Smt. Indu Mahesh Shah, Kolkata V. ITO, Ward-35(2), Kolkata, Kolkata

ITA 973/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1892 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition
• Section: 50C; 54

Judgement Text

I.T.A. NO 9 73/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 973/KOL/2017 ASSESSMENT YEAR: 2013-2014 SMT. INDU MAHESH SHAH,............................. ....................................APPELLANT 129A, S.P. MUKHERJEE ROAD, KOLKATA-700 025 [PAN: AMAPS 6603 D] -VS.- INCOME TAX OFFICER,................................ .......................................RESPONDENT WARD-35(2), KOLKATA, AAYAKAR BHAVAN POORVA, 110, SHANTIPALLY, E.M. BYE PASS, KOLKATA-700 107 APPEARANCES BY: SHRI M. SATNALIWALA, FCA, FOR THE APPELLANT SHRI S. DASGUPTA, ADDL. CIT, D.R. , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JULY 04, 2018 DATE OF PRONOUNCING THE ORDER : AUGUST 31, 2018 O R D E R PER SHRI P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA DA TED 10.02.2017. 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL RELATING TO THE DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION OF RS.43,44,214/- UNDER SECTION 54 OF THE INCOME TAX ACT, 1961 IS RAISED IN GROUNDS NO. 1 & 2. THE RELEVANT FACTS OF THE CASE APROPOS THIS ISSUE ARE THAT THE A SSESSEE IS AN INDIVIDUAL, WHO IS ENGAGED IN THE BUSINESS OF TRADING IN THE NA ME AND STYLE OF HER PROPRIETARY CONCERN M/S. ARIZONA COMPANY. THE RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HER ON 07.03. 2014 DECLARING TOTAL INCOME AT NIL. IN THE SAID RETURN, LONG-TERM CAPI TAL GAIN (WITHOUT INDEXATION) WAS SHOWN BY THE ASSESSEE AT RS.78,39,1 71/- AND THE SAME WAS CLAIMED TO BE FULLY EXEMPT FROM TAX. THE ASSESS EE WAS THE CO-OWNER I.T.A. NO 9 73/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 2 OF 7 OF FLAT NO.9C OF THE 9 TH FLOOR, GOLF TOWERS, 9, PRINCE GOLAM MUHAMMAD SHAH ROAD, KOLKATA-700 095, WHICH WAS SOLD FOR A SA LE CONSIDERATION OF RS.1 CRORE. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE REVISED COMPUTATION OF LONG-TERM CAPITAL GAIN WAS FURNISHED BY THE ASSESSEE. AS PER THE SAID WORKING, THE SAID FLAT WAS PURCHASED B Y THE ASSESSEE ON 16.12.2003 FOR RS.18,04,000/- AND AFTER CLAIMING DE DUCTION ON ACCOUNT OF THE INDEXED COST OF ACQUISITION, LONG-TERM CAPITAL GAIN OF RS.52,67,285/- WAS SHOWN BY THE ASSESSEE. THE SAID LONG-TERM CAPIT AL GAIN TO THE EXTENT OF RS.33,36,820/- WAS CLAIMED TO BE EXEMPT BY THE A SSESSEE UNDER SECTION 54 BEING INVESTMENT MADE IN HER RESIDENTIAL PROPERT Y AT MUMBAI AND THE BALANCE AMOUNT OF RS.19,30,465/- WAS OFFERED TO TAX IN THE REVISED COMPUTATION OF TOTAL INCOME. THE COMPUTATION OF LON G-TERM CAPITAL GAIN AS SHOWN BY THE ASSESSEE IN THE REVISED COMPUTATION OF TOTAL INCOME WAS EXAMINED BY THE ASSESSING OFFICER AND ON SUCH EXAMI NATION HE FOUND THAT THE MARKET VALUE OF THE FLAT SOLD BY THE ASSESSEE W AS DETERMINED BY THE STAMP DUTY AUTHORITIES AT RS.1,10,55,066/-. BY ADOP TING THE SAID AMOUNT AS SALE CONSIDERATION BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT AND AFTER DISALLOWING THE CLAIM OF THE ASSESSEE FOR THE CORPORATION TAX OF RS.14,487/- AS PART OF COST OF ACQUISITION, THE LON G-TERM CAPITAL GAIN ARISING TO THE ASSESSEE FROM THE SALE OF FLAT WAS D ETERMINED BY THE ASSESSING OFFICER AT RS.66,02,007/-. AS REGARDS THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 54, THE ASSESSING OFFIC ER FOUND THAT THE FLAT IN MUMBAI WAS BOOKED IN THE JOINT NAME OF THE ASSES SEE AND HER SON SHRI SIDDHARTH M. SHAH. HE ALSO FOUND THAT THERE WAS NO REGISTERED AGREEMENT FOR SALE EXECUTED BY THE ASSESSEE FOR THE SAID FLAT AND THERE WAS ONLY THE PROVISIONAL ALLOTMENT LETTER BY THE CONCERNED DEVEL OPER M/S. K.R. MALI BUILDERS & DEVELOPERS PVT. LIMITED. HE FURTHER NOTE D THAT THE ASSESSEE AS PER THE SAID PROVISIONAL ALLOTMENT LETTER WAS NOT H AVING ANY RIGHT, TITLE, INTEREST OR LIEN OF ANY NATURE WHATSOEVER IN THE SA ID FLAT UNTIL THE AGREEMENT FOR SALE WAS EXECUTED AND REGISTERED WITH THE OFFICE OF THE SUB-REGISTRAR OF ASSURANCES. HE ALSO FOUND THAT THE SAID FLAT HAD NOT COME TO THE POSSESSION OF THE ASSESSEE EVEN AFTER THE EX PIRY OF THE CUT OFF PERIOD PRESCRIBED IN SECTION 54. ACCORDINGLY THE CL AIM OF THE ASSESSEE FOR I.T.A. NO 9 73/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 3 OF 7 EXEMPTION UNDER SECTION 54 WAS DISALLOWED BY THE AS SESSING OFFICER AND THE LONG-TERM CAPITAL GAIN OF RS.66,02,007/- WAS BR OUGHT TO TAX BY HIM IN THE HANDS OF THE ASSESSEE VIDE AN ORDER DATED 31.12 .2015 PASSED UNDER SECTION 143(3). 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN DI SALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 54 FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 6 OF HIS IMPUGNED ORDER:- 06. DECISION: 1. THIS GROUND TAKEN BY THE APPELLANT IS ON ACCOUNT OF DENIAL OF EXEMPTION OF RS.43,44,214/- CLAIMED U/S 5 4 OF THE INCOME TAX ACT. I FIND THAT THE LD. AO HAS RECORDED ELABORATE REASONS FOR SUCH ACTION IN THE RELEVANT P ORTION OF THE ASSESSMENT ORDER WHICH HAS BEEN REPRODUCED ABOV E. ON FACTS, IT HAS BEEN RECORDED BY THE LD. AO THAT THE ASSESSEE FURNISHED A PHOTOCOPY OF LETTER DATED 16.04.2013 IS SUED BY THE PROMOTER/DEVELOPER, M/S. K.R. MALI BUILDER.& DEVELOPERS PVT. LTD. FOR PROVISIONAL ALLOTMENT OF F LAT NO,403-D WING, 4TH FLOOR AT 'PARINEE ALMOG', VILLAG E EKSAR, MAHARASHTRA FROM WHICH IT IS EVIDENT THAT THE SAID PROPERTY WAS BOOKED JOINTLY IN THE NAMES OF THE ASSESSEE AND HER SON, SRI SIDDHARTH M.SHAH. AS PER THE PAYMENT SCHEDULE O F THE PROVISIONAL ALLOTMENT LETTER DATED 16.04.2013, THE TOTAL CONSIDERATION OF THE FLAT IS RS.1,05,35,000/-, AND THAT IT WAS ALSO SEEN THAT THE ASSESSEE HAD PAID A TOKEN AMOUNT OF RS,42,14,OOO/- AND SERVICE TAX OF RS.1,30,214/- TOT ALING TO RS,43,44,214/- FOR THE PURPOSE OF BOOKING THE SAID FLAT. THE TOKEN BOOKING AMOUNT OF RS,43,44,214/- WAS PAID BY THE ASSESSEE IN TWO INSTALMENTS - RS.11,00,000/- ON 16. 03.2013 AND RS.32,44,213/- ON 10.04.2013. THE PAYMENT SCHED ULE MENTIONS THE PHASES FOR PAYMENT OF THE BALANCE AMOU NT OF RS.63, 21,000/-(EXCLUDING SERVICE TAX). 2. I FIND THAT THE LD. AO HAS QUITE CORRECTLY STATE D THAT AS PER THE PROVISIONS OF SECTION 54 OF THE LT. ACT, 19 61, EXEMPTION IS ADMISSIBLE ON PROFITS ON SALE OF PROPE RTY USED FOR RESIDENCE ONLY IF THE FOLLOWING PRIMARY CONDITI ONS ARE FULFILLED: I.T.A. NO 9 73/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 4 OF 7 A) THAT THE ASSESSEE HAS PURCHASED A RESIDENTIAL HO USE WITHIN ONE YEAR BEFORE THE DATE OF SALE/TRANSFER OF THE ORIGINAL ASSET. OR B) THAT THE ASSESSEE HAS PURCHASED A RESIDENTIAL HO USE WITHIN TWO YEARS AFTER THE DATE OF SALE OR TRANSFER OF THE ORIGINAL ASSET. OR C) THAT THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL HOUSE WITHIN THREE YEARS AFTER THE DATE OF SALE OR TRANSF ER OF THE ORIGINAL ASSET. 