V.R.Sajida Banu, CHENNAI V. ITO, CHENNAI

ITA 1357/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7976 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 17-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHJCIT
• Keywords: Cost of acquisition; Fair market value; Valuation report
• Section: 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1357/MDS/2016 * +* / ASSESSMENT YEAR : 2010-11 SMT. V.R. SAJIDA BANU, NO.4, MOTTAI GARDEN, 10 TH LANE, CHENNAI - 600 021. PAN : AXMPS 5298 R V. THE INCOME TAX OFFICER, NCW VI(2) [OLD JURISDICTION ITO, BUSINESS WARD - VII(2)], CHENNAI - 600 006. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SMT. PUSHYA SEETHARAMAN, SR. ADVOCA TE FOR MS. J. SREE VIDYA, ADVOCATE /0-. 1 2 / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT ' 1 3& / DATE OF HEARING : 02.11.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 25.11.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 5, CHENN AI, DATED 16.03.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. SMT. PUSHYA SEETHARAMAN, LD. SR. COUNSEL, SUBMIT TED THAT THE ASSESSEE SOLD A HOUSE AT DOOR NO.31, MODEL SCHO OL ROAD, 2 I.T.A. NO.1357/MDS/16 THOUSAND LIGHTS, CHENNAI 6, FOR A TOTAL CONSIDERA TION OF ` 1,20,000/- ON 06.11.2009. THE ASSESSEE COMPUTED TH E CAPITAL LOSS AT ` 32,000/- AFTER DEDUCTING THE INDEX COST OF ACQUISIT ION OF LAND AT ` 1,20,08,000/-. HOWEVER, THE ASSESSING OFFICER REJE CTED THE INDEX COST OF ACQUISITION OF LAND AS COMPUTED BY TH E ASSESSEE. THE ASSESSING OFFICER HAS TAKEN THE GUIDELINE VALUE OF THE LAND MAINTAINED BY THE STATE REGISTRATION DEPARTMENT. A CCORDING TO THE LD. SR. COUNSEL, GUIDELINE VALUE MAY NOT REFLECT TH E MARKET VALUE. FOR THE PURPOSE OF INDEXATION, THE MARKET VALUE AS ON 01.04.1981 HAS TO BE ESTIMATED. THE ASSESSING OFFICER HAS SIM PLY ADOPTED THE GUIDELINE VALUE WITHOUT ESTIMATING THE MARKET VALUE . THE ASSESSING OFFICER HAS NOT REFERRED THE MATTER TO THE VALUATIO N OFFICER FOR VALUING THE PROPERTY. THE LD. SR. COUNSEL FURTHER SUBMITTE D THAT THE ASSESSEE HAS ALSO INCURRED AN EXPENDITURE OF ` 2,40,000/- AS COMMISSION AND BROKERAGE FOR SALE OF LAND. THIS WA S ALSO NOT ACCEPTED BY THE ASSESSING OFFICER. THE LD. SR. COU NSEL FURTHER SUBMITTED THAT FROM AND OUT OF SALE PROCEEDS, THE A SSESSEE HAS CONSTRUCTED A RESIDENTIAL HOUSE AT NO.7, MOTTAI GAR DEN, 10 TH LANE, OLD WASHERMANPET, CHENNAI-21. HOWEVER, THE CLAIM O F EXEMPTION UNDER SECTION 54F OF THE INCOME-TAX ACT, 1961 (IN S HORT 'THE ACT') WAS NOT CONSIDERED. 3 I.T.A. NO.1357/MDS/16 3. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT AS PER THE ANNUAL IN FORMATION REPORT, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HAS SOLD A PROPERTY AT DOOR NO.31, MODEL SCHOOL ROAD, T HOUSAND LIGHTS, CHENNAI. THE ASSESSEE CLAIMED BEFORE THE A SSESSING OFFICER THAT THE BUILDING WAS ACQUIRED IN THE YEAR 1972 AND THE CONSTRUCTION WAS MADE IN THE YEAR 1975-76. THE ASS ESSEE ESTIMATED THE FAIR MARKET VALUE OF THE LAND AND BUI LDING AT ` 19,00,000/- AS ON 01.04.1981. IN THE ABSENCE OF AN Y MATERIAL BEFORE THE ASSESSING OFFICER, A REPORT WAS CALLED F OR FROM THE SUB- REGISTRAR. THE SUB-REGISTRAR REPORTED THAT GUIDELI NE VALUE AS ON 01.04.1981 WAS ` 15.625 PER SQ.FT. AS PER THE STATE PWD RATE, THE COST OF CONSTRUCTION OF THE BUILDING COMES TO ` 150 PER SQ.FT. THEREFORE, THE ASSESSING OFFICER ESTIMATED THE INDE X COST OF ACQUISITION AT ` 21,62,425/- AND COMPUTED THE CAPITAL GAINS AT ` 98,37,575/-. REFERRING TO THE ORDER OF THE CIT(APP EALS), THE LD. D.R. SUBMITTED THAT MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 CANNOT BE WORKED OUT WITH MATHEMATICAL ACCURACY. A T THE BEST, IT CAN BE ESTIMATED. IN THE ABSENCE OF ANY MATERIAL, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY FOUND THAT G UIDELINE VALUE OF 4 I.T.A. NO.1357/MDS/16 THE STATE REGISTRATION DEPARTMENT AND THE PWD RATE FOR COST OF CONSTRUCTION WOULD REFLECT THE FAIR MARKET VALUE AS ON 01.04.1981 AND ACCORDINGLY, HE CONFIRMED THE SAME. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE SOLD THE PROPERTY AND COM PUTED CAPITAL LOSS. FOR THE PURPOSE OF INDEXATION, THE ASSESSEE HAS ADOPTED THE VALUE OF THE LAND AND BUILDING AT ` 19,00,000/- AS ON 01.04.1981. HOWEVER, THE ASSESSING OFFICER COMPUTED THE SAME AT ` 21,62,425/- NOW, THE ASSESSEE CLAIMS BEFORE THIS TRIBUNAL THAT THE ASSESSING OFFICER OUGHT TO HAVE REFERRED THE MATTER TO THE VA LUATION OFFICER FOR ESTIMATING THE FAIR MARKET VALUE AS ON 01.04.1981. THE ASSESSING OFFICER ADOPTED THE GUIDELINE VALUE GIVEN BY THE SU B-REGISTRAR. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE GUIDELINE VALUE IS ONLY TO GUIDE THE SUB-REGISTRAR TO ESTIMATE THE MAR KET VALUE FOR THE PURPOSE OF COLLECTING STAMP DUTY ON TRANSFER OF THE LAND. THE GUIDELINE VALUE WOULD NOT REFLECT THE MARKET VALUE ALWAYS. HOWEVER, THE GUIDELINE VALUE IS ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION. THE MARKET VALUE IS NOT A CONSTANT FIGURE. IT WOULD FLUCTUATE DEPENDING UPON VARIOUS FACTORS, SUCH AS T HE DEMAND FOR 5 I.T.A. NO.1357/MDS/16 PURCHASE OF PROPERTY, THE LOCATION OF PROPERTY, ARE A OF THE PROPERTY, INFRASTRUCTURE FACILITIES AVAILABLE AROUND, POTENTI AL FOR FUTURE DEVELOPMENT, AVAILABILITY OF EDUCATIONAL INSTITUTIO NS, ESPECIALLY AROUND THE PROPERTY, ETC. WOULD DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981. BOTH THE CIT(APPEAL S) AS WELL AS THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERAT ION THESE FACTORS WHILE DETERMINING THE COST OF ACQUISITION AS ON 01. 04.1981. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT AS RIGHTLY SUBMITTED BY THE LD. SR. COUNSEL, THE MATTER OUGHT TO HAVE BEEN REFERRED TO THE VALUATION OFFICER. ACCORDINGLY, TH E ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSUE IS R EMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER SHALL RE- EXAMINE THE MATTER AFTER GETTING VALUATION REPORT F ROM THE VALUATION OFFICER. THEREAFTER, THE COST OF ACQUISITION HAS T O BE ESTIMATED AS INDICATED ABOVE. 5. SINCE THE MAIN ISSUE OF VALUATION OF PROPERTY IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE OTHER ISSUES REGARDING THE PAYMENT OF COMMISSION TO THE EXTENT OF ` 2,40,000/- AND THE CLAIM OF EXEMPTION UNDER 6 I.T.A. NO.1357/MDS/16 SECTION 54 OF THE ACT ALSO NEED TO BE RE-EXAMINED B Y THE ASSESSING OFFICER. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 25 TH NOVEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 25 TH NOVEMBER, 2016. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-5, CHENNAI 4. PRINCIPAL CIT-9, CHENNAI 5. 8; /3 /DR 6. * < /GF.