Income Tax Appellate Tribunal - Mumbai
Dcwt 1(1)(2), Mumbai vs Forbes & Company Ltd , Mumbai on 8 February, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
"F" Bench, Mumbai
Before S/Shri B.R. Baskaran (AM) & Sandeep Gosain (JM)
W.T.A. No. 4/Mum/2018 (Assessment Year 2008-09)
W.T.A. No. 5/Mum/2018 (Assessment Year 2009-10)
W.T.A. No. 6/Mum/2018 (Assessment Year 2010-11)
W.T.A. No. 7/Mum/2018 (Assessment Year 2011-12)
Deputy Commissioner M/s. Forbes & Company
of Wealth Tax-1(1)(2) Vs. Ltd.
579, Aayakar Bhavan Forbes Building
M.K. Road Charnjit Rai Marg, Fort
Mumbai-400 020. Mumbai-400 001.
(Appellant) (Respondent)
C.O. No. 229/Mum/2018 (Assessment Year 2008-09)
C.O. No. 230/Mum/2018 (Assessment Year 2009-10)
C.O. No. 231/Mum/2018 (Assessment Year 2010-11)
C.O. No. 232/Mum/2018 (Assessment Year 2011-12)
M/s. Forbes & Company Deputy Commissioner
Ltd. Vs. of Wealth Tax-1(1)(2)
Forbes Building 579, Aayakar Bhavan
Charnjit Rai Marg, Fort M.K. Road
Mumbai-400 001. Mumbai-400 020.
(Appellant) (Respondent)
PAN : AAACF1765A
Assessee by Shri K. Shivram & Shri
Rahul Hakani
Department by Shri Sushilkumar Poddar
Date of Hearing 6.2.2019
Date of Pronouncement 8.2.2019
ORDER
Per Bench :-
The appeals filed by the revenue and the cross objections filed by the assessee are directed against the orders passed by Ld CWT (A)-2, Mumbai and they relate to the assessment years 2008-09 to 2011-12. Since the issues contested therein and the underlying facts are identical in nature, they were heard together. The assessee has filed cross objections challenging 2 F or b e s & C o mp an y L i m i t e d the validity of reopening of assessments. All these appeals are being disposed of by this common order, for the sake of convenience.
2. We shall first take up the appeals filed by the revenue. In all the four years, the revenue is challenging the decision of Ld CWT(A) in deleting the addition relating to the value of urban land located at Chandivali, Mumbai made by the AO to the total wealth in all the four years.
3. The facts relating to the above said issue are discussed in brief. The assessee owned a land admeasuring 42,985.30 Sq. Mts. The assessee entered into a Memorandum of Understanding with a company named M/s Videocon Properties Limited (VPL) on 29-12-1994 for development of 27,350 Sq.mts of land out of the above said parcel. The assessee agreed to grant development rights to VPL for a lump sum consideration of Rs.2825.00 lakhs. The assessee received a sum of Rs.1977.50 lakhs as part payment in pursuance of MOU during the financial year 1994-95 relevant to the assessment year 1995-96. However, M/s VPL submitted a Bank Guarantee obtained from Global Trust Bank for the remaining amount of consideration of Rs.847.50 lakhs. The assessee took the view that the transfer of land is complete and accordingly computed capital gains by taking into account entire consideration of Rs.2825.00 lakhs and offered the same in Asst. Year 1995-96. Accordingly necessary entries were passed in the books of account for accounting the sale of land, which resulted in reduction of the corresponding cost of land from Fixed Assets. It is pertinent to note that the capital gain offered by the assessee was accepted by the assessing officer in the assessment completed u/s 143(3) of the Act.
4. In the meantime, disputes and differences arose between the parties and suits were filed by VPL against the assessee and Global Trust Bank. The assessee also invoked the bank guarantee and received a sum of Rs.1043.09 lakhs, which included interest component, also from bank. It is stated that the assessee has duly offered interest income in AY 2006-07.
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5. It is stated that during the pendency of suits, both the parties decided to amicably and mutually settle all disputes. Accordingly, they entered into an agreement for development on 01-12-2011, wherein it was agreed that M/s VPL and the assessee shall take 50% of the development rights each in the permissible Floor Space Index (FSI). It was also agreed that the land shall be developed as one project, however, both the parties shall have distinct and marked out portions of saleable area, which shall be sold separately.
6. In the wealth tax returns filed for the impugned assessment years, the assessee did not show the above said land as its asset.
7. Now we shall briefly discuss the facts that led the AO to reopen the assessment years under consideration under Wealth tax Act. The assessing officer completed the income tax assessment for the assessment year 2012- 13, wherein he took the view that the assessee has "received back a portion of land" during the financial year relevant to AY 2012-13, vide agreement dated 01-12-2011. Accordingly he assessed the estimated value of land so received back as income of the assessee u/s 28(iv) of the Act, deeming it to be a benefit arising to the assessee. The AO, accordingly, completed the assessment of AY 2012-13 on 17-03-2015 u/s 143(3) of the Act.
8. Based on the view taken by him in the income tax assessment for AY 2012-13, the AO took the view that the value of land so received back has escaped the assessment for wealth tax in assessment years 2008-09 to 2011-
12. Accordingly he reopened the wealth tax assessment of above said years.
9. The assessee submitted before the AO that it has sold the land to M/s VPL on 29-11-1994, vide MOU entered between them and accordingly contended that the impugned land should not be included in its total wealth. The AO did not accept the same with the following observations:-
"On the perusal of the Memorandum of Understanding between the assessee and M/s Videocon Properties Ltd (VPL) made on 29-11-1994, it 4 F or b e s & C o mp an y L i m i t e d is seen that the assessee agreed to transfer development rights of property in question at chandivali, Mumbai admeasuring 27263.50 sq.mt. However, the said MOU had not converted into sale agreement and remained a mere incomplete agreement. It is also observed that the assessee has neither transferred any development rights nor transferred any rights arise out of the said land to the VPL. The fact is that the possession and all rights arises out of land in question always vest with the assessee. This fact is further evident from the development agreement dt. 01-12-2011 made between the Assessee Company and Videocon Realty and Infrastructure Ltd. Vide the said Agreement, the company had neither transferred land in question nor transferred any rights arises out of the said land till 1st Dec. 2011. As per the agreement dt. 01/12/2011 made between the assessee company and VPL, the assessee company agreed to allocate 50% of the right of FSI of the said land to VPL. Further on going through the Property Card maintained in the office of Collector of Mumbai Suburban District on 25-08-1995, the ownership of the said land was in the name of the assessee which has not been transferred till the date of agreement of development dt. 01-12- 2011. Throughout these years and till 01-12-2011, name of assessee company appears on the property card being the owner of the property. Thus the contention of the assessee that the land in question was not in its possession and ownership not belongs to it does not hold water and hence not accepted."
10. The assessee also submitted that it had offered capital gains arising on transfer of land in AY 1995-96 itself and has also paid tax thereon. It also submitted that the impugned land was removed from the Balance Sheet also, as the asset did not belong to it after entering into MOU and upon receipt of entire amount of consideration. The AO, however, rejected above contentions by observing that the same would not make any difference, as the assessee was having right, possession and control of the property. Further the AO observed that the assessee has not conveyed the ownership of the land, which is evident from the Property Card also. Accordingly the AO held that the MOU cannot be termed as agreement and final document of sale.
11. Accordingly he proceeded to assess the value of land under Wealth tax in the years under consideration. For the purpose of valuation of land, the AO took support of the Stamp Duty Ready Reckoner, Mumbai published every year and computed the value of land as under:-
5F or b e s & C o mp an y L i m i t e d Assessment year Value 2008-09 4232.65 lakhs 2009-10 9814.86 lakhs 2010-11 9978.44 lakhs 2011-12 10987.19 lakhs The AO, accordingly, assessed the value of land as stated above in the respective assessment years.
12. The Ld CIT(A), however, took the view that the transfer of land was complete in the financial year 1994-95 itself. In this regard, the Ld CIT(A) accepted the contentions of the assessee that VPL was given development rights and allowed to do all the acts on the land to execute the activity of development of land. Further the assessee has received consideration towards the land from VPL and the capital gain arising thereon was offered to tax in AY 1995-96 itself. The Ld CIT(A) further held that the view of the assessing officer that MOU was not converted into sale agreement shall not survive on the ground that the assessee has paid taxes on transfer of land. It is pertinent to note that the assessee had contended before Ld CIT(A) that the transfer would be complete under the Income tax Act on execution of agreement or on arrangement also. The Ld CIT(A) also held that the rights given to the VPL for undertaking all development activities itself prove that the transfer had taken place. The Ld CIT(A) also accepted the contentions of the assessee that, if the land is not considered as transferred, then the assessee would be entitled to deduct consideration received from VPL as debt, as the same would be a liability related to the land. The Ld CIT(A) also observed that the AO has not referred the matter of valuation to the valuation officer nor he provided proper opportunity to the assessee to offer its comments on the value adopted by him. Accordingly, the Ld CIT(A) held that the impugned land cannot be brought to tax as a taxable asset in the hands of the assessee. Accordingly he deleted the addition in all the years under 6 F or b e s & C o mp an y L i m i t e d consideration. For the sake of convenience, we extract below relevant observations made by Ld CIT(A):-
"6.2.9 On analysis of all the facts, the statute and also various judicial pronouncements, it is clear that the MOU was never doubted by the department. The adequate consideration has already been received by the appellant and department accepted Capital Gains on the said transfer of the property which implies that the department has tacitly accepted the transfer of such property. Upon accepting the Capital gain and received such taxes in the A.Y. 1995-96 till 2011 department had never brought out any issue on such transfer of property. The main argument of the Assessing Officer that the MOU was not converted into sale agreement and is a mere incomplete document does not survive predominately on the ground that the taxes have been paid by the appellant on the said transfer. Further, the clause 10 of The MOU had authenticated and permitted possession as well as permission to undertake all plausible activities in favour of the consenting party itself clears that the transfer had taken place. Had there was an iota of doubt that the transfer would not be materialized or it may run into some dispute , the appellant argument appears to be reasonable that it would not have been paid the capital gains tax on such transfer. Further, the appellant had received adequate consideration as mentioned in the MOU. The subsequent legal dispute per se shall not retrospectively attributed to the appellant for bringing it into the ambit of wealth tax act. Even for the sake of argument, the same property is considered as an asset under net wealth and taxable to wealth tax, the appellant entitle for the deduction of the consideration paid by Videocon as debt and the same has to be reduced from taxable net wealth. If such value was treated as debt in the year of MOU, then the appellant case does not fall under any additional taxability of wealth with regard to such asset. In both the cases, the appellant case is not getting covered under net wealth with regarding the said asset. It is also imperative that the taxes have already paid by the appellant on account of transfer of property in the year 1995-96. Having paid the taxes, the appellant is entitled for due credit. In this case, for the same asset, the appellant either have to be taxed in income tax or to be covered under wealth tax. The same asset, if it is taxed for capital gains in income tax and as taxable asset in wealth tax, it implies that the appellant is taxed twice, on the same issue. It is against basic principles of taxation which amounts double taxation."
13. The revenue is aggrieved by the decision so rendered by Ld CIT(A) in all these years.
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14. The Ld D.R submitted that the MOU entered between the parties on 29- 12-1994 did not result in conveyance of land to M/s VPL. As per the MOU, the assessee has granted only development rights of the land to M/s VPL. Referring to Clause 2 of the MOU (Page 163 of the paper book), the Ld D.R submitted that the above said clause states in clear terms that the MOU does not create or transfer any right as contemplated under Article 25 of Schedule I of the Bombay Stamp Act, 1958. The Ld D.R, then invited our attention to clause 10 of the MOU, which reads as under:-
"10. After the Owners shall have received a sum of Rs.19,77,50,000/- (Rupees Nineteen Crores Seventy Seven lakhs fifty thousand only) from the Developers, Developers will have the licence and authority to enter upon the said property to commence and complete development and construction work thereon as contemplated by this Agreement. The licence hereby agreed to be granted shall be deemed to be a licence given to the developers under the provisions of the Indian Easements Act, 1882 and nothing contained in this Memorandum shall be construed to be an agreement to sell the said property not it is intended between the Owners and the Developers that the possession of the said property be transferred to the Developers on or before at the time or after execution of this Memorandum the intention being that the possession of the said property shall be transferred to the Developers only upon the execution of the deed of conveyance upon the completion of the Development of the said Property and the owners have received the entire consideration payable under this memorandum from or on account of the Developers."
The Ld D.R submitted that the above said clause would make it clear that the assessee has not transferred possession of property to the developer and hence it cannot be said that the assessee has transferred the property in FY 1994-95 relevant to AY 1995-96. He further submitted that the declaration of capital gains by the assessee in AY 1995-96 treating the impugned transaction as transfer of land, would not override the legal position. Accordingly the Ld D.R submitted that the assessee continues to be the owner of the property and hence the AO has rightly included the value of land in the taxable wealth. The Ld D.R submitted that the Ld CIT(A) has granted relief to the assessee mainly on the ground that the assessee has paid the tax on the capital gain in the assessment year 1995-96. However, 8 F or b e s & C o mp an y L i m i t e d he has ignored the fact that the title to the property has not been transferred to M/s VPL by the assessee. Further the name of the assessee continues in the Property Card also. Accordingly he submitted that the voluntary offer of capital gains would not change the legal position. The Ld D.R further submitted that the Ld CIT(A) has observed that the wealth tax levied on the value of land would result in double taxation as the assessee has already paid capital gains tax. He submitted that the Ld CIT(A) has inadvertently failed to appreciate that the Income tax Act and the Wealth tax Act are two different Statutes and hence the question of double taxation shall not arise in this kind of situation. Accordingly the Ld DR submitted that the Ld CIT(A) was not justified in deleting the addition made to the taxable wealth in respect of value of impugned land.
15. The Ld A.R, on the contrary, submitted that the assessing officer has mainly placed his reliance on the Transfer of Property Act and has held that the transfer of property has not taken place as per the MOU. The Ld A.R submitted that the provisions of Income tax Act would govern the taxation of the transactions entered in respect of Capital Asset. He submitted that the expression "transfer" is defined under sec.2(47) of the Income tax Act in a widest possible manner. He submitted that clause (vi) of the sec. 2(47) makes it clear that any transaction which has the effect of transferring, or enabling the enjoyment of, any immovable property is also covered by the definition of "transfer" under the Income tax Act.
16. The Ld A.R submitted that the various clauses of MOU have to be read together in order to ascertain the intention of the parties. He submitted that the Ld D.R was not correct in placing reliance on clause 10 of the MOU alone. He invited our attention to clause 12 of the MOU, which reads as under:-
"12. Neither party shall be entitled to terminate this Agreement on any account whatsoever except for non-payment of any of the installments of consideration money by the Developers to the Owners"9
F or b e s & C o mp an y L i m i t e d The Ld A.R submitted that the above said clause makes it clear that the MOU is binding on both the parties and the assessee can terminate the MOU only for non-payment of consideration. He submitted that the assessee has already received entire consideration as per MOU. Accordingly he submitted that a combined reading of Clause 10 and Clause 12 of the MOU would make it clear that the parties to the MOU have understood that the impugned land has been transferred on the date of MOU and the various clauses have been so worded only to safeguard the interests of the owners of the land, i.e., the assessee against the payment due. He submitted that the assessee has allowed the Developers to enter into the land and carry out development activities, meaning thereby, the physical possession of the land was given. Accordingly, the assessee has understood the transaction to be a case of transfer of land in terms of the Income tax Act and accordingly, it has offered capital gains arising on this transaction, which has also been accepted by the AO in the assessment completed u/s 143(3) for AY 1995-96. He submitted that the assessing officer, having accepted the transaction as a case of transfer of land in AY 1995-96, is not entitled to change his stand and say that the assessee is the owner of the land and assess the value thereof as taxable wealth under Wealth tax Act.
17. The Ld A.R further submitted that the AO has reopened the assessment only under the belief that the assessee has not conveyed the piece of land to VPL and has kept the land in its possession. Since the assessee was considered to be in possession of land, the AO has taken the view that the same should form part of taxable wealth of the assessee. He submitted that the AO, in the income tax assessment order dated 17-03- 2015 passed for assessment year 2012-13, has come to the conclusion that the assessee has, in effect, got back the land which was subject matter of dispute and which it had sold/parted with in FY 1994-95 and which it would have to give up, were it so lose the cases filed against it by VPL/VRIL. (Page 5 of the income tax assessment order). The Ld A.R submitted that the above said observations made by the AO would make it clear that the assessing 10 F or b e s & C o mp an y L i m i t e d officer has also accepted the fact that the transfer of the land has taken place in terms of MOU in FY 1994-95 itself. His view was that the assessee has received back a portion of land on account of settlement of litigations. Hence he assessed the value of right of the assessee over the land as per Settlement terms, as business profits u/s 28(iv) of the Act in AY 1995-96. The addition so made by the AO was challenged by the assessee before Ld CIT(A), who deleted the said addition. The revenue carried the matter in appeal before ITAT and the Tribunal, vide its order dated 05-11-2018, passed in ITA No.4433/Mum/2016, has since confirmed the order passed by Ld CIT(A). He submitted that the Tribunal, in paragraph 12 of its order, has come to the conclusion that the transfer has taken place as per the MOU dated 29-12- 1994. Accordingly he submitted that the view so taken by the Tribunal in the Income tax Proceedings shall in all fours apply to the present proceedings also.
18. The Ld A.R submitted that the expression "transfer" is defined under the Income tax Act and hence the capital gain was computed in accordance with the definition given under the Act, as the transaction resulted into transfer of capital asset in AY 1995-96 itself. However, the AO has taken the view that there was no transfer by placing reliance on the Transfer of Property Act, which is not always applicable to the income tax/wealth tax proceedings. Once the capital asset is considered as having been transferred within the meaning of Income tax Act, the same cannot be said to belong to the assessee.
19. He submitted that, in order to bring an asset under the ambit of taxable wealth, the said asset should "belong to the assessee". He submitted that the Hon'ble Andhra Pradesh High Court (FB) has interpreted the expression "belong to assessee" in the case of Nawab Mir Barkat Ali Khan vs. CWT (1997)(226 ITR 654), wherein it was held that, for inclusion in the net wealth of an individual, what is relevant is not "who owns the property", but "to whom the property belongs". He submitted that, in the instant case, the 11 F or b e s & C o mp an y L i m i t e d assessee has transferred the land as per MOU and hence it no longer belongs to the assessee.
20. The Ld A.R further contended that the Assessing officer cannot take a stand in wealth tax proceedings, which is different from the stand taken by him in the Income tax proceedings in respect of same issue. In support of this proposition, the Ld A.R placed his reliance on the following case laws:-
(a) Anand Charitable Trust vs. CWT (2002)(257 ITR 275)(Delhi)
(b) DIT vs. Samyuktha Gowda Saraswatha Sabha (339 ITR 456)(Mad).
He submitted that taking contrary stand in wealth tax proceedings would result in double taxation, i.e., taxation of a wealth not belonging to the assessee.
21. The Ld A.R further submitted that the assessing officer, having accepted that the land was transferred in AY 1995-96 in the income tax proceedings, could not have taken a different stand in the wealth tax proceedings, since the same has reached finality. Hence the AO cannot take two different stands that the land was transferred and not transferred.
22. In the alternative, the Ld A.R submitted that, if the stand of the AO is accepted for a moment as correct, then the amount received by the assessee from M/s VPL shall acquire the character of debt against the land, which is required to be reduced from the value of asset.
23. The Ld A.R further submitted that the assessing officer has estimated the value of land on his own. He submitted that the AO is not an expert in this matter and the valuation should have been referred to the Valuation officer. Further the assessee was also not provided any opportunity by the AO to offer its comments on valuation. Accordingly he submitted that the valuation done by the AO on his own should be rejected. The Ld A.R further submitted that the land would be of no value, if the development right is assigned to any other person. In the instant case, the assessee has assigned 12 F or b e s & C o mp an y L i m i t e d the development right to M/s VPL and the said fact is not disputed by the AO. Hence the land, without development right, would not command any value.
24. In the rejoinder, the ld D.R reiterated his contentions that the decision by the co-ordinate bench was rendered in the context of Sec.28(iv) of the Act. He further submitted that there is no double taxation, as the tax is levied under two different statutes.
25. We have heard rival contentions and perused the record. From the assimilation of facts and arguments of both the counsels, we notice that the moot question that arises is whether the impugned land was transferred in terms of the Income tax Act/Wealth tax Act in the financial year 1994-95 relevant to the AY 1995-96 or not, as claimed by the assessee. There is no dispute with the fact that the assessee has taken the view that the land has been transferred by it as per the MOU entered into by it with M/s VPL in the financial year 1994-95 itself and hence it has offered the capital gain arising there from in AY 1995-96 itself.
26. We have earlier noticed that the AO has taken support of clause 10 of the MOU in order to come to the conclusion that the assessee has not parted with the possession of land and it has given only development rights to M/s VPL. The Ld A.R, on the contrary, contended that the AO should not read "clause 10" alone in isolation and further submitted that the intention of the parties should be gathered by reading the MOU as a whole. In our view, there is merit in the said submission of Ld A.R. Placing reliance on some clauses of MOU alone would give misleading results. In the MOU, the Ld A.R invited our attention to clause 12 of the MOU, which was also extracted earlier. The said clause makes clear that the assessee, herein, could terminate the MOU only if the consideration was not received. The Ld A.R, in the course of his submissions, has pointed out that the entire consideration in terms of MOU has been received by the assessee. Hence a combined 13 F or b e s & C o mp an y L i m i t e d reading of all clauses of the MOU, including clauses 10 and 12, would make it clear that the parties have intended and also understood that the transfer of land has taken place in FY 1994-95 itself; when the part payment of the consideration along with Bank Guarantee for the balance consideration was given by M/s VPL to the assessee.
27. The Learned AR submitted that the expression "transfer" has been defined under section 2(47) of the Income Tax Act, wherein any type of arrangement or agreement which has the effect of transferring or enabling the enjoyment of any immovable property is also included. There is no dispute with regard to the fact that the developer M/s. Videocon Properties Ltd. (VPL) has been allowed to do all development activities in the impugned land. We noticed earlier, the assessee has also received the entire consideration as per MOU. Hence there is merit in the contention of the assessee that the averments made in clause 10 of MOU were only to protect interest of the assessee. He further noticed that the Assessing Officer has examined Clause 10 in isolation and has also relied upon the provisions of Transfer of Property Act. Accordingly, the Assessing Officer has taken the view that the transfer has not taken place in financial year 1994-95. From the discussions made supra, it can be noticed that the question as to whether a capital asset is transferred or not has to be examined in terms of Income Tax Act and hence the Assessing Officer was not right in law in examining the same in terms of Transfer of Property Act. Accordingly we are of the view that there is merit in the contentions of the assessee that the transfer of land has taken place in FY 1994-95 itself as per the provisions of Income tax Act. We notice that an identical view has been expressed by the co-ordinate bench in ITA No.4433/M/2016 dated 05-11-2018, while disposing of appeal filed against income tax assessment order for AY 2012-
13.
28. The Ld A.R submitted that, in order to assess the value of an asset under Wealth Tax Act, the said asset should belong to the assessee. He 14 F or b e s & C o mp an y L i m i t e d submitted that the Hon'ble Andhra Pradesh High Court, in the case of Navab Mir Barkat Ali Khan (supra), has expressed the view that the property belonging to the assessee can alone be brought to tax under the Wealth Tax Act. Relevant discussions made by Hon'ble Andhra Pradesh High Court in the above said case are extracted below:-
"Now, from the above discussion it becomes evident that for inclusion in the net wealth of an individual, what is relevant is not who owns the property, but "to whom the property belongs". Therefore, it is necessary to understand the true import of the expression "belonging to" in section 2(m)of the Act. We have extracted section 2(m) above."
"A close reading of section 4, the Explanation thereto and section 2(m) of the Act makes the intention of Parliament evident as to what should be treated as belonging to the individual for the purposes of computing the net wealth. It appears to us that a property which has been transferred by the individual in favour of another under any disposition, settlement, trust, covenant, even an agreement or arrangement will cease to belong to him and cannot be brought within the fold of "belonging to" under section 2(m) of the Act and it is for that purpose that section 4 of the Act specifically provides that the properties held by persons enumerated in clause (a) of sub-section (1) under such inchoate transfer shall be included as belonging to that individual. Therefore, it follows that in the case of a transfer as defined in the Explanation to section 4 by the individual, the property cannot be said to belong to the individual unless it is within the clutches of section 4 of the Act, notwithstanding the fact that the transfer had not been effected as contemplated under section 54 of the Transfer of Property Act or under the Registration Act."
The facts prevailing in the instance case would show that the impugned land does not belong to the assessee after receipt of consideration as per the MOU. Further we have also held that the transfer has already taken place in 1994- 95 itself. We have also noticed that the Assessing Officer himself has stated that the assessee has received back certain right over the land upon settlement of litigations. Hence, it cannot be held that the impugned land belonged to assessee subsequent to entering of MOU. Accordingly, impugned land cannot be brought to tax under Wealth Tax Act in the impugned years.
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29. The Learned AR also placed reliance on the decision rendered by Hon'ble Delhi High Court in the case of Anand Charitable Trust Vs. CIT (2002) 257 ITR 275 and also decision rendered by Hon'ble Madras High Court in the case of DIT Vs. Samyuktha Gowda Saraswatha Sabha (2011) 339 ITR 456, in order to contend that the Assessing Officer cannot take two different view, i.e., one under the Income Tax Act and another under Wealth Tax Act. Following observations made by Hon'ble Madras High Court put support in the case of the assessee:-
It is not denied by the Revenue that the decision of this Court accepting the decision reported in SAMYUKTHA GOWDA SARASWATHA SABHA (supra) relating to the assessment years 1977- 78, 1978-79 and 1979-80 as well as for the assessment year 1987-88 in TC.No. 901 of 1995, holding that the income from the property let out for Kalyana Mandapam was income from property and not business income, have not been challenged till this day and have become final. In all subsequent years too, the Revenue has been consciously holding the view that receipt on letting of the kalyana mandapam was assessable as income from property and not as business income. The benefit of Section 11 of the Income Tax Act had been consistently applied in the case of the assessee throughout. Thus, as pointed out by the learned counsel for the assessee, as far as the assessee s case is concerned, admittedly, the Revenue had no grievance consistently in treating the income earned on letting of the kalyana mandapam as income derived from the property held under Trust wholly for charitable purpose and hence, the assessee was entitled to exemption under Section 11 of the Income Tax Act. Thus, with the receipts from letting of kalayana mandapam treated as income from property and not as business income, we do not find any acceptable ground in the submissions of the learned standing counsel that for the purpose of considering the claim for exemption under Section 5(1)(i) of the Wealth Tax Act, the property held under Trust would have to be treated differently as business assets and the decision of this Court under the Income Tax Act had to be ignored, as having no relevance to the assessment under the Wealth Tax Act. On the other hand, as rightly pointed out by the learned counsel for the assessee, once the property held by the Trust is used for any public purpose of a charitable or religious nature, and consistently income from the property is treated as a property income, in the absence of any other materials shown, the claim of the assessee for exemption, merits to be upheld. Thus, as far as the case of the assessee is concerned as it stands today, the assessee's case for this year cannot be treated differently so as to deny the exemption under Section 5(1)(i) of the Wealth Tax Act. We do not find any good ground to accept 16 F or b e s & C o mp an y L i m i t e d the Revenue's case that the assessment in question falls under the proviso to Section 5(1)(i) of the Wealth Tax Act.
Hence, the Assessing Officer, having accepted fact of transfer of asset in A.Y. 1995-96 and assessed the capital gains in that year in the assessment order passed u/s. 143(3) of the Act, could not take different view under Wealth Tax Act. In any case, we noticed that the Assessing Officer has considered right received by the assessee in the relevant A.Y. 2012-13 as a benefit accruing to the assessee. The same, in our view, cannot be lead to a view that the assessee continued to be the owner of the land after receipt of entire consideration as per MOU.
30. Since we have held that the impugned land does not belong to the assessee during the years under consideration, we do not find it necessary to address the contentions of the assessee with regard to the value of the land.
31. In view of the foregoing discussion, we are of the view that the decision taken by learned CIT(A) to delete the addition by holding that transfer of land had already taken place in F.Y. 1994-95 does not call for any interference in the all the years under consideration. Accordingly, we uphold the decision rendered by learned CIT(A).
32. Since, we have upheld the view taken by learned CIT(A) on this issue, we do not find it necessary to address other alternative contentions urged by the assessee.
33. We shall now take up the cross objections filed by the assessee. In the cross objections filed for the years under consideration, the assessee is challenging the validity of reopening of assessment u/s. 17 of the Wealth Tax Act. Since, we have dismissed the appeals of the Revenue on merits, adjudication of legal ground urged by the assessee would be academic in nature and hence we do not find it necessary to adjudicate the same.17
F or b e s & C o mp an y L i m i t e d
34. In the result, all appeals filed by the Revenue and cross objections filed by the assessee are dismissed.
Order has been pronounced in the Court on 8.2.2019.
Sd/- Sd/-
(SANDEEP GOSAIN) (B.R.BASKARAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated : 8/2/2019
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. The CIT(A)
4. CIT
5. DR, ITAT, Mumbai
6. Guard File.
BY ORDER,
//True Copy//
(Senior Private Secretary)
PS ITAT, Mumbai