Yoginder Mohal Sehgal,, Chandigarh v. ACIT,, Chandigarh

CO 36/CHANDI/2010 | 2005-2006
Pronouncement Date: 03-11-2011 | Result: Dismissed

Appeal Details

RSA Number 3621523 RSA 2010
Assessee PAN ADYPS6814K
Bench Chandigarh
Appeal Number CO 36/CHANDI/2010
Duration Of Justice 1 year(s) 2 month(s) 29 day(s)
Appellant Yoginder Mohal Sehgal,, Chandigarh
Respondent ACIT,, Chandigarh
Appeal Type Cross Objection
Pronouncement Date 03-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 03-11-2011
Date Of Final Hearing 03-11-2011
Next Hearing Date 03-11-2011
Assessment Year 2005-2006
Appeal Filed On 05-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 550/CHD/2010 ASSESSMENT YEAR: 2005-06 THE ACIT VS SHRI YOGINDER MOHAN SEHGAL CIRCLE 1(1) CHANDIGARH CHANDIGARH PAN NO. ADYPS6814K & C.O. NO. 36/CHD/2010 (IN ITA NO. 550/CHD/2010) ASSESSMENT YEAR: 2005-06 SHRI YOGINDER MOHAN SEHGAL VS THE ACIT CHANDIGARH CIRCLE 1 (1) CHANDIGARH PAN NO. ADYPS6814K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL RESPONDENT BY : SHRI G.K.JAIN DATE OF HEARING : 03.11.2011 DATE OF PRONOUNCEMENT : 03.11.2011 ORDER PER H.L.KARWA VP THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A) CHANDIGARH DATED 22.2.2010 RELATING TO ASSESSMENT YEAR 2005-06. 2 2. THE ONLY GROUND RAISED BY THE REVENUE IN THE APP EAL READS AS UNDER:- 1. WHETHER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1 33 54 388/- AS THE ASSESSING OFFICER HAD NOWHERE REJECTED THE CONTENTION OF THE ASSESSEE THAT ONLY 6 0% OF THE PLOT WAS TRANSFERRED TO BUILDER BUT THE CAPITAL GAIN EARNED BY THE ASSESSEE ON ACCOUNT OF HIS SHARE OF 4 0% IS OVER AND ABOVE OF WHAT HE HAD DECLARED FOR 60% SHAR E OF PROPERTY. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM SALARY HOUSE PROPERTY CAPITAL GAIN AND OTHER SOUR CES. IN THIS CASE ORIGINAL ASSESSMENT WAS FRAMED ON 9.4.2007 U/S 143( 3) OF THE INCOME TAX ACT 1961 (IN SHORT 'THE ACT') AT AN INCOME OF RS. 61 38 784/-. THE CIT(A)-I IN EXERCISE OF HIS POWERS U/S 263 OF THE A CT VIDE ORDER DATED 22.7.2008 SET ASIDE THE ABOVE ASSESSMENT ORDER AND RESTORED THE MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATIO N. THE ORDER U/S 263 OF THE ACT WAS CHALLENGED BY THE ASSESSEE IN APPEAL BE FORE THE TRIBUNAL IN ITA NO. 869/CHANDI/2008 AND THE TRIBUNAL DISMISSED THE APPEAL OF THE ASSESSEE. THEREAFTER THE ASSESSING OFFICER REFRAM ED THE ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 30.11.2009. FRO M THE DETAILS FILED DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICE R NOTICED THAT THE ASSESSEE HAS TWO HOUSE PROPERTIES IN THE RELEVANT Y EARS. 1) HOUSE NO. 1062 SECTOR 16 CHANDIGARH 2) HOUSE NO. 79 ANAND LOK NEW DELHI. 4. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE ENTERED INTO A COLLABORATION AGREEMENT WITH A BUILD ER M/S SALUJA CONSTRUCTION COMPANY LTD ON 4.6.2004 TO DEMOLISH TH E EXISTING BUILDING 3 AT PLOT NO. 79 AT ANAND LOK NEW DELHI MEASURING 3 80 SQUARE YARDS AND CONSTRUCTED NEW BUILDING ON THE FOLLOWING TERMS :- (I) THE BUILDER SHALL ARRANGE SANCTION FOR NEW CONSTRUC TION (II) CONSTRUCT BASEMENT GROUND FLOOR FIRST FLOOR AN D SECOND FLOOR (III) CONSTRUCT 3 SERVANT QUARTERS AND 3 CAR PARKING SPAC ES (IV) THE BUILDER SHALL BEAR ITS COST OF DISMANTLING / OBTAINING PERMISSION / SANCTIONS AND COST IN LIEU THEREOF SH ALL GET 60% OF THE LAND 2 FLOORS NAMELY 1 ST AND 2 ND TWO SERVANT QUARTERS AND TWO CAR PARKING SPACES AND A S RIGHT TO USE COMMON SPACE & TERRACE ON 2 ND FLOOR. (V) THE BUILDER SHALL PAY TO THE ASSESSEE RS. 1 90 00 000/- IN ADDITION TO AMOUNT SPENT BY HIM ON CONSTRUCTION ETC. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED GOVERNMENT APPROVED VALUERS REPORT IN SUPPORT OF MARKET PRICE OF 60% LAND AS ON 1.4.1981 AND COST OF BUILDING EXISTING O N 79 ANAND LOK NEW DELHI AS ON 1.4.1981 AND INDEXED THE SAME AT RS. 7 32 302/- AND RS. 4 55 424/- RESPECTIVELY. THE ASSESSEE ALSO CLAIMED DEDUCTION U/S 54EC AT RS. 1 20 00 000/-. THE ASSESSEE HAS ALSO OBTAINED VALUERS REPORT ON COST OF CONSTRUCTION OF BASEMENT AND GROUND FLOOR INCURR ED BY SALUJA CONSTRUCTIONS AT RS. 29 78 965/-. THE ASSESSING O FFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE C ALCULATION OF THE CAPITAL GAIN. THE ASSESSING OFFICER MADE FOLLOWING OBSERVA TIONS IN PARA 6.4 & 6.5 OF THE ASSESSMENT ORDER:- 6.4.AS PER COLLABORATION AGREEMENT EXECUTED ON 4. 6.2004 BETWEEN THE ASSESSEE AND THE BUILDER M/S SALUJA CONSTRUCTIONS COMPANY LTD A COPY OF WHICH HAS BEEN SUBMITTED DURING THE ASSESSMENT PROCEEDINGS THE AS SESSEE IS ENTITLED TO:- 4 A) ENTIRE BASEMENT B) ENTIRE GROUND FLOOR INCLUDING FRONT LAWN AND REAR COURTYARD. C) ONE SERVANT QUARTER CUM GARAGE MEASURING 8 X 16-6 IN THE END OF DRIVEWAY AT GROUND LEVEL. D) ONE CAR PARKING SPACE IN THE DRIVEWAY INSIDE THE BUILDING E) USE OF COMMON AREAS FACILITIES AND SERVICES F) 40% UNDIVIDED INDIVISIBLE AND IMPARTIBLY OWNERSHIP RIGHTS IN THE PLOT OF LAND MEASURING 380 SQUARE YDS . FURTHER THE BUILDER DEVELOPING THE PROPERTY USIN G ITS INFRASTRUCTURAL FACILITIES AND AT ITS OWN COST SHAL L PAY A SUM OF RS. 1 90 000/- TO THE OWNER AS CONSIDERATION AGAINS T THE RIGHTS IN THE PROPERTY TO THE TRANSFERRED IN FAVOUR OF THE BUILDER OR ITS NOMINEE DURING OR ON THE COMPLETION OF CONSTRUCTION OF THE BUILDING THE BUILDER SHALL BE ENTITLED TO THE FOLL OWING : A) ENTIRE FIRST FLOOR B) ENTIRE SECOND FLOOR C) ENTIRE TERRACE OVER AND ABOVE THE ENTIRE SECOND FLO OR D) TWO SERVANT QUARTERS (I.E. ONE EACH ON FIRST AND SECOND FLOOR OF THE GARAGE BLOCK) E) TWO CAR PARKING SPACES IN THE DRIVEWAY INSIDE THE BUILDING F) USE OF COMMON AREAS FACILITIES AND SERVICES G) 60% UNDIVIDED INDIVISIBLE AND IMPARTIBLY OWNERSHIP RIGHTS IN THE PLOT OF LAND MEASURING 380 SQUARE YDS . 6.5 IT IS CLEAR THAT THE CONSIDERATION OF RS. 1 90 00 000/- WAS RECEIVED BY THE ASSESSEE IN CASH IS ONLY FOR 60 % OF THE BUILDING WHICH IS THE PORTION OF THE PLOT TO BE REC EIVED BY THE BUILDER. AS REGARDS THE BALANCE 40% THE OWNER REC EIVED THE CONSIDERATION IN KIND IN THE FORM OF ENTIRE BASEMEN T ENTIRE GROUND FLOOR INCLUDING FRONT LAWN AND REAR COURTYAR D ONE 5 SERVANT QUARTER-CUM-GARAGE ONE CAR PARKING SPACE & USE OF COMMON AREAS FACILITIES & SERVICES. THE VALUE OF SALE CONSIDERATION IS TO BE WORKED OUT IN TOTALITY IN VI EW OF THE PROVISIONS OF SECTION 48 OF THE INCOME TAX ACT. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBTAINED INFORMATION U/S 133(6) OF THE ACT FROM M/ S SALUJA CONSTRUCTIONS COMPANY LTD NEW DELHI. THE SAID COMPANY PROVIDED THE COPIES OF THE TWO SALES DEEDS OF THE BALANCE TWO FLOORS OF THE AB OVE SAID PROPERTY SOLD BY THE COMPANY. THE TOTAL SALE CONSIDERATION OF THE SE TWO SALE DEEDS WHICH IS THE CONSIDERATION FOR THE 60% SHARE IS RS. 2 45 00 000/-. ACCORDING TO ASSESSING OFFICER THESE SALES DEEDS WERE EXECUTED DURING THE SAME PERIOD THEREFORE THE TOTAL VALUE OF 100% SHARE SOLD BY THE ASSESSEE WAS COMPUTED AT RS. 4 08 33 333/-. THE A SSESSING OFFICER HELD THAT THE VALUE OF CONSIDERATION RECEIVED IN KIND CA ME TO RS. 1 63 33 333/- AS PER CALCULATION GIVEN BELOW:- IF 60% OF THE TOTAL CONSIDERATION COMES TO - RS. 2 45 00 000/- THEN 100% OF THE TOTAL CONSIDERATION WOULD COME TO - RS. 4 08 33 333/- BALANCE 40% OF THE TOTAL CONSIDERATION RECEIVED IN KIND - RS. 1 63 33 333/- 7. THE ASSESSING OFFICER HAS ALLOWED EXEMPTION U/S 54 OF THE ACT AMOUNTING TO RS. 29 78 965/- ON ACCOUNT OF NEW PROP ERTY PURCHASED. THEREAFTER THE ASSESSING OFFICER DETERMINED THE AM OUNT OF RS. 1 33 54 368/- ( RS. 1 63 33 333 29 78 965/-) AS T HE CAPITAL GAINS EARNED BY THE ASSESSEE ON ACCOUNT OF HIS SHARE OF 40% OVER AND ABOVE WHAT HE HAS DECLARED FOR 60% SHARE OF PROPERTY. 6 8. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 9. THE CIT(A) DELETED THE ADDITION OF RS. 1 33 54 3 68/- OBSERVING AS UNDER:- 12. I HAVE GONE THROUGH THE ASSESSMENT RECORDS COLLABORATION AGREEMENT ORDER OF CIT U/S 263 AND SUBMISSIONS OF LD. COUNSEL. I AGREE WITH THE COUNS EL THAT AS PER EVIDENCE ON RECORD THE APPELLANT TRANSFERRED 6 0% AND NOT 100%. IN MY VIEW THE STAND TAKEN BY THE APPELLANT IS FURTHER STRENGTHENED BECAUSE: THE ASSESSING OFFICER HAS NOWHERE REJECTED THE CONTENTION OF THE APPELLANT THAT ONLY 60% OF THE PL OT WAS TRANSFERRED TO BUILDER. THE ASSESSING OFFICER HAS NOT REJECTED THE CONTENTI ON OF THE AFFIDAVIT THROUGH CROSS-EXAMINATION. THE ASSESSING OFFICER HAS NOWHERE DISCUSSED THE SUBMISSIONS FO THE PAP NOR RECORDED ANY REASONS AS TO WHY 100% SHARE OF THE PLOT HAS BEEN TRANSFERRED IN HIS VIEW. THE ASSESSING OFFICER HAS NOT RECORDED ANY REASONS AS TO WHY THE AFFIDAVIT OF THE APPELLANT WAS REJECT ED. 13. IN THE CIRCUMSTANCES EXPLAINED ABOVE I AM SATI SFIED THAT THE APPELLANT TRANSFERRED 60% OF THE OWNERSHIP IN THE P LOT SINCE THIS IS EXACTLY WHAT IS SUBSTANTIATED BY THE RECORD ITSELF AND ALL RELEVANT MATERIAL AND DOCUMENTS PLACED BEFORE ME. THE ADDIT ION MADE ON THIS GROUND AMOUNTING TO RS. 1 33 54 388/- IS HEREB Y DELETED ALLOWING ASSESSEES GROUND ON THIS ISSUE. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PE RUSED THE COLLABORATION AGREEMENT ENTERED INTO BETWEEN THE AS SESSEE AND M/S SALUJA CONSTRUCTION COMPANY LTD COPY OF WHICH IS AVAILABLE AT PAGES 12 7 TO 23 OF THE ASSESSEES PAPER BOOK. AS PER THE SAI D AGREEMENT THE ASSESSEE WAS ENTITLED TO :- A) ENTIRE BASEMENT B) ENTIRE GROUND FLOOR INCLUDING FRONT LAWN AND REAR COURTYARD. C) ONE SERVANT QUARTER CUM GARAGE MEASURING 8 X 16-6 IN THE END OF DRIVEWAY AT GROUND LEVEL. D) ONE CAR PARKING SPACE IN THE DRIVEWAY INSIDE THE BU ILDING E) USE OF COMMON AREAS FACILITIES AND SERVICES F) 40% UNDIVIDED INDIVISIBLE AND IMPARTIBLY OWNERSHIP RIGHTS IN THE PLOT OF LAND MEASURING 380 SQUARE YDS . 11. FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE R ETAINED 40% OF UNDIVIDED INDIVISIBLE AND IMPARTIBLE OWNERSHIP RIG HTS IN THE PLOT OF LAND MEASURING 380 SQUARE YARDS. FROM THE SAID AGREEMEN T IT IS ALSO CLEAR THAT THE ASSESSEE TRANSFERRED ONLY 60% OWNERSHIP RI GHTS IN THE PLOT MEASURING 380 SQUARE YARDS. AS PER AGREEMENT DATED 4.6.2004 M/S SALUJA CONSTRUCTION COMPANY LTD AGREED TO DEMOLISH THE EXI STING STRUCTURE AND CONSTRUCT BASEMENT GROUND FLOOR FIRST FLOOR SECO ND FLOOR WITH TERRACE AT ITS OWN COSTS AND EXPENSES AFTER TAKING NECESSARY P ERMISSION FROM THE CONCERNED AUTHORITIES. THE COMPANY ALSO AGREED TO PAY RS. 1 90 00 000/- TO THE ASSESSEE BESIDES RAISING OF EN TIRELY NEW CONSTRUCTION ON THE SAID PROPERTY AFTER DEMOLISHING THE EXISTING CONSTRUCTION. THE ASSESSEE AGREED TO TRANSFER THE ENTIRE FIRST FLOOR 2 ND FLOOR ENTIRE TERRACE OVER THE SECOND FLOOR TWO SERVANT QUARTERS AND TWO CAR PARKING USE OF COMMON AREAS FACILITIES AND SERVICES AND 60% UNDIVI DED INDIVIDUAL AND IMPARTIABLE OWNERSHIP RIGHT IN THE SAID PLOT OF LAN D MEASURING 380 SQ. YARDS COMPRISING IN 79 ANAND LOK NEW DELHI. 8 12. WE FIND THAT THE ASSESSING OFFICER HAS NOWHERE REJECTED THE CLAIM OF THE ASSESSEE THAT ONLY 60% OF THE PLOT WAS TRANS FERRED TO THE BUILDER. THEREFORE THERE WAS NO JUSTIFICATION IN COMPUTING THE CAPITAL GAINS IN RESPECT OF 40% SHARE IN THE PROPERTY AT ANAND LOK NEW DELHI MEASURING 380 SQUARE YARDS. AS PER THE AGREEMENT THE ASSESSE E NEVER TRANSFERRED / SOLD 40% SHARE IN THE PROPERTY. CONSIDERING THE EN TIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE ARE OF THE VI EW THAT THE CIT(A) HAS CORRECTLY OBSERVED THAT THE ASSESSEE HAS TRANSF ERRED 60% OF THE OWNERSHIP IN THE PLOT ON WHICH THE ASSESSEE HAS PAI D THE CAPITAL GAINS TAX. THUS THERE WAS NO JUSTIFICATION IN COMPUTING THE C APITAL GAINS ON ACCOUNT OF 40% OF THE SHARE IN THE PROPERTY WHICH THE ASSE SSEE NEVER TRANSFERRED / SOLD TO M/S SALUJA CONSTRUCTION COMPANY LTD. WE TH EREFORE DO NOT SEE ANY MERIT IN THE GROUND OF APPEAL AND ACCORDINGLY T HE SAME IS DISMISSED. C.O. NO. 36/CHD/2011 13. AS PER LETTER DATED 14.4.2011 THE ASSESSEE HAS WITHDRAWN THE CROSS OBJECTION. THE LETTER SUBMITTED BY THE ASSESSEE IS PLACED ON RECORD. IN VIEW OF THE ABOVE WE DISMISS THE CROSS OBJECTION A S WITHDRAWN. 14. IN THE RESULT APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF NOVEMBER 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 3 RD NOVEMBER 2011 RKK 9 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR