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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
This appeal by the Assessee is arising out of the order of CIT(A)-34 Mumbai, in appeal No. CIT(A)-34/ITO-19(2)(4)/IT-08/13-14, dated 10-03- 2015. The Assessment was framed by ITO Ward-19(2)(4), Mumbai for the A.Y. 2008-09 vide order dated 18-03-2013 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).
At the outset, learned Counsel for the assessee has not pressed the first issue of re-opening under section 147 of the Act and hence, the same is dismissed as not pressed.
The next issue in this appeal of assessee is as regards to year of assessibility of long term capital gain on sale of property situated at Khar, Mumbai. For this assessee has raised following ground No. 3 and 4: -
2 Manilal Jawaharmal Wadhwa (A.Y:2008-09)
“3. The learned CIT(A) has erred in law and in facts in confirming the addition made by the Assessing Officer in A.Y. 2008-09 on account of Long Term Capital Gain of Rs. 93,78,356/- arising out of sale of residential property situated at Khar. The learned CIT(A) ought to have held that capital gain arising from sale of Khar residential property was taxable in A.Y.2009-10 as offered by the appellant in his return of income filed for A.Y. 2009- 10.
Briefly stated facts are that the AO noted during the course of assessment proceedings for AY 2009-10 that the assessee has sold one property value at Khar, Mumbai for a value of Rs. 1,26,84,356/- and the agreement for sale of this flat was registered on 20-03-2008. Accordingly, the AO reopened the assessment under section 147 of the Act for AY 2008-09. The assessee filed original return of income on 31-03-2008. According to AO, the assessee has already received consideration for sale of this Flat which is more than 98% of the total consideration in FY 2007-08 relevant to AY 2008-09 and accordingly, he assessed the long term capital gain in this AY 2008-09. The assessee before AO as well as before CIT(A) contended that the property of sale was completed in FY 2008-09 relevant to FY 2009-10 and he has disclosed long term capital gain in the return of income filed for AY 2009-10. The assessee filed the copy of return for AY 2009-10 along with computation of income wherein he has disclosed long term capital gain on sale of residential house at Khar. The CIT(A) also confirmed the action of the AO vide Para 7.2 of his appellate order. Aggrieved, now assessee is in second appeal before Tribunal.
We have heard the rival contentions and gone through the facts and circumstances of the case. The learned Counsel for the assessee
3 Manilal Jawaharmal Wadhwa (A.Y:2008-09)
Shri Vijaya Mehta filed chronology of events of the transaction which reads as under: -
Sl Date Particulars No. 1. 28.01.2008 Received part payment of Rs. 10,00,000/- against sale of flat 2. 20.03.2008 Registration of agreement for sale of flat for a total consideration of Rs. 1,26,84,356/- 3. 24.03.2008 Received part payment of Rs. 1,14,30,669/- 4. 20.05.2008 Received balance payment of Rs. 2,53,687/- received 5. 24.05.2008 Possession of flat given. 6. 25.03.2009 New Flat purchases by assessee and part payment made 7. 30.07.2009 Full payment made for purchase of new flat. The learned Counsel for the assessee stated that the possession was handed over on 24-05-2008 and also the balance payment of Rs. 2,53,687/- was received on 20-05-2008. The learned Counsel for the assessee drew our attention to the agreement registered between assessee and the purchaser dated 20-03-2008, wherein he has received out of total consideration of Rs. 1,26,84,356/- i.e. part payment of Rs. 1,24,30,669/- on 28.01.2008 & 24-03-2008. The learned Counsel for the assessee drew our attention to clauses of the agreement wherein absolute title of the property will pass only on receipt of full and final payment and even the possession is to be given after receipt of full and final payment. The relevant clause reads as under: -
“And whereas the vendor shall simultaneously with the execution hereof execute an irrevocable Power of Attorney in favour of the Purchaser and its nominee to attend the office of the Concerned sub-Registrar of Assurances & City Survey Office & Municipal Corporation of Greater Mumbai for transfer of the said premises to the name of Purchases in case the Vendor fails to 4 Manilal Jawaharmal Wadhwa (A.Y:2008-09) attend. However, the purchaser will get absolute title the said premises only upon payments of full and final amount, as agreed.”
The learned Counsel for the assessee also drew our attention to letter of possession given on 24-05-2008, which reads as under: -
“That by and under a Conveyance Deed dated 201h Day of March 2008, the Jai Laxmi Co. Operative Housing Society Limited has sold, transferred & conveyed all that piece or parcel of land or ground situate at Khar in the Registration Sub District of Sandra bearing Final Plot No. 786 of Sandra Town Planning Scheme No. III admeasuring 945 square yards or thereabouts and bearing new cadastral survey no. F/1549 along with Three Storey Building standing on the aforesaid Plot consisting of 17 residential units which presently occupied by 17 members through their membership of the Vendor to Ramee Hotels Pvt. Ltd. the Purchaser thereof, I have today handed over quiet, vacant & peaceful possession of my flat no. 15 which is one out of the said 17 residential units to the said Purchaser as against receipt of my share amounting to Rs. 1,26,84,356/- (Rupees one crore twenty six lacs eighty four thousand three hundred fifty six only) in terms of said Conveyance Deed.”
In view of this, the learned Counsel for the assessee stated that the transaction was completed only in 2009-10 and not in 2008-09.
We find that this issue is covered by the decision of Hon’ble Bombay High court in the case of Chaturbhuj Dwarkadas Kapadia of Bombay vs. CIT (2003) 260 ITR 491 (Bom), wherein it is held as under:-
5 Manilal Jawaharmal Wadhwa (A.Y:2008-09)
“11. The above quoted findings of the Tribunal is apparently an error because the financial year ended on March 31, 1996, and the first day of the next financial year was April 1, 1996, and not April 1, 1997. According to the Tribunal, the letter dated February 18, 1999, shows that Floreat came into possession on the day next to March 31, 1996, i.e., April 1, 1997. As stated above, the day next to March 31, 1996, would be April 1, 1996, and not April 1, 1997, and even if April 1, 1997, is taken as a typing mistake, it could only be read as April 1, 1996, and if April 1, 1996, is the date on which Floreat/developer came into possession, then the possession was received by the developer during the financial year 1996-97 corresponding to the assessment year 1997-98. Therefore, this finding of the Tribunal is erroneous because in this case we are concerned with the assessment year 1996-97 and not the assessment year 1997-98.”
Respectfully following the decision of Chaturbhuj Dwarkadas Kapadia of Bombay High Court (supra), we direct the AO to delete the addition of long term capital gain in this year and the assessee has already disclosed long term capital gain in AY 2009-10. Actually, the year of assessibility is AY 2009-10, which the assessee has already disclosed in the return of income.
In the result, the appeal of assessee is allowed.