Pottabathini Sudharshan, Hyderabad V. Income Tax Officer, Ward-10(4), Hyderabad

ITA 1387/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8778 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-12-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 09-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Capital Gains
• Section: 143(3); 50C; 251; 13; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC, HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1387/HYD/2019 ASSESSMENT YEAR:2011 - 12 POTTABATHINI SUDARSHAN, HYDERABAD. PAN: AHUPS 5683 G VS. INCOME TAX OFFICER, WARD - 10(4), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI K.A. SAI PRASAD REVENUE BY: SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 17/12/2021 DATE OF PRONOUNCEMENT: 06 /01/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 6, HYDERABAD IN APPEAL NO. 10645/2018 - 19/B2/CIT(A) - 6, DATED 28/06/ 2019 PASSED U/S. 143(3) R.W.S 147 AND U/S. 250(6) OF THE ACT FOR THE AY: 2011 - 12. 2. THE ASSESSEE HAS RAISED EIGHT GROUNDS IN HIS APPEAL AND THEY ARE EXTRACTED HEREIN BELOW FOR REFERENCE: 1. THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY IS NOT CORRECT EITHER IN LAW OR ON FACT AND IN BOTH. 2 2. THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE ASSESSING OFFICER ACTION IN MAKING AN ADDITION OF RS. 22,32,081/ - ADOPTING THE SALE CONSIDERATION U/S. 50C OF THE ACT. 3. THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN NOT CONSIDERING THE VALUE OF THE PR OPERTY SOLD AS PER THE CERTIFICATE ISSUED BY SRO. 4. THE LD. FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT RS. 36,00,000/ - ADOPTED IN THE SALE DEED IS THE VALUE OF THE ENTIRE PROPERTY WHEREAS THE PROPERTY ACTUALLY SOLD IS ONLY 3 RD FLOOR WITH OUT TERRACE RIGHTS. 5. THE LD. FIRST APPELLATE AUTHORITY DIRECTING THE AO TO REFER THE MATTER TO VALUATION CELL IS CONTRARY TO THE PROVISIONS OF THE ACT. 6. THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DISMISSING THE GROUND R4AISED REGARDING ADOPT ING THE YEAR 2002 - 03 FOR DETERMINING THE COST AND INDEXED COST IGNORING THE PROVISIONS OF SECTION 49(1)(II). 7. THE LD. FIRST APPELLATE AUTHORITY IS NOT CORRECT IN NOT CONSIDERING THE IMPROVEMENTS MADE TO THE PROPERTY. 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE PROFESSION AS GOLDSMITH AND IN JEWELLERY BUSINESS UNDER THE NAME AND STYLE OF M/S. SUDARSHAN JEWELLERS. THE ASSESSEE ORIGINALLY FILED HIS RETURN OF INCOME ON 28/04/2011 DECLARING TAXABLE INCOME OF RS. 1,79,460/ - UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND BUSINESS. THEREAFTER, IT WAS REVEALED THAT THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY ON 14/01/2011 BEARING MUNICIPAL NO. 5 - 1 - 373/2 SITUATED AT MEKALA BANDA, GHASMAND, SECUNDERABAD ADMEASURING PLINTH AREA OF 1200 SFT ALONG WITH UNDIVIDED SHARE OF LAND OF 13 SQ YDS TO SRI JITENDER P SETH FOR SALE CONSIDERATION OF RS. 9 LAKHS. HOWEVER, IN THE SALE DEED THE MARKET VALUE WAS MENT IONED AS RS. 36 LAKHS. ON QUERY AS TO WHY THE PROVISIONS OF SECTION 50C OF THE ACT IS NOT APPLICABLE , THE ASSESSEE HAS EXPLAINED THAT HE HAD SOLD ONLY THE THIRD FLOOR OF THE SAID 3 PROPERTY (EXCLUDING 4 TH FLOOR AND OPEN TERRACE RIGHTS) ADMEASURING 1200 SFT OF THE CONSTRUCTED ARE AND 13 SQ. YDS OF UNDIVIDED SHARE OF LAND. THE ASSESSEE ALSO FURNISHED A CERTIFICATE FROM THE SRO, SECUNDERABAD STATING THAT THE MARKET OF THE LAND AND BUILDING AS PREVALENT ON 14/ 3/2011 WAS ONLY RS. 10,66,000/ - WITH RESPECT TO THE IMMOVABLE PROPERTY SOLD BY THE ASSESSEE AND NOT RS. 36 LAKHS AS STATED IN THE SALE DEED. THE ASSESSEE ALSO CLAIMED COST OF IMPROVEMENT OF THE PROPERTY FOR THE YEAR 1989 - 90 AT RS. 50,000/ - AND FOR THE YEAR 1999 - 2000 AT RS. 79,000/ - . ACCORDINGLY, THE ASSESSEE HAD COMPUTED THE LONG - TERM CAPITAL LOSS OF RS. 21,020/ - . HOWEVER, THE L D. AO OPINED THAT SINCE IN THE SALE DEED THE MARKET VALUE WAS STATED AS RS. 36 LAKHS, THE SAME HAS TO BE ADOPTED WHILE COMPUTING T HE CAPITAL GAINS IN ACCORDANCE WITH PROVISIONS OF SECTION 50C OF THE ACT. THE LD. AO FURTHER DISREGARDED THE IMPROVEMENT COST CLAIMED BY THE ASSESSEE BECAUSE THE ASSESSEE HAD NOT FURNISHED ANY EVIDENCE FOR THE SAME. AS A RESULT, THE LD. AO COMPUTED THE LO NG - TERM CAPITAL LOSS OF THE ASSESSEE AT RS. 22,32,081/ - . ON APPEAL, THE LD. CIT (A) REMITTED BACK THE MATTER TO THE FILE OF THE LD. AO IN ORDER TO OBTAIN THE SRO VALUE OF THE PROPERTY AS PER SECTION 50C(3) OF THE ACT AND THEREAFTER, COMPUTE THE CAPITAL GAI NS OF THE ASSESSEE. WITH REGARDS TO THE COST OF IMPROVEMENT OF THE PROPERTY, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO ACCEPTING HIS VIEW. 4. AT THE OUTSET, THE LD. AR SUBMITTED BEFORE ME THAT THE LD. AO HAD ADOPTED THE ENTIRE VALUE OF THE PROPERTY OTHER THAN WHAT WAS OWNED AND 4 SOLD BY THE ASSESSEE WHICH IS ERRONEOUS. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE HAD OBTAINED A CERTIFICATE FROM THE SRO WHICH STATED THAT THE MARKET VALUE O F THE PROPERTY SOLD AS ON 14/3/2011 WAS ONLY RS. 10,66,000/ - . THE LD. AR FURTHER ARGUED STATING THAT THE LD. AO HAD NOT GIVEN THE BENEFIT OF COST OF IMPROVEMENT INCURRED BY THE ASSESSEE ON THE PROPERTY DURING THE YEAR 1989 - 90 AND 1999 - 2000 WHICH WORKS OUT TO RS. 1,25,000/ - AND THE INDEXATION BENEFITS THERE ON . IT WAS THEREFORE, PLEADED THAT THE LONG - TERM CAPITAL LOSS WORKED OUT BY THE ASSESSEE AT RS. 21,020/ - MAY BE ACCEPTED AND ACCORDINGLY DIRECTION MAY BE GIVEN TO THE LD. AO. THE LD. DR ON THE OTHER HAND VEHEMENTLY OPPOSED TO THE SUBMISSION OF LD. AR AND ARGUED IN SUPPORT OF THE ORDERS OF THE LD. REVENUE AUTHORITIES AND PRAYED FOR CONFIRMING T HE SAME . 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE ORDER OF THE LD. CIT (A) IT IS APPARENT THAT THE LD. CIT (A) HAS REMITTED THE MATTER BACK TO THE FILE OF THE LD. AO IN ORDER TO OBTAIN THE SRO VALUE OF THE PROPERTY AND THEREAFTER, PASS APPROPRIATE ORDER. THIS DIRECTION OF THE LD. CIT (A) IS NOT IN ACCORDANCE WITH LA W BECAUSE THE LD. CIT (A) DOES NOT HAVE THE POWER TO REMAND THE MATTER TO THE FILE OF THE LD. AO AS PER SECTION 251 OF THE ACT. FURTHER, IT ALSO APPEARS THAT THE ASSESSEE OWNS ONLY A PORTION OF THE PROPERTY WHICH HE HAS SOLD AND THEREFORE, THE VALUE OF THE ENTIRE PROPERTY CANNOT BE ADOPTED WHILE INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. THE LD. 5 AR HAS ALSO ARGUED STATING THAT THE ASSESSEE HAS INCURRED COST OF IMPROVEMENT AGGREGATING TO RS. 1,25,000/ - DURING THE YEAR 1989 - 90 AND 1999 - 2000 WHICH HAS NOT BEEN TAKEN INTO ACCOUNT BY THE LD. AO WHILE COMPUTING THE CAPITAL GAINS. IN THIS SITUATION, I FIND IT APPROPRIATE TO REMIT THE ENTIRE MATTER BACK TO THE FILE OF THE LD. AO FOR DE NOVO CONSIDERATION WITH DIRECTION TO OBTAIN THE MARKET VALUE OF THE PROPERTY OWNED AND SOLD BY THE ASSESSEE WHILE INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT AND THEREAFTER PASS APPROPRIATE ORDE R IN ACCORDANCE WITH LAW AND MERIT TAKING INTO CONSIDERATION OF THE CLAIM OF COST OF IMPROVEMENT OF THE PROPERTY IF PROPER EVIDENCE IS FURNISHED BY THE ASSESSEE FOR HAVING INCURRED SUCH EXPENDITURE . IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT, THE APPEAL O F THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. PRONOUNCED IN THE OPEN COURT ON THE SIXTH JANUARY, 2021. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 06 TH JANUARY, 2021. OKK 6 COPY TO: - 1) POTTABATHINI SUDARSHAN, C/O. KATRAPATI & ASSOCIATES, 1 - 1 - 298/2/B/3, 1 ST FLOOR, ASHOK NAGAR, HYDERABAD 500 020. 2) INCOME TAX OFFICER, WARD - 10(4), 5 TH FLOOR, I.T. TOWERS, AC GUARDS, HYDERABAD 500 004. 3) THE CIT (A) - 6, HYDERABAD. 4) THE PRINCIPAL COMMISSIONER OF INCOME TAX - 6, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE