SHIVALIK ESTATE AMD INVESTMENT COMPANY, V. DCIT 24(3),

MA 495/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8168 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2000-2001
• Appeal Filed On: 04-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D V LAKHANI

Judgement Text

MA NO. 495/MUM/2011 SHIVALIK ESTATE INVESTMENT CO IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI E EE E BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI P M JAGTAP P M JAGTAP P M JAGTAP P M JAGTAP, ,, ,AM AMAM AM & & & & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM MISCELLANEOUS APPLICATION NO. 495/MUM/2011 MISCELLANEOUS APPLICATION NO. 495/MUM/2011 MISCELLANEOUS APPLICATION NO. 495/MUM/2011 MISCELLANEOUS APPLICATION NO. 495/MUM/2011 ARISING OUT OF ITA NO. 6210/MUM/2008 (ASST YEAR 2000-01) M/S SHIVALIK ESTATE INVESTMENT CO SHIVAM COAMBERS 3 RD FLOOR NEXT TO AUTORIERS S V ROAD GOREGAON (W) MUMBAI 62 VS THE DY COMMR OF INCOME TAX 24(3), MUMBAI (APPELLANT (APPELLANT (APPELLANT (APPELLANT ) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAFCS8449H AAFCS8449H AAFCS8449H AAFCS8449H ASSESSEE BY SHRI D V LAKHANI REVENUE BY SH P C MAURYA DT.OF HEARING 16 TH MARCH 2012 DT OF PRONOUNCEMENT APRIL 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY T HE ASSESSEE FOR SEEKING RECTIFICATION IN THE ORDER DATED 27.5.2011 OF THE T RIBUNAL IN ITA NO.6210/MUM/2008 2 THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THER E IS A MISTAKE IN THE ORDER OF THE TRIBUNAL WHILE GIVING THE FINDING IN PARA 5 OF THE IMPUGNED ORDER BY HOLDING THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND IN QUESTI ON AND THE AMOUNT OF RS. 3 CRORES RECEIVED BY THE ASSESSEE IS PART OF SALE CONSIDERAT ION ASSESSABLE TO TAX IN THE YEAR UNDER CONSIDERATION. THE LD AR HAS FURTHER SUBMITT ED THAT THE PROPERTY WAS UNDER DISPUTE AND UNDER ACQUISITION. THIS DISPUTE WAS SET TLED IN THE HIGH COURT AND THE ASSESSEE ACQUIRED ITS INTEREST IN THE PROPERTY, WHI CH WAS SOLD TO THE DEVELOPER AGAINST A CONSIDERATION OF RS. 7.5 CRORES. THE LD A R HAS SUBMITTED THAT THE ASSESSEE HAS SHOWN ITS RIGHTS AND INTEREST IN THE PROPERTY A S STOCK IN TRADE AND ULTIMATELY, MA NO. 495/MUM/2011 SHIVALIK ESTATE INVESTMENT CO 2 OFFERED THE INCOME IN THE SUBSEQUENT YEAR. THE AMOU NT OF RS. 3 CRORES WAS ONLY ADVANCE RECEIVED BY THE ASSESSEE AND CANNOT BE TREA TED AS INCOME OF THE ASSESSEE FOR THE AY 2000-01. HE HAS FURTHER SUBMIT TED THAT THE ASSESSEE BECAME THE OWNER OF THE PROPERTY BY VIRTUE OF AGREEMENT AS WEL L AS THE CONSENT TERMS BEFORE THE HIGH COURT. THEREFORE, THERE IS A MISTAKE IN TH E ORDER OF THE TRIBUNAL BY HOLDING THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY IN QUESTION. HE HAS REFERRED THE DOCUMENTS PLACED IN THE PAPER BOOK AND REITERATED T HE SUBMISSION AS MADE AT THE TIME OF HEARING OF THE APPEAL. 2.1 ALTERNATIVELY, THE LD AR HAS SUBMITTED THAT A P ROPORTIONATE EXPENSE SHOULD BE ADJUSTED AGAINST RS. 3 CRORES OTHERWISE IT WOULD BE A DOUBLE TAXATION ON THE SAME AMOUNT. THE LD AR HAS PLACED RELIANCE ON THE DECIS ION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHAMPA LAL CHOPRA V. STAT E OF RAJASTHAN REPORTED IN 257 ITR 74 (RAJ) 2.2 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE TRIBUNAL HAS CONSIDERED ALL THE FACTS AND RELEVANT MATERIAL AND EVIDENCE AS WELL AS THE CONTENTION OF THE PARTIES AND DECIDED THE ISSUE ON MERIT. THEREFORE, IN THE PROCEEDINGS U/S 254(2), THE ORDER CANNOT BE REVIEWED. HE HAS FURTHER SUBMITTED THAT THERE WAS ONLY A MEMORANDUM OF UNDERSTANDING (MOU) WHEREBY THE ASSES SEE HAS ACQUIRED SOME INTEREST IN THE PROPERTY AND NOT THE OWNERSHIP TITL E OF THE PROPERTY IN QUESTION. 3 WE HAVE CONSIDERED THE RIVAL CONTENTION AS WELL A S CAREFULLY PERUSED THE IMPUGNED ORDER OF THE TRIBUNAL DATED 27.5.2011. T HE LD AR HAS MADE ELABORATE SUBMISSIONS AT THE TIME OF HEARING OF THE APPEAL WH ICH HAS BEEN RECORDED IN PARA 3.1 OF THE IMPUGNED ORDER AND AFTER CONSIDERING THE RIVAL CONTENTION AND RELEVANT MATERIAL ON RECORD, THE TRIBUNAL HAS GIVEN ITS FIND ING ON MERIT AND FACTS OF THE MATTER IN PARAS 5 TO 5.3 AS UNDER: MA NO. 495/MUM/2011 SHIVALIK ESTATE INVESTMENT CO 3 5 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RELE VANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE WAS N OT THE OWNER OF THE LAND IN QUESTION BUT ACQUIRED ONLY BEN EFICIAL INTEREST IN THE PROPERTY VIDE AGREEMENT DATED 22.1. 1994, WHICH WAS UNDER COMPULSORILY ACQUISITION. THE ASSE SSEE AND THE OWNER OF THE PROPERTY TRANSFERRED THE DEVELOPME NT RIGHTS VIDE DEVELOPMENT AGREEMENT DATED 21.9.1999. THUS, I T IS CLEAR THAT THE ASSESSEE TRANSFERRED ITS BENEFICIAL RIGHTS IN THE PROPERTY THROUGH THIS AGREEMENT AND NOT THE TITLE O F THE PROPERTY, WHICH WAS RESTED WITH THE OWNER OF THE PR OPERTY. THE CONSIDERATION FOR THE TRANSFER OF THE DEVELOPMENT R IGHTS AND OTHER RIGHTS WAS PAYABLE AND DUE AS PER THE TERMS O F THE AGREEMENT DATED 21.9.1999. THE AMOUNT OF RS. 3 CROR ES WAS DUE AND PAYABLE AT THE TIME OF EXECUTION OF THE AGR EEMENT AND ACCORDINGLY RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION. THE ASSESSEE RECEIVED THE SAID CONSIDERATION OF RS. 3 CRORES BEING PART CONSIDERATION AGREED UPON BETWEEN THE PA RTIES. THERE IS NO TERM OR CONDITION IN THE SAID AGREEMENT DATED 21.9.1999 WHICH SPEAKS ABOUT ANY EARNEST MONEY OR A DVANCE PAYMENT. THE AGREEMENT SPEAKS ABOUT CONSIDERATION ONLY WHICH WAS PAYABLE AS PER CLAUSE 2 OF THE AGREEMENT. THUS, THE SAID AMOUNT OF RS. 3 CRORES RECEIVED BY THE ASS ESSEE IS UNDOUBTEDLY PART OF THE CONSIDERATION AND DOES NOT REPRESENT ANY ADVANCE OR EARNEST MONEY. 5.1 AS PER CLAUSE 4 OF THE AGREEMENT, THE DEVELOPER M/S MADHU FANTASY LAND PVT LTD WAS PUT TO POSSESSION OF THE PROPERTY FOR THE PURPOSE OF DEVELOPMENT ONLY. THUS, TILL THE ENTIRE PAYMENT WAS MADE, THE DEVELOPER WAS NOT GIVE N ABSOLUTE RIGHT AND TITLE OVER THE PROPERTY TO TRANS FER THE SAME TO A THIRD PARTY. 5.2 HOWEVER, AS PER CLAUSE 9 TO 14, OF THE AGREEMEN T, ONLY AFTER THE ENTIRE PAYMENT OF THE CONSIDERATION, THE DEVELOPER WOULD BE ENTITLED TO SELL OR ALLOTMENT OF THE FLATS , SHOPS, GARAGES, PREMISES ETC. IN OTHER WORDS, THE DEVELO PER WOULD BE ENTITLED TO SELL THE DEVELOPED PROPERTY ONLY AFT ER THE PAYMENT OF THE ENTIRE CONSIDERATION DUE AS PER THE AGREEMENT. 5.3 AS PER CLAUSE 3 OF THE AGREEMENT, THE ASSESSEE IS ENTITLED TO INTEREST @ 2% PER MONTH WITH QUARTERLY REST S IN THE EVENT OF DELAY OF ANY OF THE PAYMENT STIPULATED IN THE AGREEMENT. THERE IS NO PROVISION IN THE AGREEMENT F OR CANCELLATION OR REVOCATION OF THE AGREEMENT EITHER OF THE PARTIES WHICH MEANS THE PARTIES TO THE AGREEMENT AG REED TO HAVE THE RIGHT OF PERFORMANCE OF THE AGREEMENT AGAI NST EACH OTHER AND TO CHARGE INTEREST ON DELAYED PAYMENT, I F ANY. WHEN THE AGREEMENT WAS FINALLY PERFORMED BY THE PAR TIES, THEN THE CONSIDERATION DUE AND RECEIVED AS PER THE PAYMENT CLAUSE WOULD BE THE INCOME FOR THE AY WHEN IT BECAM E DUE AND RECEIVED BY THE ASSESSEE. SINCE THE ASSESSEE W AS HAVING ONLY BENEFICIAL INTEREST IN THE LAND, AS ACQUIRED V IDE AGREEMENT DATED 22.1.1994, THE CONSIDERATION RECEIVED BY THE ASSESSEE MA NO. 495/MUM/2011 SHIVALIK ESTATE INVESTMENT CO 4 WAS FOR TRANSFER OF THE SAID INTEREST IN THE SHAPE OF DEVELOPMENT RIGHTS, WHICH IS NOTHING TO DO WITH THE TRANSFER OF TITLE OF THE LAND IN QUESTION. THEREFORE, THE PAYM ENT OF RS. 3 CRORES BEING CONSIDERATION RECEIVED BY THE ASSESSEE IS ASSESSABLE IN THE YEAR UNDER CONSIDERATION. EVERY A SSESSMENT YEAR IS A SEPARATE ACCOUNTING UNIT AND THE INCOME H AS TO BE COMPUTED SO AS TO GIVE TRUE AND CORRECT RESULT OF A CCOUNTINGS PERIOD OF 12 MONTHS RELEVANT TO THE ASSESSMENT YEAR . THUS, THERE IS NO JUSTIFICATION FOR NOT OFFERING THE SAID INCOME FOR TAXATION ON THE GROUND THAT IT WAS OFFERED IN THE S UBSEQUENT YEAR. WE CLARIFY THAT PROPORTIONATE EXPENDITURE SHA LL BE ALLOWED AGAINST THIS INCOME. ACCORDINGLY, WE SET AS IDE THE ORDER OF THE CIT(A) AND RESTORED THE ORDER OF THE A O ON THIS ISSUE. THE GROUND RAISED BY THE REVENUE IS ACCORDI NGLY ALLOWED. 3.1 AS IT IS MANIFEST FROM THE ORDER OF THE TRIBUNA L THAT ALL THE CONTENTION AND RELEVANT MATERIAL HAVE BEEN CONSIDERED AND THEN THE ISSUE WAS DECIDED; THEREFORE, THE RELIEF SOUGHT BY THE ASSESSEE IN THE PRESENT MI SCELLANEOUS APPLICATION IS NOTHING BUT IN THE NATURE OF SEEKING REVIEW OF THE IMPUGNED ORDER OF THE TRIBUNAL. THE LD AR HAS REITERATED HIS CONTENTION AS RAISED AT THE TIME OF HEARING OF THE APPEAL. IT IS NOT A CASE OF THE ASSESSEE THAT WHILE DECIDING THE APPE AL OF THE ASSESSEE, THE TRIBUNAL HAS OVERLOOKED OR COMPLETELY IGNORED ANY MATERIAL F ACT OR RELEVANT LAW ON THE POINT. 4 AS FAR AS THE ALTERNATIVE PLEA OF THE ASSESSEE IS CONCERNED, IT IS CLEAR THAT THE TRIBUNAL HAS SPECIFICALLY MENTIONED AT THE END OF P ARA 5.3 THAT PROPORTIONATE EXPENSE SHALL BE ALLOWED. 4.1 EVEN OTHER OTHERWISE, WE FIND THE SCOPE OF SEC 254(2) IS VERY LIMITED AND CIRCUMSCRIBED. FOR EXERCISING THE JURISDICTIONAL U/ S 254(2), IT IS THE MANDATORY CONDITION THAT SUCH MISTAKE SHOULD BE WIDE APPARENT , MANIFEST AND PATENT AND NOT SOMETHING WHICH COULD BE INVOLVED SERIOUS CIRCUMSTA NCES OF DISPUTES OF QUESTION OF FACTS OR LAW AND CAN BE ESTABLISHED BY LONG DRAWN P ROCESS AND REASONING ON THE MA NO. 495/MUM/2011 SHIVALIK ESTATE INVESTMENT CO 5 POINT TO BE RECTIFIED. A PATENT MISTAKE AS WELL AS EVIDENT ERROR, WHICH DOES NOT REQUIRE AN ELABORATE DISCUSSION OF EVIDENCE OR ARGU MENTS TO ESTABLISH CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORDS AND CAN BE RECTIFIED UNDER THE AMBIT OF SECTION 254(2). IT IS WELL SETTLED THAT S EC 254(2) DOES NOT CONFER POWER ON THE TRIBUNAL TO REVIEW IS EARLIER ORDER. THUS, THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER PASSED ON MERIT AND IN THE GRAB OF RECTIFICAT ION OF MISTAKE NO ORDER CAN BE PASSED U/S 254(2) WHICH AMOUNTS TO REVERSAL OF THE ORDER PASSED AFTER DISCUSSING ALL THE FACTS AND STATUTORY PROVISIONS IN DETAIL. THER EFORE, WE DO NOT FIND ANY MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE. 5 IN VIEW OF THE ABOVE DISCUSSION AND ON THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO MAKE OUT A CAS E OF ANY APPARENT MISTAKE ON THE FACE OF THE ORDER OF THE TRIBUNAL, WHICH CAN BE RECTIFIED U/S 254(2). ACCORDINGLY, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. 6 IN THE RESULT, THE MISCELLANEOUS APPLICATION FILE D BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS 4 44 4 TH THTH TH DAY OF DAY OF DAY OF DAY OF APRIL APRIL APRIL APRIL 2012 2012 2012 2012 SD/ SD/ SD/ SD/ SD/ SD/ SD/ SD/- -- - ( (( ( P M JAGTAP P M JAGTAP P M JAGTAP P M JAGTAP ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:4 TH , APRIL 2012 RAJ* RAJ* RAJ* RAJ* MA NO. 495/MUM/2011 SHIVALIK ESTATE INVESTMENT CO 6 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI