TMI Blog2022 (8) TMI 1430X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of trade. Had the intention of the assessee is to enter into an adventure in the nature of trade he might have done the transaction in his name only and as he is employed at such level, he could get the loan sanctioned his name only but he preferred it to have the time as also co-owner of the property based on his intention of investment as his retirement plan and assessee never changed his intention. The property is purchased with a home loan so that both the investment and enduring benefit of the property achieved out of the income that he earns outside India. The investment made in India by the assessee in 2007-08 is owned and continue to hold for more than five and ten years with that intention only to hold it for capital investment. Merely, the assessee realised the price more then what he has invested cannot be the criteria the decide the nature of investment, the purpose and circumstance evidence to support the contentions is also required to be looked into. Since, his intention was to stay in India and invested for long term and that is why he has even invested in the property which are under construction and even not registered in his name - The deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016-17 CIT(A)-42, Delhi 24.06.2019 2. Since the issues involved in all the appeals are almost common, inter related and also have been heard together disposed of with this common order. 3. The hearing of the appeal was conducted after issue of proper notice to both the parties. 4. For deciding these appeals, we taken IT(IT)A No. 02/JP/2018 for the A.Y. 2014-15 as lead case for wherein following grounds have been raised by the assessee: 1. Under the facts and circumstances of the case and in law, Ld. CIT (Appeals) has erred in upholding assessment order dated 26.12.2016 passed u/s 143(3) of the Act, which is perverse, arbitrary and bad in law. 2. Under the facts circumstances of the case and in law, the Ld. CIT (Appeals) has erred in confirming addition of Rs. 1,30,16,030/ by upholding the conclusion of the Ld. AO that transaction of selling rights in flats by the Appellant was adventure in the nature of trade and construing the same as business of the Appellant. 3. Under the facts circumstances of the case and in law, the Ld. CIT (Appeals) has erred in disallowing capital loss claimed and carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of grounds no. 1, 2, and 3 of the assessee s appeal except that there is no other change in the order or the findings given by the Coordinate Bench. 6. So, considering the decision of the co-ordinate bench this appeal recalled to decide the ground no. 1, 2 3 which was not decided by the earlier order dated 21.05.2018 and the decision of the bench on the Ground no. 4 will remain as given in the said order. 7. Before proceeding further, pithily stated fact as culled out from the records is that the assessee is a non-resident Indian. He left India in 1986 as he employed outside India. The assessee is working with Spice Africa during the year consideration. The assessee filed his return on 28.07.2014 declaring total income of Rs. 17,54,580/- under the head interest income and loss under the head capital gain. The case was selected for scrutiny and accordingly notice u/s 143(2) on 21.09.2015 was issued and duly served upon the assessee by RPAD. 8. During the assessment proceeding, the ld. AO observed that assessee has shown Long Term Capital loss of Rs. 3,00,675/-. From the details provided by the assessee it was observed that the assessee sold his rights over two flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is duly incorporated in the assessment order and therefore is considered but not repeated here for the sake of repetition. The ld. AO has also given his detailed observation on the submission of the assessee and finally he has formed his view that the transaction of the assessee is not of the capital gain but it is adventure in the nature of trade on the following brief contentions:- (a) the volume of transaction the assessee has entered into is a main criterion as discussed in the circular also. The assessee has sold two residential flats and the same are in the same Financial Year. (b) In total two flats in the same city were bought by the assessee in F.Y. 2007-08 and sold by the assessee during the previous year. (c) The volume of sale of flats by the assessee during the previous year was Rs. 3,13,12,513/- which is a substantial amount. (d) The purchase and sale of these flats was the only activity of the assessee. (e) The period of holding being very short, it was reasonable to presume that the purchase was made with an intention to resell. (f) The scale of activity was sustainable. (g) Assessee is not maintaining proper books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... speaking, property meant to be traded is realised within a short time after acquisition. However, the timing of selling the property is also dependent on the trend in the property market. Since, in this case, the real estate was in boom during 2007 to 2013, the appellant timed the sale of the property to earn maximum profit when the rates were getting into saturation phase. (3) The frequency or number of similar transactions by the same person. The appellant has purchased 15 flats in four different years and sold eight flats to different buyers in three different years. (4) Supplementary work on or in connection with the property realised. In this case, the property was under construction with the builder throughout the period of holding it. (5) The circumstances that were responsible for the realisation. As per the assessee, he had invested with an intention to let out the property to earn rent, however, he had to sell the flats in view of the change of scenario due to global recession which led to delay in completion of flats/apartments that were booked in FY 2007-08 for a period of more than six years and it was not possible for the Appellant to have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 and 2015, as companies that set up offices in 2004 to 06 (the first wave of occupiers) approach the end of their lease terms, report states. However, as in 2013, sales volume and sale market of commercial space in Delhi will remain low and stressed. There was a marginal 3% Year-on-Year decrease in rentals in Delhi. Average rental values in Delhi NCR will remain stable and vacancy rate will fall marginally. Gurgaon and Noida witnessed stable rental values during 2013 baring few micro markets such as Cyber city in Gurgaon and sector 18 in Noida which witnessed an increase of 7% and 2.5% respectively, on year on year basis, report adds 6.16 It is evident from the above report that Gurgaon witnessed stable rental values during 2013. The above report also mentions that the commercial space absorption in Delhi NCR (which includes Gurgaon) witnessed 22% rise in 2013 as compared to 2012, according to a report by Colliers International. 6.17 In view of the above facts, it is evident that the argument taken by the appellant of global recession in real estate market does not hold good. Therefore, there was no reason for the assessee to sell the property as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the right in flat/apartments acquired by the Appellant and subsequently sold by him were held and treated as investments by Assessee as intention at the time of purchase was not to trade in the same or earn profit rather intention was to earn capital appreciation, rental income or to assign some of the property for residence as and when Assessee or his family visits India or permanently settles in India in future. 7. The said intentions of keeping the capital assets as investment and not as stock in trade is evident from following facts and circumstances of the case in hand: a) Assessee is employed outside India in South Africa as the chief executive officer of Spice VAS Africa Pte Ltd during year under consideration and was employed there during the years under consideration. b) Assessee visit to India is very minimal (55 days in Past 5 years). c) Capital assets being allotment/booking rights in flat/apartment was held for considerable period of time (more than 5 years) before their transfer/assignment in favour of prospective buyer. d) The transfer/assignment of rights in years under-consideration was effected during year under consideration on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee on the rationale that Assessee on one hand has transferred the properties of DLF in AY 2012-13 and on the other hand has made fresh investment in the different project of the DLF in the same AY 2012-13. The said contention does not deviate the intention of the Assessee at the time of purchase of investment which is of paramount consideration to decide the nature of transaction. Even otherwise, it is not the prerogative of assessing authority to dispute the prudence of the investors and step into their shoes, because it is always prudent for an Investor to diversify its portfolio based on their own investment criteria. Assessee out of the available option of taking money out of India has rather again invested in India, which decision cannot be taken against Assessee as relevant factor to allege the transaction as business rather than investment as it is the intention at the time of purchase of investment which is most relevant factor to decide whether the transaction is adventure in the nature of trade or Investment Transaction. 10. In support of the contentions placed on records, Assessee further would like to place its reliance on the various judgments placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. The ld. AR of the assessee further placed on record an order passed pursuant to the ITAT, Jaipur bench order dated 21.05.2018 passed while deciding the ground no. 4 of the assessee whereby he submitted that the contention taken by the assessee and taken by the department has no loss to the revenue and is tax neutral transaction. The same is extracted here in below for the sake of brevity of the facts and to understand the real tax treatment and to check whether the grievance of the revenue is affected on account collection of the legitimate tax from the assessee. 16. The ld. AR of the assessee submitted that after giving effect to the order of the ITAT only on ground no. 4 the result is also loss and the same is much higher than what is claimed in the return of income filed by the assessee originally at Rs. 3,00,675/-. Thus, in fact on the view of the department the loss is much at higher the amount than what has been claimed by the assessee. 17. In addition, the ld. AR of the assessee relied upon the circular issued by the CBDT vide its No. 6/2016 [ F.No.225/12/2016-ITA-III dated 29.02.2016. The relevant extract is as under:- S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years; (c) In all other cases, the nature of transaction (i.e. whether the same is in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT. 4. It is, however, clarified that the above shall not apply in respect of such transactions in shares/securities where the genuineness of the transaction itself is questionable, such as bogus claims of Long Term Capital Gain/Short Term Capital Loss or any other sham transactions. 5. It is reiterated that the above principles have been formulated with the sole objective of reducing litigation and maintaining consistency in approach on the issue of treatment of income derived from transfer of shares and securities. All the relevant provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and stated that even a single transaction can be considered as adventure in the nature of trade. 21. We have heard the rival contentions, submission made before us and the ratio of decision relied upon by both the parties. The point of arguments raised before us by the ld. AR of are wittily stated and are potted as under: a) Assessee being Nonresident Indian having Indian origin, intend to have enduring house property for his long-term use, as capital investment. This intention based on the set of facts cannot be denied as the assessee is not regularly resides in India. He being not present in India no intention to enter into an option of having adventure in the nature of trade as he is already employed out of India. The sole purpose of his investment in India to have property for enduring benefit either to have the rental income or to have the capital appreciation over the period of time. For this intention he has added her wife s name in all the investment which he made, this also support the contention of the investment not an adventure in the nature of trade. Had the intention of the assessee is to enter into an adventure in the nature of trade he might have done the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e records and extracted in the assessment order at page 4. It is evident from the above that the stay of the assessee in the year under consideration is only to undertake the formality of the transaction that he has under taken in mother land India. c) The other laws in India does not permits NRI business entity to enter into such type of the activities but at the same time it permits to hold the property by NRI. Thus, the intention of the assessee is also required to seen as per the prevailing laws other than the taxation laws, which the assessee comply. The department cannot be permitted to take a different view which is not permitted under another law. Even subsequent year even the ld. AO considered the similar income as income under the head capital gain has given the lower deduction certificate on two instances. d) CBDT s circular which state that once the stand taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent year also and the taxpayers shall not be allowed to adopt a different / contrary stand in this regard in the subsequent years. The ld AR further submitted that this circular is issued by the CBDT to avoid litigation which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent given by the assessee in his return of income. We find force in the arguments of the ld. AR and based on the doctrine of Res-judicata when translated to English means a matter decided . Simply put the doctrine predicates that no man can be tried twice for the same cause or to put it in legal terms a matter/issue which has already been adjudicated cannot be raised again either in the same court or in a different court. This doctrine mitigates the possibility of multiple, repetitive and vexatious legal proceedings thereby avoiding unnecessary wastage of resources and strain on the legal system while also leading to a modicum of consistency in proceedings over time. 23. In common law the doctrine of Res-judicata enables a judge in a suit, when confronted with a suit that is identical to or substantially the same as an earlier/periods one, to by applying this principle to preserve the effect of the earlier judgement. The justification for applying this doctrine lies in the desire to promote efficiency and fairness and reduce unnecessary litigation. Even the CBDT s instruction is on the same line to reduce the litigation is not considered by the lower authorities where there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no party can be permitted to reopen it in a subsequent litigation. On the taxation front, in general, the doctrine has no application since each assessment year is an independent unit and its assessment, based as it is on the specific facts prevalent for that year, is final for and determines the tax only for that year and cannot govern or be made applicable to any later years. In one of the earliest decisions on the issue the Bombay High Court in the case of H.A. Shah and Co. v. CIT[1956] 30 ITR 618 (Bom.) held that the principle of estoppel or resjudicata does not strictly apply to the Income-tax authorities but also clarified that:- An earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse, if it had been arrived at after due inquiry, if no fresh facts are placed before the Tribunal giving the later decision and if the Tribunal giving the earlier decision has taken into consideration all material evidence. This view was unequivocally also upheld by the Supreme Court in the case of Instalment Supply (P.) Ltd. v. Union of India [1962] AIR (SC) 53 whereby the general rule is to make this doctrine inapplicable for tax matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MaharaoBhim Singh of Kota v. CIT [2016] 76 taxmann.com 274/[2017] 244 Taxman 139/390 ITR532, (SC). But in tax cases relating to a subsequent year involving the same issue as an earlier year, the court can differ from the view expressed if the case is distinguishable or per incuriam. Bharat Sanchar Nigam Ltd. v. UOI [2006] 3 STT 245; Meeraj Estate Developers v. CIT [2020] 113 taxmann.com 231/269 Taxman 134/[2019] 418 ITR 681 (Allahabad). The principles of res-judicata will not apply only if the Revenue is able to establish compelling reasons for a departure from settled position. Godrej Boyce Manufacturing Co Ltd. v. Dy. CIT [2017] 81 taxmann.com 111/247 Taxman 361/394 ITR 449(SC). There should be a finality attached to the issue once it stands decided by the higher courts on the merits. Parashuram Pottery Works Co Ltd. v. ITO [1977] 106 ITR 1 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by order of this tribunal s co-ordinate bench order dated 21.05.2018 and the issue is not recalled as department has not contested the said decision in MA filed by the assessee. The issue is covered by the order dated 21.05.2018 vide para 12 to 18 and in terms of this observation the Ground no. 1 to 3 of the revenue in IT(IT) A No. 04/JP/2018is dismissed. As regards the ground no. 4 of this appeal the same is squarely covered and consequential in nature as the activity of the assessee is considered chargeable to tax under the head as capital gain and necessary cost incurred by way interest be clubbed as cost and accordingly ground No. 4 is dismissed. 30. Assessee for assessment year 2012-13 preferred cross objection in CO. No. 41/JP/2018 and the grounds taken in this co are as under; 1. Under the facts and circumstances of the case and in law, Ld. CIT (Appeals) has erred in upholding assessment order dated 11.02.2015 passed u/s 143(3) of the Act, which is perverse, arbitrary and bad in law. 2. Under the facts circumstances of the case and in law, the Ld. CIT (Appeals) has erred as it was not justified in upholding the conclusion of the Ld. AO that transaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case and in law, ld. CIT(A) has erred in disallowing the brought forward capital loss as claimed by the Appellant in his return of income. 4. Under the facts and circumstances of the case and in law, Ld. CIT(A) has erred in affirming the addition made by Ld. AO under the had long term capital gain amounting Rs. 4,29,858/- while disallowing the claim of set off of brought forward capital loss. 5. The appellant craves to add, amend and modify all or any ground of appeal on or before the date of hearing. 33. The issue raised in this appeal is consequential in nature and the Assessing Officer is directed to give relief to the assessee, which are decided by us in this order for Assessment year 2012-13 and 2014-15 and thus the issue raised are set-a-side to the file of the AO for granting the consequential relief to the assessee. 38. In the result, appeals in IT(IT)A No. 02/JP/2018 of the assessee is allowed, IT(IT) A No. 12/JP/2019 of the assessee is allowed for statistical purposes, CO No. 41/JP/2018 of the assessee is allowed. IT(IT) A No. 04/JP/2018 of the Revenue is dismissed Order pronounced in the open court on 17/08/2022. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
