Income Tax Appellate Tribunal - Mumbai
Whiten Colour, Mumbai vs Department Of Income Tax on 14 January, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND
SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER
ITA NO.7455/Mum/2010
Assessment year: -2008-09
DCIT Central Circle - 35, Vs.` M/s Whiten Colour Industries
Room No. 108A, Pvt. Ltd.
First Floor, Aayakar Bhavan, 29/30, Stambha Tirth, Kidwai
Mumbai - 400 020. Road,
Wadala,
Mumbai - 400 031.
PAN:-AAACW0552A
Appellant Respondent
Revenue By Shri Kishan Vyas
Assessee By Shri Rakesh Joshi
Date of hearing
8.12.2014
Date of pronouncement
14.01.2015
ORDER
Per Vijay Pal Rao, JM
This appeal by the revenue is directed against the order dated 18.08.2010 of CIT (A) for A.Y. 2008-09. The assessee has raised following grounds:-
"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in holding that assessee company has acquired plot prior to 1-04-1981 and thereby holding that the computation of capital gain by assessee on sale of plot by adopting FMV of plot as on 1-04-1981 is correct whereas in fact assessee has acquired plot only on 23-05-1989 when it entered into agreement with MIDC."
M/s Whiten Colour Industries Pvt. Ltd.
2. "On the facts and in the circumstances of the case and in law, the ld. CIT(A) further erred in holding that cost of acquisition of plot is required to be increased by Rs. 1,60,000/- being the amount allegedly paid by partners of erstwhile firm at time of auction and not paid by assessee."
2. The assessee sold the plot no. 40, MIDC, TTC Industrial Area, New Mumbai for a consideration of Rs. 4.61 crores as per MOU found during the search operation. The assessee admitted the sale consideration at Rs. 4.61 crores and paid the tax under the head "capital gain'. The land in question was acquired by M/s Whiten Corporation (a partnership firm) in an auction sale conducted by Court Receiver in pursuant to the order dated 24.10.1975 of the Hon'ble High Court in the case of SBI Vs. M/s Bita Seal Pvt. Ltd. & Others in suit no. 968 of 1975. M/s Whiten Corporation was the highest bidder of Rs. 1,60,000/- and accordingly by order of Hon'ble High Court dated 29-03-1978, the possession of the plot of land in question was delivered to M/s Whiten Corporation on 29-03-1978. Thus the land in question was acquired by the said partnership firm on 29-07-1978 when the possession was delivered as per the orders of Hon'ble High Court. A certificate to this effect was issued by the Court Receiver on 28.051987 for execution of lease deed by the MIDC and accordingly the lease deed was executed by the MIDC in favour of M/s Whiten Corporation on 6.10.1989. In the meantime M/s Whiten Colours Pvt. Ltd., (the assessee before us) was incorporated on 23.05.1989 by the partners of the erstwhile partnership firm M/s Whiten Corporation. The Two partners of the partnership firm namely Smt. Nalini A Parekh and Shri Vijay D Mehta having equal share and contribution in the capital, got the share holding of 50% each of the assessee company. The land in question was then transferred in the name of the assessee company. The assessee shown in its balance-sheet the cost of the land as Rs. 17,600 being the premium paid to MIDC at the time of execution of lease deed. While computing the capital gain from sale of land in
2|Page M/s Whiten Colour Industries Pvt. Ltd.
question the assessee took the cost of acquisition at Rs. 1,77,600/- which comprises Rs. 1,60,000/- paid in the auction sale and Rs. 17,600/- being premium paid to MIDC. The assessee also claimed indexed cost w.e.f 1.4.1981 by claiming the date of acquisition as on 28.03.1978. The Assessing Officer did not accept the claim of the assessee and took the cost of acquisition at Rs. 17,600/- shown in the balance sheet of the assessee and accordingly computed the capital gain. The Assessing Officer has also denied the indexed cost of the assessee from 01.04.1981 by considering the date of lease as the date of acquisition. The CIT(A) accepted the claim of assessee regarding the date of acquisition of plot of land in question and accordingly deleted the addition made by Assessing Officer on this account.
3. Before us, the Ld. DR has submitted that the lease deed was executed by MIDC only on 25.03.1989 against the payment of premium of Rs. 17,600 which was shown by the assessee company in the balance-sheet under the head "fixed asset". Therefore, the cost of acquisition of the assessee company is only Rs. 17,600/-, being the cost of transfer in the name of the assessee company. He has further submitted that the land in question has been transferred in the name of the assessee only after 23.5.1989, therefore, the date of acquisition by the assessee cannot be before the incorporation. He has strongly relied upon the order of Assessing Officer.
4. On the other hand, the Ld. Authorized Representative of the assessee has submitted that it is a case falling u/s 49 r.w.s 47(XIII) and consequently the cost of acquisition of the asset in the hands of the assessee shall be deemed to be the cost for which the earlier owner (being partnership firm) acquired the property. He has relied upon the order of CIT(A).
3|Page M/s Whiten Colour Industries Pvt. Ltd.
5. We have considered the rival submissions as well as relevant material on record. It is manifest from the fact of the case that the plot of land in question was acquired by the partnership firm M/s Whiten Corporation having two partners namely Smt. Nalini A Parekh and Shri Vijay D. Mehta in an auction sale held on 20.03.1978 in pursuant to the order of Hon'ble High Court dated 24.10.1975 as well as the order dated 7.4.1976. The erstwhile partnership firm acquired the plot of land in question for a consideration of Rs. 1,60,000/- in the said auction sale. The auction was confirmed by the Hon'ble High Court vide order dated 20.03.1978 and directed the Court Receiver to deliver the possession. Accordingly, the possession of the plot of land was delivered on 29.03.1978. Thereafter, the court receiver also issued a certificate dated 29.05.1987 summarizing the facts and auction sale of plot in question. On the basis of the said certificate of the Court Receiver, the MIDC executed the lease deed on 6.10.1989 in pursuant to the direction of Hon'ble High Court. The lease deed was executed in favour of Smt. Nalini A Parekh and Shri Vijay D. Mehta being the partners of the partnership firm M/s Whiten Corporation against the payment of premium of Rs. 17,600/-. The execution of lease deed would not alter the date of acquisition of plot in auction sale as on 20.03.1978 and the possession of plot of land in question was delivered on 29.03.1978 in pursuant to the orders of Hon'ble High Court. The assessee company was incorporated in the year 1989 and took over the partnership firm. It is a case of succession of partnership firm by the assessee company . The partners of the firm got 50% of each share holding in assessee company. Therefore, as per the provisions of section 49(1) r.w.s 47(XIII), the cost of acquisition of the asset in question in the hands of the assessee would be deemed to be cost for which the previous owner of the property acquired it. Hence the cost of acquisition would be the cost at which the firm acquired the land in question and further the cost of improvement if any.
4|Page M/s Whiten Colour Industries Pvt. Ltd.
6. In the case in hand, the assessee claimed the cost of acquisition at Rs. 1,77,600/- comprising the payment made by the firm of Rs. 1,60,000/- and auction sale and the premium amount of Rs. 17,600/- paid to the MIDC at the time of execution of lease deed. Since the assets in question was acquired by the firm prior to 1.4.1981, therefore, the indexed cost of acquisition would be computed from the 01.04.1981. Accordingly, we do not find any reason to interfere with the order of CIT(A) qua this issue.
7. In the result, the appeal of the revenue is dismissed.
Order pronoucned in the open court on this 14th Day of January 2015.
Sd/- Sd/-
(D.Karunakara Rao) (Vijay Pal Rao)
ys[kk lnL;)
(Accountant Member/ys lnL; U;kf;d lnL;)
(Judicial Member/U;kf;d lnL;
Mumbai dated 14-01-2015
SKS Sr. P.S,
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, "G" Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
5|Page