ARIF AKHTAR HUSSAIN, MUMBAI v. ITO 12(2)(1), MUMBAI

ITA 541/MUM/2010 | 2006-2007
Pronouncement Date: 22-12-2010 | Result: Dismissed

Appeal Details

RSA Number 54119914 RSA 2010
Assessee PAN AAAPH8531R
Bench Mumbai
Appeal Number ITA 541/MUM/2010
Duration Of Justice 11 month(s) 1 day(s)
Appellant ARIF AKHTAR HUSSAIN, MUMBAI
Respondent ITO 12(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-12-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 22-12-2010
Assessment Year 2006-2007
Appeal Filed On 21-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI R.S.SYAL ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 541/MUM/2010 (ASSESSMENT YEARS: 2006-07) ARIF AKHATAR HUSSAIN 12 CHATEAU MARINE DRIVE MUMBAI-400020 PAN: AAAPH8531R . APPELLANT V/S INCOME TAX OFFICER 12(2)(1) AAYAKAR BHAVAN MUMBAI-400020 .. RESPONDENT ITA NO. 706/MUM/2010 (ASSESSMENT YEARS: 2006-07) JAFFAR AKHATAR HUSSAIN 12 CHATEAU MARINE DRIVE MUMBAI-400020 PAN: AAAPH4454R . APPELLANT V/S INCOME TAX OFFICER 12(2)(1) AAYAKAR BHAVAN MUMBAI-400020 .. RESPONDENT ASSESSEE BY : SHRI AMIT AMLANI REVENUE BY : SHRI JITENDRA YADAV O R D E R PER VIJAY PAL RAO JM THESE TWO APPEALS BY THE ASSESSEES ARE DIRECTED AGAINST THE TWO DIFFERENT ORDERS OF CIT(A) BOTH D ATED ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 2 24.11.2009 FOR THE ASSESSMENT YEAR 2006-07. SINCE ISSUES RAISED IN THESE APPEALS IS COMMON AND THE ASSESSEE ARE ALSO CO-SHARERS OF THE PROPERTY IN QUESTION THEREFORE FOR THE SAKE OF CONVENIENCE BOTH THE APPEALS WERE HEARD TOGETHE R AND ARE BEING DECIDED BY THIS COMPOSITE ORDER. 2. GROUNDS OF APPEAL TAKEN BY BOTH THE ASSESSEES A RE COMMON THEREFORE THE GROUND TAKEN BY THE ASSESSE E IN ITA NO.541/MUM/2010 IS REPRODUCED BELOW: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONCLUDING THAT THE PROVISIONS OF SECTION 50C OF TH E IT ACT ARE APPLICABLE TO TRANSFER OF DEVELOPMENT RIGHT S NAD THEREBY DIRECTING THE ASSESSING OFFICER TO ADOP T THE VALUATION UNDER SECTION 50C OF THE ACT AS SAL E CONSIDERATION FOR THE PURPOSES OF CALCULATING CAPI TAL GAIN INSTEAD OF ACTUAL SALE CONSIDERATION OFFERED BY YOUR APPELLANT 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AR E CO- OWNERS ALONG WITH OTHER FOUR CO-OWNERS OF THE INHER ITED PROPERTY IN QUESTION. DURING THE YEAR UNDER CONSID ERATION THE ASSESSEE ALONG WITH OTHER CO-OWNERS ENTERED INTO AN AGREEMENT WITH THE DEVELOPER FOR DEVELOPMENT OF TH E SAID INHERITED PROPERTY AGAINST THE CONSIDERATION OF RS. 63 LAKHS SHOWN IN THE SAID AGREEMENT. THE ASSESSEE HEREIN HAD 2/7 AND 1/7 TH SHARES RESPECTIVELY IN THE SAID PROPERTY. ACCORDINGLY THE ASSESSEES SHARE IN THE SHARE VALU E WAS ADMITTED AT RS.18 LAKHS AND 9 LAKHS RESPECTIVELY. HOWEVER ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 3 THE STAMP VALUING AUTHORITY VALUED THE PROPERTY AT RS.4 73 48 000/-. THE AO ACCORDINGLY ISSUED A SH OW CAUSE NOTICE TO THE ASSESSEES TO EXPLAIN AS TO WHY THE P ROVISIONS OF SECTION 50C SHOULD NOT BE INVOKED IN THEIR CASE. T HE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT ACCEPT ED BY THE AO HOWEVER HE ACCEPTED THE PRAYER OF THE ASSESSEE TO REFER THE PROPERTY FOR VALUATION TO THE DVO. THE AO AC CORDINGLY TOOK THE SALE CONSIDERATION AS PER THE VALUATION MA DE BY STAMP VALUATION AUTHORITY. THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFORE THE CIT(A) AND RAISED THE I SSUE OF TAKING THE STAMP DUTY VALUE AS SALE CONSIDERATION F OR TRANSFER OF THE DEVELOPMENT RIGHTS OF THE PROPERTY. IN TH E MEAN TIME THE REPORT OF THE DVO WAS RECEIVED AND ACCORDINGLY THE AO PASSED ORDER DATED 20.11.2009 U/S 155 R.W.S.154 OF THE ACT BASED ON THE DVOS REPORT WHEREBY THE PROPERTY WAS VALUED AT RS.1 81 34 749/-. THUS THE CAPITAL GAIN WAS RE -WORKED OUT BY THE AO AS PER THE VALUATION MADE BY THE DVO. 4. BEFORE US THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THIS IS NOT A CASE OF TRANSFER OF L AND OR OTHER CAPITAL ASSET BUT IT WAS A CASE OF TRANSFER OF DEVE LOPMENT RIGHTS OF THE PROPERTY. THEREFORE THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE FOR TAKING THE VALUATION MAD E BY THE STAMP VALUING AUTHORITY AS FULL VALUE OF SALE CON SIDERATION. HE HAS FURTHER CONTENDED THAT THE DEEMING PROVISION S OF ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 4 SECTION 50C CANNOT BE APPLIED WHEN THERE IS NO TRA NSFER OF THE PROPERTY ITSELF BUT ONLY TRANSFER OF DEVELOPME NT RIGHTS. 5. THE LEARNED AR HAS FURTHER SUBMITTED THAT THE VA LUATION BY THE STAMP VALUATION AUTHORITY HAS BEEN MADE FOR REGISTRATION OF DEVELOPMENT AGREEMENTS AND THE STAM P DUTY WAS CHARGED AS PER THE RATE PRESCRIBED FOR AGREEM ENT AND NOT FOR ANY SALE OR TRANSFER OF THE LAND OR BUILDI NG OR THE PROPERTY ITSELF. THE LEARNED AR OF THE ASSESSEE HA S MAINLY CONTENTED THAT THE ASSESSEE IS STILL OWNER OF THE PROPERTY IN QUESTION. HE HAS POINTED OUT THAT IN MUNICIPAL RE CORD THE PROPERTY TAX IS STILL IN THE NAME OF THE ASSESSEE THEREFORE THERE IS NO TRANSFER OF THE LAND OR BUILDING AND ON LY DEVELOPMENTS RIGHTS WERE TRANSFERRED. THE STAMP DU TY WAS PAID BY THE DEVELOPER AND THE ASSESSEE WAS NOT CONC ERNED ABOUT THE STAMP DUTY VALUATION EVEN WHEN THE ASSESS EE REALIZED THAT THE STAMP DUTY VALUE OF THE PROPERTY WAS TAKEN AS FULL VALUE OF THE SALE CONSIDERATION THE TIME L IMIT FOR FILING THE APPEAL AGAINST THE STAMP DUTY VALUATION WAS A LREADY EXPIRED. HE HAS POINTED OUT THAT EVEN THE STAMP DU TY AUTHORITY HAS ALSO DISTINGUISHED BETWEEN THE TRANSF ER OF LAND OR BUILDING AND TRANSFER OF THE DEVELOPMENT RIGHTS. ACCORDINGLY ONLY ONE PERCENT STAMP DUTY WAS PAI D ON THE VALUATION OF THE PROPERTY. WHERE IN THE CASE OF TR ANSFERRING ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 5 THE PROPERTY 5% OF THE VALUATION STAMP DUTY WILL H AVE TO BE PAID. 6. THE LEARNED AR OF THE ASSESSEE HAS FURTHER CONTE NDED THAT SINCE THE PROPERTY WAS OCCUPIED BY THE TENANT S AND THE DEVELOPER TOOK THE ONUS OF DEALING WITH THE TENANTS THE VALUATION OF THE PROPERTY CANNOT BE COMPARED WITH T HE OTHER PROPERTY AND ACCORDINGLY THE VALUATION MADE BY THE STAMP DUTY VALUING AUTHORITY CANNOT BE APPLIED WITHOUT TA KING INTO CONSIDERATION THE OTHER FACTORS AND DEMERITS ATTACH ED WITH THE PROPERTY. 7. ON THE OTHER HAND THE LEANED DR HAS SUBMITTED T HAT THE ASSESSEE DID NOT RAISE ANY OBJECTION REGARDING THE APPLICABILITY OF THE PROVISIONS OF SECTION50C DURIN G THE ASSESSMENT PROCEEDINGS. HE HAS FURTHER SUBMITTED T HAT THE ASSESSEE THEMSELVES HAVE OFFERED THE CAPITAL GAIN B Y ADMITTING THE TRANSFER OF THE PROPERTY/CAPITAL ASS ET DURING THE YEAR. HE HAS FURTHER SUBMITTED THAT THE DVO HAS ALREADY CONSIDERED ALL THE RELEVANT FACTORS ATTACHED WITH THE PROPERTY AND THEREBY VALUED THE PROPERTY AT RS.1 81 34 749 /- AS AGAINST THE STAMP VALUING AUTHORITY VALUED AT RS.4 73 48 000/-. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORIT IES. 8. AFTER CONSIDERING THE RIVAL CONTENTIONS AND RELE VANT RECORD WE FIND THAT THE ASESEEE THEMSELVES HAVE OF FERED THE CAPITAL GAIN AGAINST THE TRANSFER OF THE PROPERTY VIDE ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 6 DEVELOPMENT AGREEMENT WHICH WAS AVAILABLE BEFORE TH E AO. THE DOCUMENTS ITSELF SHOWS THE SALE CONSIDERATI ON ADMITTED BY THE ASESEEE AND THE STAMP VALUATION MADE BY THE STAMP VALUATION AUTHORITY. THE AO ADOPTED THE FULL VALU E OF SALE CONSIDERATION ;AT RS.4 73 48 000/- AS VALUED BY THE STAMP VALUATION AUTHORITY AGAINST THE SALE CONSIDERATION ADMITTED BY THE ASSESSEE AT RS.63 00 000/-. THE ASSESSEES SHA RE IN THE SAID PROPERTY ARE 2/7 AND 1/7 RESPECTIVELY THEREF ORE THE AO PROPORTIONATELY TOOK THE SHARE OF SALE CONSIDERATIO N AND COMPUTED THE CAPITAL GAIN. 9. THE MAIN CONTENTION OF THE LEARNED AR IS THAT TH E DEVELOPMENT RIGHTS DOES NOT AMOUNT TO TRANSFER OF L AND OR BUILDING AND THEREFORE THE PROVISIONS OF SECTION 50 C ARE NOT APPLICABLE. IT IS TO BE NOTED THAT THE DEFINITION OF TRANSFER IN THE INCOME TAX ACT IS NOT SIMILAR TO THAT OF DEFI NITION UNDER THE TRANSFER OF PROPERTY ACT. APART FROM VARIOUS MODE OF TRANSFERS PROVIDED UNDER THE TRANSFER OF PROPERTY ACT THE INCOME TAX ACT ALSO PROVIDES A DEFINITION OF TRANS FER AS DEEMED TRANSFER U/S 2(47)(V). THE DEEMED TRANSFER IS APPLIED WHEN THE CONDITION PRESCRIBED U/S 53A OF TRANSFER OF PROPERTY ACT ARE FULFILLED SECTION 53A OF THE TRA NSFER OF PROPERTY ACT DOES NOT PROVIDE THE CONDITION FOR TR ANSFER BUT IT PROVIDES PROTECTION TO THE TRANSFEROR OF ANY IMMOVA BLE PROPERTY BY A WRITTEN CONTRACT THE TERMS OF WHICH CONSTITUTE THE TRANSFER AND CAN BE ASCERTAINED WITH REASONABLE CERTAINTY ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 7 AND THE TRANSFEREE AS PART PERFORMANCE OF THE CONT RACT TAKEN THE POSSESSIONS OF THE PROPERTY AND HAS PERFORMED O R WILLING TO PERFORM HIS PART OF CONTRACT THEN EVEN THE SAID CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGI STERED AND THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFORE BY LAW THE TRANSFEROR IS BARRED FROM ENF ORCING AGAINST THE TRANSFEREE ANY RIGHT IN RESPECT OF THE PROPERTY OTHER THAN THE RIGHT EXPRESSLY PROVIDED BY THE TERM S OF THE CONTRACT. UNDER THE INCOME TAX ACT 1961 BY INSE RTING CLAUSE (V) TO SECTION 2(47) THE DEFINITION OF TH E TERM TRANSFER INCLUDES THE TRANSACTION WHICH FULFILLS THE CONDITI ONS PROVIDED U/S 53A OF TRANSFER OF PROPERTY ACT. THUS THE PRO VISIONS OF SECTION 53A OF TRANSFER OF PROPERTY ACT DOES NOT P ROVIDE ANY TRANSFER BUT IT TALKS ABOUT THE SITUATION WHEN THE RIGHT CREATED IN FAVOUR OF THE TRANSFEREE CANNOT BE DEFEATED OT HERWISE THAN THE TERMS AND CONDITIONS EXPRESSLY PROVIDED IN THE CONTRACT ITSELF. WHEN THE ASSESSEE HAS RECEIVED THE SALE CO NSIDERATION AND HANDED OVER THE POSSESSION OF THE PROPERTY IN QUESTION VIDE DEVELOPMENT AGREEMENT THEN THE CONDITION PRESC RIBED U/S 53A OF THE TRANSFER OF PROPERTY ACT ARE SATISFIE D AND ACCORDINGLY AS PER THE PROVISIONS OF SECTION 2(47) (V) OF THE IT ACT THE TRANSACTION OF TRANSFER IS COMPLETED. ACCOR DINGLY WE DO NOT FIND ANY MERIT OR SUBSTANCE IN THE CONTENTI ON OF THE ASSESSEE. MERELY BECAUSE THE NAME OF THE ASSESSEE STILL STAND IN THE RECORD OF THE MUNICIPAL RECORD DOES NO T CHANGE ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 8 THE NATURE OF TRANSACTION. EVEN OTHERWISE THE MUT ATION OF THE PROPERTY IN THE PROPERTY TAX RECORD OF MUNICIP AL AUTHORITY DOES NOT GIVE ANY TITLE OF OWNERSHIP. ONCE UNDISP UTEDLY THE ASSESSEE HAS HANDED OVER THE POSSESSION OF THE PROP ERTY TO THE DEVELOPER AGAINST THE PAYMENT OF SHARE OF SALE CONSIDERATION THEN THE PROPERTY IS DEEMED TO HAVE BEEN TRANSFERRED AS PER THE DEEMING PROVISIONS OF SECTI ON 2(47) OF THE IT ACT. WHEN THE CONDITIONS OF SECTION 53A OF TRANSFER OF PROPERTY ACT IS FULFILLED IRRESPECTIVE OF THE FA CT THAT IT IS NOT ABSOLUTE TRANSFER BY WAY OF EXECUTION OF SALE DEED THE TRANSACTION IS TO BE COMPLETED. THE TRANSFER OF C APITAL ASSET IS COMPLETED IF THE CERTAIN CONDITIONS OF SECTION 5 3A OF THE TRANSFER OF PROPERTY ACT IS SATISFIED. . ACCORDIN GLY WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LO WER AUTHORITIES ON THIS ISSUE. AS FAR AS DEMERITS ATT ACHED TO THE PROPERTY ARE CONCERNED THE DVO HAS ALREADY TAKEN I NTO ACCOUNT ALL ASPECTS WHILE MAKING THE VALUATION OF T HE PROPERTY. THE ASSESSEE HAS PARTICIPATED IN THE P ROCEEDINGS BEFORE THE DVO AND ACCORDINGLY WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE VALUATION MADE BY THE DVO WHICH IS MUCH LESS TO THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY. THE SUBSTANTIAL RELIEF HAS ALREADY BEEN GIVEN BY T HE DVO AS WELL AS BY THE AO WHILE PASSING THE CONSEQUENTIAL ORDER AS PER THE DVOS REPORT. ACCORDINGLY THE APPEALS OF THE ASSESSEE ARE DEVOID OF MERITS ON THIS ISSUE ITA NO. 541/MUM/2010 ITA NO. 706/MUM/2010 9 10. BOTH THE APPEALS OF THE ASSESSEES ARE DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 22.12.2010 SD SD (R.S.SYAL) (VIJ AY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 22 ND DEC 2010 SRL:201210 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI