PRAMOD KUMAR SABI, V. ITO WD 4(2)(4),

MA 862/MUM/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5014 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 21-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMMIT KUMAR
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JM & SHRI R.K. PANDA, AM M.A. NO. 862/MUM/2009 ARSING OUT OF I.T.A. NOS. 5971 & 6625/MUM/07 (ASSESSMENT YEAR 2004-05) MR. PRAMODKUMAR SABOO OLD HANUMAN 2 ND CROSS LANE, MUMBAI-400 002 PAN: AAVPS2360L VS. I.T.O. 14(2)4 MUMBAI APPELLANT RESPONDENT APPELLANT BY: MR. VIJAY MEHTA RESPONDENT BY: MR. SUMMIT KUMAR O R D E R DATE OF HEARING: 04.06.2010 DATE OF ORDER: 13.08.2010 PER R.K. PANDA, AM: THE ASSESSEE THROUGH THIS MISCELLANEOUS APPLICATION (MA) REQUESTS THE TRIBUNAL TO RECALL THE ORDER PASSED BY IT OR TO MODIFY ITS ORDER SO AS TO DECIDE THE ISSUE RELATING TO DETERMI NATION OF COST OF ACQUISITION AS ON 1.4.1981 AND FURTHER RECALL AND/O R CANCEL THE DIRECTION OF ADOPTING COST OF ACQUISITION AT RS.37, 500 IN THE DEPARTMENTS APPEAL AS AGAINST RS.1,50,000/- ADOPTE D BY THE CIT(A). 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DECLARED LOSS UNDER THE HEAD CAPITAL GAIN ON SALE OF OFFICE PRE MISES AT RS.22,87,674 ON ACCOUNT OF TRANSFER OF HIS 1/4 TH SHARE OF OFFICE PREMISES AT BLOCK NO. 3, THIRD FLOOR, CHANDRAMUKHI BUILDING, PLOT OF NO. 10, BACKBAY RECLAMATION, NARIMAN POINT, MUMBAI HAVING AN AREA OF 2628 SQ. FT. OUT OF THE TOTAL SALE CONSIDE RATION OF RS. 78,84,000 THE ASSESSEE DECLARED HIS SHARE OF RS.19, 71,000. IT WAS SUBMITTED THAT THE SAID PROPERTY HAD BEEN ACQUIRED AS PER AGREEMENT DATED 25 TH AUGUST, 1972 AND STOOD TRANSFERRED ON 3 RD M.A. NO. 862/MUM/09 MR. PRAMODKUMAR SABOO ================= 2 MARCH, 2004 VIDE SALE DEED EXECUTED BETWEEN THE ASS ESSEE AND THREE OTHERS AS SELLERS AND M/S. LAXMI ORGANIC INDU STRIES LTD. AS PURCHASER. WHILE COMPUTING THE CAPITAL GAIN THE AS SESSEE ADOPTED THE VALUE AS ON 1.4.1981 AT RS.9,19,800 FOR HIS 1/4 TH SHARE SINCE THE PROPERTY WAS ACQUIRED ON 25 TH AUGUST, 1972 MUCH PRIOR TO 1.4.1981. AFTER INDEXING THE SAME AT 463/100, THE SAME WAS WO RKED OUT AT RS.42,58,674 AS AGAINST THE SALE CONSIDERATION OF R S.19,71,000. 3. THE ASSESSING OFFICER MADE A REFERENCE U/S. 50C OF THE INCOME-TAX TAX, 1961 (THE ACT) TO THE DVO FOR ASCER TAINING CORRECT FAIR MARKET VALUE OF THE PROPERTY AS ON 3 RD MARCH, 2004 AND AS ON 1 ST APRIL, 1981. THE DVO VALUED THE ABOVE PROPERTY AT RS.2,44,07,292 AS ON 3 RD MARCH, 2004 AND RS.11,59,574 AS ON 1 ST APRIL, 1981 RESULTING INTO THE VALUATION OF THE ASSESSEES SHAR E AT RS.61,01,823 AND RS.2,89,894, RESPECTIVELY AS ON 3 RD MARCH, 2004 AND 1 ST APRIL, 1981. THE VARIOUS OBJECTIONS RAISED BY THE ASSESSE E TO THE PROPOSED VALUATION AND APPLICATION OF SECTION 50C WAS NOT AC CEPTED BY THE ASSESSING OFFICER WHO WORKED OUT THE CAPITAL GAIN O N THE BASIS OF VALUATION ASSESSED BY THE DVO AND DETERMINED THE LO NG TERM CAPITAL GAIN AT RS.47,59,614 BEING 1/4 TH SHARE OF THE ASSESSEE IN THE SAID OFFICE PREMISES. 