INDERLOL HOTELS P. LTD, MUMBAI v. ITO 5(2)(1), MUMBAI

ITA 5428/MUM/2010 | 2007-2008
Pronouncement Date: 23-09-2011 | Result: Allowed

Appeal Details

RSA Number 542819914 RSA 2010
Assessee PAN AAACI2899A
Bench Mumbai
Appeal Number ITA 5428/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 21 day(s)
Appellant INDERLOL HOTELS P. LTD, MUMBAI
Respondent ITO 5(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 23-09-2011
Assessment Year 2007-2008
Appeal Filed On 02-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AN D SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 5428/MUM./2010 (ASSESSMENT YEAR : 2007-08 ) INDERLOK HOTELS PVT. LTD. (NOW KNOWN AS INDERLOK INFRA-AGRO PVT. LTD.) BLOCK NO.3 SOHNI MANSION AUGUST KRANTI MARG GOWALIA TANK MUMBAI 400 026 AAACI2899A .. APPELLANT V/S INCOME TAX OFFICER WARD-5(2)(1) MUMBAI .... RESPONDENT ASSESSEE BY : MR. A.H. DALAL REVENUE BY : MR. SUNIL KUMAR SINGH DATE OF HEARING 12.09.2011 DATE OF ORDER O R D E R PER J. SUDHAKAR REDDY A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 16 TH JUNE 2010 PASSED BY THE COMMISSIONER (APPEALS)-IX MUMBAI FOR ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE CASE AS BROUGHT OUT IN PARA-1.1 OF THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) ARE EXT RACTED BELOW:- 1.1 BRIEFLY STATED FACTS OF THE CASE ARE THAT THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF THE CONSTRUCTING RESI DENTIAL FLATS. THE APPELLANT UNDERTOOK CONSTRUCTION OF THE RESIDENTIAL BUILDING KNOWN AS INDERLOK HOTELS PVT. LTD. ITA NO.5428/M/2010 2 INDER TOWER ANNEXURE A & B AT GOKHALE ROAD (SOUT H) DADAR MUMBAI. DURING THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR 2007-08 APPELLANT COMPANY SOLD TWO FLATS FOR RS.80 00 000!- AND FOR RS.42 00 000!- RESPECTIVELY. HOWEVER STAMP VALUATI ON AUTHORITIES HAVE TAKEN THE VALUE OF THESE FLATS FOR LEVY OF ST AMP DUTY AT RS. 61 40 820!- AND RS.47 53 980!- RESPECTIVELY. ASSESS ING OFFICER ASKED THE APPELLANT TO EXPLAIN WHY VALUE OF FLAT SOLD FOR RS.42 00 000/- SHOULD NOT BE TAKEN AT RS.47 53 980/- WHICH IS THE VALUE DETERMINED BY STAMP VALUATION AUTHORITIES. APPELLANT FILED WRI TTEN SUBMISSIONS ON 27/10/2009 WHICH WERE REJECTED BY THE ASSESSING OF FICER. ASSESSING OFFICER HELD THAT THOUGH PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN CASE OF SALE OF ASSETS HELD AS STOCK IN TRADE BUT THIS VALUE CAN BE A GUIDING FACTOR IN ESTIMATING THE UNDERVALUATION. TH E ASSESSING OFFICER MADE ADDITION OF RS.5 50 980!- WHICH IS THE DIFFERE NCE BETWEEN THE VALUE DECLARED BY APPELLANT IN THE SALE DEED AND VA LUE DETERMINED BY STAMP VALUATION AUTHORITIES. APPELLANT IS IN APPEAL . 3. THE FIRST APPELLATE AUTHORITY HELD THAT THE ASSESSI NG OFFICER HAS NOT APPLIED THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT ) AS THIS IS NOT APPLICABLE WHILE COMPUTING BUSINE SS INCOME BUT HAS TAKEN RECOURSE TO STAMP VALUATION AUTHORITIES FOR D ETERMINING THE SALE CONSIDERATION AS ONE OF THE IMPORTANT FACTORS. HE O BSERVED THAT THE ASSESSEE COMPANY SOLD TWO FLATS AND IN ONE CASE DECLARED MOR E VALUE THAN THE VALUE TAKEN BY THE STAMP VALUATION AUTHORITIES AND IN ANO THER CASE IT DECLARED SALE VALUE LESSER THAN THAT FIXED BY THE STAMP VALUATION AUTHORITY. HE FOLLOWED THE EARLIER YEARS ORDER PASSED BY THE COMMISSIONER (APPEALS) AND DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED TH E ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAP ERS ON RECORD WE FIND THAT A CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESS EES OWN CASE IN ITA NO.6034/MUM./2009 ORDER DATED 31 ST MAY 2010 FOR ASSESSMENT YEAR 2006- 07 HAS UNDER SIMILAR CIRCUMSTANCES VIDE PARA-2.4 /PAGES-6 & 7 HELD AS FOLLOWS:- 2.4 THE CASE OF THE ASSESSEE BEFORE US IS THAT THE ISSUE WAS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2005-06 IN ASSESSEES OWN CASE IN WHICH THE TRIBUNAL DECIDED T HE ISSUE IN FAVOUR OF THE ASSESSEE. HOWEVER WE FIND THAT IN THAT YEAR THE RELIEF GIVEN BY THE TRIBUNAL WAS ONLY ON THE GROUND THAT PROVISIONS OF SECTION 50C WERE NOT APPLICABLE WHILE COMPUTING THE INCOME UNDE R THE HEAD BUSINESS. IN THIS YEAR THE AUTHORITIES BELOW HAVE NOT APPLIED INDERLOK HOTELS PVT. LTD. ITA NO.5428/M/2010 3 PROVISIONS OF SECTION SOC. THEY HAVE ONLY FOUND THA T THE SALE VALUE DECLARED BY THE ASSESSEE IS TOO LOW COMPARED TO THE MARKET VALUE AND THE GUIDANCE REGARDING MARKET VALUE HAS BEEN TAKEN FROM THE MARKET VALUE DETERMINED FOR STAMP DUTY VALUATION. THEREFOR E WE AGREE WITH THE SUBMISSION OF LEARNED DR THAT CASE IS NOT COVER ED BY THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2005-06. HOWEVER WE AGREE WITH THE SUBMISSION OF THE LEARNED AR THAT MARKET VALUE OF THE FLAT CANNOT BE DETERMINED ON THE BASIS OF VALUATION MADE FOR ST AMP DUTY PURPOSE. THERE IS NO DISPUTE THAT INCOME IN CASE OF THE ASSE SSEE IS BEING COMPUTED UNDER THE HEAD BUSINESS AND THEREFORE SA LE VALUE DECLARED BY THE ASSESSEE CAN BE REJECTED ONLY IF ACCOUNTS AR E DEFECTIVE OR NOT RELIABLE. THEREFORE IN OUR VIEW THE ACCOUNTS CAN BE REJECTED ONLY WHEN DISCREPANCY IS FOUND IN THE SALE VALUE DECLARED BY THE ASSESSEE AND THE PURCHASE VALUE SHOWN BY THE BUYER OR IF IT IS F OUND THAT FOR AN IDENTICAL FLAT HAS BEEN SOLD FOR A MUCH HIGHER VALU E AND THE ASSESSEE IS NOT ABLE TO EXPLAIN THE DIFFERENCE. IN THE PRESENT CASE THERE IS NO MATERIAL WITH THE AO TO SHOW THAT THE SALE VALUE SH OWN BY THE ASSESSEE WAS LOWER THAN THE VALUE FOR WHICH THE BUY ERS HAD PURCHASED THE FLAT. THERE IS ALSO NO IDENTICAL THIRD PARTY SA LE INSTANCE AVAILABLE. HOWEVER WE NOTICE THAT WITHIN THE FLATS SOLD BY TH E ASSESSEE ITSELF THERE IS VIDE VARIATION IN SALE VALUE IN RESPECT OF SAME TYPE OF FLATS PARTICULARLY THE FLAT NO.20 WHICH HAS BEEN SOLD FOR RS.43 LACS WHEREAS THE FIAT NO.22 HAVING SAME AREA AND IDENTICAL SITUA TION HAS BEEN SOLD FOR RS.62 27 50O/-. THE SALE VALUE OF OTHER FLATS I N THE A WING ARE COMPARABLE WITH MINOR DIFFERENCES. THERE ARE ALSO M AJOR DIFFERENCES IN THE SALE VALUE OF FLATS NUMBER 1 AND 2 BUT THESE AR E LOCATED IN B WING AND ARE LOWER FLOOR FLATS AND THEREFORE SITUATION I S NOT IDENTICAL WITH RESPECT TO FIATS IN A WING AND THUS NOT COMPARABLE. HOWEVER AS POINTED OUT EARLIER THE DISCREPANCY IN SALE VALUE O F FLAT NO.20 VIS--VIS THE SALE VALUE OF FLAT NO.22 IS WIDE AND GLARING WH ICH HAS NOT BEEN EXPLAINED BY THE ASSESSING OFFICER SATISFACTORILY. ONLY BEFORE CIT(A) THE ASSESSEE MADE A CLAIM THAT THE FLAT HAD BEEN MO RTGAGED AND MORTGAGEE AS PER TERMS OF THE MORTGAGE DEED WAS IN POSSESSION OF THE FLAT WHICH WAS THE REASON FOR LOW SALE VALUE. C IT(A) HAS NOT ACCEPTED THE CLAIM AS THE SAME WAS NOT MADE BEFORE THE AO. THIS ASPECT OF THE FLAT BEING MORTGAGED AND MORTGAGEE BE ING IN POSSESSION OF FLAT HAD NOT BEEN EXAMINED. IN OUR VIEW THESE AS PECTS REQUIRE FRESH EXAMINATION. IN RESPECT OF OTHER FLATS AS WE HAVE M ENTIONED EARLIER THERE IS NO MATERIAL WITH THE AO TO REJECT THE SALE VALUE DECLARED BY THE ASSESSEE WHICH HAS ACCEPTED. INSOFAR AS THE FLA T NO. 20 IS CONCERNED WE RESTORE THIS ISSUE TO THE FILE OF A.O. FOR FRESH ORDER AFTER NECESSARY EXAMINATION AND AFTER ALLOWING OPPORTUNIT Y OF HEARING TO THE ASSESSEE. 5. IN OUR CONSIDERED OPINION NO ADDITION CAN BE SUSTA INED IN THIS CASE AS NEITHER THERE IS ANY INVESTIGATION WHATSOEVER M ADE BY THE ASSESSING OFFICER NOR WAS ANY EVIDENCE GATHERED BY HIM. MEREL Y BECAUSE THE MARKET VALUE AS PER THE STAMP VALUATION AUTHORITIES AND TH E SALE PRICE ARE AT VARIANCE NO ADDITION CAN BE MADE TO THE BUSINESS I NCOME. THE ASSESSING OFFICER OUGHT TO HAVE ADDUCED EVIDENCE TO PROVE THA T THE SALE CONSIDERATION INDERLOK HOTELS PVT. LTD. ITA NO.5428/M/2010 4 WAS IN FACT GREATER THAN THAT WHICH WAS MENTIONED IN THE REGISTERED DOCUMENTS. THE ASSESSING OFFICER NEITHER FOUND ANY DEFECTS IN THE BOOKS OF ACCOUNT NOR HAS REJECTED THE SAME. AS ALREADY HELD PROVISIONS OF SECTION 50C IS NOT APPLICABLE TO CASES WHERE INCOME IS COMP UTED UNDER THE HEADS PROFITS & GAINS UNDER BUSINESS OR PROFESSION. IN VIEW OF THESE DISCUSSIONS WE ALLOW THE GROUNDS RAIDED BY THE ASSESSEE. 6. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI DATED: 23 RD SEPTEMBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A) MUMBAI CONCERNED; (4) THE CIT MUMBAI CITY CONCERNED; (5) THE DR I BENCH ITAT MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT MUMBAI BENCHES MUMBAI