IN THE ITAT MUMBAI BENCH ‘I’
Irfan Abdul Kader Fazlani
Versus
Assistant Commissioner of Income-tax
IT APPEAL NOS. 8831, 8832, 8835, 8836, 8850 & 8851 (MUM.) OF 2011
[ASSESSMENT YEARS 2007- 08 & 2008-09]
JANUARY 2, 2013
ORDER
1. There are six appeals under consideration involving three assessees namely Shri Irfan Abdul Kader Fazlani, Iqbal Abdhul Kader Fazlani and Shri Imran Yunus Fazlani. Considering the commonness in the grounds raised in all the appeals of the assessees, they are being clubbed and adjudicated in this composite order. For the sake of convenience, we shall take up ITA No.8831/M/2011 filed by Irfan Abdul Kader Fazlani is against the order of CIT(A)-38, Mumbai dated 14.09.2011 for the AY 2007-2008 and the grounds raised in this appeal are reproduced as under:
“1. On the facts and circumstances of the case and in law the Ld CIT(A) erred in confirming invocation of the provisions of section 50C of the Income Tax Act, 1961 even though the document for sale of shares of M/s. Kamala Mansion P. Ltd. was not required to be registered with stamp authorities and in determining the sale value at Rs. 4,12,16,5000/- against agreement value of Rs. 3,46,71,609/- while working out the capital gain on sale of shares of M/s. Kamala Mansion P. Ltd. The purchasers of the shares of the company are not relatives of the Directors/Shareholders of the company nor they have any business relationship with the Directors/Shareholders or any associates thereof.
2. On the facts and circumstances of the case and in law the Ld CIT(A) erred in confirming addition of Rs. 55,28,500/- to the sale consideration being separate payment to the company for repayment of loan taken by the company for purchase of property.
3. Without prejudice on the facts and circumstances of the case and in law the Ld CIT(A) erred in not considering the ground of the appellant to substitute indexed cost of the immovable property while computing capital gains on sale of immovable property.
4. Each of the above grounds of the appeal is without prejudice to one another.”
2. There are two core issues raised in the grounds for our consideration and they are: if the provisions of section 50C of the Income Tax Act, 1961 apply to the fact of this case and secondly, if the ‘sale consideration‘ includes the amounts infused into the company’s accounts for discharging the liabilities of the company qua its directors.
3. Briefly stated the relevant facts of the case are that the assessee is a shareholder in M/s. Kamala Mansion Pvt. Ltd (KMPL). Along with other shareholders of this company, the assessee sold his shares to Mrs. Rekha Gunwant Ashok Shah and M/s. Suraj Limited for a consideration. The transferors are also to infuse a sum of Rs. 55,28,500/- into the company for the purpose of clearing the company’s loans to its directors. M/s. KMPL owns two flats i.e. 1901B and 2001B in a building known as Om Vikas Apartments situated at Walkeshwar Road, Mumbai-26 and the said flats are regularly given on rent and the rent is declared by the assessee as ‘income from the house property’. Otherwise, M/s. KMPL issued 3813 shares and assessee owns 306 shares out of them. Assessee sold these shares for a sum of Rs. 37,51,369/-and earned the long term capital gains and relevant computation is as under:
