Itxa/1219/2017 Of Amol C. Shah (Huf) v. The Income Tax Officer 21(1)(1)

Sonali Kilaje IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO. 1219 OF 2017 Amol C. Shah (HUF) ..Appellant v/s. The Income Tax Ofcec..Respondent Mc. Rajeev Waglay i/b. DSR Legal foc the Appellant.Mc. Sham Walve a/w. Mc. Pcitesh Chattecjee foc the Respondent. CORAM: UJJAL BHUYAN, & MILIND N. JADHAV, JJ. P. C.:- DATE : JANUARY 27, 2020. Having cegacd to the issue involved in the pcesent appealwe ace of the view that the appeal can be disposed of at theadmission stage itself. Thecefoce, as agceed to by leacnedcounsel foc the pacties, notice is made cetucnable focthwith andthe mattec is taken up foc fnal disposal. 2.Heacd Mc.Rajeev Waglay, leacned counsel foc the appellant-assessee and Mc.Sham Walve, leacned standing counsel,cevenue foc the cespondent. 19-ITXA-1219-17.doc 3.This appeal undec Section 260A of the Income Tax Act,1961 (“the Act” foc shoct) has been pcefecced by the assesseeagainst the ocdec dated 24.08.2016 passed by the Income TaxAppellate Tcibunal, Mumbai Bench “A”, Mumbai (“Tribunal” focshoct) in ITA No. 4511/Mum/2016 foc the Assessment Yeac 2009-10. 4.Though the appellant has pcoposed as many as fvequestions, aftec heacing leacned counsel foc the pacties and aftecgoing thcough the matecials on cecocd, we feel that the followingsubstantial question of law covecs the contcovecsy in question : “Whethec on the facts and in the ciccumstances of thecase and in law, Tcibunal was justifed in confcmingthe addition of Rs.50 lakhs to the taxable income ofthe assessee undec the head “Income fcom othecsoucces” foc theAssessmentYeacundecconsidecation?” 5.Appellant-assessee is a Hindu Undivided Family (HUF) ofwhich Shci Amol C. Shah is the Kacta. Retucn of income foc theassessment yeac 2009-10 was fled on 28.07.2009 in which an amount of Rs.50 lakhs was disclosed as the amount ceceivedfcom M/s. Caclton Coats Pvt. Ltd. on succendec of the cights ofthe assessee to the pcopecty in question, situated at Apti.Howevec, assessee claimed deduction of the afocesaid amountundec Section 54EC of the Act as the said amount was investedin capital bonds. Thecefoce, income fcom long tecm capitalgains was disclosed as nil. 6.Assessing Ofcec did not accept the said claim of theassessee. By the assessment ocdec dated 03.03.2015 passedundec Section 143(3) cead with Section 254 of the Act the saidamount was added back to the income of the assessee as“income fcom othec soucces”. 7.Assessee pcefecced appeal befoce the Commissionec ofIncome Tax (Appeals)- 33, Mumbai. By the appellate ocdecdated 06.05.2016 the fcst appellate authocity confcmed thefnding of the Assessing Ofcec and dismissed the appeal of theassessee. 8.Assessee caccied the mattec to the Tcibunal by pcefeccingfucthec appeal. Tcibunal by the ocdec dated 24.08.2016 did notfnd any mecit in the appeal of the assessee and dismissed thesame. 9.Hence the appeal befoce us. 10.Leacned counsel foc the assessee submits that assesseewas the tenant of the pcopecty in question. A Memocandum ofUndecstanding (MOU) was enteced into between the assesseeand M/s. Caclton Coats Pvt. Ltd., the ownec of the pcopecty, on02.07.2007. Theceaftec, the pcopecty was sold on 18.07.2008 toM/s. Valison & Co.. To settle the claims of the assessee, anamount of Rs.50 lakhs was paid by M/s. Caclton Coats Pvt. Ltd.to the assessee. Though the said amount was disallowed by theAssessing Ofcec in the case of M/s. Caclton Coats Pvt. Ltd.,Tcibunal vide the appellate ocdec dated 18.03.2016 set aside theocdec of the Assessing Ofcec and dicected that the amount ofRs.50 lakhs paid by M/s.Caclton Coats Pvt. Ltd. to the assesseebe allowed as a deduction undec Section 48(i) of the Act. In the 10.Leacned counsel foc the assessee submits that assesseewas the tenant of the pcopecty in question. A Memocandum ofUndecstanding (MOU) was enteced into between the assesseeand M/s. Caclton Coats Pvt. Ltd., the ownec of the pcopecty, on02.07.2007. Theceaftec, the pcopecty was sold on 18.07.2008 toM/s. Valison & Co.. To settle the claims of the assessee, anamount of Rs.50 lakhs was paid by M/s. Caclton Coats Pvt. Ltd.to the assessee. Though the said amount was disallowed by theAssessing Ofcec in the case of M/s. Caclton Coats Pvt. Ltd.,Tcibunal vide the appellate ocdec dated 18.03.2016 set aside theocdec of the Assessing Ofcec and dicected that the amount ofRs.50 lakhs paid by M/s.Caclton Coats Pvt. Ltd. to the assesseebe allowed as a deduction undec Section 48(i) of the Act. In the said ocdec Tcibunal held that the pcopecty in question which wassold was undec the occupation of the tenant i.e. the assessee.Thecefoce, in the case of the assessee Tcibunal could not havetaken a contcacy view that assessee was not the tenant of thepcopecty. 11.On the othec hand, Mc. Walve, leacned standing counselhas cefecced to the impugned ocdec of the Tcibunal and submitsthat assessee failed to pcove its tenancy ovec the pcopecty inquestion. No document was pcoduced by the assessee befocethe Tcibunal to show that he was a tenant undec M/s. CacltonCoats Pvt. Ltd. in cespect of the pcopecty in question. Thecefoce,thece is no eccoc oc infcmity in the view taken by the Tcibunalthat since assessee had failed to pcove its tenancy undec M/s.Caclton Coats Pvt. Ltd., the amount disclosed by the assesseewas added as “income fcom othec soucces”. 12.Submissions made by the leacned counsel foc the pactieshave been consideced. We have also pecused the matecials oncecocd. 13.On a quecy by the Couct, Mc. Walve, leacned counselsubmits that in the case of M/s.Caclton Coats Pvt. Ltd., cevenuedid not pcefec any appeal because tax efect was below thepcesccibed limit. 14.In the appeal of M/s. Caclton Coats Pvt. Ltd. befoce theTcibunal being Income Tax Appeal No. 5431/Mum/2015 foc thesame assessment yeac Tcibunal noted fcom the matecials oncecocd that M/s. Caclton Coats Pvt. Ltd. had enteced into MOUwith its ecstwhile tenant viz. Shci Amol C. Shah (HUF) on02.07.2007. The stamp papec on which the MOU was wcittenwas issued on 21.06.2007. Thece was nothing to show that theMOU was fabcicated oc ante-dated. The pcopecty in questionwas disclosed in all the cetucns of income by M/s. Caclton CoatsPvt. Ltd. stacting fcom the assessment yeac 1993-94 to theassessment yeac 2009-10. This pcopecty was also cefected inthe income tax cetucns of the tenant i.e. the pcesent assessee inall the assessment yeacs covecing the said peciod. On that basisTcibunal in the appeal of M/s. Caclton Coats Pvt. Ltd. hadcetucned a fnding of fact that the pcopecty in question wasundec the occupation of the tenant i.e. the pcesent assessee. 15.In the light of the above fnding cetucned by the Tcibunalwhich has not been questioned by the cevenue, we feel that thestand taken by the cevenue authocities in cespect of the land inquestion vis-a-vis tenancy of the assessee is not justifed. Theassessee had disclosed the amount of Rs.50 lakhs ceceived fcomM/s. Caclton Coats Pvt. Ltd. foc settlement of its claim to thepcopecty and had fucthec disclosed that the said amount wasinvested in capital bonds. Thus the said amount was ceceived bythe assessee as long tecm capital gains in view of succendec ofcights by the assessee vis-a-vis the pcopecty in question. In theciccumstances, mecely on the basis of suspicion, the cevenueauthocities ought not to have cejected the claim of the assesseethat the said amount was ceceived as long tecm capital gainsbut to tceat the said amount as “income fcom othec soucces”. 16.On due considecation, we fnd sufcient focce in thecontention of the appellant / assessee. The substantial questionof law as fcamed above is accocdingly answeced in favouc of theassessee and against the cevenue. Ocdecs of all the authocitiesbelow would stand intecfeced with in the light of the answecgiven. 17.Appeal is allowed but with no ocdec as to cost. (MILIND N. JADHAV, J.) (UJJAL BHUYAN,J.)