SRINATH RAMAMURTY, MUMBAI V. ASST CIT CIR 20(3), MUMBAI

ITA 1606/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1596 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: JAY SHAH
• Keywords: Cost of acquisition; Fair market value; Valuation report; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE HONBLE SH. G. S. PANNU, AM & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO. 1606/MUM/2016 ( / ASSESSMENT YEAR: 2012-13) SRINATH RAMAMURTY 163, FALCONS CREST, 73, G. D. AMBEDKAR MARG, PAREL VILLAGE, MUMBAI-400 012 / VS. ACIT CIR 20(3) MUMBAI PIN- ./ ./ PAN NO. AEZPR7617H ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI JAY SHAH, AR / RESPONDENTBY : SHRI M. C. OMI NINGSHEN, DR / DATE OF HEARING : 31.05.2018 / DATE OF PRONOUNCEMENT : 23.08.2018 / O R D E R PER SANDEEP GOSAIN, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEEIS AGAINST THE ORDER OF LD. CIT (APPEAL) 32, MUMBAI DATED 15.01. 16 FOR AY 2012-13 ON THE GROUNDS MENTIONED HEREIN BELOW:- 2 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAD ERRED IN NOT ALLOWING THE DEDUCTION OF INDEXED COST OF FAIR MARKET VALUE OF PROPERTY AS ON 1981 AS PER THE VALUATION REPORT, WITHOUT CONSIDERED THE FACTS AND CIRCUMSTANCES OF T HE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAD ERRED IN CONFIRMING THE ACT ION OF LD. AO IN NOT ALLOWING THE DEDUCTION OF INDEXED COST OF IMPROVEMENT OF PROPERTY AMOUNTING TO RS. 1,01,80,177/-, WITHOUT CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE THE SAID GROUND OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THATTHE ASSESSEE IS AN INDIVIDUAL EMPLOYED WITH J. M. FINANCIAL CONSULTANT S AS A DIRECTOR AND DECLARED INCOME UNDER THE HEAD SALARIES COUPLED WITH INCOME FROM CAPITAL GAIN AND INCOME FROM OTHER 3 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY SOURCES . THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATIONWAS FILED ON 28.08.2012 DECLARING TOTA L INCOME AT RS. 1,05,63,677 AFTER CLAIMING DEDUCTION OF RS. 1 L AKH UNDER CHAPTER VI-A. THE REVISED RETURN WAS E-FILED BY THE ASSESSEE ON 07.12.12 DECLARING TOTAL INCOME OF RS. 1,05,19,280 AND THE REASON FOR FILING REVISED RETURN WAS THE BROUGHT FO RWARD SHORT TERM LOSS NOT ADJUSTED IN THE ORIGINAL RETURN. LATE R ON, THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTO RY NOTICES AND SEEKING REPLY OF THE ASSESSEE, ASSESSMENT ORDER U/S . 143(3) OF THE I.T. ACT, 1961 WAS PASSED BY THE AO THEREBY MAKING ADDITIONS ON ACCOUNT OF SHORT TERM CAPITAL GAIN . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED AP PEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES,DISMISSED THE APPEAL OF THE ASSESS EE. NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRES ENT APPEAL BY RAISING THE ABOVE GROUNDS. GROUND NO. 1 3. THIS GROUND RAISED BY THE ASSESSEE HAS NOT BEEN PRESSED, THEREFORE THE SAME BECOMES INFRUCTUOUS AS NOT PRESS ED. 4 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY GROUND NO. 2 4. THIS GROUND RAISED BY THE ASSESSEE RELATES TO CH ALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN NOT ALLOWING THE DEDUCTION OF INDEXED COST OF IMPRO VEMENT OF PROPERTY AMOUNTING TO RS. 1,01,80,177/-. 5. AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF O F THE ASSESSEE SUBMITTED BEFORE US THAT ASSESSEE ALONGWIT H OTHER OWNERS HAD SOLD THE PROPERTY FOR A TOTAL CONSIDERAT ION OF RS. 13.5 CRORES, OUT OF WHICH THE ASSESSEES SHARE WAS RS. 4 .50 CRORES. LD. AR FURTHER SUBMITTED THAT THE AO MADE ADDITION ON A CCOUNT OF SHORT TERM CAPITAL GAIN IN THE CASE OF ASSESSEE BY HOLDING THAT THE ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE FOR THE ADDITIONS/COST OF IMPROVEMENT TO THE PROPERTY I N THE YEARS 1981, 1996 AND 2008, THEREFORE THE INDEX COST CLAIM ED BY THE ASSESSEE IN RESPECT OF COST OF IMPROVEMENT IN THE Y EARS 1981, 1996 AND 2008 AMOUNTING TO RS. 1,01,80,177/- WAS DI SALLOWED BY THE AO. 5 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY IT WAS FURTHER ARGUED THAT COORDINATE BENCH OF HON BLE ITAT IN ITA NO. 3429/CHEN./16 FOR AY 2012-13 IN THE CASE OF OTHER CO-OWNER SMTGAYATHRI RAMAMURTHY HAS DECIDED T HE SAID GROUND. THE OPERATIVE PORTION OF THE ORDER OF HONB LE ITAT IS CONTAINED IN PARA NO. 8.3 TO 8.4 AND THE SAME IS RE PRODUCED BELOW:- 8.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSEE CLAIMED COST OF IMPROVEMENT RELATING TO TH E YEARS 1981, 1996 AND 2008. SINCE NO DOCUMENTARY EVIDENCE WAS PRODUCED, THE ASSESSING OFFICER REJECT ED THE CLAIM OF THE ASSESSEE. BEFORE THE LD. CIT(A), T HE ASSESSEE HAS ARGUED THAT NOBODY CAN APPREHEND AN EVENT WHICH WOULD BE TAKING PLACE AFTER 20 OR 30 YE ARS LATER WITH REGARD TO MAINTAINING THE ENTIRE RECORDS TOWARDS COST OF IMPROVEMENT MADE IN THE PROPERTY. HOWEVER, THE LD. CIT(A) OBSERVED THAT THE FACT MAY BE TRUE BUT IT IS ALSO NOT UNDERSTANDABLE AS TO HOW TH E ASSESSEE COULD FIGURE OUT THE EXACT AMOUNT OF EXPENDITURE CLAIMED HAVE BEEN INCURRED TOWARDS SUCH RENOVATION OR EXPANSION AND OPINED THAT THE GENUINENESS AND AUTHENTICITY OF THE CLAIM IS HIGHLY DOUBTFUL. 6 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY 8.4 AT THE SAME TIME, THE LD. CIT(A) ALSO OBSERVED THAT IT WILL BE HIGHLY UNJUSTIFIED TO HOLD THAT NOT EVEN SINGLE PENNY WAS EXPENDED ON THE RENOVATION OR EXPANSION O F THE HOUSE DURING THE ENTIRE PERIOD OF 44 YEARS. THEREFORE, IN ORDER TO FIND OUT AS WHAT COULD BE TH E AMOUNT OF SUCH EXPENDITURE, THE LD. CIT(A) MADE A REFERENCE TO THE SALE DEED OF THE IMPUGNED PROPERTY EXECUTED ON 24.02.2012 BETWEEN THE VENDORS MS. BHARATHIRAVIPRAKASH, MS. GAYATHRI RAMAMURTHY (ASSESSEE) AND MR. SRINATH RAMAMURTHY WITH THE PURCHASER MR. P. RAVI. ON PERUSAL OF THE REGISTERED SALE DEED, THE SAME WAS REGISTERED WITH THE OFFICE OF THE SUB REGISTRAR, ADYAR, CHENNAI AND THE LD. CIT(A ) NOTICED FROM ANNEXURE 1-A WHICH IS A DOCUMENT THAT TELLS ABOUT THE MARKET VALUE OF THE PROPERTY TRANSA CTED, THE DETAILS OF THE PROPERTIES ETC. FOR THE PURPOSES OF THE STAMP DUTY AND REGISTRATION CHARGES. AS PER ANNEXURE 1-A, THE AGE OF THE BUILDING WAS MENTIONED AS 40 YEARS WITH THE 3.85 GROUNDS OF LAND ALONG WIT H SUPER BUILT UP AREA OF 6400 SQUARE FEET (4000 SQ. F T. IN THE GROUND FLOOR AND 2400 SQ. FT. IN THE FIRST FLOO R). THE COST OF LAND HAS BEEN DETERMINED AT .13,00,00,000/-. THE VALUE OF THE BUILDING HAS BEEN WORKED OUT AT .50,00,000/- AND THE TOTAL VALUE OF THE PROPERTY WA S CALCULATED AT .13,50,00,000/-. FROM THE ABOVE DETAILS, IT IS EVIDENTLY CLEAR THAT THE VALUE OF THE PROPERT Y ON THE DATE OF SALE ON 24.03.2012 WAS .50,00,000/- WHICH 7 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY INCLUDED THE COST OF RENOVATION/EXPANSION AND ALSO THE COST OF ACQUISITION OF .1,17,000/-, AS ACCEPTED BY THE ASSESSEE. THEREFORE, THE LD. CIT(A) DETERMINED THE COST OF EXPENDITURE OF EXPANSION/RENOVATION OF THE IMPUGNED PROPERTY AT .48,83,000/- [ .50,00,000 .1,17,000] AND DIRECTED THE ASSESSING OFFICER TO AD OPT THE SAME AS COST OF IMPROVEMENT. THE ARGUMENT OF TH E LD. DR THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE FOR THE CLAIM OF EXPENSES IS NOT ACCEPTABLE, BECAUSE, I T IS NOT POSSIBLE FOR THE ASSESSEE TO PRODUCE ANY EVIDEN CE FOR THE EVENT WHICH WOULD HAVE BEEN TAKEN PLACE AFT ER 20 OR 30 YEARS LATER. HOWEVER, BY CONSIDERING THE VALUE ADOPTED BY THE SRO FOR STAMP DUTY AND REGISTRATION, AS DETAILED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) HAS RIGHTLY DETERMINED THE COST OF EXPENDITURE ON EXPANSION/RENOVATION OF THE IMPUGNED PROPERTY AND ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH TH E ORDER PASSED ON THIS ISSUE. THUS, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY LD. CIT(A) AND SUBMITTED THAT THE ORDERS PASSED BY LD. CIT(A) NEEDS NO INTERFERENCE. 8 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY 7. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT THE COO RDINATE BENCH OF ITAT IN ITA NO. 3429/CHEN./16 HAS ALREADY DEALT WITH THE IDENTICAL GROUND IN THE CASE OF ONE OF THE CO-OWNER NAMELY SMT GAYATHRI RAMAMURTHY AND THE SUBJECT MATTER I.E. THE PROPERTY IN THE PRESENT CASE AS WELL AS IN THE CASE OF SMT GAYA THRI RAMAMURTHY IS ALSO SAME, BUT THE CLAIM OF THE ASSES SEE IN THE PRESENT CASE HAS BEEN DISALLOWED BY THE AO BY HOLDI NG THAT THE ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENTARY EVID ENCE WITH REGARD TO ADDITION/COST OF IMPROVEMENT. HOWEVER, IN THE CASE OF CO-OWNER, THE LD. CIT(A) IN THAT CASE DETERMINED TH E COST OF EXPENDITURE OF EXPANSION /RENOVATION OF THE IMPUGNE D PROPERTY AND DIRECTED THE AO TO ADOPT THE SAME AS COST OF IM PROVEMENT. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND KEEPING IN VIEW THE DECISION OF TH E COORDINATE BENCH OF ITAT IN RESPECT OF THE SAME PROPERTY AND A LSO KEEPING IN VIEW THE SUBSTANTIAL CAUSE OF JUSTICE, WE SET AS IDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE WHILE KEEPING IN 9 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY VIEW THE ORDERS PASSED BY THE COORDINATE BENCH OF I TAT IN ITAT NO.3429/CHENN/16 OR ANY OTHER DOCUMENTS IF SO FILED BY THE ASSESSEE AND DECIDE THE MATTER AFRESH. BEFORE PARTING, WE MAY MAKE IT CLEAR THAT OUR DECI SION TO RESTORE THE MATTER BACK TO THE FILE OF AO SHALL IN NO WAY BE CONSTRUED AS HAVING ANY REFLECTION OR EXPRESSION ON THE MERITS OF THE DISPUTE, WHICH SHALL BE ADJUDICATED BY THE AO I NDEPENDENTLY IN ACCORDANCE WITH LAW. 8. IN THE NET RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2018 SD/- SD/- (G. S. PANNU) (SANDEEP GOSAIN) ! / ACCOUNTANT MEMBER ' #! / JUDICIAL MEMBER MUMBAI; # DATED : 23 RD .08.2018 SR.PS. DHANANJAY 10 I.T.A. NO. 1606/MUM/2016 SRINATHRAMAMURTY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. & ( ) / THE CIT(A) 4. & / CIT- CONCERNED 5. #' (###) , #) , / DR, ITAT, MUMBAI 6. ( *+, / GUARD FILE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI