Loading judgment…
No AI summary yet for this case.
PER PAWAN SINGH, JUDICIAL MEMBER:
This appeal by assessee under section 253 of the Income-tax Act (for short “the Act”) is directed against the order of Commissioner of Income tax (Appeals)-18 [‘ld. CIT(A)], Mumbai dated 28.02.2014 for Assessment Year (AY) 2009-10. The assessee has raised the following grounds of appeal:
The following grounds of appeal are independent of, and without prejudice to, one another:
1. The Commissioner of Income-tax (Appeals) - 18, Mumbai (hereinafter referred to as the CIT(A)) erred in upholding the action of the Income-tax Officer 19(1)(3), Mumbai (hereinafter referred to as the Assessing Officer) in computing capital gains at Rs 31,10,500 on sale of shop as against Rs 16,70,000 as computed by the appellant.
ITA No. 2634/M/2014- Mrs. Ila M. Parekh The appellant contends that on the facts and in the circumstance of the case and in law the CIT(A) ought not to upheld the action of the Assessing Officer in computing capital gains at Rs. 31,10,500 on sale of Shop as against Rs. 16,70,000 as computed by the appellant. The appellant further contends that the ld. CIT(A) in his order has not considered the letter dated 24th February, 2014 that has been filed with him in rejoinder to the remand report dated 24.01.2014. The appellant further contend that the CIT(A)/Assessing Officer ought to have referred the valuation of the shop to a Valuation Officer as per the provisions of section 50C(2) of the Act.
2. The CIT(A) erred in upholding the action of the Assessing Officer in charging interest Rs 97,926, Rs 10,270 and Rs 598 charged under sections 234B, 234C and 234D of the Act. The appellant contends that the Assessing Officer ought not to have charged impugned interest under sections 2348, 23C and 234D inasmuch as - (a) the Assessing Officer has not given an opportunity to the appellant before charging the said interest as required by the principles of nature justice, (b) the charging of interest is not in accordance with law.
Brief facts of the case are that the assessee filed her return of income for Assessment Year (AY) 2009-10 on 12.06.2009 declaring total taxable income of Rs. 2,01,741/-. In the return of income, the assessee claimed Long Term Capital Gain (LTCG) on sale of ½ share in a Shop and computed the LTCG at Rs. Nil, after claiming deduction under section 54EC for Rs. 16,70,000/-, which was invested in REC Capital Gain Bonds. The assessee was co-sharer with Mrs Suvina P Parekh in shop No.1 Ground Floor, Mohd Gafoor Chawl, G. D. Ambedkar Marg Bombay-400033. The assessee shown the sale proceed of Rs. 18,00,000/- being 50% of the sale consideration. The Assessing Officer (AO) adopted the value of Shop as per the valuation of Stamp Duty Authorities and Mrs. Ila M. Parekh valued the consideration at Rs. 64,81,000/- against the value adopted by assessee at Rs. 36,00,000/-. Accordingly, the AO treated the sale proceed Rs.32,40,500/- being 50% and after deducting invested amount in REC Capital Gain Bond of Rs. 16,70,000/-, the remaining amount of Rs.14,40,500/- was treated as taxable LTCG. On appeal before the ld. CIT(A), the action of AO was upheld. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.
We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee argued that assessee sold her 50% rights in a tenanted Shop to Abhyudaya Co- operative Bank Ltd. The said shop was initially under the tenancy of Ramkumar Mewalal Gupta. The assessee acquired her tenancy right along with Mrs. Suveena P. Parikh in Shop No. 1, Ground Floor, from Ram Kumar Gupta on 5th December 1977. The assessee (Miss Ila M. Parekh) and Suvina Parekh purchased the business, good will as well as tenancy right from Ramkumar Gupta vide agreement dated 5th December 1977. On 1st February 1978 the assessee and her joint owner (joint- tenant) Suvina Parekh decided to close down their business and to sublet the premises to Abhyudaya Co-operative Bank Ltd (‘Bank’). The assessee and her joint tenant after taking consent from the landlord entered into sub-tenancy agreement dated 01.02.1978. The owner of the 3 ITA No. 2634/M/2014- Mrs. Ila M. Parekh property Mr. Hassam Mohammed Gafoor wanted to develop the property.
Hence, the owner entered into agreement with assessee and Suveena Pravinchandra Parikh to vacate the premises. Accordingly, the assessee and her joint-tenant (owner) asked the sub-tenant to vacate and hand over the possession of the said premises so that it could be handed over the owner for redevelopment. By agreement dated 04.06.2002 between tenant, sub-tenant (Bank), Mr. Hassan Mohammed Gafoor being owner by mentioning terms and condition for vacating agreed to allow the assessee a permanent accommodation in the new building to be constructed on said property consisting area of 327 sq. ft. on the ground floor and equal area in the basement based on free of cost on ownership basis. The assessee with the joint tenant vide offer letter dated 06.05.2002 offered to the Bank that on allotment of new space, they shall hand over ½ areas of 327 sq. ft. on the front side on the ground floor together with ½ area of basement to the sub-tenant (Bank). Hence, the terms and condition of agreement was further modified vide agreement dated 05.06.2002 by modifying conditions, the tenants confirmed that the sub- tenant shall be entitled to take possession half of the area out of the area offered to the assessee and her joint tenant in newly constructed premises from the owner. After allotment of the space/ shop in accordance with the agreement. The assessee with her joint tenant decided to sell their area to Bank vide agreement dated 17.10.2008. It was further submitted that Dr. 4 Mrs. Ila M. Parekh Pravinchandra Parikh, one of the legal heir of Mrs. Suveena Pravinchandra Parikh was also a tenant in his individual capacity in Shop No.2 on ground floor. On re-development of the property, Dr. Pravinchandra Parikh was also offered allotment on ownership basis by the owner. The Shop No.2 independently mentioned in clause 5 of agreement for sale with Bank, though not subject matter of sale by assessee and her joint owner to the Bank. The assessee and her joint owner sold only half of share in Shop No.1 i.e 160 Sq Ft on Ground floor and 160Sq ft on basement for a total consideration of Rs 36,00,000/-. The assessee received only Rs. 18.00 lacks on transfer of her ½ share in the allotted space/ shop. However, the Bank has by mistake paid stamp duty of Rs. 64,81,000/- including the area of Shop received from the owner for which Bank was already owner and in possession by virtue of tripartite agreement. All the agreements executed right from original owner in favour of Ramkumar Gupta by Mohd Gaffor. Ramkumar Gupta in favour of assessee and Suveena Parekh. By assessee and Suvina Parekh in favour of Abhyudaya Cooperative bank. The assessee vide her letter dated 30.11.2011 to Bank has specifically written that the assessee along with her joint owner has sold an area of 160 Sq Ft on Ground floor and 160 Sq ft on basement each and not 320 Sq ft each in the agreement. The similar fact was informed to the assessing officer vide assessee’s letter dated 02.12.2011. On the contrary the ld. DR for the revenue supported the 5 Mrs. Ila M. Parekh order of the authority below. It was further submitted that the documents executed by the assessee speaks something different story than the submissions put forth by the ld. AR for the assessee.
We have considered the rival submissions of the parties and have gone through the orders of the authorities below. We have also gone through the various document filed by the assessee in the form of the various agreements by and in between the original owner up till in favour of Bank. During the assessment proceedings the assessing officer noted that the assessee has computed the LTCG at Rs. Nil after claiming deduction under section 54EC of Rs. 16,70,000/- invested in REC Capital Gain Bond. The Assessing officer computed the Long term Capital Gain (‘LTCG’) on the basis of valuation adopted by Stamp Duty Authority.
The Stamp Duty Authority valued the property under sale at Rs.64,81,000/- as against the agreement value of Rs.36,00,000/-. The assessing officer invoked the provisions of section 50C and computed the LTCG after extending deduction under section 54 EC in REC Capital Gain Bond of Rs. 16,70,000/- taxed the remaining consideration. Before the ld CIT(A) the assessee explained that there is ambiguity with regard to the area in the agreement to sale dated 17.10.2008. The area under sale was only 160Sq Ft on ground floor and 160Sq ft on basement. However, the Bank while paying the stamp duty paid the stamp duty on 320 Sq Ft area on ground floor and 160Sqft in basement below the shop No.1. The 6 Mrs. Ila M. Parekh assessee also furnished the copies of the various agreements and other documents. On the submissions and the documents the ld CIT(A) called the remand report of the assessing officer. The assessing officer furnished his remand report. In the remand report the assessing officer contended that the market value of the shop adopted by Stamp Valuation authority is Rs.64,81,000/- against the agreement value of Rs.36,00,000/-. The sale consideration received by the assessee is less than the value adopted by Stamp Value Authority for the payment of stamp duty, the value so adopted shall be deemed to be full value of consideration as a result of such transfer. On the basis of remand report of assessing officer the action of the assessing officer was confirmed.
We have noted that the lower authorities have not discussed the contents of various documentary evidences furnished by the assessee in the form of various agreements to substantiate that the assessee along with her co- owner has received only 160Sq Ft area on ground floor and similar size of area (160 Sq Ft) in the basement. It is settled under the Transfer of Property Act that no one can transfer better title than he has. In our view the area of capital asset under transfer to the Bank is one of the relevant fact for determining the LTCG. The perusal of the agreement dated 19.11.1999 (PB-10-15) clearly shows that the owner agreed to allot 320Sq Ft area on ground floor and 320 Sq ft in basement in lieu of surrender of their tenancy. The assessee along with her co-owner vide 7 ITA No. 2634/M/2014- Mrs. Ila M. Parekh their letter dated 06.05.2002 (PB- 16-17) offered ½ portion on rear side and ½ portion in basement from their part to the sub-tenant. In consonance with the offer made by assessee along with her co-owner executed agreement dated 04.06.2002( PB 21-23) with Bank for handing over the similar area to the Bank in the newly developed building. The owner also signed this agreement as confirming party. Consequently, the assessee along with her co-owner (Co-tenant) executed agreement dated 05.06.2002 (PB 18-19) with Bank to hand over 327Sq ft area in new building to the bank. The owner has again signed this agreement as confirming party. To make all the transaction unambiguous prior to execution of agreement dated 05.06.2002, other tripartite agreement dated 04.06.2002 (PB 21-22) was executed by owner, assessee along with her co-owner and the Bank agreeing for allotment of similar size of area to tenants as well as to the sub-tenant on ownership basis. The careful reading of all the agreements make it clear that the Bank as well as assessee along with her co-tenant after completion of the new building got 327 Sq Ft on Ground floor and similar size of portion in the basement. Out of which half of the portion was received by the bank (½ on GF and ½ on basement) on ownership basis as per the tripartite agreement dated 04.06.2002. However, the Bank has paid the stamp duty on the entire portion of the area of shop on the ground floor (320sq Ft) and on 160 Sq Ft in basement, at the time of registration of agreement 8 Mrs. Ila M. Parekh dated 17.10.2008. While the assessee and her co-tenant was allotted only 160 Sq Ft of shop on the ground floor and similar size of area in basement. Thus, the area under agreement to sale was 160 sq ft on GF and 160 in basement and the consideration was agreed accordingly. The assessee vide her letter dated 30.11.2011 asked the Bank to give confirmation that as per tripartite agreement dated 04.06.2002 the assessee was allotted 160 sq ft on GF and same size in basement, similarly the bank was also allotted similar size of premises on GF as well as in basement. The assessee further mentioned that she along with her co-owner has sold only premises of 160 sq ft on GF and same size in basement. However, the agreement dated 17.10.2008 referred the entire area of shop i.e 320 sq ft on GF and 320 sq ft in basement. The bank has neither denied nor conceded or responded to the letter of the assessee.
From the above referred discussion it is clear that the assessee with her co-tenant (owner) was entitled to transfer only 160 sq ft on GF and same size in basement. Hence, the assessee has no occasion to transfer more than 160 sq ft on GF and same size in basement. The lower authority failed to appreciate the fact explained by assessee in a correct perspective.