PENELOPE ANN DOS REMEDIOS, MUMBAI V. ITO 19(3)(3), MUMBAI

ITA 7928/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71045 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 54

Judgement Text

M/S PENELOPE ANN DOS REMEDIOS - 1 - VK;DJ VIHYH; VF/KDJ.K LH U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI JH VKJ- DS- XQIRK] U;KF;D LNL; ,OA JH JKTSUNZ FLAG YS[KK LNL; DS LE{K BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI RAJ ENDRA SINGH ACCOUNTANT MEMBER VK;DJ VIHY LA[;K /ITA NO.7928/MUM/2010 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2006-07 M/S PENELOPE ANN DOS REMEDIOS THE FAVOURITE, 6, DMONTE ROAD, BANDRA WEST, MUMBAI- 400 050. CUKE@ VS. INCOME TAX OFFICER- 19(3(3), MUMABAI PIRAMAL CHAMBERS, MUMBAI PAN:- AAACP2191A VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VIHYKFKHZ DH VKSJ LS @ APPELLANT BY SHRI VISHWAS V. MEHENDALE IZR;FKHZ DH VKSJ LS @ RESPONDENT BY MS. TRIPURA SUNDARI VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER RAJENDRA SINGH, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 4.8.2010 OF CIT(A) FOR THE ASSESSMENT YEARS 2006-07 . THE DISPUTES RAISED BY THE ASSESSEE IN THIS APPEAL RELATE TO TAXABILITY OF SALE PROCEEDS OF DEVELOPMENT RIGHTS AS CAPITAL GAIN, YEAR OF TAXABIL ITY AND ALLOWABILITY OF EXEMPTION U/S 54 OF THE INCOME TAX ACT. 2. AT THE TIME OF HEARING OF THE APPEAL, THE LEARNE D AR FOR THE ASSESSEE DID NOT PRESS THE GROUND NO. 2 RELATING TO TAXABILI TY OF SALE PROCEEDS OF LQUOKBZ DH RKJH[K @ DATE OF HEARING 2-09-2013 ?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT 6-09-2013 M/S PENELOPE ANN DOS REMEDIOS - 2 - DEVELOPMENT RIGHTS AS CAPITAL GAIN. THIS GROUND IS THEREFORE DISMISSED AS NOT PRESSED. WE ARE, THEREFORE, LEFT WITH ONLY TWO GROUND I.E. YEAR OF TAXABILITY AND ALLOWABILITY OF EXEMPTION U/S 54 OF THE INCOME TAX ACT. 3. BRIEFLY STATED, FACTS OF THE CASE ARE THAT THE A SSESSEE ALONG WITH FOUR OTHER CO-OWNERS OWNED THE PROPERTY NAMED AS FAVOURI TE SITUATED AT SALSETTE CATHOLIC CHSL. THEY HAD ENTERED INTO A DEV ELOPMENT AGREEMENT DATED 16.2.2006 WITH M/S CALVIN CORPORATION. AS PER THE AGREEMENT, THE OWNERS HAD GRANTED THE DEVELOPMENT RIGHTS TO THE DE VELOPER. THE ASSESSEE IN TERMS OF THE AGREEMENT WAS TO RECEIVE MONETARY C ONSIDERATION OF RS. 8,00,000/- AND THE FLAT BEARING NO. 302 ADMEASURING 850 SQ. FT. CARPET AREA ON THE THIRD FLOOR AND STILT CAR PARKING NO. 8 ADMEASURING 1.15 SQ. MTR. THE ASSESSEE HAD HOWEVER NOT SHOWN ANY CAPITAL GAIN IN RESPECT OF SALE OF DEVELOPMENT RIGHTS IN ASSESSMENT YEAR 2006- 07. THE ASSESSEE EXPLAINED THAT SHE HAD NOT RECEIVED PAYMENT NOR THE FLAT FROM THE BUILDER. IT WAS ALSO SUBMITTED THAT ACTUAL TRANSFER OF THE P ROPERTY HAD TAKEN PLACE ON 15.1.2007, THE DATE ON WHICH POSSESSION OF THE P ROPERTY HAD BEEN HANDED OVER TO THE DEVELOPER. THE ASSESSEE POINTED OUT THAT IN ASSESSMENT YEAR 2006-07, THE ASSESSEE HAD DECLARED RENTAL INCO ME FROM THE TENANTS AS HOUSE PROPERTY INCOME WHICH PROVED THE FACT THAT TH E TENANTS WERE RESIDING IN THE SAID PROPERTY AND THE POSSESSION HA D NOT BEEN HANDED OVER. THE ASSESSEE ALSO SUBMITTED THAT THE CONFIRMATIONS IN THIS REGARD HAD ALSO BEEN FILED FROM THE TENANTS. IT WAS FURTHER SUBMITT ED THAT EVEN IF THE CAPITAL GAIN WAS HELD TAXABLE IN THIS YEAR, THE ASS ESSEE WILL BE ENTITLED FOR EXEMPTION U/S 54 AS THE CAPITAL GAIN HAD BEEN INVES TED IN THE FLAT AND THE PARKING LOT. 3.1 AO HOWEVER DID NOT ACCEPT THE CONTENTIONS RAISE D. IT WAS OBSERVED BY HIM THAT THE CASE OF THE ASSESSEE WAS COVERED BY SE CTION 53A OF TRANSFER OF PROPERTY ACT AS PER WHICH ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF THE CONTRACT HAD TO BE CONSIDERED AS TRANSFER. HE ALSO REFERRED TO THE JUDGMENT OF HONBLE HIGH COURT OF B OMBAY IN CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT (260 ITR 491) IN WHICH IT WAS HELD M/S PENELOPE ANN DOS REMEDIOS - 3 - THAT IN CASE IN THE GUISE OF AGREEMENT FOR SALE, A DEVELOPMENT AGREEMENT HAD BEEN CONTEMPLATED, THE AO WAS ENTITLED TO TAKE THE DATE OF THE CONTRACT AS DATE OF TRANSFER. HE, THEREFORE, HELD T HAT THE TRANSFER HAD TAKEN PLACE DURING THE ASSESSMENT YEAR 2006-07 AND THE AS SESSEE WAS LIABLE FOR CAPITAL GAIN. AS REGARDS THE ALLOWABILITY OF EXEMPT ION U/S 54 OF THE INCOME TAX ACT, THE AO OBSERVED THAT THE FLAT RECEIVED BY THE ASSESSEE AS PART OF THE CONSIDERATION CANNOT BE TREATED AS INVESTMENT A ND, THEREFORE, THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION U/S 54 OF T HE INCOME TAX ACT AS THE ASSESSEE HAD NOT MADE INVESTMENT EITHER BY WAY OF PURCHASE OR CONSTRUCTION OF THE SAME. AO ACCORDINGLY ASSESSED T HE CAPITAL GAIN IN ASSESSMENT YEAR 2006-07. IN APPEAL, CIT(A) AGREED W ITH THE FINDINGS OF AO THAT THE TRANSFER HAD TAKEN PLACE IN ASSESSMENT YEA R 2006-07 AND THE CAPITAL GAIN WAS, THEREFORE, LIABLE FOR TAXATION IN THAT YEAR. HE ALSO UPHELD THE VIEW TAKEN BY THE AO THAT THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION U/S 54 OF THE INCOME TAX ACT. AGGRIEVED BY THE DECI SION OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 4. BEFORE US, THE LEARNED AR FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES THAT THE ASSESSEE HAD NEITHER RECEIVED ANY CONSIDERATION IN CASH OR KIND NOR HAD HANDED OVER T HE POSSESSION OF THE PROPERTY. IT WAS ALSO POINTED OUT THAT THE POSSESSI ON HAD BEEN HANDED OVER ONLY ON 15.1.2007 I.E. IN ASSESSMENT YEAR 2007-08 W HICH WAS SUPPORTED BY THE FACT THAT IN ASSESSMENT YEAR 2006-07 RENT HAD B EEN RECEIVED FROM THE TENANTS OCCUPYING THE BUILDING WHICH HAD BEEN OFFER ED AS HOUSE PROPERTY INCOME. CONFIRMATIONS FROM TENANTS HAD ALSO BEEN FI LED. CONSIDERATION OF RS. 8,00,000/- HAD BEEN RECEIVED ON 12.11.2006 WHIC H WAS CLEAR FROM THE BANK STATEMENT IN WHICH THE SUM OF RS. 8,00,000/- H AD BEEN DEPOSITED ON THE SAID DATE AS PER COPY PLACED AT PAGE 28 OF THE PAPER BOOK. HE ALSO REFERRED TO THE LETTER DATED 9.12.2006 OF THE DEVEL OPER CONFIRMING THAT THE PAYMENT OF RS. 8,00,000/- HAD BEEN MADE BY CHEQUE D ATED 9.12.2006. IT WAS ALSO POINTED OUT THAT IN CASE OF CO-OWNER THE A O HAD ACCEPTED THE CAPITAL GAIN IN ASSESSMENT YEAR 2007-08 IN ORDER PA SSED U/S 143(3) OF THE INCOME TAX ACT. IT WAS, THEREFORE, URGED THAT THE A DDITION MADE IN THIS YEAR SHOULD BE DELETED. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS M/S PENELOPE ANN DOS REMEDIOS - 4 - OF AUTHORITIES BELOW AND PLACED RELIANCE ON THE FIN DINGS GIVEN IN RESPECTIVE ORDERS. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING TAXABILITY OF CAPITAL GAIN ARISING ON THE BASIS OF DEVELOPMENT AGREEMENT. THE ASSESSEE ALONG WITH OTHE R FOUR CO-OWNERS WAS OWNER OF THE TENANTED BUILDING NAMED AS FAVOURITE W HICH HAD BEEN GIVEN FOR DEVELOPMENT TO THE DEVELOPER M/S CALVIN CORPORA TION AS PER THE DEVELOPMENT AGREEMENT DATED 16.2.2006. IN TERMS OF THE AGREEMENT, THE ASSESSEE WAS TO RECEIVE MONETARY CONSIDERATION OF R S. 8,00,000/- AND A FLAT WITH CARPET AREA OF 850 SQ. FT. TOGETHER WITH STILT CAR PARKING. IN THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAD NEITHER R ECEIVED THE MONETARY CONSIDERATION OF RS. 8,00,000/- NOR THE FLAT AS MEN TIONED IN THE AGREEMENT. THE MONETARY CONSIDERATION WAS RECEIVED ONLY ON 12. 12.2006 AS PER THE CONFIRMATION GIVEN BY THE DEVELOPER AND COPY OF THE BANK ACCOUNT OF THE ASSESSEE SHOWING THE DEPOSIT. THE ASSESSEE HAD ALSO NOT HANDED OVER THE POSSESSION OF THE PROPERTY DURING THE FINANCIAL YEA R2005-06. THE POSSESSION WAS HANDED OVER ONLY ON 15.1.2007 WHICH IS SUPPORTED BY THE CONFIRMATION OF THE DEVELOOPER PLACED AT PAGE 28 OF THE PAPER BOOK. SUCH CLAIM REGARDING HANDING OVER OF THE POSSESSION MADE BEFORE THE AUTHORITIES BELOW ALSO WHICH HAS NOT BEEN CONTROVERTED BY THEM. THEREFORE, IT IS AN UNDISPUTED FACT THAT POSSESSION HAD BEEN HANDED OVE R ONLY IN ASSESSMENT YEAR 2007-08. 5.1 THE TRANSFER AS DEFINED IN SECTION 2(47) ALSO I NCLUDES ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMM OVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF THE CONTRA CT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. IN THE PRESENT CASE THE POSSESSION HAD BEEN NEITHER HANDED OVER DURING THE ASSESSMENT YEAR UNDER CONSIDERATION NOR ANY CONSIDERATION HAD BEEN RECEIVED IN THIS YEAR. THEREFORE, WE AGREE WITH THE SUBMISSIONS OF THE ASS ESSEE THAT THERE WAS NO TRANSFER OF PROPERTY IN ASSESSMENT YEAR 2006-07 AND , THEREFORE, NO CAPITAL GAIN CAN BE TAXED IN THIS YEAR. MOREOVER, IN CASE OF A CO-OWNER AS POINTED OUT BY THE ASSESSEE, THE CAPITAL GAIN HAS ALREADY B EEN ACCEPTED IN M/S PENELOPE ANN DOS REMEDIOS - 5 - ASSESSMENT YEAR 2007-08. THEREFORE, THE ORDER OF CI T(A) UPHOLDING THE TAXATION OF CAPITAL GAIN IN ASSESSMENT YEAR 2006-0 7 CANNOT BE UPHELD. AS CAPITAL GAIN HELD NOT TO BE TAXABLE IN THIS YEAR WE DO NOT CONSIDER IT NECESSARY TO GO INTO THE ALTERNATIVE CLAIM OF THE A SSESSEE THAT THE CAPITAL GAIN EVEN IF TAXABLE IN THIS YEAR, WAS EXEMPT U/S 5 4 OF THE INCOME TAX ACT. THEREFORE, THE GROUND RAISED REGARDING THE CLAIM OF EXEMPTION U/S 54 OF THE INCOME TAX ACT IS DISMISSED AS HAVING BECOME IN FRUCTUOUS. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED ON 6-9-2013 SD/- SD/- (R.K. GUPTA) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SKS SR. P.S, MUMBAI DATED 6.9.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI