I.T.O.13(3)(3), MUMBAI v. SHRI. CHANDRAKANT B. SHAH, MUMBAI

ITA 5626/MUM/2008 | 2005-2006
Pronouncement Date: 12-01-2010 | Result: Dismissed

Appeal Details

RSA Number 562619914 RSA 2008
Assessee PAN ALUPS7636R
Bench Mumbai
Appeal Number ITA 5626/MUM/2008
Duration Of Justice 1 year(s) 4 month(s) 7 day(s)
Appellant I.T.O.13(3)(3), MUMBAI
Respondent SHRI. CHANDRAKANT B. SHAH, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 12-01-2010
Date Of Final Hearing 07-01-2010
Next Hearing Date 07-01-2010
Assessment Year 2005-2006
Appeal Filed On 05-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 5626/MUM/2008 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER 13(3)(3) SHRI CHANDRAKANT B. SHA H ROOM NO. 429 4TH FLOOR 87-C ANNA BHAVAN DEVJI AAYAKAR BHAVAN M.K. ROAD VS. TATANSHI MARG BAROACH STREET MUMBAI 400020 MUMBAI 400009 PAN - ALUPS 7636 R APPELLANT RESPONDENT APPELLANT BY: SHRI K.K. MAHAJAN RESPONDENT BY: SHRI SATISH R. MODY O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XIII MUMBAI DATED 13.06.2008. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1 (I) THE LD. CIT(A) ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE ERRED IN LAW IN DELETING THE ADDITION OF RS.81 00 0 00/- MADE N THE ASSESSMENT ORDER ON ACCOUNT OF EXPENDITURE OF T HE SALE OF THE CAPITAL ASSET. (II) THE LD. CIT(A) ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE ERRED IN LAW IN INCLUDING THE COST OF CONSTRUCTION OF THE AREA ALLOTTED TO THE OWNER ALSO. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW IN NOT GIVING THE BASIS ON WHICH RELIE F OF RS.69 30 566/- IS ALLOWED BY HIM. 2. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW IN DELETING THE ADDITION OF RS.20 62 3 00/- MADE IN THE ASSESSMENT ORDER ON ACCOUNT OF PURCHASE OF TENA NCY SPACE FOR THE ASSESSEE. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW IN NOT GIVING THE BASIS FOR THE RELIEF OF RS.6 87 433/- GIVEN BY HIM. ITA NO. 5626/MUM/2008 SHRI CHANDRAKANT B. SHAH 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A LONG WITH SHRI DINESH B. SHAH WAS THE OWNER OF A PROPERTY CALLED CHANCHAL SMRITI. THE PROPERTY HAD TENANTS. THE OWNERS ENTERED INTO AN AG REEMENT WITH A DEVELOPER ON 15/07/2003 FOR THE DEVELOPMENT OF THE SAID PROPERTY. AS PER THE AGREEMENT THE OWNERS AGREED TO GIVE BUILT-UP A REA OF 6940 SQ.FT. TO TENANTS AS PERMANENT ALTERNATE ACCOMMODATION AGAINS T SURRENDER OF THEIR TENANCY RIGHTS. THE OWNERS RETAINED BUILT-UP AREA O F 1171 SQ.FT. THE OWNERS AGREED TO BEAR THE CONSTRUCTION COST OF THIS AREA W HICH AMOUNTED TO RS.81 00 000/-. THE OWNERS THE DEVELOPERS AND THE TENANTS ALSO HAD ANOTHER SUPPLEMENTARY AGREEMENT FOR TERRACE OF 410 SQ.FT. THE OWNERS AGREED TO PAY AN AMOUNT OF RS.20 62 300/-. ONE-THIR D OF THE TERRACE WERE MEANT FOR TENANTS. THE OWNERS RECEIVED A SUM OF RS. 2 56 00 000/-. WHILE COMPUTING THE LONG TERM CAPITAL GAIN THE APPELLANT CLAIMED DEDUCTION OF RS.81 00 000/- AND RS.20 62 300/- FROM THE GROSS SA LES CONSIDERATION OF RS.2 56 00 000/-. THE A.O. DID NOT ALLOW THE CLAIM OF THE ASSESSEE CITING TWO HIGH COURT DECISIONS REPORTED IN 159 ITR 797 AND 16 6 ITR 593. AFTER CONSIDERING ASSESSEES CONTENTIONS AND ALSO THE LEG AL PRINCIPLED INVOLVED IN PAYMENT OF AMOUNT TO TENANTS THE CIT(A) HAS ALLOWED ASSESSEES APPEAL AND ACCORDINGLY THE REVENUE IS AGGRIEVED. 4. AT THE OUTSET IT WAS SUBMITTED THAT SINCE THE ITAT B BENCH MUMBAI IN ITA NO. 4407/MUM/2008 HAS DISMISSED THE REVENUE APPEAL IN THE OTHER CO-OWNERS CASE THIS REVENUE APPEAL IS ALSO TO BE DISMISSED. 5. WE HAVE CONSIDERED THE ISSUE. AS FAR AS GROUND NO. 1 IS CONCERNED THE FINDINGS OF THE ITAT IN CO-OWNERS CASE IS AS UNDER : - 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUMMITS TH AT HE IS CONTENT WITH DIRECTION TO THE EFFECT THAT COST OF CONSTRUCT ION IN RESPECT OF THE AREA RETAINED BY HIM PAID TO THE DEVELOPER IS TO BE TAK EN AS PART OF ACQUISITION OF THE CONSTRUCTED AREA. WE SEE MERITS IN THIS PLEA. WHATEVER THE ASSESSEE HAS PAID TOWARDS CONSTRUCTION OF THE A REA RETAINED BY HIM AS A COROLLARY TO THE LD. CIT(A)S FINDING IS INDEE D TO BE TAKEN AS A PART OF COST OF ACQUISITION FOR THE CONSTRUCTED AREA. WE HOLD SO. 6. WITH REFERENCE TO GROUND NO. 2 THE FINDINGS ARE AS UNDER: - 23. THE RELEVANT FACTS ARE SET OUT IN PARAGRAPH AB OVE. THE SHORT QUESTION IS WHETHER THE PAYMENT MADE BY THE ASSESSE E FOR CONSTRUCTION ITA NO. 5626/MUM/2008 SHRI CHANDRAKANT B. SHAH 3 OF PERMANENT ALTERNATE ACCOMMODATION ADMISSIBLE DED UCTION U/S 48. THIS ISSUE HAS BEEN SETTLED IN FAVOUR OF THE ASSESS EE BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHAKANTULA KANTIL AL 190 ITR 56 WHEREIN THEIR LORDSHIPS HAVE HELD AN EXPENDITURE I NCURRED TO REMOVE ENCUMBRANCE IS ALLOWABLE DEDUCTION U/S 48. IN THE P RESENT CASE IT WAS ABSOLUTELY NECESSARY FOR THE TENANTS TO BE PROVIDED ALTERNATIVE PERMANENT ACCOMMODATION WITHOUT WHICH DEVELOPMENT A GREEMENT COULD NOT HAVE BEEN IMPLEMENTED. IN THIS VIEW OF THE MATT ER LD. CIT(A) WAS QUITE JUSTIFIED GRANTING THE IMPUGNED DEDUCTION IN COMPUTATION OF TAXABLE CAPITAL GAIN. WE APPROVE AND AFFIRM THE ACTION OF T HE LD. CIT(A) IN THIS RESPECT. REVENUE HAS ALSO RAISED THE PLEA THAT THE LD. CIT(A) HAS NOT DISCUSSED THE QUANTIFICATION OF THIS DISCUSSION BUT THEN WE FIND THAT THIS QUANTIFICATION HAS NOT EVEN BEEN CHALLENGED BY THE ASSESSING OFFICER NOR ANY DEFECTS HAVE BEEN POINTED OUT IN RESPECT OF THE SAME BEFORE US. WE SEE NO SUBSTANCE IN THIS PLEA EITHER. 7. RESPECTFULLY FOLLOWING THE ABOVE SINCE THE CIT(A) S ORDER IS CORRECT ON THE FACTS REVENUES GROUNDS ARE REJECTED. 8. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY 2010. SD/- SD/- (R.K. GUPTA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 12 TH JANUARY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIII MUMBAI 4. THE CIT XIII MUMBAI CITY 5. THE DR C BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P. ITA NO. 5626/MUM/2008 SHRI CHANDRAKANT B. SHAH 4 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 07.01.10 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 08.01.10 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR. PS/PS 7 FILE SENT TO THE BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER