Income Tax Appellate Tribunal - Mumbai
Late Burzor Rustum Joshi Through Legal ... vs Income Tax Officer - 17(1)(3), Mumbai on 19 February, 2024
P a g e |1 ITA No.2799/Mum/2023 Late Burzor Rustom Joshi Vs. ITO-17(1)(3) IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.2799/Mum/2023 (A.Y. 2009-10) Late Burzor Rustum Joshi Vs. Income Tax Officer-
through Legal 17(1)(3), Representative, 25, Heera Kautilya Bhavan, Meher, 108 Wodehouse Bandra Kurla Complex Road, Colaba, Maharashtra - 400051 Mumbai - 400 005
स्थायी ले खा सं ./जीआइआर सं ./ PAN/GIR No:AAEPJ5131H Appellant .. Respondent Appellant by : Dinesh Kukreja Respondent by : Ms. Indira Adakil Date of Hearing 25.01.2024 Date of Pronouncement 19.02.2024 आदे श / O R D E R Per Amarjit Singh (AM):
This appeal filed by the assessee is directed against the order passed by the ld. CIT(A) NFAC, Delhi, dated 12.06.2023 for A.Y. 2009-
10. The assessee has raised the following grounds before us:
"1. On the facts and circumstances of the case and in law, the National Faceless Appeal Centre, Delhi ('NFAC") erred in confirming the action of the Ld. Income-tax Officer- 17(1)(3), Mumbai ('AO') in reopening the assessment of the Appellant u/s. 147 of the Income-tax Act, 1961.
2. On the facts and circumstances of the case and in law, the National Faceless Appeal Centre, Delhi ('NFAC") erred in confirming the action of the Ld Income-tax Officer- 17(1)(3), Mumbai ('AO") that the transfer of an immovable property takes place only execution of conveyance deed and not before that, under Income Tax Act, 1961.
3. On the facts and circumstances of the case and in law, the NFAC has erred in holding that pursuant to the development agreement only license was given, and possession of immovable property was not transferred P a g e |2 ITA No.2799/Mum/2023 Late Burzor Rustom Joshi Vs. ITO-17(1)(3)
4. On the facts and circumstances of the case and in law, the NFAC has erred in holding that the execution of development agreement on 08-03- 2000 does not amount to transfer as per Section 2(47)(v) of the Income Tax Act, 1961 since the pre-requisites of section 53A of the Transfer of Property Act, 1882 are not fulfilled.
5. On the facts and circumstances of the case and in law, the NFAC erred in confirming the action of the Ld. AO in holding that since the name of the appellant was appearing in the 7/12 Extract" in the year 2008, he was co-owner of the land.
6. On the facts and circumstances of the case and in law, the NFAC erred in not deducting Rs. 1 crore paid to Homi Lal Chibber on the alleged ground that this payment was not contemplated in the development agreement
7. The Appellant therefore prays that the reopening of assessment be held as bad in law and also, the transfer of the subject immovable property be held to have taken place in the A.Y. 2000-01 pursuant to the development agreement entered into on 08-03-2000 and accordingly, the findings of the NFAC and Ld. AO be held as bad in law and be reversed accordingly.
8. The Appellant craves leave to, add to or alter, by deletion, substitution, or otherwise, any or all of the foregoing grounds of appeal at or before the hearing, and to submit such statements, documents, and papers as may be considered necessary either at or before the appeal hearing."
2. Fact in brief is that return of income declaring total income of Rs.106,011/- was filed on 23.07.2009. The return of income was processed u/s 143(1) of the Act. Subsequently, the case was reopened by issuing of notice u/s 148 of the Act on 29.03.2016. In this case the assessing officer had received information from ITO, Ward-2(1) Aurangabad, regarding the sale of immovable property in which the assessee was one of the co-owner of the property. The detail of such property received was as under:
Description of Name of Name of purchaser Date of Market value Sale Property Vendor sale/Registration No. consideration Agricultural land - S. Shri BhupendraShantial 05.04.2008 3,23,40,000 2,08,00,000 No. 5/1, CTS No. Burzor Shah & 3 others 3215/2008 4083 adm. 1 Rustom H.16.50 Ares [0h.40 Josh & 8 Ares owned MRVNC] others balance area. Adm 7650 sw. mtrs The property was sold for a consideration of Rs.2,08,00,000/- however, the value as per the stamp duty authority was of Rs. 3,23,40,000/- and the sold property was registered on 05.04.2008.
P a g e |3 ITA No.2799/Mum/2023 Late Burzor Rustom Joshi Vs. ITO-17(1)(3) The assessing officer show caused the assessee to explain why not the long term capital gain on the sale of aforesaid property should be determined in accordance with the provision of Sec. 50C(1) of the Act. It was submitted before the assessing officer that Power of Attorney was given by the assessee to Shri Parag Suresh Shah who has entered into the transaction on sale of property on behalf of the assessee with Shri Bhupendra S. Shah. However, the assessing officer stated that ownership of the sold property was with the assessee, therefore, he computed long term capital gain being 1/3 of the stamp duty value determined by the valuation authority to the amount of Rs.35,93,333/- and added to the total income of the assessee.
3. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has partly allowed the appeal of the assessee by providing deduction of expenses incurred for vacating encroachment of the property of Rs.86,00,000/- out of the total sale consideration of amount of Rs.3,23,40,000/- as determined by the stamp value authority and restricting the addition to the extent of 1/12 of the proportionate capital gain of Rs.2,37,40,000/- which comes to Rs.19,78,333/-.
4. During the course of appellate proceedings before us the ld. Counsel submitted that assessee had sold the land referred in the assessment order on March 2000 and offered the amount of long term capital gain arising thereon in the return of income filed for assessment year 2000-01. The ld. Counsel also filed factual paper book comprising copy of Registered Power of Attorney dated 28.02.2000 and copies of detail of document and information furnished before the lower authorities. The ld. counsel has also filed application under Rule 29 of the Income Tax Act 1963 to produce the full development agreement running into 25 pages dated 08.03.2000 with reference to the fact that assessee had offered to tax the capital P a g e |4 ITA No.2799/Mum/2023 Late Burzor Rustom Joshi Vs. ITO-17(1)(3) gain arising from the transfer of the said land in the assessment year 2000-01. We have perused the order of the ld. CIT(A) and noticed that the registered development agreement dated agreement dated 08.03.2000 was fully discussed by the Ld.CIT(A) in his order at page no.3 and 4. Therefore the copy of the agreement filed is taken on record. The ld. Counsel referred page no. 5 of the said development agreement as per which the vendor agreed to sell to the developer the said properties for the lump sum consideration of Rs.66,00,000/- and also referred page no. 6 of the agreement stating that the developer has paid the aforesaid amount to the vendor for the agreed amount of consideration in respect of the said property. At page no. 7 of the agreement the detail of distribution of the amount of Rs.66,00,000/- among the co-owner of the sold property was provided. The ld. Counsel further referred page no. 9 of the agreement showing that vendor have given permission and license and possession of the property to the developer. As per page no. 25 of the agreement the developer of the property was Shri Parag Suresh Shah. The ld. Counsel further submitted that in response to notice u/s 148 the assessee has categorically explained to the assessing officer vide letter dated 25.08.2016 that all the transactions of the said property was completed in assessment year 2000-01 and there was no escapement of income for assessment year 2009-10. The ld. Counsel also submitted that this fact was also brought to the notice of the ld. CIT(A) that capita gain arised on the land sold was already offered for tax in the return of income for assessment year 2000-01. Therefore, the ld. Counsel vehemently contended that the addition made during the assessment year 2009-10 is erroneous and not justified.
On the other hand, the ld. D.R supported the order of the lower authorities.
P a g e |5 ITA No.2799/Mum/2023 Late Burzor Rustom Joshi Vs. ITO-17(1)(3)
5. Heard both the sides and perused the material on record. Without reiterating the facts as discussed above the assessee has received 1/12 shares from the relinquishment of his right in the property and the amount of Rs.5,50,000/- was offered to tax as long term capital gain in the return of income for assessment year 2000-01. The assessee has also submitted before the ld. CIT(A) that the entire amount of Rs.5,50,000/- was invested in the UTI MEP 2000 Scheme and he claimed exemption u/s 54EA of the Income Tax Act. The assessee has also filed affidavit of Shri Parag S. Shah before the ld. CIT(A) that no amount was paid to the assessee at the time of execution of the sale deed dated 04.04.2008. Even before the assessing officer in response to show cause notice dated 23.12.2016 the assessee has provided these detail explaining that the aforesaid transaction had occurred in the year 2000. However, without controverting the aforesaid submission and relevant explanation given by the assessee the assessing officer has determined the long term capital gain as per provision of Sec.50C in the hands of the assessee. The assessee has also explained that the assessee along with the other family member have relinquished all rights and title in the sold land bearing survey no. 5/1, 5/3 and 5/4 at Nasik Maharashtra by granting development rights and physical possession to Shri Parag S. Shah vide registered development agreement dated 08.03.2000 and received a total consideration of Rs.66,00,000/- out of which share of the assessee Rs.5,50,000/- and the same was offered for tax by him in the Income Tax return for assessment year 2000-01. After considering the aforesaid material facts we find that decision of ld. CIT(A) in sustaining the impugned addition of capital gain in the hands of the assessee without controverting the claim of the assessee that capital gain amount was already shown in the assessment year 2000-01 is not justified, therefore, the appeal of the assessee is allowed on merit.
P a g e |6 ITA No.2799/Mum/2023 Late Burzor Rustom Joshi Vs. ITO-17(1)(3) The Ld. Counsel has not made any submissions on the grounds challenging re-opening of assessment, hence, ground no. 1 of appeal is dismissed.
6. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 19.02.2024 Sd/- Sd/-
(Vikas Awasthy) (Amarjit Singh)
Judicial Member Accountant Member
Place: Mumbai
Date 19.02.2024
Rohit: PS
आदे श की प्रतितिति अग्रेतिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयुक्त / CIT
4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai
5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //True Copy// आदे शानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.