G.Shanmuganathan, CHENNAI V. ITO, CHENNAI

CO 120/CHNY/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1392 (ITAT-CHENNAI)
• Duration Of Justice: 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2015
• Court: TRIBUNAL
• Department Lawyers: MAMMEN MATHEWS; J C JACOB RETD
• Assessee Lawyers: A V SREEKANTH
• Keywords: Fair market value
• Section: 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 1896/MDS/2015 AND C.O.NO.120/MDS/2015 (IN ITA NO.1896/MDS/15) / ASSESSMENT YEAR : 2010-11 THE INCOME-TAX OFFICER, NON CORPORATE WARD-7(5), CHENNAI. ( /APPELLANT) VS SHRI G. SHANMUGANATHAN, FLAT NO.2A, PLOT NO.385, NEW NO.38, W BLOCK, EAST MAIN ROAD, ANNA NAGAR WEST, EXTN. CHENNAI 600101. PAN BFYPS5201K ( /RESPONDENT/CROSS- OBJECTOR) / APPELLANT BY : SHRI A.V.SREEKANTH, JCIT / RESPONDENT BY : SHRI J.C.JACOB, RETD. DCIT & SHRI MAMMEN MATHEWS, CA / DATE OF HEARING : 27.10.2015 ! / DATE OF PRONOUNCEMENT: 06.11.2015 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEAL IS FILED BY THE REVENUE AND THE CROSS - - ITA 1896 & CO 120 /15 2 OBJECTION IS FILED BY THE ASSESSEE. THE APPEAL AND THE CROSS OBJECTION ARE DIRECTED AGAINST THE ORDER OF THE COM MISSIONER OF INCOME-TAX(APPEALS) DATED 17.3.2015. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE LD. CIT(A) OUGHT NOT TO HAVE IGNORED THE REPORT OF THE SRO, ANNA NAGAR IN ADOPTING THE VALUE OF LAND AT ` 50/- PER SQ.FT. 2.2 THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE REMAND REPORT SUBMITTED BY THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS. 2.3 THE RELIED UPON DECISION OF THE LD. CIT(A) IN THE CASE OF DR. P.K.VASANTHI RANGARAJAN (75 DTR 56)(MAD), IS DISTINGUISHABLE FROM THAT OF THE CASE ON HAND. 2.4 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAD SOLD ONLY THE LAND AS PER THE SALE DE ED AND ELIGIBLE FOR DEDUCTION FOR ONLY ONE RESIDENTIAL UNIT AS PER SECTION 54F OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE OWNE D A RESIDENTIAL PROPERTY IN CHENNAI. DURING THE PREVIO US YEAR RELEVANT TO THE PRESENT ASSESSMENT YEAR 2010-11, TH E ASSESSEE ENTERED INTO A JOINT DEVELOPMENT AGREEMENT WITH M/S . SABARI CONSTRUCTION AND HOUSING P. LTD., WHEREIN THE ASSES SEE GETS 50% OF THE CONSTRUCTED AREA AND A CASH COMPONENT OF ` 77,00,000/-. AS 50% OF HIS SHARE OF THE BUILT-UP A REA, THE ASSESSEE GOT THREE FLATS. THE ASSESSEE IN ITS RE TURN OF INCOME - - ITA 1896 & CO 120 /15 3 CLAIMED THE VALUE OF THE THREE FLATS AS EXEMPT U/S. 54 OF THE ACT. IN ADDITION, THE ASSESSEE ALSO TOOK THE VALUE OF LA ND (FMV) AS ON 01.04.1981 AT ` 125/- PER SQ.FT. AND THE VALUE OF THE BUILDING @ ` 500/- PER SQ.FT. ACCORDINGLY, THE ASSESSEE DECLAR ED NIL CAPITAL GAINS IN THE RETURN. HOWEVER, THE ASSESSING OFFICE R DID NOT ACCEPT THE ASSESSEES CONTENTIONS AND HE ADOPTED TH E FMV OF THE LAND AT ` 10/- PER SQ.FT. AS ON 1.4.1981,BEING THE GLR. THE ASSESSING OFFICER DID NOT CONSIDER HE VALUE OF THE OLD BUILDING AS IT WAS DEMOLISHED BEFORE GOING FOR NEW CONSTRUCTION . FURTHER, THE ASSESSING OFFICER CONSIDERED THE THREE NEW FLAT S RECEIVED AS THREE SEPARATE RESIDENTIAL HOUSES AND ALLOWED THE D EDUCTION U/S.54 WITH RESPECT TO ONE FLAT ONLY. ACCORDING LY, THE ASSESSING OFFICER COMPUTED THE TAXABLE LONG TERM CAPITAL GAIN S ` 1,35,36,709/-, AS AGAINST ` NIL DECLARED BY THE ASSESSEE AND BROUGHT TO TAX. AGGRIEVED BY THIS, THE ASSESSEE WE NT IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS). 4. ON APPEAL, THE COMMISSIONER OF INCOME-TAX(APPEAL S) OBSERVED THAT TOTAL VALUE OF CONSIDERATION TO BE CO NSIDERED AT `1,66,75,000/-. HOWEVER, THE COMMISSIONER OF INCOM E- TAX(APPEALS) HAS GIVEN A FINDING THAT THE FMV OF TH E LAND - - ITA 1896 & CO 120 /15 4 AS ON 1.4.1981 SHOULD BE ADOPTED AT ` 50/- PER SQ.F T. AS AGAINST THE CLAIM OF THE ASSESSEE AT ` 125/- PER SQ .FT. AND ` 10/- PER SQ.FT. AS PRESCRIBED BY THE ASSESSING OFFICER. REGARDING THE ALLOWABILITY OF DEDUCTION U/S.54, THE COMMISSIONER OF INCOME-TAX(APPEALS) OBSERVED THAT DEDUCTION TO B E ALLOWED ON THE VALUE OF THREE FLATS RECEIVED BY THE ASSESSE E IN LIEU OF 50% OF THE UDS IN THE LAND FOREGONE / PARTED WITH THE BUILDERS, AS PER THE JOINT DEVELOPMENT AGREEMENT AND HE DIREC TED ASSESSING OFFICER TO ALLOW THE VALUE OF ALL THE THR EE FLATS RECEIVED IN THE JDA AS DEDUCTION U/S.54 OF THE ACT BY PLACIN G RELIANCE ON THE DECISION IN THE CASE OF DR. P.K.VASANTHI RANGAR AJAN (75 DTR 56)(MAD.) AND THE DECISION OF THE TRIBUNAL IN THE C ASE OF V.R.KARPAGAM V. ITO (IN ITA NO.1082/MDS/2010 DATED 7.3.2013). AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE RELATING TO DETERMINATION OF FAIR MARKET VALUE AS ON 1.4.1981 WAS DECIDED BY THIS TRIBUNAL ON THE SAME PROPERTY IN ASSESSEES OWN CASE IN ITA NO.1130/MDS/ 2015 DATED 28.8.2015, WHEREIN IT WAS HELD AS FOLLOWS: 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE - - ITA 1896 & CO 120 /15 5 MATERIAL ON RECORD. IN THIS CASE THE ASSESSEE CLAI MED FAIR MARKET VALUE OF THE IMPUGNED PROPERTY AT ` 125/- PER SQ.FT. AS AGAINST WHICH THE ASSESSING OFFICER CONSIDERED THE SAME AT ` 10/-. HOWEVER, THE COMMISSIONER OF INCOME-TAX(APPEALS) ADOPTED THE SAME AT ` 50/- PER SQ.FT. ON THE BASIS OF THE PROPERTY SITUATED AT AMBATTUR INDUSTRIAL ESTATE. IN OUR OPI NION, THE COMPARISON OF PROPERTY AT AMBATTUR INDUSTRIAL ESTATE WITH ANNA NAGAR (WEST), IS NOT APPROPRIATE. HENCE, WE ARE INCLINED TO REMIT THE ISSUE BACK TO T HE FILE OF THE ASSESSING OFFICER TO BRING ON RECORD TH E FAIR MARKET VALUE OF THE PROPERTY SITUATED AT THE VICINI TY OF IMPUGNED PROPERTY AND THEN DECIDE THE FAIR MARKET VALUE OF THE IMPUGNED PROPERTY. ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. IN VIEW OF THE ABOVE DECISION OF THIS TRIBUNAL, WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER ON SIMILAR DIR ECTION. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 6. NEXT ISSUE IS WITH REGARD TO DEDUCTION U/S.54 ON THE VALUE OF THREE FLATS. THIS ISSUE CAME UP FOR CONSIDERATI ON BEFORE THIS TRIBUNAL IN ITA NO.1082/MDS/2010 DATED 7.3.2013 IN THE CASE OF SMT. V.R.KARPAGAM AND HELD AS UNDER : NONE OF THE AUTHORITIES BELOW HAS DOUBTED THE ELIGIBILITY OF THE ASSESSEE FOR CLAIMING AN EXEMPTION UNDER SECTION 54F. THERE ONLY QUALM IS TH AT ASSESSEE HAD PREFERRED SUCH CLAIM FOR ALL THE FIVE FLATS WHEREAS ACCORDING TO THEM, SUCH EXEMPTION COULD ONLY BE FOUNDED TO A SINGLE FLAT . THE PROVISO WHICH DISABLES THE ASSESSEE FROM - - ITA 1896 & CO 120 /15 6 CLAIMING EXEMPTION UNDER SECTION 54F MENTIONS AT CLAUSE (I) THAT ASSESSEE CONCERNED SHOULD NOT OWN MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET. OTHER CLAUSES ALSO RESTRICT A CLAIM UNDER SE CTION 54F , IF AN ASSESSEE PURCHASED A HOUSE OR CONSTRUCTED ANY RESIDENTIAL HOUSE OTHER THAN A NEW ASSET . SUB - PROVISO (I) TO PROVISO (A) , I . E., OWNING MORE THAN ONE RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET WILL COME INTO PLAY ONLY WHERE ASSES SEE HAD WITHIN A PERIOD OF ONE YEAR BEFORE THE DATE OF TRANSFER CONSTRUCTED A RESIDENTIAL HOUSE AS MENTION ED IN SUBSTANTIVE PORTION OF SUB-SECTION (1). NEW ASSE T IS CLEARLY DEFINED IN THE SUBSTANTIVE PORTION, TO MEAN 'A RESIDENTIAL HOUSE'. 'A RESIDENTIAL HOUSE' IN THE CONTEXT COULD NOT BE CONSTRUED AS A SINGULAR . NEW ASSET DEFINED IN SECTION 54F, AS 'A RESIDENTIAL HOUSE' HAS ALSO TO B E UNDERSTOOD IN THE PLURAL . IT IS NOT NECESSARY THAT ALL RESIDENTIAL UNITS SHOULD HAVE A SINGLE DOO R NUMBER ALLOTTED TO IT . THUS, ASSESSEE WAS ELIGIBLE FOR CLAIMING EXEMPTION UNDER SECTION 54F O N ALL THE FIVE FLATS RECEIVED BY HER IN LIEU OF THE LAND SHE HAD PARTED WITH. IN THE RESULT, THE ASSESSEE'S APPEAL WAS TO BE ALLOWED . IN VIEW OF THIS, WE AGREE WITH THE FINDING OF THE C OMMISSIONER OF INCOME-TAX(APPEALS) IN ALLOWING THE CLAIM OF THE AS SESSEE U/S.54 IN RESPECT OF VALUE OF THREE FLATS RECEIVED BY THE ASSESSEE IN LIEU OF 50% OF UDS IN THE LAND FOREGONE / PARTED WITH THE BUILDER AS PER JOINT DEVELOPMENT AGREEMENT. THIS G ROUND OF APPEAL BY THE REVENUE IS DISMISSED. - - ITA 1896 & CO 120 /15 7 7. THE ASSESSEE HAS FILED THE CROSS OBJECTION IN SU PPORTIVE OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPE ALS) WITH REGARD TO DEDUCTION U/S.54 ON THE VALUE OF THREE FL ATS. SINCE, WE HAVE AGREED WITH THE FINDING OF THE COMMISSIONER OF INCOME- TAX(APPEALS) ON THIS ISSUE, THE CROSS OBJECTION HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOU S. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED ON FRIDAY, THE 06 TH OF NOV., 2015 AT CHENNAI. SD/- SD/- ( ' . . ' . #$ ) ( % & ' ( ) ) N.R.S.GANESAN * )+,-./0-1223-04* 5 67 /JUDICIAL MEMBER 6789::2;.<-.<=>?@>0 %5 /CHENNAI, A6 /DATED, THE 06 TH NOV., 2015. MPO* 6$ BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E)* /CIT(A) 4. E /CIT 5. CF# G /DR 6. #HI /GF.