Income Tax Appellate Tribunal - Pune
Vijay Gulabdas Broker,, Pune vs Additional Commissioner Of ... on 26 November, 2020
आयकर अपीलीय अिधकरण "ए
ए" यायपीठ पुणे म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, PUNE
(Through Virtual Court)
BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT (KZ) AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.453/PUN.2016
नधा रण वष / Assessment Year : 2007-08
Shri Vijay Gulabdas Broker,
99, National Co-op Housing Society,
Baner Road, Pune - 411 007.
PAN : AAVPB4896Q ..Appellant.
Vs.
The Addl. Commissioner of Income Tax,
Range - 5, Pune. ..Respondent.
Assessee by : Shri Nikhil Pathak.
Revenue by : Shri S.P. Walimbe.
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 25.11.2020 Date of Pronouncement: 26.11.2020
आदे श/ORDER
PER SHRI PARTHA SARATHI CHAUDHURY, JM.
1. This appeal preferred by the assessee emanates from the order of the learned Commissioner of Income-Tax (Appeals) - 3, Pune dated 23.12.2015 for the assessment year 2007-08 as per the following grounds of appeal:
1. On the facts and Circumstances of the case and in law the Hon. CIT(A) and the AO erred :
i. in holding that sale consideration to the extent of Rs.10,38,00,000 accrued to the assessee in place of Rs. 8,75,48,670 mentioned in sale deed dt 11.01.2007 which was declared by the appellant in his return.2
ii. In arbitrarily bifurcating in the Assessment Order sale consideration of Rs.21,01,00,000 mentioned in the sale deed towards land Rs. 20,76,00,000 and building Rs.25,00,000.
iii. In holding that the land value of Rs.20,76,00,000 estimated in the Asst Order should be subdivided between the appellant and his brother in the ratio of 50:50.
iv. In adding to the assessee's declared income 1,63,51,330 as undisclosed sale consideration, accrued to the assessee on execution to the sale deed dated 11/01/2007 and that the assessee had parted with his share of sale consideration to his brother by way of application of income.
The appellant pleads that the action of the AO is not justified, had no basis in fact or law and was irrelevant to the assessment of his income when the sale consideration received by the assessee Rs. 8,75,48,670 and his brother Rs.12,25,51,330 towards their respective shares in the property were mentioned in the sale deed and duly declared in their respective returns.
2. The assessee has also filed one additional ground which is as follows :
"On the facts and circumstances of the case, the learned CIT(A) erred in considering sale consideration of the plot as Rs.10,38,000/- in place of Rs.8,75,48,670 without appreciating that the consideration amount received by the assessee was much higher than the value as per the ready reckoner rate adopted / assessed by the State Government. The appellant pleads that the sale consideration could not be substituted under the provisions of Section 50C of the Income Tax Act, 1961."
3. The facts in this case are that the assessee filed return of income on 30th July 2007 declaring total income Rs.l,32,78,440/-, this included Long term Capital Gain on sale of land at Mumbai at Rs.1,31,15,252/-. The sale consideration for the land was Rs.8,75,48,670/- against which indexed cost of acquisition Rs.85,71,140/- was claimed based on value of land certified by Registered Valuers M/s. S. K. Godbole and Associates, Mumbai at Rs.16,51,472/- on 01.04.1981. On 05.12.1958 the assessee and his brother Shri Vinod Broker jointly acquired leasehold rights in land admeasuring 807.50 sq.mtrs, bearing plot no.1, part of larger plot no 3/1 in the layout owned by Hatkesh Co-op Hsg. Society, JVPD Scheme, Juhu, Vile Parle (West), Mumbai - 400056 from 3 Mr. Neelkant Manishankar Dholakia, Princess Street, Bombay - 400 002 for a consideration of Rs.14,990/-. In 1966 Shri. Vinod Broker got constructed on half portion of the plot (404 sq.mtrs approx) a bungalow admeasuring 2225 sq.ft. at a cost of Rs.47,000/-. The house property was constructed under supervision of architects M/s KP Davar & Co., Bombay and was occupied by Shri. Vinod Broker and his family. The entire cost of construction of the house property was borne exclusively by Shri.Vinod Broker out of his earnings and savings. Outgoings in respect of half share of the plot and the house property such as property taxes, electricity bills and society charges were also borne exclusively by Shri. Vinod Broker. The house property and half share of land were disclosed in Shri Vinod Broker's income tax returns in A.Y.1967-68 and subsequent years and also in his Wealth Tax returns in years in which he was liable to Wealth Tax. These were also assessed in Shri. Vinod Brokers income and wealth tax assessments since 1966 to date. The assessee continued to remain the owner of his half share of the plot since December 1958 which remained vacant till sale in July 2007. The cost of half share of the plot Rs.7,445/- incurred and paid for by the assessee was disclosed in his return of income. On 11.01.2007 by deed of assignment the two brothers sold off their respective rights in the subject plot and house property standing in the plot to Mr. Nayan A Shah for agreed consideration of Rs.21,01,00,000/-. For mutual convenience of the buyer and the two brothers the transfer was done by a single deed wherein respective share of' the sale consideration was stated as under:
i) Shri Vinod Gulabdas Broker Rs.12,25,51,330/-
ii) Shri Vijay Gulabdas Broker Rs. 8,75,48,670/-4
