ACIT CIR 25(3), MUMBAI v. TOKERSHIBHAI SHIVAJI SHAH (HUF), MUMBAI

ITA 6243/MUM/2012 | 2005-2006
Pronouncement Date: 11-04-2014 | Result: Allowed

Appeal Details

RSA Number 624319914 RSA 2012
Assessee PAN AAAHT0476K
Bench Mumbai
Appeal Number ITA 6243/MUM/2012
Duration Of Justice 1 year(s) 6 month(s)
Appellant ACIT CIR 25(3), MUMBAI
Respondent TOKERSHIBHAI SHIVAJI SHAH (HUF), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-04-2014
Appeal Filed By Department
Order Result Allowed
Bench Allotted E
Tribunal Order Date 11-04-2014
Assessment Year 2005-2006
Appeal Filed On 11-10-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI SANJAY ARORA ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEM BER . / ITA NO. 6243 /MUM./201 2 ( / ASSESSMENT YEAR : 20 05 0 6 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 25(3) 308 C 11 BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400 067 .. / APPELLANT V/S M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 76 LAXMI PALACE MATHURADAS ROAD KANDIVALI (W) MUMBAI 400 067 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAAHT0476K / ASSESSEE BY : MR. JIGNESH SAVLA / REVENUE BY : MR. R.K. SAHU / DATE OF HEARING 12 .0 3 .201 4 / DATE OF ORDE R 11.04.2014 / ORDER / PER AMIT SHUKLA J.M. THE AFORESAID APPEAL HA S BEEN PREFE RRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 3 RD JULY 2012 PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXXV MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R/W SECTION 147 OF THE INCOME M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 2 TAX ACT 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 05 06 VIDE WHICH THE SOLE GROUND RAISED BY THE ASSESSEE READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION OF ` 15 00 000 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT MADE TO PURCHASES AFTER EXECUTION OF SALE DEED WITHOUT APPRECIATING THE FACTS THAT THE PAYMENT WAS MADE AFTER THE EXECUTION OF SALE DEED AND NOT A PART OF TRANSFER OF PLOT AS NOTHING WAS MENTIONED IN SALE DEED IN THIS REGARD. 2 . FACTS IN BRIEF : THE ASSESSEE HAD FILED ITS RETURN OF INCOME AT ` 59 250 ON 25 TH JULY 2005. THE SAID RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) AND THEREAFTER THE CASE WAS RE OPENED UNDER SECTION 147 BY ISSUANCE OF NOTICE DATED 28 TH MARCH 2011 UNDER SECTION 148 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD NOT OFFERED ANY TAX ON CAPITAL GAINS IN RESPECT OF TRANSFER OF A CAPITAL ASSET. THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 FILED ITS RETURN OF INCOME ON 26 TH APRIL 2011 DECLARING TOTAL INCOME OF ` 32 09 989 WHICH COMPRISED OF INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN LONG TERM CAPITAL GAIN AND INCOME FROM OTHER SOURCES . THE ASSESSING OFFICER ON A PERUSAL OF COMPUTATION OF LONG TERM CAPITAL GAIN NOTED THAT THE ASSESSEE HAD SUBMITTED WRONG WORKING OF INDEXATION OF THE COST OF THE PLOT SOLD AND HAS ALSO WRONGLY DEBITED THE EXPENDITURE OF ` 15 LAKHS AGAINST THIS CAPITAL GAIN. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE SUBMITTED THAT IT HAD SOLD THE PLOT OF LAND BY WAY OF DEED OF CONVEYANCE DATED 30 TH APRIL 2004 ON A CONSIDERATION OF ` 46 LAKHS. LATER ON THERE WAS A MUTUAL AGREEMENT BETWEEN THE ASSESSEE AND THE PURCHASER THAT THE PURCHASER HAD TO INCUR SUM OF ` 15 LAKHS TOWARDS VACATING THE ENCROACHMENT EARTH FILLING ETC. AND GETTING THE ACCESS CLEARED AND THIS AMOUNT WOULD BE ADJUSTED FROM THE TOTAL CONSIDERATION RECEIVABLE BY THE PARTY. THE ASSESSING OFFICER DID NOT M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 3 ACCEPT THE ASSESSEES CONTENTION ON THE GROUND THAT NOWHERE IN THE DEED OF CONVEYANCE SUCH TYPE OF CLAUSE IS MENTIONED THAT THE AMOUNT OF ` 15 LAKHS WILL BE ADJUSTED FROM THE TOTAL CONSIDERATION. ON THE CONTRARY PAGE 6 OF THE CONVEYANCE DEED CATEGORICALLY MENTIONS THE SUM PAYABLE TO THE ASSESSEE AT ` 46 LAKHS AND GIVES ELABORATE SCHEDULE OF PAYMENT. THUS HE HELD THAT ` 15 LAKHS HAS WRONGLY BEEN CLAIMED TO MINIMIZE THE TAX INCIDENCE ON LONG TERM CAPITAL GAIN. ACCORDINGLY HE DISALLOWED THE SUM OF ` 15 LAKHS AGAINST THE LONG TERM CAPITAL GAIN CLAIMED BY THE ASSESSE E. 3 . BEFORE THE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE SUBMITTED THAT THERE WAS A LETTER DATED 31 ST MARCH 2005 SIGNED BY THE ASSESSEE AS WELL AS THE PURCHASER AND BOTH THE PARTIES HAVE AGREED AND CONFIRMED THAT SUM OF ` 15 LAKHS WOULD BE INCURRED BY T HE PURCHASER TOWARDS VACATING THE ENCROACHMENT EARTH FILLING ETC. THE ASSESSEE WAS BOUND TO INDEMNIFY THE PURCHASER WITH REGARD TO THE ENCUMBRANCES IN RESPECT OF THE PLOT OF LAND IN TERMS OF THE LEASE DATED 30 TH APRIL 2004. THE ASSESSEE HAD ACTUALLY RECE IVED ONLY SUM OF ` 31 LAKHS AND THEREFORE THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN SHOULD BE TAKEN AT ` 31 LAKHS INSTEAD OF ` 46 LAKHS. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE ASSESSEES SUBMISSION WHICH HAVE BEEN DEALT BY HIM FROM PAGE 4 TO 6 OF THE APPELLATE ORDER AGREED WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT THERE IS NO ALLEGATION OR FINDINGS BY THE ASSESSING OFFICER THAT THE ASSESSEE AND THE PURCHASER ARE THE RELATED PARTIES OR THAT THE AMOUNT INCURRED BY THE PURCHASERS AT A SUM OF ` 15 LAKHS HAS BEEN PASSED / RETURNED BACK TO THE ASSESSEE IN THE FORM OF CASH. HE FURTHER NOTED THAT IN THE DEED OF CONVEYANCE AT PAGE 11 THE ASSESSEE HAD INDEMNIFIED TO THE PURCHASER TO GIVE VACANT AND U N ENCROACHED M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 4 POSSESSION OF THE SAID PLOT OF LAND TO THE PURCHASER AND THEREFORE UNDER THE AGREEMENT IT WAS THE DUTY OF THE ASSESSEE TO GET THE ENCROACHMENT CLEARED. THUS HE DELETED THE ADDITION OF ` 15 LAKHS. 4 . BEFORE US THE LEARNED DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT THERE IS NO IOTA OF EVIDENCE PRODUCED BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED COMMISSIONER (APPEALS) TO SHOW THAT THE ASSESSEE HAD TO INCUR A SUM OF ` 15 LAKHS TOWARDS VACATING THE ENCROACH MENT EARTH FILLING ETC. THE D EED OF CONVEYANCE DOES NOT STIPULATE ANY KIND OF CONDITION THAT THE ASSESSEE IS LIABLE FOR INCURRING SUCH KIND OF EXPENDITURE. ON THE CONTRARY HE POINTED OUT THAT AT PAGE 5 OF THE DEED OF CONVEYANCE DATED 30 TH APRIL 2004 THERE IS A CLEAR CUT CLAUSE THAT THE PURCHASER SHALL ACQUIRE AND ACCESS TO THE SAID PROPERTY AT OWN COST AND EXPENDITURE. THE RELEVANT CLAUSE (E) AS APPEARING IN TH E SAID DEED READS AS UNDER: (E) THERE IS NO ACCESS TO THE SAID PROPERTY AND THAT PURCHASERS SHALL ACQUIRE AND ACCESS AT THEIR OWN COSTS CHARGE AND EXPENSES. 5 . LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER POINTED OUT THAT THE TOTAL CONSIDERATION MENTIONED IS ` 46 LAKHS AND SCHEDULE OF PAYMENT HAS ALSO BEEN GIVEN THEREIN. THERE IS NO CLAUSE AS SUCH THAT SELLER IS LIABLE FOR G ETTING THE CLEARANCE OR TO VACATE THE ENCROACHMENT. THE LETTER WHICH HAS BEEN SUBMITTED IS DATED 31 ST MARCH 2005 WHICH IS ALMOST AFTER ONE YEAR THE SAID LETTER IS MERELY A SELF SERVING DOCUMENT WITHOUT ANY CORROBORATIVE EVIDENCE AS TO HOW THE ASSESSEE HAD INCURRED SUM OF ` 15 LAKHS. THUS HE STRONGLY RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER. M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 5 6 . THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT EVEN THOUGH THE LIABILITY OF THE SELLER TO GET THE PROPER ACCESS TO THE PLOT AND V ACATING THE ENCROACHMENT EARTH FILLING ETC. HAVE BEEN STIPULATED IN THE CONVEYANCE DEED BUT THERE IS A MUTUAL AGREEMENT BETWEEN T HE PARTIES THAT THE ASSESSEE HAD TO INCUR SUM OF ` 15 LAKHS TOWARDS VACATING ENCROACHMENT EARTH FILLING AND GETTING AC CESS CLEARED. THIS IS EVIDENT FROM THE LETTER DATED 31 ST MARCH 2005. HE FURTHER REITERATED THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) WHEREIN THE LEARNED COMMISSIONER (APPEALS) HAS OBSERVED THAT THE ASSESSING OFFICER HAS NOT MADE OUT A CASE THAT THE A SSESSEE AND THE PURCHASER ARE RELATED PARTIES AND THE ASSESSEE HAD RECEIVED BACK THE SUM OF ` 15 LAKHS IN THE FORM OF CASH. HE FURTHER SUBMITTED THAT ONCE THE ASSESSEE AGREED TO SELL THE PLOT THEN IT WAS INCUMBENT UPON THE ASSESSEE TO GIVE CLEAR PLOT WITH OUT ANY ENCUMBRANCE ENCROACHMENT AND PROPER ACCESS TO THE PLOT. IT WAS FOR THIS PURPOSE THE ASSESSEE HAD INCURRED ` 15 LAKHS TOWARDS FULFILLMENT OF GETTING THE ENCUMBRANCE FREE AND WITH PROPER ACCESS TO THE PLOT. HE THUS STRONGLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). 7 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. IN THIS CAE THE ASSESSEE HAD NOT OFFERED ANY LONG TERM CAPITAL GAIN ON SALE OF A PLOT IN THE ORIGINAL RETURN OF INCOME. SUCH A LONG TERM CAPITAL GAIN WAS OFFERED ONLY IN RESPONSE TO THE NOTICE UNDER SECTION 148. THE ASSESSEES CASE HAS BEEN THAT EVEN THOUGH IN THE CONVEYANCE DEED DATED 30 TH APRIL 2004 ENTERED WITH THE PURCHASER MENTI ONS THE SALE CONSIDERATION OF ` 46 LAKHS BUT IN FACT HE HAS RECEIVED ONLY ` 31 LAKHS AS ` 15 LAKHS WAS INCURRED ON GETTING THE PLOT FREE FROM ENCROACHMENT AND PROPER ACCESS TO THE PLOT AND ALSO EARTH FILLING. IN SUPPORT OF THIS M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 6 CONTENTION A LETTER DATED 31 ST MARCH 2005 HAS BEEN PLACED ON RECORD SIGNED BY BOTH THE PARTIES WHICH WAS FILED BEFORE THE LEARNED COMMISSIONER (APPEALS) . THE SAID LETTER MENTIONES THAT IT HAS BEEN MUTUALLY AGREED BETWEEN THE PARTIES THAT THEY HAVE TO INCUR ` 15 LAKHS TOWARDS VACA TING THE ENCROACHMENT EARTH FILLING AND GETTING AC CESS CLEARED ON THE PLOT . THE SAID EXPENDITURE HAS BEEN INCURRED BY THE PURCHASER. BASED ON THIS LETTER THE LEARNED COMMISSIONER (APPEALS) HAS ACCEPTED THE ASSESSEES CONTENTION AND ALSO SHIFTED THE ONUS ON THE ASSESSING OFFICER THAT HE HAS FAILED TO PROVE FIRSTLY THE PURCHASER AND THE SELLER ARE RELATED PARTIES AND SECONDLY THE AMOUNT INDIRECTLY PAID BY THE PURCHASER IN THE FORM OF EXPENDITURE INCURRED ON THE PLOT HAS BEEN RECEIVED BACK BY THE ASSESSEE IN CASH. THIS PREMISE OF THE LEARNED COMMISSIONER (APPEALS) IS NOT CORRECT BECAUSE O NCE THE ASSESSEE IS CLAIMING THAT IT HAS NOT RECEIVED THE FULL CONSIDERATION OF ` 46 LAKHS AS MENTIONED IN THE DEED OF CONVEYANCE AND ONLY SUM OF ` 31 LAKHS HA S BEEN REC EIVED THEN ONUS TO PROVE IS ON THE ASSESSEE WITH SOME CREDIBLE EVIDENCE. FURTHER THE CLAIM OF THE ASSESSEE THAT THE PURCHASER HAD INCURRED ` 15 LAKHS IS ALSO NOT CORROBORATED BY ANY EVIDENCE THAT THE PURCHASER HAD ACTUALLY INCURRED THIS AMOUNT FOR GETTIN G THE ENCUMBRANCE FREE PLOT AND HOW IT HAS BEEN QUANTIFIED. THE DEED OF CONVEYANCE IS COMPLETELY SILENT ON THIS POINT THAT THE ASSESSEE WAS LIABLE FOR INCURRING SUCH AN EXPENDITURE OR THE PURCHASER SHALL INCUR THIS AMOUNT WHICH SHALL BE REDUCED FROM THE TO TAL SALE CONSIDERATION AGREED UPON BETWEEN THE PARTIES. ON THE CONTRARY AS POINTED OUT BY THE LEAR NED DEPARTMENTAL REPRESENTATIVE THERE IS A SPECIFIC CLAUSE IN THE DEED [ I.E. CLAUSE (A)] TO THE EFFECT THAT THE VENDOR IS SEIZED AND POSSESSED OF HT SUBJECT LAND ABSOLUTELY AND WHICH (DEED) FURTHER STIPULATES THAT THE PURCHASER WILL ACQUIRE AND HAVE THE ACCESS ON THE SAID PLOT AT ITS OWN COST AS MENTIONED IN CLAUSE (E) INCORPORATED ABOVE. M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 7 H OWE V E R THE DEED PROVIDES THAT THE PURCHASER WILL DEDUCT THE COST INCURRED BY HIM FROM THE SALE CONSIDERATION. IF IT HAS NOT BEEN MENTIONED IN THE CONVEYANCE DEED THAT IT IS AXIOMATIC THAT TH E SALE CONSIDERATION MENTIONED IN THE CONVEYANCE DEED IS THE ACTUAL CONSIDERATION RECEIVABLE BY THE ASSESSEE. ANOTHER VERY IMPORTANT FACT WHICH IS EMERG ING FROM THE CONVEYANCE DEED IS THAT THE PLOT BELONGS TO TWO PERSONS I.E. MR. TOKERSEHBAI SHIVJI SHAH ( HUF) AND MR. DUNGARSHIVBHAI JAGASHI SHAH (HUF) WHO ARE THE JOINT SELLERS IN THE CONVEYANCE DEED. THE SELLER HAD AGREED TO PAY SUM OF ` 46 LAKHS TO THE ASSESSEE AND ` 45 LAKHS TO THE OTHER OWNER. IF THERE ARE TWO OWNERS THEN HOW THE LIABILITY OF ` 15 LAKH S WHICH HAS BEEN ALLEGEDLY INCURRED BY THE PURCHASER RESTS UPON THE ASSESSEE ALONE AND NOT ON THE OTHER OWNER / SELLER. THIS ALSO GOES TO SHOW THAT THE ASSESSEES CONTENTION BEFORE THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) IS NOT CORRECT . NOW COMING TO THE LETTER DATED 31 ST MARCH 2005 FIRST OF ALL IT DOES NOT GIVE ANY DETAIL AS TO HOW THE SAME HAS BEEN QUANTIFIED AND HOW MUCH HAS BEEN INCURRED AND FOR WHAT PURPOSE. NO EVIDENCE OR DETAILS HAVE BEEN SUBMITTED BY THE PURCHASERS WITH REGARD TO EXPENSES INCURRED. THE CONTENT OF THE LETTER ALSO RAISES A DOUBT IN THE WAKE OF THE FACT THAT HOW ONLY THE ASSESSEE IS RESPONSIBLE ALONE FOR LIABILITY OF ` 15 LAKHS FROM HIS SHARE OF SALE CONSIDERATION RECEIVABLE TO HIM AND WILL BE REDUCED FROM THE SAL E AND NOT THE OTHER SELLER. THUS THE LETTER DATED 31 ST MARCH 2005 CANNOT BE HELD TO BE CONCLUSIVE PROOF OF REDUCTION OF SALE CONSIDERATION BY ` 15 LAKHS WHEN THE REGISTERED DEED OF CONVEYANCE IS COMPLETELY SILENT ABOUT SUCH A REDUCTION OF AMOUNT BY ` 15 L AKHS. ON THESE REASONING WE FIND N O REASON TO UPHOLD THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) AND THEREFORE THE SAME IS SET ASIDE . T HE GROUND RAISED BY THE REVENUE IS THUS ALLOWED. M/S. TOKERSHIBHAI SHIVJI SHAH (HUF) 8 8 . 8. IN THE RESULT REVENUES APPEAL IS ALLOWED. 11 TH APRIL 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 11 TH APRIL 2014 SD/ - SANJAY ARORA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI DATED : 11 TH APRIL 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT MUMBAI CITY CONCERNED ; ( 5 ) / THE DR ITAT MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI