SHRI RAMJILAL RAW, AJMER V. INCOME TAX OFFICER, WARD-1-2, AJMER

ITA 1023/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6901 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 04-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P P MEENA JCIT DHK
• Assessee Lawyers: SATISH SHIVNANI
• Keywords: Sale consideration of property below Jantri Value; Gift; Cost of acquisition; Fair market value
• Section: 50C; 142(1); 148; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 1023/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 RAMJILAL RAW THROUGH L/H SMT. SITA DEVI WIFE OF DECEASED ASSESSEE, H.NO. 101/6, SHIVNANAGAR, TOPDARA, AJMER. CUKE VS. I.T.O., WARD 1(2), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AMGPR 5267 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SATISH SHIVNANI (CA). JKTLO DH VKSJ LS@ REVENUE BY : SHRI P.P. MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/01/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 07/01/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19/07/2018 OF LD. CIT(A), AJMER FOR THE A.Y. 2011-1 2. THE ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED TO UPHOLD THE ASSESSMENT ORDER PASSED BY A.O. 2. THE A.O. HAS GROSSLY ERRED IN CALCULATION OF LON G TERM CAPITAL GAIN AT RS. 4,15,800/-. AS PER LONG TERM CAPITAL GAIN MAY BE CALCULATED AS UNDER: ITA 1023/JP/2018_ RAMJILAL RAW VS ITO 2 THE LTGC CALCULATION, ASSESSEE IS ALLOWED TO DEDUC T INDEXED COST OF ACQUISITION/INDEXED COST OF IMPROVEMENTS FROM THE S ALE PRICE AND ALSO CLAIM EXEMPTIONS TO WORK OUT CAPITAL GAIN TAX. (INDEXATION IS DONE BY APPLYING CIT-COST INFLATION INDEX. THIS INCREASES ASSESSEE COST BASE I.E. PURCHASE PRICE AN D LOWERS ASSESSEE GAINS. ASSESSEE PURCHASE PRICE IS ADJUSTED FOR THE IMPACT OF INFLATION. THE ASSESSEE CAN CALCULATE THE INDEXED COST OF PUR CHASE. THE INDEXED COST IS CALCULATED WITH THE HELP OF A TABLE OF COST INFLATION INDEX. DIVIDE THE COST AT WHICH ASSESSEE PURCHASED THE PR OPERTY BY THE INDEX AS ON THE DATE OF THE PURCHASE. MULTIPLY THIS BY THE INDEX AS ON THE DATE OF SALE. AT THE TIME OF ORDER PASSING U/S 144 THE A.O. HAS IGNORED THE ABOVE PROCEDURE. 3. THE A.O. HAS GROSSLY ERRED IN ADDITION OF BANK I NTEREST OF RS. 6349/-. 4. THE A.O. HAS GROSSLY ERRED IN DISALLOWING DEDUCT IONS U/S 80C. 5. THE GROUND OF APPEAL MAY BE ADDED, CRAVE TO MODI FY BEFORE THE APPELLATE AUTHORITY DURING THE APPEAL PERIOD. 2. THE ASSESSEE IS AN INDIVIDUAL AND HAS NOT FILED A NY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFI CER RECEIVED INFORMATION FROM THE INVESTIGATION WING REGARDING D EPOSITS MADE IN THE BANK ACCOUNT OF THE ASSESSEE AS WELL AS VARIOUS INVE STMENTS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. ACCOR DINGLY, THE ASSESSING OFFICER ISSUED A NOTICE U/S 148 OF THE INCOME TAX AC T, 1961 (IN SHORT THE ACT) ON 30/8/2013. THEREAFTER THE ASSESSING OFFICER ISSUED A NOTICE U/S 143(2) ASKING THE ASSESSEE TO FILE CERTAIN INFORMAT ION RELEVANT TO THE ITA 1023/JP/2018_ RAMJILAL RAW VS ITO 3 COMPLETION OF ASSESSMENT. SUBSEQUENTLY THERE WAS A C HANGE OF ASSESSING OFFICER AND FRESH NOTICE U/S 142(1) OF THE ACT WAS I SSUED ON 23/7/2014. THE ASSESSEE FINALLY FILED HIS RETURN OF INCOME ON 1 3/11/2014 DECLARING TOTAL INCOME OF RS. 2,32,470/-. THEREAFTER A NOTICE U/S 143(2) WAS ISSUED BY THE ASSESSING OFFICER AND IN RESPONSE TO THE SAM E, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE ASSESSM ENT PROCEEDINGS. THE ASSESSEE FILED COMPUTATION OF INCOME SHOWING LONG TE RM CAPITAL GAIN OF RS. 1,97,001/- ON SALE OF LAND ON 20/11/2010 FOR A CONSIDERATION OF RS. 4,15,800/- IN TERMS OF SECTION 50C OF THE ACT. THE S AID PLOT OF LAND WAS CLAIMED TO HAVE BEEN ACQUIRED BY THE ASSESSEE ON 02 /8/1991 FOR RS. 59,000/-, HOWEVER, THE ASSESSEE PRODUCED A POWER OF A TTORNEY FOR ACQUISITION OF THE LAND IN QUESTION WHEREIN NO CONSI DERATION WAS STATED TO BE PAID. ACCORDINGLY THE ASSESSING OFFICER DISALLOWE D THE CLAIM OF COST OF ACQUISITION AND INDEXED COST OF ACQUISITION OF LAND IN QUESTION WHILE COMPUTING THE CAPITAL GAIN ARISING FROM SALE OF LAN D AND HENCE TAKEN THE ENTIRE SALE CONSIDERATION OF RS. 4,15,800/- AS LONG TERM CAPITAL GAIN. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A), HOWEVER, NO BODY HAS APPEARED ON BEH ALF OF THE ASSESSEE BEFORE THE LD. CIT(A). ACCORDINGLY, THE ADDITION MAD E BY THE ASSESSING OFFICER WAS CONFIRMED AND APPEAL OF THE ASSESSEE WAS DISMISSED. ITA 1023/JP/2018_ RAMJILAL RAW VS ITO 4 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THOUGH THE ASSESSEE HAS ACQUIRED THE LAND IN QUESTION THROUGH A REGISTERED POWER OF ATTORNEY, HOWEVER, IT CANNOT BE CONSIDERED AS NIL CO ST OF ACQUISITION. THE LD AR HAS FURTHER POINTED OUT THAT THE ASSESSEE HAD ALREADY EXPIRED AND THEREFORE, NOW AT THIS STAGE IT IS NOT POSSIBLE TO P RODUCE ANY EVIDENCE IN SUPPORT OF THE PAYMENT OF THE ACTUAL PURCHASED CONS IDERATION. THUS, THE LD AR HAS SUBMITTED THAT THE PURCHASE CONSIDERATION SHALL BE CONSIDERED AS FAIR MARKET VALUE OF THE LAND AS ON THE DATE OF ACQUISITION WHICH WAS CLAIMED BY THE ASSESSEE AT RS. 59,000/- BEING THE D LC RATE. IN SUPPORT OF THAT CLAIM, THE ASSESSEE HAS ALSO PRODUCED VARIOUS SALE INSTANCES SHOWING THE DLC RATE OF THE LAND IN QUESTION. FURTHER THE L D. AR HAS SUBMITTED THAT SINCE THE LAND WAS ACQUIRED THROUGH POWER OF ATT ORNEY, THEREFORE, THE COST OF ACQUISITION IN THE HAND OF THE EARLIER OWNER SHALL BE TAKEN AS COST OF ACQUISITION IN THE HAND OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF ACIT VS. MADAN LAL JAIN & SONS (1983) 14 0 ITR 200 (DEL). THE LD. AR HAS ALSO RELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SHANTI CHNADRAN (2000) 241 ITR 371 AS WELL AS DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. N.N. MOHAN & SONS (2001) 250 ITR 131. THUS, ONCE THE PROPER WAS ACQUIRED UNDER THE POWER OF ATTORNEY WITHOUT ANY CONSIDERATION THEN IT IS IN THE NATURE OF ITA 1023/JP/2018_ RAMJILAL RAW VS ITO 5 GIFT AND THEREFORE, THE COST OF ACQUISITION IN THE HAND OF THE PREVIOUS OWNER SHALL BE THE COST OF ACQUISITION IN THE HAND O F THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. ALTERNATIVEL Y THE LD AR HAS SUBMITTED THAT THE FAIR MARKET PRICE AS ON THE DATE OF ACQUISITION SHALL BE TAKEN AS COST OF ACQUISITION. 5. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE POWER OF AT TORNEY IN QUESTION AS SPECIFICALLY STATED THAT NO CONSIDERATION WAS PAID B Y THE ASSESSEE, THEREFORE, THE COST OF ACQUISITION IS NIL IN THE HA ND OF THE ASSESSEE WHICH WAS TAKEN BY THE ASSESSING OFFICER WHILE COMPUTING T HE CAPITAL GAIN. HE HAS FURTHER CONTENDED THAT FROM THE CONTENTS OF THE POWER OF ATTORNEY, IT CANNOT BE INFERRED THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE AS UNDER GIFT. THEREFORE, ONCE THE ASSESSEE GOT THE PRO PERTY WITHOUT ANY SALE CONSIDERATION THEN COST OF ACQUISITION WILL BE NIL. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ACQUISITION IN CASE OF THE A SSESSEE IS NOT A SIMPLICITER MODE OF TRANSFER AS PROVIDED U/S 49(1) OF THE ACT SO AS TO APPLY THE DEEMING PROVISIONS OF COST OF ACQUISITION IN THE HAND OF THE PREVIOUS OWNER AS COST OF ACQUISITION IN THE HAND OF THE ASSESSEE. SINCE IT IS NOT A TRANSFER OF THE PROPERTY BY ANY RELATED PA RTY OR ON ACCOUNT OF LOVE ITA 1023/JP/2018_ RAMJILAL RAW VS ITO 6 AND AFFECTION, THEREFORE, EVEN IF THE PROPERTY WAS T RANSFERRED UNDER POWER OF ATTORNEY IN FAVOUR OF THE ASSESSEE WHEREUNDE R THE ASSESSEE WAS ALSO AUTHORIZED TO SELL THE LAND IN QUESTION. THE AS SESSEE HAS ALSO NOT DISPUTED THE OWNERSHIP OF THE PROPERTY IN QUESTION A S ACQUIRED THROUGH THE POWER OF ATTORNEY DATED 02/8/1991. ONCE THERE WAS A TRANSACTION OF TRANSFER OF THE PROPERTY IN QUESTION BETWEEN THE TWO UNRELATED PARTIES AND THE SALE/PURCHASE CONSIDERATION IS NOT ASCERTAI NABLE FROM THE TITLED DOCUMENT THEN THE ASSESSING OFFICER HAS TO DETERMIN E THE COST OF ACQUISITION AS PER THE FAIR MARKET PRICE AS ON THE DATE OF ACQUISITION. IT IS PERTINENT TO NOTE THAT THE FAIR MARKET PRICE OF THE PROPERTY AS ON THE DATE OF ACQUISITION WILL BE THE PROPER AND REASONABLE AMO UNT TO BE TREATED AS COST OF ACQUISITION. THE ASSESSEE HAS ALSO CLAIMED THE COST OF ACQUISITION AS FAIR MARKET PRICE AS ON 02/8/1991 AND THEREFORE, IN OUR CONSIDERED VIEW, THE SAID CLAIM OF COST OF ACQUISITION BEING FA IR MARKET VALUE/DLC RATE AS ON 02/8/1991 SHALL BE A PROPER AND REASONABLE ME THOD FOR DETERMINING THE COST OF ACQUISITION WHEN IT IS OTHERWISE NOT ASCE RTAINABLE FROM THE DOCUMENT. HENCE, WE SET ASIDE THIS ISSUE TO THE REC ORD OF THE ASSESSING OFFICER FOR COMPUTING THE FAIR MARKET PRICE OF THE PROPERTY IN QUESTION AND THEN ALLOW THE BENEFIT OF COST OF ACQUISITION ALONGWI TH COST OF INDEXED WHILE COMPUTING THE CAPITAL GAIN IN QUESTION. ITA 1023/JP/2018_ RAMJILAL RAW VS ITO 7 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JANUARY, 2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07 TH JANUARY, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RAMJILAL RAW THROUGH L/H SMT. SIT A DEVI, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD 1(2), AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1023/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR