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TMI Blog2016 (4) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... deed in respect of plot at survey no.132 on Mumbai-Pune Highway which was duly shown by assessee in the revised return of income filed u/s 139(5) of the Act. The details of sale considerations from both the plots at survey no.68 and 132 were shown while calculating the capital loss in the revised return of income. The ld. CIT(A) allowed the appeal of the assessee subject to quantification by holding that the same would be considered under the head capital gains and accordingly deleted the addition of ₹ 1,20,00,000/-. However, we find merit in the ground as raised by the revenue to set aside the proceedings to the file of the AO in view of the violation of Rule 46A of the Rules. In our view, the ld.CIT(A) has rightly deleted the addition under the head “income from others sources” and therefore the order of ld. CIT(A) does not require any interference at our end. However, in order to meet principle of natural justice we are of the opinion that the matter be restored to the file of the AO for a limited purpose of examining the sale deed and delete the addition accordingly. Addition under the head income from house property by estimating the rent of property - Held that;- W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue involved in all these appeals pertain to the common issue, these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. First we shall take up the appeal bearing ITA No.739/Mum/2013. The common issue raised in all these grounds by the assessee is against the upholding the rejection of rectification application filed by the assessee u/s 154 of the Income Tax Act, 1961(the Act) in order to correct the mistake which had occurred due to offering the capital gain of ₹ 3,02,93,202/- which was wrongly offered to tax in this year instead of AY 2009-10. 3. The facts of the case in brief are that the assessee filed its return of income on 24.9.2008 declaring total income at ₹ 3,02,93,202/- by way of capital gain on sale of land. The return was processed u/s 143(1) on 8.10.2010 and a demand of ₹ 87,65,930/- was raised. The assessee did not pay the said demand but moved an application for rectification u/s 154 of the Act on 1.11.2010 requesting for rectification of mistake committed in the return of income by offering for tax the capital gain on sale of land in the current year which related the subsequent ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at these facts required to be deliberated and the same did not come under the purview of rectification of /s. 154. Considering the above facts, it is to be seen whether it is rectifiable mistake or not. To appreciate the fact the provisions of section 154 are very much necessary to be seen. Sub-section 1 of Section 154 reads as under: [(1) With a view to rectifying any mistake apparent from the record an income tax authority' referred to In section 116 may; - (a) amend any order passed by it under the provisions of this Act: [b) amend any intimation or deemed intimation under sub-section (1) of section 143/} [(c) amend any intimation under sub-section (1) of section 200A.] It can be seen from the provisions that authority mentioned u/s 116 of IT.Act, 1961 may amend orders passed by them to rectifying any mistake apparent from record. Various decisions of Hon'ble High Court and Supreme Court have observed that a mistake apparent from the record is a mistake that is manifest, plain or obvious, a mistake that can be realized without a debate or dissertation. A mistake which can be discovered by a process of elucidation or argument or a debat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- which was acquired by the assessee even prior to 1.4.1981 for a sum of ₹ 9897/- on 29.11.1965. The ld. AR further submitted that the assessee entered into an agreement for development with M/s Tarunika Gaur Housing and Construction Co.Ltd on 4.4.2007 and received a sum of ₹ 3,05,00,000/- as a consideration. However, due to some dispute, the matter was referred to Arbitration in District Court as according to the developers the title of the asset was not clear. Thereafter, the assessee reached a out of court compromise with the builder vide deed dated 29.9.2007 and both the contracting parties mutually agreed to cancel the original agreement and two sale deeds were executed on 17.4.2008 and the money of ₹ 3,05,00,000/- already received was appropriated towards the sale considerations. Thus, the capital gain arose to the assessee in the assessment year 2009-10 and not in the AY 2008-09 as was wrongly returned by the assessee. In the AY 2009-10 the assessee revised his return of income u/s 139(5) offering the capital gain on the said land for taxation. Upon realization of the mistake, the assessee filed rectification application u/s 154 before the AO to rectify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. On the basis of the above facts, we are in agreement with the argument of the ld.AR that the capital gain arose in the assessment year 2009-10 and not in the AY 2008-09 as all the previous agreements and memorandum of understandings were cancelled under out of court compromise and accordingly sale deeds were executed on 17.4.2008. We also note that the assessee had offered the same capital gain/loss in the AY 2009-10 by filing revised return of income. In our opinion the same capital gain/loss cannot be taxed twice firstly in AY 2008-09 and secondly in AY 2009- 10. We are,therefore, of the opinion that the income offered by the assessee in the current year i.e AY 2008-09 under the head capital gain be rectified as the said income accrued and was assessed in the AY 2009-10. The both the authorities below had failed to appreciate that if the same income was assessed to tax in two assessment years it would be bad in law and also would be a mistake apparent liable for rectification u/s 154 of the Act regardless of the fact that it might had happened be due to assessee s mistake. Accordingly we delete LTCG of ₹ 3,02,93,202/- from the current year ₹ 3,02,93,20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the sale deed of plot at survey no.132 which was sold at ₹ 1,20,00,000/- but the assessee could not produce the same. Hence, the AO taxed an amount of ₹ 1,20,00,000/- under the head income from other sources . The ld. CIT(A) observed that the assessee had furnished the sale deed in respect of plot at survey no.132. During the course of appellate proceedings, the assessee had filed a copy of sale deed from which it is clear that the assessee had received a sale consideration of ₹ 1,20,00,000/- for sale of plot at survey No.132 and therefore the same could not be taxed under the head income from other sources , but its taxability had to be considered under the head capital gains . The ld. CIT(A) allowed the appeal of the assessee subject to quantification that the same would be dealt with under head capital gain and accordingly deleted the addition under the head income from other sources and treated the same under the head Income from capital gains. Aggrieved by the decision of the ld.CIT(A), the revenue is in appeal before the Tribunal. 11. Before us, the ld. DR submitted that the assessee did not file a copy of the sale deed in respect of plo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the matter be restored to the file of the AO for a limited purpose of examining the sale deed and delete the addition accordingly. We, therefore, set aside the order of ld.CIT(A) and the restore the issue to the file of the AO for this limited purposes with a direction to examine the sale deed after affording the reasonable opportunity to the assessee and delete the additions accordingly. 14. In the result, the appeal of the assessee is allowed for statistical purposes. 15. Now, we shall take up the appeal bearing No. ITA No.2671/Mum/2013. The issue raised in the ground no.1 is against the confirmation of addition under the head income from house property of ₹ 23,21,775/- by estimating the rent of property at ₹ 28,23,840/-. 16. The facts of the case are that the assessee disclosed rental income of ₹ 15,808/- and claimed water tax of ₹ 4,92,982/- and property tax of ₹ 54,532/-. During the course of assessment proceedings, the AO found that the assessee had let out its properties to one Mohan Dyeing and Printing and Monica Vazirali and total let out area to these two persons was approximately 5000 sq.ft . The AO further observed that 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed from the records that assessee owned seven flats admeasuring 13,344 square feet in Union Park building located in Khar, Mumbai and assessee had disclosed rental income of ₹ 15,808/-and claimed water charges of ₹ 4,94,282/- and property tax of ₹ 54,532/- as deduction against it. Assessing Officer made inquiries in the area and found that rent for a two bed room flat in Khar area ranged between ₹ 40,000/- to ₹ 45,000/- per month and therefore worked out rent receivable in respect of seven flats at ₹ 2/35,320/- per month and total rent receivable for 12 months at ₹ 28/23,840/- and worked out income from house property at ₹ 23,21,775/- (28,23,840 + 4,92/982 - 9,95,047) after adding back water charges of ₹ 4,92,982/- and allowing deduction for repairs of ₹ 9,95,047/- against estimated rental income of ₹ 28,23,840/-. Assessee has objected against the estimation of gross rental income at ₹ 28,23,840/- and computation of house property income at ₹ 23,21,775/-. 4.3.3 It iss quite clear from the facts of the case that assessee has let out its valuable assets consisting of seven flats at Union Park, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier years by the department. The ld. AR finally submitted that the addition as made of ₹ 23,21,775/- by estimating the rent at ₹ 28,23,840/- be deleted as being based on estimation and conjectures without any basis or bring on records any cogent materials and the AO be directed to assess the income from property as in the earlier years. 18. On the contrary, the ld. DR relied on the orders of lower authorities. 19 We have considered the rival submissions and perused the record available before us. We find that the rent from the rental properties located in Khar area have been shown at ₹ 15,808/- and water charges ₹ 4,94,282/- and property tax ₹ 54,532/- were claimed in respect of the said property. The AO further observed that the five flats were occupied by the partner and their family members. The AO estimated the rent in respect of rented property at ₹ 30 to 50 sq. ft. and thus arrived at notional income of ₹ 28,23,840/- which was increased by water charges of ₹ 4,94,982/- and from the total rental charges allowed standard deduction of 30% u/s 24 of the Act and worked out the total income from house property at ₹ 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 40 lakhs as per the stamp duty authority by reverse valuation method at ₹ 3,02,93,202/- It is worth mentioning that the assessee itself while filing return of income for the assessment year 2008-09, wrongly showed ₹ 3,02,93,202/- as capital gain on the said two plots of land which was wrongly calculated by taking the purchase cost as on 29.11.1965 as FMV on 01.04.1981 and indexing the same. The assessee also claimed indexing in respect of a building at ₹ 1,55,828/- . During the course of assessment proceedings, the AO observed that the assessee had sold two plots in survey one plot in no.68 and another plot at survey No. 132 for a consideration of ₹ 1,85,00,000/- and ₹ 1,20,00,000/-. The assessee furnished sale deed only in respect of plot at survey no.68 which was sold for a consideration of ₹ 1,85,00,000/- and could not produce the sale deed in respect of plot at survey no.132 and thus, the AO calculated the capital gains at ₹ 1,61,49,622/- in respect of plot at survey no.68 after subtracting index cost of acquisition of ₹ 23,50,378/- as calculated by the AO in para 5.9 of the assessment order while the sale consideration in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the figure of valuation officer for computing the capital gains, as it is nearer to the calculation made above at ₹ 79,736/-, thereby holding that ₹ 79779/- as on 1.4.1981 by rejecting the contention of the assessee and also of the AO. 22. The ld CIT(A ) in para no 5.3.16 observed that the FMV as calculated by him on the basis of progressive method ₹ 79,736/-was near to the value as proposed by the valuation officer however the value determined by the valuation officer was not taken as it had not reached finality . Thus calculated the indexed cost at ₹ 4,64,063/- by taking the FMV as on 1.4.1981 at ₹ 79,736/- and thereby calculating the capital gain at ₹ 3,00,35,936/- 23. The ld.AR submitted before us that the assessee had rightly calculated the FMV of the two plots sold during the year by taking sales consideration as the current market value and applying the reverse valuation method to ascertain the FMV as on 1.4.1981.He raised strong objections to the FMV as calculated by the CIT(A) on the basis of progressive method which had no scientific basis and further justifying the said valuation by observing that the same is close to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital loss of ₹ 21,08,907/- and the AO by taking the FMV by taking ₹ 40,00,000/- as the FMV on the date of sale and calculating the FMV as on 1.4.1981 ₹ 6,61,415/- for both the plots. Both the assessee as well as the AO calculated the FMV on the basis of reverse valuation method. The AO however considered plot no 68 only for the purpose of capital gain and calculated the same at ₹ 1,61,49,622/- while treating the sales consideration of ₹ 1,20,00,000/ in respect the other plot under the head income from other sources on the ground of non furnishing the sale deed in respect thereof. The matter was also referred to Valuation officer by the AO which was not received till the date of assessment and also till the date of decision of First Appellate Authority. The CIT(A) calculated the FMV following the method progressive method at ₹ 79,736/- observing that the value calculated by him was close to value of ₹ 82,080/- as proposed by the valuation officer however but had not taken that value as it had not reached finality. The CIT(A) confronted the assessee with the sales instances as per the proposed valuation report and calculated the capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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