LATE MULYA B. DAS THROUGH LEGAL HEIR PANKAJ DAS, MUMBAI v. I.T.O. WD.19(2)(4), MUMBAI

ITA 2628/MUM/2012 | 2008-2009
Pronouncement Date: 30-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 262819914 RSA 2012
Assessee PAN AKLPO7335L
Bench Mumbai
Appeal Number ITA 2628/MUM/2012
Duration Of Justice 2 year(s) 11 day(s)
Appellant LATE MULYA B. DAS THROUGH LEGAL HEIR PANKAJ DAS, MUMBAI
Respondent I.T.O. WD.19(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-04-2014
Date Of Final Hearing 23-04-2014
Next Hearing Date 23-04-2014
Assessment Year 2008-2009
Appeal Filed On 18-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI . !'# $% &'() $* + $ # BEFORE SHRI D.MANMOHAN VICE PRESIDENT AND SHRI N.K . BILLAIYA AM ./I.T.A. NO. 2628/MUM/2012 ( - - - - / ASSESSMENT YEAR :2008-09 LATE MULYA B. DAS THROUGH LEGAL HEIR MR. PANKAJ DAS 117 B VAKOLA PIPE LINE BEHIND CHURCH SANTACRUZ (E) MUMBAI-400 055 THE ITO WARD 19(2)(4) MUMBAI . $* ./ /0 ./PAN/GIR NO. : AKLPO 7335L ( .1 /APPELLANT ) .. ( 23.1 / RESPONDENT ) .1 4 $ / APPELLANT BY : ` SHRI PRAKASH JHUNJHUNWALA SHRI SATISH GUPTA 23.1 5 4 $ /RESPONDENT BY : SHRI GANESH BARE 5 6* / DATE OF HEARING :23.4.2014 7- 5 6* / DATE OF PRONOUNCEMENT :30.4.2014 +$8 / O R D E R PER N.K. BILLAIYA AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-30 MUMBAI DT. 6.2.2012 PERTAINING TO ASSES SMENT YEAR 2008-09. 2. THE GRIEVANCES OF THE ASSESSEE CAN BE SUMMED UP AS UNDER: 1) THE LD. CIT(A) ERRED IN CONFIRMING THE ASSESSMENT O RDER WHICH WAS PASSED ON A DEAD PERSON ITA NO.2628/M/12 2 2) IN ALTERNATIVE THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING THE CONSIDERATION OF RS. 32 LAKH S AS SHORT TERM CAPITAL GAIN AS AGAINST LONG TERM CAPITAL GAIN AS CLAIMED BY THE ASSESSEE 3) THE LD. CIT(A) ERRED IN NOT ALLOWING THE EXPENSES I NCURRED ON TRANSFER OF RESIDENTIAL FLAT OF RS. 60 000/- 3. THE RETURN OF INCOME WAS FILED ON 19.9.2008 DECL ARING TOTAL INCOME AT RS. 6 60 500/-. THE RETURN WAS SELECTED FOR SCR UTINY. ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. WHILE SCRUTINIZING THE RETURN OF INCOME THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE HAS DECLARED INCOME FROM LONG TERM CAPITAL GAIN AND SALE OF FLAT. THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS IN RESPECT OF THE SALE OF PROPERTY AND THE EXPENSES CLAIMED THEREON. AFTER C ONSIDERING THE DETAILS FILED BY THE ASSESSEE THE AO OBSERVED THAT THE ASS ESSEE HAS BEEN ALLOTTED FLAT WHICH HE HAS SOLD FREE OF COST BY THE DEVEL OPERS IN LIEU OF SURRENDERING/VACATING THE TENANTED STRUCTURE. THE ASSESSEE GOT THE POSSESSION OF THE FLAT VIDE AGREEMENT DT. 15.7.2005 . THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS SOLD HIS TENANCY RIG HTS TO THE DEVELOPER WHO IN TURN HAS PROVIDED THE ASSESSEE WITH A HOUSE OF THE SAME SIZE FREE OF COST. THE AO WAS OF THE FIRM BELIEF THAT SINCE THE ASSESSEE BECAME THE OWNER OF THE SAID FLAT ON 15.7.2005 AND THE PROPERT Y HAS BEEN SOLD WITHIN A PERIOD OF 36 MONTHS THE GAINS ARISING ON THE TRA NSFER IS TO BE TAXED AS SHORT TERM CAPITAL GAIN AND SINCE THE ASSESSEE HAS GOT THE FLAT FREE OF COST THE COST OF ACQUISITION WAS TAKEN AT RS. NIL. THE AO WENT ON TO ADD THE ENTIRE SALE CONSIDERATION OF RS. 32 00 000/- AS SHO RT TERM CAPITAL GAIN. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS EXPLAINED TO THE LD. CIT(A) THAT THE ASSESSEE WAS O WNING A TENANCY RIGHT ITA NO.2628/M/12 3 IN THE FLAT SINCE 1960 AS A TENANT. IT WAS FURTHER EXPLAINED ON 15.7.2005 THE ASSESSEE ENTERED IN AGREEMENT WITH THE BUILDER WHEREBY HE SURRENDERED HIS TENANCY RIGHT IN LIEU OF A FLAT OF SAME SIZE IN NEW BUILDING. THE SAID FLAT WAS SUBSEQUENTLY SOLD FOR A CONSIDERATION OF RS. 32 LAKHS. IT WAS EXPLAINED THAT THE NEW FLAT WAS ACQU IRED PURSUANT TO THE TENANCY RIGHTS WHICH WAS NOTHING BUT EXTENSION OF T HE EXISTING TENANCY RIGHTS AND CONVERSION OF THE SAME INTO AN OWNERSHIP RIGHT. THEREFORE THE ASSESSEE HAS RIGHTLY COMPUTED LONG TERM CAPITAL GA IN ON THE SALE OF FLAT. 4.1. AFTER CONSIDERING THE FACTS AND THE SUBMISSION S THE LD. CIT(A) OBSERVED THAT THERE WERE TWO TRANSACTIONS. ONE WHE N THE TENANCY RIGHT WAS SURRENDERED AND THE ASSESSEE GOT A NEW FLAT ON OWNERSHIP BASIS. SECOND TRANSACTION TOOK PLACE WHEN THE ASSESSEE SOL D THE NEW FLAT FOR A CONSIDERATION OF RS. 32 LAKHS. THE LD. CIT(A) FURT HER OBSERVED THAT FOR OBTAINING THE TENANCY RIGHT THE ASSESSEE DID NOT P AY ANY COST. FURTHER ON SURRENDERING OF TENANCY RIGHT THE ASSESSEE GOT A NEW ASSET IN THE FORM OF A FLAT. THE ASSESSEE BECAME THE OWNER OF THE SAID F LAT ON 15.7.2005. THE LD. CIT(A) FURTHER OBSERVED THAT SINCE THE FLAT WAS SOLD WITHIN A PERIOD OF 36 MONTHS THE GAIN ARISING ON TRANSFER HAS BEEN RI GHTLY TREATED AS SHORT TERM CAPITAL GAIN. THE LD. CIT(A) CONFIRMED THE AC TION OF THE AO. THE LD. CIT(A) FURTHER REJECTED THE ADMISSION OF AD DITIONAL EVIDENCE RELATING TO THE VALUATION OF THE FLAT AS ON 15.7.20 05 HOLDING THAT THERE IS NO COST OF ACQUISITION OF THE NEW FLAT. 5. AGGRIEVED BY THIS THE ASSESSEE IS BEFORE US. T HE LD. COUNSEL FOR THE ASSESSEE STARTED WITH THE ADDITIONAL PLEA THAT THE AO HAS ERRED IN ISSUING NOTICES ON A DEAD PERSON AND THEREFORE THE ASSESSMENT IS BAD IN LAW. TO SUBSTANTIATE THE LD. COUNSEL RELIED UPON VARIOUS JUDICIAL DECISIONS FILED BEFORE US IN THE FORM OF PAPER BOOK . ITA NO.2628/M/12 4 6. WE HAVE CAREFULLY PERUSED THE JUDICIAL DECISIONS RELIED UPON BY THE ASSESSEE. WE FIND THAT IN ALL THOSE CASES NOT ONLY THE NOTICES WERE ISSUED ON A DEAD PERSON BUT THE ASSESSMENT WAS ALSO COMPLE TED ON THE DEAD PERSON WHEREAS IN THE CASE BEFORE US WE FIND THAT THE NOTICE WAS ISSUED IN THE NAME OF THE DEAD PERSON BUT THE ASSESSMENT HAS BEEN PROPERLY FRAMED IN THE HANDS OF THE LEGAL HEIR WHICH MEANS THAT THE AO HAS SUBSTITUTED THE DECEASED WITH THE LEGAL HEIR. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE LEGALITY OF THE ASSESSMENT ORDER. MOREOVER TH E FIRST APPEAL WAS FILED IN THE NAME OF THE LEGAL HEIR AND THE FIRST APPELLA TE AUTHORITY HAS DECIDED THE APPEAL IN THE NAME OF THE LEGAL HEIR. 6.1. ON MERIT OF THE CASE THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE FACTS STATING THAT THE ASSESSEE WAS A TENANT SINCE 1960 AND THAT TENANCY RIGHTS WAS CONVERTED INTO AN OWNERSHIP RIGHTS IN A FLAT BY VIRTUE OF AN AGREEMENT WITH THE BUILDER. THE FLAT WAS SUBSEQUEN TLY TRANSFERRED GIVING RISE TO LONG TERM CAPITAL GAIN. THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS ABRAR ALVI (247 ITR 312) HAS CONFIRMED THE ORDER OF THE TRIBUNAL WHEREIN THE TRIBUNAL HAS HELD THAT WHAT WAS TRANSFERRED VIDE SALE DEED WAS NOT TENANCY RIGHT BUT THE BUILDI NG ITSELF AND THEREFORE COST OF OWNERSHIP RIGHTS WAS TO BE ALLOWED AS DEDUC TION FOR WORKING OUT CAPITAL GAINS. SIMILARLY THE TRIBUNAL MUMBAI BE NCHES IN THE CASE OF BALMUKUND P. ACHARYA VS ITO 133 TTJ 640 HAS HELD THAT ASSET SOLD BY THE ASSESSEE IS THE PROPERTY WHICH WAS GIVEN TO HIM ON SURRENDER OF TENANCY RIGHTS. COST OF ACQUISITION OF THIS ASSET IS THE MARKET VALUE OF THE TENANCY RIGHT AS ON THE POINT OF TIME WHEN IT WAS S URRENDERED. IT IS NOT IN DISPUTE THAT THE ASSESSEE CAME INTO POSSESSION OF T HE SOLD FLAT ON SURRENDER OF HIS TENANCY RIGHTS. IT IS ALSO NOT IN DISPUTE THAT THE FLAT SOLD ITA NO.2628/M/12 5 BY THE ASSESSEE IS THE PROPERTY WHICH WAS GIVEN TO HIM ON SURRENDER OF TENANCY RIGHTS. 6.2. DRAWING SUPPORT FROM THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF ABRAR ALVI (SUPRA) WE DI RECT THE AO TO RECOMPUTE THE CAPITAL GAIN TAX LIABILITY BY TAKING THE COST OF ACQUISITION OF THE FLAT AS MARKET VALUE OF THE TENANCY RIGHT AS ON THE POINT OF TIME WHEN IT WAS SURRENDERED. WE FIND THAT THE ASSESSEE HAS S UBMITTED A VALUATION REPORT WHICH WAS DISCARDED BY THE LD. CIT(A). THE A O IS DIRECTED TO CONSIDER THE VALUATION REPORT OR DETERMINE THE VALU E BY BRINGING COGENT DEMONSTRATIVE MATERIAL ON RECORD AFTER GIVING A REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2014 +$8 5 - *$ 9 :+ ; 30.4.2014 5 < SD/- SD/- (D. MANMOHAN ) (N. K. BILLAIYA ) !'# / VICE PRESIDENT $* + / ACCOUNTANT MEMBER MUMBAI; :+ DATED 30.4.2014 . . ./ RJ SR. PS ITA NO.2628/M/12 6 +$8 +$8 +$8 +$8 5 55 5 26& 26& 26& 26& =$&-6 =$&-6 =$&-6 =$&-6 / COPY OF THE ORDER FORWARDED TO : 1. .1 / THE APPELLANT 2. 23.1 / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. &?< 26 / DR ITAT MUMBAI 6. < @ / GUARD FILE. +$8 +$8 +$8 +$8 / BY ORDER 3&6 26 //TRUE COPY// ! !! ! / / / / / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI