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2016 (4) TMI 355 - ITAT MUMBAI

2016 (4) TMI 355 - ITAT MUMBAI - TMI - Rectification of mistake - offering for tax the capital gain on sale of land in the current year which related the subsequent year i.e AY 2009-10 - Held that:- The income offered by the assessee in the current year i.e AY 2008-09 under the head capital gain be rectified as the said income accrued and was assessed in the AY 2009-10. The both the authorities below had failed to appreciate that if the same income was assessed to tax in two assessment years it .....

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le the sale deed in respect of plot at survey no.132 on Mumbai-Pune Highway which was duly shown by assessee in the revised return of income filed u/s 139(5) of the Act. The details of sale considerations from both the plots at survey no.68 and 132 were shown while calculating the capital loss in the revised return of income. The ld. CIT(A) allowed the appeal of the assessee subject to quantification by holding that the same would be considered under the head capital gains and accordingly delete .....

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the file of the AO for a limited purpose of examining the sale deed and delete the addition accordingly.

Addition under the head income from house property by estimating the rent of property - Held that;- We find that the rent from the rental properties located in Khar area have been shown at ₹ 15,808/- and water charges ₹ 4,94,282/- and property tax ₹ 54,532/- were claimed in respect of the said property. The AO further observed that the five flats were occupied b .....

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m the partners and his family members. As it is clear from the above the AO has failed to prove/bring on record by any cogent evidence that the rent of comparable properties in the vicinity where the assessee’s property was located and we find that the estimation of rent by AO is a purely guess work and based on estimation, conjecture and surmises, which in our opinion, cannot be sustained. We, therefore, delete the addition

Estimation of LTCG - Held that:- AO and CIT(A) had taken di .....

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ction to supply a copy of the valuation report to the assessee and after allowing reasonable opportunity decide the matter afresh as per law. - I.T.A. No.739/Mum/2013, I.T.A. No.2671/Mum/2013, I.T.A. No.3276/Mum/2013 - Dated:- 9-3-2016 - SHRI C.N. PRASAD, JM AND SHRI RAJESH KUMAR, AM For The Assessee : Shri M K Kulkarni For The Revenue : Shri Love Kumar ORDER PER RAJESH KUMAR, A. M: The appeal by the assessee for Ay-2008-09 is directed against the order of ld.CIT(A) dated 28.11.2012 and cross ap .....

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the Income Tax Act, 1961(the Act) in order to correct the mistake which had occurred due to offering the capital gain of ₹ 3,02,93,202/- which was wrongly offered to tax in this year instead of AY 2009-10. 3. The facts of the case in brief are that the assessee filed its return of income on 24.9.2008 declaring total income at ₹ 3,02,93,202/- by way of capital gain on sale of land. The return was processed u/s 143(1) on 8.10.2010 and a demand of ₹ 87,65,930/- was raised. The as .....

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prima facie. The AO held that there was no mistake which was proposed to be rectified u/s 154 of the Act as the assessee itself has declared Long Term Capital Gains (LTCG) of ₹ 3,02,93,202/- in the return of income which was accepted as on processing u/s 143(1) and thus rejecting the petition of the assessee that the sale deed was executed in April 2008 and further held that such issue was a matter of debate and deliberation and not a apparent mistake from record. In para 6 of the rectific .....

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he assessee. As already mentioned in the pre paras, the assessee filed application on 04/11/2010 seeking rectification order passed by the Assessing Officer u/s.143(1). It is seen from the submissions made by the assessee that it filed return of income for the A.Y.2008-09 admitting the Long Term _Capital gain of ₹ 3,02,393,202/-. This return was filed u/s.139(1) on 24/09/2008. Subsequently, the assessee submitted that the LTCG was wrongly calculated in fact the taxability of the LTCG would .....

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r in his order u/s.154 observed that there was no mistake in the intimation sent to the assessee as he himself declared LTCG which was accepted as such. He further pointed out that these facts required to be deliberated and the same did not come under the purview of rectification of /s. 154. Considering the above facts, it is to be seen whether it is rectifiable mistake or not. To appreciate the fact the provisions of section 154 are very much necessary to be seen. Sub-section 1 of Section 154 r .....

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stake apparent from record. Various decisions of Hon'ble High Court and Supreme Court have observed that a mistake apparent from the record is a mistake that is manifest, plain or obvious, a mistake that can be realized without a debate or dissertation. A mistake which can be discovered by a process of elucidation or argument or a debate, cannot be considered to be a mistake apparent from the record. Further, it is also to be pointed out that the Hon'ble Supreme Court in the case of ITO .....

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rein the mistake has occurred which is apparent from record. Therefore, the intimation u/s.143(1) can not be amended u/s.154 as rightly pointed out by the Assessing Officer. In brief, the appeal of the assessee cannot be upheld for the following reasons: i) The assessee himself filed return of income - There is no information of filing any revised return of income for the A.Y.2008-09. ii) The assessee filed revised return of income for the immediate succeeding assessment year i.e. 2009-10 based .....

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nly in A.Y. 2009-10, then it filed Revised return for A.Y.2009-10 revising the value of FMV as on 01/04/1981. The A.O. did not accept the revised valuation of the assessee and he passed a speaking order u/s.143(3) for the A.Y.2009-10, on this also, the assessee is in appeal. Thus, from the above facts, it can be noticed that the issue is clearly a debatable issue and the same cannot be subject matter of amendment u/s.154. For the above reasons, this ground of the assessee objecting to the rectif .....

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00,000/- as a consideration. However, due to some dispute, the matter was referred to Arbitration in District Court as according to the developers the title of the asset was not clear. Thereafter, the assessee reached a out of court compromise with the builder vide deed dated 29.9.2007 and both the contracting parties mutually agreed to cancel the original agreement and two sale deeds were executed on 17.4.2008 and the money of ₹ 3,05,00,000/- already received was appropriated towards the .....

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ment year 2008-09 which was offered for taxation in the AY 2009-10 correctly and thus the AO was grossly mistaken and erred in rejecting the rectification application u/s 154 of the Act on the ground that the issue involved was debatable and involved long drawn discussion and was not prima facie apparent mistake from record, whereas, as a matter of fact, the income from long term capital loss on sale of property could not be taxed twice as was done in the case of the assessee. The assessee filed .....

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ow. He also submitted that the assessee itself had offered the income for taxation in the assessment year 2008-09 and requested for upholding the order of ld.CIT(A). 7. We have considered the rival submissions and perused the material available on record. We find that the assessee sold its two plots of land to the developer M/s Tarunika Gaur Housing and Construction Co. Ltd on 4.4.2007 for a total consideration of ₹ 3,05,00,000/- which was acquired by the assessee at ₹ 9,897/- on 29. .....

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efit of FMV available as on 1.4.1981 and indexation thereon. The return was processed by the AO and the demand of income tax of ₹ 87,65,930/- was raised. The assessee moved an application for rectification on 01.11.2010 u/s 154 of the Act when the recovery proceedings were initiated against the assessee. On the basis of the above facts, we are in agreement with the argument of the ld.AR that the capital gain arose in the assessment year 2009-10 and not in the AY 2008-09 as all the previous .....

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e head capital gain be rectified as the said income accrued and was assessed in the AY 2009-10. The both the authorities below had failed to appreciate that if the same income was assessed to tax in two assessment years it would be bad in law and also would be a mistake apparent liable for rectification u/s 154 of the Act regardless of the fact that it might had happened be due to assessee s mistake. Accordingly we delete LTCG of ₹ 3,02,93,202/- from the current year ₹ 3,02,93,202/- .....

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77; 11,53,864/-. Subsequently, the said return was revised declaring income of ₹ 34,18,599/- prior to issue of notice u/s 143(2) of the Act. Statutory notices u/s 143(2) and 143(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO found that the out of total sale consideration of ₹ 3,05,00,000/-, the assessee filed details and sale deed only in respect of one sale deed qua plot no 68 sold for ₹ 1,85,00,000/-. The assessee was again as .....

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for the reasons not known. In the revised return, the assessee has mentioned only one agreement dated 17.4.2008. The assessee was requested to furnish the copy of agreement. The AO ultimately added the sale consideration in respect of second property amounting to ₹ 1,20,00,000/- as income from other sources for the reasons as incorporated in para 5.10 of the Assessment order. The ld. CIT(A) allowed the appeal of the assessee by holding that the assessee had duly shown the receipt of ₹ .....

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not produce the same. Hence, the AO taxed an amount of ₹ 1,20,00,000/- under the head income from other sources . The ld. CIT(A) observed that the assessee had furnished the sale deed in respect of plot at survey no.132. During the course of appellate proceedings, the assessee had filed a copy of sale deed from which it is clear that the assessee had received a sale consideration of ₹ 1,20,00,000/- for sale of plot at survey No.132 and therefore the same could not be taxed under the .....

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itted that the assessee did not file a copy of the sale deed in respect of plot at survey No.132 and the amount involved in the said transaction was ₹ 1,20,00,000/- and therefore, the AO had no option but to add the same to the total income of the assessee under the head income from other sources . The ld. DR further pointed out that the sale deed in respect of plot in dispute was produced before the ld. CIT(A) who did not seek comments of the AO on the same thereby committed violation of .....

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the ld. CIT(A) was right in decision in deleting the addition from the head income from others sources and directed the revenue to consider it as under head income from capital gains and therefore, there was no need for setting aside the order of ld. CIT(A). The ld. AR finally submitted that the order of the ld. CIT(A) be upheld. 13. We have considered the rival submissions and perused the record available before us. We find that the assessee during the course of assessment proceedings could not .....

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eted the addition of ₹ 1,20,00,000/-. However, we find merit in the ground as raised by the revenue to set aside the proceedings to the file of the AO in view of the violation of Rule 46A of the Rules. In our view, the ld.CIT(A) has rightly deleted the addition under the head income from others sources and therefore the order of ld. CIT(A) does not require any interference at our end. However, in order to meet principle of natural justice we are of the opinion that the matter be restored t .....

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ITA No.2671/Mum/2013. The issue raised in the ground no.1 is against the confirmation of addition under the head income from house property of ₹ 23,21,775/- by estimating the rent of property at ₹ 28,23,840/-. 16. The facts of the case are that the assessee disclosed rental income of ₹ 15,808/- and claimed water tax of ₹ 4,92,982/- and property tax of ₹ 54,532/-. During the course of assessment proceedings, the AO found that the assessee had let out its properties t .....

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sessee was very meager and the market rent in the Khar are is about ₹ 40,000 to ₹ 45,000/- per month and came to the conclusion that the market rate per st.ft was ranging between ₹ 30 to ₹ 50 per sq.ft. Accordingly, rent from the property was worked at ₹ 2,35,320/- per month. The assessee was given show cause notice as to why the income from rent of the property should not be calculated at the market rate and thus, added the newly assessed rental income to the total .....

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erred an appeal before the ld. CIT(A), who in turn dismissed the appeal of the assessee on the ground that the assessee had conferred undue benefits on its relatives and partners by not only letting out the residential property in Khar, Mumbai but had incurred extra expenses for maintaining the same. The observations of the ld. CIT(A) is reproduced below : 4.3.1 I have considered the facts of the case and the submissions made by the assessee. Assessee has submitted that the A.O. erred in estimat .....

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property tax of ₹ 54,532/- as deduction against it. Assessing Officer made inquiries in the area and found that rent for a two bed room flat in Khar area ranged between ₹ 40,000/- to ₹ 45,000/- per month and therefore worked out rent receivable in respect of seven flats at ₹ 2/35,320/- per month and total rent receivable for 12 months at ₹ 28/23,840/- and worked out income from house property at ₹ 23,21,775/- (28,23,840 + 4,92/982 - 9,95,047) after adding bac .....

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₹ 15,808/- only. section 23 of IT. Act, 1961 speaks about rent received or receivable, whichever is higher, and when market inquiries revealed that market rent was much higher than the rent received by the assessee in respect of seven flats let out to partners and persons related/known to assessee, Assessing officer invoked the provisions of section 23 of IT. Act, 1961 and recalculated the income from house property at ₹ 23,21,775/-. These seven flats are given on to persons related .....

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ssing Officer was right in estimating the rental income at ₹ 28,23,,840/- on the basis of market inquiries and calculating the income from house property at Rs, 23,21,775/-. Therefore, assessee's appeal on this ground is rejected additions made by the Assessing Officer are upheld. This ground of appeal is dismissed. Aggrieved by the decision of the ld.CIT(A), the assessee is in appeal before us. 17. The ld. AR submitted before us that the addition made by the AO was purely on the basis .....

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ssee was totally wrong and unfounded. The AO even had not bother to find out rent of the comparable properties in the nearby vicinity where the flats were rented by the assessee did not bring on record any tangible material even before estimation of rent.The ld. Counsel also submitted that the rent of the property was accepted in the earlier years by the department. The ld. AR finally submitted that the addition as made of ₹ 23,21,775/- by estimating the rent at ₹ 28,23,840/- be dele .....

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property tax ₹ 54,532/- were claimed in respect of the said property. The AO further observed that the five flats were occupied by the partner and their family members. The AO estimated the rent in respect of rented property at ₹ 30 to 50 sq. ft. and thus arrived at notional income of ₹ 28,23,840/- which was increased by water charges of ₹ 4,94,982/- and from the total rental charges allowed standard deduction of 30% u/s 24 of the Act and worked out the total income from .....

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opinion, cannot be sustained. We, therefore, delete the addition by allowing the appeal of the assessee and the AO is directed accordingly. 20. Grounds No. 2 to 5 is against the enhancement of assessment by taking long term capital gains of ₹ 3,00,35,936/- as computed by the ld. CIT(A) after taking fair market value as on 1.4.1981 at ₹ 79,736/-. 21. The facts in brief are that the assessee vide agreement dated 4.4.2007 entered into an agreement with developer M/s Tarunika Gaur Housin .....

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ecuted on 17.4.2008 for the two plots one for ₹ 1,85,00,000/- in respect of plot no 68 and another for ₹ 1,20,00,000/- for plot no 132. The money received against the earlier agreement wwas adjusted towards the sale consideration fixed in the new sale deeds and thus the assessee claimed that the Long Term capital loss from the said land arose in the assessment year 2009-10 and accordingly revised the return u/s 139(5) of the Act within time limit stipulated in the said section. The a .....

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at ₹ 3,02,93,202/- It is worth mentioning that the assessee itself while filing return of income for the assessment year 2008-09, wrongly showed ₹ 3,02,93,202/- as capital gain on the said two plots of land which was wrongly calculated by taking the purchase cost as on 29.11.1965 as FMV on 01.04.1981 and indexing the same. The assessee also claimed indexing in respect of a building at ₹ 1,55,828/- . During the course of assessment proceedings, the AO observed that the assessee .....

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uisition of ₹ 23,50,378/- as calculated by the AO in para 5.9 of the assessment order while the sale consideration in respect of plot at survey No.132 of ₹ 1,20,00,000/- under the head income from other sources . The AO rejected the capital loss as computed by the assessee at ₹ 21,08,907/- and the plot area was taken as 1,38,303 sq.ft. and thus total cost as on 1.4.1981 was calculated at ₹ 4,03,845/- which was index cost of ₹ 23,50,378/-. Aggrieved by the order of t .....

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on the basis of reverse valuation method stating the same to be not recognized in the Act. The ld. CIT(A) further observed that on 19.12.2012, the authorized signatory Shri S G Koshti, appeared for the hearing and he has informed that the fair market value as on 1.4.1981 should have been arrived at by applying the progressive working method instead of reverse calculation method. In response, the assessee filed copy of the correspondence between department valuation officer which indicates that t .....

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ions including the said valuation taken by the valuation officer in the survey No.221/1, 194/2B and 141/22 and 555. Whereas the assessee s property located at survey no.68/1 and 132/1, there was no proximity of the properties as compared by the valuation officer and therefore the value assessed by the valuation officer was unfair. The ld. CIT(A) adopted the valuation as calculated by him as per progressive valuation method at ₹ 79736/- as on 1.4.1981. It was further mentioned by the ld.CIT .....

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the valuation officer was not taken as it had not reached finality . Thus calculated the indexed cost at ₹ 4,64,063/- by taking the FMV as on 1.4.1981 at ₹ 79,736/- and thereby calculating the capital gain at ₹ 3,00,35,936/- 23. The ld.AR submitted before us that the assessee had rightly calculated the FMV of the two plots sold during the year by taking sales consideration as the current market value and applying the reverse valuation method to ascertain the FMV as on 1.4.1981 .....

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that valuation as calculated by reverse valuation method be directed to be followed.The DR per contra relied on the order of CIT(A) and requested for upholding the same 24. We have considered the rival submissions and perused the materials on records and after going through the orders of authorities below, we find that the two plots no 132 & no 68 were given to M/s Tarunika Gaur Housing and Construction Ltd for a consideration of ₹ 30,5,00,000/-( plot no 132 for ₹ 1,20,00,000/- a .....

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he long term capital loss arose on the said sale was returned by filing a revised return u/s 139(5) of the Act while moving a rectification application in preceding previous year requesting the AO to rectify the long term gain on these plots which was wrongly returned in the AY 2008-09 at ₹ 3,02,93,202/- which was also wrongly calculated by indexing the cost of ₹ 9,897/- at which the land was purchased on 29.11.1965 and also the indexing the cost of building ₹ 50,969.55 . The i .....

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5/- and the indexed cost was calculated by applying the index at ₹ 3,26,08,907/- resulting in to long term -capital loss of ₹ 21,08,907/- and the AO by taking the FMV by taking ₹ 40,00,000/- as the FMV on the date of sale and calculating the FMV as on 1.4.1981 ₹ 6,61,415/- for both the plots. Both the assessee as well as the AO calculated the FMV on the basis of reverse valuation method. The AO however considered plot no 68 only for the purpose of capital gain and calcula .....

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