Sadiq Shaikh, Panaji V. Dy.Comm. Of Income Tax,Cent . Circle, Panaji

ITA 87/PAN/2013

• Counselvise Citation: 8724114 RSA 2013
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 27-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRASANNA KUMAR
• Assessee Lawyers: P Y VAIDYA; SAMEER ANVEKAR
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 87/PNJ/2013 : (ASST. YEAR : 2004 - 05) MR. SADIQ SHAIKH FR5, 4 TH FLOOR, SOUZA TOWERS, OPP. MUNICIPAL GARDEN, PANAJI, GOA 403 001. (APPELLANT) PAN : AMFPS2073J VS. DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, PANAJI, GOA (RESPONDENT) ITA NO. 88/PNJ/2013 : (ASST. YEAR : 2007 - 08) MR S . SADIA SHAIKH FR5, 4 TH FLOOR, SOUZA TOWERS, OPP. MUNICIPAL GARDEN, PANAJI, GOA 403 001. (APPELLANT) PAN : AKQPS9076A VS. DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, PANAJI, GOA (RESPONDENT) REVENUE BY : PRASANNA KUMAR , DR ASSESSEE BY : P.Y. VAIDYA, ADV. & SAMEER ANVEKAR, CA DATE OF HEARING : 11/06/2013 DATE OF PRONOUNCEMENT : 31 / 07 /2013 O R D E R PER D.T. GARASIA : 1. THESE TWO APPEALS FILED BY THE ASSESSEE; ONE BY THE ASSESSEE AND ANOTHER BY HIS WIFE AGAINST THE ORDER OF CIT(A) DT. 27.3.2013 FOR A.Y 2004 - 05 . THE ASSESSEES ARE GOVERNED BY THE PORTUGUESE CIVIL CODE, 1960 IN FORCE IN THE STATE OF GOA. ACCORDING TO SEC. 5A OF THE INCOME TAX ACT THE INCOME OF THE HUSBAND AND WIFE UNDER ANY HEAD SHALL NOT BE ASSESSED AS THAT OF THAT COMMUNITY OR PROPERTY BUT SUCH INCOME OF HUSBAND AND WIFE UNDER EACH HEAD 2 ITA NOS. 87 & 88/PNJ/2013 (ASST. YEAR : 2004 - 05 & 2007 - 08) OF INCOME SHALL BE APPORTIONED EQUALLY BETWEEN THE HUSBAND AND WIFE. THE INCOME SO APPORTIONED WILL BE INCLUDED SEPARATELY IN THE TOTAL INCOME OF HUSBAND AND WIFE RESPECTIVELY. CONSIDERING THIS, A CONSOLIDATED ORDER IS PASSED IN THE CASE OF THE TWO APPELLANTS; HUSBAND AND WIFE. 2. THE SHORT FACTS OF THE CASE ARE THAT THE AO HAS ASSESSED THE TOTAL INCOME AT RS.39,14,310/ - AS AGAINST DECLARED INCOME OF ( - ) RS.1,28,840/ - IN ADDITION TO AGRICULTURAL INCOME OF RS.45,000/ - AND AFTER ASSESSING 50% IN THE HANDS OF THE SPOUSE, MRS. SADIA SHAIKH AS PER SEC. 5A OF THE INCOME TAX ACT. THE ADDITION MADE BY THE AO ARE ON ACCOUNT OF CAPITAL GAINS ARISING ON ACCOUNT OF ASSIGNMENT OF FLATS TO CERTAIN PERSONS I.E. 4 FLATS TO MR. TAHIR ISANI AND 1 FLAT TO MRS. CHRISTINA PINTO DO ROSARIO BY THE APPELLANT, MR. SADIQ SHAIKH. 3. GROUND NO. 1 - DURING THE COURSE OF SEARCH, ASSESSEE ADMITTED THAT HE HAS RIGHT IN BUILT - UP AREA O F 854 SQ. MTRS. IN CASTLE ROCK PROJECT, GOA IN ACCORDANCE WITH THE AGREEMENT FOR SALE AND DEVELOPMENT DT. 5.10.2002 WITH M/S. LANDSCAPE DEVELOPERS. ACCORDINGLY, 6 FLATS WERE ALLOTTED TO MR. SADIQ SHAIKH. ACCORDING TO ABOVE AGREEMENT, BUYER HAS PAID THE A BOVE SALE CONSIDERATION AND MR. SADIQ SHAIKH HAS RECEIVED THE SAME. DURING THE COURSE OF SEARCH, MR. SADIQ SHAIKH WAS CONFRONTED WITH THIS AGREEMENT AND HE CLAIMED THAT 4 FLATS WERE GIVEN TO MR. TAHIR ISANI AS BROKERAGE AND ONE FLAT WAS GIVEN TO ONE MR. VIEGAS AS COMMISSION. THE AO AFTER VERIFYING THE STATEMENT AND THE AGREEMENT, WAS OF THE VIEW THAT THE AGREEMENT SHOWS THAT MR. SADIQ SHAIKH HAS RECEIVED RS.91,91,000/ - AGAINST THE ABOVE 4 FLATS AND ASSESSEE HAS FAILED TO PRODUCE DETAILS OF LAND BROKERED, WHETHER THE LANDS WERE PURCHASED AND HOW MR. TAHIR ISANI WAS KNOWN TO THE LAND OWNERS AND WHY SUCH A HUGE BROKERAGE WAS PAID BY MR. SADIQ SHAIKH. THEREFORE, THE AO HAS ADDED THE INCOME OF FOUR FLATS TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS ALSO T AKEN THE CONTENTION THAT THE COST OF ACQUISITION OF 4 FLATS SHOULD BE TAKEN AS RS.36,72,000/ - AS VALUE 3 ITA NOS. 87 & 88/PNJ/2013 (ASST. YEAR : 2004 - 05 & 2007 - 08) OF CONSTRUCTED FLAT AS PER SAID AGREEMENT AND RS. 40 LACS HAS TO BE RECEIVED IN CASH IN ADDITION TO THE SAID FLATS. THEREFORE, CLAIM THAT RS.76,72,000/ - SHOULD BE TREATED AS COST OF 6 FLATS AND COST OF ACQUISITION OF 4 FLATS MAY BE WORKED OUT ACCORDINGLY HAS NOT BEEN ACCEPTED AND AO HAS ADDED RS.65,77,000/ - AS PROFIT ON SALE OF FLATS IN THE HANDS OF THE ASSESSEE. 3.1 THE LD. AR SUBMITTED THAT THE AO HAS MADE THE ADDITION ON THE REASON THAT THERE WAS NO DOCUMENTARY EVIDENCE TO PROVE COMMISSION/BROKERAGE PAID TO MR. TAHIR ISANI BY MR. SADIQ SHAIKH. THE LD. AR SUBMITTED THAT WHEN THERE IS NO DOCUMENTARY EVIDENCE, THEN, CIRCUMSTANTIAL EVIDENCE MUST BE ACCEPT ED. THERE ARE SUBSTANTIAL EVIDENCE IN THE FORM OF CONFIRMATION LETTER FROM MR. TAHIR ISANI. IF THE AO HAD ANY DOUBT ABOUT THIS LETTER, HE SHOULD HAVE SUMMONED HIM AND VERIFIED HIS RETURN OF INCOME AND HE IS ASSESSED IN PANAJI, GOA ONLY. FOR LACK OF VERI FICATION BY THE AO, THE ADDITION HAS BEEN MADE. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS PURCHASED IN 1991 OD XEL PROPERTY. PARTICULARLY IT WAS ONLY BECAUSE OF HIM, THE CO - OWNERS, DR. A.X. MARTINS SIGNED THE AGREEMENT. ANOTHER CO - OWNER, MR. A.X. VIEGAS HAS AGREED TO SIGN THE SALE DEED ONLY THROUGH INTERVENTION OF MR. ROBERTO ALAN M. VIEGAS AND FINALLY SALE DEED WAS SIGNED AFTER A LONG PERIOD OF 9 YEARS. IT CAN BE SEEN THAT DUE TO THESE NEGOTIATIONS AND PAYMENT OF HEFTY COMMISSION AND BROKERAGE, ASSESSE E WAS IN A POSITION TO IMPROVE THE TITLE OF THE PROPERTY AND SAVE THE MONEY ALREADY LOST IN THE ACQUISITION. THE LD. AR FURTHER SUBMITTED THAT MR. TAHIR ISANI HAS CONFIRMED BY LETTER WHICH WAS FILED BEFORE THE AO THAT HE HAS ALREADY OFFERED FOR TAXATION T WO FLATS AND CONFIRMING THAT THE BALANCE TWO FLATS WOULD BE OFFERED FOR TAX AS AND WHEN THE POSSESSION OF THE SAID FLATS ARE RECEIVED. THEREFORE, THERE WILL BE DOUBLE TAXATION OF THE SAME FLATS IN THE HANDS OF THE BUYER AND IN THE HANDS OF THE RECEIVER. 3.2 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF CIT(A). 4 ITA NOS. 87 & 88/PNJ/2013 (ASST. YEAR : 2004 - 05 & 2007 - 08) 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THERE WAS SALE AGREEMENT WITH MR. TAHIR ISANI WHICH WAS FOUND IN THE COURSE OF SEARCH PROCEEDINGS . IT WAS CLARIFIED DURING THE STATEMENT RECORDED ON OATH THAT THIS AGREEMENTS WERE ACCRUING TO MR. TAHIR ISANI AS COMMISSION FOR SERVICES RENDERED BY HIM. THERE WAS CONSEQUENTIAL SURVEY PROCEEDINGS ON MR. TAHIR ISANI D URING THE SAME TIME AND MR. TAHIR ISANI ALSO GAVE STATEMENT ON OATH THAT SUBJECT MATTER OF THESE FLATS WERE COMMISSION INCOME. WE FIND THAT DURING THE COURSE OF ASSESSMENT CONFIRMATION FROM MR. TAHIR ISANI REGARDING ASSESSABILITY OF 4 FLATS WERE GIVEN. M R. TAHIR ISANI IN HIS RETURN OF INCOME HAS ALREADY SHOWN THESE TWO FLATS AS COMMISSION INCOME AND BALANCE FLATS WOULD BE RECOGNISED AS COMMISSION INCOME ON RECEIPT OF POSSESSION LETTER. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS ALREADY GIVEN 4 F LATS AS COMMISSION, THEREFORE, IT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE. THEREFORE, WE DELETE THE ADDITION. IN RESPECT OF CASH RECEIVED BY THE ASSESSEE OF RS. 40 LACS, THE ASSESSEE CLAIMED THAT FOR ACQUIRING 4 FLATS, THE COST OF CONSTRUCTION SHO ULD BE TAKEN AS RS.36,72,000/ - , THE VALUE OF THESE CONSTRUCTED FLATS AS PER THE SAID AGREEMENT. RS. 40 LACS HAS BEEN RECEIVED IN CASH IN ADDITION TO THE SAID FLATS. WE FIND THAT DURING THE COURSE OF HEARING, THE LD. AR DID NOT BRING ANY EVIDENCE IN RESPEC T OF RS. 40 LACS WHICH WAS RECEIVED IN CASH IN ADDITION TO THE SAID FLATS. THEREFORE, WE ARE OF THE VIEW THAT RS. 40 LACS HAS TO BE ADDED IN THE HANDS OF THE ASSESSEE. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT MR. SADIQ SHAIKH HAS RIGHT IN BUILT - UP AREA OF 845 SQ. MTRS. IN CASTLE ROCK PROJECT, GOA IN ACCORDANCE WITH THE AGREEMENT FOR SALE AND DEVELOPMENT DT. 5.10.2002 WITH M/S. LANDSCAPE DEVELOPERS. ACCORDINGLY, 6 FLATS WERE ALLOTTED TO MR. SADIQ SHAIKH AND OUT OF 6 5 ITA NOS. 87 & 88/PNJ/2013 (ASST. YEAR : 2004 - 05 & 2007 - 08) FLATS, ONE FLAT WAS GIVEN TO MRS. ROSARIO. THE AO AFTER MAKING INQUIRY AND STATEMENT WAS OF THE VIEW THAT THIS ONE FLAT TO MRS. ROSARIO WAS GIVEN IN F.Y 2003 - 04 AND ASSESSEE HAS ADMITTED THIS INCOME IN A.Y 2009 - 10 MERELY ON THE BASIS OF SALE DEED WHEREAS THE ACTUAL ASSIGNMENT HAS TAKEN PLACE IN F.Y 2003 - 04. THEREFORE, THE AO HAS BROUGHT THIS AMOUNT TO TAX IN A.Y 2004 - 05. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS OFFERED THIS AMOUNT FOR TAXATION IN T HE ORDER OF COMPLETION OF TRANSFER. THE ASSESSEE HAS OFFERED THE SAME FOR TAXATION DURING A.Y 2009 - 10 AND PAID THE TAX DUE THEREON FOR THE SAID INCOME. THE TRANSACTION DOES NOT BECOME COMPLETE ON ENTERING OF AGREEMENT FOR SALE. THE SAME IS COMPLETE ONLY WHEN EITHER THE POSSESSION IS GIVEN OR THE SALE DEED ENTERED I.E. TO SAY THAT THE PROPERTY IS CONVEYED OR REGISTERED. THE RIGHT IN IMMOVEABLE PROPERTY WAS GIVEN IN 2004 - 05 BUT THE POSSESSION WAS GIVEN IN 2009 - 10. THEREFORE, IT HAS TO BE TAXED IN THE YE AR OF POSSESSION. THEREFORE, NO ADDITION IS REQUIRED. THE LD. DR RELIED ON THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT ASSESSEE HAD AL READY OFFERED THIS AMOUNT FOR TAXATION IN THE YEAR WHEREIN THE ASSESSEE HAS OBTAINED POSSESSION OF THIS FLAT IN A.Y. 2009 - 10. WE FIND THAT THE ASSESSEE HAS ALREADY ASSIGNED THIS RIGHT IN A.Y. 2004 - 05 BUT THE POSSESSION WAS GIVEN IN A.Y. 2009 - 10. THEREFOR E, WE ARE OF THE VIEW THAT WHEN THE ASSESSEE GOT THE FULL PAYMENT OF THIS FLAT, HE HAS OFFERED THIS AMOUNT FOR TAXATION. THEREFORE, WE ARE OF THE VIEW THAT EVEN CIT(A) IS NOT JUSTIFIED IN TAXING THIS AMOUNT IN A.Y. 2004 - 05. IN THE RESULT, WE ALLOW THE AP PEAL ON THIS GROUND. 6 ITA NOS. 87 & 88/PNJ/2013 (ASST. YEAR : 2004 - 05 & 2007 - 08) 4. IN THE RESULT, ITA NO. 87/PNJ/2013 IS PARTLY ALLOWED WHILE ITA NO. 88/PNJ/2013 IS ALLOWED. 5. ORDER PRONOUNCED IN THE OPEN COURT ON 31 / 07 /2013. SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER SD/ - (D.T.GARASIA) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 31 / 07 / 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA