Ito 13 2 3 Mumbai v. Rekha Pravin Shah Jaipur

In The Income Tax Appellate Tribunal Mumbai Bench D Mumbai Before Shri D T Garasia Judicial Member And Shri N K Pradhan Accountant Member Ita No 4140 Mum 2013 Assessment Year 2009 10 Ito 13 2 3 425 Aayakar Bhavan 4 Th Floor M K Marg Mumbai 400020 Vs Smt Rekha Pravin Shah 601 Golden Sobhagya 6 Th Floor B 81 Rajendra Marg Bapu Nagar Jaipur 302015 Pan No Aaeps 2402 C Appellant Respondent C O No 172 Mum 2014 Ita No 4140 Mum 2014 Assessment Year 2009 10 Smt Rekha Pravin Shah 601 Golden Sobhagya 6 Th Floor B 81 Rajendra Marg Bapu Nagar Jaipur 302015 Vs Ito 13 2 3 425 Aayakar Bhavan 4 Th Floor M K Marg Mumbai 400020 Pan No Aaeps 2402 C Appellant Respondent Ita No 3891 Mum 2013 Assessment Year 2009 10 Pravin Nanalal Shah 601 Golden Sobhagya B 81 Rajendra Marg Bapu Nagar Jaipur 302015 Vs Ito 13 2 3 Room No 477 Aayakar Bhavan M K Road Mumbai 400020 Pan No Aadps 3521 K Appellant Respondent Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 2 Revenue By Mr Purushottam Kumar Dr Assessee By Mr Jignesh Shah Ar Date Of Hearing 11 09 2017 Date Of Pronouncement 07 12 2017 Order Per N K Pradhan A M T He Appeal By The Revenue And The Cross Objection By Smt Rekha Pravin Shah For The Ay 2009 10 And The Appeal By Shri Pravin Nanalal Shah For The Ay 2009 10 Are Directed Against The Order Of The Commission Er Of Income Tax Appeals 24 Mumbai And Arise Out Of The Assessment Completed U S 143 3 Of The Income Tax Act 1961 The Act As Common Issues Are Involved We Are Proceeding To Dispose Them Off By This Consolidated Order For T He Sake Of Convenience Ita No 4140 Mum 2013 Assessment Year 2009 10 2 The Grounds Of Appeal Filed By The Revenue Read As Under 1 I On The Facts And In The Circumstances Of The Case And In Law The Ld Cit A Has Erred In Treating The Assessee As Tenant Of The Property And Consequently Deleting The Addition Of Rs 85 00 000 Made By The Ao As Income From Other Sources As Against Ca Pital Receipt Claimed By The Assessee Ii While Doing So The Ld Cit A Has Failed To Appreciate That Except Family Members No Third Party Is Involved In The Rent Receipts Furnished By The Assessee In Support Of Her Claim As Tenant Iii The Ld Cit A Has Also Failed To Appreciate That Husband Of The Assessee Is The Owner Of The Property In Question The Assessee Resides With Him In These Premises And Therefore Ration Card Telephone Bills Bearing Her Name Cannot Be Accepted As Evidence Of Tenancy Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 3 Iv The Ld Cit A Has Erred In Not Appreciating The Fact That Even Otherwise When The Assessee Is Residing In The Same Premises With Her Husband Who Is Owner Of The Premises There Is No Question Of Any Tenancy In Favour Of The Assessee C O No 172 Mum 2014 Ita No 4140 Mum 2014 Assessment Year 2009 10 3 The Cross Objection Filed By Smt Rekha Pravin Shah Read As Under 1 On The Facts And In The Circumstances Of The Case The Ld Assessing Officer Had Erred In Passing Protective Assessment And Th Ereby Making Addition Of Rs 85 00 000 A S Income From Other Sources 2 A On The Facts And In The Circumstances Of The Case The Ld Cit A Corr Ectly Held That The Respondent Is The Tenant Protected Under The Rent Act And That The Amount Of Rs 85 00 00 0 Received By Her Is Not Income From Other Sources And Correctly Deleted The Same B The Ld Cit A Held That The Respondent Is Tenant Of The Premises Which Is Substantiated By Voluminous Evidences Which Were Not Accepted By The Assessing Officer 3 Without Prejudice And As Alternative Ground The Amount Of Rs 85 00 000 Received By The Respondent Being Capital Amount And Is Long Term Gain And The Same Be Allowed To Be Exempt U S 54 F 54 Ec Ita No 3891 Mum 2013 Assessment Year 2009 10 4 The Grounds Of Appeal Filed By Shri Pravin Nanalal Shah Read As Under 1 The Learned Cit A Erred In Taking The Taxable Long Term Capital Gain At Rs 1 28 71 060 Which Is Contrary To The Facts And Evidence On Record And Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 4 Bad In Law The Appellant Prays That The Capital Gain Be Adopted And Accepted As Returned By The Appellant 2 The Learned Cit A Erred In Rejecting The Voluminous Details Filed In Support Of His Calculation Of Capital Gain 3 The Learned Cit A Erred In Taking Rs 2 21 31 000 As The Total Consideration Under The Development Agreement 4 The Learned Cit A Erred In Accepting The Value Of Rs 91 03 221 Arrived At By The Assessing Officer In Respect Of The Flat To Be Received By The Appellant On Redevelopment Of The Africa Cottage Property An D Should Have Held That The Same C Ould Not Be Added And Included In The Computation Of Capital Gains In The Assessment Year 2009 10 5 In The Alternate And On Facts And Evidence On Record In Respect Of The Said Flat To Be Received By The Appellant The Cit A Should Have Added Only The Amount As Determined By The Stamp Duty Valuation Department Of Rs 11 37 340 6 Without Prejudice To Any Other Contention Of The Appellant The Learned Cit A Should Have Exempted The Value Of The Said Flat From Computation Of L Ong Term Capital Gains In Accordance With The Provisions Of Section 54 54 F Of The Income Tax Act 1961 7 The Learned Cit A Erred In Stating That The Appellant Had Contended Before The Assessing Officer That The Present Owners Became Entitled To Only Half S Hare In The Africa Cottage Property On Death Of The Original Owner In 1977 And The Other Half Share In 1990 8 The Learned Cit A Failed To Appreciate That The Assessing Officer Has Erred In Estimating The Cost Of Acquisition Of The Africa Cottage Property As On 1 4 81 At Rs 2 26 377 Against Value Returned By The Appellant At Rs 5 98 000 Duly Supported By The Report Of The Approved Valuer 9 On Facts And Circumstances Of The Case And The Evidence On Record The Learned Cit A Erred In Valuing The C Ost Of Acquisition Of The Said Property By The Present Owners At Rs 2 27 000 Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 5 10 Without Prejudice To The Appellants Contention That The Learned Cit A Erred In His Valuation Of Cost Of Acquisition He Should Have Allowed Indexation Benefit For The Purpose Of Computation Of Capital Gains 11 On The Basis Of Facts And Evidence On Record The Cit A Erred In Not Deducting The Investment Made By The Appellant In Acquisition Of A Residential Property In Jaipur In Accordance With The Provisions Of Section 54 Of The Income Tax Act 1961 5 The Assessee Has Also Filed An Additional Ground Stating That The Transfer Of Development Rights Cannot Be Subject To Capital Gains Tax Since The Development Rights Have No Cost Of Acquisitions And As Is Settled By A Plethora Of D Ecisions Including The Direct Decision Of The Jurisdictional High Court In Cit Vs Sambhaji Nagar Co Operative Housing Society Ltd 370 Itr 325 Bom 6 We Begin With The Case Of Smt Rekha Pravin Shah She Filed Her Return Of Income For The Ay 2009 10 On 27 07 2009 Declaring Total Income Of Rs 1 56 849 Along With The Computation Of Total Income The Assessee Has Filed A Working Of Long Term Capital Gain S On Sale Of Tenancy Right As Per The Said Wo Rking The Assessee Had Received Rs 85 00 000 On Sale Of Tenancy Right And After Adjusting Long Term Capital Loss On Sale Redemption Of Mutual Fund Units Amounting To Rs 2 81 232 Again The Said Amount The Assessee Worked Out The Net Long Term Capital Gain S At Rs 82 18 768 However The Assessee Has Claimed The Same As Exempt U S 54 And 54 Ec On Account Of Purchase Of A Residential Flat At Jaipur And Investment In The Bonds Of Rural Electrification Corporation Accordingly In The Computation Of Total Income The Assessee Has Shown The Long Term Capital Gain S At Rs Nil Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 6 During The Course Of Assessment Proceedings The Assessee Filed Before The Ao A Copy Of Deed Of Assignment And Transfer Of Tenancy Dated 05 02 2009 The Assessing Officer Ao Notic Ed That The Said Deed Had Been Entered Into Between The Assessee As The Outgoing Tenant First Part Mrs Gunvanti Nanalal Shah Mr Mahendra Nanalal Shah Mr Pravin Nalalal Shah Mr Lalit Nanalal Shah And Mrs Leela Shrikant Gudka As The Landlords S Econd Part And M S Tirupati Traders As Th E Incoming Tenant Third Part The Assessee Claimed That By The Said Deed She Had Transferred Her Tenancy Rights In Respect Of The Residential Flat Together With The Attached Open Terrace On The Third Floor Of The Building Africa Cottage On Land Bearing C S No 404 10 Plot No 440 Situated At Shraddhanand Cross Road Matunga Mumbai For A Consideration Of Rs 85 00 000 The Ao Noticed That The Residential Premises In Respect Of Which The Assessee Claimed To Had A Tenancy Rights Was Part Of The Property Land And Building Africa Cottage Transferred By Shri Pravin Nanalal Shah Assessees Husband And The Other Co Owners Mother In Law Brother In Law And Sister In Law Of The Assessee Who Are A Lso Parties To The Deed Of Assignment And Transfer Of Tenancy Dated 05 02 2009 As L Andlords By A Development Agreement Dated 25 08 2008 The Ao Observed That The Assessee Thus Made A Claim That She Was A Tenant Of The Premises Owned By Her Husband Who Held 80 Share And Her In Laws Futher In Terms Of The Said Deed Of Assignment And Transfer Of Tenancy Dated 05 02 2009 In Their Capacity As Landlords The Assessees Husband And In Laws Had Also Received A Total Amount Of Rs 5 00 000 Out Of The Said Amount An Amount Of Rs 4 00 000 Had Been Paid To Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 7 Shri Pravin Nanalal Shah The Assessees Husband And The Other Co Owners Were Paid An Amount Of Rs 25 000 Each In The Case Of Smt Rekha Pravin Shah The Ao Made An Addition Of Rs 8 5 00 000 On Prote Ctive Basis 6 1 While Making The Assessment In The Case Of Shri Pravin Nanalal Shah Husband Of Smt Rekha Pravin Shah The Ao Had Made A Reference To The District Valuation Officer As Per Provisions Of Section 50 C 2 For A Valuation Report With Regard To The Property Piece Or Parcel Of Land Or Ground With Building Known As Africa Cottage Consisting Of Ground And Three Upper Floors With Garage And Servants Toilet Bearing C S No 404 10 Plot No 440 Situation At Shradanand Cross Road Matunga Mumba I 400019 Admeasu Ring 389 Sqyds I E 325 25 Sqm The Said Reference Is As Under 0 1 Referring Officer 0 Reference Ito 13 2 3 R No 425 4 Th Floor Aayakarbhavan Mumbai 400020 0 2 Reference Letter 0 3 Purpose 04 Act 0 5 Date Of Valuation 1 Ito 13 2 3 Ref To Valuation Cell 2011 12 Dt 29 08 2011 Pan Aadps 3521 K 2 Ito 13 2 3 Ref To Valuation Cell 2011 12 Dt 30 08 2011 Pan Aadps 3521 K 3 Ito 13 2 3 Ref To Valuation Cell 2011 12 Dt 14 11 2011 25 11 2011 Pan Aadps 3521 K 1 To Determine The Fair Market Value Of The Property As On 01 04 1981 For Capital Gain Tax Purpose 2 To Determine The Fair Market Value Of The Property As On 25 08 2008 For Capital Gain Tax Purpose 3 For Valuation Of Flat Admeasuring 850 Sqft To Be Gi Ven To The Assessee As Per Development Agmt Dt 25 08 2008 U S 55 A B Ii 50 C 2 Of The Income Tax Act 1961 01 04 1981 25 08 2008 Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 8 7 We Have Heard The Rival Submissions And Perused The Relevant Materials On Record The Ao Has Made A Reference To The District Valuation Officer U S 50 C 2 If The Following Conditions Are Satisfied The Ao May Refer The Valuation Of The Relevant Asset To A Valuation Officer In Accordance With Section 55 A Of The Act I Where The Assessee Claims Before The Ao That The Value Adopted Or Assessed Or Assessable By The S Tamp V Aluation A Uthority Exceeds The Fair Market Value Of The Property As On The Date Of Transfer And Ii The Value So Adopted Or Assessed Or Assessable By Stamp Valuation Authority Has Not Been Dispu Ted In Any Appeal Or Revision Or Reference Before Any Authority Or Court 7 1 We Find That In The Instant Case The Valuation Officer 1 Income Tax Department Mumbai Has Submitted A Final Valuation Report Dated 11 09 2013 Before The Ao The Ao Has Made T He Assessment U S 143 3 Of Smt Rekha Pravin Shah And Her Husband Shri Pravin Nanalal Shah On 30 12 2011 The Ld Cit A Has Passed The Order In The Case Of The Above Two Assessees On 26 02 2013 Thus The Valuation Officer 1 Income Tax Department Mumbai Has Filed A Copy Of The Final Valuation Report Of The Said Property Before The Ao After The Order Passed By The Ld Cit A On 26 02 2013 The Valuation Report Asked For By The Ao Has A Definite Bearing On The Issues Raised In The Instant Appeal As The S Aid Report Was Not Before The Ao Or The Ld Cit A We Set Aside The Order Of The Ld Cit A In These Appeals And Restore The Matter To The File Of The Ao To Make A De Novo Pravin Nanalal Shah Smt Rekha Pravin Shah Ita No 3891 Mum 2013 4140 Mum 2013 C O No 172 Mum 2014 9 Assessment After Examining The Valuation Report And Giving Reasonable Opportunity O F Being Heard To The Assessee 8 In The Result The Appeals Are Allowed For Statistical Purposes Order Pronounced In The Open Court On 07 12 2017 Sd Sd D T Garasia N K Pradhan Judicial Member Accountant Member Mumbai Dated 07 12 2017 Rahul Sharma Sr P S Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit 5 Dr Itat Mumbai 6 Guard File By Order True Copy Dy Asstt Registrar Itat Mumbai