Income TAx Officer Ward-6(3)(1), Bangalore V. Shri Arun Gautam Dugganapally , Bangalore

ITA 834/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8213 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 16-03-2018
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, BENGALURU BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 834 /BANG/20 18 (ASSESSMENT YEAR: 2014-15) INCOME-TAX OFFICER, WARD 6(3)(1), BENGALURU. VS. APPELLANT SHRI ARUN GAUTAM DUGGANAPALLY, PLOT NO.25, 2 ND MAIN ROAD, CHOLANAGAR, BENGALURU-560 032. PAN: BRGPD1602P RESPONDENT APPELLANT BY : SHRI VIKAS SURYAVAMSHI, ADDL.CIT. RESPONDENT BY : NONE. DATE OF HEARING: 25/03/2019 DATE OF PRONOUNCEMENT: 03/04/2019 O R D E R PER PAVAN KUMAR GADALE, JM: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A)-7, BENGALURU, DATED 08/01/2018 PASSED U/S 14 3(3) R.W.S 250 OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] FOR THE ASSESSMENT YEAR 2014-15. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF A PPEAL: 1. THE ORDER OF THE CIT (APPEALS) IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.834/BANG/2018 PAGE 2 OF 6 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE LD. CIT(A) WAS RIGHT IN TREATING THE INCOME OF THE ASSESSEE AS LONG TERM CAPITAL GAIN WHEREAS THE ASSESSEE HAS SOLD THE PROPERTY EVEN BEFORE GETTING ITS POSSESSION AND DIDN'T HOLD THE PROPERTY FOR 36 MONTHS TO CLAIM THE LONG TERM CAPITAL GAIN. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A), IN SO FAR AS IT RELAT ES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AME ND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT T HE TIME OF HEARING OF THE APPEAL. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED THE RETURN OF INCOME ELECTRONICALLY ON 21/07/2014 D ISCLOSING LOSS OF RS.25,34,044/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN COMPLIANCE, THE ASSESSEE T HROUGH E- MAIL SUBMITTED THE COPY OF INCOME-TAX RETURN ACKNOW LEDGMENT, SALE DEED, PURCHASE DEED AND THE COMPUTATION OF CAP ITAL GAINS ETC. THE AO, ON PERUSAL OF THE COMPUTATION OF CAPI TAL GAINS FOUND THAT THE ASSESSEE HAS ENTERED INTO PURCHASE A GREEMENT FOR FLAT WITH M/S. PURAVANKANA PROJECTS LTD., ON 29 /01/2007 AND ON THE SAME DAY CONSTRUCTION AGREEMENT WAS ALSO ENT ERED. THE ASSESSEE PAID ADVANCES IN RESPECT OF PURCHASE O F FLAT AND CONSTRUCTION OF FLAT. TH AO FOUND THAT THE ASSESSE E HAS PAID ITA NO.834/BANG/2018 PAGE 3 OF 6 LAST INSTALMENT OF RS.9,46,535/- IN THE FINANCIAL Y EAR 2013-14 AND THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS ON SALE OF PROPERTY. THE AO FOUND THAT THE ASSESSEE HAS SOLD FLAT ON 10/07/2013 THROUGH ASSIGNMENT DEED FOR CONSIDERATIO N OF RS.94 LAKHS AND ALSO CLAIMED EXPENDITURE ON TRANSFE R. THE AO IS OF THE OPINION THAT THE ASSESSEE DID NOT HELD TH E PROPERTY FOR A PERIOD OF 36 MONTHS TO CLAIM EXEMPTION OF LONG TE RM CAPITAL GAIN AND WITH OTHER ADDITIONS, THE AO ASSESSED THE TOTAL INCOME OF RS.10,84,633/- AND PASSED THE ORDER U/S 143(3) O F THE ACT ON 30/12/2016. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) HAVING CONSIDERED TH E GROUNDS OF APPEAL, SUBMISSIONS OF THE ASSESSEE AND THE JUDI CIAL DECISIONS, OBSERVED THAT THE ASSESSEE HAS ENTERED I NTO AGREEMENT FOR CONSTRUCTION OF FLATS WITH THE BUILDE R ON 29/01/2017 AND SOLD THE PROPERTY ON 10/5/2013 BEFOR E COMPLETION OF THE CONSTRUCTION WHEREAS THE AO HAS R EJECTED THE CLAIM OF THE ASSESSEE SINCE NO POSSESSION OF THE FL AT WAS TAKEN BY THE ASSESSEE. WHEREAS THE ASSESSEE SUBMITTED TH AT THE BUILDING UNDER CONSTRUCTION COMES UNDER THE BENEFIC IAL RIGHT AS PER DEFINITION OF CAPITAL ASSET U/S 2(14) OF THE AC T AND ALSO RIGHT TO OBTAIN CONVEYANCE OF IMMOVABLE PROPERTY IS CAPIT AL ASSET AND RELIED ON THE HONBLE BOMBAY HIGH COURT DECISIO N IN THE ITA NO.834/BANG/2018 PAGE 4 OF 6 CASE OF CIT VS. TATA SERVICE LTD. (122 ITR 594)(BOM) WHEREAS THE CIT(A) HAS ALSO CONSIDERED THE AGREEMENT ENTERE D BY THE ASSESSEE AND HAVING SATISFIED THAT THE ASSESSEE HAS HELD THE ASSET FOR MORE THAN 3 YEARS FROM THE DATE OF AGREEM ENT DATED 21/01/2017, THEREFORE, THE ASSET IS A LONG-TERM CAP ITAL ASSET AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGG RIEVED BY THE CIT(A) ORDER, REVENUE HAS FILED THE APPEAL WITH TRIBUNAL. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. THE LEARNED DR SUBMITTED THAT THE CIT(A) HAS ERRED IN GRANTING RELIEF WITHOUT CONSIDERING THE FACT THAT THE AO HAS OBSERV ED THAT THE PERIOD OF 3 YEARS IS NOT COMPLETED FOR THE ASSESSEE TO CLAIM EXEMPTION OF LONG-TERM CAPITAL ASSET. 6. WE HEARD THE SUBMISSIONS OF THE LEARNED DR AND P ERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE DISPUTED ISSUE IS RELATED TO PERIOD OF HOLDING OF THE PROPERTY. WE F OUND FROM THE ORDER OF THE AO THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH BUILDER FOR CONSTRUCTION OF FLAT ON 29/01/2007 AND SOLD THE FLAT ON 10/5/2013 WHICH IS NOT DISPUTE D. WHEREAS THE AO IS CONSIDERING THE HOLDING PERIOD IS LESS TH AN 36 MONTHS AND THE FLAT WAS SOLD PRIOR TO POSSESSION. WE FOUN D THAT THE ASSESSEE HAS ENTERED INTO AGREEMENT OF SALE AND AGR EEMENT OF CONSTRUCTION ON 29/1/2007. THE CIT(A) HAS PERUSED THE AGREEMENT IN THE COURSE OF APPELLATE PROCEEDINGS AN D REFERRED ITA NO.834/BANG/2018 PAGE 5 OF 6 TO A SPECIFIC CLAUSE IN THE AGREEMENT THAT THE PURC HASER CAN TRANSFER, ASSIGN HIS/HER RIGHTS UNDER THE AGREEMENT IN FAVOUR OF ANY ONE AFTER 9 MONTHS FROM THE DATE OF AGREEMEN T SUBJECT TO WRITTEN CONSENT FROM THE DEVELOPER AFTER PAYMENT OF FEES FOR TRANSFER. WE FOUND THE ASSESSEE HAS TRANSFERRED HI S RIGHT IN THE FLAT IN FAVOUR OF THIRD PARTY ON 10/5/2013 FOR A SALE CONSIDERATION OF RS.94 LAKHS. HENCE, THE SALE RESU LTS IN TRANSFER OF CAPITAL ASSET AND THE ASSESSEE IS ENTITLED TO CL AIM OF LONG TERM CAPITAL GAIN OR LOSS AS THE ASSESSEE HAS SATIS FIED THE CONDITIONS BY HOLDING THE PROPERTY FROM 29/01/2007 TO 10/5/2013. WE FOUND THAT THE CIT(A), HAVING CONSIDE RED THE PROVISIONS OF LAW, JUDICIAL DECISIONS AND THE FACTS OF THE CASE, HAS PASSED A REASONED ORDER AND CANNOT BE INTERFERE D. THE LEARNED DR COULD NOT CONTROVERT THE FINDINGS OF THE CIT(A) WITH ANY COGENT MATERIAL OR EVIDENCE. ACCORDINGLY, WE A RE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVEN UE. 7. IN THE RESULT, THE APPEAL FILED BY THE REV ENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD APRIL, 2019. SD/- SD/- (JASON P BOAZ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 03/04/2019. SRINIVASULU, SPS ITA NO.834/BANG/2018 PAGE 6 OF 6 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE