ITO - 42(1)(5), MUMBAI V. SAMYUKTA NAIR, MUMBAI

ITA 496/MUM/2025

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had allowed the Assessee's appeal against an Intimation Order passed under Section 143(1) of the Income Tax Act, 1961. The Assessee, Samyukta Nair, had booked a duplex flat and later canceled the booking, receiving a sum from the developer. The Revenue contended that the CIT(A) erred in deleting the addition of INR 6.9 Crores as it was income from other sources, and also challenged the treatment of a capital loss claimed by the Assessee. The Tribunal, after reviewing the submissions and evidence, upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396923 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Capital asset; Cost of acquisition; Capital Gains; Rectification of order; FORM 26AS
• Section: 154

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.496/MUM/2025 (Assessment Year: 2017-2018) Income Tax Officer 42(1)(5) Room No.745, Kautilya Bhavan, BKC, Bandra EastMaharashtra..…………. Appellant Samyukta Nair 1-Leela Baug, Andheri Kurla Road, Andheri East, Mumbai – 400059. Maharashtra. [PAN:AIPPN5607B] Vs …………. Respondent Appearance For the Appellant/ Department For the Respondent/ Assessee : : Shri BhangepatilPushkaraj Ramesh Shri Prakash Jotwani Date Conclusion of hearing Pronouncement of order : : 27.03.2025 30.05.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Revenue is directed against the order, dated 29/11/2024, passed by theNational Faceless Appeal Centre (NFAC), Delhi[hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961[hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had allowed the appeal of the Assessee against the Intimation Order, dated 28/03/2019, passed under Section 143(1) of the Act for the Assessment Year 2017-2018. 2. The Revenue has raised following grounds of appeal : “1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 6,90,00,000/- being the addition made by the CPC, under the head Income from Other Sources.\" 2. On the facts and circumstances of the case and in law, the ITA No.496/Mum/2025 Assessment Year 2017-2018 2 Ld.CIT(A) has failed to appreciate the fact that the capital loss of Rs. 3,00,97,077/-on the transfer of assessee's rights on the said flat was rightly disallowed by the CPC. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in treating provisional booking of the flat, as transfer of right of the assessee into the immovable property.\" 3. The relevant facts in brief are that the Assessee booked a duplex flat No. 401 in building known as BISHOPGATE at Bhulabhai Desai Road, Mumbai on 03/12/2012 for total consideration of INR.56 Crores and paid part consideration of INR.30,92,70,000/- [i.e. INR.30,00,00,000/- plus Service Tax of INR.92,70,000/-] to the developer [i.e., Bridgeview Real Estate Development LLP]in terms of the booking form dated 03/12/2012.The construction of the building could not be completed on time, and therefore, the Assessee decided to cancel the booking by surrendering the right back to the developer for agreed consideration of INR.36,90,00,000/- in terms of the Agreement dated 29/06/2016.The Assessee treated the rights in the flat as Long Term Capital Asset and offer to tax Long Term Capital Gains arising from the surrender of the aforesaid rights. The Assessee computed Long Term Capital Gain arising on surrender of rights in the flat under by claiming Indexation on the cost of INR.30,92,70,000/-, in the following manner: Computation of Capital Gain Amount (INR) Payment made 25,00,00,000 5,00,00,000 Total Cost of Flat Purchased 30,00,00,000 Add: Service Tax @ 3.09% 92,70,000 Total Cost 30,92,70,000 Indexed Cost of Acquisition Index as on 2012 852 Index as on 2016 1125 309270000*1125/852 40,83,67,077 Sale Consideration Received (Net of Service Tax) (as per Agreement Dated 26/06/20126) 36,90,00,000 Add Service Tax 92,70,000 Total Consideration Received 37,82,70,000 Long Term Capital Loss -3,00,97,077 4. Thus, the Assessee arrived at Long Term Capital Loss of ITA No.496/Mum/2025 Assessment Year 2017-2018 3 INR.3,00,97,077/- and disclosed the same in the return of income for the Assessment Year 2017-2018 filed by the Assessee on 13/07/2017 declaring Income of INR.89,187/-.While processing the Return of Income an addition of INR.6.9 Crores was made under the head Income from Other Sources vide Intimation Order dated 28/03/2019 passed under Section 143(1) of Act. 5. The Assessee filed rectification application under Section 154 of Act which was rejected vide Rectification Order dated 09/09/2020. 6. Being aggrieved, the Assessee preferred appeal before CIT(A) which was allowed vide order dated, 29/11/2024 and the addition of INR.6.9 Crores was deleted. 7. Now the Revenue has challenged the above relief granted by the CIT(A) by way of present appeal on the grounds reproduced at Paragraph 2 above. 8. Relying upon the grounds raised by the Revenue in present appeal, it was contended by the Learned Departmental Representative that the CIT(A) had failed to appreciate that Capital Loss of INR.3,00,97,077/- was correctly disallowed while processingreturn of income and that the booking made by the Assessee did not result in securing any rights in the flat. It was further contended that the CIT(A) had erred in deleting addition of INR.6.9 Crores as a same was liable to tax in the hands of the Assessee as other income. 9. Countering the submissions made by the Learned Departmental Representative, the Learned Authorized Representative for the Assessee pointed out that the contentions raised by the Revenue are based upon incorrect understanding of facts. The Capital Loss of INR.3,00,97,077/- was accepted while processing return of income. INR.6.9 Crores represented the difference between amount received back from the developer (Net of Service Tax) and the payments ITA No.496/Mum/2025 Assessment Year 2017-2018 4 made to the developer by the Assessee (Net of Service Tax). The Learned Authorized Representative for the Assessee submitted that the addition made while processing return of income had resulted in double taxation of same income once under the head Capital Gains as offered by the Assessee and then again under the head Income from Other Sources as done by the Central Processing Unit while processing the return of income. Therefore, the CIT(A) was correct in deleting the addition of INR.6.9 Crores. 10. We have considered the rival submissions and have perused the material on record. 11. We find that the submissions made by Learned Authorized Representative for the Assessee are factually correct. As per the Computation of Capital Loss placed on record, the Assessee had made aggregate payment of INR.30,92,70,000/- which included Service Tax of INR.92,70,000/-. After excluding the aforesaid service tax element, the payments made by the Assessee come to INR.30 Crores. As per the aforesaid computation, the Assessee had received aggregate amount of INR.37,82,70,000/-. After excluding the service tax element of INR.92,70,000/-, the same comes to INR.36.90 Crores. On perusal of the Form 26AS placed on record, we find that the developer had deducted tax at source on differential amount of INR.6.90 Crores. The aforesaid facts have not been disputed by the Revenue, and the same clearly establish that the differential amount of INR.6.90 Crores received by the Assessee from the developer on surrender of rights in the flat was included by the Assessee while computing Capital Loss (which has been accepted while processing return of income). On perusal of Intimation Order issued under Section 143(1) of the Act, we find that Capital Loss of INR. INR.3,00,97,077/- disclosed by the Assessee in the return of income has not been disturbed. The Revenue has failed to appreciate the correct facts, and has brought to tax the same ITA No.496/Mum/2025 Assessment Year 2017-2018 5 differential amount of INR.6.90 Crores in the hands of the Assessee as ‘Income from Other Sources’while processing return of income under Section 143(1) of the Act. On perusal of the impugned order, we find that the Learned CIT(A) had appreciating the aforesaid facts correctly and had deleted the aforesaid addition of INR.6.90 Crores. We do not find any infirmity in the order passed by the Learned CIT(A). Accordingly, Ground No.1 to 3 raised by the Revenue are dismissed. 12. In result, the present appeal preferred by the Revenue is dismissed. Order pronounced on 30.05.2025. Sd/- Sd/- (Vikram Singh Yadav) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांकDated :30.05.2025 Milan,LDC ITA No.496/Mum/2025 Assessment Year 2017-2018 6 आदेशकीŮितिलिपअŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent. 3. आयकरआयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीयŮितिनिध ,आयकरअपीलीयअिधकरण ,मुंबई/ DR, ITAT, Mumbai 6. गाडŊफाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपतŮित //True Copy// उप/सहायकपंजीकार /(Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai "