MULJI JADAVJI CHANDAN, MUMBAI V. ITO 13(2)(3), MUMBAI

ITA 1190/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79421 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , ! BEFORE SHRI SANJAY ARORA, AM AND DR. S. T. M. PAVA LAN, JM ' # I.T.A. NO. 1190/MUM/2012 ( / ASSESSMENT YEAR: 2007-08) MULJI JADAVJI CHANDAN 278, SAMUEL STREET, FIRST FLOOR, MUMBAI-400 003 # VS. ITO-13(2)(3), ICAR BHAVAN, INCOME TAX OFFICE, MAHARSHI KARVE ROAD, MUMBAI-400 001 $ #'%' ./PAN/GIR NO. AFBPC 9663 B ( $& /APPELLANT ) : ( '($& / RESPONDENT ) $&)* / APPELLANT BY : SHRI SATISH MODY '($&)* / RESPONDENT BY : MS. AMRITA SINGH + ,)- / DATE OF HEARING : 17.07.2014 ./0 )- / DATE OF PRONOUNCEMENT : 25.07.2014 '1# O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-24, MUMBAI (CIT(A) FOR SH ORT) DATED 15.12.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2007-08 VIDE ORDER DATED 29.12.2009. 2. THE ONLY ISSUE ARISING IN THIS APPEAL IS THE AMO UNT AT WHICH THE INCOME BY WAY OF LONG TERM CAPITAL GAINS (LTCG) ON SALE OF LAND IS T O BE ASSESSED. THE SAME BOILS DOWN 2 ITA NO. 1190/MUM/2012 (A.Y. 2007-08) MULJI JADAVJI CHANDAN VS. ITO TO THE DETERMINATION OF THE VALUE OF THE TRANSFER C ONSIDERATION, WHICH STOOD ADOPTED BY THE ASSESSING OFFICER (A.O.) AT RS.138.355 LACS, I. E., AS PER THE STAMP VALUATION (IN TERMS OF SECTION 50C(1)), AS AGAINST AT RS.31 LACS DISCLO SED BY THE ASSESSEE. THE ASSESSEE, HOWEVER, EXPLAINED THAT THE LAND BEING ENCROACHED A ND IN THE POSSESSION OF ILLEGAL OCCUPANTS, SO THAT IT COULD NOT BE EQUATED WITH A F REE-HOLD PROPERTY, REFERENCE WAS MADE BY THE A.O. TO THE DEPARTMENTAL VALUATION OFFICER ( DVO), IMPENDING WHOSE REPORT, HOWEVER, THE ASSESSMENT WAS FRAMED. THE LD. CIT(A), IN APPEAL, SUBSTITUTED THE SAME FOR THE VALUATION AS REPORTED BY THE VALUATION OFFICER (VO) U/S.50C(2), I.E., AT RS.54.57 LACS. THE ASSESSEES OBJECTIONS THERETO WERE DULY FORWARD ED TO THE VO, WHO RESPONDED VIDE HIS LETTER DATED 17.03.2011, WHICH STANDS REPRODUCED AT PGS. 4 TO 6 OF THE IMPUGNED ORDER. THE SAME WAS ALSO PUT ACROSS TO THE ASSESSEE AND IT S OBJECTION/S THERETO NOTED, THOUGH TO NO AVAIL, SO THAT THE SALE CONSIDERATION WAS DIRECT ED TO BE ADOPTED BY HIM AT THE SAID VALUE OF RS.54.57 LACS. AGGRIEVED, THE ASSESSEE IS IN APP EAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE LD. CIT(A) HAS CONFIRMED THE ASSESSMENT, ADOPTING THE VALUATION AS MADE BY THE DVO, BY CONSIDERING THE ASSESSEES OBJECTION/S THERETO, HAVING BEEN DUL Y RESPONDED TO BY THE DVO. IN FACT, NO SERIOUS OBJECTION STOOD RAISED BY THE ASSESSEE BEFO RE US; THE SAME HAVING BEEN ELABORATELY DEALT BY THE DVO ITSELF, WHOSE REPLY, AS AFORE-STAT ED, FINDS REPRODUCTION IN THE IMPUGNED ORDER. IN FACT, IT WAS ALSO OBSERVED BY THE BENCH A ND MADE KNOWN TO THE LD. AUTHORIZED REPRESENTATIVE (AR), THAT WE COULD NOT PROCEED TO H EAR THE ASSESSEES OBJECTIONS WITHOUT ALSO HEARING THE VO IN THE MATTER. THE ASSESSEES P RINCIPAL PLEA BEFORE US WAS LIMITED TO RAISING THE DISCOUNT FACTOR, WHICH STOOD APPLIED AT 25% ON THE GROSS VALUE OF RS.72.762 LACS ASSESSED BY THE VO AND, THUS, BY THE A.O. THE SAME BEING A PURELY SUBJECTIVE MATTER, WOULD NOT ENTAIL HEARING THE VO, IT WAS SUG GESTED BY HIM. ON MERITS, IT WAS PLEADED BY HIM THAT THE DISCOUNT WAS LOW IN-AS-MUCH AS IT IS WELL ACCEPTED THAT SUCH ENCUMBERED PROPERTIES BEAR A DISCOUNT RATE OF 50% T O AS HIGH AS 2/3. THE ONLY ISSUE, THEREFORE, THAT SURVIVES IS THE EXT ENT OF DISCOUNT THAT OUGHT TO BE REASONABLY ALLOWED ON VALUATION TOWARD ENCROACHMENT , WHICH IS NOT DISPUTED. IT IS AN 3 ITA NO. 1190/MUM/2012 (A.Y. 2007-08) MULJI JADAVJI CHANDAN VS. ITO ACCEPTED FACT THAT THE PROPERTY UNDER REFERENCE IS IN POSSESSION OF ILLEGAL OCCUPANTS FOR THE LAST SEVERAL YEARS, BEING IN FACT CLAIMED AS SI NCE 1965, WITH THE OCCUPANTS HAVING PUT UP UNAUTHORIZED STRUCTURES THEREAT. AS CLAIMED BY T HE LD. AR DURING HEARING, EVEN THE VO COULD NOT ACCESS THE PROPERTY AT THE TIME OF ITS I NSPECTION. TITLE, IT IS WELL SETTLED, FOLLOWS POSSESSION, WHICH IS VITAL FOR THE ENJOYMENT AND TR ANSFER OF ANY PROPERTY. FURTHER, THE ASSESSEE AFTER FAILING TO DISPOSSESS THEM AND, THUS , OBTAIN VACANT POSSESSION, HAVING ATTAINED AN ADVANCED AGE, FINALLY DECIDED TO SELL T HE PROPERTY TO A BUILDER ON AS IS WHERE IS BASIS. UNDER THE CIRCUMSTANCES, THEREFORE, WE C ONSIDER IT FIT AND PROPER THAT THE DISCOUNT RATE OF 40% WOULD REASONABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ALSO, THERE IS NO QUESTION OF THE ASSESSEE BEING ABLE TO DERIVE ANY MONETARY BENEFIT OF THE UNAUTHORIZED STRUCTURES THEREAT, VALUED AT RS.2 LAC S, COMPENSATION AGAINST WHICH, ON THE CONTRARY, MAY BE DEMANDED BY THE OCCUPANTS WHO RAIS ED THE SAME. ITS EXCLUSION FROM THE GROSS VALUE, THUS WARRANTED, WOULD REDUCE IT TO RS. 70.76 LACS. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. 20 -34 52-) '61 7 -) -89! ORDER PRONOUNCED IN THE OPEN COURT ON JULY 25, 2014 . SD/- SD/- (DR. S. T. M. PAVALAN) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + :, MUMBAI; ; DATED : 25.07.2014 # ROSHANI , SR. PS 4 ITA NO. 1190/MUM/2012 (A.Y. 2007-08) MULJI JADAVJI CHANDAN VS. ITO ! ' #$%& ' &$ # COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. '' + <- = > / THE CIT(A) 4. '' + <- / CIT - CONCERNED 5. ?@ A'-B4 ' B40 + :, / DR, ITAT, MUMBAI 6. A 5C , # GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , + :, / ITAT, MUMBAI