ITO - 4(3)(1), MUMBAI V. GANPATRAJ B. MEHTA, MUMBAI

ITA 870/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5531 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Capital asset
• Section: 45(2)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 870 /MUM/ 2017 (ASSESSMENT YEAR 20 12 - 13 ) ITO - 4(3)(1) ROOM NO. 648 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400 020. V S . SHRI GANPAT RAJ B. MEHTA 1401/1402, VIKAS PARADISE TOWER - II, NEAR R - MALL, LBS MARG MULUND (WEST) MUMBAI - 400 080 PAN : AADPM8567D ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI JAYANT BHATT DEPARTMENT BY SHRI V. VIDHYADHAR DATE OF HEARING 1 9 . 7 . 201 8 DATE OF PRONOUNCEMENT 19 . 7 . 201 8 O R D E R PER B.R. BASKARAN (AM) : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 11.11.2016 PASSED BY THE LEARNED CIT(A) - 9, MUMBAI AND IT RELATES TO A.Y. 2012 - 13. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN DELETING THE ADDITION RELATING TO LONG TERM CAPITAL GAINS ARISING ON ACCOUNT OF CONVERSION OF LAND INTO STOCK - IN - TRADE. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CONVE RTED ITS LAND OWNED BY HIM INTO STOCK - IN - TRADE. THEREAFTER, THE ASSESSEE ALONG WITH SHRI NARESH MEHTA (WHO WAS HOLDING ADJACENT LAND) ENTERED INTO AN AGREEMENT FOR DEVELOPMENT OF THE LAND BELONGING TO THEM WITH A PARTNERSHIP FIRM NAMED M/S. ROYAL GALEXY. T HOUGH THE ASSESSEE COMPUTED THE AMOUNT OF CAPITAL GAINS AT ` 677.65 LAKHS AND CREDITED THE SAME TO ITS CAPITAL ACCOUNT , YET H E DID NOT OFFER THE SAME FOR TAXATION. THE ASSESSEE EXPLAINED THAT HE HAS ENTERED INTO AN AGREEMENT WITH M/S. ROYAL GALEXY , BUT DID NOT HANDOVER THE POSSESSION TO THEM. IT WAS SUBMITTED THAT AT THE TIME OF HANDING OVER THE POSSESSION OF LAND, A SHRI GANPATRAJ B. MEHTA 2 SUPPLEMENTARY DEED SHALL BE ENTERED WITH A DEVELOPER TO CONFIRM THE HANDING OVER OF THE POSSESSION OF LAND . IT WAS ALSO SUBMITTED THAT THE LAN D WAS PROPOSED TO BE DEVELOPED IN PHASE S . ACCORDINGLY, FIRST PHASE WAS DEVELOPED IN SUCCEEDING YEAR ON THE LAND BELONGING TO SHRI NARESH MEHTA AND AT THAT POINT OF TIME , A SUPPLEMENTARY DEED WAS EXECUTED BY SHRI NARESH MEHTA FOR HANDING OVER THE POSSESSIO N OF LAND . IT WAS ALSO SUBMITTED THAT SHRI NARESH MEHTA HAD COMPUTED CAPITAL GAINS TAX IN THE SUCCEEDING YEAR ONLY . ACCORDINGLY, IT WAS SUBMITTED THAT THERE WAS NO TRANSFER OF LAND DURING THE YEAR UNDER CONSIDERATION AND HENCE THERE IS NOT CAPITAL GAINS L IABILITY IN TERMS OF SECTION 45(2) OF THE ACT . 3. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE CONTENTION S OF THE ASSESSEE AND ACCORDINGLY HE ASSESSED CAPITAL GAINS OF ` 675.58 LAKHS TO TAX. THE LEARNED CIT(A) DELETED THE SAME AND HENCE THE REVENUE HA S FILED THIS APPEAL BEFORE US. 4. WE NOTICED THAT THE LEARNED CIT(A) HAS ACCEPTED THE FACT THAT THE ASSESSEE DID NOT HAND OVER THE POSSESSION OF THE PROPERTY TO THE DEVELOPER. THE LEARNED CIT(A), IN THIS REGARD, HAS EXAMINED THE AGREEMENT ENTERED B Y THE ASSESSEE WITH M/S. ROYAL GALEXY , THE SUPPLEMENTARY DEED EXECUTED BY SHRI NARESH MEHTA AND FINANCIAL STATEMENT S OF SHRI NARESH MEHTA FOR THE SUCCEEDING YEAR, WHICH SUPPORTED THE SUBMISSIONS OF THE ASSESSEE THAT THE LAND SHALL BE HANDED OVER BY EXECUTI NG SUPPLEMENTARY AGREEMENT . THE LEARNED CIT(A) ALSO NOTICED THAT M/S. ROYAL GALEXY DEVELOPERS HAVE GIVEN A LETTER STATING THEREIN THAT THEY HAVE NOT TAKEN POSSESSION OF THE LAND BELONGING TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . UNDER THESE SE T OF FACTS, THE LEARNED CIT(A) TOOK SUPPORT OF THE DECISION RENDERED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA OF BOMBAY VS. CIT (260 ITR 491) AND ALSO DECISION RENDERED BY THE COORDINATE BENCH OF ITAT IN THE CASE OF DCIT VS. CREST HOTELS LTD. (2001) 78 ITD 213 AND HELD THAT THE TRANSFER OF LAND HAS NOT TAKEN PLACE DURING THE YEAR UNDER CONSIDERATION SO AS TO ATTRACT CAPITAL GAINS TAX IN TERMS OF SECTION 45(2) OF THE ACT. SHRI GANPATRAJ B. MEHTA 3 5. THE LEARNED DR STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER, WHEREAS LEARNED AR STRONGLY SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). 6. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE SINCE THE LEARNED CIT(A) HAS GIVEN A SPECIFIC FINDING THAT THE ASSESSEE HAS NOT HANDED OVER POSSESSION OF THE LAND TO THE DEVELOPERS. BEFORE US, REVENUE COULD NOT PLACE ANY MATERIAL TO CONTRADICT THE FINDINGS GIVEN BY THE LEARNED CIT(A). I N THE ABSENCE OF HANDI NG OVER THE POSSESSION OF THE LAND DURING THE YEAR UNDER CONSIDERATION , IT CANNOT BE STATED THAT THE TRANSFER HAS TAKEN PLACE. IN THE ABSENCE OF TRANSFER OF LAND, THE CAPITAL GAINS LIABILITY SHALL NOT ARISE IN THE HANDS OF THE ASSESSEE. HENCE, WE DO NOT F IND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A) AND ACCORDINGLY AFFIRM THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 19 . 7 . 201 8 . SD/ - SD/ - (RAMLAL NEGI) (B.R.BASKA RAN) J U DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 19 /7 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMB AI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR P RIVATE S ECRETARY ) PS ITAT, MUMBAI