Bombay H.C : the Tribunal has seriously erred in reversing the concurrent findings of fact. If the assessee is claiming to be engaged in the business of building, development and investments in real estate, then the Assessing Officer observed that the company had entered into an agreement with M/s. Kirit City Homes. It’s development rights in a property at Vasai were sold for a total consideration of Rs.15,94,06,500/-

High Court Of Bombay

CIT vs. Glowshine Builders & Developers (P) Ltd.

Section 48, 50C

Asst. Year 2009-2010

S. C. Dharmadhikari & Prakash D. Naik, JJ.

Income Tax Appeal No. 1756 OF 2014

4th September, 2017

Counsel Appeared:

Arvind Pinto for the Petitioner.: Madhur Agarwal a/w Atul K. Jasani for the Respondent

PC.

The Revenue’s Appeal challenges the order of the Tribunal dated 11th April, 2014, for the assessment year 2009-2010.

Mr. Pinto would submit that all the questions and proposed from pages 4 to 6 (paragraphs 6.1 to 6.8) are substantial questions of law.

He would submit that the Tribunal has seriously erred in reversing the concurrent findings of fact. If the assessee is claiming to be engaged in the business of building, development and investments in real estate, then the Assessing Officer observed that the company had entered into an agreement with M/s. Kirit City Homes. It’s development rights in a property at Vasai were sold for a total consideration of Rs.15,94,06,500/-.

The agreement in that regard dated 6th May, 2008 was duly registered with the Sub-Registrar of Assurances, Vasai. However, a rectification deed was executed and registered on 30th May, 2008, revising the consideration to Rs.5,24,27,354/-.

The Assessing Officer, according to Mr. Pinto, correctly noted that the sum of Rs.15,94,06,500/-, though received, was not recorded in the books of account maintained by the assessee. Therefore, that was treated as short-term capital gain and it was added to the income for the year under consideration.

The Commissioner of Income Tax (Appeals), Mumbai, passed an order dated 30th November, 2012 dismissing the Appeal. He upheld the view of the Assessing Officer to treat the transaction as income for capital gains for the assessment year

2009-2010.

Being aggrieved, the Tribunal was approached by the assessee, but in the submission of Mr. Pinto, the Tribunal in the garb of considering the facts in totality, have completely misinterpreted the same. It has taken upon itself the task of re-appreciating and re-appraisal of the factual findings though no perversity was established. Hence, the direction of the Tribunal to assess the income resulting from the impugned transaction under the head “profit and gains of business or profession” by taking into consideration the sale consideration at Rs.5.24 crores as shown by the assessee in its profit and loss account as relating to the business of the assessee and further holding that the provisions of Section 50C are not applicable, is perverse and contrary to law.

With the assistance of Mr. Pinto and Mr. Agarwal, we have perused the order of the Tribunal carefully.

We have also perused Section 50C of the Income Tax Act, 1961. That Section enacted special provision for full value of consideration in certain cases. Sub-section (1) of Section 50C in terms states that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, then, the value so adopted or assessed or assessable shall, for the purposes of Section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

It is common ground that the assessee is in the business of building and development of properties. There was no change in the activities of the company of the assessee during the year under consideration. The factual findings emerging from paragraphs 16 and 17 of the order of the Tribunal are that the assessee, for the year ending 31st March, 2006, disclosed the inventories at Rs.8.66 crores. For the year ending 31st March, 2007 there was no change and the same figure was disclosed. For the year ending 31st March, 2008, the assessee showed sale of land development rights at Rs.5,24,27,354/-and the cost of land was shown at Rs.5,21,37,454/-. The reason for the sale consideration of Rs.5.24 crores during the financial year 2007-2008 was disclosed as an MOU with M/s. Kirit City Homes Private Limited dated 27 December, 2007 for the transfer of development rights for a total consideration of Rs.5,24,27,354/-. The necessary entries were passed on 2nd January, 2008, debiting the account of M/s. Kirit City Homes but crediting that of one M/s. SICCL. The assessee owed to M/s. SICCL a sum of Rs.8.10 crores. Therefore, it directed M/s. Kirit City Homes to pay the consideration directly to M/s. SICCL. The corresponding entries were made in the account of M/s. SICCL. Even the possession of the land was handed over on 2nd January, 2008. This falls within the financial year 2007-2008 relating to the assessment year 2008-2009. In that assessment year, the assessee offered this sum as income under the head “business income”. The development agreement dated 6th May, 2008 did not reflect the correct sale consideration and in the above sum. Instead, it mentioned an amount of Rs.15,94,06,500/-. On relying this mistake, a deed of rectification was executed on 30th May, 2008 and registered with the office of the Sub-Registrar, Vasai.

11. Once all these facts were taken into consideration in totality and they being undisputed, we do not see how the Tribunal can be faulted. The Tribunal has recorded that the assessee was holding 50.16 acres of land, out of which 27.44 acres of land is the subject matter of the MOU dated 27the December, 2007. The remaining land aggregating to 22.72 acres has been converted by the assessee as capital asset, that is subsequent to the impugned transaction. It is in these circumstances and when the total cost of the land has been determined proportionately that all the questions, and particularly whether the impugned transaction relates to transfer of stock-in-trade or capital asset, have been answered in favour of the assessee and against the Revenue. To our mind, when the written documents were perused and with the corroborating materials, the Tribunal rightly concluded that the impugned transaction relates to the business of the assessee and is to be assessed as such under the head “profit and gains of business and profession”. When the Tribunal noticed such perversity in the concurrent findings, it has but performed its duty as a last fact finding authority. The Tribunal being empowered by law to undertake that exercise, has performed it’s duty. We do not see how in such background can the Tribunal’s view be termed as perverse or it’s order termed as vitiated by any error of law apparent on the face of record. The reasons assigned from paragraphs 16 to 18 of the impugned order are based on the materials produced before the Tribunal and forming part of the record. The Tribunal has not gone beyond the same. In the circumstances, none of the questions proposed by the Revenue in this Appeal are substantial questions of law. The Appeal is devoid of merit and is dismissed. However, there shall be no order as to costs.

[Citation : 405 ITR 540]

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