SHUBHA VICHARE, MUMBAI V. ITO 19(2)(4), MUMBAI

ITA 1124/MUM/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3541 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TASNEEM VARAWALA
• Keywords: Value adopted by valuation officer; Cost of acquisition; Fair market value; Valuation report
• Section: 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , , BEFORE S/SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL ME MBER ./ I.T.A. NO. 1124 /MUM/ 201 3 ( / ASSESSMENT YEAR : 2005 - 06 ) SMT.SHUBHA VICHARE NO.7, VARUNA DEFENCE OFFICE SOCIETY, LINKING ROAD, SANTACRUZ (W) MUMBAI - 400054 / VS. INCOME TAX OFFICER, WARD 19(2)(4), MUMBAI. ./ PAN : ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : ADTPV4719M / APPELLANT BY : MS.TASNEEM VARAWALA / RESPONDENT BY : SHRI PRAMOD NIKALJE / DATE OF HEARING : 24.11 2015 / DATE OF PRONOUNCEMENT : 13. 1 . 201 6 O R D E R PER SANDEEP GOSAIN, JM THIS IS AN APPEAL FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 8.11.2012 PASSED BY THE LD. CIT(A) - 11, MUMBAI FOR THE ASSESSMENT YEAR 2005 - 06. 2. FACT OF THE CASE ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME DATED 24.3.2006 DECLARING TOTAL INCOME OF RS.1,23,933/ - . THE RETURN WAS SELECTED FOR SCRUTINY AND BY FOLLOWING DUE PROCE SS OF INCOME TAX ACT, THE AO ADDED LONG TERM CAPITAL GAINS OF RS.6,37,400/ - AND AFTER ALLOWING ITA NO. 1124 / MUM/ 2013 2 DEDUCTION U/S 80I, THE AO DETERMINED TOTAL INCOME OF THE ASSESSEE AT RS.7,64,330/ - . 2.1 THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS O F RS.3,50,152/ - ON SALE OF PLOT LAND AT SANGLI. THE ASSESSEE CARRIED FORWARD THIS LOSS. HE FURTHER OBSERVED THAT THE ASSESSEE HAD PURCHASED A PLOT OF LAND IN THE YEAR 1972 FOR A TOTAL CONSIDERATION OF RS.6,966.75. BEARING SURVEY NO.315A, CS NO.7861, E XTN. MANISHA STATE BANK COLONY, SANGLI AND SOLD IT FOR A TOTAL CONSIDERATION OF RS.22,79,000/ - . THE COST OF ACQUISITION WAS SHOWN ON 1.4.1981 AT RS.5,47,740/ - BY A APPROVED VALUER , ON 25.2.2005 AND AFTER INDEXATION OF COST OF LAND WAS DETERMINED AT RS.26,29,152/ - AND CLAIMED LONG TERM CAPITAL LOSS OF RS.3,50,152/ - . THE AO CALLED FOR THE EXPLANATION FROM THE ASSESSEE AND ON PERUSAL OF THE VALUATION REPORT, THE AO OBSERVED THAT ASSESSEE ADOPTED VALUATION OF THE LAND AT RS.600 PER SQ.MT. WITHOUT ANY BASIS. THE AO REFERRED THE VALUATION TO THE DVO AND THE DVO AFTER CONSIDERING TWO INSTANCES IN THE SAME VICINITY DETERMINED THE VALUE OF LAND AT RS.375/ - PER SQ. MT. AS ON 1.4.1981. ACCORDINGLY, HE DETERMINED THE VALUE OF LAND AT RS.3,42,000/ - AS ON 1. 4.1981 BEING FAIR MARKET VALUE OF THE PLOT . WHILE DETERMINING THE VALUE, THE AO HAS ALSO CONSIDERED THE EXPLANATION TENDERED BY THE ASSESSEE AND THE PROVISIONS OF SECTION 55A OF THE ACT . ACCORDINGLY, THE AO DETERMINED THE TOTAL COST OF ACQUISITION AT R S.6,37,400/ - AND ADDED THE SAME TO THE TOTAL INCOME OF ASSESSEE AND REJECTED THE CLAIM OF CAPITAL LOSS ON ASSET. AGGRIEVED BY THE DECISION OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO IN TURN UPHELD THE ACTION OF THE AO. BEING AGGRIEVED BY THE DECISION OF T HE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 3. BEFORE US, THE LD.AR SUBMITTED THAT ACCORDING TO THE VALUATION REPORT GIVEN BY THE DVO WAS RS.375/ - PER SQ. MT AS ON 1.4.1981 AND THE ITA NO. 1124 / MUM/ 2013 3 VALUATION DONE BY THE ASSESSEE WA S RS.600 PER SQ.MT. THEREFORE, THE ASSESSEE MADE VALUATION ON HIGHER SIDE THAN THE VALUATION OF DVO. HE SUBMITTED THAT THE AO WAS NOT RIGHT IN REFERRING THE CASE FOR VALUATION TO THE DVO WHEN THE VALUATION DONE BY THE ASSESSEE IS ACCORDING TO FAIR MARKE T VALUE AS ON 1.4.1981. HE ALSO REFERRED THE PROVISIONS OF SECTION 55A OF THE ACT AND ACCORDING TO IT, THE AO HAS NO POWER TO REFER THE MATTER OF VALUATION TO THE DVO WHEN THE VALUATION ADOPTED BY THE ASSESSEE IS EQUAL OR MORE THAN THE FAIR MARKET VALUE. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE ON THE FOLLOWING CASE LAW: A) CIT V/S PUJA PRINTS (2014)360 ITR 697 (BOM) B) CIT V/S DAULAL MOHTA HUF, ITA NO.1031 OF 2008 C) DCIT V/S CHATURBHUJ VALLABHDAS (HUF) (2011) 130 ITD 230 D) SMT KRISHNABAI TING RE V/S ITO (2006) 101 ITD 317 (PUNE) E) MS.RUBAB M KAZERANI V/S JCIT (2004) 91 ITD 429 F) VIJAYKUMAR M SHAH V DCIT (2010) 2 ITR 116 G) SMT AMIYA BALA PAUL V CIT (2003) 262 ITR 407 . HE THEREFORE PRAYED THAT THE LONG TERM CAPITAL LOSS CLAIMED BY THE ASSESS EE BE ALLOWED. 4 . ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE VALUATION REPORT SUBMITTED BY THE ASSESSEE HAS NO LEGAL BASIS AND ALSO NO LEGAL SANCTITY. ACCORDINGLY, HE RELIED ON THE ORDER OF LOWER AUTHORITIES. 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE STANDS COVERED BY THE VARIOUS DECISIONS OF HIGH COURTS AND TRIBUNAL FOR THE SAKE OF CONVENIENCE WE PRODUCE THE RELEVANT PART OF THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S PUJA PRINTS. (2014) 360 ITR 697 (BOM), IN WHICH IT HAS BEEN HELD BY THE HONBLE HIGH COURT THAT WHEN THE ASSESSEE HAS ADOPTED ITA NO. 1124 / MUM/ 2013 4 MUCH MORE THAN FAIR MARKET VALUE THEN REFERENCE TO VALUATION OFFICER COULD NOT BE MADE : 7. WE FIND THAT SECTION 55A(A) OF THE ACT VERY CLEARLY AT THE RELEVANT TIME PROVIDED THAT A REFERENCE COULD BE MADE TO THE DEPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THEN THE FAIR MARKET VALUE. IN THE PRESENT CASE, IT IS AN UNDISPUTED POSITION T HAT THE VALUE ADOPTED BY THE RESPONDENT - ASSESSEE OF THE PROPERTY AT RS.35.99 LAKHS WAS MUCH MORE THAN THE FAIR MARKET VALUE OF RS.6.68 LAKHS EVEN AS DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER. IN FACT, THE ASSESSING OFFICER REFERRED THE ISSUE OF VALU ATION TO THE DEPARTMENTAL VALUATION OFFICER ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS ON 1981 AS MADE BY THE RESPONDENT - ASSESSEE WAS HIGHER THEN THE FAIR MARKET VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATION OF SECTION 55A( A ) OF THE ACT IS NOT JUSTIFIED. RESPECTFULLY FOLLOWING THE ABOVE SAID DECISION, WE FIND MERIT IN THE CONTENTION OF THE LD. AR AND ACCORDINGLY SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO GIVE BENEFIT OF THIS JUDICIAL PRONOUNCEMENT TO THE ASSESSEE . 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 13TH TH , JAN , 2015 . SD SD ( , / RAJENDRA ) ( / S ANDEEP GOSAIN ) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED . 13TH JAN ,201 6 . . ./ SRL , SR. PS ITA NO. 1124 / MUM/ 2013 5 / COPY O F THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI