V.sURVESH, Coimbatore V. ITO Non Corporate Ward 2(5), Coimbatore

ITA 1367/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6146 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR ERODE
• Keywords: Capital asset; Cost of acquisition; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI , , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & S HRI INTURI RAMA RAO , ACCOUNTANT MEMBER ./ I.T.A.NO.1367/CHNY/2018 / ASSESSMENT YEAR : 2009-10 SHRI V.SURVESH , 11-A, CO-OPERATIVE A COLONY, K.K.PUTHUR,COIMBATORE 641038. VS. INCOME TAX OFFICER, NON CORPORATE WARD 2(5), COIMBATORE. [PAN ATWPS 8765 M ] ( / APPELLANT) ( /RESPONDENT) !' # $ / APPELLANT BY : MR.S.SRIDHAR,ADVOCATE ERODE %&!' # $ /RESPONDENT BY : MR.B.SAGADEVAN,JCIT,D.R ' ( # ) / DATE OF HEARING : 24 - 0 1 - 201 9 *+ # ) / DATE OF PRONOUNCEMENT : 25 - 0 1 - 201 9 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, COIMBA TORE IN APPEAL NO.63/15-16 DATED 14.02.2018 FOR THE ASSESSMENT Y EAR 2009-10. ITA NO.1367/CHNY/2018 :- 2 -: 2. SHRI S.SRIDHAR REPRESENTED ON BEHALF OF THE ASS ESSEE AND SHRI B.SAGADEVAN REPRESENTED ON BEHALF OF THE R EVENUE. 3. IT WAS SUBMITTED BY LD.A.R THAT ASSESSEE IS AN INDIVIDUAL, WHO HAD PURCHASED 2,400 SQ.FT OF LAND ON 04.05.2007 . IT WAS A SUBMISSION THAT ASSESSEE HAD CONSTRUCTED A BUILDING INCURRING COST OF ` 45,60,000/-. IT WAS A SUBMISSION THAT ASSESSEE HAD PURCHASED THE LAND AT COST OF ` 4,40,000/- AND THE ASSESSEE HAD SOLD THE SAID LAND AND BUILDING ON 24.11.2008 FOR A CONSIDERATION OF ` 50 LAKHS. FOR THE PURPOSE OF STAMP DUTY, THE BREAK-UP VALUE OF LAND A ND BUILDING, AS PER SALE DEED DATED 24.11.2008, WAS AT ` 26,00,180/- AND AT ` 23,99,820/- RESPECTIVELY. THE ASSESSMENT WAS ORIGIN ALLY COMPLETED U/S.143(3) OF THE ACT ON 30.12.2011 WHEREIN THE LD. ASSESSING OFFICER HAD OBTAINED THE VALUATION REPORT U/S.55A IN RESPEC T OF COST OF ACQUISITION. ASSISTANT VALUATION OFFICER (AVO) VIDE HIS LETTER DATED 27.12.2011 HAD VALUED THE COST OF ACQUISITION AT ` 46,64,700/-. THE BREAKUP OF THE SAME WAS THE COST OF CONSTRUCTIO N OF BUILDING AT ` 42,39,600/- AND COST OF THE LAND INCLUDING STAMP DU TY AND REGISTRATION FEE AT ` 4,25,100/-, TOTALING TO ` 46,64,700/-. IT WAS A SUBMISSION THAT CONSEQUENTLY IN THE COURSE OF ORIGI NAL ASSESSMENT, THE LD. ASSESSING OFFICER HAD DETERMINED SHORT TERM CAP ITAL GAINS OF ITA NO.1367/CHNY/2018 :- 3 -: ` 3,20,400/-, WHICH HAD ALREADY BEEN ACCEPTED BY THE ASSESSEE. IT WAS A SUBMISSION THAT SUBSEQUENTLY LD.CIT-1, COIMBATORE INVOKED HIS POWER U/S.263 OF THE ACT AND SET ASIDE THE ASSESSME NT ORDER WITH THE DIRECTION TO REDO THE ASSESSMENT AND COMPUTE THE S HORT TERM CAPITAL GAINS IN RESPECT OF THE LAND BY ADOPTING GUIDELINE VALUE IN SO FAR AS BOTH THE BUYER AND THE SELLER HAD SIGNED THE ANNEXU RE-IA IN RESPECT OF THE LAND SOLD AT ` 325/- PER SQ.FT. CONSEQUENT TO THE DIRECTION OF TH E CIT-1, COIMBATORE, THE LD. ASSESSING OFFICER HAD DE TERMINED THE SHORT TERM CAPITAL GAINS IN RESPECT OF THE LAND BY ADOPTI NG THE GUIDELINE VALUE OF ` 1083/- PER SQ.FT AND DETERMINED THE SHORT TERM CAPI TAL GAINS IN RESPECT OF THE LAND AT ` 21,75,080/-, BY ADOPTING THE GUIDELINE VALUE IN RESPECT OF LAND AT ` 26,00,180/- AND REDUCING THE COST OF ACQUISITION OF THE SAID LAND AS DETERMINED BY THE AVO AT ` 4,25,100/-. IT WAS SUBMITTED BY LD.A.R THAT CONSEQUENT TO COMPUTATION OF SHORT TERM CAPITAL GAINS BY THE LD. ASSESSING OFFICER IN RESPE CT OF THE LAND, THE LD. ASSESSING OFFICER HAS NOT GIVEN BENEFIT TO THE ASSE SSEE IN RESPECT OF THE SHORT TERM CAPITAL GAINS ORIGINALLY ASSESSED IN RESPECT OF THE BUILDING. IT WAS A SUBMISSION THAT THE NET RESULT OF THE COMPUTATION OF THE SALE PRICE BY THE LD. ASSESSING OFFICER IN THE TWO ASSESSMENT ORDERS WAS AT SALE PRICE HIGHER THAN THE ACTUAL SALE PRICE IN SO FAR AS, AS PER THE ORIGINAL ASSESSMENT ORDER THE SALE PRICE OF THE BUILDING HAD BEEN DETERMINED BY THE ASSESSING OFFICER AT ` 45,60,000/- AND AS PER THE ITA NO.1367/CHNY/2018 :- 4 -: ASSESSMENT ORDER GIVING EFFECT TO DIRECTION OF LD.C IT-1,COIMBATORE U/S.263 OF THE ACT, THE LAND HAS BEEN VALUED AT ` 26,00,180/-. THUS, THE TOTAL BEING ` 71,60,180/- WHEREAS THE SALE CONSIDERATION WAS ONLY ` 50 LAKHS. IT WAS A SUBMISSION THAT WHAT HAS BEEN SO LD BY THE ASSESSEE WAS A SINGLE LAND AND BUILDING AND BY DETE RMINING THE SHORT TERM CAPITAL GAINS IN RESPECT OF THE LAND AND THE B UILDING SEPARATELY, THE SALE PRICE OF THE PROPERTY HAS BEEN ARRIVED AT A FIGURE HIGHER THAN THE ACTUAL SALE PRICE. IT WAS A SUBMISSION THAT THE LD. ASSESSING OFFICER MAY BE DIRECTED TO MAKE A CONSOLIDATED CALCULATION OF THE SHORT TERM CAPITAL GAINS / SHORT TERM CAPITAL LOSS. 4. IN REPLY, LD.D.R VEHEMENTLY SUPPORTED THE ORDER OF LD. ASSESSING OFFICER AND THE LD.CIT(A). IT WAS A SUBMISSION THAT THE LD.D.R HAD NO OBJECTION, IF THE ISSUE RAISED IN THIS APPEAL WAS R ESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FACTS IN THE PRESENT CASE SHOW VERY PECULIAR TURN OF EVENTS. WHE N THE ORIGINAL ASSESSMENT WAS PASSED U/S.143(3) OF THE ACT ON 30. 12.2011, THE LD. ASSESSING OFFICER HAD INVOKED THE PROVISIONS OF THE SECTION 55A OF THE ACT FOR THE PURPOSE OF VALUING THE COST OF ACQUISIT ION OF THE PROPERTY. THE AVO VIDE HIS VALUATION REPORT DATED 27.12.2011 DETERMINED THE VALUE OF COST OF ACQUISITION OF THE PROPERTY SOLD A S THE PROBABLE COST OF ITA NO.1367/CHNY/2018 :- 5 -: CONSTRUCTION OF THE BUILDING AT ` 42,39,600/- AND THE COST OF THE LAND INCLUDING STAMP DUTY AND REGISTRATION FEE AT ` 4,25,100/-. THUS, THE TOTAL INVESTMENT WAS DETERMINED AT ` 46,64,700/-. THE ASSESSING OFFICER ADOPTED THIS FIGURE AND REJECTED THE ASSESS EES COST OF CONSTRUCTION OF ` 45,60,000/-, AS ALSO THE ASSESSEES CLAIM OF COST O F THE LAND AT ` 4,40,000/- AND CONSEQUENTLY DETERMINED THE SHORT TE RM CAPITAL GAINS AT ` 3,20,400/-. IN THE COURSE OF THE ASSESSMENT ORDER DATED 09.03.2015 PASSED GIVING EFFECT TO THE DIRECT ION OF LD.CIT-1 U/S.263 OF THE ACT, THE LD. ASSESSING OFFICER INTER ESTINGLY DETERMINED VALUE OF LAND ALONE BY APPLYING THE GUIDELINE VALUE AND DETERMINED THE SAME AT ` 26,00,180/-. CONSEQUENTLY, HE DETERMINED THE SHORT TERM CAPITAL GAINS IN RESPECT OF LAND AT ` 21,75,080/-. THUS, WHAT WE NOTICE IS THAT BY ASSESSMENT ORDER PASSED U/S.143(3) OF TH E ACT DATED 30.12.2011, THE SALE PRICE IN RESPECT OF THE PROPER TY HAS BEEN ACCEPTED AT ` 50 LAKHS, THE COST OF CONSTRUCTION HAS BEEN ACCEPTE D AT ` 42,39,600/-, THE COST OF THE LAND HAS BEEN ACCEPTED AT ` 4,25,100/- AND AS PER THE ASSESSMENT ORDER DATED 09.03.2015 TH E SALE VALUE IN RESPECT OF LAND HAS BEEN DETERMINED AT ` 26,00,180/-. THUS, AS AGAINST A SALE PRICE ACCEPTED BY THE REVENUE AND DISCLOSED BY THE ASSESSEE AT ` 50 LAKHS, THE A.O HAS ARRIVED AT A SHORT TERM CAPIT AL GAINS OF ` 21,75,080/- IN RESPECT OF THE LAND AS PER ASSESSMEN T ORDER DATED 09.03.2015 AND TOTAL CAPITAL GAINS SHORT TERM AT ` 3,20,400/- AS PER ITA NO.1367/CHNY/2018 :- 6 -: ASSESSMENT ORDER DATED 30.12.2011, THUS TOTALING T O ` 24,95,400/-. THUS, ON A SALE OF ` 50 LAKHS, AS PER THE REVENUE THE ASSESSEE HAS EARNED A SHORT TERM CAPITAL GAINS OF ` 24,95,400/- AFTER SPENDING ` 46,64,700/- AS PER THE AVOS REPORT OBTAINED BY THE A.O U/S.55A OF THE ACT. ADMITTEDLY, WHAT HAS BEEN SOLD BY THE ASS ESSEE IS NOT INDEPENDENT LAND AND INDEPENDENT BUILDING, BUT IS A CONSOLIDATED LAND AND BUILDING. CONSEQUENCE OF THIS, THE VALUE OF LAN D SOLD WOULD NOW BE DETERMINED AT ` 26,00,180/- AND THE VALUE OF BUILDING SOLD WOULD BE ` 50 LAKHS MINUS (-) ` 4,25,100/- = ` 45,74,900/-. THUS, THE TOTAL SALE CONSIDERATION WOULD END UP BEING COMPUTED AT ` 26,00,180/- + (PLUS) ` 45,74,900/- = ` 71,75,080/-. HOWEVER, THE ASSESSEE HAS SOLD THE PROPERTY AT ONLY ` 50/- LAKHS. ADMITTEDLY THIS IS NOT POSSIBLE IN SO FAR AS NO ONE IS EXPLAINING AS TO HOW THIS PROPERTY WAS ACQUIRED IN IMMEDIATELY PRECEDING YEAR AT ` 4,25,100/- ONLY. THE PERIOD BETWEEN THE DATE OF ACQUISITION OF THE LAND BY THE ASSESSEE AND THE DATE OF SALE IS ALSO BARELY ONE YEAR AND SIX MONTHS. THIS B EING SO, AS IT IS NOTICED THAT SALE PRICE DETERMINED BY THE LD. ASSES SING OFFICER IS FAR EXCEEDING THE ACTUAL SALE PRICE AND AS IT IS ALSO N OTICED THAT THE LD. ASSESSING OFFICER HAS ADOPTED THE PIECEMEAL PORTION OF AVOS REPORT IN THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE AC T AND U/S.143(3) R.W.S.263 OF THE ACT, WE ARE OF THE VIEW THAT SUCH PIECEMEAL ADOPTION IS NOT PERMISSIBLE. THE ASSESSEE HAVING SOLD A SIN GLE LAND AND BUILDING ITA NO.1367/CHNY/2018 :- 7 -: IT IS NOT OPEN TO THE REVENUE TO BREAK UP THE TRANS ACTION AND TO DETERMINE THE SHORT TERM CAPITAL GAINS IN RESPECT O F THE TRANSACTIONS SEPARATELY. IF THAT IS TO BE DONE, THE LD. ASSESSIN G OFFICER HAVING DETERMINED THE SHORT TERM CAPITAL GAINS IN RESPECT OF LAND AT ` 21,75,080/-, WOULD ALSO HAVE TO DETERMINE THE SHOR T TERM CAPITAL GAINS /SHORT TERM CAPITAL LOSS IN RESPECT OF THE BU ILDING BEING [ ` 50 LAKHS MINUS ` 26,00,180/- = ` 23,99,820/- BEING THE VALUE OF THE BUILDING SOLD; THEREFORE ` 45,60,000 MINUS ` 23,99,820/- = ` 21,60,180/- BEING THE CAPITAL LOSS IN RESPECT OF TH E BUILDING.] THE NET RESULT WOULD SHORT TERM CAPITAL GAINS IN RESPECT OF LAND AT ` 21,75,080/- AND THE SHORT TERM CAPITAL LOSS IN RESPECT OF THE B UILDING AT ` 21,60,180/-, THEREBY GIVING RISE TO SHORT TERM CAPI TAL GAINS OF ` 14,900/-. HOWEVER THE ORIGINAL ASSESSMENT ORDER PAS SED U/S.143(3) OF THE ACT HAS ALREADY DETERMINED THE SHORT TERM CA PITAL GAINS OF ` 3,20,000/-, WHICH WOULD HAVE TO BE SET OFF, THEREBY TOTAL SHORT TERM CAPITAL LOSS OF ` 3,05,100/- WOULD RESULT. THIS BEING SO, THE LD. ASSESSING OFFICER IS DIRECTED TO RE-COMPUTE THE S HORT TERM CAPITAL GAINS / SHORT TERM CAPITAL LOSS IN RESPECT OF BOTH THE LAND AND BUILDING IN A CONSOLIDATED MANNER AND NOT INDEPENDENTLY IN S O FAR AS THE PROPERTY SOLD IS A LAND AND BUILDING AND BOTH ARE SHORT TERM CAPITAL ASSETS. ITA NO.1367/CHNY/2018 :- 8 -: 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 25 TH JANUARY, 2019, AT CHENNAI. SD/ - SD/ - ( , ) (INTURI RAMA RAO) ! '# /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) $ '# / JUDICIAL MEMBER , ( / CHENNAI - / DATED: 25 TH JANUARY, 2019. K S SUNDARAM . # %)/0 1 0 ) / COPY TO: 1 . !' / APPELLANT 4. ' 2) / CIT 2. %&!' / RESPONDENT 5. 034 %)5 / DR 3. ' 2) () / CIT(A) 6. 48 9( / GF