ACIT 2(3), MUMBAI v. WESTERN PRESS P.LTD, MUMBAI

ITA 3509/MUM/2013 | 2006-2007
Pronouncement Date: 19-11-2014 | Result: Allowed

Appeal Details

RSA Number 350919914 RSA 2013
Assessee PAN AAACW1225E
Bench Mumbai
Appeal Number ITA 3509/MUM/2013
Duration Of Justice 1 year(s) 6 month(s) 16 day(s)
Appellant ACIT 2(3), MUMBAI
Respondent WESTERN PRESS P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Department
Order Result Allowed
Bench Allotted G
Tribunal Order Date 19-11-2014
Assessment Year 2006-2007
Appeal Filed On 03-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG (JM) . . ./I.T.A. NO.3509/MUM/2013 ( / ASSESSMENT YEAR : 2006-07) ASSTT. COMMISSIONER OF INCOME TAX 2(3) ROOM NO.552 5 TH FLOOR AAYAKAR BHAVAN M K ROAD MUMBAI-400020 / VS. M/S WESTERN PRESS PVT.LTD. BOMBAY MUTUAL CHAMBERS 1 ST FLOOR 19/21 AMBALAL DOSHI MARG FORT MUMBAI-400001 ( / APPELLANT) .. ( / RESPONDENT) CROSS OBJECTION/ . 218/MUM/2014 ARISING OUT OF I.T.A. NO.3509/MUM/2013 M/S WESTERN PRESS PVT.LTD. BOMBAY MUTUAL CHAMBERS 1 ST FLOOR 19/21 AMBALAL DOSHI MARG FORT MUMBAI-400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX 2(3) ROOM NO.552 5 TH FLOOR AAYAKAR BHAVAN M K ROAD MUMBAI-400020 ( /CROSS-OBJECTOR) .. ( / RESPONDENT) ./ ! ./PAN/GIR NO. : AAACW1225E ' / REVENUE BY SHRI PREMAND J # ' /ASSESSEE BY SHRI VIPUL JOSHI $ % # &' / DATE OF HEARING : 20.10.2014 () # &' /DATE OF PRONOUNCEMENT : 19.11.2014 / O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJEC TION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 13.2. 2013 PASSED BY LD CIT(A)-6 MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR 2006- 07. I.T.A. NO3509/MUM/2013 CO 218/MUM/2013 2 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN AGREEING THE CONTENTION OF THE ASSESSEE THAT THE TWO PROPERTIES HAVE BEEN ACQUIRED BY 31.3.2006 AND THEREBY ACCEPTING THE SHORT TERM CAPI TAL GAIN RETURNED BY THE ASSESSEE. THE ASSESSEE IS OBJECTING TO THE DECISIO N OF LD CIT(A) IN HOLDING THAT THE REASSESSMENT PROCEEDING IS VALID. 3. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE R ECORD. WE SHALL FIRST TAKE UP THE LEGAL ISSUE RELATING TO THE VALIDITY OF REAS SESSMENT PROCEEDINGS. THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE ACT ON 12.12.2008. SUBSEQUENTLY THE AO NOTICED THAT THE A SSESSEE HAS TRANSFERRED A BUILDING LOCATED AT REGENT CHAMBERS FOR A CONSIDERA TION OF RS.1 79 87 341/-. THE ASSESSEE HAD BEEN CLAIMING DEPRECIATION THEREON AND THE WDV OF THE BUILDING AS ON 31.3.2005 WAS RS.49 190/-. THE DIFF ERENCE BETWEEN THE SALE CONSIDERATION AND THE WDV VALUE IS ASSESSABLE AS SH ORT TERM CAPITAL GAIN U/S 50 OF THE ACT. HOWEVER IN TERMS OF SEC. 50 OF THE AC T THE WDV SHALL BE INCREASED BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN TH E BLOCK ACQUIRED DURING THE YEAR. THE ASSESSEE CLAIMED IN THE RETURN OF INCOME THAT I T HAD ACQUIRED TWO PROPERTIES VIZ. ONE PROPERTY LOCATED AT PUNE FOR A VALUE OF R S.95 19 541/- AND ANOTHER PROPERTY LOCATED AT AHMEDABAD FOR A VALUE OF RS.81 25 000/- AND ACCORDINGLY INCREASED THE WDV BY THE AGGREGATE AMOUNT OF RS.1 7 6 44 541/- . CONSEQUENTLY THE SHORT TERM CAPITAL GAIN TO BE COM PUTED U/S 50 OF THE ACT CAME TO BE REDUCED BY RS.1 76 44 541/-. 4. IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THE COPIES OF AGREEMENT FOR PURCHASE OF BOTH THE PROPER TIES TO THE ASSESSING OFFICER. ADMITTEDLY THERE IS NO FURTHER QUERY FROM THE ASSE SSING OFFICER AND THERE IS ALSO NO DISCUSSION IN THE ASSESSMENT ORDER IN THIS REGAR D. SUBSEQUENTLY THE AO NOTICED THAT THE AO NOTICED FROM THE AGREEMENT FOR SALE PERTAINING TO THE AHMEDABAD PROPERTY THAT THE POSSESSION OF THE SAME WAS OBTAINED ONLY IN THE MONTH OF APRIL 2006. THE CONVEYANCE DEED WAS EXEC UTED ON 17.11.2006 ONLY SINCE THE VENDORS HAD OBTAINED PERMISSION FROM COLL ECTOR FOR SALE OF PROPERTY ONLY ON 8.7.2006 (AS THE SAME WAS SITUATED IN A DIS TURBED AREA). IN RESPECT OF THE PUNE PROPERTY IT WAS NOTICED THAT THE SAME WAS MORTGAGED TO SBI BY THE VENDOR; THE AGREEMENT FOR PURCHASE WAS ENTERED ONLY ON 31.3.2006; THE I.T.A. NO3509/MUM/2013 CO 218/MUM/2013 3 MORTGAGE WAS AGREED TO BE RELEASED BY 21.4.2006 AND THE DEED OF CONFIRMATION WAS REGISTERED ON 17.6.2006. HENCE THE AO CAME TO THE BELIEF THAT THE ASSESSEE HAS NOT ACQUIRED BOTH THE PROPERTIES BY 31 .3.2006 AND DID NOT PUT THE SAME TO USE FOR BUSINESS PURPOSES ALSO. ACCORDINGL Y HE REOPENED THE ASSESSMENT. IN THE ASSESSMENT PROCEEDINGS THE AO ALSO NOTICED THAT THE VENDORS OF BOTH THE PROPERTIES ARE SISTER CONCERNS OF THE ASSESSEE HEREIN. IN VIEW OF THE ABOVE THE AO REJECTED THE CLAIM OF ACQ UISITION OF PROPERTIES AND ACCORDINGLY ENHANCED THE AMOUNT OF SHORT TERM CAPIT AL GAIN. 5. WITH REGARD TO THE VALIDITY OF REASSESSMENT PRO CEEDING THE CONTENTION OF THE ASSESSEE IS THAT THE AO HAS REOPENED THE ASSESS MENT ONLY DUE TO CHANGE IN THE OPINION SINCE THE ASSESSEE HAD FURNISHED ALL THE RELEVANT DETAILS BEFORE HIM DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEE DINGS. BY PLACING RELIANCE ON THE DECISION OF FULL BENCH OF HONBLE DELHI HIGH CO URT IN THE CASE OF USHA INTERNATIONAL (348 ITR 485) THE LD A.R CONTENDED T HAT THE CHANGE OF OPINION WILL NOT PERMIT THE AO TO REOPEN THE ASSESSMENT. HE FUR THER SUBMITTED THAT THE HONBLE MUMBAI HIGH COURT HAS HELD IN THE CASE OF A SIAN PAINTS LTD VS. DCIT (308 ITR 195) THAT IF THE ASSESSING OFFICER HAS F AILED TO APPLY HIIS MIND TO THE RELEVANT MATERIAL IN MAKING THE ASSESSMENT ORDER H E CANNOT TAKE ADVANTAGE OF HIS OWN WRONG AND REOPEN THE ASSESSMENT BY TAKING R ECOURSE TO THE PROVISIONS OF SEC. 147 OF THE ACT EVEN IF THE REOPENING IS WI THIN FOUR YEARS. ON THE CONTRARY THE LD D.R SUBMITTED THAT THE ASSESSING OFFICER DID NOT FORM ANY OPINION DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. HE FURTHER SUBMITTED THAT THE AO HAD ONLY EXAMINED THE CLAIM OF SALE OF ASSET AND TH E DETAILS OF PURCHASE OF TWO PROPERTIES WERE NOT AT ALL EXAMINED BY THE AO. AC CORDINGLY HE SUBMITTED THAT THE AO DID NOT APPLY HIS MIND WITH REGARD TO THE CL AIM OF ACQUISITION OF OR TAKING POSSESSION OF PROPERTIES. 6. HAVING HEARD RIVAL CONTENTIONS WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THE CONTENTIONS OF THE ASSESSEE. NO DOUBT THE ASS ESSEE HAS DISCLOSED THE FACT OF PURCHASE OF TWO PROPERTIES IN ITS ANNUAL REPORT AND ALSO SUPPLIED COPIES OF SALE AGREEMENT TO THE AO DURING THE COURSE OF ASSES SMENT PROCEEDINGS. AS SUBMITTED BY LD D.R THE ASSESSING OFFICER HAS EXAM INED ONLY THE DETAILS RELATING TO THE SALE OF PROPERTY AND IN THAT CONTEXT ONLY HE HAS ACCEPTED THE CLAIM OF I.T.A. NO3509/MUM/2013 CO 218/MUM/2013 4 PURCHASE OF PROPERTY AT ITS FACE VALUE. FURTHER W E NOTICE THAT THE ASSESSEE HAS MERELY FURNISHED COPIES OF SALE AGREEMENTS TO THE A O AND THERE IS NOTHING ON RECORD TO SHOW THAT THE PECULIAR FACTS WHICH WERE BROUGHT OUT IN THE REASSESSMENT PROCEEDINGS WERE ALSO FURNISHED TO TH E AO. THE ASSESSEE HAS FURNISHED THE COPIES OF CONVEYANCE DEEDS PERTAINING TO THE TWO PROPERTIES WITHOUT MENTIONING THE CONTROVERSIAL POINTS ATTACHE D TO THE CLAIM OF PURCHASES. HENCE WE AGREE WITH THE CONTENTION OF THE LD D.R THAT THERE IS NO APPLICATION OF MIND BY THE AO ON THE IMPUGNED ISSUES AND IN VIEW O F THE SAME THERE IS NO QUESTION OF FORMING ANY OPINION THEREON. ACCORDING LY THE QUESTION OF CHANGE OF OPINION ALSO DOES NOT ARISE. THE SITUATION WOULD H AVE BEEN DIFFERENT IF THE ASSESSEE HAS VOLUNTARILY FURNISHED ALL THE FINER PO INTS THAT WERE BROUGHT OUT BY THE AO DURING THE COURSE OF REASSESSMENT PROCEEDING S ALSO AT THE TIME IT FILED THE RELEVANT DETAILS DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. IN OUR VIEW THE ASSESSEE CAN TAKE SUPPORT OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF ASIAN PAINTS LTD (SUP RA) ONLY IF HAS FURNISHED ALL THE DETAILS. IN THE INSTANT CASE THE ASSESSEE DID NOT FURNISH THE DETAILS RELATING TO THE PENDING PAYMENT HURDLES FACED IN REGISTERIN G THE CONVEYANCE DEEDS THE DETAILS OF PENDING APPROVAL FROM GOVERNMENT THE DE TAILS OF LIEN OF BANK OVER THE PROPERTY ETC. SINCE THE ASSESSEE HAS NOT FURNISHED THESE DETAILS IN OUR VIEW HE CANNOT PUT THE BLAME OF NON-APPLICATION OF MIND ON THE ASSESSING OFFICER. ACCORDINGLY WE REJECT THE GROUND URGED BY THE ASSES SEE WITH REGARD TO THE VALIDITY OF REOPENING OF ASSESSMENT. 7. WITH REGARD TO THE ISSUE URGED ON MERITS W E NOTICE THAT THE LD CIT(A) HELD THAT BOTH THE PROPERTIES HAVE BEEN ACQUIRED BY TH E ASSESSEE. THE RELEVANT OBSERVATIONS MADE BY LD CIT(A) ARE EXTRACTED BELOW: - I HAVE GONE THROUGH THE ORDER OF THE AO AND SUBMIS SION OF THE APPELLANT. SECTION 50(2) REFERS TO PROPERTY BEING ACQUIRED B Y THE ASSESSEE DURING THE PREVIOUS YEAR. THE APPELLANT SOLD ITS OFFICE P REMISES AT MUMBAI AT RS.1.79 CRORES AND ITS WDV AS ON 31.3.2005 WAS RS.4 9 190/-. THE APPELLANT PAID RS.75 LAKHS FOR PUNE PROPERTY AT RS. 90.09 LAKHS FOR AHMEDABAD PROPERTY BEFORE THE AGREEMENT DATED 31.3. 2006 AND ALSO OTHER EXPENSES RELATING THERETO. THE ITAT MUMBAI IN THE CASE OF ORIENT CARTONS LTD VS. DCIT 60 ITD 87 & OCEANIC INVESTMENT LTD VS. ACIT 57 TPJ 549 HELD AS UNDER: I.T.A. NO3509/MUM/2013 CO 218/MUM/2013 5 WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED T O SUCCEED ON THIS ISSUE. WE AGREE WITH THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE WORD ACQUIRED IS AMORPHOUS AND AN ASSET CAN B E ACQUIRED WITHIN THE MEANING OF S.50 WITHOUT OBTAINING A VALI D LEGAL TITLE AND WE FIND SOME SUPPORT FOR THIS VIEW IN CHAPTER XX-A WHICH PRECEDED CHAPTER XX-C 2.3.1 AS THE APPELLANT HAS PAID THE AMOUNTS OF CONSIDERATION RECEIVED ON TRANSFER OF OFFICE IN MUMBAI TOWARDS ACQUISITION OF PROPERTY AT PUNE AND AHMEDABAD AND HAS ALSO SIGNED AGREEMENT TO PURCHASE THE PROPERTY ON 31.3.2006 THE APPELLANT HAS ACQUIRED THE PROPERTY DURING THE YEAR. 8. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT IT IS NOT NECESSARY THAT THE ASSESSEE SHOULD HAVE OBTAINED LEGAL OWNERSHIP OF TH E ASSET ACQUIRED DURING THE YEAR. HE FURTHER SUBMITTED THAT WHAT WAS RELEVANT WAS GAINING DOMAIN CONTROL OVER THE ASSET WHICH WILL SATISFY THE TERM ACQUIR ED AS EXPRESSED IN SEC. 50 OF THE ACT. HE FURTHER SUBMITTED THAT THERE IS NO NEC ESSITY THAT THE NEW ASSET SHOULD HAVE BEEN PUT TO USE ALSO. IN SUPPORT OF HIS CONTE NTIONS THE LD A.R PLACED RELIANCE ON THE FOLLOWING CASE LAW:- (A) ORIENT CARTONS (P) LTD VS. DCIT (60 ITD 87)(M UM). (B) OCEANIC INVESTMENTS LTD VS. ACIT (57 TTJ 549) (MUM) (C) MYSORE MINERALS LTD VS. CIT (239 ITR 775) (SC ) IN THE CASE OF ORIENT CARTONS (P) LTD THE TRIBUNAL HAS EXPRESSED THE VIEW THAT THE PAYMENT OF FULL CONSIDERATION AND TAKING OVER O F POSSESSION OF PROPERTY WOULD SATISFY THE REQUIREMENT OF THE TERM ACQUIRED FOR THE PURPOSE OF SEC. 50 OF THE ACT. IN THE CASE OF OCEANIC INVESTMENTS LTD (SUPRA ) THE TRIBUNAL HELD THAT FOR THE PURPOSE OF SEC. 50 IT IS NOT NECESSARY THAT TH E NEWLY ACQUIRED ASSET MUST BE USED FOR THE PURPOSES OF BUSINESS. IN THE CASE OF MYSORE MINERALS LTD THE HONBLE SUPREME COURT HELD THAT THE FORMAL REGISTRA TION OF CONVEYANCE DEED IS NOT NECESSARY TO PROVE THE OWNERSHIP AND IF THE ASS ESSEE IS IN POSSESSION OF THE PROPERTY WITH DOMINION RIGHTS TO THE EXCLUSION OF O THERS THEN HE IS ENTITLED TO DEPRECIATION U/S 32 ON SUCH ASSET IF THE SAME IS P UT TO USE FOR THE PURPOSES OF BUSINESS. ALL THESE CASE LAWS BRINGS OUT THE PRINC IPLE THAT THE ASSESSEE SHOULD HAVE TAKEN POSSESSION AND SHOULD HAVE GAINED DOMAIN CONTROL OVER THE PROPERTY IN ORDER TO TREAT THE SAME AS ACQUIRED FOR THE PU RPOSES OF SEC. 50 OF THE ACT. I.T.A. NO3509/MUM/2013 CO 218/MUM/2013 6 9. IF WE EXAMINE THE FACTS PREVAILING IN THE PR ESENT CASE BY APPLYING THE PRINCIPLES DISCUSSED IN THE PRECEDING PARAGRAPH WE NOTICE THAT THE AO HAS POINTED OUT THAT THE POSSESSION OF AHMEDABAD PROPER TY WAS AGREED TO BE GIVEN IN THE MONTH OF APRIL 2006 ONLY. IN RESPECT OF TH E PUNE PROPERTY THE AO HAS POINTED OUT THAT THE SAME WAS MORTGAGED TO STATE BA NK OF INDIA AND THE MORTGAGE WAS REQUIRED TO BE RELEASED ON OR BEFORE 2 1.4.2006. THE AGREEMENT ITSELF WAS ENTERED ON 31.3.2006 FOR BOTH THE PROPER TIES. IT IS IN THE COMMON KNOWLEDGE OF EVERYBODY THAT UNDER NORMAL CIRCUMSTA NCES THE ACQUISITION OF PROPERTY/TAKING POSSESSION OF THE PROPERTY WILL NOT BE COMPLETED UNLESS THE ENCUMBRANCES ATTACHED TO THE PROPERTY ARE CLEARED W ITH. THE AO HAS ALSO POINTED OUT THAT THE ASSESSEE HAS PURCHASED BOTH TH E PROPERTIES FROM ITS SISTER CONCERNS ONLY IN WHICH CASE THE BURDEN TO PROVE T HE CLAIM OF ACQUISITION OF ASSETS LIES HEAVILY UPON THE ASSESSEE. IN THE INST ANT CASES THE POINTS BROUGHT OUT BY THE AO SUGGEST THAT THE ASSESSEE COULD NOT H AVE TAKEN POSSESSION AND GAINED DOMAIN CONTROL OVER THEM ON 31.3.2006 ITSELF . HENCE WE ARE UNABLE TO AGREE WITH THE DECISION OF LD CIT(A). ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE ORDER PASSED BY THE ASSESSIN G OFFICER. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19TH NOV 2014. () $ *+ - 19TH NOV 2014 ) # % . SD SD ( /SANJAY GARG) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * $ % MUMBAI: 19TH NOV 2014. . . ./ SRL SR. PS I.T.A. NO3509/MUM/2013 CO 218/MUM/2013 7 !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ /& ( ) / THE CIT(A)- CONCERNED 4. $ /& / CIT CONCERNED 5. 01 &2 ' 2 * $ % / DR ITAT MUMBAI CONCERNED 6. 3 4% / GUARD FILE. 5 $ / BY ORDER TRUE COPY 6 (ASSTT. REGISTRAR) ' 2 * $ % /ITAT MUMBAI