DCIT, Puducherry V. Smt. R. Santhanalakshmi, Pondicherry

ITA 1431/CHNY/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86271 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Keywords: Fair market value; Valuation report
• Section: 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI .. , , BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012. ( ! / ASSESSMENT YEAR : 2008-2009) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, D.P. THOTTAM, PUDUCHERRY 605 003. ( /APPELLANT) VS. M/S. R. SANTHANALAKSHMI, NO.33, SOUTH STREET, KURUVINATHAM P.O. PONDICHERRY. [PAN :APDPS 3465D] ( /RESPONDENT/CROSS OBJECTOR) ' # $ / APPELLANT BY : SMT. P. RADHAKRISHNAN, IRS, JCIT. %&' # $ / RESPONDENT BY : SHRI. PHILIP GEORGE, ADVOCATE. ' ( # )* /DATE OF HEARING : 19.01.2015. +,! # )* /DATE OF PRONOUNCEMENT : 30.01.2015. / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XII, CHENNAI D ATED 01.03.2012 FOR THE ASSESSMENT YEAR 2008-2009. THE ASSESSEE HAS ALSO F ILED CROSS OBJECTIONS -2- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012. AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE REVENUE IN ITS APPEAL HAS IMPUGNED THE FINDINGS OF FIRST APPELLATE AUTHORITY ON TWO GROUNDS VIZ., (I) IN ADOPTING VALUE OF LAND AT B79/- PER SQ.FT AS AGAINST THE RATE OF B33/- PER SQ.FT ADOPTED BY THE ASSESSIN G OFFICER; AND (II) IN ALLOWING EXEMPTION U/S.54 OF THE INCOME TAX ACT, 1 961 (HEREIN AFTER REFERRED TO AS THE ACT). THE ASSESSEE IN ITS CROSS OBJEC TIONS HAS ASSAILED THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ) IN NOT ACCEPTING THE VALUE OF LAND AT B145/- PER SQ.FT AS FIXED BY THE R EGISTERED VALUER. 2. BRIEF FACTS OF THE CASE ARE: THE ASSESSEE IS AN IND IVIDUAL. THE ASSESSEE IN HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 200 8-2009 ADMITTED LONG TERM CAPITAL GAIN OF B1,33,07,500/- ON THE SALE OF RESIDENTIAL PROPERTY BEARING NEW NO.28, OLD NO.14, NAINAR NADAR ROAD, MYLAPORE, CHENNAI. THE ASSESSEE HAD ACQUIRED THE AFORESAID PROPERTY FROM HER FATHER BY WAY OF SETTLEMENT DEED DATED 04.06.2003. THE FATHER OF THE ASSESSEE HAD PURCHASED THE PLOT MEASURING 4840 SQ.FT IN 1951 AND HAD CONSTRUCTED B UILDING THEREON BEFORE 1960 CONSISTING OF TWO FLOORS HAVING COVERED AREA O F 2000 SQ.FT EACH. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE FIL ED VALUATION REPORT FROM SHRI. K. RAJA KUPPUSAMY, REGISTERED VALUER. HE WORK ED OUT FAIR MARKET VALUE (FMV) OF THE LAND AS ON 01.04.1981 AT B22,18,333/- AND FMV OF THE BUILDING AT B2,76,388/- AGGREGATING TO B24,94,721/-. THE ASS ESSING OFFICER SOUGHT -3- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012 GUIDELINE VALUE OF THE PROPERTY AS ON 01.04.1981 FR OM THE OFFICE OF SUB- REGISTRAR, MYLAPORE. THE SUB-REGISTRAR VIDE LETTER DATED 15.09.2010 INTIMATED THE GUIDELINE VALUE OF THE PROPERTY IN QUESTION AS ON 01.04.1981 AT B17,000/- PER GROUND I.E B7.08 PER SQ.FT. THEREAFTER, THE ASS ESSEE SUBMITTED SECOND VALUATION REPORT FROM ANOTHER REGISTERED VALUER SH. M. PRATHABAN. HE DETERMINED FMV OF THE LAND AS ON 01.04.1981 AT B145 /- PER SQ.FT AND THE VALUE OF BUILDING AT B2,94,037/-. THE ASSESSING OF FICER AGAIN SOUGHT INFORMATION FROM THE SUB-REGISTRAR, MYLAPORE WITH R EGARD TO SALE INSTANCES OF THE PROPERTY AROUND THE PROPERTY IN QUESTION. THE SUB-REGISTRAR VIDE LETTER DATED 22.12.2010 GAVE LIST OF THE PROPERTIES IN THE AREA WHICH WERE TRANSFERRED DURING THE YEAR 1981 TO 1984. ACCORDIN G TO SUB-REGISTRAR RATE PER SQ.FT EXCLUDING BUILDING RANGED FROM B32.96 TO 48. 61 PER SQ.FT. BASED ON THE INFORMATION COLLECTED, THE ASSESSING OFFICER DETERM INED THE RATE OF LAND @ B.33/- PER SQ.FT AS ON 01.04.1981 AND ADOPTED THE V ALUE OF BUILDING AS DETERMINED BY SHRI. RAJA KUPPUSAMY, I.E B2,76,388/- . FURTHER, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ELIGIBLE TO C LAIM BENEFIT OF SECTION 54 OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31.12.2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) ESTIMATED THE FMV OF THE LAND AT B79/- PER SQ.FT AFTER REJECTING THE CLAIM OF THE AS SESSEE AT B145/- PER SQ.FT -4- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012 AND FMV ADOPTED BY THE ASSESSING OFFICER AT B33/- P ER SQ.FT. THE COMMISSIONER OF INCOME TAX (APPEALS) ADOPTED THE FM V OF BUILDING AT B2,94,037/- AS VALUED BY SHRI. M. PRATHABAN. FURTHE R, HE ALLOWED THE CLAIM OF THE ASSESSEE WITH REGARD TO GRANT OF EXEMPTION U/S. 54 OF THE ACT. AGAINST, THESE FINDINGS OF THE COMMISSIONER OF INCOME TAX (A PPEALS), THE REVENUE HAS COME IN APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTIONS BEFORE THE TRIBUNAL. 3. SMT. P. RADHAKRISHNAN REPRESENTING THE DEPARTMENT V EHEMENTLY SUPPORTED THE ASSESSMENT ORDER AND PRAYED FOR SETTI NG ASIDE THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) WITH RE SPECT TO ADOPTING VALUE OF THE LAND AT B79/- PER SQ.FT AND GRANT OF E XEMPTION U/S. 54 OF THE ACT. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTE NDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS IGNORED TH E INFORMATION RECEIVED FROM THE OFFICE OF THE SUB-REGISTRAR, MYLA PORE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER CONTENDED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM EXEMPTION U/S.54 AS MONEY UTILIZE D IN ACQUIRING NEW RESIDENTIAL HOUSE WAS NOT THE SAME WHICH WAS REALIZ ED FROM THE SALE OF ORIGINAL ASSET. THE SALE PROCEEDS WERE DEPOSITED W ITH STATE BANK OF INDIA WHEREAS, THE AMOUNT WAS WITHDRAWN FROM UCO BANK. HE FURTHER SUBMITTED -5- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012 THAT THE CONSTRUCTION OF THE RESIDENTIAL HOUSE WAS NOT COMPLETED WITHIN THE TIME SPECIFIED U/S. 54 OF THE ACT. 4. ON THE OTHER HAND, SHRI. PHILIP GEORGE APP EARING ON BEHALF OF THE ASSESSEE ASSAILED THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN NOT ACCEPTING THE FMV OF THE LAND AS VALUED BY THE REGISTERED VALUER AT B145/- PER SQ.FT. THE LEARNED COUNSEL SUBMITTED TH AT THE REGISTERED VALUER HAS DETERMINED THE VALUE IN ACCORDANCE WITH THE DEC ISION OF THE TRIBUNAL RENDERED IN THE CASE OF P.C. RAMAKRISHNA (HUF) IN ITA NO.783/MAD/2001 DECIDED ON 28 TH JULY, 2006. WITH REGARD TO ELIGIBILITY OF ASSESSE E CLAIMING EXEMPTION U/S. 54 OF THE ACT, THE LEARNED COUNSEL S UPPORTED THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 5. WE HAVE HEARD THE SUBMISSIONS OF BOTH SIDES AN D HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE FIRST ISSUE IN APPEAL IS WITH RESPECT TO DETERMINING FAIR MARKET VALUE(FMV) OF THE LAND AND BUILDING. THE ASSESSEE HAS ALSO IMPUGNED THE FMV OF LAND ADOPTED BY COMMIS SIONER OF INCOME TAX (APPEALS). THE ASSESSING OFFICER DETERMINED FMV OF THE LAND AT B33/- PER SQ.FT AND THE VALUE OF BUILDING AS B2,76,388/-. WHE REAS, THE ASSESSEE HAS RELIED ON THE REPORT OF THE REGISTERED VALUER SHRI. PRATHABAN, WHEREIN THE VALUE OF THE LAND IS DETERMINED AT B145/- PER SQ. F T. AND THE VALUE OF BUILDING -6- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012 AT B2,94,037/-. THE COMMISSIONER OF INCOME TAX (APP EALS) REJECTED THE VALUE ADOPTED BY ASSESSING OFFICER WITH THE FOLLOWING OBS ERVATIONS:- .. THOUGH THE GUIDELINE VALUE (GLR) OR THE SALE INCIDENTS IN THE NEAR BY AREAS, ADOPTED BY THE ASSESSING OFFICER, WILL NOT R EFLECT THE TRUE AND PROPER FMV, AS ON 01.04.1981, THIS VALUE FORMS A MORE RELI ABLE FMV IN THE ABSENCE OF ANY OTHER VALUE OR BASIS. FURTHER, THE IN HIGHL Y COMMERCIAL AREAS, THE MARKET PRICE OF THE PROPERTIES VARIES DRASTICALLY F ROM PROPERTY TO PROPERTY BASED ON ITS LOCATION AND PROXIMITY TO THE MAIN ROA D ETC., EVEN THOUGH THE PROPERTIES ARE LOCATED IN THE SAME LOCALITY/SURVEY NUMBER. HENCE, THE METHOD OF DETERMINING THE FMV BASED ON THE SALES IN THE SAME AREA, CANNOT BE CONSIDERED AS THE ACCURATE METHOD . THE COMMISSIONER OF INCOME TAX (APPEALS) DETERMINED FMV AS ON 01.04.1981 ON PROPORTIONATE BASIS BY ADOPTING GUIDE LINE VALUE (GLR) AS ON 01.04.1981 I.E. B7.08/- PER SQ.FT AND GLR AS ON THE DATE OF SALE I.E B 1000/- PER SQ.FT. THUS, THE COMMISSIONER OF INCOME TAX (A PPEALS) ESTIMATED THE FMV OF LAND @ B 79/- PER SQ.FT AGGREGATING TO B3,92 ,320/-. IN DETERMINING THE FMV OF BUILDING THE COMMISSIONER OF INCOME TAX (APP EALS) PLACED RELIANCE ON THE REPORT OF SHRI. PRATHABAN. WHILE ADOPTING THE V ALUATION REPORT OF SHRI. PRATHABAN, THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT FULL AND PRECISE DETAILS OF BUILD UP AREA IS GIVEN IN VALUAT ION REPORT, WHEREAS, THE VALUATION REPORT OF SHRI.RAJA KUPPUSAMY IS DEVOID O F FULL PARTICULARS. WE CONCUR TO THE FINDINGS OF THE COMMISSIONER OF INCOM E TAX (APPEALS) IN DETERMINING FMV OF THE LAND AND ADOPTING THE VALUE OF BUILDING AND REASONS FOR ADOPTING VALUATION OF BUILDING AS GIVEN IN THE REPORT BY SHRI. PARATHABAN. WE DO NOT FIND ANY ERROR IN THE IMPUGNED ORDER ON T HIS ISSUE. ACCORDINGLY, -7- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012 THIS GROUND OF APPEAL OF THE REVENUE AND THE CROS S OBJECTIONS RAISED BY THE ASSESSEE ON THIS ISSUE ARE DISMISSED. 6. THE SECOND ISSUE RAISED BY THE REVENUE IN APPEAL IS ELIGIBILITY OF ASSESSEE IN CLAIMING EXEMPTION U/S. 54 OF THE ACT. THE ASSESSING OFFICER HAS DENIED THE BENEFIT OF SEC.54 OF THE ACT TO THE ASSE SSEE ON TWO GROUNDS. FIRSTLY, THE AMOUNT UTILIZED BY THE ASSESSEE FOR C ONSTRUCTION OF NEW HOUSE IS NOT FROM THE ACCOUNT MAINTAINED WITH STATE BANK OF INDIA WHERE THE AMOUNT OF SALE CONSIDERATION OF THE ORIGINAL ASSET WAS DEP OSITED AND SECONDLY, THE HOUSE IS NOT CONSTRUCTED WITHIN THE TIME FRAME OF T HREE YEARS AS SPECIFIED IN THE PROVISIONS OF SECTION 54 OF THE ACT. SO FAR A S THE AMOUNT UTILIZED FOR PURCHASE OF NEW ASSET IS CONCERNED, THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS GIVEN DETAILS OF THE AMOUNT DEPOSITED IN THE CAPITAL GAINS DEPOSIT SCHEME. THE ASSESSEE HAS INVESTED B1,70,00 ,000/- WITH UCO BANK AND B2,00,00,000/- WITH THE STATE BANK OF INDIA UN DER SPECIFIED SCHEME. THUS, THE ASSESSEE HAD DEPOSITED A TOTAL SUM OF B3, 70,00,000/- IN CAPITAL GAINS DEPOSIT SCHEMES ACCOUNT. THE ASSESSEE HAS F ILED BEFORE THE TRIBUNAL THE DETAILS OF THE CAPITAL GAIN ACCOUNTS SCHEME AND THE DETAILS OF WITHDRAWAL FROM THESE ACCOUNTS. ALL THESE DETAILS WERE AVAILA BLE BEFORE THE AUTHORITIES BELOW. THUS, ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE AMOUNT UTILIZED FOR CONSTRUCTION OF NEW HOUSE WAS N OT FROM THE SPECIFIED -8- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012 DEPOSIT SCHEME ACCOUNT IS NOT TENABLE. SO FAR AS THE CONSTRUCTION OF THE RESIDENTIAL HO USE WITHIN TIME FRAME OF THREE YEARS AS PER SECTION 54 IS CONCERNED, IT IS A N UNDISPUTED FACT THAT THE ASSESSEE INITIATED CONSTRUCTION OF THE HOUSE WELL W ITHIN THE TIME LIMIT OF THREE YEARS. IT HAS COME ON RECORD THAT THE ASSESSEE HAD COMPLETED SUBSTANTIAL CONSTRUCTION WORK WITHIN THE THREE YEAR PERIOD. THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT V. SARADARMAL KOTHARI REP ORTED AS 302 ITR 286 (MAD) HELD THAT BENEFIT U/S.54F SHALL BE GRANTED EV EN IF THE CONSTRUCTION IS NOT COMPLETE, WHAT HAS TO BE ASCERTAINED IS THE INVESTM ENT OF ENTIRE NET CONSIDERATION WITHIN THE STIPULATED TIME. SIMILAR , VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M RS. SEETHA SUBRAMANIAN V. ACIT REPORTED AS 59 ITD 94 (MAD). IT IS NOT THE CAS E OF REVENUE BEFORE US THAT THE ASSESSEE HAS NOT UTILIZED ENTIRE SUM OF CA PITAL GAINS TOWARDS CONSTRUCTION OF HOUSE WITHIN THE PERIOD OF THREE YE ARS AS SPECIFIED U/S.54 OF THE ACT. THE PROVISIONS OF SECTION 54 ARE PARI- MA TERIA WITH THE PROVISIONS OF SECTION 54F OF THE ACT. WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. -9- I.T.A. NO.1431/MDS/2012 AND C.O. NO.148/MDS/2012 IN THE RESULT, THE APPEAL OF THE REVEN UE AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON FRIDAY, THE 30TH OF JANUARY, 2015, AT CHENNAI. SD/- SD/- ( . . ) (B.R. BASKARAN) / ACCOUNTANT MEMBER ( !' ' ) (VIKAS AWASTHY) # /JUDICIAL MEMBER - /DATED:30.01.2015. K.V . # %)/ 0!) /COPY TO: 1. '/ APPELLANT 2. %&' / RESPONDENT 3. ' 2) ( )/CIT(A) 4. ' 2) /CIT 5. 34 %) 5 /DR 6. 46 7( /GF.