Income Tax Appellate Tribunal - Mumbai
Hitesh J Parikh, Mumbai vs Ito 5(1)(1), Mumbai on 23 February, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL " H" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM
WTA No. 18/Mum/2017
(A.Y. 2008-09)
WTA No. 19/Mum/2017
(A.Y. 2009-10)
Hitesh J. Parikh The W ealth Tax Officer
501, Mittal Castle, Bhulabhai 5(1)(1), Room No. 570, 5 t h
Desai Road, Mumbai-400 026 Vs. Floor, Aayakar Bhavan,
M.K. Road, Mumbai-400
020
Appellant .. Respondent
PAN No. AABPP5220E
Assessee by : Biren Gabhawala, AR
Revenue by : M.C. Omi Ningshen, DR
Date of hearing: 14-02-2018 Date of pronouncement : 23-02-2018
ORDER
PER MAHAVIR SINGH, JM:
These two appeals of assessee are arising out of the common order of Commissioner of Income Tax (Appeals)-10, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-10/WTO-5(1)(1)/18&17/2014-15 dated 21-06-2017. The Assessment was framed by the Wealth Tax Officer, Ward-5(1)(1), Mumbai (in short WTO/ AO) for the assessment years 2008-08 & 2009-10 vide different orders of even date 14-03-2014 under section 16(3) read with section 17 of the W.T. Act, 1957 (hereinafter 'the Act').
2 WT A No. 1 8 & 1 9 / Mu m /2 0 172. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in making addition of advance paid to builders M/s Trishul Corporation towards purchase of flats treating the same as an asset within the meaning of section 2(ea) of the Act. For this Assessee has raised an identical worded grounds in both the years and the grounds as raised in WTA No. 18/Mum/2017 for AY 2008-09 reads as under: -
"On the facts and in the circumstances of the case and in law, the Hon. Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs.20,88,870!- made by the Assessing Officer on account of advance paid to builder, m/s. Trishul Corporation towards purchase of flat and shown in the balance sheet, treating the same as an asset within the meaning of Section 2(ea) of the W.T. Act, 1957, without appreciating the fact that the said flat as on the date of valuation was still under construction and. therefore, did not fall within the definition of assets in Section 2(ea) of the W.T. Act, 1957 and brushing aside the reliance placed by the appellant on the decision of the Hon. Punjab & Haryana High Court in the case of CIT vs. Smt. Neena Jain (330 ITR), wherein it is held that incomplete building neither falls within the meaning of building nor within the purview of urban land u/s. 2(ea) of the W.T. Act On the facts and in the circumstances of the case and in law, the lion. Commissioner of Income Tax (Appeals) has further erred in upholding the addition made by the Assessing Officer without appreciating that the learned Assessing Officer was wrong in 3 WT A No. 1 8 & 1 9 / Mu m /2 0 17 presuming that the construction of the property was completed during the previous year relevant to the assessment year under consideration without bringing anything on record to this effect because it was incumbent on the part of the learned Assessing Officer prove that the incomplete building was such that it squarely fell within the meaning of assets, as defined in Section 2(ea) of the W.T. Act, 1957."
3. Briefly stated facts are that the AO noticed that the assessee has made advance payment to M/s Trishul Corporation for purchase of flat, which was appearing in balance sheets as fixed asset for the FY 2007-08 and 2008-09. Accordingly, AO was of the view that the assessee has declared the flat constructed by M/s Trishul Corporation as fixed asset in the balance sheet for the FY 2007-08 and 2008-09 and accordingly, the same is asset within the meaning of section 2(ea) of the Act. Aggrieved, assessee preferred the appeal before CIT(A), who confirmed the action of the Assessing Officer. The CIT(A) observed that the assessee has shown in the balance sheet as an asset under the head of Trishul Corporation amounting to ₹ 20.88 lacs for AY 2008-09 and ₹ 24.01 lacs for AY 2009-10 but the same was not offered for the purpose of wealth tax. According to CIT(A), the assessee has not furnished any details like agreement entered with M/s Trishul Corporation showing terms and conditions for the purpose of payments made for purchase of flat and the advance paid by the assessee so as to ascertain that the flat was purchased. According to CIT(A), it is not proved that the assessee has given advance for unfurnished flat so that it can remain outside the purview of the definition of building for the purpose of Wealth Tax. In the absence of these details, he confirmed the addition for both the years. Now, assessee is in second appeal before Tribunal 4 WT A No. 1 8 & 1 9 / Mu m /2 0 17
4. Before us, the learned Counsel for the assessee drew our attention to letter dated 03-09-2011 written to the AO during the course of income tax assessment proceedings for AY 2009-10, wherein copy of agreement of Trishul Corporation was submitted whereby the assessee has made a payment of ₹ 20.88 lacs for AY 2008-09 and ₹ 24.01 lacs for AY 2009-10. The learned Counsel for the assessee before us also filed a copy of registration deed of this flat which is dated 28-10-2009, whereby stamp duty was paid. The assessee also filed summary of payments made for booking of flat along with copies of receipts of payment to prove his point that the assessee is regularly making payments for unfurnished flat and finally, the flat was transferred in the name of the assessee on 29-10- 2009. To prove his point the learned Counsel for the assessee drew our attention to assessment order of AY 2009-10, wherein at page 3 of the assessment order the AO has recorded the fact that, "the assessee has submitted that the agreement for the purchase of the property, Trishul Corporation is entered into on 29th October, 2009 between the builder and the assessee and registered on the same date for a total consideration of ₹ 25,01,000/-. Subsequently, it is also seen that the flat, Trishul Corporation (Ghansoli flat), is sold by the assessee to Dr. Prakash. D. Dhokane for a lump sum price of ₹ 29,30,175/- vide agreement dated 30.10.2009 and registered on 3-11-2009." The learned Counsel for the assessee drew our attention to the possession letter given by Trishul Corporation on 03-11-2009 which is in accordance with agreement dated 30-10-2009. In view of the above, the learned Counsel for the assessee stated that the issue is squarely covered by the decision of Hon'ble Punjab and Haryana High Court in the case of CIT vs. Smt. Neena Jain (2010) 189 taxman 308 (P&H), wherein it is held as under:-
"15. The contention of the learned counsel for the revenue that "any building would" fall within the definition of "assets", is not only devoid of merit but 5 WT A No. 1 8 & 1 9 / Mu m /2 0 17 misplaced as well, because the words "any building"
cannot possibly be read in isolation and it has harmoniously to be construed with the remaining portion of section 2(ea) of the Act, i.e., whether the building used for residential or commercial purposes or for the purpose of maintaining a guest house, because incomplete building, as in the present case of the assessee, cannot possibly either be used for residential or commercial purposes or for purposes of maintaining a guest house. Therefore, the word "building" has to be interpreted to mean a completely built structure having a roof, dwelling place, walls, doors, windows, electric and sanitary fittings, etc. If one or more such components are lacking, then it cannot possibly be said that the building is a complete structure for the purpose of section 2(ea) of the Act. A residential house is an unit, which is complete for habitation having the minimum bare required facilities. The Legislative intent underlying the amended provisions of section 2(ea) is clear and implicit that the Legislature sought to bring within the ambit of this section all those buildings, which are completed and ready for use of residential, commercial or guest house, as the case may be, as incomplete structure cannot be put to any such use.
16. It is not a matter of dispute that the assessee started the construction in the month of February 2002, which was still incomplete at the period of relevant assessment year."
5. In the present case before us also the flat was not completed during the AY 2008-09 and 2009-10 because the installments were paid 6 WT A No. 1 8 & 1 9 / Mu m /2 0 17 by assessee till 29-10-2009 i.e. the balance amount of ₹ 1 lacs to the builder M/s Trishul Corporation. Even otherwise, the flat was in no way completed till the date of 31-03-2009 i.e. AY 2009-10. Following the ratio of Hon'ble Punjab and Haryana High Court in the case of Smt. Neena Jain (supra), we are of the view that the advance given against flat to Trishul Corporation by the assessee is not an asset within the meaning of section 2(ea) of the Wealth Tax Act. The facts and circumstances are exactly identical in both the years and hence, we allow these appeals of the assessee.
6. In the result the appeals of the assessee are allowed.
Order pronounced in the open court on 23-02-2018.
Sd/- Sd/-
(MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 23-02-2018
Sudip Sarkar /Sr.PS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai BY ORDER,
6. Guard file.
//True Copy//
Assistant Registrar
ITAT, MUMBAI