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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
आयकर अपीलीय अिधकरण,‘ए’ �यायपीठ,चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ीमहावीर �सह, उपा�य� एवं एवं �ी मंजुनाथ. जी, लेखा सद�यके सम� BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA. G, HON’BLE ACCOUNTANT MEMBER आयकर अपीलसं./ITA No.: 2667/CHNY/2018 िनधा�रण वष� / Assessment Year: 2009-10 (Late) Smt. Geetha Vasan, The Income Tax Officer, Rep. By Legal Heir v. Non Corporate Ward -16(3), Shri. M.G. Vasan, Chennai. Old No. 157, New No. 48, Luz Church Road, Mylapore, Chennai – 600 004. [PAN: AEGPG-0456-C] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri. N. Arjunraj, CA : Shri. AR V Sreenivasan, Addl. CIT ��यथ� क� ओर से/Respondent by सुनवाई क� तारीख/Date of Hearing : 19.12.2023 घोषणा क� तारीख/Date of Pronouncement : 29.12.2023 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal filed by the assessee is arising out of the order of Commissioner of Income-tax (Appeals)-4, Chennai, in Appeal No. 161/2016-17/AY 2009-10/CIT(A)-4, dated 07.08.2018. The assessment was framed by the Income-tax Officer, Non Corporate Ward 16(3), Chennai for the assessment year 2009- 10 dated 30.12.2016 u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
:-2-: ITA. No: 2667/Chny/2018 2. The first issue raised by assessee in this appeal is as regards to validity of re-assessment by way of ground nos. 2&3. The Ld. Counsel for the assessee stated that he is not pressing the issue of validity of re-opening of assessment and hence, the same is dismissed as withdrawn.
The second issue in this appeal of assessee is as regards to the order of the CIT(A) sustaining the addition made by Assessing Officer under the head ‘income from other sources’ being amount received as compensation for transferring the rights accrued in favour of the assessee. For this assessee has raised following ground nos. 7 to 9: “7. The CIT (Appeals) erred in sustaining the assessment of Rs.1,46,14,290/- under the head 'income from other sources' while rejecting/misconstruing the documentary evidence placed on record along with the notes of arguments filed/dated 22.02.2018 in the computation of taxable total income without assigning proper reasons and justification.
8. The CIT (Appeals) went wrong in recording the findings in this regard in para 20.2 & para 20.3 of the impugned order without assigning proper reasons and justification.
9. The CIT (Appeals) failed to appreciate that the computation of Long Term Capital Gains on various facets excluding the specific adjudication of issues emanating there from in favour of the Appellant in the impugned order was wrong, erroneous, unjustified, incorrect and not sustainable in law.”
Brief facts are that the assessee sold one property for a total sale consideration received in respect of Brigade Palace
:-3-: ITA. No: 2667/Chny/2018 property for a total amount of Rs. 2.50 crores. The Assessing Officer while completing assessment noted from the registered sale deed executed on 05.06.2008 that the assessee and her husband are consenting parties for a total sale consideration of Rs. 1,03,85,710/-. Further, the assessee also executed a deed of nomination on 05.06.2008 and as per this deed of nomination paid a compensation of Rs. 1,46,14,290/-. The assessee claimed that the total amount received at Rs. 2.50 crores was sale consideration for transfer of property vide registered sale deed vide document no. 394/2008-09, which includes the amount of Rs. 1,03,85,710/- as sale consideration and Rs. 1,46,14,290/- paid as compensation for transferring of rights accrued. The assessee claimed that the entire amount of Rs. 2.50 crores is sale consideration and hence liable for long term capital gains only. But the Assessing Officer after going through the recitals of sale deed and recitals of deed of nomination, both executed on 05.06.2008, noted that the compensation received by way of deed of nomination executed on 05.06.2008 is to be assessed as income from other sources. Hence, the Assessing Officer computed the income of the assessee by taking this compensation received at Rs.
:-4-: ITA. No: 2667/Chny/2018 1,46,14,290/- as income from other source. Aggrieved, assessee preferred appeal before the CIT(A).
The CIT(A) after going through the nomination deed and registered sale deed and noting the clauses held that the Assessing Officer has rightly treated the compensation received by assessee at Rs. 1,46,14,290/- as income from other source. For this the CIT(A) going through the deed of nomination dated 05.06.2008 and the relevant Para 1 of page 4 of the deed, wherein it is noted that the sale consideration of property is at Rs. 1,03,85,710/- and balance amount of Rs. 1,46,14,290/-, out of total sale consideration of Rs. 2.50 crores, is compensation for transferring the rights accrued in favour of the first party, in favour of the second party. Going by the clause simpliciter the CIT(A) treated this amount of Rs. 1,46,14,290/- as income from other source and upheld action of the Assessing Officer. Aggrieved, now assessee is in appeal before Tribunal.
We have heard rival contentions and gone through facts and circumstances of the case. Before us, Ld. Counsel for the assessee filed copies of sale deed executed by the landlords,
:-5-: ITA. No: 2667/Chny/2018 wherein the assessee was a consenting party. The relevant sale deed executed is enclosed at assessee’s paperbook pages 1 to 20. The assessee has also filed copy of deed of nomination which is enclosed in second paper book of assessee filed on 22nd February, 2008 which is enclosed in assessee’s paper book at Pages 33 to 39. We noted from the sale deed registered vide document no. 394/2008-09 executed on 05.06.2008 and the relevant clause of sale deed categorically mentions the sale consideration at Rs. 1,03,85,710/- i.e., between the vendors namely (i) Smt. Indu Narayan Ubhaykar, wife of Sri. Narayan Devarao Ubhaykar, aged about 75 years (ii) Sri. Narendra Narayan Ubhaykar, son of Sri. Narayan Devarao Ubhaykar, aged about 51 years and (iii) Smt. Annapurna Shreedhar wife of Sri. G.A. Shreedhar, aged about 48 years, all are presently residing at “Sree Sadananda Nilaya” 480/24, 40th Cross 5th Block, Jayanagar, Bangalore – 560 041 and vendee namely Mr. Manoharlal G Nichani, also known as G. Manu Nichani, S/o Late Giridharidas Nichani aged about 57 years, residing at No. 301, Chanakya Apartments 8th Main, RMV Extention, Bangalore – 560 080. There is one developer M/s. Brigade Enterprises Ltd, which is also part of sale deed executed being a consenting party. The assessee also is party for transferring the rights
:-6-: ITA. No: 2667/Chny/2018 accrued in favour of the first party and in favour of the second party. The relevant clause (1) of sale deed reads as under: “1. That in pursuance of the aforesaid agreement and in consideration of a sum of Rs. 1,03,85,710/- (Rupees One Crore Three Lakh Eighty Five Thousand Seven Hundred and Ten Only) paid to the vendors and the developer as per the agreement to sell and the agreement to build entered into between the consenting parties and the vendors and developer, which the Vendors and the developer do hereby accept and acknowledge the receipt of the said sum of Rs.1,03,85, 710/- (Rupees One Crore Three Lakh Eighty Five Thousand Seven Hundred and Ten Only} to be in full and final settlement of the total agreed sale consideration, the Vendors and the developer do hereby grant, transfer and convey UNTO the Purchaser BY WAY OF ABSOLUTE SALE, the residential flat bearing No.303, in third floor of DEVAPRASAD BRIGADE PALACE, measuring to an extent of 3470 sq.ft of super built up area together with two top covered car parking place in basement together with proportionate share common areas of common use and with concealed wiring with exclusive right to use the private garden area of 2390 sq.ft., in terrace level as marked in the annexed plan and more fully described in the schedule C written hereunder together with undivided right, title, interest and ownership to an extent of 4057 /44000'hof the Schedule A' property which is more fully described in Schedule B written hereunder with all rights, easements and privileges and appurtenants thereto, TO HAVE AND TO HOLD the same as absolute owner.”
Further, we have seen from the deed of nomination executed on the same day on 05.06.2008 that as per Para 1 of this nomination deed there is a clear demarcation between the sale consideration of compensation received and the relevant clause reads as under: “The First Party hereby nominates the Second Party as buyer of the Schedule 'B & C' property for a total consideration of Rs.1,03,85,710/- (Rupees One Crore Three Lakh Eighty
:-7-: ITA. No: 2667/Chny/2018 Five Thousand Seven Hundred and Ten only ) free from all encumbrances and the Second Party above named agreed to purchase the Schedule B &C' propet1y from the First Patty for the aforesaid sum of Rs. 1,03,85,710/- (Rupees One Crore Three Lakh Eighty Five Thousand Seven Hundred and Ten only) free from all encumbrances and also agreed to pay a compensation of Sum of Rs. 1,46,14,290/- (Rupees One Crore Fatty Six Lakh Fourteen Thousand Two Hundred and Ninety) for transferring the rights accrued in favour of the first party in favour of the second party, which shall be inclusive of all payments made by the first party to the confirming party on all accounts.”
In view of the above clause of the sale deed and deed of nomination, we are of the view that the amount received by assessee on account of compensation by way of deed of nomination amounting to Rs. 1,46,14,290/- is compensation for transferring the rights accrued in favour of the first party, in favour of the second party and hence, these cannot be assessed under the head long term capital gains and it has rightly been assessed by Assessing Officer and CIT(A) under the head ‘income from other sources’. We confirm the order of the CIT(A) and this issue of assessee appeal is dismissed.
The second issue in this appeal of assessee is as regards to the order of the CIT(A) sustaining the notional rent and from unit no. 103, 104 & 302 at Rs. 50 per sq.ft. and making
:-8-: ITA. No: 2667/Chny/2018 addition of Rs. 14,86,800/-. For this assessee has raised following ground nos. 5 & 6: “5. The CIT (Appeals) failed to appreciate that the sustenance of computation/calculation of notional rent at Rs.14,86,800/- for the units in number 103, 104, & 302 was wrong, erroneous, unjustified, incorrect and not sustainable in law especially further in view of the ownership of the said units vested with another assessee/the husband of the deceased assessee.
6. The CIT (Appeals) failed to appreciate that the sustenance of the notional rent adopted for other properties on various facets was wrong, erroneous, unjustified, incorrect and not sustainable in law and went wrong in recording the findings in this regard from para 16 to para 19 of the impugned order without assigning proper reasons and justification.”
We have heard rival contentions and gone through facts and circumstances of the case. The argument made by the Ld. Counsel for the assessee that in respect of unit bearing no. 103, 104 & 302 at Brigade Corner, Bangalore, the assessee has offered a sum of Rs. 1,78,125/- and he has taken this rent offered for tax in earlier years for 12 units at Rs. 7,12,500/- and hence proportionate a sum of Rs. 1,78,125/-. The Assessing Officer adopted this precedent of reasonable realizable rental value and assessed the rental income in the hands of Shri. M.G. Vasan, husband of the assessee for the assessment year 2009-10 and determined the rental value at Rs. 3 lakhs. The Assessing Officer accordingly assessed the :-9-: ITA. No: 2667/Chny/2018 proportionate income from these three units at Rs. 2.01 lakhs as against offered by assessee’s husband at Rs. 1,78,125/-. We noted that the estimation made by the Assessing Officer in assessee’s husband case can be adopted here also and we direct that the same rate be adopted for assessee, also can be assessed notional rent at Rs. 2.01 lakhs in assessee’s case and accordingly, this ground of assessee is partly allowed.
The next issue in this appeal of assessee is as regards to the order of the CIT(A) sustaining the addition made by the Assessing Officer on interest income of Rs. 15,62,973/-. For this assessee has raised following ground nos. 10 & 11: “10. The CIT (Appeals) erred in sustaining the addition of Rs.15,62,973 being the interest income, brought to tax under the head 'interest from other sources' in the computation of taxable total income without assigning proper reasons and justification.
11. The CIT (Appeals) went wrong in recording the findings in this regard in para 21.1 of the impugned order without assigning proper reasons and justification.”
We have heard rival contentions and gone through facts and circumstances of the case. We noted that the Assessing Officer assessed the interest income of Rs. 15,40,914/- and when confronted to the assessee, he stated that income has been admitted, but this income is on account of assessee’s
:-10-: ITA. No: 2667/Chny/2018 spouse invested some of his funds in assessee name and assessee’s husband has already included this income u/s. 64(1)(iv) of the Act being clubbing provision, but when confronted the assessee neither before the Assessing Officer nor before the CIT(A) could produce any evidences. Even now before us, simply bald statement was made but no evidence whatsoever was produced. Hence, we have no hesitation in confirming the action of the Assessing Officer and that of the CIT(A) and hence, addition is confirmed. This issue of assessee’s appeal is dismissed.
The next issue in this appeal of assessee is as regards to the claim of deduction under Chapter VIA of Rs. 1 lakh. For this, the assessee has raised following ground nos. 12 to 14: “12. The CIT (Appeals) erred in confirming the addition of Rs.1,00,000/- in para 22 of the impugned order pertaining to the claim for deduction under Chapter VI A of the Act without assigning proper reasons and justification.
13. The CIT (Appeals) failed to appreciate that the notes of arguments filed with evidences on all issues comprised of 97 pages was completely overlooked and brushed aside, thereby vitiating the related findings on the ground of gross violation of the principles of legitimate expectation.
14. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.”
:-11-: ITA. No: 2667/Chny/2018 14. We have heard rival contentions and gone through facts and circumstances of the case. We noted that only plea of the assessee is that the assessee could not produce evidence neither before CIT(A) nor before the Assessing Officer and even now before us he could not produce any evidence and hence, the order of the Assessing Officer and that of the CIT(A) are confirmed.
In the result, appeal filed by the assessee is partly allowed. Order pronounced in the Court on 29th December, 2023 at Chennai. Sd/- Sd/- चे (मंजुनाथ. जी) (महावीर �सह ) (MANJUNATHA. G) (MAHAVIR SINGH) लेखा सद�/Accountant Member उपा�य�/Vice President � ई चे�ई / Chennai; िदनांक / Dated : 29.12.2023 JPV आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकरआयु� (अपील)/CIT(A) 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF