Income Tax Appellate Tribunal - Lucknow
Income Tax Officer-2(1), Lucknow vs Shri Arun Buxi, Lucknow on 26 February, 2018
I.T.A. No.481/Lkw/2016
1
Assessment Year:2012-13
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH 'A', LUCKNOW
BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER
I.T.A. No.481/Lkw/2016
Assessment Year:2012-13
Income Tax Officer-2(1), Vs. Shri Arun Buxi,
Lucknow. 14-D, Jopling Road,
Lucknow.
(Appellant) (Respondent)
Appellant by Smt. Manju Thakur, D.R.
Respondent by Shri D. D. Chopra, Advocate
Date of hearing 26/02/2018
Date of pronouncement 26/02/2018
ORDER
PER T. S. KAPOOR, A.M.
This is an appeal filed by the Revenue against the order of learned CIT(A) dated 27/05/2016. The only effective ground taken by the Revenue is reproduced below:
"1. Under the facts and circumstances of the case, the C1T(A) erred in law while computing the Long Term Capital Gain share for the year at Rs.67,350/- in as much as the provision of section 55(2)(b)(i) of the I.T. Act, 1961 for exercising option were not applicable to the assessee as original cost of previous owner i.e. Bhagyoday Brick Field was not ascertainable and moreover the assets of the dissolved firm, in which the assessee was a partner, were put the use only in 1985. The CIT(A) failed to appreciate that provision of section 552(2)(b)(ii) of the act would be applicable only when both the figures of original cost of asset I.T.A. No.481/Lkw/2016 2 Assessment Year:2012-13 of previous owner and the F.M.V. was ascertainable and also when distribution of assets of the firm had taken place at any time before the 1st day of April, 1987 as per provision of section 49(1) of the I.T. Act, 1961. Further, the CIT(A) erred in law and on facts in allowing cost of improvement at Rs.57,65,500/- as 50% paid to Rainbow Mall Makers Pvt. Ltd. without examine the accounts of the alleged party to substantiate the genuineness of the expenses incurred and claimed. Thus the CIT(A) erred in computing the capital gain at Rs.67,350/-against assessed at Rs.88,76,128/- on surmise & conjecture and against the provision of law."
2. At the outset, Learned A. R. stated that this is a covered issued by the order of the Tribunal in the case of the assessee itself and it was stated that Hon'ble Tribunal vide order dated 22/04/2016 has decided similar issue in favour of the assessee and Hon'ble Allahabad High Court vide order dated 18/10/2016 has also dismissed the appeal of the Revenue and in this respect our attention was invited to pages 58 to 81 of the paper book where copies of the orders of the Tribunal Hon'ble High Court were placed.
3. Learned D. R. fairly conceded that the issue was covered in favour of the assessee.
4. The brief facts, as noted in the assessment order, are that the assessment of the assessee was completed u/s 147 of the Act and Long Term Capital Gain was assessed at Rs.88,76,128/-. The Assessing Officer has calculated the capital gain after applying the provisions of section 50C for a land equivalent to 15% of the total land which was sold during the year under consideration. Aggrieved with the order of the Assessing Officer, the assessee filed appeal before learned CIT(A) who deleted the addition relying on the Tribunal order dated 08/04/2016. The findings of the CIT(A) are reproduced below:
I.T.A. No.481/Lkw/2016 3 Assessment Year:2012-13
"5. I have carefully considered the written submissions filed by the appellant, finding given by the AO in the assessment order and perused the records. The entire case was discussed with Shri Surendra Kohli Advocate at length and it has been specifically pointed out that while 21 plots were sold during the just preceding assessment year 2011-12, the remaining 18 plots were sold during the year under appeal. The learned counsel Shri Surendra Kohli drew my attention to the fact that the action of the A.O. was entirely unjustified in making a repetition and following the decisions of his predecessor's assessment orders passed on 28-03-2014 for the A.Y. 2011-12 and wrongly ignored the appellate order passed by the CIT (A) on 24-09- 2015 simply on the ground that the Department was in second appeal filed before the ITAT. The learned counsel argued that the said second appeal filed by the department was finally heard by the Hon'ble ITAT 'B' Bench Lucknow on 08-04-2016 and further submitted a copy of the ITAT's order passed in ITA No.702 & 767/Lkw/2015 dated 22-04-2016 which has been served and filed a copy of the appellate order during the appellate proceedings for the year under appeal. A perusal of the tribunal order clearly denotes that the departmental appeal has been rightly dismissed confirming therewith the findings of the CIT (A) in favour of the appellant.
5.1 Further I find that the issues in the present appellate proceedings are just identical and similar to the case for the A.Y 2011-12 except the figures of sale considerations, cost of acquisition, cost of improvement / development which was to the extent of 16.4% during the year under appeal fully approved by the CIT(A)/ITAT. Therefore, I have no hesitation in respectfully following the findings and deriding the present appeal in favour of the appellant on all the scores and hold that in the present assessment year the case fully stands decided in favour of the appellant. The AO is directed to compute the income of the appellant in the following manner:-
Computation of Capital Gains in the case of Arun Buxi & Others 14 D Jopling Road Lucknow relating to A.Y 2012-13 Sale Consideration as per DVO Report Rs16192150/-
determining FMV of 17 Plots under the provisions of Section 50C evaluated by the D.V.O. I.T.A. No.481/Lkw/2016 4 Assessment Year:2012-13 Acld: Valuation of 1 Plot No.21 Minzumla Khasra Rs920100/- No.81-A situated at Faridi Nagar Lucknow at Sr.No.22 relating to Mr. Rajesh Kumar Chaurasia Sale consideration for the year under ----------------- consideration for the A.Y.2012-13 for 18 plots Rs17112250 Less:Indexed Cost of Acquisition as per Assessee's Approved Valuer as on 1/4/1981 of 18 Plots. Indexed Cost of Land including addition prior to 01-04-1981 Rs9977350/-
Less : Brokerage Rs3700000/-
(--) Brokerage Considered during
A.Y. 2011-12 Rs2600000/- Rs1100000
Less:Cost of Improvement/Development (16.4%) Relates to sale of 18 plots at Rs.11531000 out of which 50% paid to M/s Rainbow Mall Makers Pvt. Ltd. as per Agreement dated 08-07-2010 Rs5765500 Long Term Capital Gains Rs.269400/-
4.1 We find that Hon'ble Tribunal has decided the issue of entire land vide para 8.1, which for the sake of completeness is reproduced below:
"8.1 From the above paras reproduced from the order of learned CIT(A), we find that it is noted by CIT(A) that the land in question of 3.60 lac sq. ft. was in fact owned by M/s Bhagyoday Brick Field and this firm was dissolved and the land was distributed to the existing seven partners including the assessee. The present assessee got 25% share i.e. 90,000 sq. ft. and his wife got 20% share i.e. 70,000 sq. ft. It is also noted by CIT(A) that the land in question was subject to proceedings in the Nagar Nigam by the individual co-owners to the extent of their respective share and remained idle for a sufficient period of time and in the meantime a small portion was trespassed by one Mr. Qurban Ali and the CIMAP under the forest dept. built their boundary wall and that it became a land locked land.
I.T.A. No.481/Lkw/2016 5 Assessment Year:2012-13 Thereafter, the assessee and the co-owners entered into registered agreement with M/s Rainbow Malls Makers Pvt. Ltd., Lucknow through its Director Syed Mohd. Qadir Ali and Shri Arun Agarwal which was registered before the Sub-Registrar- III, Lucknow on 28/09/2006 as per which sale of apartments on sharing basis was agreed in the proportion of 26% & 74% between co-owners and builders respectively and the entire expenditure was to be borne by the builders. Since the land was not having any entrance, the development did not take place and the validity of this agreement dated 28/09/2006 was to expire after four years. Under these facts, there was a fresh proposal by M/s Rainbow Malls Makers Pvt. Ltd. before the assessee and co-owners and they entered into a consequential agreement on 08/07/2010 for plotting of the land and sale thereof after making full development of the said land with a specific understanding that entire development expenses would be borne by the developer M/s Rainbow Mall Makers Pvt. Ltd. exclusively and that 50% of the sale consideration of plots will go to M/s Rainpow Mall Makers Pvt. Ltd. which was agreed by the assessee and co-owners leading to the present situation. A copy of the said agreement dated 08/07/2010 has been furnished to the Assessing Officer and CIT(A) and the copy is available before us also on pages 69 to 73 of the paper book. This is not in dispute that the land was not owned by the partnership firm M/s Bhagyoday Brick Field and the assessee became owner of 25% of such land on dissolution of the said firm. Hence, it cannot be disputed that the assessee is owner of only 25% of land and not of the entire land. This is also seen that the original agreement of 2006 was registered agreement with M/s Rainbow Malls Makers Pvt. Ltd. which had validity period of four years and second agreement of July 2010 is a consequential agreement because the original agreement could not be given effect because the land was land locked. We also find that there is no dispute regarding the amount of sale proceeds because CIT(A) has considered the sale proceeds of the land at Rs.738.19 lac in the present year whereas the Assessing Officer considered the sale proceeds in present year at Rs.747.39 lac and the difference of Rs.9 lac is not material because the Assessing Officer has considered the sale consideration as per D.V.O. report and the CIT(A) has considered actual sale consideration on the basis of fair market value. Regarding the index cost of acquisition considered by I.T.A. No.481/Lkw/2016 6 Assessment Year:2012-13 CIT(A) at Rs.4,60,65,609/- also, there is no grievance raised by the Revenue in the grounds of appeal raised before us and similarly regarding brokerage allowed by CIT(A) of Rs.6 lac, no specific grievance has been raised by the Revenue before us. Regarding the cost of improvement relating to sale of 21 plots at Rs.4,32,24,600/- out of which 50% was paid by the assessee to M/s Rainbow Malls Makers Pvt. Ltd. as per agreement dated 08/07/2010, this is the objection of the Assessing Officer that this agreement is not valid because this was neither registered nor notarized. In our considered opinion, the consequential agreement on 08/07/2010 is in continuation of the original agreement and therefore, merely on this basis that it was not registered or notarized, the agreement cannot be doubted. The Assessing Officer has considered the cost of improvement as per D.V.O. report but when the cost is not incurred by the assessee but by M/s Rainbow Malls Makers Pvt. Ltd. and as per the agreement the said party was to receive 50% of sale proceeds from the assessee as cost of development, the amount of actual cost incurred is material and the amount paid by the assessee to the developer is as per agreement has to be considered and similarly when the cost of development was incurred by M/s Rainbow Malls Makers Pvt. Ltd., there cannot be any addition in the hands of the present assessee on the basis that there is unexplained investment by the assessee on cost of development. Considering these facts, we find no reason to interfere in the order of CIT(A) on this issue also. The CIT(A) has considered all the facts in detail and he has worked out the total Long Term Capital Gain in the present year at Rs.33,91,310/- and the assessee's share has been worked out to the extent of 25% thereof at Rs.8,47,827.50 as against assessed by the Assessing Officer at Rs.3,94,05,489/-. In our considered opinion, the share of the assessee is only 25% as has been considered by CIT(A) as per the dissolution deed of the said partnership firm M/s Bhagyoday Brick Field and cost of improvement is rightly considered by CIT(A) at Rs.2,17,62,300/- as per the agreement dated 08/07/2010. Hence, on this issue, we decline to interfere in the order of CIT(A). Accordingly, ground No. 2 & 3 of the Revenue are rejected.
4.2 We further find that Hon'ble Allahabad High Court vide judgment dated 18/10/2016 has dismissed the appeal filed by Revenue against the I.T.A. No.481/Lkw/2016 7 Assessment Year:2012-13 Tribunal order dated 08/04/2016. For the sake of convenience the findings of the court are reproduced below:
"This appeal questions the correctness of the appellate order and its affirmance by the Income Tax Appellate Tribunal in respect of addition of unexplained investments, unexplained credit entry, capital gains and brought forward losses.
Sri Ghan Shyam Chaudhary, learned counsel for the appellant Department submits that the Tribunal was not justified in upholding the appellate order and has incorrectly computed the long term capital gain share inasmuch as, the provisions of Section 55 (2) (b) (ii) of the Income Tax Act, 1961 for exercising options were not applicable to the assessee. The period to which the assets of the dissolved firm were put to use and the cost was not even ascertainable.
What we find from the order of the Assessing Officer is that he had proceeded to disbelieve the agreement, which was unregistered and unauthentic and accordingly has disallowed the claim sought by the assessee. Since the said fact was the basis of the issue relating to long term capital gains, the same was gone extensively by the appellate authority that has arrived at a finding of fact, affirmed by the Tribunal.
These findings are in paragraph-14 to 21 of the appellate order dated 28.03.2014. We are not reproducing the same but on a perusal thereof, we find that the findings recorded by the appellate authority that were taken up in appeal before the Tribunal, have been rightly affirmed vide order dated 22.04.2016. The aforesaid findings that have been recorded in the appellate order and affirmed by the Tribunal are findings of facts based on material on record and in the absence of any material to the contrary we do not find any perversity so as to locate any substantial question of law. The transactions were found to be valid and so was the agreement which had been incorrectly assumed to be unauthentic by the Assessing Officer.
Consequently, in the absence of any substantial question of law arising, we do not find any merit in the appeal which is hereby dismissed."
I.T.A. No.481/Lkw/2016 8 Assessment Year:2012-13 4.3 Keeping in view the above facts and circumstances and the judicial decision, we do not find any infirmity in the order of CIT(A) therefore, the same is confirmed and the appeal of the Revenue is dismissed.
5. In the result, the appeal of the Revenue is dismissed.
(Order pronounced in the open court on 26/02/2018) Sd/. Sd/.
(PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR )
Judicial Member Accountant Member
Dated:26/02/2018
*Singh
Copy of the order forwarded to :
1. The Appellant
2. The Respondent.
3. Concerned CIT
4. The CIT(A)
5. D.R., I.T.A.T., Lucknow