RAMANLAL M. SHAH HUF, MUMBAI V. ADDL. INT. TAXATION - 2(1), MUMBAI

ITA 7562/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9492 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 22-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 09-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROOPAK KUMAR
• Assessee Lawyers: MAYUR SHAH
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition
• Section: 50C

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R.K.GUPTA , J M ITA NO. 7 562 / MUM/ 20 1 1 ( ASSESSMENT YEA R : 200 6 - 20 07 ) M/S RAMANLAL M. SHAH (HUF) , BLOCK NO.6/11, SAPNAL APTS., 44, RIDGE ROAD, MALABAR HILL, MUMBAI - 400 006. VS. ADIT(INTERNATIONAL TAXATION), RANGE - 2(1) , MUMBAI PAN/GIR NO. : AA EHR 6580 C ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. MAYUR SHAH /REVENUE BY : MR. ROOPAK KUMAR DATE OF HEARING : 2 2 ND NOV. , 2012 DATE OF PRONOUNCEMENT : 27 TH NOV. ,2012 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 15 - 9 - 2011 OF LEANED CIT(A) - 11 , MUMBAI RELATING TO THE ASSESSMENT YEAR 200 6 - 07 . 2. TH E BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENTERED INTO AN AGREEMENT ON 27 - 3 - 1990 WITH DEVPRAYAG PROPERTIES PVT. LTD. TO PURCHASE A FLAT NO.2 ON 4 TH FLOOR IN THE BUILDI NG NAMELY SHANTI CHAMBERS, 425, LAMINGTON ROAD, BOMBAY . THE PLAN OF THE BUILDING WAS NOT APPROVED AND SANCTIONED BY THE BMC AT THE TIME OF AGREEMENT , ITA NO. 7 562 /20 1 1 2 TH EREFORE, THE BUILDER CO ULD NOT CONSTRUCT THE FLATS. HOWEVER, THE ASSESSEE HAD MADE A PAYMENT AS PER SCHEDULE FIXED BY THE BUILDER FOR PURCHASE OF FLAT. COPY OF THE AGREEMENT DATED 27 - 3 - 1990 IS PLACED IN THE PAPER BOOK AT PAGE 4 TO 5. SINCE, THE BUILD ING COULD NOT BE CONSTRUCT ED , THEREFORE, THE SAME WAS SOLD AS IT IS TO A BANK. THEREAFTER THE BUILDER , M/S DEVPRAYAG PROPERTIES PVT. LTD. , ENTERED INTO ANOTHER AGREEMENT DATED 13 - 9 - 1994, BY WHICH A FLAT WAS ALLOTTED TO THE ASSESSEE IN ANOTHER BUILDING KNOWN AS PANCHRATNA COOPERATIVE HOUSING SOCIETY, SITUATED AT OPERA HOUSE, BOMBAY . THOUGH THIS FLAT WAS OF HIGH ER VALUE BUT THE BUILDER ALLOTTED THE FLAT ON THE SAME PRICE FIXED BY EARLIER AGREEMENT DAT E D 27 - 3 - 1990 , WHICH WAS FOR A CONSIDERATION OF RS. 17,05,000/ - . IT WAS AGREED BY THE ASS ESSEE THAT PART REGISTRATION FEES WILL BE PAID BY HIM ON THE PRICE OF THIS FLAT, WHICH MAY BE HIGH AND NO BROKERAGE ETC. WILL BE PAID BY THE BUILDER OR BY THE ASSESSEE IN THIS BEHALF. ACCORDINGLY, THE ASSESSEE ACQUIRED THE IMPUGNED FLAT IN PANCHRATNA COOP E RATIVE HOUSING SOCIETY, WHICH WAS FOR RS. 46,75,000/ - AS NO EXTRA MONEY WAS PAID BY THE ASSESSEE FOR THE REASON THAT HE HAS ALREADY AGREED FOR THE AMOUNT OF RS. 17,05,000/ - FOR PURCHASE OF FLAT IN SHANTI CHAMBERS. THE ASSESSEE HAS BORNE THE REGISTRATION COST PROPORTIONATE TO THE AGREEMENT DATED 27 - 3 - 1990 AT RS. 1,18,000/ - AND REST OF THE REGISTRATION COST WAS BORNE BY THE BUILDER. THE ASSESSEE SOLD ITS PROPERTY ON 8 - 12 - 2005. IN THE RETURN, THE ASSESSEE COMPUTED THE CAPITAL GAIN S AS I F THE TOTAL COST WAS ITA NO. 7 562 /20 1 1 3 RS. 18, 23,000/ - (RS.17,05,000 + 1,18,000), WHICH WAS PAID ON 27 - 3 - 1990 AND COMPUTED CAPITAL LOSS OF RS. 25,95,022/ - . 3 . THE ASSESSING OFFICER COMPUTED THE CAPITAL GAIN ON THE COST OF ACQUISITION OF RS. 18,23,000/ - FROM THE DATE THE ASSESSEE BECAME OWNER OF THE PR OPERTY AT PANCHRATNA COOPERATIVE HOUSING SOCIETY I.E 5 - 5 - 1995 . 4 . A GROUND WAS ALSO TAKEN BEFORE THE CIT(A) THAT THE INDEXATION COST SHOULD BE COMPUTED FROM THE DATE OF THE ORIGINAL AGREEMENT DATED 27 - 3 - 1990 , BECAUSE THE ASSESSEE HAD ACQUIRED THE RIGHT I N ANOTHER PROPERTY ON THE BASIS OF ORIGINAL AGREEMENT DATED 27 - 3 - 1990. F URTHER GROUND WAS RAISED THAT THE ASSESSING OFFICER WAS ALSO NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT FOR THE SIMPLE REASON THAT THE ASSESSEE HAS NOT PAID ANY OVER AND ABOVE AMOUNT FOR THE REASON THAT THE ASSESSEE HAD ALREADY DEPOSITED A SUM OF RS. 17,05,000 / - AS PER THE ORIGINAL AGREEMENT DATED 27 - 3 - 1990 . VARIOUS CASE LAWS WERE ALSO RELIED UPON. HOWEVER, THE LEARNED CIT(A) REJECTED BOTH THE GROUND BY OBSERVING THAT ON THESE TWO GROUNDS, LEARNED AR HAS NOT MADE ANY SUBMISSION, NEITHER IN THE WRITTEN SUBMISSION DATED 11 - 2 - 2010 , NOR DURING THE COURSE OF HEARING. THE CIT(A) FURTHER MENTIONED THAT AS PER SECTION 50C, THE FULL VALUE OF CONSIDERATION FOR SALE OF THE CA PITAL ASSET BEING LAND OR BUILDING IS TO BE TAKEN AS HIGHER OF FULL VALUE OF CONSIDERA TION RECEIVED OR AMOUNT ASSESSED BY A STAMP VALUATION AUTHORITY AS PER AGREEMENT. SINCE THE ASSESSING OFFICER HAS ITA NO. 7 562 /20 1 1 4 ADOPTED THE VALUE ASSESSED BY THE STAMP VALUATION OFFICE R, BEING HIGHER AND APPLIED SECTION 50C, NO INFIRMITY IS FOUND IN THE ORDER OF THE ASSESSING OFFICER. ACCORDINGLY, BOTH THE GROUNDS WERE REJECTED. 5 . A THIRD GROUND WAS ALSO RAISED BY WHICH IT WAS STATED THAT THE ASSESSING OFFICER ERRED IN HOLDING THAT T HE PROPERTY IN QUESTION WAS ACQUIRED ON 5 - 5 - 1995 AS AGAINST THE CONTENTION OF THE ASSESSEE THAT THE PROPERTY BE DEEMED TO HAVE BEEN ACQUIRED ON 27 - 3 - 1990. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND CASE LAWS RELIED UPON, HELD THAT SINCE THE PROPERTY WAS ACQUIRED ONLY ON 5 - 5 - 1995 BY AGREEMENT DATED 13 - 9 - 1994 , THEREFORE, THE INDEXATION COST HAS TO BE ALLOWED FROM 5 - 5 - 1995. AGAINST THIS FINDING OF THE LEARNED CIT(A) , NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6 . AFTER CONSIDERING THE SUBMIS SION AND PERUSING THE MATERIAL ON RECORD, I FOUND NO MERIT IN THE GROUND OF THE ASSESSEE FOR THE SIMPLE REASON THAT INDEXATION HAS TO BE ALLOWED, SUBJECT TO THE PROPERTY PURCHASED OR SOLD. THE ASSESSEE S CONTENTION IS THAT HE HAS PURCHASED THE PROPERTY ON 27 - 3 - 1990, WHICH WAS NOT GIVEN TO THE ASSESSEE FOR THE REASON THAT NO FLAT WAS CONSTRUCTED, HOWEVER, AN ALTERNATE FLAT WAS GIVEN IN ANOTHER BUILDING NAMED AS PANCHRATNA. THE FLAT ALLOTTED TO THE ASSESSEE IN PANCHRATNA WAS ALLOTTED VIDE AGREEMENT DATED 13 - 9 - 1994 W.E.F. 5 - 5 - 1995 . 7 . THE LANGUAGE OF THE SECTION IS THAT THE INDEXATION COST WILL BE ALLOWED IN RESPECT OF PARTICULAR ASSET. THE PARTICULAR ASSET, WHICH WAS ITA NO. 7 562 /20 1 1 5 PURCHASED BY THE ASSESSEE AND LATER ON SOLD BY THE ASSESSEE , WAS FLAT IN PANCHRATNA. THE FLA T IN PANCHRATNA WAS ACQUIRED ON 5 - 5 - 1995, THEREFORE, INDEXATION COST HAS TO BE ALLOWED FROM 5 - 5 - 1995 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE GROUND S RAISED BY THE ASSESSEE ARE HEREBY REJECTED. I ORDER ACCORDINGLY. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF NOV. 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 27 / 11 / 2012 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE A PPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI