IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "B", MUMBAI
BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
Assessment Year: 2008-09
Shri Narendra R. Merchant, I.T.O. 12(1)(4),
C/o. M/s. Narendra & Co., Mumbai
201, Dhun Building, Vs.
23/25 Ghoga Street, Fort,
Mumbai 400 001
Assessee by : Shri Rajiv Khandelwal, A.R.
Revenue by : Shri Asghar Zain V.P., D.R.
Date of Hearing : 13.01.2015
Date of Pronouncement : 18.03.2015
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order
dated 01.07.2011 of the Commissioner of Income Tax (Appeals) [(hereinafter
referred to as CIT(A)] relevant to assessment year 2008-09.
2. The assessee has taken the following grounds of appeal:
"1. On the facts and the circumstances of the case and in law the learned CIT(A)
has erred in confirming the order passed by the A.O. with regard to the
addition of Rs.42,41,476/- on account of Long Term Capital Gains. Reasons
assigned by him for confirming the same are wrong and insufficient.
2. He has further erred in treating the sale of Life Interest in the property as sale
of property and thereby erred in confirming the application of Sec.50C made
by the A.O. without properly applying the ratio of the decisions cited by the
3. He has further erred in confirming the value as on 1.4.1981 at
Rs.41,293/- as against Rs.3,00,000/- shown by the appellant without
2 ITA No.5994/M/2011
Shri Narendra R. Merchant
appreciating the contention of the appellant that the A.O. has determined the
value of the Life Interest as on 1.4.1981 and not the value of the property as
on 1.4.1981 in contrast to the fact that while determining the sale value
A.O. has adopted the value of the property as per stamp duty authority
but did not index the value of the property as on 1.4.1981 as per
approved valuer's certificate.
4. He has further erred in not accepting the value made by the Registered
Valuer without bringing any material to the contrary on the record and
further erred in holding that the A.O. can not resort to Sec.5A once the
assessment is completed.
5. He has further erred in confirming the charge of interest u/s.234A and 234B.
6. Order passed is bad in law and contrary to the provisions of the Act.
7. The appellant craves leave to add, alter and/or modify the grounds of
3. A perusal of the above grounds of appeal reveals that the sole issue
taken by the assessee is with regard to the addition in respect of long term
capital gains by way of application of section 50C of the Income Tax Act.
The contention of the assessee has been that the assessee had not sold the
property in question but had transferred only the life interest in the property.
The lower authorities have assessed the value of the property and not of the
life interest. It has been contended that the assessee has been the beneficiary
of the trust and not the owner of the property. The assessee has got no right to
transfer the property in question. His rights are limited to his life interest in
the property. The lower authorities have assessed the capital gains taking the
value of the property as per section 50C of the Act and even have not
considered the sale value as estimated by the approved valuer. The Ld. A.R.
has invited our attention to the trust deed dated 19.10.1935 and further transfer
deed dated 22.03.2007 between N.R. Merchant and Harsha A Zaveri. It has
been contended that since only the life interest has been transferred by the
assessee and the said interest/property will devolve back to the trust after the
death of the assessee and that the purchaser will not have absolute right over
3 ITA No.5994/M/2011
Shri Narendra R. Merchant
the property. The consideration for the transfer was to be assessed by the
lower authorities in relation to life interest of the assessee in the said property
and not that of the property itself.
4. We find that the above contentions raised by the assessee have not been
looked into by the lower authorities. The matter needs re-examination at the
hands of the Assessing Officer with regard to the contentions raised by the
assessee in this respect. We accordingly restore the matter to the file of the
Assessing Officer for decision afresh after considering the contentions of the
assessee as discussed above and also the necessary evidences produced in this
5. In view of our above observations, the appeal of the assessee is allowed
for statistical purposes.
Order pronounced in the open court on 18.03.2015.
(B.R. Baskaran) (Sanjay Garg)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 18.03.2015.
* Kishore, Sr. P.S.
Copy to: The Appellant
The CIT, Concerned, Mumbai
The CIT (A) Concerned, Mumbai
The DR Concerned Bench
//True Copy// [
Dy/Asstt. Registrar, ITAT, Mumbai.