4. The sale consideration of Rs.8,75,48,670/- representing assessee's half share of the plot was declared in his income tax return under the head Capital Gains. Shri Vinod Broker declared sale consideration of Rs.12, 25,51,330/- representing the transfer of his property and capital gains chargeable thereon and disclosed the same in his income tax return for A.Y. 2007-08 filed with the Income Tax Officer, Ward 21(2)(4), Mumbai under PAN No.AABPB4386P. The assessee enclosed with his return sale deed and valuation report in support of his declaration of capital gains. In course of assessment proceedings, the assessee furnished supporting documents in respect of acquisition of property, construction of Shri Vinod Broker's house property, copies of Vinod Broker's income tax returns relevant to AY 1967-68, supporting valuation reports and accounts, completion certificate for the bungalow and affidavit from Shri Vinod Broker outlining the facts and asserting exclusive ownership of the bungalow constructed on the half share of the plot. The Assessing Officer completed assessment by wrongly concluding that the assessee was half owner of the house property constructed by and belonging to Shri Vinod Broker. The AO has misread the sale deed and erred in relying on the' property tax receipt / record of the Mumbai Municipal Corporation to conclude about the ownership of the house property. The assessee declared cost of acquisition of land as on 01/04/1981 at Rs.16,51,472/- based on the rate of Rs.380/- sq. ft. certified by registered valuer M/s. S. K. Godbole & Associates. The AO has obtained report of registered valuer Mr. Harshad Ruparel valuing the property as on 01/04/1981 as follows:-
Area Rate / Sq. Ft Amount
Land 6466.93 sq. ft 360 23,28,094
Building 2225 sq. ft 720 16,02,000
Total 39,30,094
5
5. The AO has adopted 50% thereof i.e., Rs.19,65,047/- as the
assessee's share of cost of acquisition of land & building. It is the contention of the assessee that the AO in the assessment order has arbitrarily bifurcated the sale consideration.
Land Building Total
Vinod Broker 10,38,00,000 12,50,000 10,50,50,000
Vijay Broker 10,38,00,000 12,50,000 10,50,50,000
20,76,00,000 25,00,000 21,01,00,000
The AO has worked out assessee's share of sale consideration at Rs.10,50,50,000/- in place of Rs. 8,75,48,670/- declared by the assessee. The Ld.CIT(A) on this issue at Para 4.3 of his order has observed that while the Assessing Officer has adopted the value of the bungalow at Rs.25,00,000/- and has subdivided the total consideration of Rs.21,01,00,000/- @ 50% holding that both the brothers are held equal part. However, the Ld.CIT(A) held that this is not reasonable looking at the plethora of evidences stretching back to 1968 whereby the bungalow has always been shown as belonging to the assessee's brother and as per his income tax returns, it was not disputed that the bungalow belonged to assessee's brother. This fact has been never disputed that the bungalow was the sole property of the co-owner / brother and therefore the ld.CIT(A) has held that the assessee did not enjoy possession of the bungalow but only his portion of the vacant land. Thereafter, the ld.CIT(A) at Para 4.4 of his order determined the value of the bungalow at the time of sale so that the value of the land can be isolated. The ld.CIT(A) held that the valuation of the bungalow at Rs.25,00,000/- done by the Assessing Officer was reasonable but there was no case for dividing the entire property (land and building) considerations equally between the brothers and it was held that value of 6 bungalow cannot be taxed in the hands of the assessee. That however, the balance consideration as allocated towards the land by the Assessing Officer i.e., Rs.20,76,00,000/- should be sub-divided between the assessee and his brother in the ratio of 50 : 50 and therefore, the sale consideration in the hands of the assessee held at Rs.10,38,00,000/- in place of Rs.8,75,48,670/-.
6. That at the time of hearing before us, the Ld.A.R. of the assessee taking us through the paper book at page No.12 wherein the copy of the agreement dated 11.01.2007 and submitted that at clause (h), it is clearly mentioned that the sale consideration to be received by the assessee was Rs.8,75,48,670/- which has been agreed between the assessee and his brother, whereas the share of the brother in sale consideration was at Rs.12,25,51,330/-. The Ld.A.R. submitted that it is not at all disputed as per record of the Department that the assessee's brother has constructed the bungalow in his share of land and the brother was staying in that bungalow with his family for more than 40 years. That when the co-owners / brothers now decided to dispose of the land along with the bungalow, it is the brother of the assessee who will get immediately affected by this action since he was residing in that bungalow. Further, more, the bungalow is located at Juhu which even way back in 1968 was a prime location continues to be so and in such scenario, the share of the assessee's brother in receiving sale consideration was more than that of the assessee. The assessee's brother / co-owner has shown his share of consideration received in his income tax return for the relevant year and has paid taxes thereon. The assessee has also disclosed his share of consideration received in his return of income and also has paid taxes thereon. In such event, there is 7 no loss to the Revenue. It was further contended that the sale consideration received was more than the index cost in the context of Sec.50C of the Act and that the provisions of Income Tax Act did not provide any jurisdiction to the Assessing Officer to further increase the value of the share of the assessee when mutually decided amongst the co-owners, their respective shares as per the said agreement. Placing these arguments on record, Ld.A.R. submitted that the sale consideration received by the assessee was only Rs.8,75,48,670/- as mentioned in the Sale Deed dated 11.01.2007 and this only should be upheld. Per contra, the Ld. D.R. placed strong reliance on the orders of Sub-ordinate Authorities and submitted that the Ld.CIT(A) while determining the facts of the case has already held that the value of bungalow cannot be taxed in the hands of the assessee. However, the balance consideration towards land at Rs.20,76,00,000/- has been correctly sub-divided between the assessee and his brother / co-owner in the ratio of 50:50. Therefore, the sale consideration in the hands of the assessee should be held at Rs.10,38,00,000/-.
7. We have perused the case records, heard the rival contentions and analyzed the facts and circumstances in this case. The facts as evident from record that as per the original agreement, the land belonged to the assessee and his brother in share of 50% each share holding and thereafter, they decided to dispose of this land and receive adequate consideration in lieu thereof. Meanwhile, the brother /co-owner of the assessee had constructed a bungalow way back in 1968 on his portion of the land, whereas, the portion of assessee's land remained vacant. The brother of the assessee was staying in that bungalow for more than 40 years which is located in the upscale area of Juhu, Bombay. 8 Thereafter, in the year 2007, when they decided to dispose of this property, it had to be disposed of along with the bungalow situated thereon which was owned, constructed and in possession of the brother of the assessee. They decided that the brother would receive sale consideration of Rs.12,25,51,330/- and the assessee will receive sale consideration of Rs.8,75,48,670/-. Both the brothers have disclosed this sale consideration in their tax returns and had paid taxes thereon. Therefore, as a matter of fact, there is no loss to the Revenue as such by mutual bifurcation of shares in respect of receiving sale consideration by the co-owners herein but nonetheless question arises that once 50% share each is the owner-ship in the land as per the initial agreement whether now the co-owners can determine their respective shares of receiving the sale consideration at their own free will. To this quiry, the Ld.A.R. answered that it is evident by agreement dated 11.01.2007 entered into and after the transaction was completed, taxes have been paid and the sale consideration received was higher than the index cost and therefore, provisions of Sec.50C of the Act also complied with and more so, the Revenue has not suffered any loss by this decision of the co- owners. However, on perusal of the said agreement where the share of sale consideration has been enumerated for the co-owners, we do not find any factual evidence / justification for one brother receiving more sale consideration and the assessee receiving less. That even while analyzing the "doctrine of adverse possession" under which a person who is not the original owner because of the fact that he has been in possession of the property for a minimum of 12 years within which the real owner did not seek legal recourse to oust him, such a person who is not a title holder / original owner but gets right over the property under the doctrine of adverse possession is empowered to claim legal 9 possession in case he is dispossessed by others, meaning thereby within this doctrine also there is a value accrued to such a person having the possession of the property. In this case, it is not at all disputed that the brother of the assessee was the owner of the bungalow since he has constructed with his own savings and income. It has also been disclosed in his income tax returns. Therefore, the consideration received by him more than the assessee and the reasons for such increased consideration that should have been factually justified through evidences and materials on record, similarly, justifying why the assessee has received a lesser consideration amount for his share. There are no details on record brought actually to substantiate the agreement entered into between the co-owners dated 11.01.2007 for the purpose of taxation. These areas need to be ascertained factually with detailed verification and therefore, we are of the considered view that the matter should be restored to the file of the Assessing Officer for factual verification and re-adjudication as observed above complying with the principles of natural justice. That at the same time, the assessee is directed to file valuation report and other evidences and details before the Assessing Officer for determining this matter. We set aside the order passed by the Ld.CIT(A) and restore the matter to the file of the Assessing Officer as indicated hereinabove. We order accordingly.
8. Additional Ground:
In the additional ground, since the assessee has challenged the action of the Ld.CIT(A) in determining the sale consideration at Rs.1038000 in place of Rs.875486, this ground also needs to be ascertained in the light of the examination of facts as observed by us 10 earlier and thus, the additional ground is also restored to the file of Assessing Officer.
9. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 26th day of November, 2020.
Sd/- Sd/-
(P.M. JAGTAP) (PARTHA SARATHI CHAUDHURY)
VICE PRESIDENT JUDICIAL MEMBER
पुणे Pune; दनांक Dated : 26th November, 2020.
Yamini
आदे श क' ( त*ल+प अ,े+षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A)-3, Pune.
4. Pr. CIT-3, Pune.
5 ए" ब च, पुणे / िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, "ए DR, ITAT, "A" Bench, Pune.
6. गाड! फाईल / Guard file.
आदे शानस ु ार/ BY ORDER // True Copy // व$र%ठ 'नजी स)चव / Sr. Private Secretary आयकर अपील य अ)धकरण ,पण ु े / ITAT, Pune.