Income Tax Appellate Tribunal - Mumbai
Ito 17(2)(1), Mumbai vs Jainam Constructions, Mumbai on 18 May, 2018
IN THE INCOME-TAX APPELLATE TRIBUNAL "F" BENCH MUMBAI
BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER
AND SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA No.5292/Mum/2016 (Assessment Year 2012-13)
ITO 17(2)(1), M/s Jainam Constructions,
Room No. 134, Aayakar B-10, Shankheshwar Darshan,
Bhavan, M.K. Road, Vs. Seth Motisha Lane, Mazgaon,
Mumbai-20. Mumbai -400010.
PAN: AACFJ8965D
Appellant Respondent
C.O. No.57/Mum/2018 (Assessment Year 2012-13)
M/s Jainam Constructions, ITO 17(2)(1),
B-10, Shankheshwar Darshan, Room No. 134, Aayakar
Seth Motisha Lane, Mazgaon, Vs. Bhavan, M.K. Road,
Mumbai -400010. Mumbai-20.
PAN: AACFJ8965D
Appellant Respondent
Appellant by : S. Padmaja (DR)
Respondent by : Shri Narayan Atal &
Gautam Meisheri(AR)
Date of Hearing : 15.05.2018
Date of Pronouncement : 18.05.2018
Order under section 254(1) of Income-tax Act
PER PAWAN SINGH, JUDICIAL MEMBER;
1. This appeal by Revenue under section 253 of the Income Tax Act (the Act) is directed against the order of ld. Commissioner of Income-Tax (Appeals)-28 [ld. CIT(A)], Mumbai dated 30.06.2016. In the matter of assessment order passed under section 143(3) dated 30.05.2015 for Assessment Year 2012-13. On service of notice of appeal, the assessee has ITA No.5292/M/16 & CO . 57 Mum 18- M/s Jainam Constructions filed the Cross Objection. The Revenue has raised the following grounds of appeal:
1. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in relying upon the decision of Hon'ble Mumbai ITAT in the case of Neelkamal Realtors & Erectors India Pvt. Ltd., and thereby directing to delete the addition of Rs.14,78,00,145/- on the grounds that the addition on the basis of provisions of Sec.SOC of the I.T. Act cannot be made in the case of a builder, as the flats sold are their stock in trade and not capital assets; without appreciating the fact that the decision of the Hon'ble Mumbai ITAT in the said case has not been accepted by the Department, and appeal u/s.260A of the Act has been filed which is pending for disposal before the Hon'ble Bombay High Court."
2. "On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in directing to delete the addition of Rs.14,78,00,145/- on the grounds that the addition amanating from the provisions of Sec.SOC of the I. T. Act Cannot be made in the case of a builder, as the flats sold are their stock in trade and not Capital assets, without appreciating the fact that the said proposition has not been accepted by the Department, and as the said issue is pending for disposal at various stages of appeal, the same has not attained finality."
3. "The appellant prays that the order of the A.O. should be restored and order of the CIT(A) should be set aside."
2. Brief facts of the case are that the assessee-firm is engaged in the business of Redevelopment of Property, filed its return of income for Assessment Year 2012-13 on 18.09.2012 declaring Nil income. The assessment was completed on 30.03.2015 under section 143(3) of the Act. The Assessing Officer while passing the assessment order made the addition of Rs. 14,78,00,145/- on account of difference of value of sale of flats/property shown by assessee and the valuation of Stamp Valuation Authority. On appeal before the ld. CIT(A), the entire addition was deleted. Therefore, aggrieved by the order of ld. CIT(A), the Revenue has filed the present 2 ITA No.5292/M/16 & CO . 57 Mum 18- M/s Jainam Constructions appeal before us. As referred above on service of notice of Revenue's appeal, the assessee has filed its cross objection.
3. We have heard the ld. Departmental Representative (DR) for the Revenue and ld. Authorized Representative (AR) of the assessee and perused the material available on record. The ld. DR for the Revenue submits that assessee has sold the different units/flats in less than the market value or the valuation of Stamp Duty Valuation Authorities. The assessee has not given any explanation as to why, the said units were sold below the market value/stamp duty valuation except submitting that section 43CA is applicable from 01.04.2014 and therefore, not applicable for AY 2012-13. It is further submitted that during the relevant period, the assessee developed a property in Mazgaon wherein lease holding right for residual period was bought by the assessee in Public auction from Municipal Corporation of Greater Mumbai (MCGM). The Assessing Officer on the basis of information from data base of Assessee Information Report (AIR) dated 11.07.2014, received from the office of Central Information Bureau that assessee sold one flat at Rs. 19,65,000/- whereas Stamp Duty Authority valuation was for Rs. 35,71,000/-. The assessee was asked to furnish the details of various flat sold by the assessee. From the details supplied by assessee, the assessee was asked to substantiate with evidentiary proof and the reasons for selling the flat less than the Stamp Duty Authority valuation. The assessee instead of giving any documentary 3 ITA No.5292/M/16 & CO . 57 Mum 18- M/s Jainam Constructions evidence and to substantiate the claim contended that section 43CA had been inserted from 01.04.2014, therefore, the provision is not applicable to the relevant AY. Therefore, the Assessing Officer added the difference stamp duty authority valuation and sale price to the total income of the assessee. In support of his submission, the ld. DR for the Revenue relied upon the decision of CIT vs. Shatrunjay Diamonds [2003] 128 TAXMAN 759 (BOM.).
4. On the other hand, the ld. AR of the assessee relied upon the order of ld. CIT(A). The ld. AR of the assessee submits that provisions of section 50C would not apply to the assessee. The assessee has not made any sale after 01.04.2014. There is no provision to substitute the full value of consideration at the Stamp Duty Valuation in cases where the stock-in- trade being flats are agreed to be sold at lower value. Therefore, the provision of section 50C can also not be invoked against the assessee. Section 50C applies to the case where capital asset is transferred. The assessee is a builder and flats are is stock-in-trade and not capital asset. The provision of section 50C therefore, does not apply where immovable property is stock-in-trade and the income therefore, is to be assessed under the head Income from Business & Profession. In support of his submission, the ld. AR of the assessee relied upon the decision of jurisdictional High Court in case of CIT vs Neelkamal Realtors & Erectors India (P.) Ltd. [2017] 79 taxmann.com 238 (Bombay). The ld. AR of the 4 ITA No.5292/M/16 & CO . 57 Mum 18- M/s Jainam Constructions assessee further submits that in case the grounds of appeal are rejected, he would not press its Cross Objection.
5. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that the Assessing Officer made the addition after taking his view that the assessee has sold a flat in less than value of stamp duty authority valuation. The Assessing Officer in paragraph-9 of his order has tabulated the difference of sale value and the stamp duty authority valuation. Before the ld. CIT(A), the assessee specifically urged that the assessee is a builder and the flat/units constructed by builder are his stock-in-trade and not capital asset. Section 50C of the Act applies to capital, where the capital is transferred. There is no dispute that assessee is a developer/builder. Further, there is no dispute that assessee constructed the said flats, which were shown as stock-in- trade. The Hon'ble jurisdictional High Court in CIT vs Neelkamal Realtors & Erectors India (P.) Ltd.(supra) held that section 43CA has been introduced in the Act from 01.04.2014 which governs taking of full value of consideration for transfer of assets other than capital assets on the basis of stamp duty valuation. This section 43CA finds a place as a part of Chapter-IV-D-Profits and gains of business or profession. Therefore, with effect from 1-4-2014 the stamp duty valuation of assets sold could be taken as full value of consideration. Further, section 50C Act has no application to value stock-in-trade is also a view taken by in CIT v. Ken 5 ITA No.5292/M/16 & CO . 57 Mum 18- M/s Jainam Constructions Construction and Colonizers (P.) Ltd. [2002] 208 Taxman 478/20 taxmann.com 381 (All.). The decision rendered by the Hon'ble jurisdictional High Court is directly applicable on the fact of present case. Therefore, we do not find any reason to deviate from the finding of ld. CIT(A). The case law relied by ld. DR in CIT vs Shatrunjay Diamonds (supra) are not applicable on the facts of the present case. The said case is relates to section 40A(2), which deals with the excessive or unreasonable payments made to related parties in business dealings. In the result, grounds of appeal raised by Revenue are dismissed.
C.O. No. 57/Mum/2018 by assessee
6. As we have noted hereinabove that the ld. AR while making submission, submitted that he will not press his cross objection in case the Revenue's appeal is not succeeded on merit. Considering the submission of ld. AR of the assessee, the Cross Objection of assessee is dismissed as not pressed.
7. In the result, appeal filed by Revenue and the Cross Objection of assessee are dismissed.
Order pronounced in the open court on 18.05.2018.
Sd/- Sd/-
B.R. BASKARAN PAWAN SINGH
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Date: 18.05.2018
SK
Copy of the Order forwarded to :
1. Assessee 2. Respondent
3. The concerned CIT(A) 4.The concerned CIT
5. DR "F" Bench, ITAT, Mumbai
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ITA No.5292/M/16 & CO . 57 Mum 18- M/s Jainam Constructions
6. Guard File
BY ORDER,
Dy./Asst. Registrar
ITAT, Mumbai
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