S.Sathyamurthy, CHENNAI V. ITO Non Corporate Ward 2(4), CHENNAI

ITA 1281/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2837 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Valuation report
• Section: 50C

Judgement Text

, (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL, A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.1281/CHNY/2018 / ASSESSMENT YEAR : 2008-2009. S. SATHYAMURTHY, 322, AVVAI COLONY, MANNAPPA STREET, KOTTURPURAM, CHENNAI 600 085. [PAN EUVPS 1932J] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(4) CHENNAI. ( !' / APPELLANT) ( # $!' /RESPONDENT) / APPELLANT BY : SHRI.S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 29-10-2018 !' /DATE OF PRONOUNCEMENT : 30-10-2018 % / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS DIR ECTED AGAINST AN ORDER DATED 06.04.2018 OF COMMISSION ER OF INCOME-TAX (APPEALS)-2, CHENNAI, IT HAS TAKEN ALTOGETHER TEN G ROUNDS OF WHICH GROUNDS 1, 2, 7, 8, 9 & 10 ARE GENERAL, NEEDING NO SPECIFIC ADJUDICATION. ITA NO.1281 /MDS/2018. :- 2 -: . 2. VIDE ITS GROUND NO.3, ASSESSEE ASSAILS COMPUTATION OF CAPITAL GAINS CONSIDERING THE VALUE OF A PROPERTY AT F30,00 ,000/- AGAINST F18,77,000/- ASSESSED BY THE DEPARTMENT VALUATION O FFICER. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE W AS A CASUAL LABOUR. ACCORDING TO HIM, ASSESSEE ALONG WITH HIS FOUR FAMI LY MEMBERS HAD SOLD A PROPERTY AT VELACHERY, CHENNAI, DURING THE RELEVANT PREVIOUS YEAR, BY EXECUTING A POWER OF ATTORNEY IN FAVOUR OF ONE SHRI. RADHAKRISHNAN. AS PER THE LD. AUTHORISED REPRESENT ATIVE ASSESSEES FATHER WAS MURDERED ON A DISPUTE WITH REGARD TO THE ABOVE PROPERTY AND THEREFORE LEGAL HEIRS, INCLUDING ASSESSEE HAD S OLD IT UNDER DISTRESS. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT CONSIDERATION SHOWN IN THE SALE DEED THOUGH ONLY F25,00,000/- AS SESSEE BY MISTAKE, IN THE RETURN OF INCOME, HAD CALCULATED HI S SHARE TAKING THE CONSIDERATION AS F30,00,000/-. AS PER LD. AUTHORISE D REPRESENTATIVE, THE LD. ASSESSING OFFICER HAD REFERRED THE VALUATIO N OF THE PROPERTY TO THE VALUATION CELL OF THE DEPARTMENT, APPLYING ON SECTION 50C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE V ALUER, AS PER THE LD.AR, HAD FIXED THE VALUE OF THE PROPERTY AT F18,7 7,000/-. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, ASSESSEE AT T HE BEST COULD HAVE BEEN ASSESSED FOR THE 1/5 TH SHARE IN F25,00,000/- AND NOTHING DONE. ITA NO.1281 /MDS/2018. :- 3 -: SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT LOWER AUTHORITIES HAD TAKEN ADVANTAGE OF THE IGNORANCE AN D AN ERROR COMMITTED BY THE ASSESSEE, WHILE FILING THE RETURN. 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT ASSESSEE HIMSELF HAD SHOWN THE SALE CONSIDERATION R ECEIVED BY HIM AS 1/5 TH OF F30,00,000/-. ACCORDING TO HIM, ASSESSEE COULD NOT NOW TURN AROUND AND SAY THAT CONSIDERATION RECEIVED WAS ONLY F25,00,000/- 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. CONTENTION OF THE ASSESSEE IS THAT THE SUM RECEIVED WAS ERRONEOUSLY CONSIDERED BY HIM AS F 30,00,000/-, AGAINST ACTUAL AMOUNT OF F25,00,000/- MENTIONED IN THE DEED. IT IS NOT DISPUTED THAT THE VALUE FIXED FOR THE PROPERTY BY T HE DEPARTMENT VALUATION OFFICER U/S.50C OF THE ACT WAS ONLY F18,7 7,000/- THOUGH HE ADOPTED A HIGHER VALUE OF F25,00,000/- CONSIDERING WHAT WAS MENTIONED IN THE SALE DEED. I AM OF THE OPINION THA T LOWER AUTHORITIES OUGHT NOT HAVE TAKEN ADVANTAGE OF THE MISTAKE COMMI TTED BY THE ASSESSEE IN SHOWING THE CONSIDERATION AT A HIGHER AMOUNT THAN WHAT WAS MENTIONED IN THE SALE DEED. ESPECIALLY SO, SINC E VALUATION CELL OF THE DEPARTMENT VALUED THE PROPERTY AT F18,77,000/-. I THEREFORE DIRECT THE LOWER AUTHORITIES TO RECOMPUTE THE CAP ITAL GAINS ADOPTING 1/5 TH CONSIDERATION OF F25,00,000/- AS THE SUM RECEIVED BY THE ITA NO.1281 /MDS/2018. :- 4 -: ASSESSEE ON SALE OF THE PROPERTY AT VELACHERY, CHEN NAI. GROUND NO.3 IS TREATED AS PARTLY ALLOWED. 5. VIDE ITS GROUNDS 4 TO 6, GRIEVANCE RAISED BY THE AS SESSEE IS WITH REGARD TO DISALLOWANCE OF A CLAIM U/S.54F OF T HE ACT. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSE E HAD CLAIMED DEDUCTION U/S.54F OF THE ACT ON INVESTMENT IN CONSTRUCTING A NEW HOUSE PROPERTY. AS PER THE LD. AUTHORISED REPRE SENTATIVE, LD. ASSESSING OFFICER CONSIDERED THIS TO BE AN EXTENSIO N OF A BUILDING OWNED BY THE ASSESSEE. CONTENTION OF THE LD. AUTHOR ISED REPRESENTATIVE WAS THAT THERE WAS A VALUATION DONE BY THE DEPARTMENT VALUER AND THE DEPARTMENT VALUER HAD FOU ND THAT THERE WAS A CONSTRUCTION OF 60 SQ.M. OF RCC FAMED STRUCT URE IN THE OPEN TERRACE ON THE FIRST FLOOR OF AN EXISTING STRUCTURE . AS PER THE LD. AUTHORISED REPRESENTATIVE, THIS CONSISTED OF A SING LE ROOM WITH TOILET. THUS, ACCORDING TO HIM, ASSESSEE WAS ELIGIBLE FOR C LAIMING DEDUCTION U/S.54F OF THE ACT. 7. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT CONSTRUCTION WAS ONLY AN ADDITION MADE TO THE EXIST ING RESIDENTIAL HOUSE OWNED BY THE ASSESSEE WHICH WAS HELD JOINTLY WITH OTHER FAMILY ITA NO.1281 /MDS/2018. :- 5 -: MEMBERS. THUS, ACCORDING TO HIM, ASSESSEE WAS NOT E LIGIBLE FOR CLAIMING DEDUCTION U/S.54F OF THE ACT. 8. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN HIS VALUATION REPORT DATED 17.03.2016 BASED ON AN INSPECTION OF THE CONSTRUCT ION DONE BY THE ASSESSEE, THE DEPARTMENTAL VALUER HAS CLEARLY STATE D THAT ASSESSEE HAD INVESTED F5,23,000/- FOR A PROPERTY AT NO.32, A VVAI COLONY, MANNAPPAN STREET, KOTTURPURAM, CHENNAI-85. DESCRIPT ION OF THE PROPERTY AS IT APPEARS IN THE SAID VALUATION REPORT OF ASSISTANT VALUATION OFFICER, VALUATION CELL OF THE DEPARTMEN T IS REPRODUCED HEREUNDER:- SL.NO DESCRIPTION DETAILS 3.1 OWNERSHIP HISTORY THE ORIGINAL BULDING CONSISTI NG OF GROUND FLOOR AND PART OF FIRST FLOOR WAS PURCHASED BY (LATE) SHRI. J . SRINIVASAN (HUSBAND OF THE ASSESSEE) 3.2 VARIOUS INTEREST NOT APPLICABLE 3.3 LAND AREA NOT APPLICABLE 3.4 BUILT UP AREA NOT APPLICABLE 3.5 USAGE/TENANCY NEW PORTIONS HAD BEEN CONSTRUCTE D AND IS UNDER OCCUPATION AS SEEN ON THE DATE OF INSPECTION I.E. ON 09.03.2016 ITA NO.1281 /MDS/2018. :- 6 -: SL.NO DESCRIPTION DETAILS 3.6.1 GENERAL ACCORDING TO THE ASSESSEE & PHYSICA L INSPECTION MADE BY THE UNDERSIGNED, THE ASSESSEE HAS CONSTRUCTED AROUND 60SQ.M. OF R.C.C. FRAMED STRUCTURE IN THE OPEN TERRACE ON THE FIRST FLOOR OF THE EXISTING STRUCTURE WHICH IS A GROUND FLOOR PLUS PART FIRST FLOOR RESIDENTIAL BUILDING. ALSO A SIMI LAR CONSTRUCTION ABOVE THIS PORTIONIN SECOND FLOOR AND A SINGLE ROOM WITH TOILET BOTH ABOVE IT IN TERRACE FLOOR. ACCORDING TO THE ASSESSEE THE CONSTRUCTION WAS CARREIUD OUT BETWEEN 21.01.2008 & 19.10.2008. THE BUILDING MATERIAL WERE PURCHASED BY HIMSELF. THE CONSTRUCTION WORKERS WERE HIRED BY HIM AND THE WORK WAS SUPEREVISED BY HIM 3.6.2 FOUNDATION AND PLINTH NO APPROVED DRAWINGS WERE PRODUCED BY THE ASSESSEE. HENCE, FOUNDATION DETAILS COULD NOT BE ASCERTAINED. 3.6.3 SUPERSTRUCTURE SUPERSTRUCTURE IS WITH WALLS MADE WITH BRICKS PLAST RED ON BOTH SIDES 3.6.4 FLOORING A.COMMON AREA; STAIRCASE PORTION, STAIR TREAS, RISE RS ETC., ARE FINISHED WITH CC FLOORING.APPROACH AREAS AND FOOT PATH ARE PROVIDED WITH CEMENT CONCRETE PAVEMEN TS. B. INTERIOR FLOOR ARE (FF & SF) RECTIFIED TITLE FLO RING IS PROVIDED IN HALL, BED ROOMS AND BALCONY. IN TOILET S ANTI-SKID TILES FLOORINGIS PROVIDED AND WALL DADO FINISHED WITH DECORATIVE TILES. 3.6.5 JOINERY SECOND CLASS COUNTRY WOOD PENALLED/ FLUSH DOORS & WINDOWS ARE PROVIDED 3. 6.6 ROOFING RCC ROOF FINISHED 3.6.7 FINISHING INSIDE: - DISTEMPERING AND OUTSIDE WATER PROOF CEMENT PANTING, DOORS AND WINDOWS: PAINTED 3.6.8 INTERNAL WATER SUPPLY AND SANITARY INSTALLAIONS TOILETS ARE PROVIDED WITH EWC PAN WITH NORMAL FITTING FOR WATER SUPPLY 3.6.9 INTERNAL ELECTRICAL INSTALLATIONS CONCELAED WIRING IS DONE WITH NORMAL SWITCHES AND NORMAL LIGHT FITTING AND CEILING FANS. 3 PHASE ELECTRICAL CONNECTION IS AVAILABLE. 3.6.10 EXTERNAL SERVICES WATER SUPPLY AND SEWAGE DISPOSAL ARE FROM THE EXISTING NEARBY CORPORATION LINES. ONE OVERHEAD WATER TANK OF 950 LITRES CAPACITY IS CONSTRUCTED ABOVE THE TERRACE FOR WATER STORAGE. ITA NO.1281 /MDS/2018. :- 7 -: A READING OF THE ABOVE DOES INDICATE THAT FRESH CON STRUCTION WAS NOT A SIMPLE ADDITION OF A ROOM WITH TOILET, BUT THERE WAS OPEN TERRACE ETC., AND SEPARATE STAIRCASE ALSO. IN MY OPINION T HE CLAIM OF THE ASSESSEE THAT THE NEWLY CONSTRUCTED AREA CAN BE CON STRUED AS A NEW RESIDENTIAL UNIT, CANNOT BRUSHED ASIDE. I AM OF TH E OPINION THAT ASSESSEE OUGHT NOT HAVE BEEN DENIED THE DEDUCTION U/S.54F OF THE ACT. I SET ASIDE THE ORDERS OF THE LOWER AUTHORITIE S AND DIRECT THE LD.AO TO ALLOW THE CLAIM OF THE ASSESSEE. GROUNDS 4 TO 6 ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 30 TH DAY OF OCTOBER, 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 30 TH OCTOBER, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF