Challapalli Shyamala, Represented by L/R Challapalli Surya Rao, Visakhapatnam V. The Assistant Commissioner of Income Tax, Circle-3(1), Visakhapatnam

CO 119/VIZ/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8830 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-01-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 22-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Condonation of delay; Set aside; Capital Gains
• Section: 50C; 43

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (THROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) , . . , BEFORE SHRI N.K.CHOUDHRY, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 4 60 /VIZ/20 19 ( / A SSESSMENT Y EAR : 20 08 - 09 ) ASST.COMMISSIONER OF INCOME TAX CIRCLE - 3(1) VISAKHAPATNAM VS . SHRI CHALLAPALLI SURYA RAO 43 - 18 - 4/2, CONCEPT APTS TSN COLONY VISAKHAPATNAM [PAN : ABXPC5029P] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NO.119/VIZ/2019 (ARISING OUT OF I.T. A.NO. 460/VIZ/2019 ( / A SSESSMENT Y EAR : 2008 - 09) SMT.CHALLAPALLI SHYAMALA REP.BY SHRI CHALLAPALLI SURYA RAO 43 - 18 - 4/2, CONCEPT APTS TSN COLONY VISAKHAPATNAM [PAN : ABXPC5029P] VS. ASST.COMMISSIONER OF INCOME TAX CIRCLE - 3(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : SHRI B.RAMA KRISHNA, DR / ASSESSEE BY : S HRI G.V.N.HARI, AR / DATE OF HEARING : 0 6 . 0 1 .202 1 / DATE OF PRONOUNCEMENT : 12 .01. 202 1 2 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : CONDONATION OF DELAY TH IS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A) - 1, VISAKHAPATNAM IN I.T.A. NO.1062/2013 - 14/ITO,W - 1(4),VSP/2017 - 18 DATED 28.01.2019 FOR THE ASSESSMENT YEAR (A.Y.) 2008 - 09 WITH THE DELAY OF 74 DAYS. THE REVENUE HAS FILED CONDONA TION PETITION GIVING ADMINISTRATIVE REASONS FOR THE DELAY IN FILING THE APPEAL. THE LD.AR HAS NOT OBJECTED FOR CONDONING THE DELAY. AFTER CONSIDERING THE SUBMISSION OF THE LD.DR , THE DELAY IS CONDONED AND THE APPE A L IS ADMITTED. C ROSS OBJECTION S ARE FILED BY ASSESSEE IN SUPPORT OF THE ORDER OF THE LD.CIT(A). 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE DETERMINATION OF FAIR MARKET VALUE BY THE LD. CIT(A) WITH REGARD TO SALE OF LAND. 3. BRIEF FACTS OF THE CASE ARE THAT FOR THE A.Y.2008 - 09, THE ASSESSEE SOLD A PIECE OF LAND CONSISTING OF 545 SQ.YDS WITH ACC SHED AND ADMITTED THE CAPITAL GAINS OF RS.6,30,820/ - . THE ASSESSEE HAS TAKEN THE SALE 3 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM CONSIDERATION AT RS.32,70,000/ - AS AGAINST THE VALUE OF RS.62,73,500/ - ADOPTED BY THE STAMP DUTY AUTHORIT IES (SRO) . THE ASSESSING OFFICER (AO) INVOK ED THE PROVISIONS OF SECTION 50 C OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) AND DIRECTED THE ASSESSEE AS TO EXPLAIN AS TO WHY THE VALUE OF SUB REGISTRA R OFFICE I.E. RS.62,73,500/ - SHOULD NOT BE CONSIDERED FOR COMPUTING THE CAPITAL GAINS , AGAINST THE SALE CONSIDERATION ADMITTED BY THE ASSESSEE AT RS.32,70,000/ - . THE ASSESSEE SUBMITTED THE EXPLANATION STATING THAT THE LAND IN QUESTION WAS SITUATED IN INDU STRIAL AREA AND THE MARKET VALUE IS DETERMINED BY ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURE CORPORATION (APIIC) AT RS.6000/ - PER SQ.YD. FOR WHICH THE ASSESSEE SOLD THE PROPERTY , THEREFORE , ARGUED THAT SRO VALUE IS INAPPLICABLE IN HIS CASE. T HE ASSESSEE FUR THER SUBMITTED THAT IN THE CASE OF LAND SITUATED IN INDUSTRIAL AREAS THE LANDS ARE TO BE SOLD AS PER THE RATES PRESCRIBED BY THE APIIC AND NOT AS PER THE WHIMS AND FANCIES OF THE SELLERS . HE FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE FOR THE A.Y.2009 - 10 , THE AO REFERRED THE VALUATION TO THE DEPARTMENTAL VALUATION OFFICER (DVO), WHO HAS VALUED THE PROPERTY AT RS.8,034/ - PER SQ.YD . SINCE THE IMPUGNED A.Y IS 2008 - 09 , EARLIER YEAR, HE SUBMITTED THAT T HE VALUE WOULD BE MUCH LESSER THAN THE VALUE ADOPTED BY THE AO FOR THE A.Y.2009 - 10 , THUS, SUBMITTED THAT THE VALUE OF RS.6,000/ - PER 4 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM SQ.YD DETERMINED BY APIIC IS REASONABLE AND HENCE REQUESTED TO ACCEPT THE SAME. HOWEVER, THE AO CONSIDERED THE OBJECTIONS OF THE ASSESS E E AND NOT BEING CONVINCED, ADOPTED THE MAR KET VALUE OF RS.8,034/ - DETERMINED BY THE DVO FOR THE A.Y.2009 - 10 AND A CCORDINGLY WORKED OUT THE SALE CONSIDERATION AT RS.43,78,530/ - @8,034/ - PER SQ.YD AND COMPUTED THE LONG TERM CAPITAL GAINS AT RS.17,30,350/ - AFTER ALLOWING DEDUCTIONS. 4. AGAINST WHI CH THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND ARGUED THAT THE AO ERRED IN ADOPTING THE MARKET VALUE OF A.Y.2009 - 10 FOR THE IMPUGNED ASSESSMENT YEAR AND REQUESTED TO ACCEPT THE ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS. T HE LD.CIT(A) HELD THAT THE AO IS NOT PERMITTED TO ADOPT THE VALUE DETERMINED BY THE DVO FOR THE A.Y.2009 - 10 FOR THE EARLIER YEAR I.E 2008 - 09. HOWEVER, THE LD.CIT(A) TAKING IN TO CONSIDERATION OF THE FACTS AND CIRCUMSTANCES DETERMINED THE FAIR MARKET VALUE AT RS.6,800/ - PER SQ.YD BY ALLOWING REDUCTION OF 15% FOR THE ANNUAL INCREASE IN RATES AND ACCORDINGLY PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGAINST WHICH THE DEPARTMENT IS IN APPEAL BEFORE US. DURING THE APPEAL HE ARING, THE LD.DR SUBMITTED THAT ADOPTION OF THE VALUE DETERMINED 5 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM BY THE DVO FOR THE A.Y.2009 - 10 FOR THE YEAR UNDER CONSIDERATION IS JUSTIFIED SINCE, THE DVO CONSIDERED THE AVERAGE OF COMPARABLE SALE INSTANCES THAT TOOK PLACE IN THE YEAR 2007 AND 2008. SIN CE THE AO MADE THE ADDITION RELYING ON THE REPORT OF THE DVO, THE LD.CIT(A) HAS ERRED IN REDUC ING THE FAIR MARKET VALUE DETERMINED BY THE DVO. THEREFORE, ARGUED THAT THE LD.CIT(A) IS NOT CORRECT IN ALLOWING REDUCTION OF 15% ON THE FAIR MARKET VALUE DETE RMINED BY THE DVO. THEREFORE, REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THE ORDER OF THE AO. 6 . ON THE OTHER HAND, THE LD.AR SUBMITTED THAT THE IMPUGNED ASSESSMENT YEAR IS 2008 - 09 AND THE DVO DETERMINED THE FAIR MARKET V ALUE FOR TH E A.Y.2009 - 10 , I.E. SUBSEQUENT YEAR, THUS THE FAIR M ARKET V ALUE DETERMINED BY THE DVO FOR THE A.Y.2009 - 10 CANNOT BE ADOPTED FOR THE A.Y. 2008 - 09 FOR COMPUTING THE CAPITAL GAINS, SINCE , IN INCOME TAX EACH YEAR IS INDEPENDENT AND THE VALUES KEEP S ON CHANGING EVERY YEAR. THUS, ARGUED THAT THE LD.CIT(A) HAS REASONABLY DETERMINED THE FAIR MARKET VALUE @RS.6,800/ - PER SQUARE YARD AND NO INTERFERENCE IS CALLED FOR. HENCE, REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 6 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSEE HAS SOLD THE LAND SITUATED IN INDUSTRIAL AREA AND THE MARKET VALUE OF THE LAND SITUATED AT INDUSTRIAL AREA IS TO BE DETERMINED BY APIIC AND THIS FACT WAS NO T DISPUTED BY THE AO. AS PER THE VALUE DETERMINED BY APIIC, THE LAND VALUE WAS RS.6,000/ - PER SQ.YD AND NO EVIDENCE WAS BROUGHT ON RECORD BY THE AO TO SHOW THAT THE VALUE DETERMINED BY THE APIIC AT RS.6000/ - PER SQ.YD I S INCORRECT. IT SEEMS, NO ENQUIRY WAS MADE BY THE AO WITH APIIC WITH REGARD TO RESTRICTIONS IMPOSED BY APIIC FOR TRANSFER OF LAND. IN GENERAL, C ERTAIN RESTRICTIONS ARE IMPOSED BY APIIC FOR TRANSFER OF LAND SITUATED IN THE INDUSTRIAL AREA S, SINCE , THE LANDS ARE ALLOTTED FOR INDUSTRIAL PURPOSES AND CANNOT BE USED FOR ANY OTHER PURPOSES . THE AO OUGHT TO HAVE MADE NECESSARY ENQUIRIES WITH APIIC TO DETERMINE THE FAIR MARKET VALUE IN PLACE OF SRO VALUE FOR COMPUTING THE CAPITAL GAINS. IN THE INSTANT CASE, THE ASSESSEE HAS OBJECTED FOR ADOPTION OF SRO VALUE WHICH THE AO HAS ALSO ACCEPTED AND DID NOT ADOPT SRO VALUE FOR COMPUTING THE CAPITAL GAINS. HOWEVER, THE AO ADOPTED THE FAIR MARKET VALUE THAT WAS DETERMINED BY THE DVO FOR THE A.Y.200 9 - 10. THE IMPUGNED A.Y. IS 2008 - 09 AND THE ASSESSEE HAS OBJECTED FOR ADOPTION OF SRO VALUE STATING THAT THE VALUE DETERMINED BY APIIC IS BINDING ON SALE 7 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM TRANSACTIONS IN INDUSTRIAL AREAS. I N THE CIRCUMSTANCES AO OUGHT TO HAVE REFERRED THE VALUATION TO THE D EPARTMENTAL VALUATION OFFICER AS PROVIDED IN SUB SECTION 2 OF SECTION 50C OF THE ACT OR MADE THE ENQUIRIES WITH THE APIIC . IN THE INSTANT CASE, THE AO HAS NOT DONE THE ABOVE EXERCISE, INSTEAD BLINDLY ADOPTED THE VALUE DECIDED BY THE DVO FOR THE A.Y.2009 - 10 FOR THE IMPUGNED ASSESSMENT YEAR. THE SHORT QUESTION BEFORE US IS WHETHER THE VALUE DECIDED BY THE DVO FOR THE A.Y.200 9 - 10 CAN BE A PPLIED FOR THE A.Y.200 8 - 0 9 OR NOT? THE ANSWER IS NO , SINCE , THE VALUES KEEP CHANGING AND FOR INCOME TAX, EACH ASSESS MENT YEAR IS INDEPENDENT. THE AO OUGHT TO HAVE REFERRED THE VALUATION OF PROPERTY TO THE DVO FOR THE A.Y.2008 - 09 ALSO SEPARATELY AND TAKEN THE VALUE SO DECIDED BY THE DVO FOR THE PURPOSE OF CAPITAL GAINS. IN THE INSTANT CASE, THE LD.CIT(A) HAS DETERMINED THE FAIR MARKET VALUE OF RS.6800/ - AFTER GIVING SOME REDUCTION FOR ANNUAL INCREASE AND THE DEPARTMENT DID NOT BRING ANY MATERIAL TO SHOW THAT THE MARKET VALUE OF THE LAND IN THE IMPUGNED A.Y. IS MORE THAN THE VALUE DETERMINED BY THE LD.CIT(A). THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE IS DISMISSED. 8 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM 8. THE ASSESSEE FILED CROSS OBJECTIONS (CO) IN SUPPORT OF THE ORDER OF THE LD.CIT(A) , HOWEVER THE CO WAS NOT SIGNED BY THE COMPETENT PERSON , TH US THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DEFECTIVE AND HENCE DISMISSED IN LIMI N E . 9 . IN THE RESULT, APPEAL OF THE REVENUE AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY, 2021 . S D/ - S D/ - ( ) ( . . ) ( N.K.CHOUDHRY ) ( D.S.SUNDER SINGH) / JUDICIAL MEMBER /ACCOUNTANT MEMBER /DATED : 12 . 01 .202 1 L.RAMA, SPS 9 I.T.A. NO . 4 60 /VIZ/20 19 AND CO NO.119/VIZ/2019, A.Y.20 08 - 09 SHRI CHALLAPALLI SURYA RAO & SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO , V ISAKHAPATNAM / COPY OF THE ORDER FORWARDED TO : - 1 . / THE ASSESSEE (I) SHRI CHALLAPALLI SURYA RAO, (II) SMT.CHALLAPALLI SHYAMALA, REP.BY SHRI CHALLAPALLI SURYA RAO, 43 - 18 - 4/2, CONCEPT APTS, TSN COLONY , VISAKHAPATNAM , 43 - 18 - 4/2, CONCEPT APTS, TSN COLONY, VISAKHAPATNAM 2 . / THE REVENUE ASST.COMMISSIONER OF INCOME TAX, CIRCLE - 3(1) , VISAKHAPATNAM 3. THE COMMISSIONER OF INCOME TAX - 1 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM