MATOSHREE REALTORS, MUMBAI V. JOINT COMMISSIONER OF INCOME TAX RANGE 18 ( 3 ), MUMBAI

MA 290/MUM/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4201 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Capital asset; Principle of natural justice

Judgement Text

1 MA 290/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) M.A. 290/MUM/2018 (ARISING OUT OF I.T.A NO.3504/MUM/2015) (ASSESSMENT YEAR: 2009-10) MATOSHREE REALTORS B/202, MATOSHREE TOWER PADMABNAI TAKKAR MARG MAHIM, MUMBAI-400 016 PAN : AAMFM5625M VS JCIT, RANGE-18(3), MUMBAI APPLICANT RESPONDENT APPLICANT BY DR. K SHIVRAM RESPONDENT BY SHRI ASHISH KUMAR DATE OF HEARING 15-06-2018 DATE OF PRONOUNCEMENT 03-10-2018 O R D E R PER G MANJUNATHA, AM : THIS MISCELLANEOUS APPLICATION FILED BY THE ASSES SEE U/S 154(2) OF THE I.T. ACT, 1961 IS AGAINST ORDER PASSED BY THE I TAT, MUMBAI BENCH H IN ITA NO.2303/MUM/2015 & ITA NO.3504/MUM/2015 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE, IN ITS MISCELLANEOUS APPLICATION S TATED THAT THE ITAT HAS DISPOSED OF APPEAL FILED BY THE ASSESSEE AS WEL L AS THE REVENUE IN A COMMON ORDER DATED 08-12-2017. ON PERUSAL OF THE ORDER PASSED BY THE TRIBUNAL IT WAS NOTICED THAT CERTAIN MISTAKES A PPARENT ON RECORD ON 2 MA 290/MUM/2018 ACCOUNT OF VIOLATION OF PRINCIPLES OF NATURAL JUSTI CE, INCORRECT APPRAISAL OF FACTS, WRONG APPLICATION OF LAW, NON CONSIDERATION OF NOTE SUBMITTED BY THE ASSESSEE WITH REFERENCE TO THE NON APPLICABILIT Y OF SLP AND NON CONSIDERATION OF CBDT CIRCULAR NO.471 IN THE LIGHT OF FACTS OF ASSESSEES CASE. FOR THESE REASONS, THERE IS A PRIMA FACIE MI STAKE APPARENT ON RECORD IN ORDER PASSED BY THE ITAT DATED 08-12-2017 WHICH REQUIRES RECTIFICATION U/S 254(2) OF THE I.T. ACT, 1961. 3. THE LD.AR FOR THE ASSESSEE, REFERRING TO THE APP LICATION FILED BY THE ASSESSEE SUBMITTED THAT THE ITAT HAS GROSSLY ERRED IN NOT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE WHILE DISPOSING OF TH E APPEAL WHICH IS EVIDENT FROM THE FACT THAT IN THE SAID ORDER AT PAR A 19 ON PAGE 25, THE HONBLE MEMBERS HAVE REFERRED THE JUDGEMENT IN PARA DISE TEXTILES PVT LTD VS DCIT IN ITA NO.4773/MUM/2015 DATED 28-11-201 7 WHEREIN THE HONBLE ACCOUNTANT MEMBER WAS ONE OF THE PARTIES TO THE SAID DECISION DELIVERED ON 28-11-2017 WHEREAS THE HEARING OF ASSE SSEES CASE WAS HELD ON 09-08-2017 AND KEPT FOR CLARIFICATION ON 17 -11-2017. THE HONBLE BENCH HAS RELIED UPON THE JUDGMENT WHILE DE CIDING THE ISSUE OF THE ASSESSEE WHICH WAS RENDERED ON 28-1-2017 MUCH A FTER THE DATE OF HEARING OF THE APPEAL, I.E. ON 17-11-2017 WITHOUT G IVING AN OPPORTUNITY TO EXPLAIN THE NON APPLICABILITY OF THE SAID ORDER TO THE FACTS OF THE ASSESSEES CASE. THEREFORE, THIS IS A MISTAKE APPA RENT ON RECORD WHICH 3 MA 290/MUM/2018 REQUIRES RECTIFICATION U/S 254(2) OF THE ACT. THE LD.AR REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F INVENTURE GROWTH & SECURITIES LTD VS ITAT(2010) 324 ITR 319 (BOM) HA S CONSIDERED AN IDENTICAL ISSUE AND HELD THAT WHEN TRIBUNAL PASSES AN ORDER RELYING ON ANOTHER TRIBUNAL ORDER WITHOUT GIVING AN OPPORTUNIT Y TO ASSESSEE TO DEAL WITH THE SAME, THE ORDER REQUIRES TO BE RECALLED. THE LD.AR FOR THE ASSESSEE FURTHER REFERRING TO THE DECISION OF ITAT, JAIPUR BENCH IN THE CASE OF DIPAK DALELA VS ITO (2014) 147 ITD 19 (JPUR ) SUBMITTED THAT THE CO-ORDINATE BENCH HAS CONSIDERED SIMILAR ISSUE RELY ING UPON THE DECISION WITHOUT GIVING AN OPPORTUNITY TO DEAL WITH THE SAME AND HELD THAT THE SAME IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTI CE AND CONSTITUTE THE MISTAKE APPARENT ON RECORD. THE LD.AR FURTHER SUBM ITTED THAT EVEN THE JUDGEMENT RELIED UPON BY THE HONBLE BENCH IN THE C ASE OF PARADISE TEXTILES PVT LTD VS DCIT (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE OF APPELLANT AS THE FACTS IN BOTH THE CASES WERE DI FFERENT TO EACH OTHER. THEREFORE, RELYING UPON A JUDGEMENT WHICH IS TOTALL Y DIFFERENT FROM THE FACTS OF ASSESSEES CASE, THAT TOO, WITHOUT GIVING AN OPPORTUNITY TO ASSESSEE TO DEAL WITH THE SAME VIOLATES THE PRINCIP LES OF NATURAL JUSTICE. FOR THIS REASON, THE ORDER PASSED BY THE ITAT NEEDS TO BE RECALLED. THE LD.AR FURTHER SUBMITTED THAT THOUGH THE ORDER PASSE D BY THE ITAT NEEDS TO BE RECALLED ON FIRST GROUND ITSELF, STILL, THERE ARE MISTAKES IN THE ORDER 4 MA 290/MUM/2018 PASSED BY THE ITAT DATED 08-12-2017 IN RESPECT OF I NCORRECT APPRAISAL OF FACTS, WRONG APPLICATION OF LAW, NON CONSIDERATION OF NOTE SUBMITTED WITH REFERENCE TO NON APPLICABILITY OF SLP REJECTION AND NON CONSIDERATION OF CBDT CIRCULAR NO.471 DATED 15-10-1986. THE LD.AR FOR THE ASSESSEE HAS NARRATED THE FACTS TO ARGUE THAT HOW THE ORDER PASSED BY THE ITAT IS HAVING CERTAIN MISTAKES APPARENT ON RECORD WHICH RE QUIRES RECTIFICATION U/S 254(2) OF THE I.T. ACT, 1961. THE RELEVANT SUB MISSIONS OF THE ASSESSEE IS EXTRACTED BELOW:- 2. THE BRIEF FACTS RELATING TO THE ISSUES ARE AS UN DER:- 1. IN THE FINANCIAL YEAR 2005-06, ON 25 TH JUNE, 2005, THE APPLICANT FIRM ENTERED INTO AN AGREEMENT CUM UNDERSTANDING WITH M/S KOHINO OR PROJECTS PVT LTD (KPPL) FOR BOOKING OF PREMISES IN UPCOMING PROJECT AT KOHI NOOR MILL NO.3 AT DADAR AND ALSO PAID AN INITIAL AMOUNT OF RS.4,01,00,000/- IN PURSUANCE THEREOF. 2. THE MOU WAS EXECUTED WITH SPV KOHINOOR CTNL IN FRASTRUCTURE CO. LTD. ON 5 TH OCTOBER, 2007 WHICH CONFIRMS THE INITIAL AGREEMENT BETWEEN THE APPLICANT FIRM AND KPPL - THE CONSORTIUM PARTNER OF KOHINOOR CTNL INFR ASTRUCTURE CO. LTD. 3. SUBSEQUENTLY, KOHINOOR CTNL INFRASTRUCTURE CO. LTD. GAVE UP ITS PLAN OF DEVELOPMENT OF MALL AND OFFERED THE APPLICANT UNITS IN NEW COMMERCIAL BUILDING TO BE CONSTRUCTED BY THEM. HOWEVER, THE APPLICANT WAS NOT INTERESTED IN THE NEW OFFER AND ACCORDINGLY REQUESTED KOHINOOR CTNL INFRASTRUCT URE CO. LTD. TO CANCEL ITS BOOKING AT THE PREVAILING PRICE. ACCORDINGLY, THE D EED OF CANCELLATION WAS ENTERED INTO BETWEEN THE APPLICANT AND KOHINOOR CTNL INFRAS TRUCTURE CO. LTD, ON 28TH JUNE, 2008. THE BOOKING RIGHTS WERE SURRENDERED BY THE APPLICAN T AT MUTUALLY AGREED PRICE. THE GAINS ACCRUING FROM SURRENDER OF BOOKING RIGHTS WAS OFFERED TO TAX AS LONG TERM CAPITAL GAINS TAKING INTO CONSIDERATION THE DATE OF CONTRACT AS 25.06.2005. 4. THE ASSESSING OFFICER ASSESSED THE LONG TERM CAPITA L GAINS DECLARED BY THE APPLICANT AS SHORT TERM CAPITAL GAINS ONLY ON THE G ROUND THAT THE MOU WAJ ENTERED ON 5 TH OCTOBER, 2007 THOUGH THE ARRANGEMENT OF BOOKING OF AN AREA HAS BEEN CONFIRMED AND CONCLUDED ON 25 TH JUNE, 2005 BETWEEN THE APPLICANT AND KPPL. ONE OF THE CONSORTIUM PARTNERS. (HERE TO MARKED EXHIBIT B' ASSESSMENT ORDER DT.21/12/2011) 5. IN APPEAL, THE CIT(A) CONSIDERING THE FACTS OF T HE APPLICANT'S CASE AND BY ACCEPTING THE CONTENTION, ASSESSED THE GAINS ACCRUING ON THE TRANSFER OF BOOKING RIGHT AS LONG TERM CAPITAL GAINS. (HERE TO MARKED EXHIBIT 'C' CIT(A) ORDER DT.27/3/2018) 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE DEPARTMEN T HAS FILED AN APPEAL BEFORE THE TRIBUNAL. (HERE TO MARKED EXHIBIT 'D' GROUNDS OF APPEAL OF DE PARTMENT) 7. FOR SUPPORTING THE ORDER OF THE CIT(A), THE APPLICA NT HAS FILED THE PAPER BOOK CONTAINING 1 TO 239 PAGES. THE MATTER WAS INITIALLY HEARD ON 09-08-2017 AND AS PER 5 MA 290/MUM/2018 DIRECTION OF THE BENCH, THE DETAILS OF PAYMENT WERE FILED. THE MATTER WAS KEPT FOR CLARIFICATION ON 17-11-2017. DURING THE COURSE OF HEARING, THE SLP REJECTED BY T HE SUPREME COURT, IN THE CASE OF GULHAN MALIK VS. CIT (NO 30670/2014 DT,26-10-2015), WAS BROUGHT TO THE NOTICE OF THE APPLICANT. THE APP LICANT HAS FILED A DETAILED REPLY EXPLAINING HOW THE RATIO OF SLP REJECTED BY THE SUP REME COURT IS NOT APPLICABLE TO THE FACTS OF THE APPLICANT. (HERE TO MARKED 'EXHIBIT - E' IS THE COPY OF SUBMIS SION LETTER FILED.) 3. MISTAKES APPARENT ON RECORD 3.1. VIOLATION OF PRINCIPLES OF NATURAL JUSTICE 3.1.1. IN THE SAID ORDER AT PARA 19 AT PG. NO. 35, HONORABLE MEMBERS HAVE REFERRED THE JUDGMENT OF PARADISE TEXTILES PVT. LTD. VS. DCIT ITA N0.4773/MUM/2015 DT.28-11-2017, BENCH C', WHEREIN THE HONORABLE ACCOUNTANT MEMBER WAS ONE OF THE PARTY AND THE SAID JUDGMENT WAS DELIVERED ON 28-11-2017, WHEREAS THE HEARING OF THE APPLICANT WAS HELD ON 09-08-2017 AND KEPT FOR CLARIFICATION ON 17-11-2017 AND ON THE SAME DAY CLARIFICATION WAS HELD. THE APPLICANT HAS NOT BEEN GIVEN ANY OPPORTUNITY TO EXPLAIN THE NON-APPLICABIL ITY OF THE SAID ORDER TO THE FACTS OF THE APPLICANT. 3.1.2 THE APPLICANT STATE THAT, IN INVENTURE GROWTH & SECURITIES LTD. V. ITAT (2010) 324 ITR 319 (BOM)(HC)(PARA. 8) IT WAS HELD THAT WHEN TRIBUNAL PASSES AN ORDER RELYING ON ANOTHER TRIBUNAL ORDER WITHOUT GIV ING AN OPPORTUNITY TO APPLICANT TO DEAL WITH THE SAME, THE ORDER REQUIRES TO BE RECALL ED. IN DEEPAK DALELA V. ITO (2014) 147 ITD 19 (JAIPUR)( TRIB.)(TM)(PARA 12& 13) THE TRIBUNAL HELD THAT RELYING ON THE DECISION WITH OUT GIVING AN OPPORTUNITY TO DEAL WITH THE SAME, IS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND CONST ITUTES THE MISTAKE APPARENT ON RECORD. 3.1. 3 AS PER THE LETTER DT. 11/12/2007 ADDRESS ED BY THE HON'BLE PRESIDENT TO THE HON'BLE MEMBERS ON THE SUBJECT OF GUIDELINES BY THE MEMBERS OF THE ITAT WHILE DRAFTING THE ORDER READS AS UNDER : PARA 13. 'IF AFTER THE HEARING OF THE CASE AND WHIL E HOLDING DISCUSSIONS OR WRITING THE ORDER, ANY STATUTORY PROVISION OR JUDGMENT OR O RDER IS NOTICED (WHICH WAS NOT REFERRED TO IN THE COURSE OF THE HEARING) WHICH IS CONTRARY TO THE IMPRESSION, IF ANY, GIVEN IN THE COURT OR WHICH HAS A MATERIAL BEARING ON THE OUTCOME OF THE CASE, THE SAME MUST BE PUT TO THE PARTIES BY FIXING THE CASE FOR CLARIFICATION AND THE ORDER SHOULD BE PASSED ONLY AFTER OBTAINING THE CLARIFICA TIONS. IF IT IS AN INDISPENSABLE REQUIREMENT OF THE CONCEPT OF JUSTICE THAT THE PART IES SHALL NOT HAVE THE FEELING THAT DECISIONS ARE TAKEN AT THEIR BACK.' THE RELYING ON THE ORDER WHICH WAS PRONOUNCED DATED AFTER THE HEARING IS CONTRARY TO GUIDELINES. THE APPELLANT THEREFORE SUBMIT THAT THE MISTAKE BEING APPARENT ON THE ORDER MAY BE RECALLED. (HERE TO MARKED EXHIBIT 'F' GUIDEL INES DT. LL/12/2O07) 3.1.4. THE APPLICANT FURTHER SUBMIT THAT THE JUDGMENT OF PARADISE TEXTILE PVT. LTD. VS. DCIT ITA NO. 4773/MUM/2015 DT.28/ 11/2017 (MUM)(TRIB.) IS NOT APPLICABLE TO THE FACTS OF THE APPLICANT.. AS THE FACTS IN BOTH THE CASES ARE DIFFER FROM EACH OTHER. IN THE ABOVE REFERRED MATTER, THE ASSESEE PURCHASED THE FLATS VIDE AGREEMENT FOR SALE WHICH WAS EXECUTED AND REGISTERED ON 09-06-2007. WI THOUT TAKING THE POSSESSION OF THESE FLATS THE SAID ASSESSEE SOLD THOSE FLATS TO THIRD P ARTY ON 10-12-2009. THE TRIBUNAL HELD THAT THE FINAL PAYMENT IN RESPECT OF THE PURCHASE O F THE SAID FLATS WAS MADE BY THE SAID ASSESSEE ON 14-10-2009. HENCE UPON THE COMPLETION O F PAYMENT OF ENTIRE CONSIDERATION, THE RIGHTS IN THE SAID PROPERTY ACCRUED TO THE ASSE SSEE. THEREFORE, THE TRANSACTION WAS HELD AS SHORT TERM CONSIDERING THE FINAL PAYMENT. THE EN TIRE DECISION OF THE TRIBUNAL WAS BASED ON THE GROUND THAT THE PROVISION OF S. 53A OF THE T RANSFER OF PROPERTY ACT IS APPLICABLE. 6 MA 290/MUM/2018 (HERE TO MARKED 'EXHIBIT - G' IS THE COPY OF PARADI SE TEXTILES PVT. LTD. VS. DCIT ITA NO. 4773/MUM/2015 DT.28-11-2017.) BASICALLY SECTION 53A COMES INTO EXISTENCE WHEN THE SELLER OF THE PROPERTY REFUSES TO PERFORM THE CONTRACT OF SALE TO WHOM UNDER INADEQUATE DOCUMENT THE POSSESSION OF THE PROPERTY HAS BEEN PARTED WITH, WHICH IS NOT THE CASE OF THE APPLICANT HEREIN. THE CONTRACT DATED 25.06.2005 EXECUTED BY AND BETWE EN THE APPLICANT AND CONSORTIUM PARTNER WAS A CONCLUDED CONTRACT I.E. BOOKING OF 50 000 SQ FT CARPET AREA IN THE PROPOSED CONSTRUCTION @ 36000/- PER SQ FT. AND AS PER SAID C ONTRACT THE PARTIES HAVE PERFORMED THEIR RESPECTIVE OBLIGATIONS. IF THE OPPORTUNITY TO HEAR WOULD HAVE BEEN GIVEN TO THE APPLICANT, THE APPLICANT WOULD HAVE EXPLAINED THAT THEIR CASE IS DIFFERENT FROM TH E CASE REFERRED HEREIN AND AS THE OPPORTUNITY IS NOT GIVEN TO THE APPLICANT TO GIVE T HEIR SUBMISSION ON THE CASE REFERRED BY HONBLE TRIBUNAL THE PRINCIPLE OF NATURAL JUSTICE H AS BEEN VIOLATED. 3.1.5. THE HONORABLE TRIBUNAL DECIDED THE MATTER ON LY ON THE BASIS OF CO-ORDINATE BENCH ORDER WHICH WAS DELIVERED AFTER THE HEARING OF MATT ER AND FACTS ARE NOT APPLICABLE TO THE FACTS OF THE APPLICANT. THE ORDER PASSED RELYING ON THE JUDGMENT OF THE TRIBUNAL WHICH WAS DELIVERED AFTER THE HEARING OF THE APPLICANT'S MATT ER AND WITHOUT GIVING AN OPPORTUNITY OF HEARING ON THE JUDGMENT RELIED UPON BY THE HON'BLE TRIBUNAL, MAY BE RECTIFIED. 3.2. THE FACTS ARE NOT RECORDED CORRECTLY: 3.2.1. THE HON'BLE BENCH AT PAGE NO. 10 PARA NO. 5 OBSERVED THAT 'THE AO HAS EXTENSIVELY DISCUSSED THE ISSUE IN HIS ORDER AND BR OUGHT OUT CLEAR FACTS THAT AS ON THE DATE OF OFFER LETTER I.E. ON 25-06-2005, THE CONSORTIUM OF PARTNERS DID NOT HAVE ANY RIGHT IN THE PROPOSED PROJECT, THEREFORE, THE C LAIM OF THE APPLICANT THAT IT HAD ENTERED INTO AN AGREEMENT CUM UNDERSTANDING WITH KO HINOOR PROJECTS PVT LTD. FOR PURCHASE OF BOOKING RIGHTS CANNOT BE ACCEPTED.*' 'T HE AO FURTHER OBSERVED THAT NTCL HAS OPENED PUBLIC TENDER ON 21-07-20O5 WHICH HAS BEEN INFORMED TO THE CONSORTIUM OF PARTNERS ON 23-08-2005. TILL SUCH TIM E, THE CONSORTIUM OF PARTNERS DID NOT EVEN KNOW WHETHER THEY WILL BE SUCCESSFUL I N THEIR BID FOR PURCHASE OF PROPERTY. UNDER THESE FACTS AND CIRCUMSTANCES, IT I S HIGHLY IMPRACTICAL TO ACCEPT THE ARGUMENTS OF THE APPLICANT THAT IT HAD ENTERED INTO A VALID AGREEMENT FOR PURCHASE OF PROPERTY ON 25-06-20O5. THE AO, FURTHER REFERRING TO THE SALE DEED EXECUTED BY NTCL IN FAVOUR OF KOHINOOR-CTNL INFRAST RUCTURE CO LTD CONSORTIUM ON 11-10-2005, OBSERVED THAT ONLY AFTER VALID TITLE CAME INTO THE HANDS OF KOHINOOR-CTNL INFRASTRUCTURE CO LTD, THE APPLICANT HAS ENTERED INTO A MOU TO ACQUIRE PROPERTY IN THE PROPOSED BUILDING TO BE DEV ELOPED BY THE SPV ON 5 TH OCTOBER, 2007. THEREFORE, THERE IS NO MERIT IN THE ARGUMENTS OF THE APPLICANT THAT IT HAS GOT VALID RIGHT AND INTEREST IN THE PRO PERTY ON 25-06-2005.' THE TRIBUNAL AT PAGE NO. 26, PARA 15 OBSERVED THAT 'THE APPLICANT CLAIMS THAT IT HAS GOT RIGHT OVER THE PROPERTY FROM 25-06-2005 WHE N IT MADE AN OFFER FOR PURCHASE OF PROPERTY BY WAY OF A LETTER ADDRESSED T O KOHINOOR PROJECTS PVT. LTD.' THE TRIBUNAL'S FINDING AT PAGE NO. 44 'ON THE OTHER HAND, THE EVIDENCE RELIED UPON BY THE AO, I.E. THE MOU IS A VALID DOCUMENT CO NFERRING TITLE AND INTEREST IN THE PROPERTY IN FAVOUR OF THE APPLICANT, WHICH HAPP ENED ON 05 TH OCTOBER, 2007, (WRONGLY TYPED AS 3007) BUT NOT ON 25 TH JUNE, 2005. WE FARTHER NOTICED THAT THOUGH THE APPLICANT CLAIMS TO HAVE PAID INITIAL AD VANCE AMOUNT OF RS.L,00,000/~ ALONG WITH LETTER ON 25-6-2005, ON PERUSAL OF DETAI LS FILED BY THE APPLICANT, THE APPLICANT HAS PAID KS. L.00,000/- ON 25-7-2005. 7 MA 290/MUM/2018 3.2.2 WHILE PASSING THE ORDER, THE HON'BLE BENCH HAS CONCLUDED THAT APPLICANT HAS NOT MADE THE FIRST PAYMENT OF RS.1,00,000/- ON 25.6.2005 BUT IT WAS MADE ON 25.7.2005, THE OBSERVATION OF THE HON'BLE BENCH IS CONTRARY TO THE FACTS, AS THE CHEQUE OF RS.1,00,000/- WAS PARTED WITH KOHINOOR PR OJECTS PVT. LTD. ON 25.6.2005 BUT IT WAS ENCASHED BY KOHINOOR ON 25.7.2005. AS CONTEN DED BY APPLICANT, THE FIRST PAYMENT VIDE CHEQUE IS RIGHTLY ISSUED ON 25.6.2005 WHEN THE LETTERS OF OFFER AND ACCEPTANCE WERE EXCHANGED BETWEEN THE PARTIES AND I T RESULTED INTO CONCLUDED CONTRACT BETWEEN THE PARTIES. 3.2.3 THE APPLICANT SUBMITS THAT IF AN OPPO RTUNITY WOULD HAVE BEEN GIVEN, TO THE APPLICANT WOULD HAVE EXPLAINED THE FACTS BEFORE THE HON'BLE BENCH. THE FINDING OF THE HON'BLE TRIBUNAL IS BUSED ON THE ASSUMPTION AS NEIT HER ASSESSING OFFICER NOR CIT(A) HAS DOUBLED ABOUT THE PAYMENT ON 25/06/2005. THIS B EING A FACTUAL MISTAKE MAY BE RECTIFIED, 3.2.4 THE PERIOD OF CALCULATION OF LONG LON G TERM CAPITAL GAINS: IN THE ORDER, THE HON'BLE TRIBUNAL REFERRED THAT AS SUMING FOR A MOMENT, EVEN IF THE FIRST DATE OF PAYMENT IS CONSIDERED FOR THE PURPOSE OF RECKONING HOLDING PERIOD THE FIRST DATE OF PAYMENT IS 19.7.2005 AND IF THAT DATE IS CONSIDERED, HOLDING PERIOD OF THE ASSET IS LESS THAN 36 MONTHS THE APPLICANT SUBMITS THAT AS PER THE CONTRACT FIRS T DATE OF PAYMENT IS 25.6.2005 WHEN RS.1,00,000/- WAS PAID BY THE APPLICANT TO THE CONSORTIUM PARTNER. THE DEED OF CANCELLATION WAS EXECUTED ON 28.6.2008. THEREFORE, THE MONTH STARTS FROM JUNE, 2005 AND ENDS ON JUNE, 2008. HENCE HOLDING PE RIOD SHOULD BE CALCULATED FROM JUNE 2005 TILL JUNE 2008 AS UNDER:. JUNE 2005 TO DECEMBER 2005 = 7 MON THS JANUARY 2006 TO DECEMBER 2006 = 12 MONTHS JANUARY 2007 TO DECEMBER 2007 = 1 2 MONTHS JANUARY 2008 TO JUNE 2008 = 6 MONTH S 37 MONTHS 3.2.5. FURTHER AS STATED IN THE ORDER PASSED BY HON 'BLE TRIBUNAL IF THE FIRST DATE IS CONSIDERED AS 19.7.2005 THEN ALSO UPON THE PERIOD B EING CALCULATED FROM MENTIONED MONTH, THE PERIOD WOULD BE EQUAL TO 36 MONTHS AS HO LDING PERIOD SHOULD BE CALCULATED FROM JULY 2005 UPTO JUNE 2008 AS UNDER:- JULY 2005 TO DECEMBER 2005 = 6 MO NTHS JANUARY 2006 TO DECEMBER 2006 = 12 MONTHS JANUARY 2007 TO DECEMBER 2007 = 12 MONTHS JANUARY 2008 TO JUNE 2008 = 6 MON THS 36 MONTHS ========= THE APPLICANT WOULD HEREBY LIKE TO RELY UPON TWO JU DGMENTS WHICH CLEARLY SPEAKS ABOUT THE PERIOD OF CALCULATION SHOULD BE FROM THE MONTH AND NOT FROM THE DATE. AS PER THE JUDGMENT TAMAL LAHIRI VS. P.N. TAGORE, AIR 1978 SC 1811 SUPREME COURT (PG. NO.3 PARA NO. 7) HELD THAT, EXPRESSION SIX MONTHS MEANS SIX CALENDAR MONTHS AND NOT 180 DAYS. IN ABSENCE OF ANY DEFINITION OF THE WORD 'MONTH' IN THE ACT, THE DEFINITION OF GENERAL CLAUSE ACT, 1897 SHALL APPLY. IN YAHYA E. DHARIWALA VS. DY. CIT (2012) 49 SOT 458 (M UM)(TRIB.) IT IS HELD THAT PERIOD OF SIX MONTHS SHALL BE COUNTED FROM THE END OF THE MONTH IN WHICH ORIGINAL ASSET IS TRANSFERRED. IN ALKABEN B. PATEL VS. ITO (2014) 148 ITD 31 (SB)(AHD.)(TRIB.) IT IS HELD THAT TERM MONTH DOES NOT MEAN 30 DAYS BUT CALENDAR MONTH. 8 MA 290/MUM/2018 THE APPLICANT THEREFORE SUBMITS THAT, THE CIT(A) HA S CONSIDERED THE DATE REFERRED IN THE LETTER DTD.25/06/2005, IS THE DATE OF AN AGREEMENT AND ACCORDINGLY PASSED ITS ORDER DATED 27/03/2015 HOLDING THE GAINS AS LONG TERM CAPITAL G AINS. IF ANY OPPORTUNITY WOULD HAVE BEEN GIVEN TO THE APP LICANT TO EXPLAIN THE DIFFERENCE BETWEEN DATE OF AGREEMENT AND DATE OF THE ENCASHMEN T OF CHEQUE, THE APPLICANT COULD HAVE EXPLAINED THE REASONS FOR THE DIFFERENCE BETWE EN THE DATE OF ISSUANCE OF CHEQUE AND THE ENCASHMENT OF THE CHEQUE. THE APPLICANT WOULD A LSO EXPLAIN THAT THE SECTION 2(42A) REFERS 36 MONTHS, WHICH IS EXPLAINED BY THE VARIOUS COURTS AND THE TRIBUNALS. THE APPLICANT THEREFORE SUBMITS THAT NOT GIVING AN OPPO RTUNITY TO THE APPLICANT TO EXPLAIN DIFFERENCE BETWEEN THE DATE OF ISSUANCE OF CHEQUE A ND DATE OF ENCASHMENT OF CHEQUE IS A MISTAKE APPARENT ON RECORD AND SAME MAY BE RECTIFIE D. 3.2.6. ALL DOCUMENTS FILED BY THE APPLICANT HAVE NOT BEEN CONSIDERED. A) THE HONORABLE TRIBUNAL HAS CONCLUDED THAT THE LETTERS DATED 25.6.2005 ADDRESSED BY THE APPLICANT TO CONSORTIUM PARTNER I.E. KPPL AND V ICE E VERSA IS MERELY BASED ON A PLAIN PAPER WITH NO TERMS AND CONDITIONS MENTIONED THEREI N, WHEREAS ALL THE NECESSARY TERMS AND CONDITIONS ARE CLEARLY SPECIFIED IN BOTH THE OF FER AND ACCEPTANCE LETTERS DATED 25.6.2005. B) THE TRANSACTION HAS BEEN INITIATED BETWEEN THE APPLICANT AND KPPL UPON THE PUBLICATION OF TENDER OIL 21.6.2005 BY NTC FOR SALE OF KOHINOOR MILL NO.3. AFTER THE PARTIES ENTERED INTO CONTRACT VIDE THEIR OFFER AND ACCEPTANCE LETTERS DATED 25.6.2005, THE AMOUNT OF 4 CRORES HAS BEEN PAID ON 19.7.2005 A S PER THE AGREED TERMS. AND UPON THE APPROVALS BEING OBTAINED BY KOHINOOR CTNL, VIDE LETTER DATED 07.12.2006, THE APPLICANT CALLED UPON CONSORTIUM PARTNER TO EXE CUTE AGREEMENT FOR ALLOTMENT OF UNITS WHICH WAS CONFIRMED BY CONSORTIUM PARTNER VID E THEIR LETTER DATED 8.12.2006 ON THE BASIS OF ORIGINAL CONTRACT DATED 25.6.2005 IN W HICH THE TERMS WERE FINALIZED. IT WAS FURTHER STATED IN THE SAID LETTER DATED 8.12.20 06 THAT THE CONSORTIUM PARTNER WAS WAITING FOR CERTAIN NECESSARY REGULATORY APPROVALS WHICH ARE NECESSARILY TO BE INCORPORATED IN MOU. AS SUCH UPON THE RECEIPT OF TH E SAME, THEY SHALL EXECUTE MOU WITH THE APPLICANT. THE HON'BLE TRIBUNAL WHILE PASS ING THE ORDER HAS NOT CONSIDERED THEN TWO IMPORTANT LETTERS WHICH WERE IN CONTINUATI ON TO THE BASIC AGREEMENT DATED 25.6.2005. THESE TWO LETTERS CLEARLY INDICATE THAT THE ALLOTMENT OF UNITS SHALL BE DONE UPON THE RECEIPT OF APPROVALS ON THE BASIS OF THE O RIGINAL CONTRACT DATED 25.6.2005. (HERETO ANNEXED AND MARKED EXHIBIT H & I ARE THE CO PIES OF LETTER DATED 7.12.2006 AND 8.12.2006 RESPECTIVELY). C) THE JUDGMENT PASSED BY THE TRIBUNAL IS COMPLET ELY BASED ON THE WRONG FOOTING THAT THE MOLT WAS EXECUTED AS THE RIGHTS OF THE ASS ESSEE WERE NOT CRYSTALLIZED VIDE CONTRACT DATED 25.6.2005. D) THE HON'BLE TRIBUNAL HAS FAILED TO CONSIDER TH ESE CORRESPONDENCES MENTION THAT MOU WILL BE SIGNED BASED ON TERMS AND CONDITIONS AL READY MENTIONED IN LETTER DATED 25.6,2005. 3.2.7. THE APPLICANT SUBMITS THAT FAILURE TO CONSIDER THE EVIDENCES WHICH WAS FILED BEFORE THE TRIBUNAL AND LOWER AUTHORITIES IS MISTAKE APPARENT ON RECORD. 3.2.8. THE APPLICANT ALSO SUBMITS THAT THE P ARTIES ARE NOT RELATED, HENCE, IF THE ASSESSING OFFICER HAD ANY DOUBT ABOUT THE GENUINENE SS OF THE TRANSACTION HE SHOULD HAVE ISSUED THE SUMMONS TO THE PARTIES AND VERIFIED THE FACTS. WHEN BOTH THE PARTIES HAVE ACTED UPON, IT CANNOT BE HELD THAT LETTERS EXC HANGED BETWEEN THE APPLICANTS AND CONSORTIUM PARTNER WERE ONLY THE SELF-SERVING DOCUM ENT. IT DOES NOT HAVE ANY LEGAL SANCTITY. IT MAY BE NOTED THAT NEITHER THE ASSESSIN G OFFICER NOR CIT(A) HAVE DOUBTED THE LETTER EXCHANGED BETWEEN THE PARTIES, THEREFORE WITHOUT MAKING ANY ENQUIRY, ONE CANNOT CONCLUDE THAT THE LETTER WAS SELF-SERVING EV IDENCE. 4.3. WRONG APPLICABILITY OF LAW : 9 MA 290/MUM/2018 4.3.1. THE DECISION OF THE HON'BLE TRIBUNAL IS BASED ON TH E PRESUMPTION THAT THE PROVISION OF TRANSFER OF PROPERTY ACT AND REGISTRAT ION ACT IS APPLICABLE AS THE TRANSFER WAS OF IMMOVEABLE PROPERTY AND THE AGREEMENT WAS NO T REGISTERED. THE ORDER REFERS TO SECTION 53A OF THE TRANSFER OF PROPERTY ACT, HOW EVER, SECTION 53A IS APPLICABLE WHERE NO AGREEMENT IS MADE BUT POSSESSION IS GIVEN AND THE SELLER HAS REFUSED TO PERFORM ITS OBLIGATION AS PER THE ORIGINAL CONTRACT . IN APPLICANT'S CASE, TERMS AND CONDITIONS ARE ALREADY PREFIXED VIDE CONTRACT DATED 25.6.2005. AND SINCE THOSE WERE THE BOOKING RIGHTS THE QUESTION OF POSSESSION CANNO T ARISE. HENCE, SECTION 53A IS NOT APPLICABLE. THE ARGUMENT OF THE APPLICANT WAS THAT, IT WAS A CONTRACT AND PROVISION OF CONTRACT ACT IS APPLICABLE I.E. OFFER AND ACCEPTANC E OF OFFER. THE RIGHT TRANSFERRED WAS MOVEABLE PROPERTY WHICH WAS HELD BY THE APPLICA NT FOR MORE THAN 36 MONTHS, HENCE IT WAS A LONG TERM CAPITAL GAINS. FOR TRANSFE R OF MOVABLE PROPERTY REGISTRATION IS NOT REQUIRED. THE ENTIRE TRANSACTION IS BASED ON CO NTRACT ACT 4.3.2. THE APPLICANT STATES THAT IF THE QUERY WOULD HAVE B EEN RAISED AT THE TIME OF HEARING THE APPLICANT WOULD HAVE CLARIFIED THE FACT S. AS WRONG PROVISION IS APPLIED THIS IS A MISTAKE APPARENT ON RECORD. 4.4. NOTE SUBMITTED FOR NON-APPLICABILITY OF THE SLP REJECTIO N WAS NOT CONSIDERED. 4.4.1 THERE IS NO DISCUSSION IN ORDER PASSED THAT THE NOT E SUBMITTED BY THE APPLICANT STATING THAT HOW THE RATIO CANNOT BE APPLICABLE TO THE FACTS OF THE APPLICANT. HOWEVER, THERE IS NO DISCUSSION IN THE ORDER. 4.4.2. THE APPLICANT HAS SUBMITTED THAT THE RATIO O F THE JUDGMENT IS NOT APPLICABLE TO THE APPLICANT ON THE FACTS OF THE APPLICANT. 5 CBDT CIRCULAR NO.471 DT. 15.10.1986 (1986) 164 1T R 41 (ST.) WAS NOT CONSIDERED 5.1. THE TRIBUNAL HAS NOT CONSIDERED CBDT CIRCULAR NO.471 DATED 15.10.1986 (1986) 162 ITR 41(ST.) WHICH STATES THAT THE ALLOTMENT OF THE PROPERTY IS FINAL UNLESS IT IS CANCELLED BY THE ALLOTTEE OR ALLOTTEES WITHDRAW FRO M THE SCHEME. THE SAME CIRCULAR WAS REFERRED IN ANITA D. KANJANI (2017) 163 ITD 451 (MUMBAI HC.) AND MS. MADHUKAUL (2014) 363 ITR 54 (P&H)(HC). IN THE CASE HEREOF THE DATE OF CONTRACT SHOULD BE C ONSIDERED AS DATE OF' ALLOTMENT, AS AND WHEN THE CONTRACT TOOK PLACE THE PROPERTY WAS N OT IN EXISTENCE. AS SUCH AS PER THIS CIRCULAR THE DATE OF ALLOTMENT IN THE PRESENT CASE IS 25.6.2005 AND NOT THE DATE OF THE MOU I.E. 5.10.2007. AND SECONDLY NEITHER THE PA RTIES HAVE CANCELLED NOR WITHDRAWN FROM THE CONTRACT/SCHEME. 6. THE APPLICANT SUBMIT THAT IN HON.LA SIEL POWER PRODUCTS LTD V CIT ( 2007) 295 ITR 466 (SC) PARA 12 & 13 STATED THAT IF PREJUDICE HAD RESULTED TO THE PARTY , WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE ERROR OR OMISSION AND WHICH ERROR IS A MANIFEST ERROR THEN THE TRIBUNAL WOULD BE JUSTIFI ED IN RECTIFYING ITS MISTAKE. IN ACIT V. SAURASHTRA KUTCH STOCK EXCHANGE LTD (2008) 305 WR 227 (SC) PARE. 45. THE COURT OBSERVED THAT 'RECTIFICATION OF AN ORDER STEMS FROM THE FUNDAMENTAL PRINCIPLE THAT JUSTICE IS ABOVE ALL, IT IS EXERCISE D TO REMOVE THE ERROR AND TO DISTURB THE FINALITY.' 4. THE LD.DR, ON THE OTHER HAND, SUBMITTED THAT THE ITAT HAS PASSED DETAILED ORDER AFTER CONSIDERING RELEVANT FACTS IN THE LIGHT OF VARIOUS JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONB LE DELHI HIGH COURT IN 10 MA 290/MUM/2018 THE CASE OF GULSHAN MALIK VS CIT (2014) 223 TAXMANN .243 TO COME TO THE CONCLUSION THAT ASSET HELD BY THE ASSESSEE IS A SHORT TERM CAPITAL ASSET AND RESULTANT GAIN FROM TRANSFER OF SAID ASSE T IS ASSESSABLE UNDER THE HEAD SHORT TERM CAPITAL GAIN. THEREFORE, THE RE IS NO MISTAKE IN THE ORDER PASSED BY THE TRIBUNAL DATED 08-12-2017 WHICH REQUIRES RECTIFICATION U/S 254(2) OF THE I.T. ACT, 1962 AND HENCE, MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE MAY BE DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS FILED MISCELLANEOUS AP PLICATION U/S 54(2) TO RECALL THE ORDER PASSED BY THE ITAT DATED 08-12-201 7 ON THE GROUND THAT CERTAIN MISTAKES APPARENT ON RECORD IN THE ORDER DA TED 08-12-2017 WHICH REQUIRES RECTIFICATION U/S 254(2) OF THE ACT. THE ASSESSEE HAS CATEGORISED 5 TYPES OF MISTAKES APPARENT ON RECORD. ACCORDING TO THE ASSESSEE, THE ITAT HAS NOT FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE, WHILE DECIDING THE ISSUE WHICH IS EVIDENT FROM THE FACT THAT THE ITAT HAS CONSIDERED DECISION OF CO-ORDINATE BENCH IN THE CAS E OF PARADISE TEXTILES PVT LTD VS DCIT(SUPRA) WHICH WAS RENDERED SUBSEQUENT TO THE DATE OF HEARING CONCLUDED IN THE CASE OF THE ASSESS EE, THAT TOO, WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE TO DEAL WITH THE SAME IN THE LIGHT OF FACTS OF ASSESSEES CASE. WE FIND THAT WHILE DECID ING THE ISSUE OF TAXABILITY OF GAIN ARISING FROM TRANSFER OF A CAPIT AL ASSET WHETHER IT IS SHORT 11 MA 290/MUM/2018 TERM OR LONG TERM, THE BENCH HAS FOLLOWED THE PRINC IPLES LAID DOWN IN THE CASE OF PARADISE TEXTILES PVT LTD VS DCIT (SUPRA). ALTHOUGH THE BENCH HAS NOT DIRECTLY RELIED UPON THE DECISION OF CO-ORD INATE BENCH OF ITAT, MUMBAI IN THE CASE OF PARADISE TEXTILES PVT LTD VS DCIT (SUPRA), YET, THE FACT REMAINS THAT THE SAID DECISION WAS NOT CONFRON TED TO THE ASSESSEE AT THE TIME OF HEARING TO DEAL WITH THE SAME. THEREFO RE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS AN ERROR IN THE ORDER PASSED BY THE ITAT DATED 08-12-2017 INSOFAR AS RELYING UPON THE DECISI ON OF CO-ORDINATE BENCH OF ITAT IN THE CASE OF PARADISE TEXTILES PVT LTD VS DCIT (SUPRA) WHICH CONSTITUTE A MISTAKE APPARENT ON RECORD WHICH REQUIRES RECTIFICATION U/S 254(2) OF I.T. ACT, 1961. ACCORD INGLY, WE RECALL OUR ORDER DATED 08-12-2017 FOR THE REASONS STATED HEREINABOVE . SINCE WE RECALLED THE ORDER ON FIRST GROUND ITSELF, THE OTHER GROUNDS TAKEN BY THE ASSESSEE IN ITS MISCELLANOUES APPLICATION DATED 08-04-2018 I S NOT SPECIFICALLY ADJUDICATED UPON AND WILL BE TAKEN CARE OF AT THE T IME OF HEARING OF THE APPEAL. THE REGISTRY IS DIRECTED TO FIX THE APPEAL FOR HEARING IN DUE COURSE. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS ALLOWED. 12 MA 290/MUM/2018 ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD OCTOBER, 2018. SD/- SD/- (C.N. PRASAD) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 03 RD OCTOBER , 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI