Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘A’ BENCH, MUMBAI
Before: SHRI G.S. PANNU, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals)-22, Mumbai (for short ‘CIT(A)-22, Mumbai, dated 03.06.2013, which in itself arises from the assessment order passed by the A.O u/s 143(3)
P a g e | 2 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International of the Income Tax Act, 1961 (in short ‘the Act’), dated 23.12.2011 in the case of the assessee for A.Y. 2009-10. The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us, raising the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting addition of Rs. 93,96,127/- treated as Short Term Capital Gain u/s. 50 of the Act. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in directing to consider the value of properties amounting to Rs. 24,91,588/- in the block of assets and to allow depreciation claim by the assessee. 3. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal. 4. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer be restored.”
Briefly stated, the facts of the case are that the assessee is a custom house agent and engaged in the field of shipping, clearing and forwarding of export/import consignments from major gateway ports/airports, and also specialized in inland container depot operation related job during the year. The assessee had filed its return of income for A.Y. 2009-10 on 30.09.2009, declaring income of Rs. 9,72,794/-. The case of the assessee was taken up for scrutiny proceedings under Sec. 143(2) of the „Act‟.
The A.O during the course of the assessment proceedings observed that the asse ssee compa ny ha d sold two
P a g e | 3 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International pr ope rtie s for an a ggre ga te conside ration of Rs. 1, 18, 87, 715/ -. It wa s f urthe r notice d by the A. O, that the assessee had a lso cla ime d to ha ve made addition in the same „blo ck of asse ts ‟ of off ice pre mise s, a s unde r: -
Da te of Par ticula rs Value of addition Pr ope rty (a s pe r the asse sse e ) 27. 11.2008 Pur cha se of Re side ntia l Rs. 26,50,101/ - pr ope rty a t Na gpur. 18. 03.2009 Pur cha se of Row house Rs. 70,00,000/ - (be longing to the dire ctor of the asse sse e company, viz. Mr. L. D Fe rna nde s) Tota l Rs. 96,50,101/ - The A.O after deliberating on the facts pertaining to the purchase of the aforesaid properties during the year under consideration, had certain doubts as regards the veracity of the claim of the assessee. Thus, the A.O being of the view that the purchase transactions of the aforesaid properties had not concluded during the year under consideration, therefore, called upon the assessee to explain as to why the additions of the aforesaid properties in the „block of asset‟ under office premises may not be excluded and the income arising from the sale of the properties forming part of the said „block of assets‟, be not assessed as short term capital gain under Section 50 of the Income-tax act,1961, as well as the depreciation of Rs.12,699/- claimed on the said „block of assets‟ be disallowed.
P a g e | 4 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International 4. The assessee in compliance to the directions of the A.O, submitted as under:-
(A). Residential property at Nagpur: i). That the residential property marked as 15, Mehar Colony, Nagpur, was purchased vide agreement dated 26.08.2006 for an amount of Rs.25,00,101/-.
ii). That the physical possession of the property was received by the assessee on 21st October, 2008. The assessee in order to fortify its claim that the possession of the property was delivered on 21.10.2008, furnished with the A.O a copy of the possession receipt evidencing the said fact.
iii). The aforesaid property was put to use for its business purposes w.e.f. 27.11.2008.
iv). That it had had capitalized in its „books of accounts,‟ the purchase consideration of Rs. 25,00,101/- that was paid in terms of the agreement dated. 26.08.2006.
v). That the substantial amount of purchase consideration was paid to the seller on or before F. Y. 2008-09.
vi). That though the aforesaid purchase transaction stood concluded during the year under consideration, however, in order to secure the title, the sale deed in favour of the assessee was executed on 24.08.2009, i.e in assessment year 2010-11.
vii). That as the possession of the property was delivered to the assessee and the same was put to use for its business purpose during the year under consideration, viz. A.Y. 2009-10,
P a g e | 5 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International therefore, depreciation was allowable as per the provisions of section 32 of the „Act‟.
(B).Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai: i). The Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai was purchased by assessee, vide agreement dated 18.03.2009 for a consideration of Rs. 70.00,000/-.
ii). The physical possession of the property was delivered to the assessee on 18.03.2009. The assessee in order to fortify its contention of having been put into possession of the property on 18.03.2009, placed on the record of the A.O a copy of the possession receipt evidencing the said fact.
iii). The property was put to use for the business purposes of the assessee w.e.f. 18.03.2009.
iv). That the assessee had capitalized the purchase consideration of Rs.70.00 lac in its books of account.
v). That substantial amount of purchase consideration was paid by the assessee to the seller on or before F.Y.2008-09.
vi). That the clause in respect of the final installment of the purchase consideration to be paid on or before 31.03.2012 in the agreement was just a standard clause for payment term.
vii). That as the assessee after receiving the possession of the property, had put to use the same for its business purpose during the F.Y.2008-09, therefore, depreciation was allowable as per the provisions of Section 32 of the „Act‟.
P a g e | 6 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International 5. The A.O after deliberating on the details furnished by the assessee in order to drive home its contention that the purchase transactions of the respective properties had concluded in the period relatable to the year under consideration, viz. A.Y. 2009-10, however, did not find favor with the same, for the following reasons :-
(A). Residential property at Nagpur: i). The A.O observed that as the „Agreement of sale‟, dated 26.08.2006 in respect of the aforesaid property was executed on a Non-Judicial Stamp Paper of Rs.100/- and the stamp duty on the value of the property was not paid, therefore, it could safely be concluded that the same was not a valid agreement as per the Stamp Duty Act.
ii). The A.O observed that as per Clause 4 of the „Agreement of sale‟, it was clearly mentioned that physical vacant possession will be handed over by the seller to the purchaser at the time of sale deed. The A.O in the backdrop of the aforesaid recital in the agreement, thus concluded that as the sale deed was registered only on 24.08.2009, i.e in the period relevant to A.Y.2010-11, therefore, the physical possession of the property would have been delivered to the assessee only in A.Y. 2010-11.
(B).Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai: i). The A.O observed that the aforesaid property, which was a row house belonged to the director of the assessee company, viz. Mr. L.D. Fernandes who had 85.99% share holding in the assessee company.
ii). The AO observed that the assessee company had claimed to have purchased the row house property for a
P a g e | 7 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International consideration of Rs.70,00,000/-, vide an unregistered deed of assignment and transfer, dated.18.03.2009, executed on a Non Judicial stamp paper of Rs.100/-. That it was further observed by the A.O that the stamp duty on the value of the transaction of Rs. 70,00,000/- evidenced by the deed of assignment and transfer was not paid, therefore, it could safely be concluded that the same was not a valid agreement as per the Stamp Duty Act.
(iii). The A.O observed that neither the property was registered, nor the full payment of purchase consideration was paid, during the year under consideration.
(iv). The A.O observed that as per the deed of assignment and transfer dated.18.03.2009, the property was subject to prior approval from CIDCO in order to facilitate any transfer. That as per the A.O the assessee had during the course of assessment proceedings not furnished the copy of any such approval by the CIDCO.
(v). The A.O observed that the character of the aforesaid property which was being used by the director of the company for residential purpose was also not changed before and after the execution of the deed of assignment and transfer dated. 18.03.2009.
The A.O on the basis of his aforesaid observations, thus, holding a conviction that the purchases transactions of the aforesaid properties had not yet concluded during the year under consideration, as claimed by the assessee, therefore, excluded the respective additions of the same from the „block of
P a g e | 8 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International assets‟ of office premises. Thereafter, the A.O after reducing from the opening „written down value‟ (as on 01.04.2008) of the „block of assets‟ of office premises, the sale consideration of Rs.1,18,87,715/- of two properties forming part of the said block which were sold by it during the year under consideration, thus, assessed the Short term Capital Gain of Rs. 93,96,127/- in the hands of the assessee under Sec.50 of the „Act‟. The A.O further disallowed the depreciation of Rs. 12,699/- that was claimed by the assessee in respect of the aforesaid „block of asset‟.
The assessee being aggrieved with the order passed by the A.O under Sec. 143(3), carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the contentions of the assessee in the backdrop of the facts of the case, accepted the claim of the assessee and held that the additions of the two properties was found to be in order and had rightly been entered by the assessee in the „block of assets‟. The CIT(A) in the backdrop of his aforesaid view vacated the addition made by the A.O towards Short Term Capital Gain of Rs. 93,96,127/- , as well as the disallowance of depreciation of Rs. 12,699/-. The CIT(A) while concluding as hereinabove, had observed as under:
9.1 I have gone through the assessment order and also the contention of the appellant before me. The major issue to be decided is whether conveyance of the property is made or not and whether transfer is complete in absence of full payment. From the documents submitted before me it is seen that the appellant company has taken the possession of the property during the A.Y. 2009-10 and even the AO is not disputing this fact. As per Section 2(47) – 'transfer', in relation to a capital asset, includes, -
P a g e | 9 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or (iva) the maturity or redemption of a zero coupon bond; or (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation-2 says that "transfer' includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India. 9.2 Now from the plain reading of section 2(47) it is seen that the appellant’s case falls under it. The property has been transferred in the name of the company and the property has been used for business purposes is proved by the documentary proof of office expenses, telephone expenses and other expenses bills produced and which were reflected in the profit and loss account. It is also seen that the sale of the said property has been duly shown in the return of income of Mr. L.D. Fernandes for the A.Y 2009-10 in which the Capital Gain on sale of the New Mumbai premises has been shown. The A.O has not accepted the same citing that the property was not registered and final amount have not been paid. It is seen that out of Rs.70,00,000/- only Rs.2,95,232/-is payable and hence, in my opinion, two properties have been rightly entered in the block of assets and the depreciation claimed by the appellant company should be allowed and it is not
P a g e | 10 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International liable for Short Term Capital Gain. Hence, addition on account of Short Term Capital Gain is hereby deleted and the AO is directed to consider the said amount in the block of assets and to allow depreciation made by the appellant. 10. In the result, appeal is allowed.”
The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Departmental representative (for short ‘D.R’) relied on the order of the A.O. The ld. D.R submitted that as the purchase transactions of the aforesaid both of the properties had not concluded during the year under consideration, therefore, the A.O had rightly concluded that as the „block of asset‟ had ceased to exist, the profit on the sale of the remaining properties forming part of the said „block of assets‟, during the year under consideration, was liable to be assessed as Short Term Capital Gain under Sec. 50 of the „Act‟. It was further averred by the ld. D.R that now when the „block of assets‟ had ceased to exist on the sale of the aforesaid properties, therefore, the claim of depreciation raised by the assessee in respect of the same, had rightly been declined by the A.O. The ld D.R further submitted that it remained as a matter of fact that the assessee had failed to establish the user of the properties which were claimed by him to have been purchased during the year under consideration, as a result whereof the conviction of the A.O that the purchase transactions of the aforesaid properties had not concluded during the year under consideration, was established beyond any scope of doubt. Per Contra, the ld. Authorized representative (for short „A.R‟) for the assessee relied on the order of the CIT(A).
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material
P a g e | 11 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International available on record. We have given a thoughtful consideration to the facts of the case and are of the considered view that our indulgence in this case is sought to adjudicate as to whether in the backdrop of the facts borne from the records, it can be concluded that the purchase transactions of the aforementioned properties, viz. (i). Residential property at Nagpur; and (ii). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, as claimed by the assessee, had concluded during the year under consideration, viz. A.Y. 2009-10, or not. We have deliberated on the contentions of the authorized representatives for both the parties in the backdrop of the facts available on record, and our view as regards the respective purchase transactions of the aforementioned properties, is as under:-
(A). Residential property at Nagpur: (i). We find that as regards the residential property at Nagpur, the same is claimed to have been purchased by the assessee by way of an unregistered agreement to sell, dated. 26.08.2006, executed on a Non-judicial Stamp Paper of Rs. 100/-, while for the sale deed stood executed only as on 24.08.2009. We further find that the assessee taking support of the possession receipt, had claimed that the physical possession of the said property was received on 21.10.2008, i.e during the period relevant to the year under consideration. That as stands gathered from the records, the A.O had disbelieved the claim of the assessee that the possession of the property was delivered to it during the year under consideration, viz. A.Y. 2009-10, on the ground that as per the recital in the agreement to sell, the possession of the property was to be delivered at the time of execution of the sale deed, which took place only as on 24.08.2009, i.e in the A.Y. 2010-11.
P a g e | 12 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International
(ii). We have given a thoughtful consideration to the facts pertaining to the purchase of the property under consideration. We are of the considered view that it remains as a matter of fact that as per the terms of the agreement to sell, the assessee was to be put into possession of the property only at the time of the execution of the „Sale deed‟, which we find was executed only as on 24.08.2009, i.e in the period relevant to A.Y. 2010-11. However, the claim of the assessee that it had received the possession of the property on 21.10.2008, i.e during the year under consideration itself, had been substantiated by the assessee on the basis of the possession receipt, remains a fact that cannot be lost sight of. We are of the considered view that now when the genuineness and veracity of the possession receipt had not been disproved by the A.O, therefore, the aforesaid claim of the assessee which is backed by a documentary evidence, cannot be dislodged. We further find that as stands gathered from the order of the CIT(A), the assessee had upto 20.03.2009, i.e during the year under consideration paid an amount of Rs. 20,34,901/- (out of total purchase consideration of Rs. 25,00,101/-) to the seller, while for only an amount of Rs. 4,78,979/- remained payable. We thus in the backdrop of the aforesaid facts, viz. (i). possession of the property was received by the assessee during the year; and (ii). substantial part of the purchase consideration of Rs. 20,34,901/-(supra) was paid by the assessee to the seller during the year under consideration, viz. A.Y. 2009-10, would hereinafter proceed with and adjudicate the issue before us.
(B). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai
P a g e | 13 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International (i). We find that as regards the aforesaid property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, the same is claimed to have been purchased by the assessee from its director Shri. L.D Fernandes, who had been using the same for his residential purpose. The aforesaid property was purchased by the assessee by way of an unregistered deed of assignment and transfer, dated. 18.03.2009, executed on a Non-judicial Stamp Paper of Rs. 100/-. We further find that the assessee taking support of the possession receipt, had claimed that the physical possession of the said property was received by him on 18.03.2009, i.e during the period relevant to the year under consideration. That as stands gathered from the records, the A.O had disbelieved the claim of the assessee that the possession of the property was received by him during the year under consideration, i.e A.Y. 2009-10. The A.O held a conviction that in the backdrop of certain material facts, viz. (i). the deed of assignment and transfer was unregistered, on the basis of which the same fell short of a valid document; (ii). no prior approval from CIDCO as statutorily required was obtained to facilitate the transfer; (iii). the total purchase consideration had not been parted with by the assessee in favor of the seller of the property, viz. Shri. L.D Fernandes; and (iv). the character of the user of the property which was earlier being used by the seller for his residential purposes, was not changed by the assessee, it could thus safely be concluded that the purchase transaction of the property under consideration had not concluded during the year under consideration.
(ii). We have given a thoughtful consideration to the facts pertaining to the purchase of the property under consideration. We are of the considered view that the very fact that the deed of
P a g e | 14 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International assignment and transfer, dated. 18.03.2009 was unregistered, would undoubtedly justify raising of doubts on the part of the A.O as regards the claim of the assessee that it was put into possession of the property on the basis of the said unregistered document. However, the claim of the assessee that it had received the possession of the property on 18.03.2009, i.e during the year under consideration itself, had been substantiated by the assessee on the basis of the possession receipt, remains a fact that cannot be lost sight of. We are of the considered view that now when the genuineness and veracity of the possession receipt had not been disproved by the A.O, therefore, the aforesaid claim of the assessee which is backed by a documentary evidence, viz. possession receipt, cannot be dislodged. That still further we find that the other facts, viz. (i). „Affidavit‟ of the Managing Director of the assessee company viz. Mr. L.D Fernandes therein deposing that the property was purchased by the assessee on 18.03.2009 for office purpose and staff was employed at the said location; (ii). copy of the board resolution authorizing the assessee company to sell the other office premises and purchase the properties under consideration, i.e at Koparkhairane and Nagpur; and (iii). copy of the return of income of the seller of the property, viz. Mr. L.D Fernandes for A.Y. 2009-10, reflecting the Capital gain on sale of the property, substantially evidences the fact that the purchase transaction of the aforesaid property concluded place during the year under consideration itself. We further find that as stands gathered from the order of the CIT(A), the assessee had during the year under consideration paid an amount of Rs. 67,04,768/- (out of total purchase consideration of Rs. 70,00,000/-) to the seller, while for only an amount of Rs. 2,95,232/- remained payable. We thus in the backdrop of the aforesaid facts, viz. (i). possession of
P a g e | 15 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International the property was delivered to the assessee during the year; and (ii). substantial part of the purchase consideration of Rs. 67,04,768/- (supra) was paid by the assessee to the seller during the year under consideration, viz. A.Y. 2009-10, would hereinafter proceed with and adjudicate the issue before us.
We find that pursuant to the amendment of Sec. 17 of the Registration Act, 1908 in the year 2001, the documents containing contracts to transfer for consideration any immovable property for the purpose of Sec. 53A of the Transfer of Property Act, 1882, are mandatorily required to be registered, if they have been executed on or after the commencement of Registration and other Related Laws (Amendment) Act, 2001. That in the backdrop of the aforesaid amendment, if such documents containing contracts to transfer are not registered, then they shall have no effect for the purpose of Sec. 53A of the Transfer of Property Act, 1882. We are of the considered view that the post amended Sec. 53A of the Transfer of Property Act, 1882 r.w Sec. 17 of the Registration Act, 1908, would regulate the respective agreements to sell pertaining to the properties under consideration, viz. (i). Residential property at Nagpur (agreement to sell, dated 26.08.2006); and (ii). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, (agreement to sell dated. 18.03.2009). We not being oblivious of the fact that as both of the respective agreements to sell, dated 26.08.2006 and 18.03.2009, in respect of the residential property at Nagpur, and property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, respectively, are unregistered agreements, therefore, on the said count are unable to persuade ourselves to accept the contention of the assessee as was canvassed before the CIT(A), that the „transfer‟ of the property under consideration could safely be brought within the sweep of Sec. 2(47)(v)
P a g e | 16 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International of the „Act‟. However, we are of the considered view that the facts, viz. (i). possession of the respective properties were received by the assessee during the year; and (ii). substantial part of the purchase consideration in respect of both the properties was paid by the assessee to the respective sellers during the year under consideration, viz. A.Y. 2009-10, shall have a material bearing on the adjudication of the issue as to whether a „transfer‟ of the property under consideration could be said to have taken place in favor of the assessee, therein vesting with him the rights as that of the „Owner‟ of the property during the said year, or not.
We are of the considered view that if the answer to the aforesaid issue is found to be in affirmative, then the respective additions of the aforesaid properties in the „block of asset‟ by the assessee can safely be held to be in order. We find that the legislature in all its wisdom had vide the Finance Act, 2012 made available an Explanation 2 to Sec. 2(47)(v), w.e.f 01.04.1962, which clarifies the scope and gamut of the term „transfer‟, as stands contemplated under Sec. 2(47) of the „Act‟, and reads as under:-
“Explanation-2 says that "transfer' includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer or a share or shares of a company registered or incorporated outside India.”
We thus are of the considered view that on the basis of the facts, viz. (i). possession of the aforementioned properties was delivered to the assessee during the year; and (ii). substantial purchase
P a g e | 17 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International consideration in respect of both the properties was paid by the assessee to the sellers during the year under consideration, viz. A.Y. 2009-10, therefore, it can safely be concluded that in terms of the clarificatory Explanation 2 of Sec. 2(47)(v) as had been made available on the statute by the legislature in all its wisdom w.r.e.f 01.04.1962, the „transfer‟ of the respective properties under consideration, viz. (i). Residential property at Nagpur; and (ii). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, can safely be held to have concluded during the year under consideration, viz. A.Y. 2009-10. We further in the backdrop of our aforesaid observations find ourselves to be in agreement with the contentions raised by the assessee before the lower authorities that though the execution of the sale deed would be indispensably required to secure a legal title in favor of the purchaser of the property in the revenue records, but however, the same can neither be determinative, nor can be allowed to become a tool for deferring the incidence of “transfer” and facilitating keeping in abeyance the tax liability of the seller of the property, to the extent the chargeability of tax under the Income tax Act, 1961, is concerned. We find that our aforesaid view stands fortified by the judgments of the Hon’ble Supreme Court in the following cases:-
(i). R.B. Jodha Mal Kuthiala Vs. CIT (1971) 82 ITR 570 (SC). (ii). CIT vs. Podar Cement (P) Ltd. Etc.. (1997) 226 ITR 0625 (SC)
P a g e | 18 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International The Hon‟ble Apex Court in the aforesaid judgments had concluded that „Owner' for the purposes of Sec. 22 is a person who is entitled to receive income from the property in his own right, and the requirement of registration of sale-deed in the context of s. 22 is not warranted. That still further we find that the Hon’ble Supreme Court in the case of Mysore Minerals Ltd. vs. CIT (1999) 239 ITR 0775 (SC), had held as under:
“It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the legislature in enacting s. 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent. To take the case at hand it is the appellant-assessee who having paid part of the price, has been placed in possession of the houses as an owner and is using the buildings for the purpose of its business in its own right. Still the assessee has been denied the benefit of s. 32. On the other hand, the Housing Board would be denied the benefit of s. 32 because in spite of its being the legal owner it was not using the building for its business or profession. We do not think such a benefit-to-none situation could have been intended by the legislature. The finding of fact arrived at in the case at hand is that though a document of title was not executed by Housing Board in favour of the assessee, but the houses were allotted to the assessee by the Housing Board, part-payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. It is common knowledge, under the various schemes floated by bodies like housing boards, houses are constructed on large scale and allotted on part-payment to those who have booked. Possession is also delivered to the allottee so as to enable enjoyment of the property. Execution of document transferring title necessarily follows if the schedule of payment is observed by allottee. If only the allottee may default the property may revert back to the Board. That is a matter only between the Housing Board and the allottee. No third person intervenes. The part-payments made by allottee are with the intention of acquiring title. The delivery of possession by Housing Board to allottee is also a step towards conferring ownership. Documentation is delayed only with the idea of compelling the allottee to observe the schedule of payment.
P a g e | 19 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International 14. For the foregoing reasons, in our opinion, the High Court was not right in taking the view which it did. The appeal is allowed. The judgment of the High Court is set aside. The question referred by the Tribunal to the High Court is answered in the negative, that is, against the Revenue and in favour of the assessee. No order as to the costs.” 11. We thus in the backdrop of the aforesaid settled position of law, are thus of the considered view that it can safely be concluded that the purchase transactions in respect of both of the properties under consideration had taken place during the year under consideration, viz. A.Y. 2009-10. We thus are of the considered view that the claim of the assessee in respect of the additions made in the „block of assets‟ towards purchase of the aforesaid properties, viz. (i). Residential property at Nagpur; and (ii). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, is found to be in order. That in the backdrop of our aforesaid observations, we are of the considered view that neither the assessing of an amount of Rs.93,96,127/- under the head „Short term capital gain‟, nor the disallowance of depreciation of Rs.12,699/- could have been made in the hands of the assessee. We thus in terms of our aforesaid observations uphold the order of the CIT(A).
The appeal of the revenue is dismissed.
Order pronounced in the open court on 25.09.2017.
Sd/- Sd/- (G.S.PANNU) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER भ ुंफई Mumbai; ददन ुंक 25.09.2017 Ps. Rohit Kumar
P a g e | 20 ITA No. 5578/Mum/2013 AY: 2009-10 ITO Vs. M/s Alfreight International आदेश की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to : 1. अऩीर थी / The Appellant प्रत्मथी / The Respondent. 2. आमकय आम क्त(अऩीर) / The CIT(A)- 3. आमकय आम क्त / CIT 4. विब गीम प्रतततनधध, आमकय अऩीरीम अधधकयण, भ ुंफई / 5. DR, ITAT, Mumbai ग र्ड प ईर / Guard file. 6. सत्म वऩत प्रतत //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीऱीय अधिकरण, भ ुंफई / ITAT, Mumbai