3. ON EXAMINATION OF THE MATTER, I FIND MYSELF IN A GREEMENT WITH THE LD. AO THAT THE ASSESSEE'S CLAIM OF EXEMPT ION DOES NOT FULFIL THE TERMS OF SECTION 54 OF THE I.T. ACT, 1961. THE CUT-OFF DATE FOR THE PURPOSE OF CLAIMING EXEMPTION U/S.54 ENDS ON 24.08.2014, I.E. WITHIN TWO YEARS FROM THE DATE OF SALE OR TRANSFER OF THE ORIGINAL ASSET. HOWEVER, AS HAS BEEN CORRECTLY NOTED BY THE LD. AO, THE PROPERTY IS NOT IN THE POSSESSION OF THE ASSESSEE EVEN AFTER THE EXPIRY OF THE CUT OFF PERIOD. IT IS ALSO SEEN THAT THE ASSESSEE-INDIVIDUA L HAS FAILED TO PROVIDE ANY PROOF ABOUT THE USE FOR RESIDENTIAL PURPOSES OF THE FLAT IN QUESTION BEFORE ITS SALE. AS HAS BEE N RIGHTLY RECORDED BY THE LD. AO, THE APPELLANT WAS UNABLE TO PRODUCE ANY NEUTRAL PROOF ABOUT THE USE OF THE SAID FLAT FO R RESIDENTIAL PURPOSES. THE DECISIONS RELIED UPON BY THE APPELLANT BOTH IN ASSESSMENT AND IN APPEAL HAVE BEE N DULY COUNTERED BY THE LD. AO IN THE ASSESSMENT ORDER. 4. ON FACTS, IT IS APPARENT THAT THE ASSESSEE WOULD BE INELIGIBLE FOR ANY CLAIM OF EXEMPTION U/S 54. AS SU CH THE ACTION OF THE LD. AO IS CONFIRMED AND THE GROUND TA KEN BY THE APPELLANT STANDS DISMISSED. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE INVESTMENT IN PURCH ASE OF NEW FLAT WAS MADE BY THE ASSESSING OFFICER ON 16.04.2013, I.E. W ITHIN THE PERIOD STIPULATED IN THE RELEVANT PROVISION, WE FIND THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 54 WAS DISALLOWED BY TH E AUTHORITIES BELOW MAINLY ON THE GROUND THAT THE CLAIM OF THE ASSESSEE OF HAVING PURCHASED THE NEW FLAT WAS NOT SUPPORTED BY ANY REGISTERED AG REEMENT FOR SALE EXECUTED BY THE ASSESSEE WITH THE CONCERNED DEVELOP ER. AS NOTED BY THEM, THE SAID CLAIM WAS BASED MERELY ON THE PROVIS IONAL ALLOTMENT LETTER I.T.A. NO 9 73/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 5 OF 7 ISSUED BY THE CONCERNED DEVELOPER, WHEREIN IT WAS C LEARLY STATED THAT THE ASSESSEE WAS NOT HAVING ANY RIGHT, TITLE, INTEREST OR LIEN OF ANY NATURE WHATSOEVER IN THE FLAT UNTIL THE AGREEMENT FOR SALE WAS EXECUTED AND REGISTERED WITH THE OFFICE OF THE SUB-REGISTRAR. EV EN AT THE TIME OF HEARING BEFORE THE TRIBUNAL, NO SUCH AGREEMENT FOR SALE EXECUTED AND REGISTERED WITH THE OFFICE OF THE SUB-REGISTRAR HAS BEEN FILED BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE HER CLAIM OF H AVING PURCHASED THE NEW FLAT. ON THE OTHER HAND, THE LETTER DATED 23.01 .2017 ISSUED BY THE CONCERNED DEVELOPER AS PLACED AT PAGE NO. 34 OF THE ASSESSEES PAPER BOOK SHOWS THAT THE PROJECT IS STILL UNDER CONSTRUC TION. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE AUTHORITIES BE LOW THAT THE PRIMARY CONDITION OF HAVING PURCHASED A RESIDENTIAL HOUSE W ITHIN TWO YEARS OR CONSTRUCTED A RESIDENTIAL HOUSE WITHIN THREE YEARS AFTER THE DATE OF SALE OR TRANSFER OF ORIGINAL ASSET IS NOT SATISFIED BY T HE ASSESSEE IN ORDER TO CLAIM EXEMPTION UNDER SECTION 54. WE, THEREFORE, UP HOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) IN CONFIRMING THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES CLAIM FO R EXEMPTION UNDER SECTION 54 AND DISMISS GROUNDS NO. 1 & 2 OF THE ASS ESSEES APPEAL. 5. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 3 RE LATING TO THE INCOME TAX CHARGED BY THE ASSESSING OFFICER WRONGLY AT 30% INSTEAD OF 20% ON THE LONG-TERM CAPITAL GAIN, WE DIRECT THE AS SESSING OFFICER TO VERIFY THIS ASPECT AND ALLOW APPROPRIATE RELIEF TO THE ASSESSEE ON SUCH VERIFICATION. 6. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 4 RE LATING TO THE DISALLOWANCE OF RS.46,994/- MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE LD. CIT(APPEALS) OUT OF PROMOTION EXPENSES, IT IS OBSERVED THAT THE TOTAL EXPENDITURE OF RS.1,08,328/- CLAIMED BY THE A SSESSEE TOWARDS EXHIBITION EXPENSES WAS EXAMINED BY THE ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON SUCH EXAMINATI ON, HE FOUND THAT THE CLAIM OF THE ASSESSEE FOR EXHIBITION EXPENSE TO THE EXTENT OF RS.46,994/- WAS NOT DULY SUPPORTED BY THE RELEVANT DOCUMENTARY EVIDENCE. HE, I.T.A. NO 9 73/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 6 OF 7 THEREFORE, DISALLOWED THE SAID EXPENSES TO THE EXTE NT OF RS.46,994/-. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE T HE LD. CIT(APPEALS), CERTAIN VOUCHERS WERE FILED BY THE ASSESSEE IN SUPP ORT OF HER CLAIM FOR THE EXHIBITION EXPENSES OF RS.46,994/-. WHEN THE SA ID VOUCHERS WERE FORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR VERIFICATION, THE ASSESSING OFFICER IN HIS REMAND R EPORT POINTED OUT CERTAIN DEFICIENCIES AND DISCREPANCIES TO SHOW THAT THE RELEVANT EXPENDITURE WAS UNVERIFIABLE. THE LD. CIT(APPEALS) ACCORDINGLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON T HIS ISSUE BY OBSERVING THAT THE CLAIM OF THE ASSESSEE WAS NOT SUPPORTED BY CREDIBLE EVIDENCE. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. A COPY OF THE LEDGER ACCOUNT OF THE EXHIBITION EXPENSES PLACED AT PAGE NO. 36 OF THE PAPER BOOK SHOWS THAT THE EXPENDITURE IN QUESTION W AS INCURRED BY THE ASSESSEE FOR PARTICIPATING IN THE EXHIBITIONS ORGAN IZED AT CHENNAI, AHMEDABAD AND RAJKOT. IN OUR OPINION, ALTHOUGH THE SAID EXPENDITURE WAS NOT FULLY SUPPORTED BY THE RELEVANT SUPPORTING DOCU MENTARY EVIDENCE AS POINTED OUT BY THE AUTHORITIES BELOW MAKING IT UNVE RIFIABLE, THE SAME CANNOT BE ENTIRELY DISALLOWED KEEPING IN VIEW THE N ATURE OF THE ASSESSEES BUSINESS AND IT WOULD BE FAIR AND REASONABLE TO DIS ALLOW THE SAID EXPENDITURE TO THE EXTENT OF 50% FOR THE UNVERIFIAB LE ELEMENT INVOLVED THEREIN. WE, ACCORDINGLY, MODIFY THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTRICT THE DISALLO WANCE OF RS.46,994/- MADE OUT OF PROMOTION EXPENSES TO RS.23,497/-. GROU ND NO. 4 OF THE ASSESSEES APPEAL IS THUS PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 31, 20 18. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 31 ST DAY OF AUGUST, 2018 I.T.A. NO 9 73/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 7 OF 7 COPIES TO : (1) SMT. INDU MAHESH SHAH, 129A, S.P. MUKHERJEE ROAD, KOLKATA-700 025 (2) INCOME TAX OFFICER, WARD-35(2), KOLKATA, AAYAKAR BHAVAN POORVA, 110, SHANTIPALLY, E.M. BYE PASS, KOLKATA-700 107 (5) COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLK ATA, (6) COMMISSIONER OF INCOME TAX- , (7) THE DEPARTMENTAL REPRESENTATIVE (8) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O. INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.