Mr.Dinshaw Cawasji , Bangalore V. Assistant Commissioner of Income Tax Circle-1(1), Bangalore

ITA 1128/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4790 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: C J BRITTO CA SHRI B K
• Keywords: Depreciation; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B ENGALURU BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I TA NO. 1128 / BANG/2 0 1 7 (ASSESSMENT YEAR S : 20 1 1 - 12 ) M/S.DINSHAW CAWASJI, NO.16, ALEXANDARA STREET, RICHM OND TOWN, BENGALURU - 5600 25. PAN:ABHPC1767 G VS. APPELLANT ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BENGALURU. RESPONDENT AND ITA NO.1201/BANG/2017 (ASSESSMENT YEAR: 2011 - 12) (BY THE REVENUE) ASSESSEE BY : SHRI C.J.BRITTO, CA. REVENUE BY : SHRI B.K.PANDA, CIT(DR) DATE OF HEARING : 10 /0 4 /2018 DATE OF PRONOUNCEMENT : 31 /05/2018 O R D E R PER I NTURI RAMA RAO, AM : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX(APPEALS) - 7, [CIT(A)], BENGALURU, DATED 15/02/2017 FOR THE ASSESSMENT YEAR 2011 - 12. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CAPITAL GAINS . THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 WAS FILED ON 25/07/2011 DISCLOSING TAXABLE INCOME OF RS.21,97,20,310/ - WHICH INCLUDES INCOME UNDER HEAD CAPITAL GAINS OF RS.21,79,25,224/ - . AGAINST THE SAID RETURN OF INCOME, THE ASS ESSMENT WAS COMPLETED BY THE ASST. ITA NO S . 1128 & 1201 /BANG/20 17 PAGE 2 OF 8 COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BENGALURU [ THE AO FOR SHORT] VIDE ORDER DATED 23/12/2013 PASSED U/S 143(3) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] AT TOTAL INCOME OF RS.30, 40,19,515/ - . THE DISPARITY BETWEEN RETURNED INCOME AND ASSESSED INCOME IS ON ACCOUNT OF ADDITION MADE BY ADOPTING CONSIDERATION OF RS.32,53,83,738/ - AS AGAINST CONSIDERATION SHOWN OF RS.29,25,41,204 ON ACCOUNT OF ENTERING INTO JOINT DEVELOPMENT AGREEMENT (JDA) AND ALSO RESTRICTING THE COST OF IMPROVEMENT OF RS.26,66,670/ - AS AGAINST THE CLAIM OF RS.49,56,376/ - . THE FACTS, SET OUT BY THE AO ON ACCOUNT OF HIGHER VALUE OF CONSIDERATION IS AS UNDER: AS REGARDS COST OF IMPROVEMENT, THE FACTS SET OUT BY TH E AO ARE AS UNDER: ITA NO S . 1128 & 1201 /BANG/20 17 PAGE 3 OF 8 3. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) WHO, VIDE IMPUGNED ORDER HAD ALLOWED PART RELIEF IN RESPECT OF COST OF IMPROVEMENT BY DIRECTING THE AO TO ADOPT FMV OF THE PROPERTY SOLD AS ON 01/04/1981 AT RS.50 . 4. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US IN ITA NO.1128/BANG/2017 AND THE DEPARTMENT IS IN APPEAL IN ITA NO.1201/BANG/2017. 5. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO S . 1128 & 1201 /BANG/20 17 PAGE 4 OF 8 ITA NO S . 1128 & 1201 /BANG/20 17 PAGE 5 OF 8 5. AS REGARDS F AIR MARKET VALUE ( F MV ) OF THE BUILDING AS ON 01/04/1981, THE LD.CIT(A) DIRECTED THE AO TO RE - COMPUTE COST BY CONSIDERING DEPRECIATION RATE OF 5% ON THE INDEXED COST OF ACQUISITION. HOWEVER, THE LD. CIT(A) HAD FAILED TO ADJUDICATE THE GROUNDS RAISED REGARDING COST OF IMPROV EMENT AND INDEX ATION THEREON AS ON 01/04/1981. THE LD.CIT(A) ALSO ALLOWED THE GROUND RELATING TO 1/3 RD SHARE OF THE SISTER OF THE ASSESSEE. THE LD. CIT(A) HAD FAILED TO ADJUDICATE GROUND RAISED REGARDING DISALLOWANCE OF EXPENSES INCURRED ON TRANSFER OF PR OPERTY OF RS.49,56,376/ - . 6. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT COST OF CONSTRUCTION WAS BASED ON VALUATION REPORT PROVIDED BY GOVT. APPROVED INDEPENDENT VALUER. IT IS FURTHER SUBMITTED THAT THE ENTIRE COST OF CONSTRUCTION WAS NOT MET BY THE DEVELOPER BUT PARTLY BY THE ASSESSEE HIMSELF AND THEREFORE, THE COST OF CONSTRUCTION MET BY THE ASSESSEE SHOULD NOT BE TREATED AS PART OF CONSIDERATION AND THE COST OF WORK CARRIED WORKED OUT BY THE ASSESSEE CAME TO RS.3,28,41,951/ - AND THE SAME SHOUL D BE REDUCED FROM THE COST OF CONSTRUCTION ESTIMATED BY THE VALUER. AS REGARDS FMV OF THE LAND SOLD AS ON 1/4/1981, IT IS SUBMITTED THAT THE AO HAD ADOPTED VALUE OF THE PROPERTY WHICH WAS LOCATED IN DIFFERENT LOCATIONS I.E. SHANTHINAGAR BUT THE PROPERTY F ALLS UNDER RICHMOND ROAD. IT IS SUBMITTED THAT THE AO SHOULD HAVE ADOPTED FMV SITUATED IN RICHMOND TOWN. IN SUPPORT OF THIS, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I. ITA NO.161/BANG/2011 DATED 31/5/2011 II. C.H.PRAHALADA RAO VS. DCIT IN ITA NO.1152/BA NG/2009 DATED 17/9/2010 ITA NO S . 1128 & 1201 /BANG/20 17 PAGE 6 OF 8 AS REGARDS COST OF IMPROVEMENT AFTER 1/4/1981, THE LD.CIT(A) HAS FAILED TO ADJUDICATE THE GROUNDS OF APPEAL. 7. ON THE OTHER HAND, LD.CIT(DR) CONTENDED THAT THE ISSUE IN THE PRESENT APPEAL DOES NOT EMANATE FROM THE ORDER OF THE LD.CIT(A) AND THE ARGUMENT OF THE LEARNED AR OF THE ASSESSEE CANNOT BE SUSTAINED. 8. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS REGARDS GROUND NO.1 CHALLENGING ADDITION OF RS.3,28,41,951/ - ON ACCOUNT OF ALLEGED SHORTFALL IN THE CONS IDERATION, WE FIND THAT THE AO AS WELL AS THE LD.CIT(A) HAD FAILED TO CONSIDER THE EVIDENCE IN SUPPORT OF THE COST OF CONSTRUCTION M ET BY THE ASSESSEE. THEREFORE, WE REMIT THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO ASCERTAIN THE COST OF CONSTRUC TION MET BY THE ASSESSEE BY EXAMINING BILLS, INVOICES ETC., AND TO EXAMINE THE BUILDER TO VERIFY THE VERACITY OF STATEMENT MADE BY THE ASSESSEE BY RECORDING A STATEMENT FROM THE BUILDER. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPO SES . 9. AS REGARDS GROUNDS NO.3 I.E. FMV OF THE LAND SOLD, WE REMIT THIS ISSUE ALSO TO THE FILE OF THE AO TO ADOPT FMV OF THE PROPERTY SITUATED IN THE AREA WHERE THE PROPERTY OF THE ASSESSEE IS LOCATED OR THE PROXIMITY TO THE PROPERTY SOLD BY THE ASSESSEE . 10. THE OTHER GROUNDS OF APPEAL I.E. 5 AND 6, SINCE THE LD. CIT(A) HAD FAILED TO ADJUDICATE, WE REMIT THE GROUNDS OF APPEAL TO THE FILE OF THE LD.CIT(A) FOR ADJUDICATING THE SAME. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. 12. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.1201/BANG/2017: ITA NO S . 1128 & 1201 /BANG/20 17 PAGE 7 OF 8 13. THE ONLY ISSUE IN THE PRESENT GROUNDS OF APPEAL IS WHETHER THE LD.CIT(A) WAS JUSTIFIED IN ADOPTING FMV COST OF IMPROVEMENT AS ON 1/4/1981 A T RS.50/ - AS AGAINST RS. 22/ - A LLOWED BY THE AO. IN THE ASSESSEE S APPEAL IN ITA NO.1128/BANG/2017, WE HAVE REMITTED THE MATTER BACK TO THE AO TO ADOPT FMV OF PROPERTY WHICH IS SIMILARLY PLACED. ON THE SIMILAR REASONING, THIS ISSUE IS ALSO REMITTED BACK TO THE FILE OF THE AO. THEREFORE, THIS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY , 2018 S D/ - SD/ - ( SUNIL KUMAR YADAV ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 31 / 0 5 /201 8 SRINIVASULU, SPS ITA NO S . 1128 & 1201 /BANG/20 17 PAGE 8 OF 8 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE