Assistant Commissioner of Income-tax, V. Shri Bhima Dada Kharate, Nashik

ITA 1582/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7245 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-10-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Retrospective amendment; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1582 /P U N/20 1 5 / ASSESSMENT YEAR : 20 0 9 - 1 0 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK . / APPELLANT VS. SHRI BHIMA DADA KHARATE, H.NO.894/3, GANDHARWADI, NEAR FOREST NURSERY CANAL, MAKHAMALABAD, NASHIK . / RESPONDENT PAN: BCMPK7951D / APPELLANT BY : SHRI MUKESH JHA / RESPONDENT BY : S HRI PRAMOD SHINGTE / DATE OF HEARING : 2 6 . 1 0.2017 / DATE OF PRONOUNCEMENT: 31 . 1 0.2017 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - 1 , NASHIK , DATED 1 4 . 09 .201 5 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - 1, NASHIK IS JUSTIFIED IN DELETING THE ADDITION OF RS.48,42,862/ - MADE BY THE AO ON ACCOUNT OF LTCG AND NOT AS PER REPORT OF DVO BY HOLDING THAT THE REFERENCE MADE BY AO TO THE DVO U/S 55A OF THE ACT ITSELF WAS BAD IN LAW. 2 ITA NO. 1582 /PUN/20 15 SHRI BHIMA DADA KHARATE 2) WHETHER ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE, THE LD. CIT(A) - 1, NASHIK IS JUSTIFIED IN HOLDING THAT AMENDMENT TO SECTION 55A IS NOT RETROSPECTIVE AND ALLOWING ASSESSEE'S CLAIM WHEN THE ISSUE OF THE AMENDMENT BEING APPLICABLE WITH RETROSPECTIVE EFFECT WAS NOT IN QUESTION. 3) WHET HER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C I T(A) - 1, NASHIK FAILED TO APPRECIATE THAT S.55A BEING A MACHINERY PROVISION DELINEATING THE PROCEDURE FOR DETERMINATION OF FAIR MARKET VALUE OF AN ASSET THE AMENDMENT BY FINANCE ACT, 2012 WOUL D APPLY TO ALL PENDING MATTERS ON THE DATE THE AMENDMENT CAME INTO FORCE. 4) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - 1, NASHIK FAILED TO APPRECIATE THAT IN THE CASE OF THE ASSESSEE THE REFERENCE TO DVO U/S 55A READ WITH THE AMENDMENT WAS CORRECT IN LAW AND PROCEDURE. 5) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - 1, NASHIK IS JUSTIFIED IN RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS, IN WHICH T HE MATTER WAS NOT PENDING BEFORE THE ASSESSING OFFICER AFTER THE AMENDMENT CAME INTO FORCE WHEREAS IN THE INSTANT CASE OF THE ASSESSEE THE ASSESSMENT WAS PENDING AND REFERENCE WAS MADE AFTER THE AMENDMENT HAD COME INTO FORCE. 6) THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 7) THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE HIS CASE. 3. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITION OF RS.48,42,862/ - MADE ON ACCOUNT OF COST OF ACQUISITION OF ASSETS SOLD BY THE ASSESSEE, ON WHICH LONG TERM CAPITAL GAINS WAS DECLARED, WHEREIN THE ASSESSING OFFICER MADE REFERENCE TO THE DVO UNDER SECTION 55A OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE DURING THE YEAR UNDER CO NSIDERATION HAD ENTERED INTO SALE TRANSACTION IN RESPECT OF PIECE OF LAND AT SURVEY NO.150, AT MAKHAMALABAD, NASHIK ON 05.08.2008 . THE ASSESSEE FURNISHED THE WORKING OF CAPITAL GAINS REGARDING THE SALE OF PROPERTY AND WORKED OUT THE INDEXED COST OF ACQUIS ITION AT RS.1,60,59,301/ - AS AGAINST THE SALE VALUE OF RS.1.80 CRORES , T HE LONG TERM CAPITAL GAINS OF RS.19,40,699/ - WAS WORKED OUT . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE VALUE SUBMITTED BY THE ASSESSEE AS ON 01.04.1981 WAS NOT ACCEPTABLE. THE A SSESSING OFFICER MADE REFERENCE TO 3 ITA NO. 1582 /PUN/20 15 SHRI BHIMA DADA KHARATE THE VALUATION OFFICER TO DETERMINE THE COST OF ACQUISITION AS ON 01.04.1981. THE ASSESSING OFFICER DID NOT RECEIVE THE REPORT OF THE ASST. VALUATION OFFICER BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS AND MADE ENQUIRIES FROM THE JOINT DISTRICT REGISTRAR, STAMP VALU E D UTY , NASHIK FOR DETERMINING THE VALUE OF LAND AS ON 01.04.1981. IN REPLY, THE SAID AUTHORITY REFERRED TO ANOTHER SALE INSTANCE , BUT THE ASSESSEE POINTED OUT THAT THERE WAS NO JUSTIFICATION AND BASIS FOR ADOPTING THE SAME. THE ASSESSEE HAD DECLARED THE VALUATION OF LAND AT RS.68,71,658/ - ON THE BASIS OF VALUATION REPORT OF AN APPROVED VALUER. IT WAS FURTHER POINTED OUT BY THE ASS ESSEE THAT THE DEPARTMENTAL VALUATION OFFICER HAD PROPOSED TO DETERMINE THE VALUE AT RS. 47,57,000/ - AND THE COPY OF THE DRAFT VALUATION REPORT ISSUED BY THE DVO WAS ALSO FILED BY THE ASSESSEE. THE ASSESSEE POINTED OUT THAT THE OBJECTIONS WERE FILED AGAINS T THE SAME. THE ASSESSING OFFICER IN VIEW OF THE TIME BARRING ASSESSMENT, COMPUTED THE INCOME FROM LONG TERM CAPITAL GAINS IN THE HANDS OF ASSESSEE BY TAKING THE COST OF LAND AS ON 01.04.1981 AT RS. 64,675/ - AND INDEXED COST OF ACQUISITION AT RS.3,76,409/ - BASED ON THE REPORT OF THE JOINT DISTRICT REGISTRAR, STAMP VALUE DUTY, NASHIK. THE ASSESSING OFFICER THUS, RE - COMPUTED THE INCOME FROM LONG TERM CAPITAL GAINS IN THE HANDS OF ASSESSEE AND WORKED OUT THE ADDITION AT RS.48,42,862/ - . 5. THE CIT(A) ON THE O THER HAND, RELYING ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. PUJA PRINTS (2014) 360 ITR 697 (BOM) REFERRED TO THE SAID RATIO LAID DOWN IN PARAS 4.5.3 AND 4.5.4 AT PAGES 7 AND 8 OF THE APPELLATE ORDER AND HELD THAT SINCE THE ISSUE I NVOLVED IN THE PRESENT CASE WAS SIMILAR TO THE ISSUE IN CIT VS. PUJA PRINTS (SUPRA) AND FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LONG TERM CAPITAL GAINS. 4 ITA NO. 1582 /PUN/20 15 SHRI BHIMA DADA KHARATE 6. THE RE VENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER AND POINTED OUT THAT THE VALUATION SUBMITTED BY THE ASSESSEE VIS - - VIS COST OF ACQUISITION AS ON 0 1.04.1981 WAS HIGHER. 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND, PLACING RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. PUJA PRINTS (SUPRA) RELIED ON THE OBSERVATIONS OF THE CIT(A) IN THIS REG ARD. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE DETERMINATION OF COST OF ACQUISITION OF PLOT OF LAND AS ON 01.04.1981. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD PIECE OF LAND AND THE ISSUE WHICH AROSE IN THE PRESENT APPEAL WAS THE COST OF ACQUISITION TO BE ADOPTED AS ON 01.04.1981 IN ORDER TO COMPUTE THE INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF SAID LAND, IN THE HANDS OF ASSESSEE. THE ASSESSEE IN THIS REGARD FURNISHED THE VALUATION REPORT AS ON 01.04.1981 AND CLAIMED THE COST OF PLOT AS ON 01.04.1981 AT RS. 68,71,658/ - AND DECLARED THE INDEXED COST OF ACQUISITION AT RS.1,60,59,301/ - . THE ASSESSING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THAT THE COST OF ACQUISITION DECLARED BY THE ASSESSEE AS ON 01.04.1981 WAS HIGHER AN D REFERENCE WAS MADE TO THE DVO IN ORDER TO COMPUTE THE VALUE OF THE PROPERTY. THOUGH THE DRAFT VALUATION REPORT WAS ISSUED TO THE ASSESSEE I.E. DURING THE COURSE OF PROCEEDINGS BEFORE THE DVO, BUT NO FINAL REPORT WAS RECEIVED BY THE ASSESSING OFFICER FRO M THE DVO. SINCE THE ASSESSMENT WAS GETTING TIME BARRED, THE 5 ITA NO. 1582 /PUN/20 15 SHRI BHIMA DADA KHARATE ASSESSING OFFICER MADE REFERENCE TO THE STAMP VALUATION AUTHORITY IN THIS REGARD AND RELYING ON THE REPORT OF THE STAMP VALUATION AUTHORITY, ADOPTED THE COST OF ACQUISITION AS ON 01.04.1981 AT R S. 64,675/ - AND WORKED OUT THE INDEXED COST OF ACQUISITION AT RS.3,76,409/ - . THE CIT(A) ON THE OTHER HAND, HAS RELIED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. PUJA PRINTS (SUPRA). THE DICTATE OF THE HONBLE BOMBAY HIGH COURT IS T HAT REFERENCE COULD BE MADE TO THE DEPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. IN CASE THE VALUE ADOPTED BY THE ASSESSEE OF ANY PROPERTY WAS MORE THAN THE FAIR MARKET VALUE AS DETERMINED BY THE DVO, THEN SUCH INVOCATION OF PROVISIONS OF SECTION 55A(A) OF THE ACT WAS HELD TO BE NOT JUSTIFIED. REFERENCE WAS ALSO MADE TO THE AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012, WHEREIN FOR THE WORDS IS LESS THAN THE FAIR MARKET VALUE WAS SUBSTIT UTED BY THE WORDS IS AT VARIANCE WITH ITS FAIR MARKET VALUE, WAS HELD TO BE CLARIFICATORY AND IT WAS CATEGORICALLY HELD THAT WHERE THE AMENDMENT WAS MADE EFFECTIVE ONLY FROM 01.07.2012; THE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT . THE HONBLE HIGH COURT THUS, HELD THAT THE LAW TO BE APPLIED IN THE FACTS OF THE PRESENT CASE WAS THE SECTION AS EXISTING DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2006 - 07. 10. NOW, COMING TO THE FACTS OF THE PRESENT CASE, THE YEAR UNDER REFERENCE IS ASSESSMENT YEAR 2009 - 10 AND SINCE THE AMENDMENT WAS MADE EFFECTIVE FROM 01.07.2012 AND THE HONBLE HIGH COURT HAS HELD THAT LAW WHICH IS TO BE APPLIED IN SUCH CASES IS AS EXISTING DURING ASSESSMENT YEAR 2009 - 10, THEN THE PRE - AMENDED PROVISIONS OF SECTIO N 55A(A) OF THE ACT ARE TO BE APPLIED . IN SUCH SCENARIO, THERE IS NO MERIT IN THE ORDER OF ASSESSING OFFICER IN ADOPTING THE COST OF ACQUISITION AS ON 01.04.1981 AT THE VALUE LESS THAN THE VALUE SHOWN BY THE ASSESSEE, WHICH IN TURN, IS BASED ON THE REPORT OF THE APPROVED VALUER . 6 ITA NO. 1582 /PUN/20 15 SHRI BHIMA DADA KHARATE ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 11 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 3 1 S T DAY OF OCTO BER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 3 1 S T OCTO BER , 201 7 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 , NASHIK ; 4. THE PR. C IT - 1 , NASHIK ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE