VIKRAM KUMAR RATANCHAND JAIN, MUMBAI v. ITO WD 14(1)(2), MUMBAI

ITA 3231/MUM/2010 | 2007-2008
Pronouncement Date: 30-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 323119914 RSA 2010
Assessee PAN AACPJ9968L
Bench Mumbai
Appeal Number ITA 3231/MUM/2010
Duration Of Justice 1 year(s) 7 month(s) 3 day(s)
Appellant VIKRAM KUMAR RATANCHAND JAIN, MUMBAI
Respondent ITO WD 14(1)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 30-11-2011
Date Of Final Hearing 16-11-2011
Next Hearing Date 16-11-2011
Assessment Year 2007-2008
Appeal Filed On 26-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER I.T.A. NO. 3231/MUM/2010 ASSESSMENT YEAR : 2007-08. SHRI VIKRAM KUMAR RATANCHAND JAIN THE INCOME-TAX OFFICER 28/38 VITHALWADI SHOP NO. 43 VS. WARD-14(1) L.K. MARKET 2 ND FLOOR MUMBAI. MUMBAI 400002. PAN : AACPJ 9968L APPELLANT. RESPONDENT APPELLANT BY : SHRI M.N. VAISHNAV. RESPONDENT BY: SHRI SHANTAM BOSE. DATE OF HEARING : 16-11-2011. DATE OF PRONOUNCEMENT : 30-11-2011. O R D E R. PER P.M. JAGTAP A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-25 MUMBAI DATED 11-03-2010. 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL RELATES T O THE ADDITION MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 50C. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO WAS ENGAGED IN THE BUSINESS OF DEALING IN GREY CLOTH AND DEVELOPME NT OF LAND IN THE NAMES AND STYLE OF HIS PROPRIETARY CONCERN M/S R. VIKRAMKUMAR AND M/S ARKADE CONSTRUCTION RESPECTIVELY. DURING THE YEAR UNDER CO NSIDERATION HE SOLD A PLOT 2 ITA NO. 3231/MUM/2010 ASSESSMENT YEAR:2007-08 OF LAND FOR CONSIDERATION OF RS.40 00 000/- WHICH W AS EARLIER PURCHASED BY HIM AT RS.35 00 000/-. THE PROFIT ARISING FROM THE SAID SALE WAS DECLARED BY THE ASSESSEE AS HIS BUSINESS INCOME IN THE NAME OF M/S ARKADE CONSTRUCTION. ACCORDING TO THE AO THE SAID PLOT OF LAND SHOWN UNDER THE HEAD WORK IN PROGRESS ALONG WITH OTHER EXPENSES INCURRED BY THE ASSESSEE ACTUALLY CONSTITUTED HIS CAPITAL ASSET AND THE PROFIT ARISIN G FROM SALE THEREOF WAS CHARGEABLE TO TAX AS SHORT TERM CAPITAL GAIN. IN TH IS CONTEXT HE NOTED THAT THE MARKET VALUE OF THE LAND SOLD BY THE ASSESSEE AS PE R THE RECEIPT ISSUED BY THE REGISTRATION AUTHORITY WAS RS.52 00 500/- AND ADOPT ING THE SAME AS SALE CONSIDERATION U/S 50C HE COMPUTED THE SHORT TERM C APITAL GAIN CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AT RS.11 87 532/-. ON APPEAL THE LEARNED CIT(APPEALS) UPHELD THE ACTION OF THE AO ON THIS IS SUE. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LE ARNED COUNSEL FOR THE ASSESSEE THE ISSUE UNDER CONSIDERATION HAS NOW BEE N DECIDED IN PRINCIPLE BY THE HONBLE MADRAS HIGH COURT IN FAVOUR OF THE ASSE SSEE IN THE CASE OF CIT VS. THIRUVENHADAM INVESTMENT PVT. LTD. 320 ITR 445 WHER EIN IT WAS HELD THAT SINCE THE PROPERTY IN THE HANDS OF THE ASSESSEE WAS TREATED AS A BUSINESS ASSET AND NOT A CAPITAL ASSET THERE WAS NO QUESTION OF I NVOKING THE PROVISIONS OF SECTION 50C WHICH PERTAINS TO DETERMINING THE FULL VALUE OF THE CAPITAL ASSET. THE LEARNED DR HAS NOT DISPUTED THIS POSITION. HE HOWEVER HAS CONTENDED THAT THE BENEFIT OF THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. THIRUVENHADAM INVESTMENT PVT. LTD. (SUPRA) WAS NOT AVAILABLE TO THE AO WHILE DECIDING THE ISSUE AS TO WHETHER THE LAND IN QUESTION WAS BUSINESS ASSET OR CAPITAL ASSET OF THE ASSESSEE. HE HAS CONT ENDED THAT THIS MATTER THEREFORE MAY BE RESTORED TO THE FILE OF THE AO F OR DECIDING THE SAME AFRESH IN 3 ITA NO. 3231/MUM/2010 ASSESSMENT YEAR:2007-08 THE LIGHT OF THE DECISION OF HONBLE MADRAS HIGH CO URT IN THE CASE OF CIT VS. THIRUVENHADAM INVESTMENT PVT. LTD. (SUPRA). WE FIND MERIT IN THIS CONTENTION OF THE LEARNED DR. THE IMPUGNED ORDER OF THE LEARNE D CIT(APPEALS) ON THIS ISSUE IS THEREFORE SET ASIDE AND THE MATTER IS R ESTORED TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE DECISI ON OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. THIRUVENHADAM INVESTM ENT PVT. LTD. (SUPRA) AFTER VERIFYING THE RELEVANT FACTS FROM RECORD. 5. THE NEXT ISSUE INVOLVED IN THIS APPEAL RELATING TO DISALLOWANCE OF EXPENSES AMOUNTING TO RS.33 481/- MADE BY THE AO A ND CONFIRMED BY THE LEARNED CIT(APPEALS) IN RELATION TO CONSTRUCTION BU SINESS OF THE ASSESSEE IS CONSEQUENTIAL TO THE MAIN ISSUE INVOLVED IN THIS AP PEAL AS AGREED BY THE LEARNED REPRESENTATIVES OF BOTH THE SIDES. SINCE THE MAIN I SSUE HAS BEEN RESTORED BY US TO THE FILE OF THE AO WE RESTORE THIS ISSUE ALSO T O THE FILE OF THE AO FOR DECIDING THE SAME AFRESH DEPENDING UPON HIS ULTIMAT E DECISION ON THE MAIN ISSUE. 6. THE REMAINING ISSUE INVOLVED IN THIS APPEAL RELA TES TO THE DISALLOWANCE OF EXPENSES AMOUNTING TO RS.13 992/- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THA T OUT OF THE TOTAL TELEPHONE EXPENSES OF RS.18 791/- CLAIMED BY THE ASSESSEE A DISALLOWANCE OF RS.3758/- BEING 20% OF THE TOTAL EXPENSES WAS MADE BY THE AO ON ACCOUNT OF PERSONAL USE. SIMILARLY REFRESHMENT AND SHOP EXPENSES TO TH E EXTENT OF RS.4071/- BEING 1/10 TH OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE UNDE R THESE HEADS WERE DISALLOWED BY THE AO FOR WANT OF SUPPORTING EVIDENC E IN THE FORM OF BILLS AND 4 ITA NO. 3231/MUM/2010 ASSESSMENT YEAR:2007-08 VOUCHERS. HE ALSO DISALLOWED SUNDRY EXPENSES AND TR AVELLING EXPENSES TO THE EXTENT OF RS.6163/- BEING 1/10 TH OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE UNDER THE SAID HEADS FOR SIMILAR REASONS. ON APPEAL THE LEARNED CIT(APPEALS) CONFIRMED THE DISALLOWANCE MADE BY THE AO ON THESE ISSUES AGGREGATING TO RS.13 992/-. 8. AT THE TIME OF HEARING BEFORE US THE LEARNED CO UNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO RAISE ANY MATERIAL CONTENTION OR B RING ANY THING ON RECORD TO SHOW THAT THIS DISALLOWANCE MADE BY THE AO AND CONF IRMED BY THE LEARNED CIT(APPEALS) IS UNREASONABLE EXCESSIVE OR UNJUSTIF IED. IN OUR OPINION THE SAID DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LE ARNED CIT(APPEALS) IS QUITE FAIR AND REASONABLE HAVING REGARD TO ALL THE FACTS OF THE CASE AND CONFIRMING THE SAME WE DECIDE THIS ISSUE AGAINST T HE ASSESSEE. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOV. 2011. SD/- SD/- (R.S.PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED : 30 TH NOV. 2011. WAKODE 5 ITA NO. 3231/MUM/2010 ASSESSMENT YEAR:2007-08 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR F-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI.