Smt Smitha Kshetrapal , Bangalore V. Commissioner of Income Tax (Appeals)-7, Bangalore

ITA 1162/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7437 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 23-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R REDDY I
• Assessee Lawyers: P V N GUPTA
• Keywords: Capital asset; Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N V VASUDEVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS.1160 TO 1162/BANG/2017 & ITA NO.1869/BANG/2017 ASSESSMENT YEAR : 2012-13 SMT. SAPNA KSHETRAPAL PAN: AGHPS 4287J SMT. SHOBHA KSHETRAPAL PAN: AFWPK 2695A # 327/14, 10 TH D MAIN, I BLOCK, JAYANAGAR, BENGALURU 0 560 011. SMT. SOUMYA KSHETRAPAL PAN: AGHPS 4288H # 1583/A, 26 TH CROSS, 30 TH MAIN, BSK 2 ND STAGE, BENGALURU 560 070. SMT. SMITHA KSHETRAPAL PAN: ADKPK 5519M # 21, 4 TH B CROSS, K.V. LAYOUT, 4 TH BLOCK EAST, JAYANAGAR, BENGALURU 560 011. VS. THE INCOME TAX OFFICER, WARD 7(2)(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI P.V.N. GUPTA, CA RESPONDENT BY : S/SHRI G.R. REDDY, CIT(DR)-I, ITAT & B.R. RAMESH, JT.CIT(DR), ITAT DATE OF HEARING : 23.10.2017 DATE OF PRONOUNCEMENT : 25.10.2017 ITA NO.1160/BANG/2017 PAGE 2 OF 7 O R D E R PER BENCH THESE ARE APPEALS BY THE 4 DIFFERENT ASSESSEES AGA INST FOUR DIFFERENT ORDERS OF CIT(A)-7, BENGALURU, DATED 22.2 .2017, 22.2.2017, 22.8.2016 & 31.5.2017, ALL RELATING TO AY 2012-13. 2. ALL THE ASSESSEES IN THESE APPEALS ARE CO-OWNER S OF PROPERTY SITUATE IN S.NO.27/1, LAL BAGH SIDDHAPURA VILLAGE, JAYANAGAR 1 ST BLOCK, BANGALORE, MEASURING 21,832 SQ.FT., HEREINAFTER REF ERRED TO AS THE PROPERTY. DURING THE RELEVANT PREVIOUS YEAR, THE Y SOLD THE PROPERTY FOR A SALE CONSIDERATION OF RS.7.25 CRORES. THE COMPUTAT ION OF LONG TERM CAPITAL GAIN ON SALE OF THE PROPERTY IS THE SUBJECT MATTER OF DISPUTE IN ALL THESE APPEALS. THOUGH THE ASSESSEES HAVE RAISED SE VERAL GROUNDS IN THE GROUNDS OF APPEAL, AT THE TIME OF HEARING, THE LEAR NED COUNSEL FOR THE ASSESSEES SUBMITTED THAT THE ONLY ISSUE THAT HE SEE KS ADJUDICATION BY THE TRIBUNAL IS THE DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. THE UNDISPUTED FACTS ARE THAT THE PROPER TY WAS ACQUIRED BY MR. M. KSHETRAPAL ON 12.2.1970, THE FATHER OF SMT. SOUM YA KSHETRAPAL, SMT. SAPNA KSHETRAPAL AND SMT. SMITHA RAGHAVENDRA KSHETR APAL (DAUGHTERS) AND HUSBAND OF SMT.SHOBHA KSHETRAPAL. 3. THE COMPUTATION PROVISIONS OF CAPITAL GAIN, IN S O FAR AS IT IS RELEVANT FOR THE PRESENT APPEAL, HAVE TO BE FIRST SEEN. SE C.45 OF THE ACT LAYS DOWN THAT ANY PROFIT OR GAIN ARISING FROM THE TRANSFER O F A CAPITAL ASSET EFFECTED IN ITA NO.1160/BANG/2017 PAGE 3 OF 7 THE PREVIOUS YEAR SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD CAPITAL GAINS AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. SEC.48 LAYS DOWN THE MANN ER OF COMPUTATION OF CAPITAL GAIN AND THE RELEVANT PORTION OF THE SAID S ECTION FOR THE PRESENT CASE, READS THUS: SEC.48: THE INCOME CHARGEABLE UNDER THE HEAD 'CAP ITAL GAINS' SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE C OST OF ANY IMPROVEMENT THERETO: 4. FROM A READING OF SEC.48 OF THE ACT IT IS CLEAR THAT FROM THE FULL VALUE OF CONSIDERATION RECEIVED ON TRANSFER THE COST OF A CQUISITION OF THE CAPITAL ASSET AND THE COST OF ITS IMPROVEMENT ARE ONE OF TH E PERMISSIBLE DEDUCTION TO ARRIVE AT THE CAPITAL GAIN/LOSS. THE EXPRESSION COST OF ACQUISITION HAS BEEN DEFINED IN SEC.55 (2) OF THE ACT. THE CLAUSE OF SEC.55(2) OF THE ACT WHICH IS RELEVANT IN THE PRESENT CASE IS CLAUSE (B) (I) WHICH READS THUS: (2) FOR THE PURPOSES OF SECTIONS 48 AND 49, 'COST OF ACQUISITION', (B) IN RELATION TO ANY OTHER CAPITAL ASSET, (I) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE THE 1ST DAY OF APRIL, 1981, MEANS THE COST O F ACQUISITION OF THE ASSET TO THE ASSESSEE OR THE FAIR MARKET VAL UE OF THE ASSET AS ON THE 1ST DAY OF APRIL, 1981, AT THE OPTION OF THE ASSESSEE; ITA NO.1160/BANG/2017 PAGE 4 OF 7 (II) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY ANY OF THE MODES SPECIFIED IN SUB-SECTION (1) OF SE CTION 49, AND THE CAPITAL ASSET BECAME THE PROPERTY OF THE PREVIOUS O WNER BEFORE THE 1ST DAY OF APRIL, 1981, MEANS THE COST OF THE C APITAL ASSET TO THE PREVIOUS OWNER OR THE FAIR MARKET VALUE OF THE ASSET ON THE 1ST DAY OF APRIL, 1981, AT THE OPTION OF THE ASSESSEE; 5. IT CAN BE SEEN THAT CLAUSE (B)(II) OF SEC.55(2)( B) WOULD BE ATTRACTED ONLY WHEN THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY MODES SPECIFIED IN SEC.49(1) AND THE CAPITAL ASSET BECAME THE PROPERTY OF THE PREVIOUS OWNER BEFORE THE 1 ST DAY OF APRIL, 1981, THAT THE COST TO THE PREVIOUS OWNER OR THE FMV AS ON 1.4.1981 CAN BE ADO PTED BY THE ASSESSEE. 6. THE ASSESSEES IN THEIR RESPECTIVE COMPUTATION OF LONG TERM CAPITAL GAIN (LTCG) OPTED TO ADOPT THE FMV AS ON 1.4.1981 A S THE COST OF ACQUISITION FOR COMPUTING LTCG. THE ASSESSEES ADOP TED RS.331.34 PER SQ.FT. AS FMV AS ON 1.4.1981. THE ASSESSEES IN SUPP ORT OF THEIR CLAIM FOR FMV AS ON 1.4.1981 RELIED ON TWO SALE INSTANCES DAT ED 30.6.1982 AND 29.7.1982 IN THE VICINITY OF THE PROPERTY OF THE AS SESSEES WHICH WERE AT RS.322 PER SQ.FT., AND RS.128 PER SQ.FT. 7. THE AO HOWEVER OBTAINED DETAILS OF SALE INSTANCE S AT JAYANAGAR, SUB-REGISTRAR OFFICE AND FOUND THAT RS.64 PER SQ.F T AS FMV AS ON 1.4.1981 BY RELYING ON THE HIGHEST OF THE VALUE OUT OF THE 7 SALE INSTANCES WHOSE DETAILS WERE RECEIVED FROM JAYANAGAR, SUB-REGISTRAR OFFICE. THE AO ITA NO.1160/BANG/2017 PAGE 5 OF 7 ULTIMATELY ADOPTED FMV AS ON 1.4.1981 AT RS.160/- P ER SQ.FT. AS AGAINST THE CLAIM OF THE ASSESSEES OF FMV AS ON 1.4.1981 AT RS. 331.35/- PER SQ.FT. 8. BEFORE CIT(A), THE ASSESSEES POINTED OUT THAT TH ERE WERE SALE INSTANCES OF PROPERTIES IN THE VICINITY OF THE ASSE SSEES PROPERTY AROUND 1.4.1981 IN WHICH SALE VALUE PER SQ.FT. WAS RS.265/ - PER SQ.FT. 322 PER SQ.FT. AND RS.418 PER SQ.FT. AND THOSE SALE INSTANCES HAVE BEEN IGNORED BY THE AO. THE CIT(A) ON CONSIDERATION OF THE DETAILS DIR ECTED THE AO TO ADOPT RS.245 PER SQ.FT. AS FMV AS ON 1.4.1981. THE FOLLO WING WERE THE CONCLUSIONS OF THE CIT(A): 4.6 THE SUBMISSIONS FILED BY THE APPELLANT VIDE L ETTER DATED 28.11.2014, 18.12.2014 AND 13.02.2015 ALONG WITH AN NEXURE, BEFORE THE AO WAS CLOSELY PERUSED. THE DETAILS OF FORM 15 OBTAINED FROM THE OFFICE OF SUB-REGISTRAR, JAYANAGA R FOR THE PROPERTIES REGISTERED DURING THE F.Y. 1982-83 WAS C LOSELY PERUSED. DESCRIPTION OF PROPERTY DATE OF TRANSACTION SALE CONSIDERATION (RS.) BOOK NO. YEAR FMV PER SQ.FT. (IN RS.) NO.79 CORP NO. 79/7, 20 X 31 30.06.1982 RS.2,00,000 1143/82-83 322.58 HOUSE NO. 138, 27X13.50 29.07.1982 RS.5,00,000 1499/82-83 1371.74 ML NO.126/16 CORP NO. 16, 20X24 31.07.1982 RS.1,27,500 1517/82-83 265.62 4.7 THE CLAIM OF APPELLANT THAT SOME OF THE EVIDENC ES PLACED BEFORE THE AO WERE NOT CONSIDERED IN WHICH THE COMP ARATIVE FIGURES OF FMV WERE MUCH HIGHER THAN WHAT IS CONSID ERED BY THE AO. FROM THE VARIANCE OF FMV OF THE SAME AREA DURI NG THE SAME PERIOD CLEARLY SHOWS THAT THERE CANNOT BE A DEFINIT E PREPOSITION ITA NO.1160/BANG/2017 PAGE 6 OF 7 FOR CALCULATING THE FMV OF ONE PARTICULAR LAND IN T HE SAME VICINITY BECAUSE IT ALL DEPENDS UPON THE LOCATION O F THE LAND, THE AREA AVAILABLE FOR CONSTRUCTION, ITS LANDSCAPING AN D THE SURROUNDINGS. IN VIEW OF THE ABOVE DISCUSSION I AM OF THE OPINION THAT THE FMV OF RS.245 PER SQFT WILL BE JU ST AND REASONABLE. ACCORDINGLY APPELLANT GETS A RELIEF TO THAT EXTENT AND THE INDEX COST OF THE PROPERTY SHOULD BE CALCULATED ACCORDING TO THE FMV OF RS.245 PER SQFT AS ON 01.04.1981. 9. STILL AGGRIEVED THE ASSESSEES ARE IN APPEAL BEFO RE THE TRIBUNAL PRAYING FOR A FURTHER INCREASE IN THE FMV AS ON 1.4 .1981. WE HAVE SEEN THE THREE SALE INSTANCES DATED 29.7.1982. SHOWING R S.418 PER SQ.FT. AND SALE INSTANCE DATED 31.7.1982 SHOWING RS.265 PER SQ .FT. AND ANOTHER SALE INSTANCE DATED 30.6.1982 SHOWING SALE INSTANCE OF R S.322 PER SQ.FT. FROM THE EXTRACT OF THE DETAILS FROM SROS OFFICE, IT IS NOT POSSIBLE TO IDENTIFY THE PROPERTY AND THEIR NEARNESS AND SIMILARITY OF SIZE, LOCALITY ETC., TO THE ASSESSEES PROPERTY. NEVERTHELESS, THE VALUATION O F FMV AS ON 1.4.1981 IS ALWAYS AN APPROXIMATION. THERE IS NO VALUATION REP ORT OF A REGISTERED VALUER OR DVO TO SUPPORT EITHER CLAIMS OF THE ASSES SEES OR THE DEPARTMENT. THE AO OR THE CIT(APPEALS) HAVE NOT DI SPUTED THE FACT THAT THE SALE INSTANCES CITED BY THE ASSESSEE DO NOT COM PARE FAVOURABLY WITH THE ASSESSEES PROPERTY IN TERMS OF LOCATION. THEY HAVE DISPUTED THE VALUE ONLY ON THE GROUND THAT THE SIZE OF THE COMPARABLE PROPERTIES WERE SMALL. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IN INT EREST OF JUSTICE AND FAIRNESS AND GIVING THE BENEFIT OF DOUBT TO THE ASS ESSEES, IT WOULD BE ITA NO.1160/BANG/2017 PAGE 7 OF 7 APPROPRIATE TO ADOPT THE FMV AS ON 1.4.1981 AT RS.3 00/- PER SQ.FT. WE HOLD AND DIRECT THE AO TO ADOPT THE SAME IN COMPUTI NG LTCG. 10. THE OTHER ISSUE WITH REGARD TO LEVY OF INTEREST U/S.234B AND C OF THE ACT, IS CONSEQUENTIAL. CHARGING OF INTEREST IS MAND ATORY AND IF AT ALL THE ASSESSEES HAVE GRIEVANCE IN THIS REGARD, IT IS FOR THEM TO APPROACH THE RELEVANT ADMINISTRATIVE MACHINERY FOR WAIVER OF INT EREST. THE JUDICIAL RULING CITED BY THE LEARNED DR ARE IN THE CONTEXT OF EXERC ISE OF DISCRETION BY THE ADMINISTRATIVE AUTHORITIES AND THEREFORE THEY ARE N OT BEING DISCUSSED. 11. IN THE RESULT, APPEALS BY THE ASSESSEES ARE PAR TLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF OCTOBER, 2017. SD/- SD/- ( INTURI RAMA RAO ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 25 TH OCTOBER, 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RE SPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.