ITO, Bangalore V. Mrs. Naseema Hasim, Bangalore

ITA 1272/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51411 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-10-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Keywords: Capital asset; Gift; Principle of natural justice; Additional evidence; Cost of acquisition; Fair market value; Valuation report; Revised return; Capital Gains
• Section: 54F; 143(1); 192; 139(1); 148; 54; 144

Judgement Text

PAGE 1 OF 16 ITA NOS.1250 & 1272/BANG/2 010 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO. ASST. YEAR APPELLANT RESPON DENT 1250/BANG/10 2005-06 SMT. NASEEMA HASHIM, NO.35/4, SPENCER ROAD, BANGALORE-5. PA NO.AAXPH 0475 K THE ITO, WARD-1(2), BANGALORE. 1272/BANG/10 2005-06 THE ITO, WARD-1(2), BANGALORE. SMT. NAZEEMA HASHIM, BANGALORE-5. DATE OF HEARING : 29/11/2011 DATE OF PRONOUNCEMENT: 20/12/2011 ASSESSEE BY : SMT. SHEETHAL BORKAR, ADVOCATE REVENUE BY : SMT. SUSAN THOMAS JOSE, JCIT O R D E R PER BENCH ; THESE APPEALS INSTITUTED BY THE REVENUE AS WELL AS THE ASSESSEE ARE DIRECTED AGAINST THE IMPUGNED ORDER OF THE L D. CIT (A)-I, BANGALORE DATED 20.8.2010 FOR THE ASSESSMENT YEAR 2005-06 . I. ITA NO.1272/B/2010 [BY TH E REVENUE]: 2. THE REVENUE HAS RAISED FIVE GROUNDS, IN WHICH, GROUND NOS.1, 4 & 5 BEING GENERAL IN NATURE, THEY DO NOT SURVIVE FOR ADJUDICATION. IN THE REMAINING GROUNDS, THE ESSENCE OF THE ISSUE IS CONFINED TO A SOLITARY GROUND, NAMELY: THAT THE LD. CIT (A) HAD ERRED IN ADOPTING THE COST OF ACQUISITION OF THE LAND AT RS.175/SFT AS ON 1.4.1981 AS AGAINST RS.24/SFT DETERMINED BY THE AO. PAGE 2 OF 16 ITA NOS.1250 & 1272/BANG/2 010 2 II. ITA NO.1250/B/2010 [BY THE ASSESSEE]: 3. THE ASSESSEE HAS RAISED EIGHT GROUNDS , OUT OF WHICH, GROUND NOS.1, 7 AND 8 BEING GENERAL IN NATURE, THEY HAVE BECOME NON-CONSEQUENTIAL. IN THE REMAINING GROUNDS, THE CORE OF ISSUES REVOLVE THAT (I) THE CIT (A) IN NOT ALLOWING THE DEDUCTION U/S 54 OF THE ACT AND ALSO ERRED IN HOLDING THAT THE APPELLANT WAS NOT ENTITLED TO RELIEF U/S 54 OF THE ACT; HE OUGHT TO HAVE ACCEPTED THE ASSESSEES CONTENTION THAT HE HAD SATISFIED THE CONDITIONS REQUIRED FOR CLAIMING DEDUCTION U/S 54 AND 54F OF THE ACT; (II) THAT THE CIT (A) OUGHT TO HAVE ACCEPTED THE VALUE OF THE PROPERTY AS ON 1.4.1981 AS DECLARED BY THE ASSESSEE AND ERRED IN ESTIMATING THE VALUE AT RS.175/SFT. & (III) THAT THE CIT (A) ERRED IN DISALLOWING THE LEGAL FEES, COMMISSION PAID TO TENANTS ETC. 4. AS THE ISSUES RAISED IN THESE APPEALS PERTAINING TO T HE SAME ASSESSEE AND FOR THE SAME ASSESSMENT YEAR, THEY WERE HE ARD, CONSIDERED TOGETHER AND DISPOSED OFF, FOR SAKE OF CONVEN IENCE, IN THIS COMMON ORDER. WE SHALL NOW PROCEED TO ADDRESS TH E GRIEVANCE OF THE REVENUE AS UNDER: I. ITA NO.1272/B/2010 [BY THE REVENUE]: 5. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL, FURNISHE D HER ORIGINAL RETURN OF INCOME ON 21.10.2005, ADMITTING, A TOTAL INCOME OF RS.20,243/- WHICH WAS SUBSEQUENTLY REVISED ON 12.3.2007, ADMITTING PAGE 3 OF 16 ITA NOS.1250 & 1272/BANG/2 010 3 AN INCOME OF RS.3,20,043/-. THE SAME WAS INITIALLY PRO CESSED U/S 143(1) OF THE ACT. DURING THE COURSE OF VERIFICATION OF DETAILS FURNISHED ALONG WITH THE RETURNS, THE LD. AO OBSERVED THAT THE ASSESSEE HAD SHOWN TAXABLE CAPITAL GAINS OF RS.3,21,543/- AS AGAINST TAXABLE CAPITAL GAINS OF RS.31,68,864/- . ACCORDING TO THE A O, AS INCOME CHARGEABLE TO TAX HAD ESCAPED, THE ASSESSEE WAS SERVED WIT H A NOTICE U/S 148 OF THE ACT ON 13.7.2007. AS THERE WAS NO COMPL IANCE TO THE SAID NOTICE, THE ASSESSEE WAS SERVED WITH A PROPOSAL TO CONCLU DE THE ASSESSMENT U/S 144 OF THE ACT FOR WHICH THE ASSESSEE FURNISHED CERTAIN DETAILS/SUBMISSION. AFTER DUE CONSIDERATION OF THE ASSESSE ES CONTENTIONS, THE LD. AO, FOR THE REASONS RECORDED IN HIS IMPUGNED ASSESSMENT ORDER UNDER DISPUTE, DETERMINED INCOME FROM CAP ITAL GAINS AT RS.92,34,445/-. 6. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE, AMONG OTH ERS, WITH THE LD. CIT (A) FOR RELIEF. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS WITH ADDITIONAL EVIDENCES AND FOR THE DETAILE D REASONS RECORDED WITH REGARD TO THE ADOPTION OF VALUE OF RS.2 4/SFT FOR DETERMINING THE COST OF ACQUISITION AS ON 1.4.1981, THE LD. CIT (A) HAD OBSERVED THUS: 5.1. RECORDS SHOWS THAT THE ASSESSING OFFICER GOT M ISTAKEN BY THE FACT THAT THE ORIGINAL ASSET WAS ONLY A VACANT SITE AND PROBABLY THEREFORE THE VALUE ADOPTED WAS RS.24/- PER SFT. HOWEVER, THERE ARE THREE DIFFERENT FIGURES AVAILABLE FOR THIS PURPOSE. FIRSTLY, THE ORIGINAL RETURN DATED 21.10.05 SHOWED THE FIGURE AT RS.450/-. THE SECOND FIGURE IS OF RS.325/- PER SQFT AS PER THE REVISED RETURN DATED 12.3.07. THE REGISTERED VALUERS REPORT SHOWED SUCH FIGURE AT RS.350 PER SQFT FOR THE SITE AND THE BUILDING VALUE AT RS.10 LAKHS WITH 10% LESS FOR FORCED SALE. I DO NOT ADOPT THE THIRD VALUE PAGE 4 OF 16 ITA NOS.1250 & 1272/BANG/2 010 4 BECAUSE THE ASSESSING OFFICER HAS GIVEN JUSTIFIED REASON NOT TO ACCEPT THE VALUE BASED ON REGISTERED VALUERS REPORT IN THE REMAND REPORT REPRODUCED BELOW: 5.1.1. NOW BEFORE THE CIT (A), THE ASSESSEE HAD SUBMITTED A VALUATION REPORT WHICH HAS BEEN FORWARDED FOR EXAMINATION REPORT. THE VALUER WAS SUMMONED TO EXAMINE ON WHAT BASIS THE VALUE OF RS.350 PER SFT WAS ADOPTED FOR VALUING THE LAND. THE VALUER, SRI RAMAMURTHY APPEARED ON 12.11.2009 AND DEPOSED THAT SINCE THERE WERE NO COMPARABLES FOR THAT AREA BRIGADE ROAD FOR THAT PERIOD, HE HAD RELIED ON THE MARKET INFORMATION AND TREND AND THE REAL ESTATE VALUES OF SIMILR AREAS. THE VALUER ADMITTED THAT THERE WERE NO CONCRETE MATERIAL ON THE BASIS OF WHICH HE COULD BASE HIS VALUATION; THERE BEING NO COMPARABLES. HENCE, IT IS CONCLUDED THAT THE VALUE ARRIVED AT BY THE VALUER IS AN ESTIMATE BASED ON INFERENCE AND SURMISE AND NOT ON ANY CONCRETE MATERIAL. (THE STATEMENT RECORDED FROM THE VALUER IS PLACED ON RECORD). AS AGAINST THIS, THE ASSESSING OFFICER HAS BASED HIS VALUATION ON THE MATERIAL EXTRACTED FROM THE SUB-REGISTRARS OFFICE REGARDING THE ONE SALE INSTANCE IN BRIGADE ROAD ON 18.6.1981. HENCE, THE ORDER OF THE ASSESSING OFFICER NEEDS TO BE CONFIRMED. 5.2. IN VIEW OF THE FACTS AND INCONSTANCIES AND EVIDENCES FILED, I DEEM IT FIT THE APPROPRIATE VALUE WOULD BE RS.175 FOR LAND AND BUILDING COST AT RS.5 LAKHS I.E., HALF THE RATES OF VALUATION REPORT MAKING DISCOUNT, TO SUCH REPORT BECAUSE IT WAS AN ADMITTED FACT BANGALORE WAS NOT A METRO IN 1981 AND IT WAS ONLY A CLUSTER OF VILLAGES AS LIKE OTHER CITIES HAVING NO SUCH POTENTIALITIES AS IT HAS ACHIEVED AFTER 2001. THIS ESTIMATION OF VALUE PER SQFT @ RS.175/- IS BASED ON THE GUIDELINES ENUNCIATED BY THE SUPREME COURT IN THE CASE OF CHIMANLAL HARGOVINDDAS V. SPECIAL L.A.O A.I.R. 1988 S.C. 1652. THIS IS CONSIDERED AS THE MOST JUDICIOUS PAGE 5 OF 16 ITA NOS.1250 & 1272/BANG/2 010 5 GUIDELINES IN 1980S WHEN THE STATE GOVERNMENT HAD NO PRESCRIBED VALUATIONS OF LAND IN THEIR PRIME LOCALITIES. THE HONBLE COURT HAS IN THE CASE OF CHIMANLAL HARGOVIND DAS V. SPECIAL LAO AIR 1988 SC 1652 (SC) LAID DOWN SOME PLUS FACTORS WHICH INTENDS TO INCREASE THE NORMAL PRICE AND SOME NEGATIVE FACTORS LEADING TO DECREASE IN THE PRICE OF LAND IN BIG CITIES. SUCH GUIDELINES ARE AS UNDER: .. FOLLOWING THE YARDSTICKS NARRATED SUPRA, I FIND THE VALUE OF LAND TAKEN AT RS.175/- PER SQFT AS ON 1.4.1981 IS JUSTIFIED IN VIEW OF THE FACTS THAT THE LAND HAD ALSO MANY NEGATIVE FACTORS IN 1981 VIZ., AN OLD TENANTED BUILDING THEREON, NOT SO DEVELOPED AREA IN 1981 HAVING ONLY ROAD FRONT IN WEST SIDE. 5.3. IN VIEW OF THE FORE-GOING DISCUSSION THE ASSESSING OFFICER IS DIRECTED TO ADOPT THIS VALUE TO ARRIVE AT THE COST OF ACQUISITION WHILE CALCULATING THE CAPITAL GAINS ON SALE OF PROPERTY LOCATED AT 70/71, BRIGADE ROAD, ON 8.10.2004 INSTEAD OF RS.24/- PER SQFT. HENCE APPEAL IS PARTLY ALLOWED ON THIS ISSUE. 7. NOT SATISFIED WITH THE FINDING OF THE LD. CIT (A ) IN DIRECTING THE AO TO ADOPT THE VALUE OF LAND AT RS.175/SFT AS AGA INST RS.24/SFT ADOPTED, THE REVENUE HAS COME UP WITH THE PRESENT APPE AL. 7.1. IT WAS THE CONTENTION OF THE REVENUE THAT THE C IT (A) HAD ERRED IN ADOPTING THE COST OF ACQUISITION OF THE LAND TAKEN AT RS.175/- PER SFT AS ON 1.4.1981 AS AGAINST RS.24/- PER SFT. DETERM INED BY THE AO WHILE CALCULATING THE CAPITAL GAINS ON SALE OF PROP ERTY LOCATED AT 70/71, BRIGADE ROAD ON 8.10.2004. IT WAS, FURTHER, SUBMITTED THAT THE CIT (A) WAS ALSO NOT JUSTIFIED IN ADOPTING THE COST OF ACQUISITION OF THE LAND AT RS.175/SFT WITHOUT A SCIENTIFIC BASIS AS AGAINST THE VALUE PAGE 6 OF 16 ITA NOS.1250 & 1272/BANG/2 010 6 ADOPTED BY THE AO ON THE BASIS OF GUIDELINE RATE FIXE D BY THE GOVERNMENT AT RS.24/SFT. IT WAS, THEREFORE, PLEADED T HAT THE STAND OF THE AO REQUIRES TO BE RESTORED. 7.2. ON THE OTHER HAND, THE LD. AR SUBMITTED, HIGHL IGHTING VARIOUS ISSUES, THE SUBSTANCES OF WHICH ARE SUMMARIZED AS UN DER: (I) THAT AS PER THE RECORDS OF THE SUB-REGISTRAR AT THAT RELEVANT PERIOD, THE SALE TRANSACTION WAS ALMO ST NIL EXCEPT ONE SALE TRANSACTION WHICH APPEARS TO HAVE BEEN REGISTERED SOME TIME IN 1981 IN WHICH THE TRANSACTION WAS AT AN ABNORMALLY LOW RATE AND APPEARS TO BE MORE A GIFT, BUT, FOR SOME SMALL VALU E MENTIONED ONLY FOR THE PURPOSE OF REGISTERING THE SALE DEED WHICH WAS RS.25/SFT AND THAT DURING THAT RELEVANT PERIOD, THERE WAS NO PRESCRIBED GUIDELINE VALUE FOR REGISTRATION OF PROPERTIES BY THE GOVERNMENT; (II) THAT THE PRESENT VALUE OF LAND ON BRIGADE ROAD IS RS.7000/SFT AND IF THE VALUE IS WORKED BACK BY APPLYING THE COST OF INFLATION INDEX, IT CAME TO AROUND RS.1270/SFT WHEREAS THE ASSESSEE HAD TAKEN THE FMV AT RS.325/SFT IN HER REVISED RETURN MERELY TO BUY PEACE WITH THE DEPARTMENT AND THAT THE PROPERTIES IN BANGALORE HAD SUDDENLY GONE UPWARD FROM 1980 ONWARDS AND IN THE PRIME LOCALITIES SUCH AS COMMERCIAL STREET, M.G.ROAD, BRIGADE ROAD ETC., THE RATE WAS ROOSTING AROUND RS.600 TO RS.800/SFT. (III) CONSIDERING THE DOCUMENTARY EVIDENCES PRODUCED BEFORE THE FIRST APPELLATE AUTHORITY, THE LD. CIT (A) OUGHT TO HAVE DIRECTED THE AO TO ADOPT RS.480/SFT INSTEAD OF RS.175/SFT. 7.3. TO SUBSTANTIATE THE ASSESSEES CLAIM, THE LD. A R CAME UP WITH A PAPER BOOK CONTAINING 1 -97 PAGES WHICH, INTER ALIA, CONSIST OF COPIES OF (I) VALUATION REPORT; (II) SALE DEEDS; (III) REMAND REPORT; (IV) PAGE 7 OF 16 ITA NOS.1250 & 1272/BANG/2 010 7 REJOINDER ETC., IN THE CASE OF SMT. RIZWANA AMEEN WHO HAD ALSO SOLD 1/8 TH SHARE OF SUBJECT PROPERTY. 8. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS, METICULOUSLY GONE THROUGH THE RELEVANT CASE RECORDS AND A LSO VARIOUS DOCUMENTARY EVIDENCES ADVANCED DURING THE COURSE OF HEARI NG ON BEHALF OF THE ASSESSEE TO SUBSTANTIATE HER CLAIM. 8.1. AT THIS JUNCTURE, WE WOULD LIKE TO REITERATE T HAT AN IDENTICAL ISSUE TO THAT OF THE ISSUE UNDER CONSIDERATION HAD CROPPED UP IN THE CASE OF SMT. RIZWANAQ AMEEN [ITA NOS.562 & 425/10] WHE REIN, FOR THE DETAILED FINDINGS RECORDED THEREIN, THIS BENCH TOOK AN UNANIMOUS VIEW THAT: 8.3. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS DISCUSSED IN THE FORE-GOING PARAGRAPHS AND ALSO KEEPING THE PROVISIONS OF S.55A OF THE ACT IN VIEW, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION ON THE FOLLOWING GROUNDS, NAMELY: (I) THE ASSESSEE HAD STRONGLY OBJECTED TO THE VALUE OF LAND TO BE ADOPTED AT RS.24/SFT AS ON 1.4.1981; (II) THE ASSESSEES A R IN HIS LETTER DT.31.1.2008 REQUESTED THE AO TO REFER THE MATTER TO THE VALUATION OFFICER TO ASCERTAIN THE FAIR MARKET VALUE. HOWEVER, THE AOS STAND - THE BASIS FOR ADOPTING FMV OF RS.24/SFT AS ON 1.4.1981 BASED ON INFORMATION COLLECTED FROM SUB-REGISTRAR - DOESNT CARRY MUCH CONVICTION AS THE SUBJECT PROPERTY WAS ADORNED WITH A BUILDING WHEREAS THE SALE INSTANCE QUOTED BY THE AO APPEARS TO BE A VACANT LAND AND ALSO NOT IN THE NEIGHBORHOOD OF THE SUBJECT PROPERTY; (III) THE SUBJECT PROPERTY WAS LOCATED AT 70/71, BRIGADE ROAD CONSISTED OF A MAIN BUILDING PAGE 8 OF 16 ITA NOS.1250 & 1272/BANG/2 010 8 WHEREAS THE AO APPEARS TO HAVE CONSIDERED THE SUBJECT PROPERTY AS A PIECE OF VACANT LAND AND HE HAD CITED A SINGLE SALE INSTANCE OF A VACANT LAND THAT TOO NOT IN THE VICINITY OF THE SUBJECT PROPERT Y SITUATED, BUT, A PROPERTY WHICH WAS SITUATED AT A CONSIDERABLE DISTANCE, NAMELY, NEARER TO SHOOLAY CIRCLE WHICH WAS BRANDED AS SURRENDERED BY A SLUM; (IV) THE ASSESSEE HAD, IN HER ORIGINAL RETURN, ADOPTED THE VALUE OF LAND AT RS.450/SFT, HOWEVER, IN THE REVISED RETURN ADOPTED THE VALUE AT RS.325/SFT AND THE REGISTERED VALUERS REPORT FURNISHED BEFORE THE CIT (A), THE VALUE WAS ADOPTED AT RS.350/SFT FOR THE SITE AND THE BUILDING VALUE AT RS.10 LAKHS WITH 10% LESS FOR FORCED SALE. THE AO, IN HER REMAND REPORT, SUBMITTED THAT THE REGISTERED VALUER DEPOSED DURING THE REMAND PROCEEDINGS THAT AS THERE WERE NO COMPARABLE INSTANCES IN THE VICINITY OF BRIGADE ROAD, HE HAD RELIED ON MARKET INFORMATION AND TREND AND THE REAL ESTATE VALUES OF SIMILAR AREAS WHICH, IN OUR CONSIDERED VIEW, HAVE NO SANCTITY; (V) THE CIT (A), ON HIS PART, ESTIMATED THE VALUE OF LAND AT RS.175/SFT AND TAKING INTO ACCOUNT THE BUILDING COST OF RS.5 LAKHS WHICH HAS AGAIN ONLY ON ESTIMATION; (VI) AT THE REMAND PROCEEDINGS, THE AO HAS BEEN DEPRIVED OF PERUSING THE ORDER IN THE CASE OF PUSHPA SOFAT (2002) 81 ITD 1 (CHD) (SMV) TO CONSIDER THE ASSESSEES CONTENTIONS; (VII) THE ISSUE HAS NOT PROPERLY BEEN DEALT WITH AT THE ASSESSMENT PROCEEDINGS BY THE AO AND THE ASSESSEE, ON HER PART, HAD NOT FURNISHED THE REQUIRED DOCUMENTARY EVIDENCES TO SUBSTANTIATE HER CLAIM. 8.4. ACCORDINGLY, THE AO IS DIRECTED TO LOOK INTO THE ISSUE AFRESH WITH REFERENCE TO THE GUIDELI NES DETAILED SUPRA AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AT THAT RELEVANT PERIOD. THE AO SHALL BE AT LIBERTY TO INVO KE PAGE 9 OF 16 ITA NOS.1250 & 1272/BANG/2 010 9 THE PROVISIONS OF S.55A OF THE ACT, IF THE MATTER S O WARRANTS. THE ASSESSEE, ON HER PART, FURNISHES ALL THE RELEVANT DOCUMENTARY EVIDENCE AT HER POSSESSION WHICH WOULD FACILITATE THE AO TO IMPLEMENT THE DIRECTIONS OF THIS BENCH EXPEDITIOUSLY . 8.2. IN VIEW OF THE ABOVE, WE ARE OF THE FIRM VIEW THAT THE REASONS RECORDED IN THE CASE OF MRS.RIZWANA AMEEN CITED SUP RA HOLD GOOD FOR THE PRESENT ISSUE UNDER CONSIDERATION ALSO. IT IS ORDERED ACCORDINGLY. WE SHALL NOW PROCEED TO CONSIDER THE ASSESSEE S GRIEVANCES IN THE FOLLOWING PARAGRAPHS: II. ITA NO.1250/B/2010 [BY THE ASSESSEE]: 9. THE FIRST GROUND OF THE ASSESSEE BEING THAT THE CIT (A) OUGHT TO HAVE ACCEPTED THE ASSESSEES CONTENTION THAT SHE HAD SATISFIED THE CONDITIONS REQUIRED FOR CLAIMING DEDUCTION U/S 54 OF THE ACT. 9.1. BRIEFLY, IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.55.00 LAKHS U/S 54F OF THE ACT AN D, SUBSEQUENTLY, IN THE REVISED RETURN, SHE CLAIMED DEDUCTIO N OF AN IDENTICAL AMOUNT U/S 54 OF THE ACT. HOWEVER, THE AO TO OK A STAND THAT AS THE ASSESSEE HAD SOLD 1/8 TH SHARE OF LAND IN TOTAL AREA AD-MEASURING 14760 SFT AND THE CAPITAL ASSET SOLD WAS LAND, THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. AS DISCUSSED ABOVE, THE ASSESSEE HAD CLAIMED THE VALUE OF LAND RS.325/SFT AS ON 1.4 .1981, HOWEVER, THE AO DETERMINED THE VALUE OF LAND AT RS.2 4/SFT AS ON 1.4.1981. THE ASSESSEE HAD CLAIMED INDEXATION FROM 1981 , BUT, THE AO TOOK A STAND THAT AS PER THE SALE DEED, THE PROPERT Y WAS RECEIVED BY THE ASSESSEE ONLY IN 2003 AND, HENCE, AS PER EXPLANATI ON (III) TO PAGE 10 OF 16 ITA NOS.1250 & 1272/BANG/ 2010 10 S.48, THE ASSESSEE WAS ELIGIBLE FOR INDEXATION FROM THE F Y 2003-04 AS THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION U/S 54F AND, ACCORDINGLY, WORKED OUT THE TAXABLE CAPITAL GAINS AT RS.31,68,864/ - AS AGAINST RS.3,12,243/- DECLARED BY THE ASSESSEE. ACCORDING TO THE A O, THE ASSESSEE HAD NOT FURNISHED (I) PURCHASE DEED OF PROPERTY F OR CLAIMING EXEMPTION OF RS.55.00 LAKHS U/S 54F AND (II) PROOF OF CONSTRUCTION/RENOVATION ETC., THE LONG TERM CAPITAL G AINS WAS WORKED OUT AT RS.92.34,445/- WHICH WAS TREATED AS INCOME FROM C APITAL GAINS. 9.2. IT WAS CONTENDED BY THE ASSESSEE BEFORE THE FIRST AP PELLATE AUTHORITY THAT THE AO MISTOOK THE PROPERTY I.E., TH E ORIGINAL ASSET OWNED BY EIGHT PERSONS, BEING A VACANT LAND AD-MEASURIN G 14760 SFT RESULTING IN ALLOWING THE CLAIM OF CAPITAL GAINS U/S 54F OF THE ACT. DURING THE APPELLATE PROCEEDINGS, COPIES OF GIFT DEED A S WELL AS THE VALUATION REPORT WERE FURNISHED, ACCORDING TO WHICH, T HE PROPERTY CONSISTED OF A MAIN BUILDING AND ALSO AN ADJOINED BUILD ING RESIDED BY SOME TENANTS AND ALSO SOME BY THE OWNERS. IT WAS, THEREF ORE, CONTENDED THAT THE ORIGINAL ASSET BEING A RESIDENTIAL H OUSE, DEDUCTION U/S 54 OF THE ACT SHOULD HAVE BEEN ALLOWED TO THE ASSESSE E. 9.3. AFTER ANALYZING THE PROVISIONS OF S.54 OF THE ACT , THE LD. CIT (A) HAD REJECTED THE ASSESSEES CLAIM ON THE FOLLOWING GROUND: 5HERE, THE APPELLANT CLAIMED TO HAVE PURCHASED A VACANT SITE AND CONSTRUCTED A HOUSE THEREON FOR CLAIMING RS.35,04,000/- U/S 54 OF I.T. ACT, I.E., WITHIN 2 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET, I.E., 8.10.2004 AND, THEREFORE, SHOULD HAVE GOT RELIEF U/S 54(1) OF I.T. ACT, BUT, SHE IS NOT ENTITLED FOR SUCH RELIEF FIRSTLY AS THE PROVISIONS OF SECTION 54(2) OF THE ACT HAS NOT BEEN FULFILLED. AS PER THE PROVISIONS OF SECTION 54(2), THE CAPITAL GAINS ARISING FROM THE SALE OF RESIDENTIAL HOUSE HAS TO BE PAGE 11 OF 16 ITA NOS.1250 & 1272/BANG/ 2010 11 DEPOSITED IN CAPITAL GAINS ACCOUNTS SCHEME, 1988, UNLESS THE SAME IS UTILIZED IN PURCHASE/CONSTRUCTION OF HOUSE BEFORE THE DUE DATE OF FURNISHING THE RETURN SPECIFIED U/S 139(1) OF I.T. ACT. SINCE THE PROVISIONS OF SECTION 54(2) OF I.T. ACT HAVE NOT BEEN ADHERED TO, I AM CONSTRAINED TO HOLD THAT THE CLAIM U/S 54 OF I.T. ACT HAS TO BE TREATED AS NIL. THUS, THE COMPUTATION MADE IN THE CASE OF SMT RIZWANA AMIN HOLDS GOOD HERE IN TOO. 10. NOT SATISFIED WITH THE REASONING OF THE LD. CIT(A ) IN REJECTING HER CLAIM, THE ASSESSEES A R ARGUED BEFORE THIS BENCH THAT THE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE APPEL LANT HAVING MADE INVESTMENT ON THE RESIDENTIAL PROPERTY AND, THUS, THE ASSESSEE HAD SATISFIED THE CONDITIONS U/S 54 OF THE ACT. IT WAS EXPRES SLY STRESSED DURING THE COURSE OF HEARING THAT THE PROVISO TO SUB-SECT ION (2) TO S.54 OF THE ACT HAS NOT BEEN EXPLORED BY THE AUTHORITIES BE LOW WHILE CONSIDERING THE ASSESSEES CLAIM AND, THEREFORE, PLEADED TH AT THE ISSUE MAY BE ADDRESSED TO IN LIEU OF THE SAME. 10.1 THE LD. D R SUPPORTED THE ORDERS OF THE INCOME TAX AUTHORITIES. 11. WE HAVE DULY CONSIDERED THE ISSUE AND ALSO GONE THR OUGH THE STAND OF THE AO AS WELL AS THE REASONING OF THE LD . CIT (A) CITED SUPRA. THOUGH, THE ASSESSEE HAS BEEN CONSISTENTLY MAINTAIN ING THAT SHE HAD PURCHASED A VACANT SITE AND CLAIMED TO HAVE CONSTR UCTED A HOUSE THEREON WITHIN TWO YEARS FROM THE DATE OF TRANS FER OF ORIGINAL ASSET, NO DOCUMENTARY EVIDENCE WAS PRODUCED TO SUBSTANTI ATE HER CLAIM. MOREOVER, THE ASSESSEE WAS SILENT AS TO WHETHER SHE HAD FULFILLED THE PROVISIONS OF S.54 (2) OF THE ACT AS POSED BY THE LD CIT PAGE 12 OF 16 ITA NOS.1250 & 1272/BANG/ 2010 12 (A). THE AO, IN HIS IMPUGNED ORDER, HAD EMPHASIZED TH AT THE ASSESSEE WAS REQUIRED TO FURNISH COPIES OF (I) PURCHASE DEED OF PR OPERTY FOR CLAIMING EXEMPTION U/.S 54F OF THE ACT; AND (II) PROOF FOR CONSTRUCTION/RENOVATION ETC., HOWEVER, NO PROOF APPEARS TO HAVE BEEN FURNISHED FOR HIS CONSIDERATION. THE MOOT QUESTION NOW FOR CONSIDERATION IS - WHETHER THE CAPITAL GAINS ARISING FROM THE SALE OF RESIDENTIAL HOUSE HAS TO BE DEPOSITED IN CAPITAL GAINS ACCOUNTS SCHEME 1988 UNLESS THE SAME WAS UTILIZED I N PURCHASE OF A HOUSE BEFORE THE DUE DATE OF FURNISHI NG THE RETURN OF INCOME SPECIFIED U/S 139(1) OF THE ACT? 11.1. ADMITTEDLY, THIS ISSUE HAS NOT BEEN EXPLICITLY EXPLAINED BY THE ASSESSEE WITH DOCUMENTARY PROOF. 11.2. IN VIEW OF THE ABOVE AND IN THE INTEREST OF NATURAL JUSTICE AND EQUITY THIS ISSUE IS REMITTED BACK ON THE FILE OF T HE AO FOR CONSIDERATION. IN THE MEANWHILE, THE ASSESSEE, THROUGH H ER A.R, IS DIRECTED TO PLACE ALL THE RELEVANT FACTS BEFORE THE AO FOR HIS CONSIDERATION. IT IS ORDERED ACCORDINGLY. 12 . THE SECOND GROUND OF THE ASSESSEE THAT THE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE SUBJECT LAND WAS LOCATED EV EN IN 1980 IN A PRIME PLACE AND OUGHT TO HAVE DIRECTED THE AO TO AD OPT RS.480/SFT INSTEAD OF RS.175/SFT. 13. AT THE OUTSET, WE WOULD LIKE TO REITERATE THAT THE ISSUE OF ADOPTING THE VALUE OF SUBJECT PROPERTY AS ON 1.4.1981 HAS BEEN REMITTED BACK TO THE FILE OF THE AO FOR FRESH CONSIDER ATION FOR THE DETAILED REASONS RECORDED SUPRA, AND, ACCORDINGLY, THE FI NDINGS REFERRED ABOVE HOLD GOOD FOR THIS GROUND TOO. IT I S ORDERED ACCORDINGLY. PAGE 13 OF 16 ITA NOS.1250 & 1272/BANG/ 2010 13 14. IN THE LAST GROUND, THE ASSESSEE HAS AGITATED THAT T HE LD. CIT (A) ERRED IN DISALLOWING THE LEGAL FEES, COMMISSION PAID TO TENANTS AND COMMISSIONER FOR THE COURT COMPROMISE ETC., 14.1. IT WAS CONTENDED THAT THE EXPENSES INCURRED WERE EXCLUSIVELY IN CONNECTION WITH THE SALE OF PROPERTY AND, ACCORDINGLY, LIABLE TO BE ALLOWED AS DEDUCTION U/S 48(II) OF THE ACT 14.3. THE LD. CIT (A), IN HIS FINDINGS BY TAKING REF UGE UNDER THE RULINGS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. RARJA SETTY (R) (1986) 159 ITR 797 (KAR) AND THE HON BLE DELHI HIGH COURT IN THE CASE OF ASHOK SOI V. CIT (2004) 192 CTR 5 35 (DEL), HAD OBSERVED THAT SUCH PAYMENTS HAVE BEEN CONSIDERED DISALLOW ABLE. 14.3. WE HAVE CONSIDERED THE ASSESSEES SUBMISSION. IT IS PERTINENT TO MENTION HERE THAT IN THE ABSENCE OF ANY DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO DENIED THE ASSESSEES CLAIM. 14.3.1. INCIDENTALLY, THE AO IN HER REMAND REPORT IN THE CASE OF SMT. RIZWANA AMEEN, OBSERVED, THE RELEVANT PORTIONS O F WHICH, FOR APPRECIATION OF FACTS ARE EXTRACTED AS UNDER: LEGAL FEE AND COMMISSION PAID: 3.1 . FROM THE PERUSAL OF RECORDS AND THE SUBMISSIONS OF THE ASSESSEE, IT IS SEEN THAT THE SALE OF THE PROPERTY WAS NOT FREE FROM HASSLE. IT WAS SUBMITTED THAT THE PROPERTY WAS NEGOTIATED TO BE SOLD TO A CERTAIN FARAH BUILDERS WHICH DID NOT MATERIALIZE AND, HENCE, SOLD TO M/S.FRONTLINE BUILDCOM. HENCE, CERTAIN LEGAL EXPENSES COULD HAVE BEEN INCURRED ON PAGE 14 OF 16 ITA NOS.1250 & 1272/BANG/ 2010 14 ACCOUNT OF TRANSFER OF THE PROPERTY, BUT, HOW MUCH WAS SPENT COULD NOT BE SUBSTANTIATED BY THE ASSESSEE. AS FAR AS THE CLAIM FOR COMMISSION PAID IS CONCERNED, THE CLAIM COULD NOT BE SUPPORTED BY ANY EVIDENCE, NOR COULD IT BE ESTABLISHED TO WHOM THE COMMISSION WAS PAID. .. 3.3. COMPENSATION PAID TO EVICT THE TENANTS : THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.4,75,000/- AS BEING COMPENSATION PAID BY CHEQUE FOR EVICTION OF TENANTS IN HER RETURN FILED ON 21.10.2005. SUBSEQUENTLY, THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 12.3.2 007 MAKING CERTAIN CORRECTIONS OF TYPOGRAPHICAL MISTAKE S THAT HAD CREPT INTO THE ORIGINAL RETURN AND WHEREIN THE COMPENSATION PAID TO EVICT TENANTS WAS ENHANCED TO RS.17,25,000/-NOW, ON BEING REMANDED FOR A REPORT BY THE CIT (A), THE ASSESSEE HAS SUBMI TTED THE DECLARATION ON STAMP PAPER OF TWO PERSONS STATE D T BE TENANTS OF THE ERSTWHILE PROPERTY AT BRIGADE ROAD. THE DETAILS ARE AS UNDER: (1) SYED NAZEER FOR RS.1,87,500/- (BEING ASSESSEES SHARE) VIDE CHEQUE NO.569008 PAID ON 20.8.2004 (2) SYED MUNEER FOR RS.62,500/- VIDE CHEQUE NO.569007 PAID ON 19.8.2004. THE ASSESSEES A R EXPRESSED HIS INABILITY TO FURNI SH PROOF FROM SUCH TENANTS. BOTH THE ABOVE AMOUNTS ADD UP-TO RS.2,50,000/- AS AGAINST THE ORIGINAL CLAIM OF RS.4,75,000/-. 14.3.2. AFTER DUE CONSIDERATION OF THE ABOVE, THIS BENCH IN THE CASE OF SMT. RIZWANA AMEEN HAS OBSERVED TH US: DURING THE COURSE OF HEARING BEFORE THIS BENCH, THE LD. A R FURNISHED A PAPER BOOK WHICH CONTAINED BANK STATEMENTS AND RECEIPT CUM -LETTER OF DELIVERY OF VACANT POSSESSION [COURTESY: P 81- 83]. HOWEVER, ON A GLIMPSE OF PAGE 15 OF 16 ITA NOS.1250 & 1272/BANG/ 2010 15 THE SAME, IT HAS BEEN OBSERVED THAT THE ASSESSEE HAD ISSUED CHEQUES TO SYED MUNEER AND SYED NAZEER ETC., WHEREAS SYED NAZEER IN HIS RECEIPT CLAIMED THAT I HAVE NO FURTHER CLAIM WHATSOEVER AGAINST SRI SYED SAJJID OR ANY OF HER HEIRS OR FAMILY MEMBERS OR ANYBODY. LIKEWISE, SYED MUNNER IN HIS RECEIPT ALSO CLAIMED THAT I HAVE NO FURTHER CLAIM WHATSOEVER AGAINST SMT.NASEEMA HASHIM THESE ASSERTIONS OF THE ALLEGED TENANTS REQUIRES FURTHER INVESTIGATION TO ASCERTAIN AS TO WHETHER THIS HAS ANY REFERENCE TO HANDING OVER OF THE VACANT POSSESSION OF THE SUBJECT PROPERTY. HOWEVER, THE ASSESSEES A R DURING THE COURSE OF REMAND PROCEEDINGS SUBMITTED THE DECLARATION ON STAMP PAPERS OF TWO PERSONS ALLEGED TO HAVE BEEN TENANTS OF THE SAID PROPERTY WHICH AMOUNTED TO ONLY (ASSESSEES SHARE) RS.2.5 LAKHS ONLY AS AGAINST THE ASSESSEES CLAIM OF RS.17.25 LAKHS. IN VIEW OF THE CONFLICTING CLAIM OF THE ASSESSEE, THIS ISSUE REQUIRES A DETAILED VERIFICATION /INVESTIGATION. TO FACILITATE THE AO TO CONDUCT FURTHER VERIFICATION, THE ISSUE IS REMANDED BACK ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO LOOK INTO ALL THESE ASPECTS AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, OF COURSE, AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. AS THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THAT OF T HE ISSUE DEALT WITH IN THE CASE OF SMT. RIZWANA AMEEN CITED SUPRA, WE ARE OF THE FIRM VIEW THAT THE PRESENT ISSUE REQUIRES FRESH LOOK AT THE ASSESSING OFFICERS LEVEL. THEREFORE, THE SAME IS REMITTED BACK ON THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE AUTHENTICITY OF THE ASSESSEES CLAIM AND TO TAKE APPROPRIATE ACTION AFTER AFFORDING AN OP PORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. PAGE 16 OF 16 ITA NOS.1250 & 1272/BANG/ 2010 16 15. IN THE RESULT : (1) THE REVENUES APPEAL IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES; AND (2) T HE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DAY OF DECEMBER, 2011 SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO:- 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. .