Shailender H. Bhatia, Mumbai vs Assessee

सर्वश्री आय.सी.शभमव, रेखम सदस्म एवुं सश्र ु ी सष ु भम चमर्रम, न्ममयमक सदस्म BEFORE SHRI R.C.SHARMA, AM & MS. SUSHMA CHOWLA, JM आमकय अऩीर सं./ITA No.5653/Mum/2012 ( नििाारण वषा / Assessment Years :2009-10) Shailendra H.Bhatia, 14, Vs. ITO 22(2)-4, Navi Mumbai Indira Apartment, Opp.USV Limited, Govandi Station Road, Govandi, Mumbai-400088 स्थममी रेखम सं ./ जीआइआय सं ./ PAN/GIR No. : AACPB 5434 D (अऩीरमथी /Appellant) .. (प्रत्मथी / Respondent)

यनधमवरयती की ओर से /Assessee by : Shri Vimal Punmiya यमजस्र् की ओर से /Revenue by : Shri Neil Philip

सुनर्मई की तमयीख / Date of Hearing : 02/06/2015 घोषणम की तमयीख/Date of Pronouncement 10/06/2015

आदे श / O R D E R

PER R.C.SHARMA (A.M):

Both these appeals have been filed by the assessee against the

order CIT(A), for the assessment years 2009-2010, in the matter of order

passed u/s.143(3) of the Income Tax Act, on the following grounds :-

The following are the ground of appeal, which are without prejudice to one other:-

1. Sale of Possession right of Flat:- Rs 47,00,000/-

The learned CIT(A) has erred in law and in facts in confirming gain from sale of property as income from other sources instead of long-term capital gain.

2. The learned CIT CA) has erred in law and in fact by not allowing deduction of Rs. 69,050/- being stamp duty paid on purchase of property. .

2 ITA No.5653/12

3. The learned CIT CA) has erred in law and in fact by not allowing deduction of Rs. 75,000/- paid as brokerage on sale of property.

4. The appellant craves leave to add to, alter, amend, modify, substitute, delete and/or rescind all or any of the GROUND OF APPEAL on or before the final hearing, if necessity so arises.

2. Rival contentions have been heard and record perused. Facts in

brief are that the assessee is an individual and declared income u/s.44AE

of the Act on tanker transport business @Rs.3500/- per month i.e

Rs.42,000/-. Apart from the above, the assessee offered remuneration

income from Siddhivinayak LPG Carriers, remuneration from Bhatia

Tyres. During the year under consideration, the assessee sold immovable

property being Flat No.389, 6th floor, Oshiwara Tarapore Towers, New

Link road, Andheri West, Mumbai-53 for an amount of Rs.60,00,000/- on

20-6-2008. The said transaction was also reported in ITS details for the

same amount. However, on verification of the return of income, no capital

gains income was offered for taxation. The assessee was asked to furnish

copy of purchase and sale agreement of the flat and to explain why long

term capital was not offered for taxation. However, the AO did not

convince with the explanation of the assessee and computed the income

under the head "income from other sources" at Rs.47,00,000/-.

3. In appeal, the CIT(A) confirmed the action of the AO, against which

the assessee is in further appeal before us.

4. Ld. AR before us submitted that clause 14b of the agreement to

sale dated 5-9-1995 has not been considered by the AO, as the flat in 3 ITA No.5653/12

question is already sold and all the original documents were handed over

to the assessee. The entire payment made in this regard are as under :-

Cheque No. Date Amount 229679 07-09-1995 2,00,000 229680 11-09-1995 2,00,000 192543 14-09-1995 9,00,000 Total 13,00,000

Ld. AR further submitted that the assessee has transferred the ownership

right of the property, as he was having the ownership right over the flat,

which is a capital asset, therefore, question of assessing the income

under the head income from other sources does not arise at all. He further

submitted that the person who has the right to receive the income from

property in his own right is the owner for the purpose of assessment of tax

and as per the judgment of the Hon'ble Supreme Court in the case of

Podar Cement Pvt. Ltd., 92 Taxman 541(SC), if the assessee is not the

legal owner, the gain will be taxed as capital gains. However, without

considering the same, the AO added the impugned amount in the income

of the assessee. Ld. AR also placed reliance on the following judgments :-

i) Sureshchandra Agarwal Vs. ITO, 15 taxmann.com 115(Mum);

ii) CIT Vs. Hormasji Mancharji Vaid, 118 Taxman 276; and

iii) Asian PPG Industries Ltd. Vs. DCIT, 1 Taxmann.com 94 He further submitted that as per clause (v) of Section 2(47), property will

be transferred when the possession was given under Part Performance of

agreement. In present case as per purchase agreement the assessee

paid Rs.13,00,000/- to vendor and in part performance vendor handover

the possession of the property. Therefore, as per clause (v) of Section 4 ITA No.5653/12

2(47), assessee acquired the capital asset and same is required to be

assessed under the head capital gain.

5. Ld. DR relied on the order of lower authorities.

6. We have considered rival contentions, carefully gone through the

orders of the authorities below and found that the AO has basically

declined the claim of assessee's long term capital gain on the plea that

the original sale deed was not filed before him. The CIT(A) has confirmed

the action of the AO mainly on the ground that vide agreement dated 7-9-

1995 assessee was given only possession of the said premises on live

and license basis for a period of 33 months and since sale agreement

was executed on 20-6-2008, the period of 33 months was already over,

therefore, assessee had not sold any property, the income arising out of

the transaction was liable to be taxed as income from other sources.

7. From the record we found that assessee had purchased flat from

Mr. Vijay Kumar, an ex-army official for Rs.13,00,000/- vide agreement of

purchase dated 7-9-1995 which is registered on 28-12-1998 and stamp

duty of Rs.69,500/- was also paid. Possession was also obtained. The

assessee sold above flat vide agreement dated 11-6-2008 registered on

20-6-2008 for Rs.60,00,000/- and brokerage of Rs.75,000/- were also

paid. The contention of lower authorities was that the assessee was

having only possession but not the ownership of the premises as the flat

was not conveyed in the name of the assessee. Therefore, it is not a

capital asset and gain arising on its sale is liable to be taxed under the

head "income from other sources". As per clause 14(b) of the purchase 5 ITA No.5653/12

agreement dated 7-9-1995, the seller has transferred all his rights, original

documents were also handed over to the assessee. There was a payment

of Rs.13 lakhs by Account Payee Cheque, details of which are as under :-

Cheque No. Date Amount 229679 07-09-1995 2,00,000 229680 11-09-1995 2,00,000 192543 14-09-1995 9,00,000 Total 13,00,000

It is well established law that person can transfer the right which he has.

In the present case, assessee has transferred the ownership right of the

property. Hence, assessee had ownership right of flat which is a capital

asset. Therefore, question of assessing the income under other source

head not arises at all. Under the Income Tax Act, there is no condition

that the property should be registered in name of the assessee. Even if

the assessee is beneficial owner or having right in property then same will

be assessed in the hands of the assessee. The above view is confirmed

by the judgment of the Hon'ble Supreme Court in the case of Podar

Cement Pvt. Ltd., 92 Taxman 541(SC). As per clause (v) of Section 2(47),

property will be transferred when the possession was given under Part

Performance of agreement. In present case as per purchase agreement

the assessee paid Rs.13,00,000/- to vendor and in part performance

vendor handed over the possession of the property. Therefore, as per

clause (v) of Section 2(47), assessee acquired the capital asset and same

is required to be assessed under the head capital gain.

8. With regard to furnishing of sale deed dated 11-6-2008 is

concerned, the same was filed first time before us. The contention of ld. 6 ITA No.5653/12

AR was that since father of the assessee was bedridden at the time of

assessment proceedings and thereafter expired, the original sale deed

could not be traced out. As the sale deed goes to the root of the issue, we

restore the entire appeal back to the file of the AO for deciding afresh in

terms of our observation.

9. In the result, appeal of the assessee is allowed in part for statistical purposes.

Order pronounced in the open court on this 10/06/2015.

Sd/- Sd/- (सष ु भम चमर्रम) (आय.सी.शभमव) (SUSHMA CHOWLA) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भंफ ु ई Mumbai; ददनमंक Dated 10/06/2015 प्र.कु.मभ/pkm, यन.स/ PS

आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :

1. अऩीरमथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमुक्त(अऩीर) / The CIT(A), Mumbai.

4. आमकय आमुक्त / CIT आदे शािसार/ BY ORDER,

5. वर्बमगीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भंफ ु ई / DR, ITAT, Mumbai

6. गमर्व पमईर / Guard file.

उप/सहायक पुंजीकार सत्ममवऩत प्रयत //True Copy/ (Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai