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Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Before: Shri Sanjay Garg & Shri Sanjay Awasthi
order : May 30, 2024 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 19.10.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the action of the A.O of making the addition of Rs. 47,55,787/- by wrongly invoking the provisions of sec 56(2)(vii)(b)(ii).
2. For that on the facts and circumstances of the case, the Ld CIT(A) ought to have considered the fact that the assessee is a promoter and real estate developer and the asset purchased was to be used for business and was not a capital asset as such provisions of sec 56(2\(vii) (b)(ii) were not applicable.
Assessment Year: 2014-15 Mohammad Ibrahim
Without prejudice to the above, the Ld. CIT(A) ought to have considered the fact that the AO has not referred to the Departmental Valuation Officer for valuation of the property which is squarely overruling the order of Hon'ble Supreme Court in the case of Jute Corp. of India Ltd vs CIT (187 ITR 688) and NTPC vs CIT (229 ITR 383).
4. For that without prejudice to the above and on the facts and circumstances of the case, Ld CIT(A) ought to have considered the Order of Hon'ble ITAT, Kolkata dated 28.12.2018 in respect of the settled matter of Md Gulzar, Other Co-Owner of the Subject Property and an inference drawn divorced of the same is a change in opinion. 5. The appellant craves leave to add, alter or delete all or any of the grounds of appeal
.”
3. The brief facts of the case are that the assessee had purchased a property jointly with Md Gulzar for Rs.40,00,000/-. The Assessing Officer noted that the stamp duty value of the said property was Rs.1,35,11,573/-. He calculated the difference between the stamp duty value and the purchase consideration at Rs.95,11,573/-. The share of the assessee was calculated at Rs.47,55,790/- and the said amount was added to the income of the assessee invoking the provisions of section 56(2)(vii)(b)(ii) of the Act.
The ld. CIT(A) confirmed the addition so made by the Assessing Officer.
Before us, Smt. Swatee Baid, the ld. Counsel for the assessee, has submitted that the provisions of section 56(2)(vii)(b)(ii) of the Act were not attracted in the case of the assessee. She has submitted that the assessee is in the business of real estate developer and the property was purchased to commercially exploit the same i.e. to construct flats thereupon. That the property was purchased in the month of February i.e. 18.02.2014, and that the accountant of the assessee inadvertently shown it as an investment. However, immediately on 01.04.2015, the property in the balance sheet was shown as stock-in-trade. The assessee always intended to use the property as stock-in-trade and Assessment Year: 2014-15 Mohammad Ibrahim even in the accounts of the assessee in the immediately next financial year, the property was shown as stock-in-trade only. The ld. Counsel also referred to the assessment proceedings carried out in the case of the joint owner namely Md. Gulzar and invited our attention to page 17 of the paper-book to submit that the similar issue/query was raised by the Assessing Officer in the show-cause notice dated 27.12.2019 during the assessment proceedings carried out in his case and the identical reply was given by Md. Gulzar in this respect that the property was always kept as stock-in-trade. That considering the reply given by Md. Gulzar, no addition has been made by the Assessing Officer in the case of joint owner of the property. The ld. Counsel referring to the provisions of section 56(2)(vii)(b)(ii) of the Act and the explanation given thereunder has submitted that the property under the said section means a capital asset of the assessee and that the stock-in-trade is not included in the definition of the property.
The ld. DR, on the other hand, has relied upon the findings of the lower authorities. 7. We have considered the rival submissions of the ld. Representatives of the parties. In the case in hand, the ld. Counsel had duly demonstrated that the assessee always intended and has also treated the said property as stock-in-trade, which is duly decipherable from the financial accounts of the assessee from 01.04.2014 onwards. It is also a fact on the file that the property was purchased on 18.02.2014 only and merely because immediately on the purchase of the property, the accountant did not show it as stock-in-trade and further considering the fact that the assessee immediately thereafter on 01.04.2014 has shown the said property as stock-in-trade and also considering that the assessee is in the business of real estate developer