JAWAHAR CO.OP HSG SOCIETY LTD, MUMBAI V. ITO 19(2)(3), MUMBAI

ITA 7000/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70903 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 22-08-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 08-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Section: 234B; 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 7000/MUM/2010 ASSESSMENT YEAR : 2000-01 M/S JAWAHAR CO - OP HOUSING SOCIETY LIMITED VASANT VILAS,JAIN DERASAR MARG (ST. ANDREWS ROAD) SANTACRUZ (W) MUMBAI-400 054. PAN NO.AAAAJ 0695 H VS. INCOME TAX OFFICER WARD 19(2)(3) 4 TH FLOOR, PIRAMAL CHAMBERS LALBAUG MUMBAI. (APPELLANT) (RESPONDENT) ASSE SSEE BY : SHRI KIRAN MEHTA REVENUE BY : SHRI O.P. SINGH DATE OF HEARING : 22/08/2013 DATE OF PRONOUNCEMENT : 30 / 0 8 /2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF C IT(A)-30 DATED 28.07.2010 FOR THE ASSESSMENT YEAR 2000-01.THE ASSE SSEE HAS RAISED THE FOLLOWING GROUNDS.:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSMENT ORDER IN REFERENCE IS BAD IN LAW IN AS MUCH AS IT WAS MADE PURSUANT TO NOTIC E U/S 147/148 WHICH ITSELF WAS BAD IN LAW AND/OR WAS ISSUE WITHOU T ASSUMPTION OF PROPER JURISDICTION. ITA NO.7000/M/10 A.Y.00-01 2 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE LONG TERM GAIN OF RS.63,27,000/- THAT AROSE TO THE APPELLANT FROM GRA NT OF TDR FSI RIGHTS PARTOOK THE CHARACTER OF TAXABLE CAPITAL GAI NS. IT IS SUBMITTED THAT THE CONSIDERATION OF RS.70,00,000/- RECEIVED O N THIS ACCOUNT WAS NOT IN THE NATURE OF TAXABLE INCOME. 3. WITHOUT PREJUDICE TO THE ABOVE, IN THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THAT THE AFORESAID LONG TERM CAPITAL GAIN OF RS.63,27,00 0/- WAS TAXABLE IN THE YEAR OF APPEAL. 4. THE LEARNED AO ERRED IN LEVYING INTEREST U/S 234B A ND U/S 234C WITHOUT PASSING ANY ORDER OR DIRECTION FOR THE LEVY THEREOF AND WITHOUT APPRECIATING THAT NO SUCH INTEREST WAS LEVI ABLE IN AN ASSESSMENT MADE U/S 147/148. 2. BRIEFLY STATED, IT IS OBSERVED BY AO THAT THE AS SESSEE ENTERED INTO AN AGREEMENT WITH SHRI P.G. HIRANI AND MS. A.P. HI RANI ON 18.01.2000 FOR CONSTRUCTION OF ADDITIONAL FLOORS ON EXISTING S TRUCTURE OF SOCIETY BUILDING AT A CONSIDERATION OF RS.70.00 LACS. HE NO TED DOWN THE PAYMENTS RECEIVED AS EARNEST MONEY DEPOSIT TO AN EX TENT OF RS.4.00 LACS ON 20.05.1996 AND AMOUNT OF RS.7.00 LACS ON 25.01.2 000 AS ADVANCE PAYMENT, AMOUNT OF RS.4.00 LACS ON 12/02/2000 TOTAL OF 11 LACS IN THE YEAR. AMOUNT OF RS.30.00 LACS WAS RECEIVED IN NEXT YEAR AND THE ASSESSEE OFFERED THE ENTIRE AMOUNT OF RS.70.00 LACS FOR TAX ATION IN AY 2002-03 AS FULL PAYMENT WAS RECEIVED BY 19/11/2001. AO WAS OF THE OPINION THAT THE AGREEMENT BETWEEN DEVELOPER AND SOCIETY DATED 1 8/01/2000 IS CLEAR THAT SOCIETY TRANSFERRED RIGHTS ON THAT DATE AND AS A PART PERFORMANCE RECEIVED PAYMENT OF RS.7.00 LACS AND RS.4.00 LACS. INVOKING THE PROVISIONS OF SECTION 2(47), HE BROUGHT THE ENTIRE LONG TERM CAPITAL GAIN RESULTING IN SALE OF FSI IN THE PREVIOUS YEAR RELEV ANT TO ASSESSMENT YEAR 2000-01. SINCE THESE FACTS CAME TO THE NOTICE IN TH E COURSE OF ASSESSMENT IN LATER YEAR, AO RE-OPENED ASSESSMENT U /S. 147 AND AFTER ISSUE OF SHOW CAUSE NOTICE TO THE ASSESSEE SOCIETY, BROUGHT TO TAX THE ENTIRE AMOUNT IN THE ASSESSMENT YEAR 2000-01. ITA NO.7000/M/10 A.Y.00-01 3 3. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT ASS ESSEE OFFERED CAPITAL GAIN OF RS.63,27,000/- IN 2002-03 BUT ASSESSING OFF ICER TAXED THE SAME WRONGLY AT RS.70.00 LACS IN ASSESSMENT YEAR 2000-01 AND MODIFIED THE SAME U/S. 154 IN ASSESSMENT YEAR 2002-03. IT WAS FU RTHER SUBMITTED THAT THE ORIGINAL AGREEMENT WAS AS EARLY AS 20-05-1 996 AND EARNST DEPOSIT OF RS 4 LACS WAS RECEIVED BUT ONLY PART PAY MENT WAS RECEIVED ON 18/01/2000 AND TRANSACTION WAS CONCLUDED IN LATER Y EAR RELEVANT FOR ASSESSMENT YEAR 2002-03 WHERE GAIN WAS CONSIDERED A S INCOME AND WAS OFFERED AS LONG TERM CAPITAL GAIN. IT WAS FURTHER S UBMITTED THAT THERE IS NO REVENUE LOSS TO THE DEPARTMENT AS THE LONG TERM CAPITAL GAIN IS TAXED AT 20% IN ALL ASSESSMENT YEARS. IN FACT AN AMOUNT O F RS.30.00 LACS RECEIVED DURING ASSESSMENT YEAR 2001-02 AND ASSESSI NG OFFICER VIDE SCRUTINY ASSESSMENT DATED 21.11.2006 ACCEPTED THE S AME IN THAT YEAR. THEREFORE, ASSESSEE QUESTIONED RE-OPENING OF THE AS SESSMENT AND ALSO BRINGING INTO TAX THE ENTIRE AMOUNT UNDER THE HEAD CAPITAL GAIN. THE ASSESSEE ALSO TOOK ADDITIONAL GROUND THAT THE CAPIT AL GAIN IS NOT TAXABLE AT ALL AS THERE IS NO COST FOR ADDITIONAL FSI. THE LD.CIT(A) DID NOT AGREE WITH THE CONTENTIONS AND CONFIRMED THE ORDER. 4. AFTER CONSIDERING RIVAL SUBMISSIONS AND EXAMININ G THE DOCUMENTS ON RECORD, WE ARE OF THE OPINION THAT THE ASSESSEE HAS CORRECTLY OFFERED CAPITAL GAIN WHEN TERMS OF AGREEMENT WERE COMPLETEL Y FULFILLED IN ASSESSMENT YEAR 2002-03. THE ORIGINAL AGREEMENT WAS ON 19/05/1996 AND IF AT ALL THE CONTENTION OF AO THAT THERE IS PA RT PERFORMANCE, IT SHOULD HAVE BEEN IN AY 1997-98 AND NOT IN AY 2000-0 1. THE AGREEMENT DATED 18/01/2000 WAS PARTIAL MODIFICATION OF EARLIE R AGREEMENT AND FURTHER TO THAT ASSESSEE WAS PAID ONLY AMOUNT OF R S.11.00 LACS AFTER PAYMENT OF RS.4.00 LACS IN 1996 AS EARNEST DEPOSIT. AS SUBMITTED, THERE ARE MANY CONDITIONS TO BE FULFILLED INCLUDING OBTAI NING PERMISSIONS, ALLOTTING OF TDR ETC. AGREEMENT REFERS TOAPPROVAL O F DRAFT AGREEMENT IN GENERAL BODY ON 13-12-1999. PAYMENTS WERE STAGGERE D OVER A PERIOD OF ITA NO.7000/M/10 A.Y.00-01 4 TIME AS MENTIONED IN CLAUSE 4 OF THE AGREEMENT. THE REFORE, WE ARE OF THE OPINION THAT ON THE PRINCIPLES LAID DOWN BY AO HIMS ELF, THE PART PERFORMANCE IF AT ALL HAPPENED, HAPPENED IN ASSESSM ENT YEAR 1997-98 AND NOT IN ASSESSMENT YEAR 2000-01. BE THAT AS IT M AY, ASSESSEE HAS ALREADY OFFERED CAPITAL GAIN IN ASSESSMENT YEAR 200 2-03 AND THAT IS TO BE RIGHTLY TAXED IN THAT YEAR ONLY. IN CASE ASSESSING OFFICER WITHDREW THE SAME BY WAY OF ORDER U/S. 154, SAME IS BEYOND THE J URISDICTION AS THERE IS NO MISTAKE APPARENT FROM RECORD TO WITHDRAW THE AMOUNT OFFERED IN THAT YEAR. ON THE BASIS OF THE FACTS AVAILABLE, WE ARE OF THE OPINION THAT THE AMOUNT CAN NOT BE BROUGHT TO TAX IN THIS ASSESS MENT YEAR. THEREFORE, THE ADDITION MADE BY ASSESSING OFFICER STANDS DELET ED. THE GROUND THAT CAPITAL GAIN AMOUNT IS NOT TAXABLE AS RAISED IN GRO UND NO.2 BECOMES ACADEMIC. THE GROUNDS ARE ALLOWED TO THAT EXTENT. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2013. SD/- SD/- (AMIT SHUKLA ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 30/08/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.