ITO, Bangalore V. Sri. C.D. Medappa, Bangalore

ITA 120/BANG/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5677 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU J
• Assessee Lawyers: V SRINIVASAN
• Keywords: Gift; Cost of acquisition; Fair market value
• Section: 143(3); 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B E NGAL U R U BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI LALIT KUMAR, JUDICIAL MEMBER ITA NO. 120 / BANG/ 201 6 (ASSESSMENT YEAR : 201 0 - 11 ) INCOME - TAX OFFICER, WARD 1(2)(1), BENGALURU VS. APPELLANT SHRI C.D.MEDAPPA, NO.21/29, M.G.ROAD, BENGALURU - 560001. PAN:BDIPS9841M RESPONDENT APPELLANT BY : SHRI M.K.BIJU, JCIT(DR). RESPONDENT BY : SHRI V.SRINIVASAN, ADVOCATE. DATE OF HEARING : 07/11/2017 DATE OF PRONOUNCEMENT : 17 /01/2018 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 1 , BANGALORE, [CIT(A)] DATED 14/10/ 2015 FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE R EVENUE RAISED THE FOLLOWING GRO UNDS OF APPEAL: ITA NO . 120 /BANG/201 6 PAGE 2 OF 6 3. BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSE S SEE IS AN INDIVIDUAL DERIVING INCOME UNDER THE HEAD OTHER SOURCES AND CAPITAL GAINS. THE R ETURN OF INCOME FOR THE ASSESSM ENT YEAR 2010 - 11 WAS FILED ON 0 7 / 10 /2 010 DECLARING TOTAL INCOME OF RS. 6 , 82 , 440 / - AFTER CLAIMING EXEMPTION UNDER SECTION 54 F OF THE INCOME TAX ACT 1961 [ HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT ] . SUBSEQUENTLY THE ASSESSEE FILED A LETTER DATED 12/06/201 4 BEFORE THE ASSESSING O FFICER WITHDRAWING THE EXEMPTION CLAIMED UNDER SECTION 54F. BASED ON THIS INFORMATION, THE ASSESSING OFFICER ISSUE D NOTICE UNDER SECTION 148 ON 20 /0 6 /2014 CALLING FOR THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 IN ORDER TO ASSESS THE ESCAPED INCOME. THE ASSESSEE HAS E - FILED RETURN OF INCOME. AGAINST SAID R ETURN OF INCOME , THE ASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER , W ARD - 1(2)(1) , BANGALORE VIDE ORDER DATED 24/12/2014 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT AT TOTAL INCOME OF RS. 3 , 78 ,0 6 , 090 / - . THE VARIATION BETWEEN THE RETURNED INCOME AND THE ASSESSE D INCOME IS ONLY ON ACCOUNT OF ADDITION MADE UNDER THE HEAD ITA NO . 120 /BANG/201 6 PAGE 3 OF 6 CAPITAL GAINS O N SALE OF PROPERTY BEARING NO.21/ 41, MG ROAD BANGALORE . THE ADDITION WAS MADE BY THE ASSESSING OFFICER BY COMPUTING INDEXED COST OF ACQUISITION OF THE PROPERTY SOLD BY ADOPTING TH E RATE OF RS.510 PER SQUARE METER AS ON 0 1/ 0 4/1981 AS A GAINST TH E RATE ADOPTED BY THE ASSESSEE OF RS.3 50/ - PER SQ.FT. 4. THE FACTS SET OUT BY THE ASSESSING OFFICER LEADI NG TO THE ADDITION ARE AS UNDER: 5. AGGRIEVED BY THE ASSESSMENT ORDER AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) WHO , VIDE IMPUGN ED ORDER , ALLOWED THE APPEAL HOLDING AS UNDER: ITA NO . 120 /BANG/201 6 PAGE 4 OF 6 ITA NO . 120 /BANG/201 6 PAGE 5 OF 6 6. BEING AGGRIEVE D BY THIS ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 7. THE LEARNED DR CONTENDED THAT THE FAIR MARKET VALUE OF THE PROPERTY AS ON 0 1/ 0 4/ 1 981 FOR THE PURP OSE OF COMPUTING COST OF ACQUISITION OF THE PROPERTY SHOULD BE BASED ON THE GUID ANCE VALUE OF THE SUB REGISTRAR. THE LD. CIT(A) OUGHT NOT TO HAVE ACCEPTED THE METHODOLOGY OF BACKWARD WORKING. ON T HE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 8. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL IS WHETHER THE CIT(A) WAS JUSTIFIED IN ADOPTING BACKWARD WORKING OF SALE PRICE FOR THE PURPOSE OF WORKING OUT FMV AS ON 1/4/1981. WHEN THE MARKET VALUE OF THE PROPERTY IS KNOWN, WORKING BACKWARD FOR A PASSAGE OF TIME BASED ON INFLATION RATE IS ONE OF THE ACCEPTED METHODS OF VALUATION OF THE PROPERTY. THE CIT(A) HAS ACCEPTED THIS METHOD OF BACKWARD WORKING OUT OF FMV AND THIS PRINCIPLE IS ALSO RECOGNI Z ED IN THE FOLLOWING DECISIONS: I. SHANTADEVI GAEKWAD ( 72 DTR 241) II. JAHANGANJ COLD STORAGE VS. ACIT (133 TTJ 278)(AGRA)(TM) III. MIZAR ANITA PAI & ANOTHER IN ITA NO.198 & 199/BANG/2011 DATED 30/08/2012 FURTHER, THE GUIDELINES VALUE ADOPTED FOR REGISTRATION WAS NOT FOUND TO BE RELEVANT FOR DETERMINATION OF VALUE OF PROPERTY FOR GIFT TAX PURPOSE, AS IT DOES NOT REFLECT VALUE OF A PARTICULAR PROPERTY BUT THE VALUE OF A PARTICULAR AREA IN WHICH PROPERTY IS SITUATED. ( CGT VS. R.JAWAHAR ( 1996) 217 ITR 59 (MAD) AND CGT VS. R.DAMODARAN (247 ITR 698). THEREFORE, WE DON'T FIND ANY FALLACY IN THE ORDER OF THE CIT(A). THE REFORE GROUNDS OF APPEAL FILED BY THE REVENUE ARE DISMISSED . . ITA NO . 120 /BANG/201 6 PAGE 6 OF 6 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2018. SD/ - SD/ - ( LALI T KUMAR) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU D A T E : 17/0 1 /2018 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY IN COME - TAX APPELLATE TRIBUNAL BANGALORE