THE ACIT 25(2), MUMBAI v. M/S. KESARINATH P. PATIL, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI SHRI A.L. GEHLOT A.M. & SHRI V. DURGA RAO J.M. ITA NO. 3860/M/2007 ASSESSMENT YEAR: 2004-05 ASSTT. COMMISSIONER OF INCOME-TAX APPELLANT 25(2) BLDG. NO. C-11 1 ST FLOOR R.NO. 108 PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400 051. VS. M/S KESARINATH P. PATIL RESPONDENT KHITIJ OPP. UNION BANK TOWER OFF LAXMAN MAHATRE ROAD MAHADAPESHOOR BORIVVALI(W) MUMBAI 400 103 (PAN AACHK6568F) C.O. NO. 84/MUM/2010 (IN ITA NO. 3860/M/2007 ASSESSMENT YEAR: 2004-05) ASSTT. COMMISSIONER OF INCOME-TAX APPELLANT MUMBAI 400 051. VS. M/S KESARINATH P. PATIL RESPONDENT MUMBAI 400 103 (PAN AACHK6568F) APPELLANT BY : MR. SURENDRA KUMAR RESPONDENT BY : MR. MANDAR M. VAIDYA ORDER PER A.L. GEHLOT A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-XXV MUMBAI PASSED ON 02.02.2007 FOR T HE ASSESSMENT YEAR 2004-05 WHEREIN THE REVENUE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS CAPITAL GAIN IN SALE OF TDR AS LONG TERM CAPITAL GAIN. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE RELIANCE OF THE LD. CIT(A) ON THE DECISION OF HONB LE ITAT IN THE CASE OF SHAKTI INSULATORS WIRES LTD. VS. JCIT 87 ITD 56 IS MISPLACED DUE TO THE REASON THAT THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE DIFFER FROM THE CASE RELIED UPON BY THE LD. CIT(A). THE ASSESSEE ALSO FILED C.O. AGAINST THE SAID ORDER OF CIT(A). 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE HAS SURRENDERED SOME AGRICULTURAL LAND FALLING WITHIN M UNICIPAL LIMIT TO BMC AND IN LIEU OF IT BMC GRANTED FS/TDR TO THE TUN E OF 5869 SQ. MTRS. ON 24 TH MARCH 2003. THE ASSESSEE IS 1/3 RD CO-OWNER OF THE ABOVE STATED TDR. THE ASSESSEE OFFERED LONG TERM CA PITAL ON SALE OF ITA NO. 3860/M/07 KESARINATH P. PATIL 2 TDR. THE AO WAS OF THE VIEW THAT TDR IS SEPARATE AN D DISTINCT CAPITAL ASSET WHICH THE ASSESSEE GOT IN EXCHANGE OF LAND HENCE GAIN ON SALE OF TDR IS TAXED BY THE AO IS A SHORT T ERM CAPITAL GAIN. THE CIT(A) FOLLOWING THE DECISION OF ITAT MUMBAI B ENCH IN THE CASE OF SHAKTI INSULATED WIRES LTD. VS. JCIT 87 ITD 56 AND DIRECTED THE AO TO ASSESS THE CAPITAL GAIN ON SALE OF TDR AS LONG TERM CAPITAL GAIN. 3. AT THE OUTSET THE LEARNED AR POINTED OUT THAT O N IDENTICAL SET OF FACTS IN CASE OF SHRI DEVIDAS P. PATIL CO-OWNER S VIDE ITA NO. 5530/MUM/07 AND C.O. NO. 66/MUM/09 VIDE ORDER DATED 30 TH DECEMBER 2009 AND IN THE CASE OF SMT. YESUBAI P. P ATEL VIDE ITA NO. 6158/MUM/07 AND C.O. NO. 48/MUM/09 VIDE ORDER D ATED 28 TH APRIL 2009 REMITTED THE MATTER BACK TO THE FILE O F THE AO FOR FRESH ADJUDICATION. 4. THE LEARNED DR ON THE OTHER HAND DID NOT CONTR OVERT THE FACTS ON RECORD. 5. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES WE FIND THAT THE ITAT MUMBAI BENCH IN THE CASE OF SHR I DEVIDAS P. PATIL CO-OWNERS VIDE ITA NO. 5530/MUM/07 AND C.O. NO. 66/MUM/09 FOLLOWED THE DECISION OF SMT. YESUBAI P. PATEL VIDE ITA NO. 6158/MUM/07 AND C.O. NO. 48/MUM/09 AND REMITTED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH ADJUDIC ATION. THE FINDING OF ITAT MUMBAI BENCH IN THE CASE OF SHRI DEVIDAS P . PATIL CO- OWNERS VIDE ITA NO. 5530/MUM/07 AND C.O. NO. 66/MUM /09 IS REPRODUCED BELOW:- AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTIC E THAT IN THE CASE OF ANOTHER CO-OWNER OF THE VERY SAME LAND WHI CH WAS SURRENDERED TO BMC AND IN TURN TDR OBTAINED AND WHO HAD SOLD TDR TOGETHER WITH THE ASSESSEE IN THE PRESENT APPEAL THIS TRIBUNAL HAD AN OCCASION TO DECIDE IDENTICAL G ROUNDS RAISED BY THE REVENUE AND THE ASSESSEE. THE TRIBUN AL HELD IN ITA NO. 6158/MUM/07 AND CO NO. 48/MUM/2009 HELD AS FOLLOWS:- WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSION RELEVANT RECORDS AND THE CASE LAWS RELIED UPON BY T HE PARTIES. THE CONTENTION OF LEARNED DR THAT THE DEC ISION RELIED UPON BY LEARNED CIT(A) IS NOT APPLICABLE TO FACTS ITA NO. 3860/M/07 KESARINATH P. PATIL 3 AND CIRCUMSTANCES OF THE PRESENT CASE COULD NOT BE REBUTTED BY THE LEARNED AR OF THE ASSESSEE. FURTHER THE DECISIONS RELIED UPON BY LEARNED AR TO SUPPORT HIS CONTENTION HAVE BEEN RENDERED THE CONTEXT OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF C IT VS. B.C. SRINIVASA SHETTY [1981] 128 ITR 294 (SC). IT I S PERTINENT TO POINT OUT HERE THAT THE RETIREMENT CA RRIED OUT AN AMENDMENT TO SECTION 55(2) OF THE ACT AND HE NCE THE RATIO OF THE SAID DECISION IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE HAV E CAREFULLY PERUSED THE DECISIONS RELIED UPON BY THE LEARNED AR AND FOUND THAT THE SAME ARE NOT APPLICAB LE TO THE FACTS OF THE PRESENT CASE BEING FACTUALLY DI FFERENT AND DISTINGUISHABLE. IN VIEW OF THE ABOVE DISCUSSIO NS WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAI SED IN THE PRESENT APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE REQUIRED TO B E DECIDED IN THE LIGHT OF THE SPECIAL BENCH DECISION QUOTED AND RELIED UPON BY LEARNED DR IN THE CASE OF VIJAY SINH R. RATORE (SUPRA) AND IN THE LIGHT OF AMENDED PROVI SIONS OF SECTION 55(2) OF THE ACT. THEREFORE THE ISSUE R AISED IN THE PRESENT APPEAL IS RESTORED TO THE FILE OF THE A O TO BE ADJUDICATED DENOVO IN THE LIGHT OF THE SAID SPECIAL BENCH DECISION AND RELEVANT PROVISIONS OF THE ACT AS CONT AINED IN SECTION 55(2) OF THE ACT AFTER AFFORDING REASON ABLE AND PROPER OPPORTUNITY TO THE ASSESSEE. THEREFORE THE GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATI STICAL PURPOSES. IN THE LIGHT OF THE ABOVE OBSERVATIONS IN THE FORE GOING PARAS THE CROSS OBJECTIONS FILED BY THE ASSESSEE D OES NOT SURVIVE AND HENCE NEEDS NO SEPARATE ADJUDICATI ON. IN THE RESULT APPEAL OF THE REVENUE AS WELL AS CRO SS OBJECTION ARE ALLOWED FOR STATISTICAL PURPOSES. 9. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF TH E TRIBUNAL WE SET ASIDE THE ORDER OF LEARNED C(A) AND REMAND T HE ISSUE TO THE AO FOR FRESH ADJUDICATION IN THE LIGHT OF DIREC TION CONTAINED IN THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE. 10. FOR STATISTICAL PURPOSES APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE TREATED AS ALLOWED. 6. SINCE THE FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL TO THAT OF CASES DECIDED BY THE ITAT IN THE CO-OWNE RS CASES CITED SUPRA WE RESPECTFULLY FOLLOW THE DECISION OF ITAT IN THOSE CASES AND IN THE LIGHT OF THAT WE REMIT THE MATTER BACK T O THE FILE OF THE AO WITH IDENTICAL DIRECTION. ITA NO. 3860/M/07 KESARINATH P. PATIL 4 7. SINCE THE APPEAL OF THE REVENUE HAS SENT BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION THE C.O. FILED BY TH E ASSESSEE IS ALSO REMITTED BACK TO THE FILE OF THE AO. 8. IN THE RESULT THE APPEAL OF THE REVENUE AND THE C.O. OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PUR POSES. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF APRIL 2010. SD/- SD/- (V. DURGA RAO) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 30 TH APRIL 2010. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE H BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 26.4.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 27.4.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER