K.Smita, Hyd, Hyderabad V. ITO, Ward-8(1), Hyd, Hyderabad

ITA 1062/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2403 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Sale consideration of property below Jantri Value; Gift; Cost of acquisition; Fair market value
• Section: 50C; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1062/HYD/2016 ASSESSMENT YEAR: 2008-09 K. SMITA, HYDERABAD [PAN: AHCPK0009N] VS INCOME TAX OFFICER, WARD-8(1), NOW ITO, WARD-4(5), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. RAGHAVENDRA RAO, AR FOR REVENUE : SMT. N. SWAPNA, DR DATE OF HEARING : 06-11-2017 DATE OF PRONOUNCEMENT : 10-11-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E LD.COMMISSIONER OF INCOME TAX (APPEALS)-9, HYDERABA D, DATED 22-02-2016, DISMISSING THE ASSESSEES CONTENTIONS. 2. BRIEFLY STATED, ASSESSEE HAS FILED RETURN OF INCOM E DECLARING CERTAIN LONG TERM CAPITAL GAINS (LTCG) AFTE R CLAIMING DEDUCTIONS. THE RETURN WAS PROCESSED AND SELECTED FO R SCRUTINY. IN THE COURSE OF SCRUTINY PROCEEDINGS, INFORMATION WAS CALLED FOR AND SAME WAS FURNISHED BY ASSESSEE AS SEEN FROM PAR A 3 OF THE ASSESSMENT ORDER. DURING THE YEAR UNDER CONSIDERATIO N, ASSESSEE HAS SOLD A PROPERTY AT ROAD NO. 12, BANJARA HILLS FO R A CONSIDERATION OF RS. 1,00,50,000/-. HOWEVER, SUB-REG ISTRAR ADOPTED THE VALUE FOR JURISDICTION AT RS. 1,22,38,000 /-. INVOKING I.T.A. NO. 1062/HYD/2016 :- 2 - : THE PROVISIONS OF SECTION 50C(1) OF THE INCOME TAX ACT [ACT] ASSESSING OFFICER (AO) ADDED AN AMOUNT OF RS. 21,88, 000/-. IT WAS THE ASSESSEES EXPLANATION THAT EVEN THOUGH PROPERTY SOL D WAS 330 SQ. YDS., AN AREA OF 60 SQ. YDS., IS AN APPROACH RO AD TO THE PLOT OF 270 SQ. YDS., WHICH IS BEHIND ANOTHER PLOT AND APPRO ACH ROAD IS A MUST. THEREFORE, THE CONSIDERATION WAS ONLY FOR 270 SQ. YDS., AND NOT FOR ENTIRE 330 SQ. YDS., REGISTERED. SINCE THE SUB -REGISTRAR ADOPTED THE MARKET VALUE, THE AO REJECTED ASSESSEES CO NTENTIONS AND MADE THE ADDITION. IN ADDITION TO THAT, ASSESSEE CLA IMED AN AMOUNT OF RS. 90 LAKHS PAID FOR PURCHASE OF A FLAT TO M/S. SOBHA DEVELOPERS AND RS. 10 LAKHS THAT WAS DEPOSITED IN REC BONDS AS AN EXEMPTION FROM CAPITAL GAINS (TOTAL OF RS. 1 CRORE) . THE COST OF ACQUISITION ADOPTED BY ASSESSEE FOR THE PURPOSE OF CO MPUTING CAPITAL GAINS WAS FROM THE DATE OF ASSESSEE GETTING THE GIFT OF PROPERTY FROM HER FATHER. AO MADE THE ADDITION OF RS. 21,88,000/- U/S. 50C AND EXCESS CLAIM OF RS. 60,000/- U/S. 54 A FTER VERIFYING THE AGREEMENT OF PURCHASE. ASSESSEE PREFERRED AN APPE AL BEFORE THE LD.CIT(A) CONTESTING ABOUT THE VALUE ADOPTED U/S. 50C AND ALSO THE DISALLOWANCE OF RS. 60,000/- U/S. 54. IN ADDITI ON, ASSESSEE ALSO CONTESTED THAT THE COST OF ACQUISITION HAS TO BE ADOP TED FROM THE TIME ASSESSEES FATHER ACQUIRED THE PROPERTY AND THE REFORE, REQUESTED THE CIT(A) TO CONSIDER THE PERIOD OF HOLDIN G AND GRANT COST OF ACQUISITION FROM THE TIME, HER FATHER ACQUIRED THE PROPERTY. EVEN THOUGH ASSESSEE CLAIM OF DEDUCTION ON INVESTMENT IN REC BONDS WAS ALLOWED BY THE AO (AS THE COMPUTATION STARTED FROM THE RETURNED INCOME) ASSESSEE, HOWEVER, PREFERRED AN APP EAL BEFORE THE LD.CIT(A) WRONGLY CONTESTING THAT AO HAS NOT ALLOWED THE AMOUNT. LD.CIT(A), HOWEVER, DID NOT ALLOW ANY OF THE CONTENTION S AND REJECTED THE GROUNDS AND DISMISSED THE APPEAL. I.T.A. NO. 1062/HYD/2016 :- 3 - : 3. ASSESSEE RAISED THE GROUNDS ON ALL THE FOUR ISSU ES. ADDITIONAL GROUNDS WERE SUBMITTED THAT THE AO HAS ALREADY ALLOWED THE CLAIM U/S. 54 ON THE REC BONDS, THEREFORE , THE DISMISSAL OF THE GROUNDS BY THE CIT(A) MAY RESULT IN DISALLOWING THE CLAIM BY AO. THESE ADDITIONAL GROUNDS BEING LEGA L IN NATURE, ARE ADMITTED. 4. AFTER CONSIDERING THE CONTENTIONS OF ASSESSEES CO UNSEL AND PERUSING THE ARGUMENTS OF THE LD.DR, I AM OF THE OP INION THAT THE ISSUES ARE TO BE RE-CONSIDERED BY THE AO AFRESH. EVEN THOUGH THE SALE DEED, ON THE BASIS OF WHICH THE VALUE OF THE SUB-REGISTRAR WAS ADOPTED BY THE AO, INDICATES THAT PIECE OF 60 SQ. YD S., IS SHOWN SEPARATELY LEADING TO THE MAIN PLOT WHICH IS B EHIND ANOTHER PLOT, THE CONTENTION THAT IT IS AN APPROACH ROAD AND HAS N O VALUE SEPARATELY HAS NOT BEEN CONSIDERED BY THE AO AT ALL. JUST BECAUSE THE SUB-REGISTRAR ADOPTED THE VALUE AS PER THE PRESCRIBE D GUIDE LINES GIVEN BY THE GOVERNMENT, INDIVIDUAL VALUE OF TH E PROPERTY MAY DEPEND ON VARIOUS FACTORS. EVEN THE PROVISIONS O F SECTION 50C(2) ALLOWS THAT ASSESSEE CAN CLAIM BEFORE THE AO THA T THE VALUE ADOPTED OR ASSESSED IS MORE THAN THE FAIR MARKET VALUE OF THE PROPERTY. IN SUCH CASE, THE AO HAS TO REFER THE VALU E TO VALUATION OFFICER BEFORE INVOKING THE PROVISIONS OF SECTION 50C (1). I AM OF THE OPINION THAT SINCE THE LAND ITSELF IS SHOWN AN APPROAC H ROAD, BUT FOR WHICH THE PLOT BEHIND COULD NOT BE REACHED, THE CO NTENTION OF ASSESSEE REQUIRES EXAMINATION. AO MAY INSPECT AND V ERIFY WHETHER ASSESSEES CONTENTIONS ARE CORRECT OR HE MAY REFER THE VALUATION TO THE VALUATION OFFICER AS PROVIDED U/S. 50C(2), GIVING PROPER OPPORTUNITY TO ASSESSEE TO EXPLAIN THE CONTENTIONS. THE REFORE, TO THE EXTENT OF ADDITION OF RS. 21,88,000/-, I AM OF THE OPINION THAT I.T.A. NO. 1062/HYD/2016 :- 4 - : AO IS STATUTORILY BOUND TO REFER THE MATTER TO VALUATIO N OFFICER WITH SPECIFIC DIRECTION WHETHER 60 SQ. YDS., CAN BE CONSID ERED AT MARKET VALUE. WITH THESE DIRECTIONS, THE GROUNDS PERTAINING T O THE ADDITION U/S. 50C, FOR THAT PURPOSE IS RESTORED TO THE FILE OF A O. 4.1. COMING TO THE COST OF ACQUISITION, EVEN THOUGH LD.CIT(A) HAS NOT ENTERTAINED THE CLAIM ON THE REASON T HAT ASSESSEE HAS NOT MADE THE CLAIM IN RETURN OF INCOME, THE IGNORANCE OF ASSESSEE COULD NOT COME IN ANY WAY OF M AKING PROPER CLAIM AS PER THE PROVISIONS OF THE ACT. SINCE THE LAW PROVIDES FOR COST OF ACQUISITION AND PERIOD OF HOLDING FROM THE P REVIOUS OWNER IN CASE OF DEVOLUTION BY WAY OF GIFT, SUCCESSION AND INHERITANCE ETC., THE ASSESSEE HAS MERIT IN CLAIMING COST OF ACQUIS ITION AND PERIOD OF ACQUISITION BEFORE THE LD.CIT(A). I AM OF THE OPINION THAT SINCE IT IS A STATUTORY CLAIM, THE SAME CAN BE ALLOWED TO ASSESSEE. HOWEVER, SINCE THESE ASPECTS ARE NOT EXAMINED BY THE AO , I AM OF THE OPINION THAT AO CAN RE-EXAMINE THE ISSUE OF COST OF ACQUISITION BY GIVING DUE OPPORTUNITY TO ASSESSEE TO MAKE A PROPE R CLAIM AND CONSIDER THE SAME ON MERITS AS PER THE PROVISIONS OF L AW AND FACTS. 4.2. COMING TO THE NEXT ISSUE OF ADDITION OF RS. 60,0 00/- TOWARDS EXCESS DEDUCTION U/S. 54, IT IS ON RECORD THA T ASSESSEE HAS PAID AN AMOUNT OF RS. 90 LAKHS TO M/S. SOBHA DEVELOP ERS. THE COST OF PROPERTY AS PER THE SALE AGREEMENT WAS RS. 41, 30,000/- AS AGREED BY THE AO AND STAMP DUTY THEREON AT RS. 3,10,00 0/-. THE DEVELOPMENT AGREEMENT FOR COMPLETION OF SEMI-FINISHED FLAT WAS TAKEN AT RS. 45 LAKHS. AO HAS ALLOWED ONLY THESE AMO UNTS EVEN THOUGH ASSESSEE HAS PAID BALANCE AMOUNT FOR THE PURPOS E OF VAT AND REGISTRATION CHARGES ETC. AO SHOULD HAVE SUBJECTED THESE FOR I.T.A. NO. 1062/HYD/2016 :- 5 - : PROPER VERIFICATION BY GIVING DUE OPPORTUNITY TO ASSES SEE BEFORE DISALLOWING THE AMOUNT. I AM SATISFIED THAT ASSESSEE H AS INVESTED RS. 90 LAKHS IN PURCHASE OF FLAT AND CLAIM WAS PROPE R. HOWEVER, SINCE AO HAS NOT EXAMINED THE EXPENDITURE ON RS. 60,0 00/- MADE TOWARDS INVESTMENT IN THE HOUSE (IN THE FORM OF VAT AND OTHER AMOUNTS), AO IS DIRECTED TO EXAMINE THE PAYMENT AND ALL OW THE SAME. 4.3. LAST OF THE ISSUE WAS WITH REFERENCE TO REJECTIO N OF ASSESSEES CLAIM ON INVESTMENT IN REC BONDS BY THE CI T(A). IN FACT, ASSESSEE CLAIMED INVESTMENT OF RS. 10 LAKHS IN R EC BONDS WHICH IN FACT WAS ALLOWED BY THE AO. THEREFORE, RAISI NG A GROUND BEFORE THE CIT(A) IS ITSELF A MISTAKE. LD.CIT(A), WI THOUT EXAMINING THE FACTS, DISMISSING THE GROUND HAS CAUSED UN-NECESS ARY PROBLEM WHEREIN AO MAY HAVE TO DISALLOW THE CLAIM BECAUSE OF THE ORDER OF THE CIT(A), WHEREAS THE AO AFTER DUE VERIFICATION ALLO WED IN THE ASSESSMENT ORDER. THEREFORE, TO THAT EXTENT, THE ORDER OF CIT(A) IS MODIFIED AND ASSESSEES ADDITIONAL GROUND ON THAT IS ALLOWED. AO IS DIRECTED TO EXAMINE THE ISSUES OF (1) ADOPTION OF SUB-REGISTRAR VALUE U/S. 50C, (2) ADOPTION OF CORRECT COST OF ACQUI SITION AND (3) ALLOWING THE CLAIM U/S. 54 TO AN EXTENT OF RS. 60,00 0/- AS DIRECTED ABOVE. THE GROUNDS ARE CONSIDERED ALLOWED FOR STATISTI CAL PURPOSES. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH NOVEMBER, 2017 TNMM I.T.A. NO. 1062/HYD/2016 :- 6 - : COPY TO : 1. K. SMITA, 3-6-116, STREET NO. 18, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-8(1), NOW ITO, WARD -4(5), HYDERABAD. 3. CIT (APPEALS)-9, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.