SIDDIQUE ABDUL GAFFAR FAZLANI, MUMBAI v. ASST CIT CEN CIR 44, MUMBAI

ITA 8834/MUM/2011 | 2008-2009
Pronouncement Date: 01-07-2013 | Result: Allowed

Appeal Details

RSA Number 883419914 RSA 2011
Assessee PAN ABKPS0357B
Bench Mumbai
Appeal Number ITA 8834/MUM/2011
Duration Of Justice 1 year(s) 6 month(s) 3 day(s)
Appellant SIDDIQUE ABDUL GAFFAR FAZLANI, MUMBAI
Respondent ASST CIT CEN CIR 44, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 01-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 01-07-2013
Date Of Final Hearing 01-07-2013
Next Hearing Date 01-07-2013
Assessment Year 2008-2009
Appeal Filed On 29-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI . . !'#$ % &' BEFORE SHRI H.L. KARWA PRESIDENT AND SHRI N.K. BILLAIYA AM ./I.T.A. NO.8834/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR :2008-09 SHRI SIDDIQUE ABDUL GAFFAR FAZLANI 21 A NIRMAL NARIMAN POINT MUMBAI-400 021 THE ACIT CENT. CIR.44 AAYAKAR BHAVAN MUMBAI-400 020 ') % ./ *+ ./PAN/GIR NO. : ABKPS 0357B ( ) /APPELLANT ) .. ( -.) / RESPONDENT ) ) / / APPELLANT BY : ` SHRI RAHUL K. HAKANI -.) 0 / /RESPONDENT BY : SHRI GIRIJA DAYAL 0 12% / DATE OF HEARING :01.07.2013 34( 0 12% / DATE OF PRONOUNCEMENT :01.07.2013 &5 / O R D E R PER N.K. BILLAIYA AM: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-38 MUMBAI DT.14.9.2011 PERTAINING TO A.Y. 2008-09. 2. THE ASSESSEE HAS RAISED 4 SUBSTANTIVE GROUNDS OF APPEAL. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING INVOCATION OF THE PROVISIONS OF SEC. 50C OF THE I.T. ACT EVEN THOUGH THE DOCUMENT FOR SALE OF SHARES OF BLUE DIAMOND REALTORS PVT. LTD. WAS NOT REQUIRED TO BE REGISTERE D WITH STAMP AUTHORITIES. ITA NO.8834/M/2011 2 3. THE ASSESSEE IS A PARTNER IN SOPARIWALA EXPORTS HOLDING 10% SHARE. THE ASSESSEE IS A CO-OWNER OF KARNALA RESORT PROPER TY HOLDING 4.16% SHARE. HE IS ALSO A SHAREHOLDER IN ALL SOPARIWALA GROUP COMPANIES. WHILE SCRUTINIZING THE RETURN FOR THE YEAR UNDER CO NSIDERATION THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR THE ASSESSEE HAS SOLD 2000 SHARES IN THE GROUP COMPANY M/S. BLUE DIAMOND REALTORS PVT. LTD. ON 15.11.2007 FOR A TOTAL CONSIDERATION OF RS. 29 4 0 000/- AND AFTER INDEXING THE COST OF SHARES THE TAXABLE LONG TERM CAPITAL GAIN WAS COMPUTED AT RS. 28 23 406/-. HOWEVER ON FURTHER E XAMINING THE TRANSACTION OF SALE OF SHARES THE AO NOTICED THAT THE ENTIRE SHARES HELD BY THE FAMILY MEMBERS OF SOPARIWALA GROUP IN BLUE DIA MOND REALTORS PVT. LTD. HAVE BEEN SOLD TO MS. RASHMI C. BHIMJYANI & SHRI TULSI C. BHIMJYANI. THE AO WAS OF THE FIRM BELIEF THAT IN T HE GUISE OF SALE OF SHARES THE ASSESSEE HAS ACTUALLY TRANSFERRED GODOW N NO. 2 AT DALAMAL HOUSE NARIMAN POINT MUMBAI ADMEASURING ABOUT 2200 SQ. FT BUILT UP AREA. ACCORDING TO THE AO THE AGREEMENT FOR THE S ALE OF SHARES IS DEFACTO A AGREEMENT FOR TRANSFER OF PROPERTY AND A CCORDINGLY WENT ON TO INVOKE PROVISIONS OF SEC. 50C OF THE ACT AND ADOPT ED THE STAMP DUTY VALUATION AT RS. 3 02 80 800/- AND RECOMPUTED THE C APITAL GAINS AT RS. 78 21 293/- DEDUCTING THE LTCG OFFERED BY THE ASSES SEE AT RS. 28 23 406/-. THE AO ADDED THE DIFFERENCE OF RS. 49 97 887/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT FAILED TO CONVINCE THAT THE TRANSFER WAS NOT OF AN IMMOVEABLE PROPERTY BUT THAT OF SHARES. THE LD. CIT(A) CONVINCED THAT A PIECE OF REAL ESTATE IS TRANSFERRED AND AN ATTEMPT HAS BEEN MADE TO CIRCUMV ENT SECTION 50C OF THE ACT AS WELL AS OTHER APPLICABLE LAWS SUCH AS RE GISTRATION ACT AND STAMP ACT AND CONCURRED WITH THE FINDINGS OF THE AO THAT PROVISIONS OF SEC. 50C ARE DIRECTLY APPLICABLE ON THE FACTS OF TH E CASE. ITA NO.8834/M/2011 3 5. AGGRIEVED BY THIS FINDINGS OF LD. CIT(A) ASSESS EE IS BEFORE US. 6. AT THE VERY OUTSET THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF OTHER MEMBERS OF THE FAMILY. THE LD. COUNSEL FOR THE ASSESSEE SUPPLIED THE ORDERS OF THE TRIBUNAL. 7. PER CONTRA THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO THE ORDER OF THE TRIBUNAL RELIED UPON BY THE ASSESSEE. WE FIND THAT THE TRIBUNAL IN THE CAS E OF SHRI IRFAN ABDUL KADER FAZLANI SHRI IQUBAL ABDUL KADER FAZLANI AND SHRI IMRAN YUNUS FAZLANI IN ITA NOS. 8831 & 8832/M/2011 ITA NOS. 88 35 & 8836/M/2011 & ITA NOS. 8850 & 8851/M/2011 WHILE DE CIDING THE IDENTICAL ISSUE IN CASE OF THESE FAMILY MEMBERS AT PARA-11 PAGE-6 OF ITS ORDER IT HAS HELD AS UNDER: WE HAVE HEARD BOTH THE PARTIES PERUSED THE ORDER O F THE REVENUE AND THE MATERIAL AVAILABLE BEFORE US. THERE IS NO DISPUTE ON THE FACTS AND THEREFORE THE DISPUTE RELATES TO THE APPLICABILITY OF PROVISIONS OF SECTION 50C OF THE ACT. FOR EXAMININ G THE VALIDITY OF THE APPLICABILITY OF THE SAID PROVISIONS WE PROCEED TO EXAMINE RELEVANT PROVISIONS AND THE PROVISIONS OF SECTION 50C OF THE ACT READ AS FOLLOWS: SECTION 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED [O R ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAM P VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE S O ADOPTED OR ASSESSED [OR ASSESSABLE] SHALL FOR THE PURPOSES OF SECTION 48 BE DEEMED TO BE THE FULL ITA NO.8834/M/2011 4 VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER 12. PRIMA FACIE THE ABOVE SECTION REFERS TO THE EX PRESSIONS IE CAPITAL ASSET BEING LAND OR BUILDING OR BOTH A SSESSED (ASSESSABLE DOES NOT APPLY TO THE AY IN QUESTION) CAPITAL ASS ET BEING LAND OR BUILDING OR BOTH DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION ETC. THE ABOVE SUB-SECTION PROVIDES FOR MEANING OF THE FULL VALUE OF THE CONSIDERATION (FVC) AND IT IS A DEEMED DEFINIT ION. ACCORDINGLY WHEN THE ASSESSEE TRANSFERS A CAPITAL ASSET BEING L AND OR BUILDING OR BOTH FOR A CONSIDERATION LESSER THAN THE VALUE ADO PTED ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT THE VALUE SO A DOPTED OR ASSESSED SHALL BE DEEMED TO THE FULL VALUE CONSIDERATION F OR THE PURPOSE OF COMPUTING CAPITAL GAINS U/S 48 OF THE ACT. THE EXP RESSION ASSESSABLE HAS INSERTED INTO THE STATUTE FOR PERSPECTIVE APPLI CATION W.E.F 1.10.2009 WHEREAS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2007-08 AND 2008-09. THE CAPITAL ASSETS THAT ARE COVERED UNDER THE PROVISIONS ARE LAND OR BUILDING OR BOTH. EXPRESSION TRANSFER SH ALL HAVE TO BE A DIRECT TRANSFER AS DEFINED U/S 2(47) OF THE ACT WHICH DOES NOT INCLUDE THE TAX PLANNING ADOPTED BY THE ASSESSEE. IT IS SETTLED ISS UE THAT THE PROVISIONS OF SECTION 50C ARE DEEMED PROVISIONS AND THEREFORE THE SAME HAVE TO BE INTERPRETED STRICTLY IN ACCORDANCE WITH THE SPIRIT OF THE PROVISIONS. IN THE LIGHT OF THE ABOVE LEGAL IN TERPRETATION OF SECTION 50C OF THE ACT WE NEED TO EXAMINE THE FACTS OF THE PRESENT CASE. IN THE INSTANT CASE WHAT TRANSFERRED BY THE ASSESSEE ARE THE SHARES IN THE COMPANY AND NOT THE LAND OR BUILDING OR BOTH. ASSESSEE DOES NOT HAVE FULL OWNERSHIP ON THE FLATS WHICH ARE OWNED BY THE COMPANY. THE TRANSFER OF SHARES WAS NEVER A PART OF THE ASSE SSMENT OF THE STAMP DUTY AUTHORITIES OF THE STATE GOVERNMENT. TH E COMPANY WAS DERIVING INCOME TAXABLE UNDER THE HEAD INCOME FRO M PROPERTY FOR MORE THAN A DECADE. THE EXPRESSION ASSESSABLE IS INSERTED IN SECTION 50C (1) OF THE ACT IS NOT RELEVANT FOR THE IMPUGNED ASSESSMENT YEARS. IN SUCH CIRCUMSTANCES THE AOS DECISION TO INVOKE T HE PROVISIONS OF SECTION 50C TO THE TAX PLANNING ADOPTED BY THE ASSE SSEE IS NOT PROPER AND IT DOES NOT HAVE THE SANCTION OF THE PROVISIONS OF IT ACT. THE PROVISIONS OF SECTION 50C ARE DEEMED PROVISIONS WHI CH ARE REQUIRED TO BE STRICTLY INTERPRETED IT IS NOT COVERED BY THE E XPRESSIONS OF THE PRESENT CASE. THEREFORE WE ARE OF THE OPINION THA T ORDER OF THE CIT (A) IS REQUIRED TO BE REVERSED WITH A DIRECTION TO THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. ACCORDINGLY GROUND NO.1 RA ISED BY THE ASSESSEE IS ALLOWED . 9. WE FIND THAT IN OTHER FAMILY MEMBERS CASE I.E. SHRI ASIF ABDUL KADER FAZLANI SHRI ABDUL GAFFAR ABDUL LATIF FAZLAN I AND SHRI ARIF ABDUL KADER FAZLANI IN ITA NOS. 8837 & 8838/M/2011 8848 & 8849/M/2011 & ITA NOS. 8845 & 8846/M/2011 THE TRIB UNAL HAS ITA NO.8834/M/2011 5 FOLLOWED THE DECISION IN THE CASE OF OTHER FAMILY M EMBERS CITED HEREINABOVE. RESPECTFULLY FOLLOWING THE DECISION O F THE TRIBUNAL WE HAVE NO HESITATION IN DIRECTING THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.07.2013 . &5 0 4( % 6 7&8 01.07.2013 4 0 9 SD/- SD/- (H.L. KARWA ) (N.K . BILLAIYA ) / PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; 7& DATED 01 /07/2013 . . ./ RJ SR. PS &5 &5 &5 &5 0 00 0 -1! -1! -1! -1! :!(1 :!(1 :!(1 :!(1 / COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT 2. -.) / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. !<9 -1 / DR ITAT MUMBAI 6. 9= > / GUARD FILE. &5 &5 &5 &5 / BY ORDER .!1 -1 //TRUE COPY// ? ?? ? / @ @ @ @ * * * * (DY./ASSTT. REGISTRAR) / ITAT MUMBAI