Taruben Anupbhai Contractor, Surat V. Income Tax Officer (International Taxation), Surat

ITA 117/SRT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8154 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 26-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Keywords: Value adopted by valuation officer; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 54F; 250; 55A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRIPAWAN SINGH, JM &DR. A.L.SAINI, AM ./ ITA NO.117/SRT/2018 ( / ASSESSMENT YEAR: (2012-13) (VIRTUAL COURT HEARING) TARUBEN ANUPBHAI CONTRACTOR, 63, NARMADA NAGAR SOCIETY, ATHWALINES, SURAT 395007. VS. THE INCOME TAX OFFICER, (INTL. TAXATION), SURAT. ./ ./PAN/GIR NO.: ALPPC 0235 M (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI BHARAT JHAVERI, ADVOCATE RESPONDENT BY : MS. ANUPAMA SINGLA SR. DR / DATE OF HEARING : 05/08/2021 / DATE OF PRONOUNCEMENT : 25/08/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2012- 13, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-13, AHMEDABAD DATED 18.01.2018, IN APPEAL NO. CIT(A)13/INTL. TAXN./AHD/11/2016-17, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 21.03.2016. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1.THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN NOT SETTING ASIDE THE NOTICE DATED 09.03.2015 ISSUED U/S 148 OF THE ACT FOR A.Y. 2012-13 BY NOT APPRECIATING THE FACT THAT THE ASSESSING OFFICER HAS FAILED TO APPLY HIS MIND TO THE MATERIAL COLLECTED, THEREBY RESULTING IN FORMATION OF ERRONEOUS BELIEF REGARDING ESCAPEMENT OF INCOME, AND THEREFORE, THE NOTICE ISSUED U/S 148 IS INVALID. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE REFERENCE MADE TO DVO U/S 55A OF THE ACT WAS BAD IN LAW AS THE ASSESSING OFFICER HAS NOT FORMED ANY OPINION ANY OPINION THAT THE VALUE CLAIMED BY THE ASSESSEE IS LESS THAN THE MARKET VALUE. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.20,44,622/- ON ACCOUNT OF LONG TERM CAPITAL GAIN WITH RESPECT TO LAND ADMEASURING 35912 SQ. MTRS SITUATED AT KARADVA BY ADOPTING THE FAIR MARKET VALUE OF AS ON PAGE | 2 ITA NO.117/SRT/2018 FOR A.Y. 12-13 TARUBEN ANUPBHAI CONTRACTOR 01.04.1989 AT RS.5,09,232 COMPUTED BY DVO AS AGAINST RS.89,78,000 COMPUTED BY THE REGISTERED VALUER. 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.9,48,020 ON ACCOUNT OF LONG TERM CAPITAL GAIN WITH RESPECT TO LAND ADMEASURING 1922 SQ. MTRS SITUATED AT SANIYA-KANDE BY ADOPTING THE FAIR MARKET VALUE OF AS ON 01.04.1989 AT RS.6612 COMPUTED BY DVO AS AGAINST RS.3,84,400 COMPUTED BY THE REGISTERED VALUER. 5. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATIVE, THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ADOPTING FMV AT RS.30 PER SQ. MTRS. WITH RESPECT TO LAND AT KARADVA CONFIRMED BY THE LEARNED CIT(APPEALS) IN THE CASE OF CO-OWNER MAHESH NAGINBHAI PATEL WAS PLACED ON RECORD. 3. FACTS OF THE CASE WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS: DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) HAS OBSERVED THAT ASSESSEE HAS SOLD LAND AT VILLAGE KARDAVA, BLOCK NO. 83 ADMEASURING 35912 SQ. MTRS, FOR RS.4.49 CRORES AND ASSESSEE HAS SHOWN SALE VALUE OF RS.22,44,500/- BEING HER SHARE IN PROPERTY LIMITED TO 1/4 TH IN 1/5 TH OF THE TOTAL SALE CONSIDERATION. THIS FACT IS NOT DISPUTED BY AO. THE ASSESSEE HAS CONSIDERED FAIR MARKET VALUE OF PROPERTY AT RS.89,78,000/- AND HER SHARE COMES TO RS.4,48,900/- AND CLAIMED INDEXED COST OF RS.35,23,865/- AND ACCORDINGLY ARRIVED AT THE LONG TERM CAPITAL LOSS AT RS.12,79,365/-. WITH RESPECT TO THE LAND SITUATED AT KARADVA, THE AO HAS OBSERVED THAT REFERENCE UNDER SECTION 55A WAS MADE BY ITO, WARD-2(3)(3), SURAT, TO DVO FOR DETERMINING FMV AS ON 1-4-1981 IN ONE OF THE JOINT OWNERS CASE WHO HAS DETERMINED THE FAIR VALUE AT RS.5,09,232/- AND AO HAS CONSIDERED THE DVO REPORT AND CONSIDERED FMV OF LAND AT RS.25,462/- IN CASE OF ASSESSEE AND ALLOWED INDEXED COST OF RS.1,99,878/-. ON THIS BASIS HE MADE AN ADDITION OF RS.20,44,622/- TOWARDS LONG TERM CAPITAL GAIN. 4. THE ASSESSEE HAS ALSO SOLD ONE MORE LAND AT VILLAGE: SANIYA KANDE, BLOCK NO.35 ADMEASURING 1922 SQ. MTRS. AND SHOWN SALE VALUE AT RS.9,61,000/-. THE ASSESSEE HAS ADOPTED FAIR MARKET VALUE OF ABOVE PROPERTY AT RS.96,100/- (HER SHARE AND COMPUTED INDEXED COST AT RS.7,54,385/-. HOWEVER, AO HAS REFERRED THE MATTER TO DVO ON 29 TH OCTOBER, 2015 WHO HAS DETERMINED THE FAIR MARKET VALUE AT RS.6612/- FOR ENTIRE LAND AND AS ASSESSEES SHARE WAS ONE-FOURTH. THE AO HAS ADOPTED FMV AS ON 1-04-1981 AT RS.1653/- AND ALLOWED INDEX COST AT RS.12,980/-. PAGE | 3 ITA NO.117/SRT/2018 FOR A.Y. 12-13 TARUBEN ANUPBHAI CONTRACTOR THE AO HAS THUS MADE AN ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN AT RS.9,48,020/- AS AGAINST VALUE SHOWN BY ASSESSEE AT RS.2,06,615/-. 5. ON APPEAL, LD CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 6. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 18.07.2019, PASSED BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES CO-OWNER CASE ( ON IDENTICAL FACTS), IN ITA NO.1070/AHD/2017 FOR THE ASSESSMENT YEAR 2012-13 WHEREBY THE ISSUE RELATING TO LONG TERM CAPITAL GAIN IN RESPECT OF LAND SOLD AT VILLAGE KARDAVA, BLOCK NO. 83 ADMEASURING 35912 SQ. MTRS, AND LAND SOLD AT VILLAGE: SANIYA KANDE, BLOCK NO.35 ADMEASURING 1922 SQ. MTRS, HAVE BEEN DISCUSSED AND ADJUDICATED PARTLY IN FAVOUR OF ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT APPEAL IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL, A COPY OF WHICH WAS ALSO PLACED BEFORE THE BENCH. 7. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES CO-OWNER CASE VIDE ORDER DATED 18.07.2019. IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS: 2. GROUND NO. 1 TO 4 ARE RELATES LD. CIT (A) HAS ERRED IN REJECTING GOVERNMENT APPROVED VALUER REPORT FOR COMPUTING FAIR MARKET VALUE AS ON 01.04.1981 @ 250 PER SQ. METER FOR THE LAND SITUATED AT VILLAGE KARADVA AND @ 200 FOR THE LAND SITUATED AT SANIA KANDE SURAT BY ADOPTING RIM REVERSE INDEX METHOD AND BY ADOPTING AGAINST THE SAME THE FAIR MARKET VALUE @ 30 PER SQ. METER FOR BOTH LANDS. 3. SUCCINCT FACTS ARE THAT THE ASSESSEE HAS SHOWN LONG-TERM CAPITAL LOSS AT RS.5,54,842 IN RESPECT OF HIS SHARE IN SALE OF LAND AT VILLAGE KARADVA, SURAT BY ADOPTING FAIR MARKET VALUE AS ON 01.04.1981 @ 250 PER SQ. METER AND IN RESPECT OF LAND SOLD AND SITUATED AT VILLAGE SANIYA KANDE, SURAT BY ADOPTING FAIR MARKET VALUE @ 200 PER SQ. METER AS PER GOVERNMENT REGISTERED VALUER. HOWEVER, THE AO HAS OBTAINED A VALUATION REPORT DATED 20.03.2015 UNDER SECTION 55A FROM PAGE | 4 ITA NO.117/SRT/2018 FOR A.Y. 12-13 TARUBEN ANUPBHAI CONTRACTOR DVO WHO VALUED THE LAND BY ADOPTING FAIR MARKET VALUE @ 14.18 PER SQ. METER FOR LAND AT VILLAGE KARADVA AND AT 5.59 PER SQ. METER FOR LAND AT VILLAGE SANIA KANDE AS ON 01.04.1981. THE ASSESSEE VIDE HIS REPLY DATED 25.03.2015 STATED THE DVO HAS TAKEN SALE INSTANCES OF LETTER PERIOD AND APPEAL BACKWARD INDEX METHOD ON PRESUMPTION BASIS. THE BOTH LANDS ARE SITUATED AT DIFFERENT VILLAGE HENCE; AVERAGE RATE COMPARING VALUE OF AGRICULTURAL LAND IS NOT JUSTIFIED. IT IS SETTLED LAW THAT WHEN TWO EQUALLY EFFICACIOUS AND ACCEPTABLE DATA FOR THE PURPOSE OF VALUATION ARE AVAILABLE, ONE WHICH IS BENEFICIAL TO THE ASSESSEE SHOULD BE PREFERRED. THE ASSESSEE HAS ALSO MADE CLAIM FOR DEDUCTION UNDER SECTION 54F OF THE ACT. HOWEVER, THE AO AFTER DISCUSSING OBJECTION OF THE ASSESSEE HAS ADOPTED THE RATE AT 14.18 PER SQ. METER IN RESPECT OF LAND AT KARADVA AND RS. 5.59 PER SQ. METER FOR LAND AT SANIA KANDE AS PER DVO REPORT, AND DENIED THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IN ABSENCE OF COMPLETE DETAILS AND ALSO DISREGARDED THE RATIO OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SHANTI DEVI GAEKWAD V. DCIT WHICH HELD THAT WHEN TWO EQUALLY EFFICACIOUS AND ACCEPTABLE DATA FOR THE PURPOSE OF VALUATION ARE AVAILABLE, ONE WHICH IS BENEFICIAL TO THE ASSESSEE SHOULD BE PREFERRED. THE AO ALSO DISCUSSED THAT REFERENCE AS PER AMENDED PROVISIONS UNDER SECTION 55A CAN BE MADE AFTER 01.07.2012, BUT EARLIER FIGURES OF ILLEGAL REFERENCE CAN BE CONSIDERED. ACCORDINGLY, MADE ADDITION OF RS.25,12,250 AS LONG TERM CAPITAL GAIN. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). BEFORE CIT (A), IT WAS CONTENDED THAT REFERENCE UNDER SECTION 55A COULD NOT BE MADE FOR THAT YEAR UNDER CONSIDERATION, AS AMENDED PROVISIONS ARE EFFECTIVE FROM 01.07.2012. HOWEVER, THE CIT (A) OBSERVED THAT REFERENCE UNDER SECTION 55A COULD BE VERY WELL MADE WHERE THE AO CONSIDERED THAT IT IS AT VARIANCE. AS REGARDS VALUATION MADE BOTH GOVERNMENT REGISTERED VALUER AND DVO, THE CIT (A) OBSERVED THAT BOTH VALUERS HAVE SOME INFIRMITIES AND NEITHER OF THE VALUATION IS EXACT OR PERFECT IN ALL RESPECT, SO CANNOT BE TAKEN ON ITS FACE VALUE AND APPLIED AS IT IS FOR DETERMINATION OF FMV AS ON 01.04.1981. THEREFORE, AFTER OBSERVING THAT ITAT IN THE CASE OF VIJAY KUMAR M SHAH V. DCIT [I.T.A. NO. 457& 452/MUM DATED 26.02.2009 HAS AFTER REJECTING BOTH THE REPORTS OF DVO REGISTERED VALUER HAVE ADOPTED AVERAGE OF BOTH VALUATION. CONSIDERING THESE FACTS, THE CIT (A) ADOPTED FMV @ 30 PER SQ. METER BY TAKING ONE-SALE INSTANCES AT RS. 29.99 AS CONSIDERED BY THE DVO. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED A VALUATION REPORT OF FAIR MARKET VALUE AS ON 01.04.1981, FROM GOVERNMENT REGISTERED VALUER, HENCE, THE AO CAN MAKE A REFERENCE TO THE VALUATION OFFICER UNDER SECTION 55A(B) CAN BE MADE ONLY IN A CASE WHERE THE ASSESSEE HAS NOT FURNISHED A VALUATION REPORT. THE AO CANNOT IGNORE THE VALUE ADOPTED BY THE ASSESSEE ON THE BASIS OF GOVERNMENT REGISTERED VALUER. IN THE INSTANT CASE, SINCE THE VALUE AS ON 1 APRIL 1981 WAS TAKEN BY THE ASSESSEE ON THE BASIS OF THE REPORT OF A REGISTERED PAGE | 5 ITA NO.117/SRT/2018 FOR A.Y. 12-13 TARUBEN ANUPBHAI CONTRACTOR VALUER, THE AO DID NOT HAVE THE POWER TO MAKE A REFERENCE UNDER SECTION 55A(B) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT (A) HAS REFERRED ITAT DECISION IN THE CASE OF VIJAY KUMAR M SHAH V. DCIT [457 &552/MUM] AND ITAT AHMEDABAD IN THE CASE OF PARIKH RAJESH R HUF V. ITO [I.T.A. NO. 1578/AHD/2011 AND ARRIVED AT CONCLUSION OF FMV @30 WHICH IS NOT CORRECT. THE CIT (A) OUGHT TO HAVE TAKEN AVERAGE VALUE OF BOTH THE LAND AFTER CONSIDERING VARIOUS FACTORS OF THE LAND MADE BY THE BOTH VALUER. ACCORDINGLY, THE AO'S REFERENCE TO THE DVO IS INVALID EVEN UNDER SECTION 55A (B) OF THE ACT. IT WAS FURTHER SUBMITTED THAT VALUE ADOPTED BY THE DVO ON REVERSE INDEX METHOD IS NOT JUSTIFIED WHEN THE VALUATION DONE BY THE GOVERNMENT REGISTERED VALUER HAS BEEN FILED BEFORE THE AO. 6. PER CONTRA, THE LD. SR. D.R. RELIED ON THE ORDER OF LD. CIT (A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE OBSERVE THAT THE HON`BLE HIGH COURT IN GAURANGIBEN S. SHODHAN INDL [2014] 367 ITR 238 (GUJARAT) / [2014] 45 TAXMANN.COM 356 (GUJARAT) HAS SPECIFICALLY HELD THAT AMENDMENT IN SECTION 55A WITH EFFECT FROM 01.07.2012 IN A CASE, THE VALUE OF ASSETS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE AO WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN THE FAIR MARKET VALUE AS ON 01.04.1981 THEN REFERENCE CAN BE MADE. IF THE VALUE ADOPTED BY THE ASSESSEE ON THE BASIS OF REGISTERED VALUER WAS NOT LESS THAN FAIR MARKET VALUE RATHER IT WAS ON HIGHER SIDE. THE AO WANTS TO REDUCE THE VALUE I.E. COST OF ACQUISITION AS ON 01.04.1981. IT IS NOT PERMISSIBLE PRIOR TO AMENDMENT CARRIED OUT IN SECTION 55A OF THE ACT. WHETHER THIS AMENDMENT CAN BE TAKEN INTO CONSIDERATION FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. WE FIND THAT THE GOVERNMENT REGISTERED VALUER HAS CONSIDERED THE RATE OF LAND AT VILLAGE KARADVA @250 PER SQ. METER AND FOR LAND AT VILLAGE SANIA KANDE @200 PER SQ. METER AS AGAINST WHICH THE DVO HAS ADOPTED THE RATE @ 14.18 AND 5.59 PER SQ. METER RESPECTIVELY. WHEREAS LD. CIT (A) HAS CONSIDERED THE RATE FOR BOTH LAND @ 30 PER SQ. METER. CONSIDERING, THE VARIATION IN THREE AUTHORITIES, AND CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE FAIR, REASONABLE AND LOGIC IF THE AVERAGE RATE OF ADOPTED BY THE GOVERNMENT REGISTERED VALUER OF THE ASSESSEE AND DVO AND LD. CIT (A) IS CONSIDERED FOR AVERAGE VALUATION OF FMV AS ON 01.04.1981 CONSIDERING THE RATIO LAID DOWN BY THE ITAT MUMBAI IN THE CASE OF THE CASE VIJAY KUMAR M SHAH (SUPRA) AS CITED BOTH LD. CIT (A) AS WELL AS THE LEARNED COUNSEL FOR THE ASSESSEE. ACCORDINGLY, THE ARRIVING RATE COMES TO RS.99.95 ROUNDED TO RS. 100 PER SQ. METER I.E. [250+200+30] FOR BOTH LAND UNDER CONSIDERATION. ACCORDINGLY, THE AO IS DIRECTED TO WORKED OUT LONG-TERM CAPITAL GAIN BY TAKING ARRIVE RATE @ 100 AS FMV AS ON 01.04.1981 FOR BOTH IMPUGNED THE LAND UNDER CONSIDERATION. IN VIEW OF THIS MATTER, GROUND NO. 1 TO 4 OF THE APPEAL ARE THEREFORE, PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PAGE | 6 ITA NO.117/SRT/2018 FOR A.Y. 12-13 TARUBEN ANUPBHAI CONTRACTOR 9. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH, IN ASSESSEE`S CO-OWNER CASE AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS OF THE DIVISION BENCH (SUPRA). WE FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE CO-ORDINATE BENCH, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE COORDINATE BENCH IN ASSESSEES CO-OWNER CASE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE LONG TERM CAPITAL GAIN TAKING THE RATE OF RS.100/- AS FAIR MARKET VALUE AS ON 01.04.1981. 10. IN THE RESULT, APPEAL OF THE ASSESSEE (ITA NO.117/SRT/2018 AY.2012-13) IS PARTLY ALLOWED. ORDER IS PRONOUNCED ON 25/08/2021 BY PLACING RESULT ON THE NOTICE BOARD AS PER RULE 34(5) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE 1963. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT/ / DATE: 25/08/2021 /DKP OUTSOURCING P.S COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR/SR. PS/PS ITAT, SURAT