ACIT 12(1), MUMBAI V. M/S. MANUBHAI A. SHETH LARGER (HUF), MUMBAI

ITA 802/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83544 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 18-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Sale consideration of property below Jantri Value; Business income; Opportunity of being heard
• Section: 50C

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE S/SHRI H.L. KARWA, HONBLE PRESIDENT AND N.K . BILLAIYA, AM .. , . . , ./ I.T.A. NO.802 /MUM/2011 ( / ASSESSMENT YEAR : 2007-2008 ASSTT. COMMISSIONER OF INCOME TAX 12(1), ROOM NO. 117, AAYAKAR BHAWAN, M.K. MARG, MUMBAI. / VS. M/S MANUBHAI A SHETH LARGER (HUF), 501, JANMABHOOMI CHAMBERS, 29, W.H. MARG, BALLARD ESTATE, MUMBAI 400 020. ./ PAN : AAAHM5487K ( # / APPELLANT ) .. ( $%# / RESPONDENT ) ./ I.T.A. NO.831 /MUM/2011 ( / ASSESSMENT YEAR : 2007-2008 M/S MANUBHAI A SHETH LARGER (HUF), 501, JANMABHOOMI CHAMBERS, 29, W.H. MARG, BALLARD ESTATE, MUMBAI 400 020. / VS. ASSTT. COMMISSIONER OF INCOME TAX 12(1), ROOM NO. 117, AAYAKAR BHAWAN, M.K. MARG, MUMBAI. ./ PAN : AAAHM5487K ( # / APPELLANT ) .. ( $%# / RESPONDENT ) REVENUE BY SHRI A.K. NAYAK ASSESSEE BY SHRI VINOD KUMAR BINDAL ( * / DATE OF HEARING : 19-08-2014 ( * / DATE OF PRONOUNCEMENT : 19-08-2014 [ ITA 802/M/11 & 831/M/11 2 / O R D E R PER N.K. BILLAIYA, A.M . : . . , THESE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) 23, MUMBAI DATE D 15-11-2010 PERTAINING TO A.Y. 2007-08. THESE APPEALS ARE HEAD TOGETHER AND D ISPOSE OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVIT Y. ITA NO. 802/MUM/2011 (REVENUES APPEAL): 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE RE VENUE IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO COMPUTE THE L ONG TERM CAPITAL GAIN ON SALE OF TWO PLOTS OF LAND USING THE VALUATION OF ST AMP DUTY AUTHORITY. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 14-8- 2008 DECLARING TOTAL INCOME OF RS. 32.53 LACS. THE RETURN WAS SELECTED F OR ASSESSMENT AND STATUTORY NOTICE WAS ISSUED AND SERVED UPON THE ASS ESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT TH E ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN FROM SALE OF TWO PLOTS OF LAND. T HE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PROVISIONS OF SECTION 50-C OF THE INCOME TAX ACT, 1961 SHOULD NOT BE APPLIED ON THE SALE TRANSACTION OF TW O PLOTS OF LAND. IT WAS EXPLAINED THAT THE VALUATION ADOPTED BY THE STAMP D UTY AUTHORITY IS MUCH BELOW THE AGREEMENT VALUE AND AS SUCH THE PROVISION S OF SECTION 50-C OF THE ACT DO NOT APPLY ON THE FACTS OF THE CASE. TAKING A LEAF OUT OF THE ASSESSMENT ORDER FOR A.Y. 2006-07, THE A.O. PROCEEDED TO APPLY THE READY RECKONER RATE AND RECOMPUTED THE LONG TERM CAPITAL GAIN AND COMPL ETED THE ASSESSMENT. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) AND EXPLAINED THAT THE A.O. HAS ERRED IN ADOPTING THE READY RECKONER RATE WHEN THE VALUATION OF STAMP DUTY AUTHORITY IS MUCH LESS THAN THE AGREEMEN T VALUE. AFTER CONSIDERING THE FACTS AND SUBMISSIONS OF THE ASSESS EE, THE LD. CIT(A) WAS CONVINCED THAT THE FINDINGS OF THE A.O. ARE ERRONEO US AND ACCORDINGLY DIRECTED ITA 802/M/11 & 831/M/11 3 THE A.O. TO COMPUTE THE CAPITAL GAIN USING THE VALU ATION OF THE STAMP DUTY AUTHORITY ON THE DATE OF TRANFER OF THE PROPERTY. AGGRIEVED BY THIS, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE US. 3. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE S AY OF THE LD. COUNSEL FOR THE ASSESSEE THAT AN IDENTICAL ISSUE HAS BEEN DECIDED B Y THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ITA NO. 3841 & 3842/MUM/2009 FOR AS SESSMENT YEARS 2003- 04 & 2006-07. 4. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. WE HAVE ALSO HAVE THE BENEFIT OF ASSESSEES OWN CASE FOR AS SESSMENT YEARS 2003-04 AND 2006-07. THE TRIBUNAL AT PARA 18 & 19 OF ITS O RDER HAS HELD AS UNDER:- 18. TAKING INTO ACCOUNT THE ARGUMENTS OF THE DR AND FACTS COMING OUT OF THE ORDERS OF THE REVENUE AUTHORITIES, IT IS CLEAR THAT THE PROPERTY HAD ALREADY CONVEYED TO THE BUYER PRIOR TO 2001-02 AND IT WAS ONLY THE FINAL PART PAYMENT WHICH WAS MADE DURING THE YEAR A LONG WITH THE FORMAL DOCUMENTATION. THE FACT THAT THE PROPERTY IN QUESTION WAS AGREED TO BE SOLD AND CONVEYANCE DONE EVEN PRIOR TO FINANCIAL YEAR 2001-02 IS NOT DISPUTED EVEN IN THE ASSESSMENT ORDE R. THE ONLY SKIN OF THE NAIL, WHICH THE AO IS USING IS THE FINAL PAYMEN T AND DOCUMENTATION AND ON THAT BASIS, THE APPLICATION OF SECTION 50. I T IS CRYSTAL CLEAR FROM THE FACT THAT EXCEPT FOR THE LAST INSTALMENT EVERYT HING WAS COMPLETED PRIOR TO 2001-02, IN WHICH CASE, THE PROVISIONS OF SECTION 50C WERE NEITHER THERE NOR COULD HAVE BEEN APPLIED. IN THESE CIRCUMSTANCES, WE HAVE TO ACCEPT THE FINDINGS OF THE CIT(A) WHO HAS B ASED HIS ORDER ON THE CIT(A)S ORDER FOR ASSESSMENT YEAR 2005-06, WHERE, THE THEN CIT(A) HAS DEALT WITH ALL THE ISSUES ELABORATELY. 19. IN THESE CIRCUMSTANCES, WE DO NOT DEEM IT FIT T O DISTURB THE FINDINGS OF THE C1T(A). THE AO IS DIRECTED TO ACCEP T THE LTCG AS DETERMINED AND OFFERED BY THE ASSESSEE IN ITS RETUR N. 5. THE FACTS AND ISSUES BEING IDENTICAL, RESPECTFUL LY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, WE UPHOL D THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE. THE APPEAL FILED BY THE REVEN UE IS ACCORDINGLY DISMISSED. ITA 802/M/11 & 831/M/11 4 ITA NO. 802/MUM/2011 (ASSESSEES APPEAL) 6. THE ASSESSEE IS AGGRIEVED BY : 1) DISALLOWANCE O F BUSINESS LOSS OF RS. 25,41,480/- AND 2) TREATMENT OF INTEREST INCOME OF RS. 1,23,153/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 7. IT WAS VEHEMENTLY SUBMITTED BEFORE US THAT THE B USINESS LOSS IN EARLIER YEARS WAS ALLOWED BY THE A.O., THEREFORE, THE SAME VIEW SHOULD HAVE BEEN TAKEN FOR THE YEAR UNDER CONSIDERATION. SIMILARLY, THE INTEREST INCOME WAS TAXED AS BUSINESS INCOME IN EARLIER YEARS, THEREFOR E, THERE IS NO REASON IN CHANGING THE HEAD OF INCOME FOR THE YEAR UNDER CONS IDERATION. 8. WE HAVE CAREFULLY PERUSED THE ORDER OF THE AUTHO RITIES BELOW. WE HAVE ALSO THE BENEFIT OF ASSESSMENT ORDER FOR A.Y. 2005- 06. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE BOTH THESE ISSUES TO THE FILE OF THE A.O. THE A.O.IS DIRECTED TO VERIFY THE CONTENTIONS OF THE ASSESSEE THAT IN EARLIER YEARS THE BUSINESS LOSS WAS ALLOWED AND THE INTEREST INCOME W AS TAXED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AFTER GIVING PROPER AND FAIR OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASS ESSEE IS DIRECTED TO FILE NECESSARY DETAILS TO SUBSTANTIATE ITS CLAIM. THE AP PEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED WHEREAS THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST, 2014. ( 0 1 2 19 -8-2014 ( SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA ) /PRESIDENT ACCOUNTANT MEMBER MUMBAI ; 2 DATED 19?8?2014 [ ITA 802/M/11 & 831/M/11 5 .D../ R.K. , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. E () / THE CIT(A) 23, MUMBAI 4. E / CIT- XII, MUMBAI 5. H $DDJ , * J , / DR, ITAT, MUMBAI G BENCH 6. / GUARD FILE. / BY ORDER, %H $D //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI