ACIT, Circle - 29, Kolkata , Kolkata V. Smt. Daksha Vipin Bhimani, Kolkata

ITA 1205/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7007 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Capital asset; Earning of tax free income; Fair market value
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D, KOLKATA BEFORE SH. P.M.JAGTAP, VICE PRESIDENT & SH.S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1205/KOL/2018 (ASSESSMENT YEAR-2012-13) ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 28.03.2018 PASSED BY CIT(A)-8, KOLKATA FOR AY 2012-13 U/S 143(3)/147 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. THE ONLY ISSUE RAISED IN THIS APPEAL AS TO WHETHER THE CIT(A) JUSTIFIED IN ALLOWING EXEMPTION U/S 54 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE IS AN INDIVIDUAL, DERIVED INCOME UNDER THE HEADS INCOME FROM SHARE PROFIT OF FIRM, LONG TERM CAPITAL GAIN AND FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO DETERMINED CAPITAL GAIN RELATING TO SALE OF ANCESTRAL PROPERTY IN RESPECT OF 1/3 RD SHARE BELONGING TO THE ASSESSEE WHICH READS AS UNDER:- TOTAL SALE CONSIDERATION RS.15 CRORE I/3 RD SHARE OF ASSESSEE RS. 5 CRORE 3. AS PER INDEXATION AS ON 01.04.1991 IS RS.4,29,13,336/- AND CLAIMED RS.70,86,664/- (RS.5,00,00,000/- - RS.4,29,13,336/-) AS EXEMPT INCOME. ACCORDING TO THE AO, THE ASSESSEE HAS ALLEGED TO HAVE PURCHASED TWO FLATS ACIT, CIRCLE-29, KOLKATA-700068. VS SMT. DAKSHA VIPIN BHIMANI, FRONT BLOCK, 82, SARAT BOSE ROAD, LANSDOWN MARKET, KOLKATA-700026. PAN-AEMPB1937P (APPELLANT) (RESPONDENT) APPELLANT BY SH.SHANKAR HALDER, SR.DR JCIT RESPONDENT BY SH.S.S.GUPTA, FCA DATE OF HEARING 31.01.2019 DATE OF PRONOUNCEMENT 26 .04.2019 ITA NO.1205/KOL/2018 (ASSESSMENT YEAR-2012-13) PAGE | 2 AND JUST STARTED CONSTRUCTION ON 27.01.2015. THEREBY, CONSIDERING THE PROVISION U/S 54/54F, THE AO OPINED THAT THE ASSESSEE WILL BE ENTITLED TO CLAIM EXEMPTION WHERE THE PROPERTY SHOULD BE CONSTRUCTED BY 06.10.2014. SINCE IT IS UNDER CONSTRUCTION, THE AO DENIED CLAIM OF EXEMPTION TO THE ASSESSEE AND ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. THE CIT(A) HELD AS UNDER:- 7. COMPUTATION OF THE CAPITAL GAINS: THE REFERENCE BY ACIT AO TO DVO; QUANTUM OF EXEMPTION U/S 54. 7.1 AS ALREADY BRIEFED IN EARLIER PARAGRAPH 5, WHEN THE ENTIRE GROSS RECEIPTS AT RS.5 CRORE FROM THE CAPITAL GAINS HAD BEEN UTILISED/DEPOSITED PER SECTION 54 [RS.4 CRORE DEPOSITED IN THE CGAS, AND RS.1 CRORE PAID TO THE BUILDER] - THEN THERE REALLY REMAINS ACTUALLY NOT MUCH POINT TO DISCUSS ABOUT THE COMPUTATION OF THE LONG-TERM CAPITAL GAINS. IT JUST BECOMES MERELY FOR ACADEMIC DISCUSSION SAKE. ANYWAY- 7.2 THE CAUSE OF THE DISPUTE IN THE MATTER OF COMPUTATION OF LONG-TERM CAPITAL GAINS - IS THE REFERENCE MADE BY THE ACIT AO TO THE DVO, CHENNAI, FOR VALUATION OF THE FAIR MARKET VALUE OF THE TRANSFERRED PROPERTY AS ON 01.04.1981. THIS IS THE ISSUE TAKEN IN THE ADDITIONAL GROUND OF APPEAL. THE ASSESSEE HAD ALREADY HAD THE VALUATION DONE BY REGISTERED VALUER M/S R M ASSOCIATES [EST. 19711, ARCHITECTS, VALUERS, INTERIOR DESIGNERS, CHENNAI. THIS FIRM HAD BEEN GRANTED REGISTRATION UNDER THE WEALTH TAX ACT, 1957, SINCE THE YEAR 1975 VIDE CBDT F NO. 325/173/74 - W.T. DATED 7TH AUGUST, 1975. SO THE VALUATION FROM SUCH A LONG-EXISTING FIRM CANNOT BE SIMPLY SNUFFED OFF. EVEN SO, AS THERE HAD BEEN VALUATION DONE BY A REGISTERED VALUER, SO THE ACIT AO REFERENCE TO THE DVO - FAILS UNDER CLAUSE (A) OF THE SECTION 55A. IN THE SAID CLAUSE (A), THE PHRASE IS LESS THAN ITS FAIR MARKET VALUE' WAS SUBSTITUTED BY 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE' BY THE FINANCE ACT, 2012, W.E.F. 01.07.2012. THUS, IN THIS INSTANT CASE, AT THE POINT OF TIME WHEN THE TRANSFER WAS EFFECTED, IT WAS THE EARLIER PHRASE THAT WAS THEN EXISTING. AND IT HAS ALSO BEEN HELD IN SEVERAL JUDICIAL DECISIONS, AS ALSO BY HON'BLE ITAT KOLKATA 'C' BENCH IN SONALI ROY VS. PCIT -L7, KOLKATA [ITA NO. 1329/KOL/2017J THAT THE SUBSTITUTION IS W.E.F. AY 2013- 14. THUS, NOT BEING THE CASE THAT THE ESTIMATE MADE BY THE REGISTERED VALUER IS LESS THAN ITS FAIR MARKET VALUE, SO THE ACIT AO'S REFERENCE TO THE DVO WAS BAD IN LAW. FURTHERMORE TOO, THE ASSESSEE HAD FURNISHED HER OBJECTIONS TO THE DVO CHENNAI VIDE HER LETTER DATED 24/09/2014. IT IS NOT KNOWN AS TO WHETHER, OR, HOW THE DVO TREATED THE OBJECTIONS. ANYWAY, AS I HAVE HELD THE REFERENCE TO THE DVO TO BE BAD IN LAW, SO AS TO WHETHER OR NOT THE DVO ACTED/RESPONDED TO THE OBJECTIONS OF THE ASSESSEE - THIS DOES NOT MATTER NOW. ITA NO.1205/KOL/2018 (ASSESSMENT YEAR-2012-13) PAGE | 3 THUS, THE ADDITIONAL GROUND OF APPEAL ALSO SUCCEEDS. 7.3 THUS ON THE ISSUE OF THE COMPUTATION OF THE LONG-TERM CAPITAL GAINS, THE COMPUTATION AS PER THE ASSESSEE IS TO BE TAKEN, I.E., THE LTCG IS AT RS.70,86,664/-. BUT, TO REPEAT AGAIN, THIS REALLY DOES NOT MATTER AS - THE ENTIRE GROSS RECEIPTS HAD BEEN UTILISED/ DEPOSITED PER SECTION 54. 8. OTHER ISSUES - REFERENCE BY ACIT AO TO ALSO SECTION 54F. FIRSTLY, IT WAS NOT THE CLAIM NOR CONTENTION OF THE ASSESSEE TO ALSO CLAIM FOR EXEMPTION U/ S 54F. IT WAS THE ACIT AO WHO INTRODUCED THIS ALTERNATIVE. I TAKE IT THAT IT WAS RATHER THE ACIT AO'S DESIGN TO DRAW IN SECTION 54F - SO THAT, AS THE APPELLANT WAS HAVING A RESIDENTIAL HOUSE APPEARING IN ITS BALANCE SHEET, SO THE PURCHASE OF THE NEW HOUSE WOULD NOT QUALIFY FOR DEDUCTION/ EXEMPTION U/S 54F. THE CLAIM OF THE APPELLANT IS ONLY FOR SECTION 54. IN THE SECTION 54, THERE IS NO SUCH CONDITION THAT THE ASSESSEE MUST NOT BE ALREADY OWNING A RESIDENTIAL HOUSE. SECONDLY, THE ASSET TRANSFERRED IS A RESIDENTIAL HOUSE. TRANSFER OF RESIDENTIAL HOUSE IS DEALT WITH ONLY IN SECTION 54. WHEREAS SECTION 54F IS TRANSFER OF LONG-TERM CAPITAL ASSET NOT BEING A RESIDENTIAL HOUSE. 4. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE REVENUE CHALLENGED THE ACTION OF DVO IN ALLOWING EXEMPTION U/S 54 OF THE ACT IN GROUND NOS.1 TO 4. IT IS NOTED FROM THE RECORD THAT THE ASSESSEE CLAIMED EXEMPTION U/S 54 OF THE ACT AND ON EXAMINATION OF SUCH CLAIM, THE AO REFERRED THE MATTER TO THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE U/S 55A(A) OF THE ACT. ACCORDING TO CIT(A), THE AO HAS NO POWER TO REFER THE MATTER TO THE DVO AS A VALUE SUBMITTED BY THE ASSESSEE UNDER REGISTERED VALUER IS MORE THAN THE FAIR MARKET VALUE. FURTHER, HE HELD THAT THE AO CAN ONLY REFER TO THE DVO WHEN THE VALUATION ADOPTED BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE. TO REACH THIS CONCLUSION, THE CIT(A) PLACED RELIANCE ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF SONALI ROY IN ITA NO.1329/K/2017 FOR AY. 2012-13 WHICH IS PLACED AT PAPER BOOK AT PAGES 49 TO 59. 5. ON PERUSAL OF THE SAID ORDER, WE NOTE THAT THE ASSESSMENT YEAR THEREON IS 2012-13 AND THE AO REFERRED THE MATTER TO THE DVO FOR DETERMINATION OF FAIR MARKET VALUE TAKING INTO CONSIDERATION THE AMENDMENT INSERTED TO CLAUSE (A) OF SECTION 55A WHICH CAME INTO FORCE FROM 01.07.2012. ITA NO.1205/KOL/2018 (ASSESSMENT YEAR-2012-13) PAGE | 4 THE CO-ORDINATE BENCH OF THIS TRIBUNAL HELD THAT THE SAID AMENDMENT WOULD BE APPLICABLE FROM ASSESSMENT YEAR BEGINNING FROM 01.04.2013 RELEVANT TO ASSESSMENT YEAR 2013-14. FURTHER, THE SAID AMENDMENT OF INSERTION IS AT VARIANCE WITH ITS FAIR MARKET VALUE IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION THEREON I.E AY 2012-13. THEREFORE, IT IS CLEAR THAT THE POWER OF AO TO REFER TO THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE IS AVAILABLE ONLY FROM AY 2013-14 AND IN THE PRESENT CASE, WE FIND AY IS 2012- 13. THEREFORE, THE SAID AMENDMENT WHICH HAS BEEN INVOKED BY THE AO IS NOT CORRECT AS RIGHTLY POINTED BY THE CIT(A) IN HIS IMPUGNED ORDER, FOR THE REASON, NOT BEING THE CASE THAT THE VALUE MADE BY THE REGISTERED VALUER OF ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND IT IS JUSTIFIED. THUS, GROUND NOS. 1 TO 4 RAISED BY THE REVENUE ARE DISMISSED. 6. GROUND NO.5 IS RELATING TO ALLOWING EXEMPTION U/S 54/54F OF THE ACT. WE FIND FROM THE IMPUGNED ORDER THAT ACCORDING TO CIT(A), THERE WAS NO CLAIM MADE BY THE ASSESSEE U/S 54F OF THE ACT AND ACCORDING TO HIM, THE AO ALTERNATIVELY INTRODUCED THIS CLAIM ON HIS OWN AS AN ALTERNATIVE. THE CIT(A) DID NOT DISCUSS THE SAME AND THERE WAS NO FINDING ON THIS ISSUE. WHEN THERE IS NO FINDING BY THE CIT(A) AND GROUND NO.5 RAISED BY THE REVENUE FAILS AND IT IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2019. SD/- SD/- (P.M.JAGTAP) (S.S.VISWANETHRA RAVI) VICE PRESIDENT JUDICIAL MEMBER DATE:- 23.04.2019 *AMIT KUMAR* ITA NO.1205/KOL/2018 (ASSESSMENT YEAR-2012-13) PAGE | 5 COPY FORWARDED TO: 1. APPELLANT- ACIT, CIRCLE-29, KOLKATA-700068. 2. RESPONDENT- SMT. DAKSHA VIPIN BHIMANI, FRONT BLOCK, 82, SARAT BOSE ROAD, LANSDOWN MARKET, KOLKATA-700026. 3. CIT-KOLKATA 4. CIT(APPEALS)-KOLKATA 5. DR: ITAT -KOLKATA BENCHES BY ORDER AR/H.O.O ITAT, KOLKATA