JANET FERNADES (LEGAL HEIR OF LATE FERNANDES JACK XAVIER ), MUMBAI V. ACIT CIR 18(2), MUMBAI

ITA 7411/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4160 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 14-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KISHORE PATEL
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Cost of acquisition; Fair market value; Competent authority
• Section: 50C; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.7411/M/2012 ASSESSMENT YEAR: 2007-08 MISS. JANET FERNANDES, LEGAL HEIR OF LATE MR. FERNANDES JACK XAVIER, 2 ND FLOOR, CASA MARIA, GOKHLE ROAD, DADAR, MUMBAI 400 028 PAN: AAAPF 7347R VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 18(2), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NITESH JOSHI, A.R. & SHRI KISH ORE PATEL, A.R. REVENUE BY : SHRI VINOD KUMAR, D.R. DATE OF HEARING : 03.12.2015 DATE OF PRONOUNCEMENT : 05.02.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE LEGAL HEIR OF THE DECEASED ASSESSEE LATE MR. FERNANDES JACK XAVIER AGAINST THE ORDER DATED 23.02.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFT ER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007-08. 2. THE MAIN ISSUE RAISED THROUGH GROUNDS OF APPEAL IS REGARDING THE APPLICATION OF SECTION 50C OF THE INCOME TAX ACT IN RELATION TO SALE CONSIDERATION RECEIVED BY THE ASSESSEE IN LIEU OF T RANSFER OF DEVELOPMENT RIGHTS IN HIS PROPERTY. THE CLAIM OF THE ASSESSEE HAS BEE N THAT THE TOTAL CONSIDERATION RECEIVED WAS RS.70 LAKHS FOR REDEVELOPMENT OF TENAN TED BUILDING WITH RESIDENTIAL UNITS. THE ASSESSING OFFICER (HEREINAF TER REFERRED TO AS THE AO), HOWEVER, APPLYING SECTION 50C OF THE ACT SUBSTITUTE D THE VALUE OF SALE ITA NO.7411/M/2012 MISS. JANET FERNANDES, LEGAL HEIR OF LATE FERNANDES JACK XAVIER 2 CONSIDERATION AT RS.1,11,25,500/- AS DETERMINED BY THE STAMP DUTY AUTHORITIES. IN THE REVISED GROUNDS OF APPEAL, IT HAS BEEN AGITATED THAT THE PROVISIONS OF SECTION 50C DO NOT APPLY TO SALE OF D EVELOPMENT RIGHTS/FSI AND FURTHER THAT NO CAPITAL GAIN WAS CHARGEABLE TO TAX IN LIEU OF THE CONSTRUCTED AREA/RESIDENTIAL HOUSE RECEIVED BY THE ASSESSEE AND THEREBY ENTITLEMENT OF THE ASSESSEE OF THE CONCESSION AVAILABLE UNDER SECTION 54 OF THE ACT. THE ASSESSEE FURTHER, VIDE ADDITIONAL GROUND OF APPEAL, HAS PLEA DED THAT AS THERE WAS NO COST OF ACQUISITION OF THE ADDITIONAL FSI TRANSFERRED BY THE ASSESSEE, HENCE IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. B.C. SRINIVASA SHETTY (1981) 128 ITR 294 AND FURTHER IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. S AMBHAJI NAGAR CO-OP HSG. SOCIETY LTD. IN ITA NO.1356 OF 2012, NO CAPIT AL GAINS TAX IS CHARGEABLE IN THAT RESPECT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIGINA L ASSESSEE LATE MR. FERNANDES JACK XAVIER HAD GIVEN A BUILDING FOR DEVE LOPMENT TO A BUILDER ON 18.01.07. THE PROPERTY WAS GIVEN TO THE BUILDER AL ONG WITH THE AREA THAT WAS OCCUPIED BY 10 TENANTS. AGAINST OLD AREA OF 1100 SQ .FT. SURRENDERED, THE ASSESSEE HAD BEEN ALLOTTED JOINT FLATS OF TOTAL ARE A OF 750 SQ.FT. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE SALE CONSIDERATIO N HAD BEEN CONSIDERED AT RS.70 LAKHS AND LTGG OF RS.61,69600/- HAD BEEN OFFE RED FOR TAXATION. THE ACQUISITION COST OF RS.8,30,400/- HAD BEEN REDUCED AFTER INDEXATION. NO EXEMPTION HAD BEEN CLAIMED. THE AO OBSERVED THAT TH E ASSESSEE HAD NOT CONSIDERED THE FAIR MARKET VALUE OF THE PROPERTY AS DETERMINED BY STAMP DUTY AUTHORITIES FOR DISCLOSING THE SALE CONSIDERATION. THIS VALUE ACCORDING TO AO AMOUNTED TO RS.1,11,25,500/- AS REQUIRED UNDER SECT ION 50C. THE AO CALCULATED CAPITAL GAINS ON THAT BASIS AND BROUGHT TO TAX THE DIFFERENTIAL CAPITAL GAIN OF RS.61,69,600/-. ITA NO.7411/M/2012 MISS. JANET FERNANDES, LEGAL HEIR OF LATE FERNANDES JACK XAVIER 3 4. IN APPEAL, THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO. HE REJECTED THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HA D RECEIVED RS.70 LAKHS IN LIEU OF ADDITIONAL FSI ONLY WHICH COULD NOT BE SUBJECTED TO THE CAPITAL GAINS TAXED IN VIEW OF THE FACT THAT NO COST OF ACQUISITION WAS RECEIVED BY THE ASSESSEE OR THAT THE COST OF ACQUISITION WAS NOT DETERMINABLE O F THE SAID FSI. HE ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE PR OVISIONS OF THE SECTION 54 WERE APPLICABLE AS THE ASSESSEE HAD RECEIVED NEW RE SIDENTIAL UNIT IN LIEU OF SURRENDER OF OLD RESIDENTIAL UNIT WHICH AMOUNTS TO INVESTMENTS IN THE NEW RESIDENTIAL HOUSE PROPERTY. BEING AGGRIEVED, THE A SSESSEE HAS COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. AT THE OUTSET, THE LD. A.R. OF THE ASSESSE E HAS BROUGHT OUR ATTENTION TO THE APPLICATION AND AFFIDAVIT OF MISS. JANET FERNAN DES LEGAL HEIR OF THE ORIGINAL ASSESSEE LATE MR. FERNANDES JACK XAVIER, WHEREIN, I T HAS BEEN DEPOSED THAT THE STAMP DUTY AUTHORITIES HAVE NOT PROPERLY CALCULATED THE VALUATION/SALE CONSIDERATION OF THE PROPERTY IN QUESTION. STAMP D UTY AUTHORITIES HAVE WRONGLY INCLUDED THE COST OF CONSTRUCTION OF THE BU ILDING AS WELL AS AMOUNT OF RENT RECEIVED FROM TENANTS WHILE CALCULATING THE VA LUATION OF THE DEVELOPMENT RIGHTS/FSI TRANSFERRED BY THE ASSESSEE. THE ASSESS EE HAS FILED REPRESENTATIONS TO THE COMPETENT AUTHORITY IN THIS RESPECT AND THAT TH E DECISION OF THE COMPETENT AUTHORITY IS AWAITED IN THIS RESPECT. IT HAS BEEN FURTHER CONTENDED THAT THOUGH ORIGINALLY THE ASSESSEE HAD NOT CLAIMED BENEFIT OF THE PROVISIONS OF SECTION 54 OF THE ACT, HOWEVER, THE ASSESSEE IS ENTITLED TO TH E SAME. THE LD. A.R. IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS P VT. LTD. (2012) 349 ITR 336 (BOM.) WHEREIN THE HONBLE BOMBAY HIGH COURT HA S HELD THAT A CLAIM TO WHICH THE ASSESSEE, OTHERWISE, IS ENTITLED TO, IF I NADVERTENTLY COULD NOT BE MADE TO THE LOWER AUTHORITIES, THE SAME CAN BE PRESSED B EFORE THE APPELLATE AUTHORITIES. THE LD. A.R. HAS FURTHER STRESSED THA T SINCE THE VALUE OF THE ITA NO.7411/M/2012 MISS. JANET FERNANDES, LEGAL HEIR OF LATE FERNANDES JACK XAVIER 4 PROPERTY HAS NOT BEEN CORRECTLY/ARRIVED AT BY THE S TAMP DUTY AUTHORITIES AND A REPRESENTATION HAS ALREADY BEEN SUBMITTED, THE AO B E DIRECTED TO CONSIDER THE ABOVE REPRESENTATION SUBMITTED BY THE ASSESSEE AND THE AO BE DIRECTED TO AWAIT/CALL UPON OR GET CLARIFICATION FROM THE COMPE TENT AUTHORITY REGARDING THE REPRESENTATION SUBMITTED BY THE ASSESSEE AND APPLY THE STAMP DUTY VALUE ARRIVED AT BY THE STAMP DUTY AUTHORITIES AFTER DECI SION ON THE REPRESENTATION SUBMITTED BY THE ASSESSEE IN THIS RESPECT AND FURTH ER TO CONSIDER THE ADDITIONAL PLEAS RAISED BY THE ASSESSEE REGARDING THE NON ATTR ACTION OF CAPITAL GAINS TAX ON THE TRANSFER OF ADDITIONAL FSI AND FURTHER THE BENE FIT OF SECTION 54 BEING AVAILABLE TO THE ASSESSEE. THE LD. D.R. HAS ALSO FAIRLY AGREED THAT THE ENTIRE CASE OF THE ASSESSEE REQUIRES RECONSIDERATION AT THE HANDS OF THE AO. 6. WE, THEREFORE, RESTORE THE ISSUES INVOLVED IN TH IS APPEAL TO THE FILE OF THE AO FOR ASSESSMENT AFRESH, AFTER CONSIDERATION OF TH E PLEAS RAISED BY THE ASSESSEE, ADDITIONAL EVIDENCES SOUGHT TO BE FURNISH ED. THE AO IS ALSO DIRECTED TO CONSIDER THE ADMISSIBLE CLAIM OF THE ASSESSEE UN DER SECTION 54 OF THE ACT. NEEDLESS TO SAY THAT THE AO WILL GIVE PROPER OPPORT UNITY TO THE ASSESSEE TO PRESENT HIS CASE AND WOULD ALSO SEEK THE NECESSARY DETAILS FROM THE COMPETENT AUTHORITIES, IF SO REQUIRED, IN ARRIVING AT A PROPE R DECISION OF THE CASE. 7. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE IS HEREBY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 05.02.2016. * KISHORE, SR. P.S. ITA NO.7411/M/2012 MISS. JANET FERNANDES, LEGAL HEIR OF LATE FERNANDES JACK XAVIER 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.