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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: SHRI G.S. PANNU & SHRI SANJAY GARG
Per Sanjay Garg, Judicial Member:
The above titled two appeals have been preferred by two different assessees against the orders dated 17.09.2007 & 30.11.2007 respectively of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to same assessment year 2004-05. Since common issues are involved in both the appeals, hence, they are taken together and are being disposed of with this common order. For the sake of convenience, the facts have been taken from ITA No.7360/M/2007.
The issue taken in this appeal is as to what amount of sale consideration is to be taken for computation of long term capital gains on the sale of land. The assessee has claimed that the total consideration was settled at Rs.4,35,00,000/- whereas the Assessing Officer (hereinafter referred to as the AO) has taken the sale value of the land at Rs.9,00,99,500/- as per the value determination by the stamp duty valuation authority.
The brief facts of the case are that the assessee was a co-owner of the property along with 14 other persons situated at Mazgaon. The assessee had only 5% share in the said property. The assessee along with the other co- owners entered into a development agreement dated 16.02.04 with Shri A.J. Ladak, developer, for a consideration of Rs.4,35,00,000/-. The property transferred under the said agreement included all the piece of land with super structure standing thereupon. The property was occupied by the tenants who were running commercial shops thereupon. The assessee offered capital gains on the said property by adopting the actual sale consideration received of entire property at Rs.Rs.4,35,00,000/- and accordingly offered his proportionate share of Rs.11,67,000/- to taxation for capital gains. The AO computed the long term capital gains under section 50C in respect of share of the assessee adopting the value of the DVO at Rs.11,88,64,105/-. However, later on an order under section 154 was passed by the AO taking the value of the property as determined by the Stamp Valuation Authority at Rs.9 crores. In the said order under section 154, the AO also took into account the cost of acquisition of the land as per section 49 of the Act at the cost for which the previous owner of the property had acquired the property as increased by cost of any improvement of the asset. He, however, held that since the assessee had not furnished any documentary evidence as to the valuation as on 01.04.81. He, therefore adopted the value of the property at Rs.1,62,651/-.
In appeal, the Ld. CIT(A) upheld the findings of the AO. The assessee has, thus, come in appeal before us.
During the earlier dates of hearing, it was observed by the Tribunal that the property was sold by the assessee along with 14 other persons who were joint owners in the said land. The Tribunal directed the parties to furnish the information in cases of such other persons. The information in relation to some parties was furnished. However, the information relating to other persons could not be obtained by the parties. Since so many opportunities have already been granted, so we proceed to hear the matter on merits.
The Ld. A.R. of the assessee has invited our attention to the various clauses of the agreement dated 06.02.04 vide which the assessee along with the other 14 persons had transferred the land in question. A perusal of the clause (2) of the agreement reveals that it has been specifically mentioned therein that the property had been occupied by tenants’/occupants’, list of which has been given in second schedule attached with the agreement. A perusal of the second schedule to the agreement reveals that the property had been occupied by 30 tenants. The names of the tenants, the area occupied and the user of the area/building, the monthly rent etc. has been mentioned in the second schedule. Further, the clause (3) at page 4 of the agreement reveals that the developer has agreed to settle with the tenants on behalf of the owners at his own cost and that the owners have not been held liable or responsible for any stamp duty registration charges, vacation of the building etc. or any portion thereof in the property in question. The owners have been paid the money in question for transfer of their rights in the property and the developer had taken the responsibility himself to pay to the tenants for vacating and handing over the possession of the property to the developer. In view of the above circumstances and taking into consideration that the building was occupied by the tenants, the sale consideration was settled and whatever the amount as per the agreement was received by the assessee, the same was offered for capital gains as per the provisions of the Act.
At this stage, the Ld. A.R. of the assessee has brought our attention to the assessment order dated 28.12.06 passed in the case of another co-owner, Shri Yasin Esmail Gulam Hussain wherein the scrutiny assessment proceedings under section 143(3) read with section 147 of the Act were carried out and the capital gains were computed in the said case adopting the sale price as was actually received by the assessee in lieu of consideration for his share in the said property. The Ld. A.R. has further invited our attention to the letter of the Income Tax Officer – 15(2)-Mumbai which has been addressed to the Ld. D.R. and placed on the file by the Ld. D.R. accordingly wherein it has been mentioned that the letters were issued to all the co-owners to file the details relating to the computation of capital gains of their share in the property in relation to the transaction in question. Most of the letters were returned as unclaimed. However, the information relating to the one of the co-owners namely Shri Yasin Esmail Gulam Hussain was provided by his C.A to the AO. The said Shri Yasin Esmail Gulam Hussain also appeared before the AO on 06.11.11 and his statement under section 131 of the Act was also recorded wherein he stated that he had offered his share of income for taxation as capital gains. He had produced the copy of letter and other details which were also produced during the course of assessment proceedings explaining the working of the capital gains. The Ld. A.R. of the assessee has brought our attention to the letter dated 19th September 2006 filed by the C.A. of said Shri Yasin Esmail Gulam Hussain wherein a note relating to the computation of capital gains was submitted to the AO. The AO after considering the explanation submitted vide said note had computed the capital gains adopting the actual amount received by the assessee on transfer of his share in the property. Further, the statement of said Shri Yasin Esmail Gulam Hussain was also recorded under section 131 of the Act wherein Shri Yasin Esmail Gulam Hussain has deposed about the actual consideration received and the circumstances for the less consideration settled as the property in question was occupied by 30 tenants and even by some unauthorized hutments and encroachments. It was also explained that the said Shri Yasin Esmail Gulam Hussain had received Rs.94,50,000/- and the income thereupon which amount was invested in REC Bonds and claimed exempt under section 54EC as per the provisions of the Act. The Ld. A.R. has further invited our attention to the assessment order in the case of other co-seller namely Mrs. Bilkish Arif Nathani wherein the actual amount of consideration received was offered to capital gains tax and the same was accepted by the AO without any further addition. However, the Ld. D.R. has relied upon the decision of another assessee namely Shri Muzammil Rafique Esmail wherein the AO had adopted the value of the land as per the stamp duty valuation authority and computed the capital gains on the share of the assessee accordingly.
We have heard the rival contentions and have also gone through the relevant evidences and explanations offered by the Ld. Representatives of the parties. This is a fact on the file that the property was occupied by 30 tenants and even some part of the property was also illegally occupied by encroachers. The developer had offered to the owners of the property the amount of sale consideration taking into consideration the amount paid/to be paid to the said tenants/encroachers so that the vacant possession of the property be delivered to the developer. The AO has also not disputed that the amount of actual consideration received by the assessee as per the sale agreement which has been offered for taxation. Enquiries were made in the case of other related co- owners wherein the explanation offered relating to the occupancy of the property by tenants was considered and the capital gains were assessed as per the actual consideration received by the said persons. The facts and evidences on the file prove that the assessee had not received any amount more than the amount offered for taxation. The assessee has satisfactorily proved his case. Under such circumstances the adoption of the stamp duty value by the AO in the case of the assessee cannot be held to be justified. We, therefore, direct the AO to adopt the sale value of the property as per the actual consideration received by the assessee and not on the basis of value of the stamp duty authority.
So far as the question as to the cost of acquisition is concerned, the Ld. CIT(A) has rejected the claim of the assessee on the ground that the assessee had not furnished the valuation report regarding the value of the property as on 01.04.81 before the AO. We find that during the proceedings under section 154 of the Act, the AO had given credit of the cost of acquisition but has not adopted the value of the property as on 01.04.81 and further indexation thereupon. The said claim, therefore, was put by the assessee before the Ld. CIT(A). Ld. CIT(A) ought to have considered the claim of the assessee and determine the correct taxable capital gains. It has been held by the Hon’ble Bombay High Court in the case of “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” (2012) 349 ITR 336 (Bom.) that even if a claim is not put by the assessee before the AO, however the same can be pressed before appellate authority and the appellate authority should consider the claim if, otherwise, it is admissible. Moreover, it is the duty of the taxing authorities to collect the tax which is actually and rightly payable by the assessee as per the relevant provisions of the Act and not to punish the assessee for any inadvertent mistake on his part. We, therefore, restore the matter on this issue to the file of the AO with the direction to adopt the cost of acquisition of the property as per the provisions of the Act as on 01.04.81 and with indexation benefit thereupon in accordance with law. Needless to say that AO will give proper opportunity to the assessee to present his case, furnish evidence if any relating to this issue.
The next ground taken by the assessee is that the AO has not computed the capital gains as per the provisions of section 112 of the Act. We find that the assessee has not addressed any specific argument in this respect. The Ld. CIT(A) in the impugned order has directed the AO to compute the tax on long term capital gains as per provision of section 112. The above directions do not require any inference on our part. The facts and issue involved in being identical, the same is therefore treated as decided on the same lines as discussed above.
In view of the above observations, the appeals of both the assessees are hereby treated as allowed.
Order was pronounced in the open court on 30.10.2015.