Sri G S Prabhakar, Hyderabad V. ITO., Ward-13(2), Hyderabad

ITA 1635/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91685 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 13-04-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 24-10-2014
• Court: TRIBUNAL
• Department Lawyers: V RAJITHA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Gift; Fair market value
• Section: 143(3); 54F; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A. NO. 1635/HYD/2014 ASSESSMENT YEAR: 2003-04 S HRI G.S . PRABHAKAR, HYDERABAD [PAN: AAPPG6558C] VS INCOME TAX OFFICER , WARD-13(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHU RAM , AR FOR REVENUE : MISS V. RAJITHA, DR DATE OF HEARING : 18 - 0 5 - 201 5 DATE OF PRONOUNCEMENT : 22 - 05 - 2015 O R D E R PER INTURI RAMA RAO, A.M. : THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, HYDERABAD, DATED 22-08-2014 ON THE FOLLOWING GROUND(S): ' 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, H YDERABAD, IS PERVERSE, ILLEGAL AND UNSUSTAINABLE IN LAW AND AGAINST THE D IRECTIONS GIVEN BY THE HON'BLE ITAT IN EARLIER ROUND OF APPEAL. I.T.A. NO. 1635/HYD/2014 SRI G.S. PRABHAKAR :- 2 -: 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE ACTIONS OF THE ASSESSING OFFICER IN ADOPTING THE F AIR MARKET VALUE OF LAND IN QUESTION AT RS. 60 PER SQ. YARD BASED ON A GIFT AND SETTLEMENT DEEDS. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE TH AT THE DIRECTION OF THE HON'BLE ITAT TO THE ASSESSING OFFICER WAS TO INQUI RE AND ASCERTAIN COMPARABLE SALE VALUE, WHICH THE ASSESSING OFFICER HAS FAILED TO DO. 3. THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THERE WAS NO REASON FOR THE ASSESSING OFFICER TO REJECT THE MOR TGAGE DEED PLACED ON RECORD BY THE APPELLANT IN AS MUCH AS THE ASSESSIN G OFFICER IN ANY CASE HAS FAILED TO ASCERTAIN FAIR MARKET VALUE. THE CO MMISSIONER (APPEALS) FAILED TO APPRECIATE THAT THE MORTGAGE DEED RELIED UPON BY THE APPELLANT IS A RELIABLE DOCUMENT AS THE SAME PERTAINED TO A LOA N TRANSACTION WITH LIFE INSURANCE OF INDIA. 4. THE COMMISSIONER (APPEALS) OUGHT TO HAVE DIRECT ED THE ASSESSING OFFICER TO ADOPT THE FAIR MARKET VALUE AT RS. 236. 50 PER SQ. YARD. 5. WITHOUT PREJUDICE TO ANY OF THE CONTENTIONS RA ISED IN THIS APPEAL, THE COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT I N THE SECOND ROUND OF PROCEEDINGS, THE ASSESSING OFFICER HIMSELF ADOPTED THE FAIR MARKET VALUE OF THE LAND AT RS. 100 PER SQ. YARD, AND THEREFORE IN A SITUATION WHERE THE ASSESSING OFFICER FAILED TO ADHERE TO THE DIRECTIO NS OF THE HON'BLE ITAT, THERE IS NO REASON TO GO DOWN FROM THAT VALUE IN A S MUCH AS THE DEPARTMENT DID NOT HAVE GRIEVANCE AGAINST ADOPTION OF FAIR MARKET VALUE AT RS. 100 IN THE EARLIER ROUND'. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A RETIRED GOVERNMENT SERVANT. THE APPELLANT ENTERED INTO A D EVELOPMENT AGREEMENT CUM POWER OF ATTORNEY ON 23-06-2010 WITH M/S. R.G. CONSTRUCTIONS FOR DEVELOPMENT OF APPELLANT'S LAND B EING PLOT NO. 107, SRINAGAR COLONY, HYDERABAD. THE DEVELOPMENT AGREEM ENT ENVISAGED SHARING CONSTRUCTED AREA IN THE RATION OF 50% : 50% BETWEEN THE PARTIES TO THE DEVELOPMENT AGREEMENT. THE APPELLANT WAS EN TITLED FOR BUILT UP AREA OF 11,012 SFT OUT OF TOTAL BUILT UP AREA OF 22 ,823 SFT. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE APPELLANT FILED RETURN OF INCOME ON 30-09-2003 ADMITTING INCOME OF RS. 3,10,0 80/-. THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) AND LATER ON TH E ASSESSMENT WAS REOPENED UNDER THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, 1961 [ACT]. THE REASSESSMENT WAS COMPLETED BY DETE RMINING THE INCOME AT RS. 83,52,190/-. WHILE DOING SO, THE CAPITAL GA INS WERE WORKED OUT BY I.T.A. NO. 1635/HYD/2014 SRI G.S. PRABHAKAR :- 3 -: THE ASSESSING OFFICER (AO) IN RESPECT OF THE VALUE OF LAND SURRENDERED IN THE DEVELOPMENT AGREEMENT, ADOPTING A RATE OF RS. 2 5 PER SQ. YARD AS AGAINST THE RATE ADOPTED BY THE APPELLANT AT RS. 23 4.50 PER SQ. YARD. 3. BEING AGGRIEVED, THE APPELLANT FILED APPEAL BEFO RE THE COMMISSIONER (APPEALS), WHO GRANTED RELIEF IN COMPU TATION OF CAPITAL GAINS. THE COMMISSIONER (APPEALS) DETERMINED THE F AIR MARKET VALUE OF THE LAND AS ON 01-04-1981 TO BE RS. 100 PER SQ. YAR DS AS AGAINST THE CLAIM OF THE APPELLANT AT RS. 236.50 SQ. YARD. THE COMMISSIONER (APPEALS) FURTHER GRANTED THE RELIEF OF DEDUCTION U /S. 54F OF THE ACT. 4. BOTH THE APPELLANT AND THE REVENUE FILED CROSS A PPEALS BEFORE THE ITAT AGAINST THE ORDER OF THE COMMISSIONER (APPEALS ). WHILE THE APPELLANT FILED THE APPEAL AGGRIEVED BY THE ORDER O F THE COMMISSIONER (APPEALS) DETERMINING THE VALUE OF THE LAND AT RS. 100 AS AGAINST RS. 236.50 PER SQ. YARD CLAIMED BY HIM AND FOR OTHER IS SUES, THE REVENUE FILED APPEAL AGAINST THE ORDER OF THE CIT(A) DIRECT ING THE AO TO ADOPT THE FAIR MARKET OF LAND AT RS. 100 PER SQ. YARD. THE I TAT CONSIDERING THE FACT THAT THE APPELLANT HAD FILED ADDITIONAL EVIDEN CE HAS REMITTED BACK THE ENTIRE MATTER TO THE FILE OF THE AO. 5. THE AO PASSED FRESH ASSESSMENT ORDER U/S. 143(3) R.W.S. 254 OF THE ACT. IN THE FRESH ASSESSMENT ORDER BEFORE THE AO, THE APPELLANT FILED A COMPARABLE CASE IN THE FORM OF MORTGAGE DEED REGI STERED IN THE YEAR 1980 SHOWING THE VALUE AT RS. 236.50 PER SQ. YARD. THE AO DID NOT ACCEPT THE SAME HOLDING THAT IT IS NOT A 'SALE DEED ' BUT A 'MORTGAGE DEED' AND FURTHER THE AO FOUND THAT THE PROPERTY INVOLVED IN THE MORTGAGE DEED CONSISTS OF BOTH LAND WITH SUPER STRUCTURE. H OWEVER, THE AO BASED ON ENQUIRIES CONDUCTED HAD ADOPTED THE FAIR MARKET VALUE OF LAND AT I.T.A. NO. 1635/HYD/2014 SRI G.S. PRABHAKAR :- 4 -: RS. 100 PER SQ. YARDS, WHICH IS ALSO THE VALUE DIRE CTED BY THE COMMISSIONER (APPEALS) IN THE EARLIER ROUND OF PROC EEDINGS. 6. THE APPELLANT, BEING AGGRIEVED, HAD PREFERRED AP PEAL BEFORE THE COMMISSIONER (APPEALS). THE COMMISSIONER (APPEALS) ALLOWED THE APPEAL OF THE APPELLANT DIRECTING THE AO TO ADOPT T HE VALUE OF LAND AT RS. 236.50 SQ. YARD BASED ON THE COMPARABLE INSTANCE FO UND IN THE FORM OF MORTGAGE DEED REGISTERED IN THE YEAR 1980. THE REV ENUE WENT IN APPEAL AGAINST THE ORDER OF THE COMMISSIONER (APPEALS). 7. IN THIS APPEAL FILED BY THE REVENUE, THE ITAT C ONSIDERING THE ISSUE BEFORE IT HAD AGAIN RESTORED THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO CAUSE NECESSARY ENQUIRIES AND ARRIVE A T THE FAIR MARKET VALUE OF THE LAND AS ON 01-04-1981 THAT WAS SURRENDERED I N THE DEVELOPMENT AGREEMENT. IT MAY BE POINTED OUT HERE THAT THE GRI EVANCE OF THE REVENUE WAS THAT THE COMMISSIONER (APPEALS) BASED ON THE MO RTGAGE DEED HAD DETERMINED THE FAIR MARKET VALUE OF LAND AT RS. 236 .50 PER SQ. YARD AS AGAINST RS. 100 PER SQ. YARD DETERMINED IN THE ASSE SSMENT ORDER. THEREFORE, EVEN IF THE APPELLATE TRIBUNAL HAD SET A SIDE THE MATTER TO THE FILE OF THE AO, IT WAS ONLY FOR THE PURPOSE OF ASCE RTAINING THE FAIR MARKET VALUE OF THE LAND SURRENDERED AS ON 01-04-1981 WHIC H AT ANY RATE COULD NOT HAVE GONE BELOW RS. 100 PER SQ. YARD IN VIEW OF THE FACT THAT THE AO HIMSELF HAD ACCEPTED THE RATE TO BE RS. 100 PER SQ. YARD. HOWEVER, IN THE CONSEQUENTIAL PROCEEDINGS TO THE ORDER PASSED B Y THE APPELLATE TRIBUNAL, THE AO AGAIN ADOPTED THE FAIR MARKET VALU E AT RS. 60 PER SQ. YARD. 8. IN THE SET ASIDE PROCEEDINGS U/S. 143(3) R.W.S. 254 OF THE ACT DT. 24-02-2014, AS PER THE DIRECTIONS OF THE HON'BLE IT AT, THE AO CAUSED NECESSARY ENQUIRIES AND HER OBSERVERS ARE AS UNDER: I.T.A. NO. 1635/HYD/2014 SRI G.S. PRABHAKAR :- 5 -: 'AS DIRECTED BY ITAT, NECESSARY ENQUIRIES HAVE BEEN MADE. APART FROM CALLING FOR DETAILS OF SALE TRANSACTION DURING 1968 0/1981, FAIR MARKET VALUE OF THE LAND PER SQUARE YARD AS ON 1.4.1981 HAS ALSO BE EN CALLED FOR FROM THE SRO. THE SRO VIDE HIS LETTER DT. 2.9.2013 STATED THAT MA RKET VALUE OF THE PROPERTY SITUATED IN SRINAGAR COLONY IS RS. 60 PER SQUARE YA RD AS ON 1.4.1981 AS PER MARKET VALUE GUIDELINES. WITH REGARD TO COMPARABLE CASES OF SALE AS PER COPIES OF DOCUMENTS OBTAINED, IT HAS BEEN OBSERVED THAT TH ERE WERE NOT MUCH SALE TRANSACTIONS OF OPEN LANDS DURING THE YEAR 1980 AND 1981 EXCEPT ONE OR TWO GIFT DEEDS AND SETTLEMENT DEEDS. AS OBSERVED FROM THE G IFT DEED THE MARKET VALUE WAS MENTIONED AS RS. 25 AND IN SETTLEMENT DEED THE VALUE WAS RS. 50 PER SQUARE METRE OR RS. 65 PER SQUARE YARD. IN ONE REL INQUISHMENT DEED, THE VALUE WAS COMPUTED AT RS. 43.60 PER SQ. YARD. TO FIND PU T THE COMPARABLE CASE, REAL SALE TRANSACTIONS AFTER 1981 HAVE ALSO BEEN VERIFIE D. IN THE YEAR 1983, IT IS OBSERVED THAT IN ONE SALE TRANSACTION, THE SALE VAL UE WAS RS. 58.70 PER SQUARE YARD (DOCUMENT NO. 920 OF 1983). IN ONE CASE, A PR OPERTY OF RESIDENTIAL BUILDING CONSTRUCTED ON A LAND OF 220.56 SQUARE YARDS WAS SO LD FOR RS. 95,000. THE RATE PER SQUARE YARD FOR OPEN LAND NATURALLY DIFFERS WHE N COMPARED TO THE LAND WITH BUILDINGS. SO LAND PER SQUARE YARD FOR OPEN LAND I S ONLY CONSIDERED. ASSESSEE'S CLAIM OF LAND PER SQUARE YARD FOR RS. 236 IS NOT CO NSIDERED, SINCE THE ISSUE INVOLVES INDEPENDENT ENQUIRIES AS PER ITAT DIRECTIO NS. THUS AS PER THE ENQUIRIES, THE LAND VALUE VARIED F ROM RS. 25 TO 65 PER SQUARE YARD DURING THAT PERIOD. CONSIDERING THE MA TERIAL AVAILABLE AND ALSO ENQUIRIES MADE WITH THE SRO, IT IS CONSIDERED THAT RS. 60 PER SQUARE YARD IS REASONABLE FOR DETERMINING THE CAPITAL GAINS'. 9. AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, THE APP ELLANT FILED BEFORE CIT(A)-II, HYDERABAD WHO VIDE ORDER DT. 22-08-2014, DISMISSED THE APPEAL BY MAKING THE FOLLOWING OBSERVATION VIDE PAR A 4 AS FOLLOWS: 'IN THE THIRD ROUND OF PROCEEDINGS, THE ASSESSING O FFICER ONCE AGAIN ADOPTED THE VALUE AT RS. 60 PER SQ. YARD. IN THIS ORDER, THE ASSESSING OFFICER OBTAINED THE INFORMATION FROM THE SUB REGISTRAR OFF ICE AND ALSO COLLECTED THE INFORMATION ABOUT THE COMPARABLE CASES OF REAL ESTA TE TRANSACTIONS IN 1981 AS WELL AS IN 1983. THEREFORE, THE LONG TERM CAPITAL GAINS COMPUTED BY THE ASSESSING OFFICER ADOPTING THE VALUE OF LAND AT RS. 60 PER SQ. YARD, IS SUSTAINED'. HENCE, THE APPELLANT HAD COME UP WITH THE PRESENT A PPEAL. 10. IT WAS ARGUED BEFORE US BY THE LD. COUNSEL FOR THE APPELLANT THAT THE AO HAD REITERATED THE SAME MISTAKE THOUGH IT WA S NOT MENTIONED IN THE ASSESSMENT ORDER THE AO ADOPTED ONLY THE VALUES AS PER SRO AND THEREBY HE HAS NOT FOLLOWED THE DIRECTIONS OF HON'B LE ITAT, HYDERABAD IN I.T.A. NO. 1635/HYD/2014 SRI G.S. PRABHAKAR :- 6 -: ITA NO. 1004/HYD/2010 DT. 27-07-2012 AND THEREFORE HE SUBMITTED THAT THE ASSESSMENT ORDER PASSED CONSEQUENT TO THE HON'B LE TRIBUNAL'S DIRECTION IN THE ABOVE MENTIONED APPEAL SHOULD BE Q UASHED. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF LOWE R AUTHORITIES. 11. WE HEARD THE RIVAL PARTIES AND PERUSED THE ORDE RS OF LOWER AUTHORITIES. IN THIS CASE, THE AO IS BOUND BY THE ORDER OF THE HON'BLE TRINUAL 1004/HYD2010 DT. 27-07-2012. THE MANDATE OF THE HON'BLE TRIBUNAL IN THE SAID APPEAL WAS TO MAKE NECESSARY E NQUIRIES AND FIND OUT THE COMPARABLE CASE OF SALE OF LAND IN THE SAME LOCALITY FOR ASCERTAINING THE FAIR MARKET VALUE OF LAND AS ON 01 -04-1981 FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS. WHILE PASS ING THE ASSESSMENT ORDER, CONSEQUENT TO THE HON'BLE TRIBUNAL'S ORDER, THE LD. AO HAD AGAIN ADOPTED THE VALUES AS PER SUB-REGISTRAR OFFICE AS C AN BE SEEN FROM THE BODY OF THE ASSESSMENT ORDER VIDE PAGE NO.2 OF THE ORDER. THERE IS NO GAIN SAYING THAT THE VALUE AS PER SUB-REGISTRAR OFF ICE MAY NOT BE THE MARKET VALUE. IN THIS CONNECTION, WE RELY ON THE F OLLOWING CASES: (I) TAWJAEE NAGNATHAM VS. REVENUE DIVISIONAL OFFICER, ADILABAD [1994] [4 SCC 595]; (II) PRAKASHWATI VS. CHIE CONTROLLING REVENUE AUTHORITY, U.P. [1996] [4 SCC 657]; (III) STATE OF PUNJAB VS. MOHABIR SINGH [1996] [1 S CC 609]. THUS, THE AO HAD TRAVELLED BEYOND THE FINDINGS GIVE N IN THE TRIBUNAL'S ORDER. THE REVENUE HAD NOT GONE ON APPEAL AGAINST THE ORDER OF THE TRIBUNAL. THEREFORE, THE TRIBUNAL ORDER HAD ATTAIN ED FINALITY AND THE AO IS BOUND TO PASS THE CONSEQUENTIAL ASSESSMENT ORDER WITHIN THE FOUR CORNERS OF THE TRIBUNAL ORDER. SINCE IN THE PRESEN T CASE, THE AO HAD I.T.A. NO. 1635/HYD/2014 SRI G.S. PRABHAKAR :- 7 -: GONE BEYOND THE SCOPE OF THE TRIBUNAL ORDER, WE HAV E NO HESITATION TO QUASH THE ORDER DT. 24-02-2014 PASSED BY THE ITO, W ARD-13(2), HYDERABAD. 12. IN THE RESULT, APPEAL FILED BY THE APPELLANT IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 22 ND MAY, 2015 SD/- SD/- (ASHA VIJAYARAGHAVAN) (INTURI RAMA RAO) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED 22 ND MAY, 2015 TNMM COPY TO : 1. SRI G.S. PRABHAKAR, H.NO. 10-2-289/111, SHANTHIN AGAR, HYDERABAD. C/O. K. VASANTKUMAR, A.V. RAGHU RAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDER ABAD. 2. INCOME TAX OFFICER, WARD-13(2), HYDERABAD. 3. CIT(APPEALS)-II, HYDERABAD. 4. CIT-I, HYDERABAD. 5. D.R. ITAT, HYDERABAD