NARENDRA K SHETH, MUMBAI V. ITO 5(1)(1), MUMBAI

ITA 7742/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4214 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 10-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-11-2011
• Court: TRIBUNAL
• Department Lawyers: DR SANDEEP GOEL
• Assessee Lawyers: S C TIWARI
• Keywords: Capital asset; Benefit of exemption
• Section: 143(3); 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI R.C. SHARMA, AM AND SHRI MAHAVIR SINGH, JM ITA NO. 7742/MUM/2011 (ASSESSMENT YEAR: 2008-09) SHRI NARENDRA K. SHETH APPELLANT AJIT AUTO ENTERPRISE 25 A.G. STREET MUMBAI 400004 VS. INCOME TAX OFFICER-5(1)-1 RESPONDENT MUMBAI PAN - AA FPS5384Q APPELLANT BY: SHRI S.C. TIWARI RESPONDENT BY: DR. SANDEEP GOEL DATE OF HEARING : 22.03.2016 DATE OF PRONOUNCEMENT : 07.04.2016 O R D E R PER MAHAVIR SINGH, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)- 9, MUMBAI IN APPEAL NO. CIT(A)9/ITO 5(1)-1/161/2011 -12 VIDE ORDER DATED 05.10.2011. THE ASSESSMENT WAS FRAMED BY ITO , WD-5(1)-1, MUMBAI U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE HIS ORDER DATED 2 8.12.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AG AINST THE ORDER OF THE CIT(A) CONFIRMING THE ACTION OF THE AO IN TR EATING THE GAINS ARISING OUT OF SALE OF ASSESSEES SHOP AS SHORT TER M CAPITAL GAIN AS AGAINST THE CLAIM OF THE ASSESSEE AS LONG TERM CAPI TAL GAIN, AND CONSEQUENTLY DENYING EXEMPTION UNDER SECTION 54F OF THE ACT EVEN THOUGH ASSESSEE HAS INVESTED THE CONSIDERATION IN P URCHASE OF NEW RESIDENTIAL FLAT. 2 ITA NO. 7742/MUM/2011 SHRI NARENDRA K. SHETH 3. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN ASSESSEES CASE FOR A.Y. 2008-09 THE AO NOTICED THAT THE ASSESSEE ENTERED INTO AGREEMENT FOR SALE A COMMERCI AL PROPERTY, SHOP NO. 19, BRAHMA AT CBD BELAPUR FOR A SALE CONSIDERAT ION OF RS.31,20,200/- ON 15.05.2007. THIS PROPERTY WAS PUR CHASED BY THE ASSESSEE VIDE AGREEMENT DATED 10.07.1993. THE AO NO TICED FROM THE REGISTERED AGREEMENT FOR SALE THAT THE SALE WAS CON DITIONAL ONE AS PER CLAUSES 1 & 2, BY VIRTUE OF WHICH THE PURCHASER HAS TO PAY A SUM OF RS.4,00,000/- TO THE VENDOR TOWARDS PART PAYMENT OF THE TOTAL CONSIDERATION FIXED AT RS. 31.20 LAKHS AND BALANCE SUM OF RS.27.20 LAKHS TO BE PAID ON OR BEFORE 15.06.2007. ACCORDING TO THE AO, ENQUIRIES REVEALED THAT THE PURCHASER HAS OBTAINED LOAN OF RS.27.20 LAKHS FROM BANK OF INDIA FOR PURCHASE OF THIS PROPE RTY, I.E. SHOP NO. 19, BRAHMA, CBD BELAPUR ON 13.07.2007. ACCORDING TO AO, THIS PROPERTY WAS FINALLY SOLD ON 13.07.2007. ACCORDINGLY, AO TRE ATED THIS GAIN ARISING OUT OF THE SALE AS SHORT TERM CAPITAL GAIN. THE ASSESSING OFFICER ALSO CLAIMED THAT HE HAS PURCHASED A NEW RESIDENTIA L FLAT, KAILASH MAHAL ON 25.05.2006 AND CLAIMED EXEMPTION ON THIS L ONG TERM CAPITAL GAIN UNDER SECTION 54F OF THE ACT. SINCE THE CAPITA L GAIN ARISING OUT OF THE TRANSACTION OF SALE OF SHOP NO. 19, BRAHMA WAS TREATED AS SHORT TERM CAPITAL GAIN, NO EXEMPTION UNDER SECTION 54F W AS ALLOWED BY THE AO. AGGRIEVED ON BOTH, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE, NOTED THE FACT THAT ASSESSEE HAS PURCHASED SHOP NO. 19, BRAHMA, CBD BELAPUR VIDE AGREEMENT DATED 19.07.1993 BUT THE SAI D AGREEMENT WAS REGISTERED ONLY ON 18.07.2005, WHICH IS THE ACTUAL DATE OF CONFIRMATION OF PURCHASE OF STAMP DUTY AND REGISTRATION WAS DONE ON 18.07.2005. ACCORDING TO THE CIT(A), THIS PROPERTY WAS SOLD VID E AGREEMENT FOR SALE DATED 15.05.2007, WHICH WAS A CONDITIONAL AGREEMENT TO SALE FOR THE FACT THAT AS PER CLAUSES 1 & 2 THE PURCHASER HAS PA ID RS.4 LAKHS AS ADVANCE AND BALANCE RS.27.20 LAKHS WAS PAID ON 15.0 6.2007 BUT IT WAS 3 ITA NO. 7742/MUM/2011 SHRI NARENDRA K. SHETH ACTUALLY PAID BY PURCHASER AFTER RECEIVING BANK LOA N OF RS.27.20 LAKHS FROM BANK OF INDIA ON 17.07.2007 AND PAID THE ASSES SEE ON 17.07.2007. ACCORDING TO THE CIT(A), THE ASSESSEE H AS PURCHASED NEW FLAT AT KAILASH MAHAL ON 25.05.2006, WHICH IS MORE THAN ONE YEAR PRIOR TO THE DATE OF SALE OF SHOP NO. 19, BRAHMA, CBD BEL APUR ON 17.07.2007. THE CIT(A) DENIED THE BENEFIT OF LONG T ERM CAPITAL GAIN TO THE ASSESSEE IN RESPECT TO SALE OF PROPERTY AND TRE ATED THE SAME AS SHORT TERM CAPITAL GAIN FOR THE REASON THAT SALE TRANSAC TION WAS COMPLETE WHEN THE SAID AGREEMENT WAS REGISTERED ONLY ON 18.0 7.2005, WHICH IS THE ACTUAL DATE OF CONFIRMATION OF PURCHASE OF STAM P DUTY AND REGISTRATION WAS DONE ON 18.07.2005. HE ALSO DENIED THE BENEFIT OF EXEMPTION UNDER SECTION 54F OF THE ACT FOR INVESTIN G THE SALE CONSIDERATION IN PURCHASE OF NEW RESIDENTIAL FLAT. FOR THIS, THE CIT(A) RELIED ON THE DECISION OF THE HON'BLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS. SMT. BEENA K. JAIN (1996) 217 ITR 363 (BOM. ). AGGRIEVED BY THE ACTION OF THE CIT(A), ASSESSEE NOW IS IN SECOND APP EAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US THE LEARNE D COUNSEL OF THE ASSESSEE STATED THAT THE ASSESSEE HAS PURCHASED SHO P NO. 19, BRAHMA. CBD BELAPUR BY AN AGREEMENT DATED 19.07.1993 AND SO LD THE SAME ON 15.05.2007. ACCORDING TO THE AO, IT WAS PURCHASED O N 18.07.2005 WHEN STAMP DUTY WAS PAID AND AGREEMENT WAS REGISTER ED AND FINAL PAYMENT WAS MADE BY THE ASSESSEE. ACCORDING TO THE ASSESSEE HE BOUGHT THE RESIDENTIAL FLAT AT KAILASH MAHAL ON 25. 05.2006, WHICH IS AN UNDISPUTED FACT. THE ASSESSEE REPLIED THAT THE BRAH MA SHOP WAS PURCHASED BY AGREEMENT FOR SALE DATED 19.07.1993 AN D CIDCO GRANTED OCCUPANCY CERTIFICATE TO THE ASSESSEE ON 20.09.1994 AND POSSESSION WAS RECEIVED BY ASSESSEE ON 09.12.1997. THE NAVI MU MBAI MUNICIPAL CORPORATION, VIDE ITS LETTER DATED 25.05.1999, HAS ALSO DEMANDED PROPERTY TAX FOR AND FROM THE YEAR 1994-95 FROM ASS ESSEE. THE LEARNED 4 ITA NO. 7742/MUM/2011 SHRI NARENDRA K. SHETH COUNSEL OF THE ASSESSEE HAS TAKEN US TO THESE DOCUM ENTS, WHICH WERE FILED IN ASSESSEES PAPER BOOK, I.E. OCCUPANCY CERT IFICATE DATED 20.06.1994 AND PAYMENT OF MUNICIPAL CORPORATION TAX DATED 25.05.1999. IN VIEW OF THIS THE LEARNED COUNSEL OF THE ASSESSEE STATED THAT ASSESSEE ACTUALLY ACQUIRED THIS BRAHMA PROPERT Y ON 19.07.1993 OR AT THE BEST IT CAN BE SAID THAT IT IS ACQUIRED WHEN POSSESSION WAS RECEIVED ON 09.12.1997. ACCORDING TO THE LEARNED CO UNSEL OF THE ASSESSEE IF THAT DATE IS TAKEN AS FINAL FOR THE TRA NSACTION EVEN THEN THE ASSESSEE SOLD THIS PROPERTY ON 15.05.2007 AND IT CA NNOT BE TREATED AS SHORT TERM CAPITAL ASSET. IT IS MORE THAN 36 MONTHS AND IT IS TO BE TREATED AS LONG TERM CAPITAL ASSET. WHEN THESE FACT S WERE CONFRONTED TO THE LEARNED CIT-DR HE ONLY RELIED UPON THE ORDERS O F THE AO AND CIT(A). 6. WE HAVE FIND THAT THE ADMITTED FACTS ARE THAT THE A SSESSEE MADE AN AGREEMENT FOR PURCHASE OF SHOP NO. 19, BRAHMA, C BD BELAPUR VIDE AGREEMENT DATED 19.07.1993 FOR WHICH OCCUPANCY CERT IFICATE WAS GRANTED BY CIDCO ON 20.06.1994 AND POSSESSION WAS G IVEN ON 09.12.1997. THESE FACTS WERE NEVER DISPUTED BY THE LEARNED SR. DR DESPITE SPECIFIC QUERY BY THE BENCH. IT IS ALSO NOT ED FROM CASE RECORD THAT NAVI MUMBAI MUNICIPAL CORPORATION DEMANDED TAX FROM ASSESSEE FOR AND FROM 1994-95 VIDE LETTER DATED 25.05.1999. ACCORDING TO US THESE ARE SUFFICIENT EVIDENCE WHICH PROVES THAT THE PROPERTY IS TRANSFERRED OR ACQUIRED IN ASSESSEES NAME IF NOT E ARLIER THEN LATEST BY 09.12.1997. ACCORDINGLY, WE HOLD THAT THE GAIN ARIS ING OUT OF THIS TRANSACTION IS LONG TERM CAPITAL GAIN AND IT IS TO BE TAXED ACCORDINGLY. THE AO IS DIRECTED ACCORDINGLY. 7. AS REGARDS THE SECOND ISSUE OF CLAIM OF EXEMPTION U NDER SECTION 54F OF THE ACT IN RESPECT OF INVESTMENT OF THIS LON G TERM CAPITAL GAIN IN PURCHASE OF KAILASH MAHAL RESIDENTIAL FLAT ON 25.05 .2006 IT IS WITHIN THE TIME FRAME OF ONE YEAR AS PRESCRIBED UNDER SECTION 54F OF THE ACT. WE FIND THAT THE REVENUE HAS DISPUTED THE SALE OF SHOP NO. 19, BRAHMA, CBD BELAPUR BY THE ASSESSEE. THE ASSESSEE CLAIMED T O HAVE SOLD THE 5 ITA NO. 7742/MUM/2011 SHRI NARENDRA K. SHETH SAME ON 15.03.2007 WHEREAS THE REVENUE CLAIMED THAT THIS WAS SOLD VIDE AGREEMENT REGISTERED AND PAYMENT MADE AND ALSO POSSESSION GIVEN OF THIS SHOP BY ASSESSEE TO THE PURCHASER ONLY ON 1 7.07.2007 AND THAT THE ACTUAL DATE OF TRANSFER. 8. WE FIND FROM THE FACTS OF THE CASE THAT THE ASSESSE E HAS PURCHASED NEW FLAT AT KAILASH MAHAL ON 25.05.2006, WHICH IS NOT IN DISPUTE. BUT THE ASSESSEE HAS ACTUALLY SOLD HIS SH OP NO. 19, BRAHMA, CBD BELAPUR ON 17.07.2007, WHICH IS CLEARLY AFTER O NE YEAR FROM THE DATE OF PURCHASE OF NEW FLAT. WE AGREE WITH THE FIN DINGS OF THE CIT(A), WHO DENIED THE BENEFIT OF LONG TERM CAPITAL GAIN EX EMPTION U/S. 54F OF THE ACT TO THE ASSESSEE IN RESPECT TO SALE OF PROPE RTY BY TREATING THE SAME AS SALE OF SHOP ONLY ON 17.07.2007. IN VIEW O F THIS REASON, WE CONFIRM THE FINDING OF CIT(A) DENYING EXEMPTION U/S . 54 OF THE ACT. ACCORDINGLY, THIS ISSUE OF ASSESSEES APPEAL IS DIS MISSED. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH APRIL, 20 16. SD/- SD/- (R.C. SHARMA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 7TH APRIL, 2016 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) -5, MUMBAI 3. CIT-10, MUMBAI 4. DR, B BENCH ITAT, MUMBAI 5. GUARD FILE. BY ORDER //TRUE COPY// (ASSTT. REGISTRAR) ITAT, MUMBAI N.P.