Mrs. Susan Rahman, Bangalore V. ACIT, Bangalore

ITA 1216/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85997 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRASAD JT
• Assessee Lawyers: V SRINIVASAN
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1216/BANG/2013 ASSESSMENT YEAR : 2007-08 MRS. SUSAN RAHMAN, APT, NO.203, FOOTPRINTS, NO.1, 7 TH MAIN, 7 TH CROSS, HAL II STAGE, INDIRANAGAR, BANGALORE 560 038. PAN: ABQPR 0363N VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, C.A. RESPONDENT BY : DR. K. SHANKAR PRASAD, JT. CIT(DR) DATE OF HEARING : 08.01.2015 DATE OF PRONOUNCEMENT : 23.01.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 13.5.2013 OF THE CIT(APPEALS), LTU, BANGALORE, REL ATING TO ASSESSMENT YEAR 2007-08. THE ASSESSEE IS AN INDIVIDUAL. ITA NO.1216/BANG/2013 PAGE 2 OF 5 2. THE ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL LIES IN A VERY NARROW COMPASS. THE ASSESSEE SOLD A PROPERTY AT RE D FIELDS AREA, COIMBATORE AND DECLARED LONG TERM CAPITAL GAIN ON S UCH SALE AS FOLLOWS:- INCOME FROM CAPITAL GAIN: LONG TERM CAPITAL GAIN ON SALE OF PROPERTY AT REDFIELDS, COIMBATORE 12,400,000 LESS: INDEXED COST OF ACQUISITION (1129060/100*519) 5,859,821 (FAIR MARKET VALUE AS ON 01.04.1981 IS RS.11,29,060 AS PER THE VALUATION REPORT BY MR. D. KRISHNARAJAN, DATED 19.07.2007) LONG TERM CAPITAL GAIN ON SALE OF PROPERTY 6,54 0,179 3. AS CAN BE SEEN FROM THE ABOVE COMPUTATION, THE A SSESSEE ADOPTED FAIR MARKET VALUE AS ON 1.4.1989 BY APPLYING A RATE OF 20,000 / CENT. IN SUPPORT OF HIS CLAIM, REGISTERED VALUER'S REPORT HA D BEEN FILED. IN THE SAID REPORT, IN COLS. 38 & 39, THE BASIS ON WHICH THE RA TE OF 20,000 / CENT WAS ADOPTED BY THE REGISTERED VALUE IS GIVEN AS FOLLOWS :- 38. IF SALE INSTANCES ARE NOT AVAILABLE OR NOT RELIED UPON, THE BASIS OF ARRIVING AT THE LAND RATE NO SALE INSTANCES AVAILABLE FOR THE PERIOD 01/04/1981. A THOROUGH ENQUIRY WAS MADE WITH REAL ESTATE PEOPLE & DEVELOPERS. IT WAS ASSESSED THAT THE MARKET RATE VARIES FROM RS.20000/- TO RS.22000/CENT. HOWEVER, THE GUIDELINE VALUE AS ON 01/04/1981 AS ASCERTAINED FROM DISTRICT REGISTRAR, COIMBATORE IS RS.10000/CENT. 39. LAND RATE ADOPTED IN THIS VALUATION RS.20,000 / CENT. ITA NO.1216/BANG/2013 PAGE 3 OF 5 4. IN PART II OF VALUATION REPORT, THE REGISTERED V ALUER HAS FURTHER GIVEN REASONS FOR ADOPTING THE FAIR MARKET VALUE AS ON 1. 4.1981 AT 20,000 / CENT AS FOLLOWS:- LAND RATE: THE EXACT LAND RATE ON MARKET VALUE BA SIS IS NOT AVAILABLE. HOWEVER, THE RATES PREVALENT IN 1981 WE RE ASSESSED FROM LOCAL ENQUIRIES FROM REAL ESTATE AGENTS, LOCAL NEIGHBOURS AND DEVELOPERS. THE PROPERTY LIES WITHIN THE COIMBATOR E CORPORATION LIMITS AND IN POSH AREA. DEFENCE DEPARTMENTS LIKE ARMY, NAVY & AIRFORCE, ETC., ARE NEARBY. AGE OLD NIRMALA COLL EGE, BANKS, ETC. ARE CLOSE BY. COIMBATORE TOWN IS 3 KM AWAY FR OM THIS PLACE. CONSIDERING ALL THE ABOVE, THE MARKET RATE ASSESSED IS VARYING FROM RS.20,000/- TO RS.22,000 / CENT. THE CORRESPONDING GUIDELINE VALUE AS ASCERTAINED FR OM DISTRICT REGISTRARS OFFICE, COIMBATORE IS RS.10,000 / CENT. HENCE THE MINIMUM MARKET VALUE OF RS.20,000/- IS AD OPTED. 5. IT IS NOT IN DISPUTE THAT THE GUIDELINE VALUE IN THE AREA WHERE THE PROPERTY IS SITUATED AS ON 1.4.1981 WAS 10,000 / CE NT. THE AO DID NOT CONSIDER THE REGISTERED VALUER'S REPORT, BUT MERELY OBSERVED IN THE ORDER OF ASSESSMENT THAT FAIR MARKET VALUE AS PER THE GUIDEL INES VALUE IN THE SUB- REGISTRAR'S OFFICE WHICH IS RS.10,000 / CENT IS TAK EN AS FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. THUS, CAPITAL GAIN DEC LARED BY THE ASSESSEE WAS ASSESSED AT AN ENHANCED FIGURE RESULTING IN AN ADDITION OF RS.11,68,790 TO THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. ITA NO.1216/BANG/2013 PAGE 4 OF 5 6. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CON FIRMED THE ORDER OF AO. HE WAS OF THE VIEW THAT THE REGISTERED VALU ER'S REPORT WAS PURELY BASED ON HEARSAY AND COULD NOT BE ACCEPTED. 7. AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT A PPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN OUR VI EW, THE ISSUE WITH REGARD TO DETERMINATION OF FAIR MARKET VALUE REQUIR ES TO BE CONSIDERED AFRESH BY THE AO. AS PER PROVISIONS OF SECTION 55A OF THE ACT, IF THE ASSESSEE SUPPORTS THE VALUATION WITH A REPORT OF TH E REGISTERED VALUER, THEN THE AO CAN MAKE A REFERENCE TO THE VALUATION OFFICE R FOR ASCERTAINING THE FAIR MARKET VALUE OF THE CAPITAL ASSET, IF THE AO F ORMS AN OPINION THAT THE VALUE CLAIMED BY THE ASSESSEE IS AT VARIANCE WITH T HE FAIR MARKET VALUE. THUS, THE AO HAS TO SEEK AN OPINION OF AN EXPERT VI Z., VALUATION OFFICER AND CANNOT DISPUTE THE REGISTERED VALUER'S REPORT ON HI S OWN. BESIDES THE ABOVE, WE ALSO FIND THAT THE AO HAS NOT GIVEN ANY B ASIS AS TO WHY THE REGISTERED VALUER'S REPORT COULD NOT BE ACCEPTED. IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE ISSUE OF DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 FOR FRESH CONSIDERATION BY THE AO. THE AO WILL MAKE A REFERE NCE TO THE VALUATION OFFICER FOR THE PURPOSE OF ASCERTAINING THE FAIR MA RKET VALUE OF THE PROPERTY AS ON 1.4.1981. SUCH REPORT OF THE VALUATION OFFIC ER WILL BE CONFRONTED TO ITA NO.1216/BANG/2013 PAGE 5 OF 5 THE ASSESSEE FOR HIS OBJECTIONS AND AFTER AFFORDING THE ASSESSEE OPPORTUNITY OF BEING HEARD, THE AO WILL DECIDE THE ISSUE AFRESH. 9. FOR STATISTICAL PURPOSES, THE APPEAL OF THE ASS ESSEE IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JANUARY, 2015. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 23 RD JANUARY, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.