Sudhakar Gajananrao Apstambha, Nanded V. Income-tax Officer, Ward - 1, Nanded

ITA 1275/PUN/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4318 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P S SHINGTE
• Keywords: Retrospective amendment; Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 143(3); 142(1); 143(1); 143(2); 54EC; 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1275/PUN/2018 / ASSESSMENT YEAR : 2010-11 SUDHAKAR GAJANANRAO APSTAMBHA, SIDDHANATHPURI, BRAHMINGALLI, NEAR SIDDHESHWER MANDIR, NANDED. PAN : AORPA2521B. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1, NANDED. . / RESPONDENT ASSESSEE BY : SHRI P.S. SHINGTE. REVENUE BY : SHRI RAJESH GAWALI. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, AURANGABAD DATED 11.06.2018 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR A .Y. 2010-11 ON 31.07.2010 DECLARING TOTAL INCOME AT RS.1,40,740 /-. THE RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143(1) OF THE A CT ON 15.07.2011. SUBSEQUENTLY, A NOTICE U/S 148 OF THE ACT DA TED 09.02.2016 WAS ISSUED AND SERVED ON ASSESSEE ON 12.02.2 016. IN / DATE OF HEARING : 22.01.2019 / DATE OF PRONOUNCEMENT: 13.03.2019 2 RESPONSE TO THE AFORESAID NOTICE, ASSESSEE SUBMITTED THA T THE RETURN OF INCOME FILED BY THE ASSESSEE ON 31.07.2010 BE TREATED A R ETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THEREAFTER, NOT ICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED ON THE ASS ESSEE. SUBSEQUENTLY, THE ASSESSMENT WAS FRAMED U/S 143(3) R.W.S . 147 OF THE ACT VIDE ORDER DT.25.11.2016 AND THE TOTAL INCOME WAS D ETERMINED AT RS.18,24,130/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CA RRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.11.06.2018 (IN APPE AL NO.ABD/CIT(A)-1/253/2016-17) DISMISSED THE APPEAL OF ASSE SSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN MAKING THE REFERENCE TO DVO U/S 55A OF THE INCOME TAX ACT, 1961, FOR DETERMINING THE COST OF A CQUISITION AS ON 01.04.1981, THE ACTION IS BEYOND THE SCOPE OF SECTI ON 55A, AND THEREFORE THE SAME IS ILLEGAL AND NEEDS TO BE QUASHED, AND CA LCULATION OF COST OF ACQUISITION MADE ON SUCH BASIS NEEDS TO BE RESORTED BACK TO THE CALCULATIONS MADE BY YOUR APPELLANT IN THE RETURN O F INCOME. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS N OTICED THAT ASSESSEE ALONG WITH HIS TWO BROTHERS HAD SOLD ANCESTRAL LAND SITUATED AT GUT NO.274, MAUJE SANGAVI (BU.) TQ & DIST. NANDED FOR RS.49,9 8,666/-. THE GOVERNMENT VALUATION OF THE LAND ON THE DATE OF SALE WAS RS.68,55,000/- AND FOR THE PURPOSE OF COMPUTATION OF LONG T ERM CAPITAL GAINS, ASSESSEE HAS ADOPTED THE GOVERNMENT VALUATION OF LAND AT RS.68,55,000/-. ASSESSEE THEREAFTER CONSIDERED THE SALE CONSIDERATION IN HIS HANDS AT RS.22,85,000/- (I.E., 1/3 RD OF RS.68,55,000/-). AO NOTED THAT AS THE LAND WAS AN ANCESTRAL ONE, ASSESSEE HAD AD OPTED THE COST OF ACQUISITION AS ON 01.04.1981 ON THE BASIS OF VALUATION CERTIF ICATE DATED 29.10.2009 ISSUED BY SHRI R.S. MALU, WHO HAD VALUED THE LAND AT RS.8,29,000/- AS ON 01.04.1981. ACCORDINGLY, ASSESSEE HAD CONSIDERED THE COST OF ACQUISITION IN HIS HANDS AT RS.2,76,333/- (I.E, 1/3 RD OF 3 RS.8,29,000/-) AND THE INDEXED COST WAS WORKED OUT AT RS .17,46,425/-. ASSESSEE THEREAFTER COMPUTED THE LONG TERM CAPITAL GAINS AT RS.5,38,575/-. THE ENTIRE LONG TERM CAPITAL GAINS WAS CLAIMED AS EXEMPT U/S 54EC OF THE ACT AS ASSESSEE HAD MADE INVES TMENTS IN REC BONDS OF RS.5,50,000/-. AO NOTED THAT FOR ASSESSMENT FOR A.Y. 2010-11 IN THE CASE OF SHRI RATNAKAR APASTAMBHA, ONE OF THE BROT HERS OF THE ASSESSEE WHO ALSO HAD A SHARE IN THE LAND THAT WAS SOLD , WAS COMPLETED ON 14.12.2015 U/S 143(3) R.W.S. 263 OF THE ACT. HIS BROTHER HAD TAKEN THE SAME COST OF ACQUISITION AS CONSIDERED BY THE ASSES SEE ON THE BASIS OF THE SAME VALUATION CERTIFICATE. IN THAT CASE, IT WAS FOUN D THAT THE RATE OF THE LAND ADOPTED BY THE VALUER WAS WITHOUT ANY BASIS AND WAS NOT RELIABLE AND ACCORDINGLY, A REFERENCE WAS MADE TO THE DEP ARTMENTAL VALUATION OFFICER (DVO) TO ASCERTAIN THE FAIR MARKET VALUE (FM V) AS ON 01.04.1981. THE DVO DETERMINED THE FMV OF THE LAND AS O N 01.04.1981 AT RS.24,500/-. AFTER CONSIDERING THE VALUATION R EPORT, LONG TERM CAPITAL GAINS WAS WORKED OUT AT RS.22,33,385/- AS AG AINST RS.5,38,575/- WHICH WAS WORKED OUT BY ASSESSEES BROTHE R. CONSIDERING THE AFORESAID FACTS, THE ASSESSEES CASE WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT. ASSESSEE RAISED VARIOU S CONTENTIONS BEFORE AO BUT THE SAME WERE NOT FOUND ACCEPTABLE TO AO. AO, THEREAFT ER TAKING INTO CONSIDERATION THE VALUATION OF LAND AS PER VALUE RS REPORT, WORKED OUT THE LONG TERM CAPITAL GAINS AT RS.22,33,385/- A S AGAINST RS.5,38,575/- WORKED OUT BY ASSESSEE. AO AFTER GRANTING DEDUCTION OF RS.5,50,000/- U/S 54EC OF THE ACT WORKED OUT THE NET LON G TERM CAPITAL GAINS AT RS.16,83,385/-. AGGRIEVED BY THE ORDER OF AO, AS SESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO. A GGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 4 4. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFO RE AO AND LD.CIT(A). HE FURTHER SUBMITTED THAT IN THE PRESENT CASE, ASSESSEE HAD CONSIDERED THE VALUATION OF THE PROPERTY IN HIS HANDS AT RS.2,76,333/- AS AGAINST THE VALUATION OF ASSESSEES SHARE AS DETERMINED BY THE VALUER AT RS.8,167/-. HE SUBMITTED TH AT SEC.55A(A) OF THE ACT PROVIDES THAT A REFERENCE COULD BE MADE TO THE DEPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ASSE SSEE WAS LESS THAN F.M.V. IN THE PRESENT CASE, SINCE THE VALUE ADOPTED BY THE ASSESSEE WAS HIGHER THAN THE F.M.V., INVOCATION OF SEC.55A(A ) OF THE ACT WAS NOT JUSTIFIED. HE FURTHER SUBMITTED THAT AMENDMENT T O SEC.55A(A) OF THE FINANCE ACT, 2012 WAS EFFECTIVE ONLY FROM 01.07.2012 AND IS PROSPECTIVE AND FOR THIS PROPOSITION, HE RELIED ON THE DECIS ION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS (S UPRA). HE THEREFORE SUBMITTED THAT PRIOR TO 01.07.2012, THE REVENUE COULD NOT HAVE INVOKED THE PROVISIONS OF SEC.55A(A) OF THE ACT. HE FUR THER SUBMITTED THAT IN CASE OF THE ASSESSEES BROTHER I.E., RAT NAKAR APASTAMBHA, THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE O RDER DATED 28.11.2017 IN ITA NO.1575/PUN/2015 HAD FOUND THE EXERCISE OF JURISDICTION BY LD.CIT U/S 263 OF THE ACT BE INVALID SINCE T HE COST OF ACQUISITION AS ON 01.04.1981 COULD NOT BE DISTURBED BY THE AUTHORITY ON THE GROUND OF CLAIMING AT HIGHER VALUE AND FOR WHICH THE CO -ORDINATE BENCH OF THE TRIBUNAL HAD FOLLOWED THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS REPORTED IN (20 14) 43 TAXMANN.COM 247. HE PLACED ON RECORD THE COPY OF THE A FORESAID DECISION. HE THEREFORE SUBMITTED THAT THE ADDITION MADE BY THE AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES AND FURTHER PLACED RELIANCE ON THE DECISION OF H ONBLE CAULCUTTA HIGH COURT IN THE CASE OF NIRMAL KUMAR RAVINDRA KUMAR VS. 5 CIT REPORTED IN (2016) 70 TAXMANN.COM 339. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO ADDITION MADE ON THE BASIS OF VALUATION REPORT OF DVO OBTAINED BY THE AO. IT IS AN UNDISPUTED FACT THAT THE COST OF ACQUISITION AS ON 01.0 4.1981 WAS CONSIDERED BY THE ASSESSEE ON THE BASIS OF VALUATION REP ORT OF THE VALUER WHO HAD VALUED THE LAND AT RS.8,29,000/- AND ASS ESSEES 1/3 RD SHARE WAS WORKED OUT AT RS.2,76,330/-. AS AGAINST THE A FORESAID VALUATION, AO HAD MADE A REFERENCE TO THE DVO TO ASCERT AIN THE F.M.V. OF THE LAND WHO HAD VALUED THE LAND AT RS.24,500/- AND TH E ASSESSEES SHARE WAS WORKED OUT AT RS.8,167/-. IT IS AN UNDISPUT ED POSITION THAT THE VALUE ADOPTED BY THE ASSESSEE OF HIS SHARE OF THE P ROPERTY AT RS.2,76,330/- WAS MUCH MORE THAN THE FMV OF ASSESSEES SHARE AT RS.8,167/- THAT WAS DETERMINED BY THE DVO. WE FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS (SUP RA) HAS HELD THAT SEC.55A(A) OF THE ACT AT THE RELEVANT TIME PROVIDED T HAT A REFERENCE COULD BE MADE TO THE DVO ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE IS LESS THAN THE MARKET VALUE. IT HAD FURTHER HELD THAT THE AMENDMENT TO SEC.55A(A) OF THE ACT IN 2012 BY WHICH THE WORDS IS L ESS THAN THE MARKET VALUE WAS SUBSTITUTED BY THE WORDS IS AT VARIA NCE WITH ITS FAIR MARKET VALUE WAS MADE EFFECTIVE ONLY FROM 01.07.2012 AND THAT PARLIAMENT HAD NOT GIVEN RETROSPECTIVE EFFECT TO THE AMEN DMENT. BEFORE US, REVENUE HAS PLACED RELIANCE ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF NIRMAL KUMAR RAVINDRA KUMAR VS . CIT (SUPRA), WHEREIN THE FACTS ARE DIFFERENT AS THE MARKET VALUE OF THE PROPERTY ON 01.04.1981 ADOPTED BY THE ASSESSEE WAS TH E MARKET VALUE WHICH WAS NOT SUPPORTED BY ANY VALUATION REPORT AND IT WAS OBSERVED 6 THAT THE INFLATION OF MARKET VALUE AS ON 01.04.1981 ADOPTED BY THE ASSESSEE WAS INSPIRED BY SINISTER MOTIVE OF AVOIDING TO PA Y CAPITAL GAINS. WE THUS FIND THAT THE FACTS OF THE CASE RELIED UPON BY REVENUE ARE DISTINGUISHABLE AND ARE NOT APPLICABLE TO THE PRESENT FACTS. IN VIEW OF THE AFORESAID FACTS, WE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT, BEING THE JURISDICTIONAL HIGH COURT IN THE CASE OF PU JA PRINTS (SUPRA) ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE CAPITAL GAINS WORKED OUT BY THE ASSESSEE ON THE BASIS O F VALUATION REPORT. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 13 TH DAY OF MARCH, 2019. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER PUNE; DATED : 13 TH MARCH, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4 5. 6. CIT(A) 1, AURANGABAD. PR.CIT-1, AURANGABAD. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.