G.Mohan, CHENNAI V. ITO, CHENNAI

ITA 1402/CHNY/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1643 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITAJCIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Fair market value; Valuation report; Capital Gains

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , !'# !. , & ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER # ./ ITA NOS.1402/CHNY/2014 '( /ASSESSMENT YEAR: 2010-11 SHRI G. MOHAN FLAT NO.2-B, NEW NO.16, (OLD NO.81) I-AVENUE, INDIRA NAGAR, CHENNAI 600 020 [PAN: AXXPM 8046J] VS. THE INCOME TAX OFFICER INTERNATIONAL TAXATION-I (2), CHENNAI 600 034 ( /APPELLANT) ( )*+ /RESPONDENT) + , - / APPELLANT BY : MR. S. SRIDHAR, ADVOCATE )*+ , - /RESPONDENT BY : MS. R. ANITA, JCIT . ' , /& /DATE OF HEARING : 02.12.2019 01( , /& / DATE OF PRONOUNCEMENT : 02.12.2019 2 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VII, CHENNAI I N ITA NO.874/13-14 DATED 27.03.2014 FOR THE ASSESSMENT YEAR 2010-11. ITA NO.1402/CHNY/2014 :- 2 -: 2. SHRI S. SRIDHAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND MS. R. ANITA, JCIT REPRESENTED ON BEHALF OF THE REV ENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRE SENTATIVE THAT THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE HAD DURING THE RELEVANT ASSESSMENT YEAR SOLD A FLAT CONSISTING OF 2324 SQ.FT TOGETHER WITH 1255.33 SQ.FT OF THE UNDIVIDED INTEREST IN THE LAND IN A BUILDING KNOWN AS VENKATALAKSHMI SITUATED AT NO.16, PLOT NO.284W, FIRST AVENUE, INDIRA NAGAR, ADAYAR, CHENNAI 600 020 FOR A CONSIDERATION OF RS.1,19,30,000/-. THE A SSESSEE HAD COMPUTED THE LONG TERM CAPITAL GAINS AT RS.40,13,378/-. IT WAS A SUBMISSION THAT THE ASSESSEE HAD REDUCED THE COST OF CONSTRUCTION OF A HOUSE DEMOLISHED AT RS.24,22,667/-. THE SUM WAS NOT ACCEPTED BY THE AS SESSING OFFICER. IT WAS ALSO A SUBMISSION THAT THE ASSESSING OFFICER HAD CO MPUTED THE LONG TERM CAPITAL GAINS IN RESPECT OF THE FLAT SOLD BY THE AS SESSEE BY GRANTING THE BENEFIT OF INDEXATION FROM THE ASSESSMENT YEAR 2005-06 AS A GAINST 01.04.1981. IT WAS ALSO A SUBMISSION THAT THE ASSESSING OFFICER HA D NOT ACCEPTED THE ASSESSEES CLAIM IN RESPECT OF THE VALUE OF THE UND IVIDED INTEREST AS DISCLOSED BY THE ASSESSEE AND HAD DETERMINED THE COST OF THE LAND AS PER THE SALE DEED DATED 31.08.1984 AT RS.4,506/-. THE LEARNED AUTHOR IZED REPRESENTATIVE FURTHER SUBMITTED THAT THE PROPERTY WAS ORIGINALLY ALLOTTED TO ONE SHRI G. RANGARAJAN SON OF SHRI S. GOPALASWAMY BY THE TAMIL NADU HOUSING BOARD VIDE ALLOTMENT LETTER DATED 07.12.1973. ON 07.02.1 982 SHRI G. RANGARAJAN HAD REQUESTED THAT THE PROPERTY BE REGISTERED IN TH E NAME OF SHRI G. GOPALASWAMY, THE KARTHA OF THE JOINT FAMILY. ON 31 ST AUGUST, 1984, THE TAMIL ITA NO.1402/CHNY/2014 :- 3 -: NADU HOUSING BOARD REGISTERED THE PROPERTY IN THE N AME OF SHRI. G. GOPALASWAMY. SHRI. G. GOPALASWAMY EXPIRED ON 10.04 .1997. THE TOTAL AREA OF THE LAND WAS 7532 SQ.FT. THE SEVEN CO-OWNERS OF THE PROPERTY HAD ENTERED INTO A CONSTRUCTION AGREEMENT WITH M/S. MATS ENGINE ERING PRIVATE LIMITED VIDE AGREEMENT DATED 30.06.2004 AND HAD PUT UP A BUILDIN G UNDER THE NAME OF VENKATALAKSHMI. SUBSEQUENTLY, VIDE THE PARTITION DEED DATED 6 TH DAY OF JUNE, 2006, THE SAID PROPERTY WAS PARTITIONED AND THE ASS ESSEE WAS ALLOTTED SCHEDULE E OF THE PROPERTY REPRESENTING A FLAT BE ARING DOOR NO.4B TO THE EXTENT OF 2,324 SQ.FT. ON THE FIRST FLOOR ALONG WIT H TWO COVERED CAR PARK AND 1,255.33 SQ.FT. OF THE UNDIVIDED SHARE TITLE AND IN TEREST IN THE LAND OF 7,522 SQ.FT. FOR THE PURPOSE OF VALUATION OF STAMP DUTY AND REGISTRATION, THE PROPERTY WAS VALUED AT RS.10.00 LAKHS. IT WAS A SUBMISSION THAT THE SAID FLAT WAS SOLD BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR FOR A CONSIDERATION OF RS.1,19,30,000/-. IT WAS A SUBMISSION THAT BEFORE ENTERING THE CONSTRUCTION AGREEMENT WITH M/S. MATS ENGINEERING PRIVATE LIMITE D, THE CO-OWNERS HAD DEMOLISHED THE EXISTING OLD HOUSE BUILDING AND THE ASSESSEE HAD CLAIMED THE COST WHEN COMPUTING THE LONG TERM CAPITAL GAINS. T HE AUTHORIZED REPRESENTATIVE DREW OUR ATTENTION TO PAGE-3 OF THE PAPER BOOK WHICH WAS A COPY OF THE LETTER ADDRESSED TO THE TAMIL NADU HOUS ING BOARD, WHEREIN IT IS REFERRED THAT A HOUSE HAD BEEN CONSTRUCTED AND IS A CTUALLY IN OCCUPATION OF THE JOINT FAMILY CONSISTING OF SHRI S. RANGARAJAN, HIS PARENTS AND BROTHERS AND SISTERS. THE LEARNED AUTHORIZED REPRESENTATIVE ALS O DREW OUR ATTENTION TO THE PARTITION DEED TO SUBMIT THAT IN THE RECITALS IT IS MENTIONED THAT SHRI G. ITA NO.1402/CHNY/2014 :- 4 -: GOPALASWAMY HAS CONSTRUCTED A HOUSE IN THE SAID PLO T. IT WAS FURTHER A SUBMISSION THAT (1) THE EXISTENCE OF THE EARLIER BU ILDING WAS TO BE RECOGNIZED AND THE COST OF THAT BUILDING WAS ALSO TO BE CONSID ERED EVEN THOUGH THE SAME HAD BEEN DEMOLISHED, WHEN COMPUTING THE LONG TERM C APITAL GAINS. (2) IT WAS A SUBMISSION THAT THE LONG TERM CAPITAL GAINS WAS LIA BLE TO BE COMPUTED BY DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY A S ON 01.04.1981AS AGAINST 31.08.1984 AS ADOPTED BY THE ASSESSING OFFICER. I T WAS A THIRD SUBMISSION THAT THE FAIR MARKET VALUE OF THE LAND AS ADOPTED B Y THE ASSESSING OFFICER AT RS.4,506/- WAS WRONG AND THE VALUE AS ON 01.04.1981 HAD TO BE ADOPTED FOR THE PURPOSE. THE LEARNED AUTHORIZED REPRESENTATIVE PLACED BEFORE US THE COPY OF THE VALUATION REPORT BY SHRI. ER. R. PERIYA SAMY, WHEREIN BY PLACING RELIANCE THE SALE DEED DATED 03.01.1983 REGISTERED IN S.R.O. ADAYAR, THE VALUE OF THE LAND HAS BEEN DETERMINED AT RS.37/- PE R SQ.FT. IT WAS A SUBMISSION THAT THE LEARNED CIT(A) HAD ALSO NOT CON SIDERED THE SUBMISSION OF THE ASSESSEE. 4. IN REPLY THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER AND THE LEARNED CIT(A). IT WAS A SUBMISSION THAT THE ASSESSEE HAS NOT PROVED THE EXI STENCE OF THE BUILDING WHICH WAS DEMOLISHED. BY CERTAIN RECITALS IN THE SE LF-DECLARED DOCUMENT THE EXISTENCE OF THE BUILDING CANNOT BE ACCEPTED. IT W AS FURTHER A SUBMISSION THAT SHE HAD NO OBJECTION IF THE VALUE OF THE LAND WAS T AKEN AT RS.37/- PER SQ.FT. OF THE UNDIVIDED INTEREST, THOUGH IN FACT THE VALUATIO N IS LIABLE TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION. IT WAS FAIRLY AGREED BY THE ITA NO.1402/CHNY/2014 :- 5 -: LEARNED DEPARTMENTAL REPRESENTATIVE THAT IN VIEW OF THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF COMMISSION ER OF INCOME TAX VS. MANJULA J. SHAH REPORTED IN 249 CTR 20 (BOM) WHEREIN IT HAS BEEN HELD THAT THE COST INFLATION INDEX IS LIABLE TO BE APPLIED FR OM 01.04.1981 AS THE PROPERTY WAS RECEIVED BY THE ASSESSEE THROUGH PARTITION AND WAS ALSO AN ANCESTRAL PROPERTY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIALS AVAILABLE ON RECORD. 6. AT THE OUTSET, A PERUSAL OF THE ALLOTMENT LETTER FROM THE TAMIL NADU HOUSING BOARD SHOWS THAT THE PROPERTY REPRESENTING THREE GROUNDS AND 332 SQ.FT. HAS BEEN ALLOTTED TO ONE SHRI RANGARAJAN SON OF SHRI G. GOPALASWAMY, A JUDGE AND SPECIAL OFFICER. THE LETTER OF SHRI G. R ANGARAJAN TO THE TAMIL NADU HOUSING BOARD DATED 7 TH FEBRUARY, 1982 TALKS OF THE PROPERTY HAVING BEEN PURCHASED AND THE CONSTRUCTION OF THE HOUSE HAVING BEEN DONE WITH MAJOR PORTION OF THE FUNDS OF SHRI G. GOPALASWAMY AND THE INCOME FROM THE JOINT FAMILY PROPERTIES. THE PROPERTY IS REGISTERED ON 31 ST AUGUST, 1984 IN THE NAME OF SHRI THIRU G. GOPALASWAMY, SON OF SHRI S. GOPALA SWAMY. THUS, WHAT BECOMES EVIDENT HERE IS THAT IN THE LETTER DATED 7 TH FEBRUARY, 1982, THE PROPERTY HAS ALREADY BEEN IMPRESSED WITH THE CHARAC TERISTICS OF HINDU UNDIVIDED FAMILY [HUF] PROPERTY, BEING JOINT FAMILY PROPERTY REGISTERED IN THE NAME OF THE KARTHA, SHRI G. GOPALASWAMY. IN THE PA RTITION DEED, IT IS MENTIONED THAT THE SAID PROPERTY WAS ORIGINALLY PUR CHASE BY LATE SHRI. G. GOPALASWAMY, SON OF SHRI S. GOPALASWAMY, THE HUSBAN D OF THE FIRST PARTY AND ITA NO.1402/CHNY/2014 :- 6 -: THE FATHER OF THE SECOND TO SEVENTH PARTIES, OUT O F HIS OWN EFFORTS AND FUNDS THAT THE SAID SHRI G. GOPALASWAMY HAD CONSTRUCTED A HOUSE ON THE SAID PLOT AND EVER SINCE THEN WAS IN POSSESSION OF ENJOYMENT TILL HIS DEMISE ON 10.04.1997. THIS STATEMENT IN THE PARTITION DEED I S IN DIRECT CONTRAST TO THE LETTER DATED 7 TH FEBRUARY, 1982 WRITTEN TO THE TAMIL NADU HOUSING B OARD, WHEREIN IT IS MENTIONED THAT THE PROPERTY WAS PURCH ASED USING JOINT FUNDS AND THAT THERE WAS ALREADY A HOUSE ON THE SAID PLOT WHI CH WAS CONSTRUCTED USING JOINT FUNDS AND THAT THE PROPERTY BELONGING TO THE HUF. WHEN THIS HUF WAS PARTITIONED, WHETHER IT WAS PARTITIONED? IF PARTITI ONED, WHO ARE THE BENEFICIARIES? NOTHING IS COMING OUT. FURTHER, TH IS RECITAL IN THE PARTITION DEED STANDS CONTRARY TO THE STAND TAKEN IN THE LETTER DA TED 7 TH FEBRUARY, 1982 WRITTEN TO THE TAMIL NADU HOUSING BOARD AND THIS ALSO WOULD ALSO CLEARLY SHOW THAT THE EXISTENCE OF THE HOUSE OR THE DEMOLITION THEREO F STANDS UNPROVED. THE ASSESSEE HAS ALSO BEEN UNABLE TO PRODUCE ANY EVIDEN CE WHATSOEVER TO SUBSTANTIATE THE CLAIM THAT THERE WAS IN EXISTENCE A BUILDING ON THE LAND. IN ANY CASE, AS IT IS THE ONLY COMPUTATION OF THE CAPI TAL GAINS THAT IS IN DISPUTE BEFORE US, WE DO NEED TO GO INTO THE LEGALITY OF TH E OWNERSHIP IN RESPECT OF THE SAID PROPERTY. AS THE ASSESSEE HAS BEEN CLEARLY UN ABLE TO PRODUCE ANY DOCUMENTARY EVIDENCES THEREON, THE SAID RECITALS IN THE VARIOUS DOCUMENTS WHICH ARE BY THEMSELVES CONTRARY TO EACH OTHER, THE CLAIM OF THE ASSESSEE IN RESPECT OF THE HOUSE BUILDING WHICH WAS DEMOLISHED, THE COST OF CONSTRUCTION OF WHICH HAS BEEN REDUCED BY THE ASSESSEE IN ITS CO MPUTATION OF LONG TERM ITA NO.1402/CHNY/2014 :- 7 -: CAPITAL GAINS STANDS DISPROVED. CONSEQUENTLY, GROU ND NOS.2 AND 3 OF THE ASSESSEES APPEAL STANDS DISMISSED. GOUND NO.1 IS GENERAL IN NATURE. IN RESPECT OF GR OUND NO.4 WHICH IS IN REGARD TO THE VALUATION OF THE UNDIVIDED INTEREST I N THE LAND, IT IS NOTICED THAT THE LAND ON WHICH THE ASSESSEE HAS CONSTRUCTED THE FLAT IS AN ANCESTRAL PROPERTY. THE ASSESSEE ALONG WITH HIS SIBLINGS HAS ENTERED IN TO AN AGREEMENT FOR THE PURPOSE OF CONSTRUCTION OF THE SAID FLAT ON THE SAI D LAND IN JUNE 2004 WITH M/S. MATS ENGINEERING PRIVATE LIMITED. CONSEQUENTLY, FO R THE PURPOSE OF COMPUTING THE LONG TERM CAPITAL GAINS IN RESPECT OF THE UNDIV IDED SHARE MORE SO IN THE UNDIVIDED INTEREST OF THE LAND TO THE EXTENT OF 1,2 55.33 SQ. FT. ON UNDIVIDED INTEREST IS CONCERNED, THE SAME IS TO BE VALUED AS ON 01.04.1981 AND AS THE SAME HAS ALREADY BEEN VALUED BY THE VALUATION OFFIC ER AT RS.37/- PER SQ. FT. BY ADOPTING A COMPARABLE SALE INSTANCE OF THE YEAR 198 2-83, THOUGH IDEALLY THE ISSUE MUST BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION, CONSIDERING THE AFFLUX OF TIME AND THE AVAILABILITY OF EVIDENCES, WE ACCEPT THE VALUATION REPORT PRODUCED BY THE ASSESSEE IN RESPEC T OF THE VALUATION OF THE LAND AT RS.37/- PER SQ.FT. AS ON 01.04.1981 AND DIR ECT THE ASSESSING OFFICER TO ADOPT THE FIGURE OF RS.37/- PER SQ. FT. IN RESPECT OF THE VALUE OF THE UNDIVIDED INTEREST IN THE LAND TRANSFERRED BY THE ASSESSEE WH EN COMPUTING THE LONG TERM CAPITAL GAINS. CONSEQUENTLY, GROUND NO.4 OF THE AS SESSEES APPEAL STANDS PARTLY ALLOWED. IN RESPECT OF GROUND NOS.5 TO 10, IT IS NOTICED TH AT THE CONSTRUCTION OF THE FLAT TOOK PLACE ON THE ANCESTRAL LAND, THE COST INF LATION INDEX IN RESPECT OF ITA NO.1402/CHNY/2014 :- 8 -: COMPUTING LONG TERM CAPITAL GAINS IN RESPECT OF THE UNDIVIDED SHARE IN THE LAND WHICH HAS BEEN SOLD BY THE ASSESSEE DURING THE RELE VANT ASSESSMENT YEAR IS TO BE TAKEN AS ON 01.04.1981. THIS IS BECAUSE THE PROPERTY HAS ALREADY BEEN ALLOTTED TO THE ASSESSEES FAMILY AS EARLY AS IN 19 73, THOUGH THE SAME HAD BEEN REGISTERED AS A HUF PROPERTY IN THE NAME OF TH E KARTHA, SHRI G. GOPALASWAMY IN 1984. CONSEQUENTLY, GROUND NOS.5 TO 10 OF THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. GROUND NO.11 IS GENE RAL IN NATURE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND DECEMBER, 2019 IN CHENNAI. SD/- ( ! . ) ( S. JAYARAMAN ) & /ACCOUNTANT MEMBER /CHENNAI, 3# /DATED: 2 ND DECEMBER, 2019 . IA, SR. PS SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER 2 , )/45 65(/ /COPY TO: 1. + /APPELLANT 2. )*+ /RESPONDENT 3. . 7/ ( )/CIT(A) 4. . 7/ /CIT 5. 5'89 )/ /DR 6. 9 : /GF