ITO 2(1)(4), MUMBAI vs. HIMALAYAN SALES P. LTD, MUMBAI

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ITA 5586/MUM/2016Status: DisposedITAT Mumbai06 June 2019AY 2008-0912 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the findings of the CIT(A) and dismissed the Revenue's appeal. The CIT(A) had noted that the lease deed required written consent from RIICO for subletting or selling leasehold rights, which was not obtained. The CIT(A) also observed that physical possession was not given to the purchaser, and the Special Power of Attorney submitted to RIICO was allegedly tampered with. The AO failed to verify these facts with RIICO. Furthermore, the balance sheets submitted by the assessee showed the leasehold land and buildings as fixed assets as of March 31, 2008, and in subsequent years, supporting the contention that the land was not sold. The CIT(A) also relied on the fact that Rs. 20 lakh was shown as a deposit for land, appearing in the balance sheet since March 31, 2007. The Tribunal found the CIT(A)'s findings to be based on evidence and established legal principles, thus dismissing the Revenue's grounds of appeal.

What were the facts?

The Revenue (Income Tax Officer) filed an appeal against an order by the Commissioner of Income Tax (Appeals) for Assessment Year 2008-09. The assessee, Himalayan Sales Pvt. Ltd., had declared a total loss of Rs. 23,026. The case was reopened because the company allegedly sold Plot No. 41 in Kota, Rajasthan, for Rs. 20,00,000 on January 9, 2008, via a Special Power of Attorney holder. The Sub-Registrar valued the property at Rs. 5,89,29,840 for stamp duty purposes. The assessee denied selling any property or executing a power of attorney for this sale, stating the property was leasehold and required government permission for transfer. The Assessing Officer (AO) rejected these contentions, treating the Sub-Registrar's value as consideration and making additions of Rs. 11,98,870 as short-term capital gain and Rs. 5,75,91,232 as long-term capital gain.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) erred in holding that the sale deed was fraudulently executed without considering the receipt of full and final consideration and the registration by the Sub-Registrar (Revenue's contention). The Revenue argued that the alleged fraud by Ramesh Agarwal was yet to be established by a Civil Court and that the AO's findings were based on a precedent. The assessee contended that the sale deed was fraudulently executed by Ramesh Agarwal who misused the Power of Attorney, that the company never authorized the sale, and that as a holder of lease rights, it was not competent to sell without prior permission from RIICO. The assessee also initiated civil proceedings. 2. Whether the Commissioner of Income Tax (Appeals) erred in deleting the addition made under Section 50C, disregarding the AO's discussion (Revenue's contention). The Revenue argued that the transfer of substantial and absolute rights in land and building attracts Section 50C. The assessee argued that since no permission was obtained for the sale or transfer of leasehold land, the contract was void-ab-initio, and the company continued to hold rights over the land, thus no capital gain arose. The assessee also pointed out that the property remained in its balance sheet as fixed assets.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 50C,Section 48,Section 143(1),Section 142(1),Section 80

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI

Before: SHRI G.S. PANNU (VP) & SHRI RAM LAL NEGI (JM)

For Appellant: Shri Devendra Jain (AR)
Hearing: 22/03/2019Pronounced: 06/06/2019

Shri J. Saravanan & Revenue by : Manoj Kumar Singh(DR) Assessee by : Shri Devendra Jain (AR) Date of Hearing: 22/03/2019 Date of Pronouncement: 06/06/2019 O R D E R

PER RAM LAL NEGI, JM

1.

This appeal has been filed by the revenue against the order dated 23.06.2016 passed by the Commissioner of Income Tax (Appeals)-4 (for short ‘the CIT(A), Mumbai, for the assessment year 2008-09, whereby the Ld. CIT(A) has partly allowed the appeal filed by the assessee against the assessment order passed u/s 143 (3) r.w.s. 147 of the Income Tax Act, 1961 (for short the ‘Act’).

2.

Brief facts of the case are that the assessee company filed its return of income for the assessment year under consideration declaring total loss of Rs. 23,026/-, which was processed u/s 143 (1) of the Act. Subsequently, the case was reopened by issuing notice u/s 148 on the ground that the company during the previous year sold Plot No. 41, Large Industrial Area, Kota (Rajasthan) measuring 9.5 acres for consideration of 20,00,000/- under sale Assessment Year: 2008-09 agreement dated 09.01.2008 executed between the assessee company through Special Power of Attorney holder Sh. Ramesh Agarwal and Madan Mohan Vijay (Transferring). The Sub-

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