Edna Victor Samuels, Pune V. ITO, Central-II, Pune

ITA 1015/PUN/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2587 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINHA
• Keywords: Cost of acquisition; Fair market value; Valuation report; Revised return

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1015/PN/2012 #& & / ASSESSMENT YEAR : 2006-07 LATE MRS.EDNA VICTOR SAMUELS THROUGH LEGAL HEIR MR. AKHTAR JALLU KHAN FLAT NO.101, SHAN GANGA, SALISBURY PARK, PUNE 411 037 PAN NO.AJNPS5535L . / APPELLANT V/S ITO, CENTRAL-II, PUNE . / RESPONDENT / ASSESSEE BY : SHRI MAHAVIR JAIN / REVENUE BY : SHRI MANISH KUMAR SINHA / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 20-02-2012 OF THE CIT(A) CENTRAL, PUNE RELATING TO ASSESSMENT YEAR 2006-07. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL. A SEARCH OPERATION U/S.132 OF THE I.T. ACT WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 06-05-2005. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31-10-2006 DECLARING / DATE OF HEARING :17.02.2016 / DATE OF PRONOUNCEMENT:29.02.2016 2 ITA NO.1015/PN/2012 TOTAL INCOME OF RS.6,30,62,010/-. SUBSEQUENTLY, THE ASSESSE E FILED A REVISED RETURN DECLARING TOTAL INCOME OF RS.6,34,67,010/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAS SOLD A PIECE OF LAND ADMEASURING 48800 SQ.MTRS. FOR A CONSIDERATIO N OF RS.9 CRORES. COST OF ACQUISITION AS ON 01-04-1981 ADOPTED BY THE ASSESSEE WAS RS.53,68,000/- WHICH COMES TO RS.110/- PER SQ.MTR. THIS IS THE COSTING GIVEN BY THE GOVERNMENT APPROVED VA LUER AS ON 01-04-1984. THE AO, THEREFORE, ASKED THE ASSESSEE TO J USTIFY AS TO HOW SHE IS ADOPTING THE SAME VALUE AS ON 01-04-1981 WH ICH IS 3 YEARS EARLIER. THE ASSESSEE IN HER RESPONSE SUBMITTED T HAT AS UNDER : A. THE LAND IS LOCATED AT KHARADI WHICH WAS ON THE O UTSKIRTS OF PUNE IN 1984 AS WELL AS IN 1981. THERE WAS NO MATERI AL CHANGE IN THE CIRCUMSTANCES BETWEEN 1981 & 1984. THERE WAS NO IMPRO VEMENT OR DEVELOPMENT IN THE AREA BETWEEN 1981 & 1984. HENCE , THE ASSESSEE HAS ADOPTED THE VALUE GIVEN BY THE GOVT. APPROVED VA LUER AS ON 01-04- 1984 FOR 01-04-1981 ALSO. B. SECONDLY, WHEN THE STAMP DUTY RATE WAS INTRODUCED IN 1991, THE RATE FOR THE RELEVANT AREA WAS PUBLISHED AS BELOW : I. RATE FOR S.NO.23, H.NO.2B, KHARADI WAS PUBLISHED A S RS.220/- PER SW.MT AS ON 01-01-1991. CONSIDERING THIS RATE & INDEXING BACKWARDS AS PER THE INCOME TAX INDEX VALUE S, THE RATE PER SQ.MT WORKS OUT TO RS.220 X 100/182 = RS. 121 PER SQ.MT. (INDEX FOR F.Y.81-82 =100) (INDEX FOR F.Y. 90-91 182) HENCE, THE VALUE FOR S.NO.23, H.NO.2B KHARADI, WORK S OUT TO RS.30,73,400/-. II. RATE FOR S.NO.24, H.NO. 2A+2B+24/1C, KHARADI, W AS PUBLISHED AS RS.200/- PER SQ.MT AS ON 01-01-1991. CONSI DERING THIS RATE & INDEXING BACKWARDS AS PER THE INCOME TAX INDEX VALUES, THE RATE PER SQ.MT WORKS OUT TO RS.200 X 100/182 = RS. 110 PER SQ.MT. (INDEX FOR F.Y.81-82 =100) (INDEX FOR F.Y. 90-91 182) HENCE, THE VALUE FOR S.NO.24, H.NO. 2A+2B+24/1C, KH ARADI WORKS OUT TO RS.25,74,000/-. 3 ITA NO.1015/PN/2012 III. IT HAS BEEN SUBMITTED THAT AS PER THE ABOVE WORKI NG, THE TOTAL COST WORKS OUT TO RS.56,47,400/-. AS AGAINST THIS , THE ASSESSEE HAS CLAIMED THE COST AS ON 01-04-1981 AT RS.53,68,000/- ONLY, WHICH IS LOWER. HENCE, THE ASSESSEE HAS REQUESTED THAT THE RATE ADOPTED BY HER FOR THE COST O F LAND AS ON 01-04-1981 MAY PLEASE BE ACCEPTED. 4. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT SINCE THE VALUER HA S VALUED THE LAND @ RS.110/- PER SQ.MTR AS ON 01-04-1984, THEREFORE, CONSIDERING THIS RATE AND INDEXING BACKWARDS AS PER THE INCOME TAX INDEX VALUES, THE RATE PER SQ.MTR AS ON 01-04-1981 COMES TO RS.88/- PER SQ. MTR. AS AGAINST THIS THE ASSESSEE HAS GIVEN JUSTIFICATION FOR HIGHER VALUE OF R.121 PER SQ.MTR IN RESPECT OF S.NO.23 AND RS.110/- PER SQ. MTR IN RESPECT OF S.NO.24 AS ON 01- 04-1981 BASED ON GOVERNMENT PUBLISHED VALUES. CONSIDERIN G THE TOTALITY OF THE FACTS OF THE CASE THE AO ADOPTED THE VALUE OF RS.100/- PER SQ.MTR AS ON 01-04-1981. THE AO ACCORDINGLY DETER MINED THE LONG TERM CAPITAL GAIN OF RS.6,50,21,400/- AS AGAINST RS.6,25,96,040/- DECLARED BY THE ASSESSEE. 5. BEFORE CIT(A) THE ASSESSEE REITERATED THE SAME SUBMIS SIONS AS MADE BEFORE THE AO. HOWEVER, THE CIT(A) ALSO WAS NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHE LD THE ACTION OF THE AO. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER- ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ASSESSME NT ORDER PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER 'AO' ) IN CASE OF THE APPELLANT ASSESSING TOTAL INCOME AT RS. 6,61,09,897/- AS AGAINST THE RETURNED INCOME OF RS. 6,34,67,010/-. 4 ITA NO.1015/PN/2012 2] THE LEARNED CIT(A) ERRED IN CONFIRMING ENHANCED CAPITAL GAIN AS COMPUTED BY THE LEARNED AO AT RS. 6,50,21,400/-. 2.1] THE LEARNED AO ERRED ADOPTING AN IRRATIONAL AND ARB ITRARY METHODOLOGY WHILE COMPUTING THE FAIR MARKET VALUE A S ON 01.04.1981 WITHOUT ACCEPTING THE VALUATION REPORT OF THE GOVER NMENT CERTIFIED VALUER AS RELIED UPON BY THE APPELLANT. 2.2] THE LEARNED CIT(A) IS NOT JUSTIFYING IN IGNORIN G THE REQUEST OF APPELLANT TO REFER THE CASE FOR REVISED VALUATION EIT HER TO THE GOVERNMENT CERTIFIED VALUER OR TO THE DEPARTMENTAL VALUATION OFFICER INSTEAD FOLLOWING THE UNSCIENTIFIC METHOD OF VALUATIO N OF THE ASSET ADOPTED BY THE LEARNED AO. 2.3] THE LEARNED AO ERRED IN NOT ACCEPTING THE OPINION/R EPORT OF THE TECHNICAL PERSON (GOVERNMENT CERTIFIED VALUER) INSTEA D APPLYING HIS OWN UNSCIENTIFIC AND IRRATIONAL METHODS VALUATION LIK E REVERSE INDEXATION WHICH IS NOT PERMISSIBLE. HE SHOULD HAVE REF ER THE CASE TO THE DVO FOR VALUATION AS THERE IS SEPARATE TECHNICAL AUTHORITY CREATED BY THE LAW. 3] THE LEARNED AO AS WELL AS LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT A. THOUGH THE VALUATION REPORT BY THE VALUER HAD VALUA TION DATE AS 01.04.1984, THE VALUE DERIVED WAS ACTUALLY AS OF 01.04.1981. B. THERE WERE NO COMPARATIVE TRANSACTIONS IN THAT AREA D URING THE PERIOD FROM 01.04.1981 TO 01.04.1984 AND THIS IS THE REASON THAT THE VALUER HAD TAKEN 01.04.1984 AS VALUAT ION DATE. C. EVEN THE VALUER HAS CONFIRMED THAT THERE WOULD NOT BE SIGNIFICANT DIFFERENCE IN VALUATION AS ON 01.04.1981 AND 01.04.1984, AS THE AREA WAS IN EXTREME OUTSKIRTS OF PU NE WHERE HARDLY ANY TRANSACTIONS HAPPENED IN THOSE PERIO D. 4] WITHOUT PREJUDICE TO THE CLAIM THAT THERE IS NO N EED TO REJECT THE VALUE ADOPTED BY THE APPELLANT, THE LEARNED AO FURT HER ERRED IN REJECTING THE ALTERNATIVE VALUATION PROVIDED BY THE APPELLANT TO SUBSTANTIATE ITS EARLIER CLAIM WHERE REVERSE INDEXATIO N WAS APPLIED TO THE STAMP DUTY VALUATION PUBLISHED FOR RELEVANT AREA FOR THE FIRST TIME IN THE YEAR 1991. 5] THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THERE IS A TYPOGRAPHICAL ERROR IN THE VALUATION REPORT O BTAINED FROM THE REGISTERED VALUER. HE SUBMITTED AS AGAINST 01-04-19 81 THE DATE WAS WRONGLY TYPED AS 01-04-1984. HE ACCORDINGLY SUBM ITTED THAT 5 ITA NO.1015/PN/2012 FOR THE PURPOSE OF CALCULATION OF RATE PER SQ.MTR AS ON 0 1-04-1981 IF THE VALUE DETERMINED BY THE REGISTERED VALUER AT RS.110/ - PER SQ.MTR IS TAKEN, THEN THERE IS NO NECESSITY FOR DISTURBING THE COMPUTATION ADOPTED BY THE ASSESSEE FOR THE PURPOSE O F CALCULATION OF LONG TERM CAPITAL GAIN. 8. IN HIS ALTERNATE CONTENTION HE SUBMITTED THAT THE AS SESSEE HAS CONSIDERED THE COST OF ACQUISITION AS ON 01-04-1981 AT RS.110/- PER SQ.MTR WHICH HAS BEEN REDUCED TO RS.100/- PER SQ.MTR AS ON 01-04-1981 BY THE AO WITHOUT BRINGING ANY COMPARATIVE CASE. REFERRING TO THE 3 VALUATIONS GIVEN BY THE ASSESSEE BEFORE THE AO WHICH HAS ALREADY BEEN REPRODUC ED BY THE AO AT PARA 7.1 OF THE ORDER HE SUBMITTED THAT AS PER C ALCULATION DONE BY THE ASSESSEE THE HIGHEST RATE PER SQ.MTR COME S TO RS.121/- PER SQ.MT AND THE LOWEST COMES TO RS.110/- PER SQ. MTR . HOWEVER, THE AO IGNORING THE VARIOUS CALCULATIONS MADE BY THE ASSE SSEE HAS ADOPTED THE RATE OF RS.100/- PER SQ.MTR AS ON 01-04-1 981. HE SUBMITTED THAT THE STAMP DUTY RATES CAME INTO EFFECT ON LY W.E.F. 01- 01-1991, A FACT WHICH HAS BEEN ADMITTED BY THE AO AT P ARA 7.2 OF THE ORDER. SINCE THE RATE ADOPTED BY THE ASSESSEE AS ON 01-04-1 981 IS ON SCIENTIFIC BASIS, THEREFORE, THE CAPITAL GAIN DETERMINED B Y THE ASSESSEE SHOULD BE ACCEPTED AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 9. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE RATE ADOPTED BY THE AO PER SQ.MTR AS ON 01-04-1981 IS VER Y REASONABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE WHICH HA S BEEN UPHELD BY THE CIT(A) AND THERE IS NO NEED TO INTERFERE IN THE ORDER OF THE CIT(A). 6 ITA NO.1015/PN/2012 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IN THE INSTANT CASE THE ASSESSEE OBTAINED A VALUATION REPORT FROM A REGISTERED VA LUER FOR THE PURPOSE OF DETERMINING THE COST OF ACQUISITION AS ON 01-04 -1981. HOWEVER, THE VALUER GAVE A REPORT FOR THE PURPOSE OF DE TERMINING THE COST OF ACQUISITION AS ON 01-04-1984. SINCE THE VALU ERS REPORT WAS FOR THE CALCULATION OF COST OF ACQUISITION AS ON 01-04-1 984, THEREFORE, THE AO BROUGHT IT DOWN TO 1981 RATE AND ADOPTED THE RA TE OF RS.100/- PER SQ.MTR AS ON 01-04-1981 AS AGAINST RS.1 10/- PER SQ.MTR ADOPTED BY THE ASSESSEE AS ON 01-04-1981. 11. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE TH AT THERE WAS A TYPOGRAPHICAL ERROR IN THE REPORT OF THE VALUER AN D IT SHOULD BE READ AS ON 01-04-1981 INSTEAD OF 01-04-1984 IS NOT ACCEPTABLE ESPECIALLY WHEN THE REPORT WAS OBTAINED ON 01-07-2005 AND THE ASSESSEE HAS OBTAINED THE CLARIFICATION FROM THE VALUER WHIC H IS DATED 25-04-2015;, I.E. AFTER A GAP OF ABOUT 10 YEARS. IN THE LAST 10 YEARS, THOUGH THE CASE WAS ARGUED BEFORE THE AO AND T HE CIT(A) NOBODY HAS POINTED OUT THAT THERE WAS A TYPOGRAPHICAL ERROR. EVEN BEFORE THE AO ALSO THE ASSESSEE HAS REFERRED TO THE GO VERNMENT APPROVED VALUERS REPORT AS ON 01-04-1984 AND IT WAS STATED THAT SINCE THERE WAS NO IMPROVEMENT OR DEVELOPMENT IN THE AR EA BETWEEN 1981 AND 1984, THEREFORE, HE HAS ADOPTED THE S AME VALUE AS GIVEN BY THE GOVERNMENT APPROVED VALUER AS ON 01-0 4-1984. EVEN BEFORE THE CIT(A) ALSO NO SUCH ARGUMENT WAS TAKEN THAT THERE WAS A TYPOGRAPHICAL ERROR AND THE ASSESSEE WANTED TO OBTAIN THE REPORT FROM THE VALUER FOR THE PURPOSE OF DETERMINING TH E COST OF ACQUISITION AS ON 01-04-1981. THEREFORE, THE FIRST PLANK OF 7 ITA NO.1015/PN/2012 ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE C OST OF ACQUISITION DETERMINED BY THE REGISTERED VALUER AS ON 01- 04-1984 IS INFACT THE COST OF ACQUISITION AS ON 01-04-1981 AND THER E WAS A TYPOGRAPHICAL ERROR CANNOT BE ACCEPTED. ACCORDINGLY, THE FIRST PLANK OF ARGUMENT IS REJECTED. 12. SO FAR AS THE SECOND PLANK OF THE ARGUMENT IS CONCE RNED THAT ADOPTION OF RS.100/- PER SQ.MTR AS ON 01-04-1981 BY THE AO AS AGAINST RS.110/- PER SQ. MTR ADOPTED BY THE ASSESSEE IS NOT BASED ON ANY COMPARATIVE ANALYSIS, WE FIND THERE IS SOME FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. TH E AO IN THE BODY OF THE ASSESSMENT ORDER HAS ADMITTED THAT THE ST AMP DUTY RATE AS ON 01-01-1991 POINTED OUT BY THE ASSESSEE IS ACTUAL RATE AS PUBLISHED AS ON 01-01-1991 FOR S.NO.23, H.NO.2B KHARADI FOR A PART OF THE LAND SOLD BY THE ASSESSEE WAS RS.220/- PER SQ. MTR. SIMILARLY, FOR THE LAND SOLD AT S.NO.24, H.NO.2A+2B+24/1C, KHARADI THE RATE AS ON 01-01-1991 COMES TO RS.200/- P ER SQ.MTR. THE AO HAS ADOPTED THE MEAN VALUE BY DOING BACKWARD IN DEXATION CALCULATED THE RATE AT RS.88/- PER SQ.MTR AND THEREAFTER ADOPTED RS.100/-PER SQ.MTR AS ON 01-04-1981 WHICH HAS BEEN UPH ELD BY THE CIT(A). 13. SINCE ADMITTEDLY THERE IS NO COMPARATIVE SALE INSTANC E OBTAINED EITHER BY THE AO OR BY THE ASSESSEE IN THE INS TANT CASE FOR DETERMINING THE COST OF ACQUISITION AS ON 01-04-1981 AND THE CALCULATION BY THE ASSESSEE AS WELL AS THE REVENUE ARE O N ESTIMATE BASIS, THEREFORE, ADOPTION OF RS.105/- PER SQ.MTR AS ON 01- 04-1981 IN OUR OPINION WILL MEET THE ENDS OF JUSTICE. WE ACCORDINGLY MODIFY THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ADOPT THE RATE OF 8 ITA NO.1015/PN/2012 RS.105/- PER SQ.MTR AS ON 01-04-1981 FOR THE PURPOSE O F CALCULATING THE COST OF ACQUISITION. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29-02-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 29 TH FEBRUARY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) CENTRAL, PUNE 4. 5. 6. THE CIT CENTRAL, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // $ ' //TRE COPY // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE