Smt.Santhadharan, Trivandrum V. DCIT, Trivandrum

ITA 131/COCH/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65055 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Fair market value
• Section: 54F; 131

Judgement Text

1 ITA NO.606/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 606/COCH/2011 (ASSESSMENT YEAR 2008-09) SHRI R VIDHYADHARAN (DECEASED) VS DY.CIT, CENT.CIR .2 BY LEGAL HEIR SMT. SANTHADHRAN TRIVANDRUM VIDHYA, CHAYAKUDI LANE PETTAH, PALLIMUKKU, TRIVANDRUM PAN : ALHPR1890F (APPELLANT) (RESPONDENT) I.T.A NO. 131/COCH/2012 (ASSESSMENT YEAR 2008-09) SMT. SANTHADHARAN VS THE DY.CIT, CENT.CIR.2 PETTAH, PALLIMUKKU TRIVANDRUM TRIVANDRUM PAN : AFSPN6853R (APPELLANT) (RESPONDENT) TAXPAYERS BY : SHRI TM SREEDHARAN, SR.COUNSEL RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 15-11-2012 DATE OF PRONOUNCEMENT : 21-12-2002 2 ITA NO.606/COCH/2011 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE TWO INDEPENDENT TAXPAYERS ARE DIRECTED AGAINST THE INDEPENDENT ORDERS OF THE COMMISSIONER OF INCOME-TAX(A)-III, KOCHI DATED 27-10-2011 AND 30-04-2012 RESPECTIVELY FOR THE ASSESSMENT YEAR 2008-09. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS THE FAIR MARKET VALUE AS ON 01-04-1981 FOR THE PURPOSE OF COMPUTATION OF CAPITA L GAIN. SHRI T.M. SREEDHARAN, THE LD. SENIOR COUNSEL FOR THE TAXPAYER S SUBMITTED THAT THE TAXPAYERS ADOPTED THE FAIR MARKET VALUE AS ON 01-04 -01981 AT RS. 5,588 PER CENT. HOWEVER, THE ASSESSING OFFICER ON THE BASIS OF THE LETTER SAID TO BE RECEIVED FROM SUB REGISTRAR HAS FIXED THE FAIR MARK ET VALUE AT RS.466 PER CENT. THIS WAS CONFIRMED BY THE COMMISSIONER OF IN COME-TAX(A). ACCORDING TO THE LD.SENIOR COUNSEL IN THE CASE OF O NE SHRI C.R. RAVINDRAN NAIR, WHOSE LAND WAS SITUATED NEXT TO THAT OF THE T AXPAYERS , THE FAIR MARKET VALUE WAS ADOPTED AT RS.2,300 PER CENT AS ON 01-04- 1981. THEREFORE, THE VALUE FIXED BY THE LOWER AUTHORITIES AT RS.466 PER CENT IS VERY LOW. 3 ITA NO.606/COCH/2011 3. ON THE CONTRARY, SMT. S VIJAYAPRABHA, THE LD.DR S UBMITTED THAT THE TAXPAYERS HAVE ACCEPTED IN THE STATEMENT RECORDED U /S 131 THAT HE PURCHASED THE LAND IN THE YEAR 1978 AT AN APPROXIMA TE COST OF RS.1,000 PER CENT. THE SUB REGISTRAR, TRIVANDRUM IN HIS LETTER DATED 30-11-2007 INFORMED THE ASSESSING OFFICER THAT THE FAIR MARKET VALUE AS ON 01-04-1987 WAS AT RS.466 PER CENT. THIS VALUE WAS ADOPTED BY THE ASSESSING OFFICER. REFERRING TO THE ASSESSMENT ORDER OF SHRI C.R. RAVI NDRAN NAIR, THE LD.DR SUBMITTED THAT IT IS NOT KNOWN WHERE EXACTLY THE LA ND WAS SITUATED. ACCORDING TO THE LD.DR IT MAY BE ON THE NATIONAL HI GHWAY. THEREFORE, THE VALUE ADOPTED IN THE CASE OF SHRI C.R. RAVINDRAN NA IR MAY NOT BE APPLICABLE IN THE PRESENT CASE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ONLY DISPUTE IS WITH REGARD TO THE FAIR MARKET VALUE AS ON 01-04-1981. WHEREVER T HE LAND WAS ACQUIRED PRIOR TO 01-04-1981 THE TAXPAYERS ARE GIVEN OPTION TO ADOPT THE FAIR MARKET VALUE AS ON 01-04-1981 AS THE BASIS FOR COMPUTING T HE CAPITAL GAIN. IT IS NOT IN DISPUTE THAT THE PROPERTY WAS ACQUIRED IN THE YE AR 1978 BY THE TAXPAYERS. THEREFORE, THE TAXPAYERS OPTED TO ADOPT THE MARKET VALUE AS ON 4 ITA NO.606/COCH/2011 01-04-1981. IT IS WELL SETTLED PRINCIPLES OF LAW T HAT FAIR MARKET VALUE IS NOTHING BUT A PRICE THAT PROBABLY MAY BE AGREED BET WEEN A WILLING PURCHASER AND A WILLING SELLER. THE FAIR MARKET VA LUE MAY FLUCTUATE DEPENDING UPON THE AREA OF THE LAND, LOCATION, ACCE SSABILITY TO THE INFRASTRUCTURE FACILITIES, POTENTIALITY FOR FUTURE DEVELOPMENT, ETC. THEREFORE, FOR THE PURPOSE OF ESTIMATING THE FAIR M ARKET VALUE AS ON 01-04- 1981 WE HAVE TO TAKE INTO CONSIDERATION THE LOCALIT Y IN WHICH THE LAND IS SITUATED, THE ACCESSABILITY TO INFRASTRUCTURE FACIL ITIES, COMPARATIVE SALE INSTANCES IN THE LOCALITY, POTENTIALITY FOR FUTURE DEVELOPMENT, DISTANCE BETWEEN THE LAND AND THE BUS STAND, RAILWAYS STATIO N, AIR PORT, ETC. THE GUIDELINE VALUE FIXED BY THE SUB REGISTRAR IS ONLY A GUIDELINE VALUE TO ASCERTAIN THE MARKET VALUE. THE GUIDELINE VALUE FIX ED BY THE GOVERNMENT TO GUIDE THE SUB REGISTRAR MAY BE A BASIS FOR FIXING T HE FORMAL MARKET VALUE FOR COLLECTION OF STAMP DUTIES. THEREFORE, THOUGH THE GUIDELINE VALUE FIXED BY THE GOVERNMENT TO GUIDE THE SUB REGISTRAR MAY BE ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION FOR ESTIMATING THE FAIR MARKET VALUE, HOWEVER, IT CANNOT BE THE SOLE BASIS FOR FIXING THE FAIR MAR KET VALUE AS ON 01-04-1981. IN THE CASE BEFORE US THE ASSESSING OFFICER HAS TAK EN THE FAIR MARKET VALUE AS ON 01-04-1981 FIXED BY THE GOVERNMENT AS SOLE BASIS FOR TAKING THE FAIR 5 ITA NO.606/COCH/2011 MARKET VALUE. THE TAXPAYERS NOW CLAIM THAT IN THE CASE OF THE NEIGHBOUR SHRI C.R. RAVINDRAN NAIR, THE FAIR MARKET VALUE AS ON 01-04-1981 WAS FIXED AT RS.2,300. IF THE LAND IS NEARER TO THE TAXPAYER S LAND AND IT WAS SIMILARLY LOCATED THEN THIS ALSO HAS TO BE TAKEN INTO CONSIDE RATION WHILE FIXING THE FAIR MARKET VALUE. UNFORTUNATELY, ALL THESE FACTS WERE NOT CONSIDERED BY THE ASSESSING AUTHORITY. THEREFORE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO RECONSIDER THE IS SUE IN THE LIGHT OF ALL FACTORS MENTIONED ABOVE AND THEREAFTER TAKE A DECIS ION. ACCORDINGLY THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL RECONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE FACTORS REFERRED A BOVE AND THEREAFTER DETERMINE THE FAIR MARKET VALUE AS ON 01-04-1981 AF TER PROVIDING OPPORTUNITY OF HEARING TO THE TAXPAYER. 5. THE NEXT ISSUE IS WITH REGARD TO EXEMPTION U/S 5 4, 54F AND 54EC. WE HAVE HEARD THE LD.SENIOR COUNSEL AND THE LDE.DR. A DMITTEDLY, THE TAXPAYERS HAVE DEPOSITED THE AMOUNT IN THE FIXED DEPOSIT IN S TATE BANK OF TRAVANCORE, PETTAH BRANCH, TRIVANDRUM. THE AMOUNT WAS NOT DEPOSITED IN THE CAPITAL GAIN BOND. THE CLAIM OF THE TAXPAYERS BEFORE THIS TRIBUNAL IS 6 ITA NO.606/COCH/2011 THAT THE MONEY WAS INTENDED TO BE DEPOSITED IN THE CAPITAL GAIN BOND. HOWEVER, THE BANK DEPOSITED THE AMOUNT IN THE FIXED DEPOSIT. WE ARE UNABLE TO ACCEPT THE CLAIM OF THE TAXPAYERS. THE L EGISLATURE HAS FRAMED THE SCHEME FOR THE PURPOSE OF GIVING EXEMPTION FROM THE CAPITAL GAIN TAX BY ASKING THE TAXPAYER TO DEPOSIT THE AMOUNT IN THE CA PITAL GAIN BOND SCHEME. THEREFORE, IF THE TAXPAYER WANTS TO TAKE BENEFIT OF THE SCHEME THE MONEY HAS TO BE DEPOSITED IN THE CAPITAL GAIN BOND. DEPO SIT OF MONEY IN THE FIXED DEPOSIT CANNOT BE CONSTRUED AS DEPOSIT IN THE CAPIT AL GAIN BOND. IF AT ALL THERE WAS ANY NEGLIGENCE ON THE PART OF THE BANK TH EN IT IS OPEN TO THE TAXPAYER TO CLAIM DAMAGES AGAINST THE BANK FOR THE NEGLIGENCE, IF ANY, COMMITTED BY THE OFFICIALS OF THE BANK. HOWEVER, U NDER THE INCOME-TAX ACT, SINCE THE MONEY WAS NOT DEPOSITED IN THE CAPIT AL GAIN BOND, THE TAXPAYERS ARE NOT ELIGIBLE FOR EXEMPTION AT ALL. T HEREFORE, THE ORDERS OF LOWER AUTHORITIES ARE CONFIRMED. 6. THE NEXT ISSUE IS WITH REGARD TO INDEXED COST OF IMPROVEMENT. WE HEARD THE LD.SENIOR COUNSEL FOR THE TAXPAYER AND TH E LD.DR. ON THE INSPECTION OF THE LAND, THE REVENUE AUTHORITIES FOU ND THAT NO IMPROVEMENT WAS UNDERTAKEN BY THE TAXPAYERS. NO MATERIAL IS AV AILABLE ON RECORD TO 7 ITA NO.606/COCH/2011 SUGGEST THAT THE TAXPAYER HAS UNDERTAKEN ANY IMPROV EMENT IN THE LAND. IN THE ABSENCE OF ANY MATERIAL EVIDENCE MERE ORAL STAT EMENT CANNOT BE A BASIS FOR ALLOWING THE CLAIM OF THE TAXPAYERS. THE REFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITY. AC CORDINGLY, THE SAME ARE CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE TAXPAYER IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DECEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 21 ST DECEMBER, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH