ACIT 2(2)(1), MUMBAI V. KHANDELWAL INFOTECH LTD, MUMBAI

ITA 7463/MUM/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0321 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 29-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Sale consideration of property below Jantri Value; Rectification of order; Fair market value; Valuation report; Tax effect
• Section: 50C; 154

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO. 7463/MUM/2017 ( / ASSESSMENT YEAR 2012-13) T HE ASST. COMMISSIONER OF INCOME CIRCLE-2(2)(1), ROOM NO. 545, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI-400 020 / VS. M/S KHANDELWAL INFOTECH LTD. 2 ND FLOOR, 2 REHEM MANSION, 445 BHAGAT SINGH ROAD, COLABA, MUMBAI-400 001 ( ' / APPELLANT) ( #$' / RESPONDENT) . /PAN NO. AAACK1637J ./ ITA NO. 6089/MUM/2018 ( / ASSESSMENT YEAR 2012-13) M/S KHANDELWAL INFOTECH LTD. 2 ND FLOOR, 2 REHEM MANSION, 445 BHAGAT SINGH ROAD, COLABA, MUMBAI-400 001 / VS. THE ASST. COMMISSIONER OF INCOME CIRCLE-2(2)(1), ROOM NO. 545, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI-400 020 ( ' / APPELLANT) ( #$' / RESPONDENT) '&' / APPELLANT BY : SHRI GURBINDER SINGH, DR # $'&' / RESPONDENT BY : NONE & *+ / DATE OF HEARING: 15.12.2020 & *+ / DATE OF PRONOUNCEMENT: 12 .03 .2021 PAGE | 2 ITA NOS.7463/MUM/2017 & 6089/MUM/2018 M/S KHANDELWAL INFOTECH LTD.; AY 12-13 / O R D E R , . PER VIKAS AWASTHY, JM : THESE CROSS APPEALS BY THE REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX-5, MUMBAI [IN SHORT THE CIT(A)], DATED 3 RD OCTOBER, 2017 FOR THE AY 2012-13. 2. NOTICES FOR HEARING OF APPEALS WERE SENT TO THE ASS ESSEE THROUGH REGISTERED POST WITH ACKNOWLEDGE DUE (RPAD) REPEATE DLY ON THE ADDRESS MENTIONED IN FORM NO. 36. THE SAID NOTICES HAVE BEEN RECEIVED BACK UNSERVED BY THE POSTAL AUTHORITIES WI TH REMARKS LEFT/ NOT KNOWN. THE NOTICE WAS ALSO SENT THROUGH THE O FFICE OF DEPARTMENTAL REPRESENTATIVE. THE OFFICE OF THE DEPA RTMENTAL REPRESENTATIVE HAS SERVED TO THE ASSESSEE THROUGH E MAIL, ON THE EMAIL ID FURNISHED BY THE ASSESSEE. THE SERVICE REPORT FU RNISHED BY THE DEPARTMENT SHOWS THAT EMAIL WAS SUCCESSFULLY DELIVE RED ON MAIL ID [e-mail]. THE ASSESEE HAS N OT FURNISHED REVISED FORM 36 INTIMATING HIS CURRENT/ NEW ADDRESS . THEREFORE, THE NOTICE SENT THROUGH EMAIL IS DEEMED TO BE SERVED IN ACCORDANCE WITH SEC 282(1)(C) READ WITH RULE 127 OF THE IT RULES. D ESPITE SERVE OF NOTICE NONE APPEARED TO REPRESENT THE ASSESSEE COMP ANY. IT SHOWS THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THE APPEAL. UNDER SUCH CIRCUMSTANCES, THESE APPEALS ARE TAKEN UP FOR HEARING WITH THE ASSISTANCE OF LEARNED DEPARTMENTAL REPRESENTATIVE A ND THE MATERIAL AVAILABLE ON RECORD. PAGE | 3 ITA NOS.7463/MUM/2017 & 6089/MUM/2018 M/S KHANDELWAL INFOTECH LTD.; AY 12-13 3. BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECOR DS ARE; THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF LAND AT BHANDUP ON 08/12/2008 FOR SALE CONSIDERATION OF RS. 85 LACS. T HE REGISTERED DEED OF CONVEYANCE WAS EXECUTED BY THE ASSESSEE ON 15 TH JUNE, 2010. IN SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER (AO) HELD THAT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE IS LESS THAN THE FAIR MARKET VALUE OF LAND AS ASSESSED BY STAMP VALUATION AUTHORITY AT RS. 5,78,55,000/- AS ON 15-06-2010. THE AO INTENDED TO COMPUTE LONG TERM CAPITAL GAIN ON THE VALUE ASSESSED BY STAMP VA LUATION OFFICER. AT THE BEHEST OF ASSESSEE, A REFERENCE WAS MADE TO THE DEPARTMENT VALUATION OFFICER (IN SHORT DVO) FOR DETERMINATION OF FAIR MARKET VALUE. HOWEVER, BEFORE THE RECEIPT OF REPORT FROM DVO, THE AO PASSED ASSESSMENT ORDER DETERMINING LONG TERM CAPITAL AFTE R TAKING THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY. THE AS SESSEE FURTHER CLAIMED RS. 46 LACS AS COST OF IMPROVEMENT, THE SAM E WAS ALSO DISALLOWED BY THE AO AS NO DOCUMENTARY EVIDENCE WAS FILED BY THE ASSESEE TO SUBSTANTIATE THE CLAIM. AGGRIEVED, BY TH E ASSESSMENT ORDER DATED 27.03.2015, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. DURING FIRST APPELLATE PROCEEDINGS, THE DVO FILED HIS VALUATION REPORT DETERMINING VALUE OF PROPERTY AT RS. 2,82,78 ,000/- AS ON 15.06.2010 I.E. THE DATE OF EXECUTION OF THE REGIST ERED DEED OF CONVEYANCE. THE ASSESSEE CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT THE VALUE AS ON THE DATE OF EXECUTIN G SALE AGREEMENT I.E. 08.12.2018 SHOULD HAVE BEEN DETERMINED BY THE DVO, AS PAGE | 4 ITA NOS.7463/MUM/2017 & 6089/MUM/2018 M/S KHANDELWAL INFOTECH LTD.; AY 12-13 SUBSTANTIAL CONSIDERATION WAS RECEIVED ON THAT DATE AND THE POSSESSION OF LAND WAS HANDED OVER TO THE PURCHASER AT THE TIM E OF EXECUTION OF AGREEMENT TO SELL. TO SUPPORT HIS CONTENTION, THE A SSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT (2003) 260 ITR 491 (BOM). THE CIT(A) DIRECTED THE AO TO REFER VALUATION TO DV O FOR DETERMINING THE VALUE OF PROPERTY AS ON 08.12.2008 FOR THE PURP OSE OF COMPUTING LONG TERM CAPITAL GAIN U/S 50C OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT). IN SO FAR A S, THE ASSESSEES CLAIM OF COST OF IMPROVEMENT OF THE PROPERTY, THE CIT(A) REJECTED THE CONTENTIONS IN THE ABSENCE OF ANY COGENT EVIDENCE T O SUPPORT THAT THE ASSESSEE HAD ACTUALLY PAID RS. 46 LACS TOWARDS THE COST OF IMPROVEMENT. AGAINST THESE FINDINGS OF CIT(A), BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL. 5. SHRI GURBINDER SINGH, REPRESENTING THE DEPARTMENT S UBMITTED THAT THE CIT(A) HAS ERRED IN DIRECTING THE AO TO RE FER VALUATION OF PROPERTY TO THE DVO TO DETERMINE THE VALUE AS ON 08 .12.2008. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THAT THE PROPERTY WAS IN FAC T TRANSFERRED TO THE PURCHASER ON THE DATE OF EXECUTION OF AGREEMENT TO SALE. AS PER THE PROVISION OF SECTION 50C OF THE ACT VALUE AS ON THE DATE OF REGISTERED DOCUMENT HAS TO BE TAKEN FOR THE PURPOSE OF DETERMI NING LONG TERM CAPITAL GAIN. AFTER RECEIPT OF VALUATION REPORT FRO M THE DVO, THE AO PASSED RECTIFICATION ORDER UNDER SECTION 154 OF THE ACT, TAKING THE FAIR MARKET VALUE OF THE PROPERTY AS DETERMINED BY THE D VO AS ON 15 TH PAGE | 5 ITA NOS.7463/MUM/2017 & 6089/MUM/2018 M/S KHANDELWAL INFOTECH LTD.; AY 12-13 JUNE, 2010. THE LEARNED DEPARTMENTAL REPRESENTATIVE PRAYED FOR REVERSING THE FINDINGS OF THE CIT(A) ON THE ISSUE A ND RESTORING THE ORDER PASSED BY THE AO. 6. WE HAVE HEARD THE SUBMISSION MADE BY LEARNED DR AND HAVE EXAMINED THE ORDERS OF THE AUTHORITIES BELOW. THE S OLITARY ISSUE RAISED IN THE APPEAL BY REVENUE IS AGAINST THE FINDINGS OF CIT(A) IN DIRECTING THE AO TO CONSIDER FAIR MARKET VALUE OF THE PROPERT Y AS DETERMINED BY THE DVO ON THE DATE OF AGREEMENT OF SALE. FROM THE EXAMINATION OF RECORDS, WE FIND THAT THE TAX EFFECT INVOLVED IN TH E PRESENT APPEAL BY THE REVENUE IS LESS THAN THE MONETARY LIMIT SPECIFI ED BY CBDT CIRCULAR NO. 17 OF 2019 DATED 03.03.2019 FOR FILING OF APPEA LS BEFORE THE TRIBUNAL. THEREFORE, WITHOUT ADVERTING TO THE MERIT S OF ISSUE RAISED IN APPEAL, THIS APPEAL BY THE REVENUE IS DISMISSED ON ACCOUNT OF LOW TAX EFFECT. 7. THE ASSESSEE IN ITS APPEAL HAS ASSAILED THE FINDIN GS OF THE CIT(A) IN NOT ALLOWING THE DEDUCTION OF COST OF IMPROVEMEN T OF RS. 46 LACS. THE CONTENTION OF THE ASSESSEE BEFORE CIT(A) WAS TH AT MUNICIPAL CORPORATION OF GREATER MUMBAI HAS CONSTRUCTED A NAL LA WALL ON THE LAND OF THE ASSESEE AND HAD RAISED A BILL OF RS. 46 ,12,155/- IN FEBRUARY, 2002. THE ASSESSEE INSTEAD OF MAKING PAYM ENT OF RS. 46 LACS TO THE BMC TRANSFERRED THE SAID LIABILITY WITH INTEREST TO THE PURCHASER AND THE CREDIT FOR THE SAID AMOUNT WAS GI VEN TO THE PURCHASER. THUS, THE ASSESSEE CLAIMED THE BENEFIT O F INDEXED COST OF IMPROVEMENT FOR CONSTRUCTION OF NALLA WALL ON THE P LOT OF THE ASSESSEE. PAGE | 6 ITA NOS.7463/MUM/2017 & 6089/MUM/2018 M/S KHANDELWAL INFOTECH LTD.; AY 12-13 THE CIT(A) HAS REJECTED THE CONTENTION OF THE ASSES SEE BY OBSERVING THAT THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY DOC UMENT TO SHOW THAT THIS COST WAS PAID BY THE ASSESSEE. THE BENEFI T OF INDEXED COST OF IMPROVEMENT CAN ONLY BE CLAIMED WHERE THE COST HAS BEEN ACTUALLY INCURRED BY THE ASSESSEE TILL THE DATE OF SALE. WE CONCUR WITH THE FINDINGS OF THE CIT(A). ACCORDINGLY, WE UPHOLD THE SAME. THE GROUND RAISED BY THE ASSESSEE IS WITHOUT ANY MERIT, HENCE, DISMISSED. 8. IN THE RESULT, APPEAL BY THE REVENUE AND BY THE ASS ESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON _FRIDAY THE _12 TH DAY OF MARCH, 2021. SD/- SD/- ( / SHAMIM YAHYA ) ( / VIKAS AWASTHY) ( / ACCOUNTANT MEMBER) ( / JUDICIAL MEMBER) , 0 / MUMBAI, DATED: 12.03.2021 + ,.1 23 / SUDIP SARKAR, SR.PS PAGE | 7 ITA NOS.7463/MUM/2017 & 6089/MUM/2018 M/S KHANDELWAL INFOTECH LTD.; AY 12-13 / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT. 3. ( 5* ( ) / THE CIT(A) 4. ( 5* / CIT 5. 89 #*2 , + 2 , ( / DR, ITAT, MUMBAI 6. 9: / GUARD FILE. / BY ORDER, $* #* //TRUE COPY// / (ASSTT. REGISTRAR) , ( / ITAT, MUMBAI