4. IN APPEAL, THE CIT(A) NOTED THAT IT IS NECESSARY FI RST TO DECIDE AS TO WHETHER IT WAS A CASE OF CAPITAL GAIN RESULTI NG FROM TRANSFER OF DEBENTURES OR FROM TRANSFER OF IMMOVABLE PROPERTY R IGHTS. HE NOTED THAT THERE WAS NO REGISTRATION OF THE PREMISE S TRANSFERRED AND NO STAMP DUTY WAS PAID. WHATEVER RIGHTS WERE ENJOY ED BY THE ASSESSEE OVER THE PROPERTIES STOOD PASSED ON THROUG H TRANSFER OF DEBENTURES. THUS, IT HAS TO BE TREATED AS A CASE O F TRANSFER OF DEBENTURES OF M/S. R.R. INVESTMENT ESTATES PVT. LTD . AND BY VIRTUE OF THE TRANSFER OF THESE DEBENTURES, THE TRANSFEREES B ECAME ENTITLED TO THE RIGHTS OF OCCUPATION AND ENJOYMENT OF PREMISES UNDER CONSIDERATION. IN THE CIRCUMSTANCES, SINCE NO STAM P DUTY WAS PAID WHILE TRANSFERRING THE RIGHTS OVER PREMISES THROUGH TRANSFER OF M.A. NO. 862/MUM/09 MR. PRAMODKUMAR SABOO ================= 3 DEBENTURES, THE PROVISIONS OF SEC. 50C EMPOWERING T HE AO TO ADOPT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATIO N AUTHORITY COULD NOT BE APPLIED. THEREFORE, THE AO WAS NOT JU STIFIED TO SUBSTITUTE THE SALE CONSIDERATION ON THE BASIS OF T HE DVOS VALUATION REPORT. SINCE THE AO HAD NOT MADE OUT A CASE THAT THE ASSESSEE HAD RECEIVED ANY CONSIDERATION OVER AND ABOVE THE CONSI DERATION WHICH WAS SHOWN AND DECLARED IN THE RETURN OF INCOME, WHA TEVER SALE CONSIDERATION WAS RECEIVED AND SHOWN BY THE ASSESSE E HAS TO BE TREATED AS THE SALE CONSIDERATION ACTUALLY RECEIVED . AS REGARDS THE COST OF ACQUISITION OF DEBENTURES, SINCE NO BENEFIT OF INDEXATION WAS ALLOWABLE TO CASE OF DEBENTURES IN VIEW OF THE 3 RD PROVISO TO SEC. 48, HE HELD THAT THE COST OF ACQUISITION OF DEBENTURES HAS TO BE ADOPTED AT RS.1,50,000/- ONLY, THE VALUE AT WHICH THE DEBEN TURES WERE PURCHASED. HE ACCORDINGLY WORKED OUT THE CAPITAL G AINS AT RS.18,21,000/- (RS.19,71,000 1,50,000). 5. IN APPEALS FILED BY THE REVENUE AS WELL AS THE ASSE SSEE, THE TRIBUNAL DISMISSED THE GROUND RAISED BY THE ASSESSE E AND PARTLY ALLOWED THE APPEAL FILED BY THE REVENUE I.E., TO TH E EXTENT OF COST OF DEBENTURES AT RS.37,500 AS AGAINST RS.1,50,000 DETE RMINED BY THE CIT(A). WHILE DOING SO THE TRIBUNAL HELD THAT THE ASSESSEE ALONG WITH THREE OTHER PERSONS BY VIRTUE OF BEING THE HOL DER OF 15 DEBENTURES OF RS.10,000 EACH WAS ENTITLED TO OCCUPY THE SAID PREMISES. THE ASSESSEE VIDE LEASE AGREEMENT BETWEE N THE ASSESSEE AND M/S. GARWARE NYLONS LTD., DATED 23 RD OCTOBER, 1972 LET OUT THE SAME FOR A PERIOD OF 5 YEARS AS PER THE TERMS AND C ONDITIONS MENTIONED THEREIN ACCORDING TO WHICH AN OPTION WAS GIVEN TO THE LESSEE TO RENEW THE SAID AGREEMENT FOR A FURTHER PE RIOD OF 5 YEARS. HOWEVER, THE LESSEE DID NOT HONOUR THEIR COMMITMENT BY VACATING THE PREMISES AT THE END OF THE RENEWED PERIOD OF LE ASE I.E., 13 TH MAY, 1992 AND CONTINUED TO OCCUPY THE SAID PREMISES AND DENIED TO MAKE PAYMENT OF RENT TO THE ASSESSEE. THE ORIGINAL LICE NSEE M/S. GARWARE NYLONS LTD., HAD PERMITTED ITS ASSOCIATE M/S. GARWA RE MARINE M.A. NO. 862/MUM/09 MR. PRAMODKUMAR SABOO ================= 4 INDUSTRIES LTD., TO USE AND OCCUPY THE SAID PREMISE S WHO CONTINUED TO OCCUPY THE SAID PREMISES EVEN AFTER M/S. GARWARE NYLONS LTD., WENT INTO LIQUIDATION. THE ASSESSEE SOLD DEBENTURE S TOGETHER WITH THE RIGHT TO USE AND OCCUPY TO M/S. LAKSHMI ORGANIC INDUSTRIES LTD., AT A TOTAL CONSIDERATION OF RS.28,84,000 WHICH WAS AS PER THE DEED OF SALE ON STAMP PAPER OF RS.100 ONLY. THUS THE TRIBU NAL HAS HELD THAT THERE IS NO REGISTRATION OF THE PREMISES TRANSFERRE D, NO STAMP DUTY WAS PAID AND THE SALE DEED WAS MADE ONLY ON A STAMP PAPER OF RS.100 AND, THEREFORE, THE ASSESSING OFFICER WAS NO T JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 50C AND REFERRIN G THE MATTER TO THE DVO. ACCORDINGLY, THE TRIBUNAL HAS CONFIRMED T HE ORDER OF THE CIT(A) HOLDING THAT THE ASSESSING OFFICER WAS NOT J USTIFIED TO SUBSTITUTE THE SALE CONSIDERATION ON THE BASIS OF T HE DVOS VALUATION REPORT. 6. THE TRIBUNAL HAS FURTHER NOTED THAT SINCE THE ASSES SEE ALONG WITH 3 OTHER PERSONS SOLD THE DEBENTURES AT A COST OF RS.78,84,000, THEREFORE, THE SHARE BEING 1/4 TH OF THE TOTAL SALE CONSIDERATION COMES TO RS.19,71,000. THE COST OF THE DEBENTURES FOR 4 PERSONS WAS RS.1,50,000. THEREFORE, THE SHARE OF THE ASSESSEE ON ACCOUNT OF COST OF DEBENTURES COMES TO RS.37,500. THEREFORE, THE C IT(A) WAS NOT JUSTIFIED IN DEDUCTING RS.1,50,000 FROM RS.19,71,00 0 ESPECIALLY IN ABSENCE OF ANY MATERIAL BEFORE HIM THAT EACH OF THE CO-OWNER WAS HOLDING 15 DEBENTURES EACH. 7. THE TRIBUNAL FURTHER HELD THAT THE ASSESSEE IN THE INSTANT CASE HAS TRANSFERRED THE DEBENTURES AND HAS NOT SOL D THE IMMOVABLE PROPERTY. EVEN THE CLAIM OF THE ASSESSEE THAT IT H AD TRANSFERRED THE RIGHTS IN THE IMMOVABLE PROPERTY ALSO DOES NOT CARR Y MUCH WEIGHT SINCE THE TRANSFEROR HAS TRANSFERRED ONLY THE DEBEN TURES OF M/S. R.R. INVESTMENTS & ESTATES PVT. LTD. AND BY VIRTUE OF TH E TRANSFER OF THE DEBENTURES THE TRANSFEREE TOOK POSSESSION OF THE PR EMISES. SINCE NO BENEFIT OF INDEXATION IS ALLOWABLE UNDER THE 3 RD PROVISO TO SECTION 48 OF THE ACT ON ACCOUNT OF TRANSFER OF DEBENTURES THE ASSESSEE IS NOT M.A. NO. 862/MUM/09 MR. PRAMODKUMAR SABOO ================= 5 ENTITLED TO CLAIM THE BENEFIT OF INDEXATION. ACCOR DINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE WAS UPHELD. 8. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO T HE MA SUBMITTED THAT IN THE APPEAL FILED BY THE DEPARTMEN T, THE GRIEVANCE WAS THAT THE COST OF DEBENTURES TO THE ASSESSEE WAS RS.37,500 BEING HIS 1/4 TH SHARE AND NOT RS.1,50,000 AS ERRONEOUSLY ASSUMED B Y THE CIT(A) WHICH WAS THE TOTAL COST OF THE DEBENTURES T O ALL THE CO- OWNERS. ACCORDINGLY, THE TRIBUNAL SUBSTITUTED THE FIGURE OF RS.37,500 IN PLACE OF RS.1,50,000. HOWEVER, THE TR IBUNAL DID NOT DECIDE THE ISSUE AS TO WHETHER THE CIT(A) WAS JUSTI FIED OR NOT IN IGNORING THE FAIR MARKET VALUE AS ON 1.4.1981 WHICH AS PER THE ASSESSEE WAS RS.9,19,800 AND AS PER THE DEPARTMENT IT WAS RS.2,89,894. HE SUBMITTED THAT DURING THE COURSE O F HEARING IT WAS SPECIFICALLY POINTED OUT THAT THIS IS A CLEAR CUT E RROR ON THE PART OF THE CIT(A) AS THE BENEFIT OF SUBSTITUTION OF FAIR M ARKET VALUE AS ON 1.4.1981 HAS BEEN GRANTED AND CLAUSE (B)(I) OF SUBS ECTION (2) OF SECTION 55 AND IT HAS GOT NOTHING TO DO WITH THE BE NEFIT OF INDEXATION WHICH IS COVERED BY SECTION 48 OF THE ACT ALONG WIT H THE SECOND AND THIRD PROVISO THERETO. SINCE THE TRIBUNAL HAS NOT DECIDED THIS ISSUE IN SPITE OF DETAILED ARGUMENTS, THEREFORE, A MISTA KE HAS CREPT IN THE ORDER OF THE TRIBUNAL. HE ACCORDINGLY SUBMITTED TH AT THE TRIBUNAL SHOULD RENDER ITS DECISION ON THIS POINT. IN HIS A LTERNATE CONTENTION, HE SUBMITTED THAT THE TRIBUNAL SHOULD RECALL THE OR DER FOR FRESH ADJUDICATION. 9. THE LEARNED DR, ON THE OTHER HAND,, SUBMITTED THAT NO SUCH GROUND HAS BEEN TAKEN BY THE ASSESSEE EITHER BEFOR E THE CIT(A) OR BEFORE THE TRIBUNAL. THE ASSESSEE NOW IS TRYING TO ARGUE A NEW POINT AND TRYING TO REQUEST THE TRIBUNAL TO REVIEW ITS OWN ORDER WHICH IS NOT PERMISSIBLE UNDER THE LAW. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES. AT THE OUTSET, WE MAY HAVE TO MENTION THAT THERE WAS NO M.A. NO. 862/MUM/09 MR. PRAMODKUMAR SABOO ================= 6 SPECIFIC GROUND BY THE ASSESSEE EITHER BEFORE THE C IT(A) OR BEFORE THE TRIBUNAL REGARDING DETERMINATION OF COST OF ACQ UISITION OF THE PROPERTY AS ON 1.4.1981. SECONDLY THE TRIBUNAL IN ITS DETAILED ORDER HAS ALSO GIVEN A FINDING THAT NO BENEFIT OF INDEXAT ION IS ALLOWABLE UNDER THE THIRD PROVISO TO SECTION 48 OF THE ACT ON ACCOUNT OF TRANSFER OF DEBENTURES AND THEREFORE, THE ASSESSEE IS NOT ENTITLED TO CLAIM THE BENEFIT OF INDEXATION. THE TRIBUNAL IN T HE SAID ORDER HAS FURTHER HELD THAT THE ASSESSING OFFICER WAS NOT JUS TIFIED IN INVOKING THE PROVISIONS OF SECTION 50C AND REFERRING THE MAT TER TO THE DVO. IT HAS FURTHER BEEN HELD THAT THE ASSESSEE IN THE INST ANT CASE HAS TRANSFERRED THE DEBENTURES AND NOT SOLD THE IMMOVAB LE PROPERTY. EVEN THE CLAIM OF THE TRANSFER OF RIGHT IN THE IMMO VABLE PROPERTY WAS ALSO REJECTED BY THE TRIBUNAL. THE TRIBUNAL HAS ALSO UPHELD THE ORDER OF THE CIT(A) WHO HAS HELD THAT WHATEVER SALE CONSIDERATION WAS RECEIVED AND SHOWN BY THE ASSESSEE HAS TO BE TR EATED AS THE SALE CONSIDERATION ACTUALLY RECEIVED. THEREFORE, WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE AS SESSEE THAT THE TRIBUNAL HAS NOT ADJUDICATED THE ISSUE AS TO WHETHE R THE CIT(A) WAS JUSTIFIED OR NOT IN IGNORING THE FAIR MARKET VALUE AS ON 1.4.1981 WHICH ACCORDING TO THE ASSESSEE WAS RS.9,19,800 AND AS PER THE DEPARTMENT IT IS RS.2,89,894. THEREFORE, THE QUESTI ON OF CONSIDERING THE FAIR MARKET VALUE AS ON 1.4.1981 IS IMMATERIAL AND NOT AT ALL RELATED TO THE ISSUE ON HAND AND MERELY ACADEMIC IN NATURE. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE MA FILED BY THE ASSESSEE AND THE SAME IS ACCORDINGLY DISMISSED. 11. IN THE RESULT, THE MA FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON 13 TH AUGUST, 2010. SD/- (D.K. AGARWAL) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 13 TH AUGUST, 2010 M.A. NO. 862/MUM/09 MR. PRAMODKUMAR SABOO ================= 7 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT(A)-XIV, MUMBAI, (4) THE CIT-14, MUMBAI, (5) THE DR, C BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO