TOPAZ TRADING CO. P. LTD, MUMBAI V. ITO WD 3(2), THANE

ITA 7527/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87842 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-10-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 03-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Gift; Depreciation
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI , BEFORE : SHRI I.P.BANSAL, JM & SHRI R.C.SHARMA , A M ITA NO. 7527 / MUM/20 1 0 ( ASSESSMENT YEAR : 200 4 - 200 5 ) TOPAZ TRADING CO. PVT. LTD., 106, DHANALAXMI INDL. ESTATE, OLD AGRA ROAD, GOKUL NAGAR, THANE (W) VS. ITO, WARD - 3(2), THANE PAN/GIR NO. : A AACT 6236 G ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI VIPUL JOSHI & SHRI NISHIT GANDHI /REVENUE BY : SHRI NEIL PHILIP DATE OF HEARING : 13 TH OCT . 201 4 DATE OF PRONOUNCEMENT : 1 ST JAN, 201 5 O R D E R PER R.C.SHARMA ( A .M.) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , DATED 30 - 7 - 2010 FOR ASSESSMENT YEAR 200 4 - 0 5 , IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, WHEREIN FOLLOWING GROU NDS HAVE BEEN TAKEN BY ASSESSEE : - 1.1 THE COMMISSIONER OF INCOME - TAX (APPEALS) - 1, THANE, ['THE LD. CIT (A)'] ERRED IN CONFIRMING THE ACTION OF THE INCOME TAX OFFICER, WARD - 3(2), THANE, ['THE AO'] WHEREB Y THE A.O. TAXED RS. 11,92,890/ - AS ALLEGED SHORT TERM CAPITAL GAIN EARNED BY THE APPELLANT. 1.2 THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ACTION OF THE A.O IN SO TAXING THE SHORT TERM CAPITAL GAIN WAS BAD, ILLEGAL AND VOID AND BEYOND THE PURVIEW OF SEC. 45 READ WITH 48 OF THE ACT. ITA NO. 7527 /1 0 2 1.3 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCE OF THE CASE, AND IN LAW, NO SUCH ACTION ON THE PART OF THE A.O. WAS CALLED FOR. . WITHOUT PREJUDICE TO THE ABOVE AND IN ALTERNATIVE: 2 IT IS SUBMITTED THAT, AS SUMING - BUT NOT ADMITTING - THAT ANY SUCH CAPITAL GAIN TAX LIABILITY AROSE IN THE HANDS OF THE APPELLANT, THE CALCULATION OF THE CAPITAL GAIN TAX AT RS. 11,92,890/ - IS ERRONEOUS AND IS NOT IN ACCORDANCE WITH LAW. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT S MT SAVITA RATHI AND SHRI CHANDRAKANT RATHI , EX - DIRECTORS OF THE ASSESSEE COMPANY HAD PURCHASED A FLAT NO 201 AT HARINIWAS CIRCLE, THANE FROM SOHAM BUILDERS FOR A CONSIDERATION OF RS 9.35 LACS VIDE AN AGREEMENT DAT ED 15/10/91. THEREAFTER, THE ASSESSEE COMPANY ACQUIRED THE FLAT FROM THE DIRECTORS FOR A CONSIDERATION OF RS 12 LACS INCLUDING PARKING CHARGES OF RS 1 LACS. THE FLAT WAS SUBSEQUENTLY SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY AND DEPRECIATION WA S ALSO CLAIMED THEREON IN THE BOOKS OF ACCOUNTS. LATER ON , THE FLAT WAS ALLEGEDLY LET OUT FOR A MONTHLY RENT OF RS 10,000/ - . THE DIRECTORS , SMT. SAVITA RATHI & CHANDRAKANT RATHI RESIGNED FROM THE COMPANY ON 25/02/03 AND SOLD OFF THEIR SHARES. DURING THE PE RIOD RELEVANT TO THE AY 04 - 05 , SHARES OF THE ASSESSEE COMPANY WERE SOLD TO ONE SHRI BHAVESH PATEL AND SURESH SHAH. THE ASSESSEE COMPANY ALLEGED TO HAVE GIFTED THE FLAT TO MRS AND MR RATHI. ACCORDINGLY, GIFT DEED WAS EXECUTED. THE GIFT DEED WAS NOT REGISTE RED. AFTER GIFT, THE SAID FLAT WAS SOLD TO MRS. & MR. NARSANA. ON GIFT OF FLAT, BLOCK OF ASSETS CEASED TO EXIST IN ASSESSEES BOOKS AND THE RESULTANT LOSS WAS CLAIMED AS STCG. THE AO REJECTED THE THEORY OF GIFT AND PROCEEDED TO TREAT THE GIFT AS SALE TRANS ACTION AND ITA NO. 7527 /1 0 3 WORKED OUT THE STCG ADOPTING THE MARKET VALUE OF THE PROPERTY. HE HAS WORKED OUT THE STCG AT RS 11,92,890/ - AND IT WAS ADDED TO THE RETURNED INCOME. 3. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO, AGAINST WHICH ASSESSEE IS IN FU RTHER APPEAL BEFORE US. 4. IT WAS ARGUED BY LEARNED AR THAT THERE CAN BE NO CAPITAL GAIN ARISING OUT OF NULL AND VOID TRANSFER AND FOR THIS PURPOSE RELIANCE WAS PLACED ON THE DECISIONS REPORTED AT 236 ITR 1001 & 41 TTJ 83. 5. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED AT BAR BY THE LEARNED AR. FROM THE RECORD WE FOUND THAT T HE AO HIMSELF HAS RECORDED A FINDING TO THE FACT THAT THE ORIGINAL GIFT DEED WAS ALSO CALLED FOR VERIFICATION. ON VERIFICATION OF THE SAME, IT WAS NOTICED CLEAR LY FROM THE BACK SIDE IMPRESSION OF THE STAMP PAPER THAT THE ORIGINAL WORDS WERE DEED OF SALE AND NOT DEED OF GIFT . THUS, THERE WAS NO GIFT OR DONATION OF FLAT BY THE ASSESSEE COMPANY. ASSESSEE COMPANY WAS AN ARTIFICIAL PERSON AND THERE WAS NO LOVE AND AFFECTION FOR GIFTING THE FLAT TO THE EX - DIRECTOR OF THE ASSESSEE COMPANY. THUS, THE THE ORY OF GIFT OF FLAT WAS NOT GENUINE AND WAS ONLY PAPER TRANSACTION TO GIVE DIFFERENT COLOUR. 7. IN VIEW OF THE ABOVE, WHEN THE FINDING OF FACT RECORDED BY BOTH THE LOWER AUTHORITIES COULD NOT BE CONTROVERTED BY LEARNED AR BY BRINGING ANY ITA NO. 7527 /1 0 4 POSITIVE MATERIAL ON RECORD, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY LOWER AUTHORITIES REGARDING SALE OF FLAT BY ASSESSEE RESULTING INTO TAXING CAPITAL GAIN OF RS. 11,92,890/ - IN ASSESSEES HANDS. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01 / 01 / 201 5 . / 01 / 201 5 SD/ - SD/ - ( ) ( I.P.BANSAL ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 01 / 01 /201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / T HE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//