ACIT, CHENNAI V. Geetha Durai, CHENNAI

ITA 1507/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8847 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVASRINIVAS IRS
• Assessee Lawyers: B RAMANA KUMAR
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report; Competent authority
• Section: 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO.1507/MDS/2016 / ASSESSMENT YEAR : 2008-2009 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE -4, CHENNAI 600 006. VS. SMT. GEETHA DURAI, NEW NO.21, OLD NO.54, DEVARAJA MUDALI STREET, PARK TOWN, CHENNAI 600 003. [PAN AEZPG 0183M] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. SHIVA SRINIVAS, IRS, JCIT. $% ! ' # /RESPONDENT BY : SHRI. B. RAMANAKUMAR, ADVOCATE & ' '( /DATE OF HEARING : 08-08-2016 )* ' '( /DATE OF PRONOUNCEMENT : 17-08-2016 ! / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED A GAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-5 , CHENNAI IN ITA NO.36/CIT(A)-5/13-14, DATED 14.03.2016 FOR THE ASSE SSMENT YEAR ITA NO.1507/MDS/2016 :- 2 -: 2008-2009 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 2.1 THE LEARNED CIT(A) ERRED IN REFERRING THE VALUATION OF LAND TO THE VALUATION OFFICER. 2.2 THE LD.CIT(A) FAILED TO APPRECIATE THAT THE CASE OF ASSESSEE IS DISTINGUISHABLE FROM THE DECISION OF MADRAS HIGH COURT IN 'THE CASE OF SHRI.APPADURAI VIJAYARAGHAVAN AS IN THE CASE OF APPADURAI VIJAYARAGHAVAN THERE WAS A DISTRESS SALE OF PROPERTY. 2.3 THE LD.CIT(A) FAILED TO CONSIDER THAT THE VALUE HAS BEEN FIXED AS PER MARKET VALUE BASED ON THE REPORT OF THE SUB-REGISTRAR WHO IS A COMPETENT AUTHORITY UNDER THE STATE GOVERNMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. MUDRA ENTERPRISES AND FILED RETURN OF INCOME ON 26.02.2010 ADMITTING TOTAL INCOME OF @28, 23,883/- AND THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE A CT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED. THE LD. ASSESSING OFFICER C ALLED FOR FURNISHING OF DETAILS OF BANK STATEMENTS, TENANCY AGREEMENT, COR PORATION TAX PAID PAYMENT, INVESTMENTS MADE DURING THE FINANCIAL YE AR AND BOOKS OF ACCOUNT. IN COMPLIANCE TO NOTICE, THE LD. AUTHORIS ED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED T HE INFORMATION. ITA NO.1507/MDS/2016 :- 3 -: THE LD. ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT ADMITTED LONG TERM CAPITAL GAINS ON SALE OF HOUSE PROPERTY, BUT FILED DETAILS OF PURCHASE AND SALE DEED. THE ASSESSEE HAS INHERITED 1/6 SHARE OF THE PROPERTY FROM HER GRANDFATHER THROUGH SETTLEMENT D EED DATED 11.08.1949. THE ASSESSEE WHILE CALCULATING LONG TERM CAPITAL GAINS CLAIMED COST OF ACQUISITION OF THE PROPERTY AS ON 0 1.04.1981 RELYING ON THE VALUATION REPORT DATED 16.10.2009, THE LAND VA LUE @43,28,625/- AND BUILDING VALUE @17,40,328/-. THE LD. ASSESSIN G OFFICER SENT A LETTER TO THE SUB-REGISTRAR, T. NAGAR, CHENNAI ON 0 9.11.2010 TO ASCERTAIN THE VALUE OF LAND AS ON 01.04.1981. THE S UB-REGISTRAR VIDE LETTER DATED 25.11.2010 INFORMED THAT THE VALUE OF THE LAND PER GROUND AS ON 01.04.1981 IS @80,000/- AND THE SAME VALUE W AS ADOPTED BY THE LD. ASSESSING OFFICER. THE LD. ASSESSING OFFIC ER VERIFIED THE SETTLEMENT DEED AND NOT SATISFIED WITH THE ACTION O F DEMOLITION OF THE BUILDING IN THE YEAR 1996 AND FURTHER PERUSED T HE DEMOLITION PERMIT ISSUED BY THE CORPORATION ON 19.01.1995 AND IS OF THE OPINION THAT THERE IS NO EXISTENCE OF BUILDING ON LAND AND ADOPTED THE VALUE OF BUILDING AS ON 01.04.1981 AS NIL. THE ASSESSEE F ILED COPY OF THE APPROVED PLAN ISSUED BY THE CORPORATION OF CHENNAI PERMITTING CONSTRUCTION OF NEW BUILDING AND DEMOLITION OF EXIS TING BUILDING. THE LD. ASSESSING OFFICER IS OF THE OPINION THAT THERE IS NO CONNECTION IN RESPECT OF SETTLEMENT DEED FOR THE PURPOSE OF VALUE OF BUILDING AND ITA NO.1507/MDS/2016 :- 4 -: WORKED OUT THE CAPITAL GAINS ON LAND BY ADOPTING SUB-REGISTRAR VALUE OF @80,000/- PER GROUND AND ALSO ALLOWED COST INFLA TION INDEX AND DETERMINED 1/6 TH SHARE OF ASSESSEES LONG TERM CAPITAL GAINS AND PASSED ORDER WITH OTHER ADDITIONS U/S.143(3) OF TH E ACT DATED 31.12.2010. AGGRIEVED BY THE ORDER, THE ASSESSEE F ILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 4. . IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ARGUED THE GROUNDS AND E XPLAINED THAT THE ACTION THE LD. ASSESSING OFFICER IS AGAINST THE PR OVISIONS OF LAW. THE ASSESSEE HAS ADOPTED FAIR MARKET VALUE OF THE PROPE RTY AS ON 01.04.1981 @80,000/- PER GROUND INSTEAD OF @8,50,0 00/- AS PER VALUERS REPORT. SIMILARLY, THE LD. ASSESSING OF FICER FURTHER ERRED IN CONSIDERING THE VALUE OF BUILDING AS NIL ON 01.04. 1981 INSTEAD OF @17,40,328/- SUPPORTED BY THE VALUER REPORT CLAIME D BY THE ASSESSEE. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSID ERED THE ARGUMENTS AND FINDINGS OF THE LD. ASSESSING OFFICER FOR ADOPTING THE VALUE AS ON 01.04.1981 AND ELABORATELY DEALT AT PAG E 2 & 3 OF THE ORDER AND CONSIDERED THE WRITTEN SUBMISSIONS FILE D BY THE ASSESSEE ON 29.02.2016 AT PARA 4 OF HIS ORDER ON THE VALUAT ION OF LAND AND BUILDING AND ADOPTING FAIR MARKET VALUE AND RELIED ON THE JUDICIAL DECISIONS REFERRED AT PAGE 4 TO 9 OF THE LD. COMMIS SIONER OF INCOME ITA NO.1507/MDS/2016 :- 5 -: TAX (APPEALS). THE ASSESSEE HAS ALSO OBJECTED FOR ADOPTION OF THE SUB-REGISTRAR VALUE FOR COMPUTATION OF CAPITAL GAIN S. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PLACED RELIANC E ON THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF SRI APPADURAI VIJAYARAGHAVAN VS. JCIT (2014) 369 ITR 486 AND THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF ACIT VS. SMT. MONA MALANI AND OTHERS IN ITA NO.6960/MUM/2011, DATED 03.10.2012 DISCUSSED AT PAGE 11 TO 15 OF THE ORDER AND FINALLY DIRECTED THE LD. ASSES SING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER WHICH IS IN AC CORDANCE WITH LAW AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVE D BY THE ORDER, THE REVENUE ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE REI TERATED THE SUBMISSIONS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN REFERRING THE VALUATION OF LAND TO THE VALUATI ON OFFICER WHICH IS AGAINST LAW AND DECISION OF THE JURISDICTIONAL HIGH COURT WHICH IS DISTINGUISHABLE BECAUSE OF DISTRESS SALE. THE LD. ASSESSING OFFICER RELIED ON VALUE AS PER REPORT OF THE SUB-REGISTRAR, BEING A COMPONENT AUTHORITY OF STATE GOVERNMENT. THEREFORE, THE ACTI ON OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRING TO T HE VALUATION OFFICER IS NOT APPRECIATED. THE ASSESSEE HAS ADOPT ED FAIR MARKET VALUE OF LAND AS ON 01.04.1981 @8,50,000/- AS AGAINST THE SUB-REGISTRAR ITA NO.1507/MDS/2016 :- 6 -: VALUE OF @80,000/-. SIMILARLY, THE LD. ASSESSING OF FICER ADOPTED THE VALUE OF BUILDING AS NIL AS AGAINST THE VALUE AD OPTED BY THE ASSESSEE @17,40,328/- AND PRAYED FOR SET ASIDE OF THE COMMI SSIONER OF INCOME TAX (APPEALS) ORDER AND ALLOW THE GROUNDS OF THE RE VENUE. 6. CONTRA, THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITTED A COPY OF THE VALUATION REPORT RELIED IN THE ASSESSMENT PR OCEEDINGS AND VEHEMENTLY OPPOSED TO THE GROUNDS. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS CITED. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED VALUATION REPOR T SUPPORTING THE VALUE AS ON 01.04.1981 ALONGWITH BUILDING WHICH IS DISPUTED BY THE LD. ASSESSING OFFICER AND CALCULATED LONG TERM CAPITAL GAINS. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD. COMMISSIONER OF INCOME TAX (APPEALS). IN APPELLATE PROCEEDINGS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DEALT WITH JUD ICIAL DECISIONS OF TRIBUNAL AND HIGH COURT AND DIRECTED THE LD. ASSES SING OFFICER TO REFER TO THE VALUATION OFFICER. THE REVENUE IS DISPUTING THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN DIRECTING TO VALUATION OFFICER. THE ASSESSEE CLAIMED COST OF ACQUISITION AS ON 01.04.1981 BASED ON THE VALUATION REPORT. THE ASSESSEE HAS A OPTION TO ADOPT ASA ITA NO.1507/MDS/2016 :- 7 -: PER PROVISIONS OF THE ACT WHICH SHE HAS RIGHTLY FO LLOWED. THE POWERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ARE CO-TERMINUS WITH LD. ASSESSING OFFICER. THE PROVISIONS OF SEC. 251( 1) OF THE ACT ARE AS UNDER:- (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS-- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT ; (AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT I N RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABATES UNDER SECTION 245HA, HE MAY, AFTER TAKING INTO CONSIDERATION ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE, OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORDED BY, THE SETTLEMENT COMMISSION, IN THE COURSE OF THE PROCEEDING BEFORE IT AND SUCH OTH ER MATERIAL AS MAY BE BROUGHT ON HIS RECORD, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT ; (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENALT Y, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO A S EITHER TO ENHANCE OR TO REDUCE THE PENALTY; (C) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN T HE APPEAL AS HE THINKS FIT. AND REFERRING TO THE VALUATION OFFICER, THE LD.CI T(A) DIRECTIONS ARE WITHIN THE PROVISIONS OF LAW. THE VALUATION OFFICE R HAS TO ASCERTAIN THE FAIR MARKET VALUE OF CAPITAL ASSET AND THE PROVISIO NS U/SEC. 55A ARE AS UNDER:- ITA NO.1507/MDS/2016 :- 8 -: WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSI NG OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A V ALUATION OFFICER-- (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MAD E BY A REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MAR KET VALUE ; (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF OPINION-- (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF ; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO, AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISION S OF SUB- SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSES (HA) AND (I) OF SUB-SECTION (1) AND SUB-SECTIONS (3A) AN D (4) OF SECTION 23, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 19 57 (27 OF 1957), SHALL, WITH THE NECESSARY MODIFICATIONS, APP LY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATIO N TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-S ECTION (1) OF SECTION 16A OF THAT ACT. ON COMBINED READING OF BOTH PROVISIONS, THE LD. COM MISSIONER OF INCOME TAX (APPEALS) POWERS ARE CO-TERMINUS WITH TH E LD. ASSESSING OFFICER AND WITHIN PROVISIONS OF LAW ON REFERRING TO THE VALUATION OFFICER. HENCE, CONSIDERING THE PROVISIONS OF LAW, MATERIAL ON RECORD ITA NO.1507/MDS/2016 :- 9 -: AND JUDICIAL DECISIONS, WE ARE NOT INCLINED TO INTE RFERE WITH THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHO HAS DEALT EXHAUSTIVELY ON PROVISIONS AND FACTS VIZ-A-VIZ EXP LANATION OF THE ASSESSEE AND WE DISMISS THE GROUNDS OF THE REVENUE . 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED ON WEDNESDAY, THE 17 TH DAY OF AUGUST, 2016, AT CHENNAI. SD/- SD/- ( . ) (ABRAHAM P. GEORGE) $ % & / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) ' % & / JUDICIAL MEMBER +& / CHENNAI , / DATED:17TH AUGUST, 2016 KV - ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 3. 1' () / CIT(A) 5. /45 $'6 / DR 2. $% ! / RESPONDENT 4. 1' / CIT 6. 57 8& / GF