AND DISPLACEMENT CAUSED TO THE ASSESSEE FOR ALTERNATIVE ACCOMMODATION. ON THE OTHER HAND, THE LD. DR, SHRI M. MURLI, DEFENDED THE CONCLUSION ARRIVED AT IN THE IM PUGNED ORDER BY CONTENDING THAT THE LD. COMMISSIONER OF IN COME TAX (APPEALS) RIGHTLY TREATED THE SAME AS CAPITAL G AINS U/S 45 OF THE ACT. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE WAS A TENANT IN THE BUILDING NAMELY JAYDEEP, SITUATED AT ROAD NO.1, JVPD SCHEME, VILE -PARLE, MUMBAI, WHICH WAS AGREED TO BE GIVEN FOR REDEVELOPM ENT THROUGH AN REDEVELOPMENT AGREEMENT WITH THE BUILDER S M/S ITA NO.657/MUM/2013 KSHAMA VIPUL CHOKSI 6 TASSA NETCOM PVT. LTD. IN VIEW OF THE SURRENDER OF TENANCY RIGHTS IN THE OLD FLAT, THE ASSESSEE WAS GIVEN COMP ENSATION OF RS.6,50,000/- ON ACCOUNT OF HARDSHIP AND DISPLAC EMENT, CAUSED TO THE ASSESSEE, FOR ALTERNATIVE ACCOMMODATI ON. THE LD. ASSESSING OFFICER WAS NOT SATISFIED WITH TH E EXPLANATION OF THE ASSESSEE AND HE TREATED THE INCO ME ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCE S. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TA X (APPEALS), IT WAS HELD THAT THE AMOUNT OF RS.6,50,0 00/- AND THE VALUE OF THE NEW FLAT IS CHARGEABLE UNDER THE H EAD CAPITAL GAINS U/S 45 OF THE ACT. THE ASSESSEE IS AG GRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 3.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE RECEIVED CASH OF RS.6,50,000/- FR OM THE DEVELOPER THROUGH A REDEVELOPMENT OF AGREEMENT FOR SURRENDER OF TENANCY RIGHT IN THE OLD FLAT AND ON A CCOUNT OF HARDSHIP AND DISPLACEMENT CAUSED TO THE ASSESSEE FO R ALTERNATIVE ACCOMMODATION. IN SUCH A SITUATION, NEI THER IT IS A INCOME FROM OTHER SOURCES NOR TO BE TAXED AS C APITAL GAIN U/S 45 AS WAS HELD IN THE IMPUGNED ORDER, BECA USE, THE ASSESSEE RECEIVED THIS AMOUNT FOR GETTING ALTER NATIVE ACCOMMODATION UNTIL THE PERIOD, THE NEW FLAT IS ALL OTTED TO ITA NO.657/MUM/2013 KSHAMA VIPUL CHOKSI 7 THE ASSESSEE. THIS AMOUNT WAS RECEIVED ON ACCOUNT OF HARDSHIP AND DISPLACEMENT CAUSED TO THE ASSESSEE FO R ALTERNATIVE ACCOMMODATION. IN SUCH A SITUATION, THE RE IS NO GAIN TO THE ASSESSEE. PRESUMABLY, THE AMOUNT WAS US ED FOR PAYING THE RENT FOR THE ALTERNATIVE ACCOMMODATION F OR A FIXED PERIOD OF TIME UNTIL, THE NEW BUILDING CAME I N TO EXISTENCE AND NEW FLAT WAS ALLOTTED TO THE ASSESSEE IN PLACE OF OLD ONE, PURSUANT TO REDEVELOPMENT AGREEMENT. W HAT THE ASSESSEE RECEIVED WAS ONLY A NEW FLAT IN PLACE OF OLD FLAT TO BE USED FOR RESIDENTIAL PURPOSES, THEREFORE, THE RE IS NO GAIN TO THE ASSESSEE AS HAS BEEN HELD IN THE IMPUGN ED ORDER, CONSEQUENTLY, THERE IS NO QUESTION OF TREATI NG THE AMOUNT AS CAPITAL GAIN TAXABLE U/S 45 OF THE ACT. T HE APPEAL OF THE ASSESSEE, IS, THEREFORE, ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 16/03/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ) DATED : 16/03/2016 F{X~{T? P.S/. . . ITA NO.657/MUM/2013 KSHAMA VIPUL CHOKSI 8 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. / THE RESPONDENT. 3. + + # ,! ( ) / THE CIT, MUMBAI. 4. + + # ,! / CIT(A)- , MUMBAI, 5. /'01 !2 , + & 23 , # $ / DR, ITAT, MUMBAI 6. 14 5$ / GUARD FILE. / BY ORDER, /! ! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI