ANIL GROVER, MUMBAI v. DCIT 13(2), MUMBAI

ITA 5531/MUM/2008 | 2005-2006
Pronouncement Date: 25-02-2010 | Result: Allowed

Appeal Details

RSA Number 553119914 RSA 2008
Assessee PAN AACPB8517E
Bench Mumbai
Appeal Number ITA 5531/MUM/2008
Duration Of Justice 1 year(s) 5 month(s) 23 day(s)
Appellant ANIL GROVER, MUMBAI
Respondent DCIT 13(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-02-2010
Date Of Final Hearing 18-02-2010
Next Hearing Date 18-02-2010
Assessment Year 2005-2006
Appeal Filed On 02-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI. BEFORE SHRI R.K. GUPTA J.M. AND SHRI J. SUDHAKAR REDDY A.M. I.T.A. NO. 5 531/MUM/2008 ASSESSMENT YEAR : 2005-06. ANIL GROVER DY. COMMISSIONER OF INCOME-TAX PROP. ANIL GROVER & CO. VS. 13(2) MUMBAI. 181/183 SAMUEL ST. MUMBAI 400 009. PAN AACPB8517E APPELLANT RESPONDENT I.T.A. NO. 5532/MUM/2008 ASSESSMENT YEAR : 2005-06 SMT. ASHA GROVER DY . COMMISSIONER OF INCOME-TAX 18/183 SAMUEL ST. VS. 13(2)(1) MUMBAI. MUMBAI 400 009. APPELLANT BY : SHRI S.C. TIWARI. RESPONDENT BY : SHRI VIKRAM GAUR. O R D E R PER J. SUDHAKAR REDDY A.M. THESE APPEALS ARE FILED BY THE TWO ASSESSEES AGAI NST THE SEPARATE BUT IDENTICAL ORDER OF THE CIT(APPEALS)-XI II MUMBAI DATED 19- 05-2008. AS THE ISSUE ARISING IN BOTH THE APPEALS A RE THE SAME AND AS BOTH THE ASSESSEES ARE CO-OWNERS OF THE SAME PROPERTY F OR THE SAKE OF CONVENIENCE WE HEARD THEM TOGETHER AND DISPOSED OF THE SAME BY WAY OF THIS COMMON ORDER. 2. THE FACTS OF THE CASE ARE BROUGHT OUT AT PARA 2 .2 AND 2.3 OF THE CIT(APPEALS ORDER WHICH IS EXTRACTED FOR READY REFERENCE. 2 THE APPELLANT IS A MEMBER OF A COOPERATIVE HOUSIN G SOCIETY AND IS A OWNER OF FLAT NO. 9 IN THE CHS BUILDING NA V SONARIBALA. THE HUSBAND OF THE APPELLANT IS THE COOWNER OF THE FLAT. SHE IS THE OWNER OF THE FLAT SINCE 1/05/1976. THE APPELLANT DE CLARED CAPITAL GAIN OF RS.26 55 000/- ON AMOUNT RECEIVED ON TRANSF ER OF DEVELOPMENT RIGHT. THE BUILDING WAS BUILD IN 1972 AND AS PER THE DEVEL OPMENT CONTROL REGULATION 1991 THE SOCIETY HAD AN EXCESS SPACE OF 18500 SQ.FT. TO CONSTRUCT ANOTHER BUILDING. A SPECIAL GEN ERAL BODY OF THE SOCIETY WAS HELD ON 18/07/2004 WHEREIN IT WAS DECI DED THAT EACH MEMBER OF THE SOCIETY WILL BE ENTITLED TO HIS SHARE OF TDR-FSI IN PROPORTION TO THE AREA OF HIS OR HER RESPECTIVE FLA T AND EACH MEMBER WILL SELL RESPECTIVE SHARE TO M/S. ORBIT VENTURES & CO. THE TOTAL CONSIDERATION FOR TRANSFER OF TDS WAS RS.12 CRORES AND THE APPELLANTS SHARE CAME TO RS.26 55 000/-. THE APPEL LANT TREATED THE SAME AS LONG TERM CAPITAL GAIN. THE AO OBSERVED THA T THE EXCESS BENEFIT OF TDS-FSI AVAILABLE ACCRUED TO THE SOCIETY AND NEVER TO THE INDIVIDUAL MEMBER. THIS IS BECAUSE THE SOCIETY IS THE OWNER OF THE LAND AND BUILDING. THE RIGHT OF THE APPELLANT A CCRUED ONLY BECAUSE OF THE RESOLUTION DATED 18/07/2004. AS THE RIGHT ON TDR- FSI CAME TO THE APPELLANT ON 18/07/2004 THE SALE C ONSIDERATION ON TRANSFER OF SUCH RIGHT CAN ONLY BE TREATED AS SHORT TERM CAPITAL GAIN. THE AO THEREFORE REJECTED THE APPELLANTS CLAIM OF LONG TERM CAPITAL GAIN AND CONSEQUENT CLAIM OF DEDUCTION U/S 54F OF THE I.T. ACT. 3. THE ONLY ISSUE THAT ARISES FOR OUR CONSIDERATIO N IS WHETHER THE CAPITAL GAIN THAT ARISES OUT OF TRANSFER OF TDR S GIVES RIGHT TO SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. THE AO HELD THAT THE PLOT OF LAND ON WHICH NAV SONARIBALA WAS CONSTRUCTED BELO NG TO THE HOUSING SOCIETY AND IN TDR-FSI MADE AVAILABLE THROUGH OPER ATION OF THE DEVELOPMENT CONTROL REGULATION 1991 WOULD HAVE BEL ONGED RIGHTLY TO THE SOCIETY AS A WHOLE AND THIS BENEFIT WAS BESTOWE D ON THE INDIVIDUAL MEMBERS ON 18-07-2004 BY WAY OF A SPECIAL RESOLUTIO N AND THE DATE OF ACQUISITION SHOULD BE TAKEN AS 18-07-2004 AND THE G AIN IN QUESTION WOULD BE SHORT TERM CAPITAL GAIN. 3 4. THE CIT(APPEALS) HELD THAT THE ASSESSEE NEVER P RODUCED ANY DETAILS TO PROVE THAT THE ADDITIONAL TDR-FSI WAS RE CEIVED IN MAY 1991. HE ALSO HELD THAT THERE IS NO PROOF THAT THE SOCIET Y GIFTED THE RIGHTS TO THE ASSESSEE AND HENCE HE HOLDS THAT SECTION 49(III) WI LL NOT APPLY AND THE GAIN IN QUESTION IS SHORT TERM CAPITAL GAIN. AGGRIE VED THE ASSESSEE IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS : 1. THE ORDER PASSED BY LEARNED CIT(A) IS BAD IN LAW. 2. THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT THE SU M OF RS.2 65 000/- RECEIVED BY THE APPELLANT IS NOT CHAR GEABLE TO TAX UNDER ANY PROVISIONS OF INCOME TAX ACT 1961. 3. WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 & 2 ABO VE THE LEARNED CIT(A) ERRED IN HOLDING THAT THE SUM OF RS.2 65 000 /- RECEIVED FROM THE DEVELOPER FOR TRANSFER OF HER SHARE OF DEVELOPM ENT RIGHT IS SHORT TERM CAPITAL GAINS AND NOT LONG TERM CAPITAL GAINS. 4. WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO.1 2 AND 3 ABOVE THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT THE A.O. W AS NOT SUPPOSED TO ASSESS ANY CAPITAL GAINS IN THE ASSESSMENT OF TH E APPELLANTS INCOME IF HE FOUND THAT THE CAPITAL GAINS WERE CHA RGEABLE TO TAX IN THE ASSESSMENT OF INCOME OF THE SOCIETY AND NOT THE APPELLANT. 5. MR. S.C. TIWARI LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT IF THE REVENUE HOLDS THAT IT IS A GIFT GIVEN B Y THE SOCIETY TO THE ASSESSEE THEN THE LEGAL POSITION IS THAT THE DATE OF ACQUISITION OF THE PREVIOUS OWNER WOULD BE THE DATE OF ACQUISITION OF THE ASSESSEE. ON THE OTHER HAND IF IT IS HELD THAT THE SOCIETY HAS NOT GIFTED THE TDRS TO THE ASSESSEE THEN THE SALE PROCEEDS CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. HE ALSO SUBMITTED THAT AS NO CONSIDER ATION WAS PAID FOR ACQUISITION OF THE TDRS NO CAPITAL GAIN CAN BE COM PUTED AS HELD BY VARIOUS BENCHES OF THE TRIBUNAL. IF IT IS HELD THAT THERE IS NO TRANSFER OF 4 TDRS FROM THE SOCIETY TO THE ASSESSEE THEN THE PRO FIT ON TRANSFER OF THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE A SSESSEE. HE SUBMITTED THAT AS NO CONSIDERATION IS PAID THIS IS NOTHING B UT A GIFT FROM THE SOCIETY TO THE ASSESSEE AND HENCE SECTION 49(III) READ WITH SECTION 2(42A)(B) APPLIES AND THE ORIGINAL DATE ON WHICH THE ASSET WA S ACQUIRED BY THE SOCIETY SHOULD BE TREATED AS THE DATE OF ACQUISITIO N BY THE ASSESSEE. 6. MR. VIKRAM GAUR LEARNED DR ON THE OTHER HAND SUBMITTED THAT THE SOCIETY ACQUIRES TDR IN ITS OWN RIGHTS AND WHEN THE SAME IS GIVEN TO THE ASSESSEE IT IS THE DATE ON WHICH THE ASSESSEE GETS A RIGHT TO THE TDRS. WHICH IS DATE OF TRANSFER. HE RELIED ON P ARA 2.5 OF THE CIT(APPEALS) ORDER AND PRAYED THAT THE SAME BE UPH ELD. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL O F THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW WE HOLD A S FOLLOWS : 8. THE UNDISPUTED FACT IS THAT THE ASSESSEE SOCIET Y IS THE OWNER OF THE LAND AND IT HAS RECEIVED TDR-FSI RIGHTS IN M AY 1991. IT IS ALSO NOT IN DISPUTE THAT THE SOCIETY AT ITS GENERAL BODY MEE TING PASSED A SPECIAL RESOLUTION BESTOWING THE RIGHT OF TDRS ON THE VARIO US SHARE HOLDERS OF THE COOPERATIVE SOCIETY. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT PAID ANY CONSIDERATION TO THE SOCIETY FOR OBTAINING THIS TDR-FSI RIGHTS. WHEN A PERSON RECEIVES A PARTICULAR ASSET WITHOUT C ONSIDERATION IT IS A GIFT. WHEN IT IS A GIFT SECTION 49(III) COMES INTO PLAY AND THE ORIGINAL DATE ON WHICH SOCIETY HAS ACQUIRED I.E. MAY 1991 SHOU LD BE TREATED AS A DATE OF ACQUISITION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS TAX. THUS WE UPHOLD THE CONTENTION OF THE ASSESSEE THAT THE GAIN IN QUESTION IS A LONG TERM CAPITAL GAIN. WE DIRECT THE AO TO COMPUTE THE SAME AS LONG TERM CAPITAL GAINS. 5 9. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE S ARE ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY 2010. SD/- SD/- (R.K. GUPTA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 25 TH FEBRUARY 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR H-BENCH. (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES MUMBAI.