MOHD IQBAL ABDUL SALAM KHAN,MUMBAI vs. ASST CIT CIR 17(3), MUMBAI

At the outset, it is seen that in of Revenue’s appeal is a law tax effect and the relief allowed by CIT(A) on account of deletion of addition of income from house property is only Rs.6,50,000/- and the tax on this will beat Rs. 2,,08,000/-. The net tax demand will be Rs.2,08,000/-. Hence, net tax effect in this appeal of revenue on the disputed additions made by AO and deleted by CIT (A), is less than Rs. 10 lacs.

During the course of hearing before us, the learned Counsel for the assessee, pointed out that in this case, the net tax demand is Rs.2,08,000/- and thus, the tax effect in this appeal is below Rs.10.00 lacs. The learned Counsel for the assessee further submitted that in view of the CBDT Circular No.21/2015, dated 10.12.2015 brought out by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, the appeal was not maintainable and be dismissed. The learned Sr. DR also agreed to the facts stated by the learned Counsel for the assessee but could not point out whether this case falls under any of the exception provided in the Circular. 4. We have heard the rival submissions and perused the material on record. We find from the records before us that the tax involved in the disputed issue is below Rs.10 lacs and therefore, in view of the circular No. 21/2015 dated 10th December, 2015 no appeal should be filed by the Revenue before the Tribunal which has tax effect of Rs. 10.00 lacs or less and this circular is also applicable retrospectively to all pending appeals. The relevant extract the said CBDT Circular (Supra) is as under: - “This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.” 5. Considering the above, the appeal filed by the Revenue, is therefore, dismissed. 6. Coming to assessee’s appeal in A.Y. 2010- 11, the first issue in this appeal of assessee is against the order of CIT(A) sustaining the action of the AO in determining the short term capital gain determining by the AO on sale of residential flat instead of determining of long term capital gains. For this assessee has raised following ground No.2: -

Briefly stated facts are that the assessee has purchased one Flat in Orchid by way of agreement on 28-09-2009 for a sum of Rs. 56,00,000/- and sold the same on 31-08-2009 for a sum of Rs. 61,39,560/-. According to AO, the assessee has recorded the sale consideration as on 31-08-2009 of Orchid Flat at Rs. 61,39,560/- as against the same stamp duty value of Orchid as on 28-01-2009 is Rs. 1,04,56,387/- as per registered documents of purchase. According to AO, the assessee has purchased this Flat on 28-01-2009 and sold the same on 31-08-2009, the gain arising out of the same is short term capital gain and accordingly he computed the short term capital gain at Rs. 53,17,385/- by working out the same as under: -

We have heard the rival contentions and gone through the facts of the case. We find that the facts of the case are that the assessee entered into agreement with the builder Neelkamal Realtors & Erectors (I) Pvt. Ltd for purchase of residential Flat No.3202, 32nd Floor, ‘A’ Wing in the proposed and under consideration building known as ‘Orchid Tower’ for which assessee paid a total consideration of Rs. 56,00,000/-as under: -: -

The builder issued an allotment letter No. 48/OT/3202/A/06 dated 04-12-2006, the copy of which is enclosed in the assessee’s paper book. After consideration and occupation certificate from the appropriate authorities, the builder Neelkamal Realtors & Erectors (I) Pvt. Ltd., finally entered into agreement vide letter dated 28- 01-2009, which was registered with the registrar of stamp duty vide registration No. BBE-3/746/2009 and paid stamp duty of Rs. 5,07,600/- along with registration fee of Rs. 31,960/-. The assessee enclosed this registered agreement in his paper book. The Page 4 of 8 assessee paid a total consideration including stamp duty and registration charges i.e. the cost of acquisition at Rs. 61,39,560/-. Although, while filing return of income the assessee shown less cost of acquisition of this flat at Rs. 51,39,415/-, which was revised by filing a revised return disclosing the cost of acquisition at Rs. 61,39,560/-. The assessee sold this residential flat no. 3202, 32nd floor, A Wing of Orchid tower to Mrs. Tasneembai Abbasbhai Yamni and Mr. Abbasbhai Shaikh Ebrahim Yamini for a total consideration recorded in the sale deed at Rs. 61,39,560/- vide sale deed dated 28-08-2009. The sale deed was registered vide No. BBE-3/7446/2009 and copy of the registered sale deed is enclosed in assessee’s paper book. The assessee disclosed long term capital gain on sale of this residential flat No.3202 in Orchid tower for the reason that the assessee acquired right in this residential flat by paying total consideration of Rs. 56,00,000/- on or before 16-06-2006 and the same was sold on 28-08-2009. It means that this flat was retained by assessee for more than 36 months and this is a long term capital asset. In our view, AO should have assessed this as long term capital gain after verifying the fact of cost of acquisition and sale consideration. The AO is directed accordingly. The issue is restored back to the file of the AO but for limited purpose of verification only.

The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in taking the full value consideration as assessed by stamp valuation authority and AO adopted the same by invoking the provision of Section 50C of the Act. For this assessee has raised following ground No.1: -

While adjudicating the issue of assessment of capital gain whether the same is long term capital gain or short term capital gain, we have discussed the facts of the case which are undisputed. The only disputed points in this issue is that the assessee has recorded the sale consideration of this flat No. 3202, 32nd floor, A Wing, Orchid tower on 28-08-2009 at Rs. 61,39,560/-. But for the purpose of stamp duty valuation, the market value of property has been determined by stamp value authorities at Rs. Page 5 of 8 1,04,56,800/-. The AO adopted the same and CIT(A) confirmed the same by observing in Para 26 as under: -

Now before us, the only issue raised by the assessee is that while registering the above sale deed dated 28-08-2009 stamp valuation authority, Maharashtra State had charged only Rs. 1,00,000/- as stamp duty and no other valuation was assessed under the applicable low. For this learned Counsel for the assessee drew our attention to the Maharashtra Stamp Act section 5 clause g-a (ii) which reads as under: -

In the result, the appeal of assessee is partly allowed and the appeal of Revenue is dismissed.