DCIT, CHENNAI V. M/s. Kutty flush Doors & Furniture (P) Ltd., CHENNAI

ITA 1547/CHNY/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0784 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SRIDHAR
• Assessee Lawyers: DR S MOHARANA
• Keywords: Fair market value
• Section: 143(3); 115JB; 11

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.1211/MDS/2010 ASSESSMENT YEAR : 2006-07 M/S. KUTTY FLUSH DOORS & FURNITURE COMPANY PVT. LTD., 167, POONAMALLEE HIGH ROAD, KOYAMBEDU, CHENNAI -107. [PAN:AAACK1422F] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4), CHENNAI (APPELLANT) (RESPONDENT) I.T.A. NO.1547/MDS/2010 ASSESSMENT YEAR : 2006-07 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4), 121, M.G. ROAD, CHENNAI 34. VS. M/S. KUTTY FLUSH DOORS & FURNITURE COMPANY PVT. LTD., 167, POONAMALLEE HIGH ROAD, KOYAMBEDU, CHENNAI -107. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : DR. S. MOHARANA, CIT DATE OF HEARING : 12.02.2013 DATE OF PRONOUNCEMENT : 18.02.2013 ORDER PER S.S. GODARA, JUDICIAL MEMBER THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE RE SPECTIVELY; ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) III, CHENNAI DATED 28.06.2010 PASSED IN ITA NO. 437/08-0 9/A.III FOR ASSESSMENT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 1211 211211 211 & 1 & 1& 1 & 1547 547547 547/M/ /M/ /M/ /M/10 1010 10 2 YEAR 2006-07, IN PROCEEDINGS UNDER SECTION 143(3) O F THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. IN THE COURSE OF HEARING, THE ASSESSEE WOULD AR GUE BEFORE US THAT THE CIT(A) HAS ERRED IN PARTLY ACCEPTING THE APPEAL QUA FAIR MARKET VALUE OF THE PROPERTY SOLD IN QUESTION AS ON 01.04.1981. BY SUBM ITTING THAT IT IS ENTITLED FOR ADOPTING FAIR MARKET VALUE OF THE PROPERTY SOLD AS ON 01.04.1981 @ ` .11,84,124/- PER GROUND, WHICH HAS BEEN TAKEN AS ` .10,000/- PER GROUND BY THE ASSESSING OFFICER AND ` .1,50,000/- PER GROUND BY THE CIT(A), THE AR REITERATES THE PLEADINGS IN GROUNDS AND PRAYS FOR A CCEPTANCE OF THE APPEAL. 3. PER CONTRA, THE REVENUE ARGUES BEFORE US THAT T HE CIT(A) HAS WRONGLY ENHANCED THE FAIR MARKET VALUE SOLD BY THE ASSESSEE FROM ` .10,000/- ADOPTED BY THE ASSESSING OFFICER TO ` .1.50 LAKHS. THEREFORE, THE GIST OF ITS ARGUMENT IS THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF FLUSH DOORS, PANEL DOORS AND WINDOW FRAMES. ON 28.11.2006, IT HAD FILED ITS RET URN DECLARING LOSS OF ` .8,76,690/- IN NORMAL COMPUTATION AND ` .15,85,80,807/- UNDER SECTION 115JB OF THE ACT. 5. IN THE COURSE OF SCRUTINY, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAD SOLD ITS LAND MEASURING 27.256 GROUNDS AS WELL AS BUILDING I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 1211 211211 211 & 1 & 1& 1 & 1547 547547 547/M/ /M/ /M/ /M/10 1010 10 3 ERECTED THERE UPON VIDE SALE DEED DATED 22.02.2006. THE SAID PROPERTY SOLD WAS LOCATED AT POONAMALLEE HIGH ROAD, CHENNAI. THE ASSESSEE HAD BEEN STATED TO HAVE RECEIVED CONSIDERATION MONEY OF ` .16,16,04,247/-. IT HAD COMPUTED CAPITAL GAINS @ NIL. BEFORE THE ASSESSIN G OFFICER, IT CONTENDED THAT THE PROPERTY HAD BEEN PURCHASED IN THE YEAR 19 60 AND AS PER APPROVED VALUERS REPORT, ITS FAIR MARKET VALUE AS ON 01.04. 1981 WAS ` .3,24,25,308/-, WHICH CAME TO BE ` .16,11,53,781/-. FURTHER, THE ASSESSEE ALSO ADDED TRANSFER EXPENSES OF ` .22,16,043/- AND DID NOT DECLARE ANY CAPITAL GAINS AS TO HAVE ARISEN FROM THE SALE DEED IN QUESTION. 6. WE NOTICE FROM THE ASSESSMENT ORDER THAT THE AS SESSING OFFICER WAS NOT CONVINCED WITH THE ABOVE SAID COMPUTATION SUBMI TTED BY THE ASSESSEE. THEREFORE, BY SEEKING A REPORT FROM THE OFFICE OF T HE SUB-REGISTRAR CONCERNED, HE HELD IN THE ASSESSMENT ORDER DATED 2 9.12.2008 THAT THE ACTUAL VALUE OF THE PROPERTY AS ON 27.12.1983 WAS ` .10,000/- PER GROUND AND HE COMPUTED LONG TERM CAPITAL GAINS OF ` .15,86,33,581/-. 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. WE NO TICE FROM THE CIT(A)S ORDER UNDER CHALLENGE THAT ON A PRAYER MAD E BY THE ASSESSEE, HE HAD SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER . THE ASSESSING OFFICER REITERATED THE VALUE OF THE PROPERTY AS ` .10,000/- PER GROUND. THEREAFTER, THE CIT(A) HAS OBSERVED THAT THE ACTUAL VALUE STATED BY THE SUB-REGISTRAR CANNOT BE THE BASIS OF DETERMINING FAIR MARKET VALU E AS ON 01.04.1981. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 1211 211211 211 & 1 & 1& 1 & 1547 547547 547/M/ /M/ /M/ /M/10 1010 10 4 THEREAFTER, HE HAS PROCEEDED AS PER CASE LAW OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KEYARAM HOTELS (P) LTD. V. ACI T [300 ITR 118 (MAD)] REGARDING VALUE OF THE PROPERTY AS ON 01.04.1981 SI TUATED AT HARRINGTON ROAD, CHENNAI DETERMINING THE VALUE BASED ON INSPEC TION AS ` .3,40,000/- PER GROUND. THEN, THE CIT(A) HAS CONSIDERED THE LOC ATION OF THE PROPERTY SOLD BY THE PRESENT ASSESSEE AND THE FAIR MARKET VA LUE AS ON 01.04.1981 HAS BEEN TAKEN AS ` .1.50 LAKHS INSTEAD OF ` .11,84,124/- PER GROUND CLAIMED BY THE ASSESSEE. IN THIS BACKGROUND, BOTH PARTIES ARE IN APPEAL. 8. WE HAVE HEARD BOTH REPRESENTATIVES AND ALSO PER USED THE FINDINGS OF THE ASSESSING OFFICER, CIT(A) AS WELL AS OTHER DOCU MENTS ON RECORD. SO FAR AS SALE DEED EXECUTED BY THE ASSESSEE IS CONCERNED, THE PARTIES ARE FAIR ENOUGH NOT TO RAISE ANY DISPUTE QUA EXECUTION OF SA LE AND LOCATIONS ETC. THE ONLY ISSUE RAISED FOR OUR CONSIDERATION IS AS TO WH AT IS THE VALUE OF THE PROPERTY SOLD BY THE ASSESSEE WITH BUILDING ERECTED THERE UPON AS ON 01.04.1981. THE ASSESSEE CLAIMS THAT ITS FAIR MARKE T VALUE AS ` .11,84,124/- PER GROUND AS ON 01.04.1981 WHICH IS OPPOSED BY THE REVENUE, WHO STATES THAT IT IS ` .10,000/- ON 27.12.1983 PER THE REPORT OF THE SUB-R EGISTRAR CONCERNED. IN THIS BACKDROP, WE OBSERVE THAT SO FAR AS THE VALUE STATED BY THE SUB-REGISTRAR (SUPRA), IT IS ONLY A GUIDELINE V ALUE INSTEAD OF FAIR MARKET VALUE, WHICH IS ADOPTED FOR THE PURPOSE OF STAMP DU TY AND OTHER COLLATERAL I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 1211 211211 211 & 1 & 1& 1 & 1547 547547 547/M/ /M/ /M/ /M/10 1010 10 5 PURPOSE. THE GUIDELINE VALUE AFORESAID IS ONLY A BL ANKET RATE PRESCRIBED BY THE STATE QUA PROPERTIES SITUATED IN A PARTICULAR A REA OR LOCALITY BY FOLLOWING STANDARD METHOD. THEREFORE, SO FAR AS THE VALUE CLA IMED BY THE REVENUE IS CONCERNED, EXCEPT THE GUIDELINE VALUE THERE IS NOTH ING ELSE POINTED OUT IN SUPPORT OF THE CLAIM. HENCE, WE REJECT THE ARGUMENT OF THE REVENUE AFORESAID. 9. AT THE SAME TIME, WE ARE ALSO CAUTIOUS OF THE FACT THAT SO FAR AS THE VALUE CLAIMED BY THE ASSESSEE @ ` .11,84,124/- PER GROUND AS ON 01.04.1981 IS CONCERNED, IN OUR OPINION, THE SAME I S ONLY IN FURTHERANCE TO REVERSE INDEXATION METHOD ADOPTED BY ASSESSEES VAL UER, WHICH IS ALSO NOT ABSOLUTELY FREE FROM ERRORS AS FROM 1981 TO 2006, T HE PERIOD OF TWO AND HALF DECADES HAS SEEN LOTS OF UPS AND DOWNS QUA FAIR MAR KET VALUE OF THE IMMOVABLE PROPERTIES. FACED WITH THIS SITUATION, WE NOTICE THAT THE HONBLE JURISDICTIONAL HIGH COURT IN CASE LAW [2012] 204 TA XMAN 258 (MAD) TITLED AS CIT V. J. CHELLADURAI HAS DETERMINED FAIR MARKET VALUE OF THE PROPERTY AS THE AVERAGE VALUE OF THE CLAIM MADE BY THE ASSESSEE AND THE REVENUE. GUIDED BY THE AFORESAID ANALOGY AND BY ADOPTING HOL ISTIC APPROACH, WE ALSO PROCEED AS PER SAME FORMULA IN THE LARGER INTEREST OF THE JUSTICE AND DIRECT THE ASSESSING OFFICER TO ADOPT THE AVERAGE VALUE AD OPTED BY THE SUB- REGISTRAR AND THE ASSESSEE I.E. ` .10,000 + ` .11,84,124 2 = ` .5,97,062/- AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1 981 AND PASS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1 11 1211 211211 211 & 1 & 1& 1 & 1547 547547 547/M/ /M/ /M/ /M/10 1010 10 6 CONSEQUENTIAL ORDER IN ACCORDANCE WITH LAW. 10. CONSEQUENTLY, APPEAL OF THE ASSESSEE IS PARTLY ACCEPTED, WHEREAS, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 18 TH OF FEBRUARY, 2013 AT CHENNAI. SD/ - SD/ - (DR. O.K. NARAYANAN) VICE-PRESIDENT (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 18.02.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.