SANJAY DUTT, MUMBAI v. ACIT 11(1), MUMBAI

ITA 1567/MUM/2010 | 2005-2006
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 156719914 RSA 2010
Assessee PAN THMAR2011S
Bench Mumbai
Appeal Number ITA 1567/MUM/2010
Duration Of Justice 1 year(s) 29 day(s)
Appellant SANJAY DUTT, MUMBAI
Respondent ACIT 11(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 25-03-2010
Assessment Year 2005-2006
Appeal Filed On 26-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI S V MEHROTRA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 1567/MUM/2010 (ASSESSMENT YEAR 2005-06) SANJAY DUTT 1101 IMPERIAL HEIGHTS SMT. N DUTT MARG PALI HILL BANDRA (W) MUMBAI PAN:AAJPD2027K . APPELLANT VS THE ACIT MUMBAI. RESPONDENT APPELLANT BY : SHRI STANY SALDANHA RESPONDENT BY : SHRI S K SINGH O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.12.2009 OF CIT(A) FOR THE ASSESSMEN T YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIV E GROUNDS OF APPEAL NO.4 AND 5 AS UNDER : ITA NO. 1567/MUM/2010 (ASSESSMENT YEAR 2005-06) 2 4. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED AO OUGHT TO HAVE APPRECIATE D THAT ALTHOUGH CONVERSION BY THE OWNER OF A CAPITAL ASSET INTO STOCK IN TRADE IS A DEEMED TRANSFER UNDE R THE PROVISIONS OF SECTION 45(2) OF THE ACT. THE LIA BILITY TO CAPITAL GAINS TAX IS POSTPONED TO THE YEAR IN WH ICH THE STOCK-IN-TRADE IS ACTUALLY SOLD OR OTHERWISE TRANSFERRED BY THE APPELLANT. THE LEANED COMMISSIONER OF INCOME TAX(A) HAS ERRED IN CONFIRMING THE VIEW OF THE LEARNED ASSESSING OFFICE R; 5. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN DIN LAW THE LEARNED ASSESSING OFFICER ERRED IN NOT GRANTING EXEMPTION UNDER SECTION 54 OF THE AT. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS CONFIRMED DISALLOWANCE OF SUCH EXEMPTION 3. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIL M STAR AND HELD CAPITAL ASSET BEARING SURVEY NO.C/1408 C/1409 /C/1411 AND C/1412D BANDRA (WEST) MUMBAI. THE ASSESSEE IS HAVING HOLDS 27% SHARE IN THESE PLOT OF LAND AND THE BALA NCE PERCENTAGES OF 73% BELONG TO HIS FATHER LATE SHRI SUNIL DUTT THE FATHER OF THE ASSESSEE WHICH DIVIDED AMONG THE LEGAL HEIRS OF LATE SHRI SUNIL DUTT. THE PROPERTY IN QU ESTION WAS SOLD DURING THE YEAR UNDER CONSIDERATION IN PARTS. THE ASSESSEE HAS SHOWN VALUATION OF PROPERTY AT RS.15 22 66 333/- IN RESPECT OF THE FATHER OF THE A SSESSEE WITHOUT ANY VALUATION CERTIFICATE. THE ASSESSEE SHO WN VALUE AT ITA NO. 1567/MUM/2010 (ASSESSMENT YEAR 2005-06) 3 RS.5 63 17 685/-. SINCE THERE WAS NO VALUATION CER TIFICATE THE AO DID NOT ACCEPT THE VALUE OF THE ASSET. THEREFOR E THE AO WAS OF THE VIEW THAT THERE WAS A SHORT VALUATION O F THE PROPERTY AND HENCE THE SUBSTANTIAL QUANTUM OF CAPIT AL GAINS WAS ESCAPED ASSESSMENT. ON THE BASIS OF THIS FAC T THE AO ISSUED NOTICE U/S 148 TO THE ASSESSEE. IN REPLY TO THE NOTICE ISSUED UNDER SECTION 148 THE ASSESSEE FILED A LETT ER DATED 1.03.2008 IN WHICH HE HAS CONTENDED THAT THE RETUR N FILED EARLIER BE TREATED AS THE RETURN FILED IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE ACT. THE ASSESSEE ALSO CLAI MED THE BENEFIT U/S 54 OF THE ACT. THE AO DID NOT FIND FA VOUR WITH THE SUBMISSIONS OF THE ASSESSEE AND MADE ADDITION TO T HE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL THE CIT(A) CONFIRMED THE ACTION OF TH E AO. 5. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEA RNED DR AND CONSIDERED THE RELEVANT RECORD. AT THE OUTS ET WE NOTE THAT IN THE CASE OF THE FATHER OF THE ASSESSEE THE IDENTICAL ISSUE HAS BEEN CONSIDERED AND ADJUDICATED BY THI S TRIBUNAL IN I.T.A.NO. 2333/MUM/2009 (ASSESSMENT YEAR : 2005- 06) VIDE ORDER DATED 20TH AUGUST 2010. THIS TRIBUNAL HAS R EMITTED THE MATTER TO THE RECORD OF THE AO BY HOLDING AS UNDER : ITA NO. 1567/MUM/2010 (ASSESSMENT YEAR 2005-06) 4 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. CONSIDERING THE REASONS GIVEN IN THE APPLICATION FO R ADMISSION OF ADDITIONAL EVIDENCE AND CONSIDERING VARIOUS AGREEMENTS FILED AS ADDITIONAL EVIDENCE WE ARE OF THE VIEW THAT TO ASCERTAIN CORRECT FACTS ADDITIONAL EVIDENCE SOUGHT TO BE FILED SHOULD BE ADMITTED AS ADDITIONAL EVIDENCE. THESE DOCUMENTS ARE NECESSARY FOR DETERMINATION OF THE ISSUE THAT ARISES FOR CONSIDERATION IN THE ASSESSMENT AND THE APPEAL. PRIMA FACIE ON A CURSORY GLANCE OF THESE AGREEMENTS WE FIND IT TO BE A DEVELOPMENT AGREEMENT. THERE COULD BE AN INCIDENCE OF CAPITAL GAIN CHARGEABLE TO TAX ON SUCH DEVELOPMENT AGREEMENTS. THERE ARE SEVERAL AGREEMENTS IN THIS REGARD BETWEEN THE OWNERS OF THE PROPERTY AND THE DEVELOPERS. THE ASSESSING OFFICER IS AT LIBERTY TO EXAMINE ALL THESE DOCUMENTS AND ALSO ASCERTAIN THE YEAR OF LEGAL HEIRS OF LATE SHRI SUNIL DUTT 8 TRANS FER UNDER THE DEVELOPMENT AGREEMENT AND BRING TO TAX ANY CAPITAL GAIN THAT MIGHT ARISE CONSEQUENT TO SUC H DEVELOPMENT AGREEMENT IN THE APPROPRIATE YEAR I.E. YEAR OF TRANSFER. THERE COULD ALSO BE INSTANCE OF CAPITAL GAIN IN THE HANDS OF THE OWNERS OF THE PROP ERTY WHEN THEY SELL CONSTRUCTED AREA ALLOTTED TO THEM BY THE DEVELOPERS UNDER THE DEVELOPMENT AGREEMENT. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE YE AR OF TRANSFER OF SUCH PROPERTY AND BRING IT TO TAX IN THE APPROPRIATE ASSESSMENT YEAR. THE ASSESSEE WILL BE A T LIBERTY TO PUT FORTH THE CLAIM REGARDING EXEMPTION AND ALSO ALL ASPECTS OF COMPUTATION OF CAPITAL GAIN. TH E ASSESSING OFFICER WILL DECIDE THE SAME IN ACCORDANC E WITH LAW. THE ASSESSEE WILL ALSO BE AT LIBERTY TO ESTABLISH THAT THERE WAS NO CONVERSION OF CAPITAL ASSET IN TO STOCK-IN-TRADE AND THAT SUCH A CLAIM MA DE IN THE RETURN OF INCOME WAS ERRONEOUS. IN THIS REGA RD WE ARE OF THE VIEW THAT LIABILITY TO TAX DEPEND ON PROVISIONS OF LAW AND A WRONG CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME CANNOT BE THE BASI S ON WHICH LIABILITY TO TAX CAN BE FASTENED ON THE ASSESSEE. THE ASSESSING OFFICER IS ALSO AT LIBERTY TO PROCEED AGAINST ANY OTHER PERSON IN WHOSE HANDS CAPITAL GAIN IN RESPECT OF ANY OF THE TRANSFERS REF ERRED TO ABOVE SHOULD BE BROUGHT TO TAX. WITH THESE OBSERVATIONS WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND REMAND THE CASE TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION ON THE LINES INDICATED ABOV E. ITA NO. 1567/MUM/2010 (ASSESSMENT YEAR 2005-06) 5 6. SINCE THE SUBJECT MATTER OF THE ISSUE IS COMMON IN BOTH THE APPEALS AND THE FACTS ARE ALSO IDENTICAL THERE FORE FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE CASE O F LATE SHRI SUNIL DUTT THE FATHER OF THE ASSESSEE WE SET ASID E THE ISSUE TO THE RECORD OF THE AO TO DECIDE THE SAME IN TERM S OF THE DIRECTION GIVEN BY THIS TRIBUNAL IN THE CASE OF LA TE SUNIL DUTT. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH MAR 2011 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 25 TH MAR 2011 SRL:9311 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI