Shri C.H. Prahalada Rao, Bangalore V. DCIT, Bangalore

ITA 1152/BANG/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8809 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-08-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GANESH RAO A K
• Assessee Lawyers: S VENKATESAN
• Keywords: Fair market value
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 1152/BANG/2009 ASSESSMENT YEAR : 2006-07 SHRI C.H. PRAHALADA RAO, NO.1451, 28 TH CROSS, 22 ND MAIN, BANASHANKARI II STAGE, BANGALORE 560 070. : APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 4(1), BANGALORE. : RESPONDENT APPELLANT BY : SHRI S. VENKATESAN, C.A. RESPONDENT BY : SHRI GANESH RAO, A.K., ADDL.CIT(DR ) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF CIT(APPEALS) IN ITA NO.129/DC-4(1)/CIT(A)-II/08-09 DATED 9.9.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED SIX GROUNDS IN HIS APPEA L WHEREIN GROUND NO.6 IS GENERAL IN NATURE AND DOES NOT SURVIVE FOR ADJUDICATION. GROUND NOS. 1 TO 5 ARE ELABORATE AND THE ONLY ISSUE ARISIN G OUT OF IT IS THAT THE LD. ITA NO.1152/BANG/09 PAGE 2 OF 5 CIT(A) ERRED IN ADOPTING THE FAIR MARKET VALUE AT R S.100/- PER SQ.FT. AS ON 1.4.1981 AS AGAINST RS.250 PER SQ.FT. PROPOSED BY T HE APPELLANT FOR COMPUTING CAPITAL GAINS. 3. THE ASSESSEE FILED HIS RETURN OF INCOME ON 27.6. 06 DECLARING INCOME OF RS.1,07,15,791. SUBSEQUENTLY THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED ON 15.12.2008 U/S. 143(3) OF THE I.T. ACT ENHANCING THE LONG TERM CAPITAL GAINS TO RS.1,44,24 ,250 AS AGAINST RS.1,03,27,127 WORKED OUT BY THE ASSESSEE. THE AS SESSEE HAD RELIED UPON THE VALUATION CERTIFICATE OF THE REGISTERED VA LUER DATED 10.3.2006, WHEREIN THE FAIR MARKET VALUE OF THE PROPERTY SOLD WAS WORKED OUT TO BE RS.10,81,000 AS ON 1.4.1981. LD. AO REJECTED THE V ALUATION CERTIFICATE ON THE BASIS THAT THE REGISTERED VALUER HAD WORKED OUT THE FAIR MARKET VALUE AS ON 1.4.1981 WITHOUT ANY MATERIAL EVIDENCE OR SALE I NSTANCE. THE ASSESSEE FURTHER CONTESTED BEFORE THE LD. AO STATING THAT HE HAD SOLD HIS HOUSE PROPERTY AT JAYANAGAR ON 5.9.2005 FOR A CONSIDERATI ON OF RS.1,70,00,000. THIS WORKS OUT TO RS.4,500 PER SQ.FT. WHEREAS THE G UIDELINE VALUE PRESCRIBED BY THE GOVERNMENT OF KARNATAKA FOR THE P ROPERTY IN THAT AREA FOR THE YEAR 2005 IS RS.1,600 PER SQ.FT. WHICH IS LESS THAN 2.8 TIMES OF THE ACTUAL MARKET VALUE OF THE PROPERTY. SINCE THE REV ENUE HAS ARRIVED AT A VALUE OF RS.100 PER SQ.FT. BASED UPON THE MARKET VA LUE FIXED BY THE GOVT. OF KARNATAKA, THE ANALOGY EXPRESSED ABOVE SHOULD BE CONSIDERED AND APPLIED AND THE VALUE OF RS.100 PER SQ.FT. SHOULD B E INCREASED BY 2.8 TIMES OR AT LEAST AN AMOUNT OF RS.250 PER SQ.FT. MAY BE A DOPTED. HOWEVER, THE AO REJECTED THIS PROPOSAL OF THE ASSESSEE SINCE THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY RELIABLE SALE INSTANCE IN THE LOCALI TY. THE LD. AO CAME TO A ITA NO.1152/BANG/09 PAGE 3 OF 5 CONCLUSION THAT THE VALUE OF PROPERTY IN AND AROUND BANGALORE AS ON 1.4.1981 WAS TRANSACTED AROUND RS.45 TO RS.50 PER S Q.FT. FROM THE ENQUIRIES MADE FROM THE SUB-REGISTRARS OFFICE AND BY CONSIDERING THE ASSESSEES SUBMISSIONS, ARRIVED AT A FIGURE OF RS.1 00 PER SQ.FT. AS THE FAIR MARKET VALUE AS ON 1.4.1981 FOR COMPUTING CAPITAL G AINS. 4. BEFORE THE LD. CIT(APPEALS), APART FROM THE SUBM ISSIONS MADE BEFORE THE LD. AO, THE ASSESSEE FURTHER PLEADED THA T THE FAIR MARKET VALUE AS ON 1.4.1981 MAY BE WORKED OUT BY USING COST INFL ATION INDEX NOTIFIED BY CBDT FOR COMPUTING CAPITAL GAINS AS FOLLOWS :- (A) BASED ON APPELLANTS SALE INSTANCE ON 05.09.2005 4,506*100 = RS.906 497 (B) BASED ON GUIDANCE VALUE BY KARNATAKA GOVT. 1,600*100 = RS.322 497 (C) BASED ON REGISTERED SALE INSTANCE OF ANOTHER PROPERTY 1,500*100 = RS.302 IN SAME ROAD ON 08.09.2005 497 IN CONSIDERATION OF THE ABOVE WORKING, THE ASSESSEE PRAYED THAT THE VALUE ADOPTED BY THE INDEPENDENT VALUER AT RS.250 PER SQ. FT. IS NOT EXCESSIVE AND REFLECTS THE TRUE MARKET VALUE OF THE PROPERTY AS O N 1/4/1981 IN QUESTION AND THEREFORE THE SAME VALUE MAY BE ADOPTED. 5. FURTHER THE ASSESSEE FURNISHED A COPY OF SALE DE ED OF RS.1,50,000/- IN RESPECT OF COMPARABLE INSTANCE FOR THE YEAR 1981 FROM THE OFFICE OF THE SUB-REGISTRAR, JAYANAGAR, BANGALORE, FOR A COMMERCI AL SITE SIZE OF 40 X 20 MEASURING 800 SQ.FT. WHICH WORKS OUT TO RS.187.5 P ER SQ.FT. THE ASSESSEE PRAYED THAT THE SITE WAS TENANTED AND NOT A VACANT PROPERTY AND THEREFORE ITA NO.1152/BANG/09 PAGE 4 OF 5 THE ACTUAL MARKET VALUE OF THE PROPERTY WILL BE MOR E THAN RS.187.5 PER SQ.FT. WHICH COULD BE TAKEN AS RS.235 PER SQ.FT. 6. LD. CIT(A) REJECTED THE SUBMISSIONS OF THE ASSES SEE AND BY RELYING UPON THE DECISION OF THE ITAT BANGALORE BENCH IN TH E CASE OF SMT. NARASAMMA V. ACIT 75 TTJ 293, ARRIVED AT THE FOLLOW ING CONCLUSION:- FROM A PLAIN READING OF THE OBSERVATIONS OF THE HO NBLE ITAT, THE FACTS OF THE CASE ARE APPLICABLE IN THE INSTANT CASE AS THE PROPERTY IN QUESTION IS IN THE SAME LOCALITY. ON T HE FACTS STATED ABOVE, THE AO WAS JUSTIFIED IN ADOPTING THE FMV AS ON 1/4/1981, WHICH IS FAR AND REASONABLE. THEREFORE, THE APPEAL IN THIS GROUND IS DISMISSED. 7. LD. AR FORCEFULLY ARGUED BASED ON THE SUBMISSION S BEFORE LD. AO AND THE LD. CIT(APPEALS), WHEREAS THE LD. DR ARGUED IN SUPPORT OF THE ORDER OF THE LD. CIT(APPEALS). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND MINUTELY PERUSED THE MATERIALS ON RECORD. THE MOOT QUESTION ARISING OUT OF THE DISPUTE IS WITH REGARD TO THE VALUATION OF THE RESIDENTIAL HOUSE PR OPERTY SITUATED AT NO.32, OLD NO.421, 7 TH B MAIN ROAD, IV BLOCK, NEAR SHOPPING COMPLEX, JAYANAGAR, BANGALORE, MEASURING 3750 SQ.FT. AS ON 1.4.1981. FROM THE ORDER OF THE LD. CIT(APPEALS), IT IS EVIDENT THAT T HE ASSESSEE HAD FURNISHED A COPY OF THE SALE DEED FOR COMPARING THE SALE INST ANCES IN THE YEAR 1981 OF THE NEIGHBORHOOD AND ARRIVED AT A VALUE OF RS.18 7.5 PER SQ.FT. IT IS ALSO NOT DISPUTED THAT THE PROPERTY SHOWN FOR COMPARABLE SALE INSTANCE WAS TENANTED, LESSER SIZE (MEASURING 800 SQ.FT.) AND LO CATED IN LESSER POSH AREA THAN THE PROPERTY SOLD BY THE ASSESSEE. LD. AO COU LD ALSO APPRECIATE THE ARGUMENTS PUT FORTH BY THE ASSESSEE BEFORE HIM AND OBSERVED THAT THE ITA NO.1152/BANG/09 PAGE 5 OF 5 CONTENTIONS OF THE ASSESSEE HAS PERSUASIVE VALUE BU T CANNOT BE RELIED UPON FULLY. CONSIDERING THE FACTS OF THE CASE AND SUBMISSIONS PUT FORTH BY THE LD. AR AS DETAILED ABOVE, WE ARE OF THE CONSIDE RED VIEW THAT THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 MAY BE ADOPTED AT RS.200 PER SQ.FT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF SEPTEMBER, 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 17 TH SEPTEMBER, 2010. DS/- COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.