Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: SHRI G.S.PANNU (AM) & SHRI RAM LAL NEGI (JM)
The present appeal filed by the revenue is directed against order dated 24/12/2012 passed by the CIT (Appeals)-36, Mumbai pertaining to the assessment year 2008-09.
Brief facts of the case are that in response to notice issued under section 153A of the Income Tax Act, 1961 (in short, ‘the Act’) the assessee filed her return of income for the A.Y. 2008-09 declaring the total income of Rs. 2,13,37,720/- During the relevant financial year, The assessee had sold her flat at ‘Takshashila’ Society Dader, Mumbai, for a total consideration of Rs. 1,01,00,000/-, The said flat had been acquired by her in lieu of surrender of tenancy rights. While working out the taxable gains the assessee calculated the cost of acquisition of the flat at Rs. 54,72,000/- as on 30/10/1993, i.e., the date when the assessee got possession of the flat in the re-developed building. After considering the contentions of the assessee, the AO made addition of the entire amount of Rs 1,01,00,000/- as Long Term Capital Gain treating the cost of acquisition of the tenancy as ‘NIL’ and assessed the total income of the assessee at Rs.3,14,37,720/-as against the returned income of Rs. 2,13,37,720/-.
Being aggrieved by the assessment order the assessee filed an appeal before the Ld. CIT(A), Mumbai on the ground that the Ld. Assessing Officer has wrongly computed the total income of the appellant at Rs. 3,14,37,720/- .The ld. CIT(A) after hearing the assessee in the light of the cases relied upon by the assessee allowed the appeal holding as under:- “The decision of special Bench of ITAT in Dr. D.A. Irani’s case is authority for the proposition that the surrender of tenancy amounts to transfer of capital asset and the consideration was fair market value of the flat received in lieu thereof. This view has recently been reiterated by the Tribunal in Atul Puranik’s case. In this case, the ITAT further held that capital gain arising on sale of asset acquired(leasehold rights) in lieu of the original surrendered asset would be computed by reducing from the sale consideration the fair market value of the plot acquired by the assessee on surrender of original assets.”
Dissatisfied with the impugned order passed by the Ld. CIT(A), the revenue is in appeal before the Tribunal. The revenue has challenged the impugned order on following effective grounds:- (i) On the facts and in the circumstances of the case the ld. CIT(A) erred in deleting addition made by the A.O under the head ‘Long
Term Capital Gain’ by holding that the cost of acquisition of the flat which was acquired in lieu of tenancy, is the fair market value of the flat as on the date of acquisition i.e. Rs. 54,72,000/- as against Rs. NIL adopted by the A.O without appreciating the fact that the assessee failed to prove the acquisition cost of the surrender of tenancy rights with corroborative evidence at the time of possession of flat given on 30/10/1993. (ii) On the facts and in the circumstances of the case the ld. CIT(A) erred in deleting addition made by the A.O under the head ‘Long Term Capital Gain’ by admitting additional evidence regarding cost of acquisition at Rs. 54,72,000/- without giving opportunity to the A.O as per Rule 46A of the I.T.Rules”.
Before us the Ld. DR heavily relying upon the assessment order submitted that since the assessee has failed to prove the cost of acquisition of the flat in question, the Ld. CIT(A) has wrongly allowed the contentions of the assessee and deleted the addition made by the AO. The cases referred by the assessee are distinguishable on facts and as such the same are not applicable to the assessee’s case. Since the cost of tenancy to the assessee was NIL, the entire sale value of said flat was required to be taken as capital gain of the assessee, therefore, the AO has rightly added the entire amount of sale consideration to the income of the assessee under the head Long Term Capital Gain. Therefore, the impugned order is bad in law and liable to be set aside.
On the other hand the Ld. Counsel for the assessee submitted that the CIT(A) has rightly deleted the addition made by the AO in the light of the decision rendered by the Mumbai Bench of ITAT in the case of Shri. G. Atul Puronik vs. ITO, and law laid down by the Hon’ble jurisdictional High court in Nila Products Ltd. 148 ITR 99 and Shiribai
Pundole 129 ITR 448(Bom). The assessee was a tenant in flat No. 283, First floor, Vincent Terrace, Goculdas Past Road, Dadar, Mumbai. On 20/12/1984 the assessee, entered into an agreement with the landlady to surrender her tenancy rights, in lieu of getting ownership of a flat, as the landlady wanted to reconstruct the whole building which was in dilapidated condition. Accordingly, under that agreement assessee was allotted flat no. 2 in newly constructed building ‘Takshashila’ Goculdas & Madhavdas Pasta Road, Dadar on surrender of tenancy rights in 1984-85, the assessee became owner of the saiod flat. The assessee has rightly calculated the cost of acquisition of the flat at Rs. 54,72,000/- as on 30/10/1993, i.e., the date when she got possession of the flat. Hence the impugned order does not suffer from any legal infirmity. Therefore, the appeal filed by the revenue has no merit.
We have heard the rival submissions and perused the material on record including the cases referred by the parties in support of their contentions. In the case of Atul G.Purnaik vs. ITO (supra) the assessee was allotted a plot of land to the assessee as compensation in lieu of agricultural land acquired by the government under “12.5% Expansion Scheme and the issue was determination of cost of acquisition of the said plot of land for the purpose of computing capital gain. It was held that market value of the plot of land on the date of allotment shall be the cost of acquisition for the purpose of computing capital gains. Following the aforesaid view, the co-ordinate Bench of the Mumbai Tribunal has decided the similar issue in the case of Shri Ramesh Abaji Walavalkar vs. ACIT & 1534/Mum/2010 for the assessment years 2005-06 and 2003-04 respectively. The operative part of the order reads as under:- “We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the cost of acquisition of Sanpada land was taken by the assessee at Rs.1,07,90,000/- being 83% of the market value of Rs.1,30,00,000/- of the entire land on the date of allotment as valued by the Registered Valuer. The AO, however, took the same as Nil relying on the provisions of sec. 45(5), while the ld. CIT(A) took the same at Rs.52,000/-, being the premium paid by the assessee for obtaining the said land. As rightly submitted by the ld. counsel for the assessee, a similar issue had come up for consideration before the Co-ordinate Bench of the Tribunal in the case of Atul G. Puranik vs. ITO (132 ITD 499) wherein a similar plot of land was allotted to the assessee as compensation in lieu of agricultural land acquired by the Government under the same scheme called “12.5% scheme” and the issue was determination of cost of acquisition of the said plot of land for the purpose of computing capital gains. In this regard, the Tribunal noted that the market value of the plot of land as on the date of allotment is to be considered as full value of consideration at the time of computing capital gain on the first transaction. It was held that once a particular amount was considered as full value of consideration at the time of its purchase, the same shall automatically become the cost of acquisition at the time when such capital asset is subsequently transferred. It was held that the market value of the plot of land on the date of allotment thus shall constitute the cost of acquisition for the purpose of computing capital gain when it was subsequently sold or transferred. The ratio of the decision of the Tribunal in the case of Atul G. Puranik is thus squarely applicable to the issue involved in the present case and respectfully following the same, we direct the AO to take the cost of acquisition of the land of the assessee for the purpose of computing capital gain at Rs.1,07,90,000/-, being the market value of the said land on the date of allotment. Ground no. 3 of the assessee’s appeal is accordingly allowed.”
In our considered opinion the issue in dispute in the present case is similar to the issue decided by the co-ordinate Bench of the Mumbai Tribunal in the aforesaid case. No case law contrary to the findings of the co-ordinate Bench was brought to our notice by either of the parties. We are, therefore, of the considered view that the impugned order is neither contrary to the expressed provisions of law nor contrary to the settled principles of law. We do not find any infirmity in the order of the Ld. CIT(A) to interfere with. Hence, respectfully following the view taken by the co-ordinate Benches in Atul G.Purnaik vs. ITO and Shri Ramesh Abaji Walavalkar vs. ACIT (supra), we uphold the order dated 30.1.2012 passed of the Ld. CIT(A) and dismiss the appeal of the revenue.
In the result, appeal filed by the revenue for A.Y. 2008-09 is dismissed.