, ""
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM)
.. , .. ,
./I.T.A. No.6466/Mum/2012
( / Assessment Year :2009-10 )
Smt.Sanjay Sudhir Kambli / Income Tax Officer, Ward 21
Red House, Opp. IIT Market, Vs. (3)(2),
Padmavati Society, Powai, Mumbai
Mumbai-400076.
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. : AAAPPK3272R
/ Appellant by : Shri Pramod Kumar Parida
/Respondent by : Shri Prakash L Padhade
/ Date of Hearing
: 10.7.2014
/Date of Pronouncement : 10.7.2014
/ O R D E R
Per B.R.BASKARAN, Accountant Member:
The appeal filed by the assessee is directed against the order dated
16.07.2012 passed by Ld CIT(A)-32, Mumbai and it relates to the assessment
year 2009-10.
2. The assessee is in appeal before us in respect of the following issues:-
(a) Rejection of claim of Long term capital gain arising on sale of
a house and consequential rejection of claim for deduction u/s
54 of the Act.
(b) Disallowance of foreign travel expenses.
(c) Validity of charging interest.
2 I.T.A. No.6466/Mum/2012
3. The facts relating to the case are stated in brief. The assessee sold flats
located at No.201 & 202, B-Wing, Bldg. No.4, Lake Palace CHS, Powai
(hereinafter "Original asset") and claimed the capital gain arising thereon as
Long term Capital gains. The assessee had purchased a new house and claimed
the cost of new house as deduction u/s 54 of the Act. The AO noticed that the
original asset was purchased on 12.09.2005 and they were sold on 16.07.2008.
Thus the AO noticed that the assessee had held the original asset for a period of
2 years and 10 months only, i.e., less than three years and accordingly held that
the gain arising on sale of flats shall constitute "Short term Capital gains" only.
Accordingly, he assessed the gains arising on sale of flats as Short term capital
gain and accordingly rejected the claim for deduction u/s 54 of the Act, since the
said deduction is available against Long term Capital gain.
3.1 The assessee was an employee of a foreign company named M/s Egyptian
International Free Zone Co., Alexandria from which he received salary. He was
also the proprietor of a concern named M/s Trident Marketing doing business in
Mumbai. In the Profit and Loss account, he claimed a sum of Rs.6,66,592/- as
foreign travel expenses from Egypt to India and vice versa on several occasions.
The AO took the view that the assessee has incurred foreign travel expenses for
visiting his family in India and accordingly treated the foreign travel expenses as
purely personal in nature. Accordingly, he disallowed the said expenses.
3 I.T.A. No.6466/Mum/2012
4. The assessee challenged the assessment order by filing appeal before Ld
CIT(A), but could not succeed. Aggrieved, the assessee has filed this appeal
before us.
5. The ld Counsel appearing for the assessee Shri Pramod Kumar Parida
submitted that the tax authorities have taken the view that the assessee has
held the asset for less than three years by recognizing the date of Sale
agreement. He submitted that the assessee did not hand over the possession of
the property on the date of agreement and he handed over the same only on
22.9.2008 after receipt of full amount of consideration and also after completion
of all formalities. Accordingly he submitted that the tax authorities have wrongly
recognized the date of agreement as the date of sale / date of handing over of
possession, which is against the facts prevailing in the instant case. He
submitted that the assessee has gathered certain additional evidences to support
its stand and accordingly prayed that the assessee may be given an opportunity
to produce the same before the tax authorities. With regard to the foreign travel
expenses, the Ld A.R submitted that the assessee was wrong in presuming that
the assessee has incurred those expenses in connection with family trips. He
submitted that the assessing officer has ignored the fact the assessee has carried
on business in India and has declared income from there from. He submitted
that the AO, while accepting the business income, should not have singled out
the foreign travel expenses alone to take adverse decision against the assessee.
He submitted that the assessee may be given one more opportunity to make its
submissions on this issue also. With regard to the ground relating to charging of
4 I.T.A. No.6466/Mum/2012
interest, the Ld A.R admitted that the charging of interest is consequential in
nature.
6. On the contrary, the ld D.R objected to the plea made by the Counsel for
the assessee and strongly supported the order passed by Ld CIT(A).
7. We have heard the rival contentions and carefully perused the record. With
regard to the first issue relating to the nature of capital gain arising on sale of
flats, we notice that the tax authorities have recognized the date of sale
agreement for determining the nature of capital gain. It is pertinent to note that
the sale consideration was fixed by the Stamp authorities at Rs.73,68,800/- as
against the value of Rs.50.00 lakhs shown in the sale agreement. Hence, the AO
has adopted the sale consideration at Rs.73,68,800/- in terms of sec. 50C of the
Act. However, it appears that the tax authorities have not considered the
covenants of the sale agreement. According to Ld A.R, the assessee did not
hand over the possession on the date of execution of the Sale agreement, but
has given the same only subsequently. In this regard the Ld A.R submitted that
the assessee is gathering certain additional evidences including confirmation
from the purchasers to prove this fact and accordingly sought an opportunity. A
perusal of the covenants of agreement prima facie supports the submissions
made by the Ld A.R. However, in our view, the said submissions require proper
verification. Accordingly, we find merit in the plea made by Ld A.R. Accordingly,
we set aside the order of ld CIT(A) on this issue and restore the same to the file
of the assessing officer with the direction to examine this matter afresh by duly
considering the materials and explanations that may be furnished by the
assessee and take appropriate decision in accordance with the law.
5 I.T.A. No.6466/Mum/2012
8. In respect of the foreign travel expenses, the contention of the Ld A.R was
that the tax authorities have made the disallowance on presumptions. According
to the counsel, the assessee would be in a position to prove the business
exigencies in undertaking the travel if one more opportunity is given to the
assessee. On this issue also, we are of the view that the assessee may be given
one more opportunity in the interest of natural justice. Accordingly, we set aside
the order of ld CIT(A) on this issue and restore the same to the file of the AO
with the direction to examine this matter afresh by duly considering the materials
and explanations that may be furnished by the assessee and take appropriate
decision in accordance with the law.
9. In the result, the appeal filed by the assessee is treated as allowed for
statistical purposes.
The above order was pronounced in the open court on 10th July, 2014.
10th July, 2014
Sd sd
(.. / H.L. KARWA) (.. ,/ B.R. BASKARAN)
/ PRESIDENT /Accountant Member
th
Mumbai: 10 July,2014.
. ../ SRL , Sr. PS
6 I.T.A. No.6466/Mum/2012
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
True copy
(Asstt. Registrar)
, /ITAT, Mumbai
|