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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI G.S.PANNUShri Siddharth S.Ajmera, Dr.Ambedkar Road,
The captioned appeal filed by the assessee pertaining to assessment year 2010-11 is directed against an order passed by CIT(A)- 32 Mumbai dated 16/03/2015 which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 08/03/2013.
In this appeal, the substantive dispute arises from the long term capital gain of Rs.6,16,448/- declared by the assessee in his return of income on sale of flat No.602, Marigold Building, Pune. The Assessing
(Assessment Year : 2010-11) Officer however, held that the gain was to be taxed as short term capital gain and accordingly, he computed such gain at Rs.11,32,020/-. The primary area of difference between the assessee and the Revenue was with regard to the period for which the property was held by the assessee for the purposes of classification as long term or short term capital asset. As per the assessee, the date of purchase of the property was to be reckoned as 20/12/2006 and date of sale was 10/01/2010, thereby reflecting a period of holding in excess of 36 months so that the property was to be considered a long term capital asset for the purposes of determining the nature of capital gains. The Assessing Officer, however, held that the date of purchase of the property was to be taken as 30/01/2008 and date of sale as 31/01/2009, which showed that the period of holding was less than 36 months and thus, the gain was to be characterized as short term capital gain. This aspect of the controversy was carried by the assessee in appeal before the CIT(A), who also affirmed the stand of the Assessing Officer by concluding as under:-
“Having discussed the aforesaid legal position, I concur with the finding of the Assessing Officer that the said flat was purchased and sold by appellant on 30.01.2008 & 31.01.2009, being the date of registered agreement for purchase and sale respectively. Accordingly, I confirm the treatment given to capital gain as Short Term Capital Gain. Therefore, the grounds of appeal are dismissed.”
3. Before the Tribunal, assessee raised the following Grounds of appeal in the Memo of appeal:-
1.1 The Learned Principal Commissioner of Income - tax (OSD) (Appeals) - 32, Mumbai, ["Ld. Pr. CIT (050) (A)"] erred in confirming the action of the Income Tax Officer-20(3)(3), Mumbai ["the A.O."], in treating the capital gain arising on transfer of capital asset during the year as short term capital gain, instead of long term capital gain as claimed by the Appellant.
(Assessment Year : 2010-11) 1.2 While doing so, the Ld. Pr. CIT (OSD) (A) erred in confirming the action of the A.O. in holding that the date of purchase and the date of sale of the capital asset should be taken as 31.03.2008 and 31.01.2009, respectively. 1.3 It is submitted that, in the facts and the circumstances of the case, and in law, no such action was called for. 2. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.”
3.1 Ostensibly, the aforesaid Grounds preferred in the Memo of Appeal assailed the action of the income tax authorities in treating the capital gain arising on the transfer of the property as short term capital gain instead of long term capital gain claimed by the assessee.
At the time of hearing, Ld. Representative for the assessee raised a preliminary objection, which according to him goes to the root of the matter. The Ld. Representative for the assessee has referred to an Additional Ground of appeal preferred by the appellant, which reads as under:-
“3. Having held and confirmed that the ‘transfer’ of the property took place on 31.01.2009, could C.I.T(A) have confirmed levy of capital gain in A.Y 2010-2011 and, consequently, whether his action is consistent and in accordance with law?” 4.1 As per the Ld. Representative for the assessee, the aforesaid Additional Ground of appeal raises a pure point of law and is based on the findings recorded by the lower authorities and goes to the root of the tax treatment of the said capital gains and, therefore, deserves to be admitted. In terms of the said Additional Grounds of appeal, it is sought to be made out that if the transfer of the property is to have taken place on 31/01/2009, as held by the income tax authorities, then the gain on such a transfer is not taxable in the instant year inasmuch as (Assessment Year : 2010-11) such date of transfer is outside the previous year relevant to the assessment year under consideration. Factually speaking, the aforesaid plea of the assessee is a fall out of the findings recorded by the income tax authorities in their respective orders.
5. Ld. Departmental Representative has not disputed the factual aspect of the plea raised by the assessee but pointed out that the said plea was not raised before the CIT(A) and was also not raised as a part of the Memo of appeal when it was originally filed before the Tribunal.
I have carefully considered the rival submissions. It is abundantly clear that the Additional Ground of appeal, now being raised by the assessee springs-out of the findings recorded by the lower authorities to the effect that the property in question was acquired/purchased by the assessee on 30/1/2008 and sold on 31/1/2009 as against the position of the assessee that the property was purchased on 20/12/2006 and sold on 10/01/2010. As per assessee, the taxable event occurred during the year under consideration on account of the sale of property on 10/01/2010, whereas the Assessing Officer as well as the CIT(A) differed with the assessee and have concluded that the sale of property took place on 31/01/2009. Without going into the merits of the differing claims on the date of sale, one thing clearly emerges that as per the stand of the Assessing Officer as well as the CIT(A), the taxable event by way of transfer/sale of property (i.e. 31/1/2009) has not taken place during the previous year relevant to the assessment year under consideration. Ostensibly, the consequence would be that the gain/loss on account of taxable event of 31/01/2009 cannot be brought to tax in the instant previous year, which comprises
(Assessment Year : 2010-11) of the period 01/04/2009 to 31/03/2010 corresponding to the assessment year under consideration i.e. 2010-11.
6.1 In view of the aforesaid, I am inclined to accept for adjudication the Additional Ground of appeal raised by the assessee, which is based on the findings recorded by the income tax authorities and is also relevant to decide the tax liability of the assessee . In the course of hearing, it was announced before both the parties that the aforesaid Additional Ground of appeal is liable to be admitted and, thus, both sides were heard on the merits of the same also.
6.2 In so far as the merit of the Additional Ground of appeal is concerned, it is quite clear that once the income tax authorities reach a conclusion that the transfer of the property took place on 31/01/2009, the resultant gain cannot be brought to tax in the instant assessment year as it does not correspond to the previous year relevant to the assessment year under consideration. As a consequence, the Additional Ground of appeal preferred by the assessee is allowed.
6.3 In view of the aforesaid, the Grounds raised by the assessee originally in the Memo of appeal are rendered academic and are not being adjudicated.
In the result, appeal of the assessee is allowed, as above.
Order pronounced in the open court on 19/08/2016