TMI Blog2017 (10) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... y included in the said flat for name sake . The assessee only filed one unsubstantiated accounts for assessment year 2003- 04 of father of the assessee which only showed general description ‘Office Premises’ without having any details of the said flat and verification from the Revenue that the total consideration was paid by the assessee’s father which was reflected in his statement of affairs/balance sheet filed with revenue. The father of the assessee had also not paid taxes on capital gain earned from the sale of the said flat and hence no taxes on this sale of flat is paid to Revenue. Contentions of the assessee cannot be accepted. The assessee has however filed purchase agreement for the purchase of this flat for the first time before the tribunal. We have perused both the sale agreement and purchase agreement which are placed on record in paper book filed with the tribunal. Thus the capital gain on sale of assessee’s share in the said flat (being 1/3 )is to be brought to tax in the hand of the assessee. However, the A.O. is directed to give relief for the cost of acquisition of the flat and cost inflation index, as per provisions of section 48 & 49 of the Act in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a)(ia) even if the said expenses are already paid during the year and nothing remains to be payable as at the year end, wherein Hon ble Supreme Court in the case of Palam Gas Service v. CIT (2017) 394 ITR 300(SC) has recently decided the issue against assessee by holding that disallowance u/s 40(a)(ia) shall be made even if the entire amount of covered expenditure are paid during the financial year and nothing remains to be paid at the year end, which decision of Hon ble Supreme Court is binding on the assessee as it is now law of the land. The relevant extract of decision of Hon ble Supreme Court is as under: 14. In the aforesaid backdrop, let us now deal with the issue, namely, the word 'payable' in Section 40(a)(ia) would mean only when the amount is payable and not when it is actually paid. Grammatically, it may be accepted that the two words, i.e. 'payable' and 'paid', denote different meanings. The Punjab Haryana High Court, in P.M.S. Diesels (supra) referred to above, rightly remarked that the word 'payable' is, in fact, an antonym of the word 'paid'. At the same time, it took the view that it was not significant to the interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such persons who are liable to come within the network of tax payers. The intention was to ensure the collection of tax irrespective of the system of accounting followed by the assessees. We do not see how this dual purpose of augmenting the compliance of Chapter XVII and bringing within the Department's fold tax payers is served by confining the provisions of Section 40(a)(ia) to assessees who follow the mercantile system. Nor do we find anything that indicates that for some reason the legislature intended achieving these objectives only by confining the operation of Section 40(a)(ia) to assessees who follow the mercantile system. 22. The same view was taken by a Division Bench of the Calcutta High Court in Commissioner of Income Tax v. Crescent Export Syndicate, (supra). It was held:- '12.3. It is noticeable that Section 40(a) is applicable irrespective of the method of accounting followed by an assessee. Therefore, by using the term 'payable' legislature included the entire accrued liability. If assessee was following mercantile system of accounting, then the moment amount was credited to the account of payee on accrual of liability, TDS was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s yet to be paid and does not cover the cases where the amount is actually paid. If the provision is interpreted in the manner suggested by the appellant herein, then even when it is found that a person, like the appellant, has violated the provisions of Chapter XVIIB (or specifically Sections 194C and 200 in the instant case), he would still go scot free, without suffering the consequences of such monetary default in spite of specific provisions laying down these consequences. The Punjab Haryana High Court has exhaustively interpreted Section 40(a(ia) keeping in mind different aspects. We would again quote the following paragraphs from the said judgment, with our complete approval thereto: 26. Further, the mere incurring of a liability does not require an assessee to deduct the tax at source even if such payments, if made, would require an assessee to deduct the tax at source. The liability to deduct tax at source under Chapter XVII-B arises only upon payments being made or where so specified under the sections in Chapter XVII, the amount is credited to the account of the payee. In other words, the liability to deduct tax at source arises not on account of the assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtaway concluded, without any discussion, that Section 40(a)(ia) would apply only when the amount is 'payable' and dismissed the appeal of the Department stating that the question of law framed did not arise for consideration. No doubt, the Special Leave Petition thereagainst was dismissed by this Court in limine. However, that would not amount to confirming the view of the Allahabad High Court (See V.M. Salgaocar Bros. (P.) Ltd. v. CIT [2000] 243 ITR 383/110 Taxman 67 (SC) and Supreme Court Employees Welfare Association v. Union of India [1989] 4 SCC 187 . 18. In view of the aforesaid discussion, we hold that the view taken by the High Courts of Punjab Haryana, Madras and Calcutta is the correct view and the judgment of the Allahabad High Court in Vector Shipping Services (P) Ltd. (supra) did not decide the question of law correctly. Thus, insofar as the judgment of the Allahabad High Court is concerned, we overrule the same. Consequences of the aforesaid discussion will be to answer the question against the appellant/assessee thereby approving the view taken by the High Court. The Learned DR did not raise any objection to the dismissal of ground no. 1 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as photocopy of the purchase agreement dated 29th November, 1999 entered into with M/s Runwal Chambers for purchase of said flat B-201, 2nd floor Runwal Towers CHS Ltd., LBS Marg, Mulund (W), Mumbai . Thus, the A.O. adopted a sum of ₹ 20 lacs as assessee s share in sales consideration for arriving at the working of the amount of long term capital gain on sale of said flat and no credit was given towards indexed cost of acquisition and hence the long term capital gain of ₹ 20 lacs ( being 1/3) was brought to tax by the AO vide assessment order dated 28-02-2014 passed u/s 143(3) of 1961 Act. 5. Aggrieved by the assessment order dated 28-02-2014 passed by the A.O. u/s 143(3) of 1961 Act, the assessee filed first appeal before the ld. CIT(A). 6. The assessee reiterated the submission made before the A.O. and submitted that the said flat B-201, 2nd floor Runwal Towers CHS Ltd., LBS Marg, Mulund (W), Mumbai was owned by Mr. Prahladrai Bharthlya and the entire purchase price for the flat i.e. ₹ 14,12,951/- was paid by Mr. Prahladral Bharthlya alone. It was submitted that the assessee and Mrs. Usha P. Bhartiya did not contribute anything and therefore they did not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank account of Mr. Prahladrai Bhartiya. The assessee brought on record agreement dated 29-11-1999 for purchase of flat. The copy of agreement for sale with Runwal Estates P. Ltd. is placed on record vide paper book page 48- 92. It was submitted that the said agreement dated 29-11-1999 for purchase of the said flat was not produced before the A.O. . Copy of Agreement dated 23-07-2010 for sale of the said flat is placed on record at paper book page 97 to 123. It is submitted that loan was obtained from Karur Vyasa bank against mortgage of the said flat. It was submitted that father of the assessee purchased the said flat in the year 1999 which was sold in the year 2010. Our attention was invited to paper book page 106 whereby Shri Prahladrai Bharthia has been shown as owner as registered holder of the shares in society. Our attention was also drawn to paper book page 36 whereby statement of schedule of fixed assets and depreciation for financial year 2002- 03 is placed of Shree Keshav Textile , wherein office premises of ₹ 14,21,951/- is shown. It is submitted that Sh. Prahaladrai Bharthiya is proprietor of Shree Keshav Textiles., for which our attention to that effect is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered rival contention and also perused the material available on record. We have observed that the assessee has in its name jointly with his father and mother, a flat situated at 201, B-201, Runwal Towers CHS Ltd., LBS Marg, Mulund (W), Mumbai which was sold for a consideration of ₹ 60 lacs during the previous year relevant to the impugned assessment year on 23-07-2010. The said flat was purchased in the name of these three owners in the year 1999 on 29-11-1999. The name of the assessee is appearing in purchase deed for purchase of flat as well sale deed for sale of flat along with name of Mr. Prahladrai Bhartiya, and Mrs. Usha P. Bhartiya who are father and mother of the assessee. The said deeds for purchase and sale of the flat under consideration are placed in paper book filed with the tribunal. It is the contention of the assessee that the assessee has not made any payment for purchase of the said flat while his name is only added for the sake of convenience being the flat owned by the family. The two other persons who are jointly holding the flat are Mr. Prahladrai Bhartiya and Mrs. Usha P. Bhartiya who are father and mother of the assessee. Thus, the flat was joi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prahladrai Bhartiya, Mr. Roopam Prahladrai Bhartiya and Mrs. Usha P. Bhartiya have ownership right , title and interest in the said flat along with they jointly availed loan from Karur Vysya Bank unless said presumption is rebutted by the assessee with cogent evidences. The assessee s father has not filed income tax return for the year under consideration and capital gain earned on this flat was not declared to the Revenue , and only one year records i.e. for assessment year 2003-04 of father are produced and that also did not establishes that the father of the assessee has declared this flat in the said return of income as general description office premises is mentioned . No evidence is brought on record which could show that the payment were made by the assessee s father as no bank statement of father is produced by the assessee. Nor bank statement wherein proceeds of the sale of office are credited are brought on record. Any assumption of the facts in the absence of evidence will be contrary to material on records and shall be in the realm of conjectures and surmises. It is incumbent on the assessee to have brought on record all the evidences whereas the assessee did not br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee s father which was reflected in his statement of affairs/balance sheet filed with revenue. The father of the assessee had also not paid taxes on capital gain earned from the sale of the said flat and hence no taxes on this sale of flat is paid to Revenue. In view of peculiar facts and circumstances of the case, the contentions of the assessee cannot be accepted. The assessee has however filed purchase agreement for the purchase of this flat for the first time before the tribunal. We have perused both the sale agreement and purchase agreement which are placed on record in paper book filed with the tribunal. Thus, we are of the considered view that the capital gain on sale of assessee s share in the said flat ( being 1/3 )is to be brought to tax in the hand of the assessee. However, the A.O. is directed to give relief for the cost of acquisition of the flat and cost inflation index , as per provisions of section 48 49 of the Act in accordance with law after verification of the purchase deed dated 29-11-1999 and other cogent and credible material brought on record by the assessee. We order accordingly. 11. In the result, appeal filed by the assessee in ITA No. 4537/Mum/2016 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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