VISHAL DYE CHEM INDUSTIRES P. LTD, MUMBAI V. ITO 7(3)(1), MUMBAI

ITA 6906/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0378 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 25-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Sale consideration of property below Jantri Value; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.6906/MUM/2016 ASSESSMENT YEAR : 2007-08 VISHAL DYE CHEM INDUSTRIES P.LTD., 210 SUJATA CHAMBERS, ABHECHAND GANDHI MARG, MUMBAI 400 009 PAN AAACV1632Q VS. ITO 7(3)(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K GOPAL RESPONDENT BY : SHRI RAJEEV GUBGOTRA DATE OF HEARING : 07 .0 8 .201 8 DATE OF PRONOUNCEMENT : 19 .0 9 .201 8 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER, D ATED 30.09.2016, OF LEARNED CIT(A)-14, MUMBAI FOR THE ASSESSMENT YEAR 2 007-08. 2. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ADJUDICATION. 3. GROUND NOS. 2 & 3 ARE IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED OF ` 57,15,400/- TOWARDS MARKET VALUE OF FLOOR SPACE IN DEX (FSI) SOLD PRIOR TO THE SALE OF LAND AND BUILDING. BRIEFLY, FACTS R ELATING TO THIS ISSUE ARE THE ASSESSEE COMPANY IS A MANUFACTURER AND DEALER IN CH EMICALS AND SOLVENTS. FOR THE YEAR UNDER DISPUTE THE ASSESSEE FILED ITS R ETURN OF INCOME ON ITA NO6906/MUM/2016 VISHAL DYE CHEM INDUSTRIES P LTD 2 11.10.2007 DECLARING INCOME OF ` 27,905/-. ASSESSMENT IN CASE OF THE ASSESSEE WAS ORIGINALLY COMPLETED U/S. 143(3) OF TH E ACT DETERMINING TOTAL INCOME AT ` 1,47,67,446/- AFTER MAKING ADDITION OF LONG TERM C APITAL GAIN OF ` 1,84,62,000/- AND COUPLE OF OTHER ADDITIONS. THE ASSESSMENT ORDER SO PASSED WAS CHALLENGED BY THE ASSESSEE BEFORE THE CI T(A) AND, THEREAFTER, BEFORE THE TRIBUNAL. THE TRIBUNAL AFTER CONSIDERIN G THE SUBMISSIONS MADE BY THE ASSESSEE DISPOSED OF THE APPEAL, VIDE ORDER DAT ED 05.06.2013 IN ITA NO. 4069/MUM/2011, RESTORING ALL THE ISSUES TO THE ASSE SSING OFFICER FOR FRESH ADJUDICATION. WHILE DOING SO THE TRIBUNAL OBSERVED THAT THE CIT(A) SHOULD HAVE MET THE OBJECTIONS OF THE ASSESSEE BEFORE ADOP TING THE VALUATION REPORT OF THE DVO. ACCORDINGLY, IN PURSUANCE TO THE DIREC TIONS OF THE TRIBUNAL, THE ASSESSING OFFICER TOOK UP THE ASSESSMENT PROCEEDING S AFRESH BY CALLING UPON THE ASSESSEE TO FURNISH THE DETAILS WITH REGARD TO ITS CLAIM OF DEDUCTION AGAINST LONG TERM CAPITAL GAIN. THE ASSESSING OFFI CER CALLED UPON THE ASSESSEE TO SPECIFICALLY EXPLAIN ITS OBJECTION TO A DOPTION OF SALE CONSIDERATION OF THE ASSET FOR THE PURPOSE OF COMPUTATION OF CAPI TAL GAIN AT ` 1,04,55,000/- IN RESPONSE, IT WAS SUBMITTED BY TH E ASSESSEE THAT IT HAD ENTERED INTO AN AGREEMENT WITH ONE M/S NARENDRA SIL K MILLS PROCESS DEPARTMENT ON 27.03.1986 FOR SALE OF FSI OF THE LAN D TO THE EXTENT OF 15,000 SQ. FT. @ ` 20/- PER SQ. FT. IT WAS SUBMITTED, ON COMPLETION OF THE SAID TRANSACTION, PAYMENT OF ` 3,00,000/- WAS RECEIVED IN THE BANK ACCOUNT. IT WAS SUBMITTED, AS PER THE SAID AGREEMENT, IT WAS SP ECIFICALLY AGREED THAT THE ITA NO6906/MUM/2016 VISHAL DYE CHEM INDUSTRIES P LTD 3 ASSESSEE WILL NOT BE ALLOWED TO USE THE PLOT OF LAN D ADMEASURING 1,394 SQ. MTS. EQUIVALENT TO 15,000 SQ. FT FSI OUT OF THE TOT AL LAND ADMEASURING 2750 SQ. FT. THUS, IT WAS SUBMITTED, WHILE COMPUTING CA PITAL GAIN, THE MARKET VALUE OF FSI OF 15,000 SQ. FT. AS ON 14.06.2006 AMOUNTING TO ` 57,15,400/- SHOULD HAVE BEEN REDUCED FROM THE MARKET VALUE OF ` 1,04,55,000/- DETERMINED BY THE DVO. THE ASSESSING OFFICER AFTER CONSIDERING S UBMISSIONS OF THE ASSESSEE DID NOT FIND MERIT IN THEM. HE OBSERVED, THOUGH, THE ASSESSEE MADE THE AFORESAID CLAIM BEFORE THE DVO HOWEVER, TH E DVO ON THE BASIS OF INFORMATION OBTAINED FROM THANE MUNICIPAL CORPORATI ON (TMC) HAS FOUND THE CLAIM OF SALE OF FSI OF 15,000 SQ. FT. TO BE WITHOU T ANY BASIS CONSIDERING THE FACT THAT FSI OF 2,550 SQ. MT WAS AVAILABLE TO THE ASSESSEE WHEN THE PROPERTY WAS SOLD IN THE YEAR 2006. THUS, ON THE BASIS OF T HE OBSERVATIONS OF THE DVO, THE ASSESSING OFFICER REJECTED ASSESSEES CLAI M OF DEDUCTION OF ` 57,15,400/-. THOUGH, THE ASSESSEE CHALLENGED THE A FORESAID DECISION OF THE ASSESSING OFFICER BEFORE THE CIT(A), HOWEVER, THE L EARNED CIT(A) SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. THE LEARNED AR REITERATING THE STAND TAKEN BEFOR E THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT THE CLAIM OF THE ASSESSE E THAT IT HAS SOLD FSI OF 15,000 SQ. FT. IN THE YEAR 1986 HAS NOT BEEN CONSID ERED APPROPRIATELY BY THE DEPARTMENTAL AUTHORITIES BY CONDUCTING NECESSARY EN QUIRY. HE SUBMITTED, THE ASSESSEE THROUGH AN AGREEMENT EXECUTED IN 1986 HAS SOLD FSI OF 15000 SQ. FT. TO M/S. RAJASHRI BUILDERS, WHO WAS OWNER OF THE ADJACENT LAND. IN THIS ITA NO6906/MUM/2016 VISHAL DYE CHEM INDUSTRIES P LTD 4 CONTEXT, HE DREW OUR ATTENTION TO THE AGREEMENT DAT ED 27.03.1986. THE LEARNED AR SUBMITTED, BEFORE REJECTING ASSESSEES C LAIM ENQUIRY SHOULD HAVE BEEN CONDUCTED BY THE ASSESSING OFFICER AND CIT(A) WITH M/S. RAJASHRI BUILDERS TO PROVE THE FACT THAT THE ASSESSEE HAS SO LD FSI OF 15,000 SQ. FT. IN THIS CONTEXT, THE LEARNED AR DREW OUR ATTENTION TO LETTER DATED 11.04.1986 ADDRESSED TO M/S. RAJASHRI BUILDERS, A COPY OF WHIC H IS PLACED AT PAGE 10 OF THE PAPER-BOOK. HE SUBMITTED, THOUGH, THE ITAT HAD DIRECTED THE ASSESSING OFFICER TO MEET ALL THE OBJECTIONS OF THE ASSESSEE, HOWEVER, THE ASSESSING OFFICER HAS NOT COMPLIED TO SUCH DIRECTIONS. THUS, HE SUBMITTED, ASSESSEES CLAIM OF DEDUCTION WITH REGARD TO SALE OF FSI OF 15 ,000 SQ. FT. SHOULD BE EXAMINED BY THE ASSESSING OFFICER. 5. THE LEARNED DR STRONGLY OPPOSING THE CONTENTIONS OF THE ASSESSEE SUBMITTED THAT IN COURSE OF ASSESSMENT PROCEEDINGS IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSEE HAS NOT FI LED ANY FRESH EVIDENCE OR BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER ANY FRESH FACT TO DEMONSTRATE THAT FSI OF 15,000 SQ. FT WAS ACTUALLY SOLD. THERE FORE, THE CLAIM MADE BY THE ASSESSEE REMAINED UNPROVED. HENCE, THERE IS NO REA SON TO INTERFERE WITH THE DECISION OF THE CIT(A). 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THOUGH, THE ASSESSEE HAS CLAIMED THAT BEFORE THE SA LE OF LAND AND FACTORY BUILDING ON 14.06.2006, IT HAS SOLD FSI TO THE EXTE NT OF 15,000 SQ. FT. TO ITA NO6906/MUM/2016 VISHAL DYE CHEM INDUSTRIES P LTD 5 RAJASHRI BUILDERS THROUGH NARENDRA SILK MILLS, HOWE VER, EXCEPT AN UNREGISTERED AGREEMENT, DATED 27.03.1986, AND LETTE R WRITTEN TO RAJASHRI BUILDERS ON 11.04.1986, THE ASSESSEE HAS NOT BROUGH T ANY OTHER EVIDENCE ON RECORD TO CONCLUSIVELY PROVE THE SALE OF FSI OF 15, 000 SQ. FT. IN MARCH 1986. IT IS RELEVANT TO OBSERVE, DURING THE COURSE OF PRO CEEDINGS BEFORE THE DVO, THOUGH, THE ASSESSEE HAD TAKEN THE AFORESAID PLEA O F SALE OF FSI, HOWEVER, THE DVO AFTER DUE ENQUIRY WITH THE TMC HAS FOUND TH AT NO SUCH SALE OF FSI OF 15,000 SQ. FT WAS EFFECTED BY THE ASSESSEE, WHICH I S EVIDENT FROM THE FACT THAT FSI SANCTIONED AT THE TIME OF SALE OF LAND BY THE ASSESSEE WAS CONSIDERING THE AREA OF 2550 SQ. MTS. THE DVO HAS OBSERVED, HAD IT BEEN THE FACT THAT THE ASSESSEE HAD SOLD FSI OF 15,000 S Q. FT. IN 1986, THE TMC DEFINITELY WOULD HAVE DEDUCTED THE AREA OF 15,000 S Q. FT. FROM THE TOTAL PLOT AREA WHILE SANCTIONING FSI ON THE PLOT OF LAND SOLD BY THE ASSESSEE. IF THE ASSESSEE CLAIMS THAT IT HAS SOLD FSI OF 15,000 SQ. FT IN THE YEAR 1986, THE ONUS IS ENTIRELY ON THE ASSESSEE TO PROVE SUCH FACT S THROUGH COGENT EVIDENCE. HOWEVER, IN OUR VIEW, THE ASSESSEE HAS FAILED TO DI SCHARGE SUCH ONUS. MOREOVER, ON PERUSAL OF LETTER DATED 04.10.2010 FIL ED BEFORE THE DVO, IT IS NOTICED, THE ASSESSEE HAS SUBMITTED THAT THOUGH TO THEIR BELIEF FSI OF 15,000 SQ. FT. SOLD BY THE ASSESSEE TO NARENDRA SILK MILLS HAS BEEN UTILISED BY M/S. RAJASHRI BUILDERS, WHICH HAS CONSTRUCTED RAJASHRI I NDUSTRIAL ESTATE IN THE ADJACENT PLOT LAND, HOWEVER, THE ASSESSEE DID NOT H AVE ANY DOCUMENTARY EVIDENCE TO PROVE SUCH FACT. WHEN THE ASSESSEE IS NOT IN A POSITION TO FURNISH ITA NO6906/MUM/2016 VISHAL DYE CHEM INDUSTRIES P LTD 6 ANY COGENT EVIDENCE TO PROVE ITS CLAIM OF SALE OF F SI OF 15,000 SQ. FT., SUCH CLAIM CANNOT BE ACCEPTED ON MERE FACE VALUE. IN TH ESE CIRCUMSTANCES, WHEN THE ASSESSEE HAS FAILED TO PROVE ITS CLAIM AT THE S TAGE OF DEPARTMENTAL PROCEEDINGS AS WELL AS BEFORE US BY FURNISHING ANY COGENT DOCUMENTARY EVIDENCE, WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE DECISION OF CIT(A) ON THIS ISSUE. ACCORDINGLY, THE GROUNDS RAISED ARE DISMISSED. 7. IN GROUND NO.4, ASSESSEE HAS CHALLENGED THE DECI SION OF THE ASSESSING OFFICER IN APPLYING THE PROVISIONS OF SECTION 50C(2 ) AFTER COMPLETION OF THE ASSESSMENT PROCEEDINGS. AT THE OUTSET, WE MUST OBS ERVE THAT THE LEARNED AR HAS NOT MADE ANY SPECIFIC ARGUMENT ON THIS GROUND. HOWEVER, AS COULD BE SEEN FROM THE MATERIAL ON RECORD, BEFORE THE ASSESS ING OFFICER ALSO THE ASSESSEE HAS NOT RAISED ANY OBJECTIONS ON THE ISSUE OF REFERENCE BEING MADE U/S. 50C(2) OF THE ACT TO THE DVO. IN ANY CASE OF THE MATTER, BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS SPECIFICALLY RAISED THE ISSUE OF NON REFERRAL OF VALUATION TO THE ASSESSING OFFICER U/S. 50C(2) OF THE ACT. CONSIDERING THE AFORESAID SUBMISSIONS OF THE ASSESS EE, THE CIT(A) HAS DIRECTED THE DVO TO DETERMINE THE VALUE OF THE ASSE T AND THE ASSESSEE HAS ALSO PARTICIPATED IN SUCH PROCEEDINGS. IN ANY CASE OF THE MATTER, BY REFERRING THE VALUATION TO THE DVO, THE ASSESSEE IS IN NO WAY PREJUDICED, SINCE, THE VALUE DETERMINED BY THE DVO IS MUCH LESS THAN THE V ALUE DETERMINED BY STAMP VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY. THEREFORE, WE DO NOT FIND ANY MERIT IN THE GROUND RAISED. IT IS DIS MISSED. ITA NO6906/MUM/2016 VISHAL DYE CHEM INDUSTRIES P LTD 7 8. GROUND NO.5 BEING CONSEQUENTIAL IS NOT REQUIRED TO BE ADJUDICATED. 9. IN GROUND NO.6, ASSESSEE HAS CHALLENGED ADDITION OF ` 2,58,011/- BEING THE SCRAP VALUE OF FACTORY SHED. IT IS THE CLAIM O F THE ASSESSEE THAT SINCE NO AMOUNT WAS RECEIVED BY THE ASSESSEE TOWARDS SCRAP V ALUE OF FACTORY SHED, IT CANNOT BE ADDED. SAME ALSO IS THE ARGUMENT OF THE ASSESSEE WITH REGARD TO THE ADDITION OF ` 3,00,000/- TOWARDS SALE VALUE OF FURNITURE AND FIX TURES AS RAISED IN GROUND NO.7. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS EMANATING FROM RECO RD, ASSESSEE ITSELF HAS CREDITED AFORESAID AMOUNTS TO THE PROFIT & LOSS ACC OUNT. THEREFORE, AS A NATURAL COROLLARY THE AMOUNTS WERE REQUIRED TO BE O FFERED AS INCOME, UNLESS, THE ASSESSEE THROUGH PROPER EVIDENCE PROVES THAT IT HAS NOT RECEIVED SUCH INCOME. THE ASSESSEE HAVING NOT DONE SO, THE ASSES SING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF THE AFORESAID AMOUNTS. A CCORDINGLY, GROUND NOS. 6 & 7 ARE DISMISSED. 11. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 19 TH SEPTEMBER 2018. SD/- SD/- (MANOJ KUMAR AGGARWAL) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED : 19 TH SEPTEMBER, 2018. SA ITA NO6906/MUM/2016 VISHAL DYE CHEM INDUSTRIES P LTD 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI