NETRA SANJEEVA SHETTY, MUMBAI V. ITO 16(1)(4), MUMBAI

ITA 1634/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7820 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: SUBRAMANIAN
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Cost of acquisition; Fair market value; Valuation report; Assessment record
• Section: 50C; 142(1); 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 2232 /MUM/20 1 3 ( / ASSESSMENT YEAR : 2 0 09 - 10 ) NARAYAN SHEENA SHETTY, 41,A PASARA BUILDING, DATTA MANDIR ROAD, DAHANUKARWARI, KANDIVALI, MUMBAI - 400067 / VS. INCOME TAX OFFICER - 25 (3)(1), MUMBAI ./ PAN : AAJPS1695Q ( / APPELLANT) : ( / RESPONDENT ) ITA NO.1634/MUM/2015 ( / ASS ESSMENT YEAR : 2009 - 10 ) SMT.NETRA SANJEEVA SHETTY, BLOCK NO.1, ROOM NO.8,BANE COMPOUND ARTHUR ROAD, TARDEO, MUMBAI - 400034. / VS. INCOME TAX OFFICER - 16 ( 1 ) (4) , MUMBAI ./ PAN : AMOPS4769E ( / APPELLANT) : ( / RESPON DENT ) / ASSESSEE BY : SHRI M S SUBRAMANIAN / REVENUE BY : SHRI T A KHAN / DATE OF HEARING : 6.12.2017 / DATE OF PRONOUNCEMENT : 22. 1 2 . 201 7 2 I.T.A. NO . 2232 - 1634 /MUM/2015 / O R D E R PER RAJESH KUMAR, A. M: THESE APPEALS BY THE TWO DIFFERENT ASSESSEES AGAINST THE TWO DIFFERENT LD.CIT(A) - 35 , CIT(A) - 30, MUMBAI, DATED 22.1.2013 AND 10.12.2014 RESPECTIVELY FOR THE ASSESSMENT YEAR 2009 - 10. SINCE THE ISSUES RAISED IN THESE APPEALS ARE IDENTICAL ON SIMILAR FACTS, THEREFORE, WE ARE DECIDING THESE APPEALS BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. ITA NO.2232/MUM/2013 2. ORIGINAL GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : 1. WHETHER ON FACT AND IN THE CIRCUMSTANCE OF THE CASE, THE LD. CIT (APPEAL) HAS ERRED IN DISMISSING THE APPEAL OF APPELLANT WHEN ALL THE RELEVANT DOCUMENTS AND OTHER DETAILS AS CALLED FOR BY ASSESSING OFFICER WAS PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT 1961 . 2. WHETHER ON FACT AND IN THE CIRCUMSTANCE OF THE CASE, THE LD. CIT (APPEAL) HAS ERRED IN DISMISSING THE APPEAL WITH QUANTUM OF ASSESSABLE AMOUNT IS ENHANCED BY MERE VALUATION REPORT BY VALUATION OFFICER WITHOUT CONSIDERI NG THE OTHER THINGS AND CONFIRMING THE ADDITION BASED AS PER PROVISION OF SECTION 50 C OF THE INCOME TAX ACT, EVEN THOUGH THE ASSESSEE HAS SHOWN AS BUSINESS ASSETS, AND ACQUIRED THE PROPERTY IN THE COURT SETTLEMENTS. 3. WHETHER ON FACT AND CIRCUMSTANCE O F THE CASE, THE LD CIT (APPEAL) HAS ERRED WITHOUT CONSIDERING THE INFORMATION COLLECTED FROM THE BUYERS AND MERELY RELY ON THE INSPECTORS REPORT UNDER SECTION 131 OF THE INCOME TAX ACT. 3. IN ADDITION TO THE ORIGINAL GROUNDS OF APPEAL, THE ASSESSEE HAS ALSO TAKEN FOLLOWING ADDITIONAL GROUNDS: 3 I.T.A. NO . 2232 - 1634 /MUM/2015 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE LEARNED C.I.T.CA) ERRED IN DISMISSING THE APPEAL AND THAT TOO IN VIOLATION OF RULES OF NATURAL JUSTICE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED C.LT.CA) ERRED IN DISMISSING THE APPEAL AND THAT TOO WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE F ULLY AND PROPERLY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, CAPITAL GAINS INCOME OUGH T TO HAVE BEEN COMPUTED AS PER THE PROVISIONS OF SECTIONS 45 TO 55A OF THE ACT AND THE LEAR NED C.LT.CA) ERRED IN NOT DIRECTING SO. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED C.LT.CA) ERRED IN NOT DEALING WITH THE GROUND OF A PPEAL NO.5 RAISED BEFORE HIM. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED C.LT.CA) ERRED IN CONFIRMING THE ACTION OF THE A. O COMPUTING THE CAPITAL GAINS INCOME AT RS. 74,45,788/ - ALTOGET HER THE SAME IS NOT AS PER THE PROVISIO NS OF SECTION 45 TO 55A OF ACT. 6. WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO. 2 &3, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEAR NED C.LT.CA) ERRED IN CONFIRMING THE ADOPTION OF THE SALE VALU E OF THE HOUSE PROPERTY SOLD AT RS .82,OO,OOOI - AND ALSO FURTHER E RRED IN DIRECTING THE A.O. TO TAKE THE SALE VALUE AT AN ENHANCED FI GURE OF RS.94,99,OOOI - FOR THE PURPOSES OF COMPUTATION OF CA PITAL GAINS INCOME. 7. WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO. 2 &3, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEAR NED C.LT.(A) ERRED IN CONFIRMING THE ADOPTION OF THE PURCHASE COST OF THE HOUSE PROPERTY TRANSFERRED AT RS.6,00,000/ - FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS INCOME. 8. WITHOUT PREJUDICE TO GRO UNDS OF APPEAL NO.2 AND 3, AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN GRANTING BENEFIT OF INDEXATION DEDUCTION ONLY FROM THE FINANCIAL YEAR 2003 - 04 FOR THE PURPOSE OF C OMPUTATION OF CAPITAL GAINS INCOME 4 I.T.A. NO . 2232 - 1634 /MUM/2015 4 . THE LD. AR VEHEMENTLY STATED THAT THE ISSUE RAISED BY THE ASSESSEE BY MEANS OF ADDITIONAL GROUNDS ARE EMANATED FROM THE ORDER OF LD.CIT(A) AND RECORD AVAILABLE WITH THE ASSESSEE AT THE TIME OF ASSESSMENT FILED AND G OES TO THE ROOT OF THE MATTER. THE LD. AR PRAYED BEFORE THE BENCH THAT THESE ADDITIONAL GROUNDS SHOULD BE ADMITTED AND BE ADJUDICATED. THE LD AR RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO.LTD V/S CIT REPO RTED IN 229 ITR 383(SC) IN DEFENSE OF HIS ARGUMENTS WHICH WA S OBJECTED BY THE LD. DR BY SUBMITTING THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE WAS NOT RAISED IN THE APPEAL MEMO, THEREFORE, SHOULD NOT BE ENTERTAINED. 5 . AFTER HEARING BOTH THE PARTIES AND GOING THROUGH THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, WE FIND THAT THE GROUNDS RAISED BY THE ASSESSEE IS IN RESPECT OF VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND ALSO NOT COMPUTING THE CAPITAL GAINS AS PER THE PROVISIONS OF SECTION 45 TO 55 A OF THE INCOME T AX ACT, 1961 AND FURTHER ENHANCING THE SALE CONSIDERATION ON THE BASIS OF DVOS VALUATION ETC BY CIT(A) . THE PERUSALS OF THE RECORD REVEALS THAT ALL THESE ISSUE S WERE EMANAT ING OUT OF THE ASSESSMENT RECORD AND THEREFORE THESE ARE TO B E ADMITTED IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF NTPC(SUPRA). BY RESPECTFULLY FOLLOWING THE DECISION OF APEX COURT (SUPRA), WE ADMIT THE ADDITIONAL GROUNDS FOR ADJUDICATION. 5 I.T.A. NO . 2232 - 1634 /MUM/2015 6 . FACTS OF THE CASE ARE THAT RETURN OF IN COME FILED BY THE ASSESSEE ON 2.12.2009 DECLARING TOTAL INCOME OF RS.2,52,560/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE . THE ASSESSEE IN THE PRESENT CASE I S A PARTNER IN M/S HIMMAT COUNTRY BAR AND ALSO DERIVES INCOME FROM COMMISSION CHARGES, INTEREST AND OTHER SERVICES ETC. AS PER AIR INFORMATION, THE ASSESSEE WITH 50% SHARE IN A PROPERTY IN JOINT OWNERSHIP WITH MS NETRA SANJEEVA SHETTY SOLD SUCH PRO PERTY FOR RS.50,00,000/ - BEING ADIL HOUSE, 497, JAGANNATH SHANKERSETH ROAD , CHIRA BAZAR, MUMBAI TO M/S KATURI INFRASTRUCTURE PRIVATE LIMITED. HO WEVER, AS PER THE STAMP DUTY VALUATION AUTHORITY MARKET VALUE WAS RS.1,64,00,000/ - . THE AO OBSERVED THAT TH E SALE CONSIDERATION OF THE PROPERTY AS PER STAMP VALUATION AUTHORITY IS MORE THAN THE ACTUAL SALE CONSIDERATION SHOWN BY THE ASSESSEE AND HENCE SECTION 50C IS APPLICA BLE TO THIS CASE. THE AO OBSERVED THAT THE ASSESSEE DID NOT SHOW ANY CAPITAL GAIN REC EIVED IN THE RETURN OF INCOME. ON QUERY FROM THE AO, THE ASSESSEE VIDE LETTER DATED 11.11.2011 SUBMITTED THAT RECIPIENT S HA VE RECEIVED ONLY RS.20 LAKHS AND REMAINING 30 LAKHS HAS BEEN ADJUSTED AGAINST THE REQUISITE DUTIES AND INCIDENTAL CHARGES AFTER SELL ING OF THE PROPERTY. THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAS PAID RS.18 LAKHS TO THREE PERSONS IN ORDER TO GET CLEAR TITLE OF THE PROPERTY. IN ADDITION TO THE ABOVE, THE ASSESSEE ALSO PAID RS.9,88,442/ - TOWARDS INTEREST ON LOAN. THE 6 I.T.A. NO . 2232 - 1634 /MUM/2015 EXPLANATION OFFERED BY THE ASSESSEE WAS REJECTED BY THE AO AND CALCULATED THE CAPITAL GAIN ON THE BASIS OF STAMP DUTY VALUATION AMOUNT I.E. RS.1,64,00,000/ - BEING 50% OF ASSESSEES SHARES AND DEDUCTED INDEXED COST OF ACQUISITION OF RS.7,54,212/ - AND DETERMINED THE CAPITAL GAIN AT RS.74,45,788/ - . AGGRIEVED BY THIS COMPUTATION, THE ASSESSEE APPEALED BEFORE THE FAA , WHO ALSO CONFIRMED THE ACTION OF AO ON THE POINT OF APPLICABILITY OF SECTION 50C OF THE ACT AND ALSO ACCEPTED THE LETTER DATED VO - II/MUM/CGT/693/2011 - 12/ 156 DATED 17.9.2012 INFORMING THE FMV OF THE PROPERTY AT THE RELEVANT POINT OF TIME WA S RS.1,89,98,000/ - THEREBY ENHANCING THE ASSESSMENT . AGAINST THIS ENHANCEMENT, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS BENCH. 7 . THE LD.AR ALSO RAISED THE ISSUE TH AT THE LD.CIT(A) HAS NOT CONSIDERED THE EVIDENCES FILED BY THE ASSESSEE AND COST OF ACQUISITION . THE LD AR CONTENDED THAT THE CONSIDERATION HAS BEEN TAKEN ONLY TO THE TUNE OF PAYMENT BY THE ASSESSEE UNDER THE DIRECTION OF COURT TO THE LANDLORD AS TENANT AS HE WAS THE TENANT SINCE 1.11.1997 . THE LD. AR ALSO SUBMITTED THAT FOR THE COMPUTATION OF CAPITAL GAIN , THE COST OF ACQUISITION HAS BEEN TAKEN ONLY TO THE TUNE OF PAYMENT MADE TO THE LANDLORD UNDER THE COURT DIRECTION THEREBY NOT CONSIDERING TH E VALUE OF TENANCY RIGHT OF THE ASSESSEE. THE LD. AR PRAYED BEFORE THE BENCH THAT IN ORDER TO DETERMINE THE CORRECT VALUATION OF THE PROPERTY AND RESULTANT CAPITAL GAINS, THE MATTER SHOULD BE SENT BACK TO 7 I.T.A. NO . 2232 - 1634 /MUM/2015 THE FILE OF THE AO TO CONSIDER IT DENOVO AS PER LAW BY CONSIDERING THE ALL THE FACTS OF THE CA SE. 8 . THE LD. DR OBJECTED TO SUCH PLEA OF THE ASSESSEE FOR RESTORING THE MATTER BACK TO THE FILE OF THE AO AND RELIED HEAVILY ON THE ORDER OF CIT(A) . 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS A ND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. WE ARE OF THE CONSIDERED OPINION THAT IN ORDER TO CALCULATE EXACT CAPITAL GAIN, APPLICABILITY OF SECTION 50C AND THE VALUATION BY DVO/FMV, THE MATTER NEED S F URTHER APPLICATION OF MIND AT THE LEVEL OF ASSESSING OFFICER ON ALL COUNTS AND POSITION OF LAW WITH REGARD TO THE COMPUTATION OF CAPITAL GAIN AS PER THE PROVISIONS OF SECTION 45 TO 55A OF THE ACT. W E FIND THAT THE FAA HAS DIRECTED THE FIRST ASSESSING AUTHORITY TO TAKE THE SALE CONSIDERATION AT RS.1,89,98,000/ - AS DETERMINED BY DVO WHICH IS WRONG AND ALSO CONTRARY TO THE PROVISIONS OF SECTION 50C OF THE ACT, AS THE PROVISIONS OF THIS SECTION PROVIDES FOR TAKING THE VALU E EQUAL TO STAMP VALUATION IN THE EVENT TO SALE CONSIDERATION BEING L OWER TO THE VALUE AS PER THE STAMP VALUATION AUTHORITY. CONSIDERATION ALL THESE FACTS , WE ARE OF THE OPINION, THIS MATTER REQUIRES FRESH APPLICATION OF MIND AT THE LEVEL OF AO . A CCORDINGLY WE SET ASIDE THE ORDER O F THE FAA AND RESTORE THIS MATTER TO THE FILE OF AO WITH A DIRECTION TO CONSIDER ALL THE EVIDENCES AS MAY BE FILED BY THE ASSESSEE IN THE SET ASIDE PROCEEDINGS AND COMPUTE THE CAPITAL GAIN AFTER CONSIDERING THE COST OF 8 I.T.A. NO . 2232 - 1634 /MUM/2015 ACQUISITION AS PER LAW IN TERMS OUR DISCUSSION ABOVE AND TAKING SALE CONSIDERATION EQUAL TO THE VALUE OF STAMP VALUATION AUTHORITY FOR THE PURPOSE OF CAPITAL GAIN . ACCORDINGLY, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO TO ASSESS THE CAPITAL GAIN DENOV O AS PER FACTS AND LAW . RES ULTANTLY, THE ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1634/MUM/2015 SINCE WE HAVE DECIDED IDENTICAL ISSUE IN ITA NO 2232/MUM/2013 IN THE CASE OF CO - OWNER SUPRA AS IN THE PRESENT APPEAL . WE TAKE THE SIMILAR DECISION IN THIS CASE ALSO. RESULTANTL Y, THIS APPEAL ALSO RESTORED TO AO AND IS ALLOWED FOR STATISTICAL PURPOSES . 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE S STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 22ND D EC, 2017. S D SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 22. 1 2 .2017 SR.PS:SRL: 9 I.T.A. NO . 2232 - 1634 /MUM/2015 / 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 F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI