ACIT, CHENNAI V. K.A.Fathima, CHENNAI

ITA 1698/CHNY/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3859 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E SULOCHANA
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Depreciation; Cost of acquisition; Fair market value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1698/MDS/2013 ( )( / ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE I, CHENNAI - 600 034. V. MS. K.A. FATHIMA, NO.220, CLASSING RETREAT, SHOLINGANALLUR, CHENNAI - 600 119. PAN : AAEPF 1462 D (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SMT. E. SULOCHANA, JCIT -.+, / 0 / RESPONDENT BY : DR. ANITA SUMANTH, ADVOCATE 1 / 2% / DATE OF HEARING : 08.06.2016 3') / 2% / DATE OF PRONOUNCEMENT : 06.09.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) VI, CHEN NAI, DATED 29.04.2013 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS COMPU TATION OF CAPITAL GAIN. 2 I.T.A. NO.1698/MDS/13 3. SMT. E. SULOCHANA, THE LD. DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS DETERMINATION FAIR MARKET VALUE AS ON 01.04.1981. ACCORDING TO THE LD. D.R., THE ASSESSEE PURCHASED A HOUSE PROPERTY A T DOOR NO.47, SARANGAPANI STREET, T. NAGAR, CHENNAI, FOR A TOTAL CONSIDERATION OF ` 1,67,000/- ON 23.01.1976. WHILE COMPUTING THE CAPI TAL GAIN, THE ASSESSEE COMPUTED THE INDEX COST OF ACQUISITION AT ` 1,20,03,750/- BY ADOPTING THE FAIR MARKET VALUE OF THE LAND AND B UILDING AS ON 01.04.1981 AT ` 20,62,500/-. ACCORDING TO THE LD. D.R., THE ASSESSEE WAS PLACING RELIANCE ON THE CONSTRUCTION A GREEMENT SAID TO BE ENTERED INTO WITH SHRI GOPAL ACHARI ON 23.02. 1983. THE ASSESSING OFFICER FOUND THAT THE GUIDELINE VALUE OF THE PROPERTY AS ON 01.04.1981 AT SARANGAPANI STREET, T. NAGAR IS ON LY ` 27,000/- PER GROUND. THE ASSESSING OFFICER ACCEPTED THIS GUIDEL INE VALUE FOR THE PURPOSE OF COMPUTING THE FAIR MARKET VALUE AS ON 01 .04.1981. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED THE CAP ITAL GAIN. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS ) FOUND THAT THE GUIDELINE VALUE INDICATES THE VALUE OF PROPERTY AT ` 27,000/- PER GROUND AS ON 01.04.1981. THE CIT(APPEALS) FOUND TH AT IT WAS NOT CLEAR WHETHER THE SUB-REGISTRAR OFFICE WAS GIVING V ALUE OF THE SAME 3 I.T.A. NO.1698/MDS/13 PROPERTY IN QUESTION OR OF A DIFFERENT PROPERTY. A CCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF APEX COURT IN RESPECT OF PROPERTIES, WHICH ARE LOCA TED AT CATHEDRAL ROAD AND PANTHEON ROAD. AFTER OBSERVING THAT CATHE DRAL ROAD AND PANTHEON ROAD ARE COMMERCIAL AREA, THE CIT(APPE ALS) FOUND THAT THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE IS REASONABLE. ACCORDING TO THE LD. D.R., THE PROPERTIES AT CATHED RAL ROAD AND PANTHEON ROAD CANNOT BE COMPARED WITH THE PROPERTY AT SARANGAPANI STREET, T. NAGAR. ACCORDING TO THE LD. D.R., FOR THE PURPOSE OF COMPARISON, THE PROPERTY HAS TO BE SITUA TED IN THE SAME AREA, THEREFORE, THE COMPARISON MADE BY THE CIT(APP EALS) IS NOT JUSTIFIED. 4. REFERRING TO THE VALUE OF THE BUILDING, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE BUILDING WAS 38 YEARS OLD AND IT WAS DEMOLISHED IN 1983. THEREFORE, ACCORDING TO THE LD. D.R., AFTER ALLOWIN G DEPRECIATION, THE MARKET VALUE WILL BE VERY LIMITED AS COMPARED TO TH E VALUE ADOPTED BY THE ASSESSEE. ACCORDING TO THE LD. D.R., THE AS SESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE HAS NOT VALUED THE BUILDING SEPARATELY. THE ASSESSEE ALSO DID NOT ACCEPT THE V ALUE OF LAND AND 4 I.T.A. NO.1698/MDS/13 BUILDING. HOWEVER, ACCORDING TO THE LD. D.R., THE ASSESSEE ADOPTED THE MARKET VALUE AT ` 7,50,000/- PER GROUND AS ON 01.04.1981. THE CIT(APPEALS), HOWEVER, FOUND THAT THE REMAINS OF TH E BUILDING WHEN DEMOLISHED WOULD HAVE FETCHED ` 15 LAKHS IN THE YEAR 1982 AND THE ASSESSEE HAS ADOPTED ONLY 46% OF ` 15 LAKHS AND THIS WAS REASONABLE. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) ACCEPTED THE FAIR MARKET VALUE ADOPTED BY THE ASSES SEE AS ON 01.04.1981. ACCORDING TO THE LD. D.R., THE DEPRECI ATION HAS TO BE TAKEN INTO CONSIDERATION WHILE VALUING THE PROPERTY AS ON 01.04.1981. 5. ON THE CONTRARY, DR. ANITA SUMANTH, THE LD.COUNS EL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER SIMP LY ADOPTED THE GUIDELINE VALUE FOR THE PURPOSE OF ADOPTING THE FAI R MARKET VALUE. ACCORDING TO THE LD. COUNSEL, GUIDELINE VALUE IS ON E OF THE FACTORS TO BE TAKEN INTO CONSIDERATION AND THE GUIDELINE VALUE MAY NOT REFLECT THE MARKET VALUE. ACCORDING TO THE LD. COUNSEL, WH AT IS REQUIRED TO BE DETERMINED IS THE MARKET VALUE OF THE PROPERTY A ND NOT THE GUIDELINE VALUE. THE GUIDELINE VALUE IS ONLY TO GU IDE THE SUB- REGISTRAR TO DETERMINE THE MARKET VALUE FOR THE PUR POSE OF COLLECTING STAMP DUTY. THE ASSESSING OFFICER, ACCORDING TO TH E LD. COUNSEL, 5 I.T.A. NO.1698/MDS/13 WITHOUT MAKING ANY FURTHER INVESTIGATION, ACCEPTED THE GUIDELINE VALUE AS FAIR MARKET VALUE. ACCORDING TO THE LD. C OUNSEL, THE CIT(APPEALS), AFTER COMPARING THE VALUE OF VARIOUS PROPERTIES, INCLUDING THE PROPERTIES AT CATHEDRAL ROAD AND PANT HEON ROAD, AND CIVIL SUITS PENDING IN THE PROPERTY, FOUND THAT NEA RER AND COMPARABLE PROPERTIES AND LOCALITIES HAVE TO BE TAKEN INTO CON SIDERATION FOR THE PURPOSE OF VALUING THE PROPERTY AS ON 01.04.1981. ACCORDINGLY, THE CIT(APPEALS) FOUND THAT THE VALUE ADOPTED BY THE AS SESSEE IS REASONABLE, HENCE, NEEDS TO BE ACCEPTED. 6. COMING TO THE VALUE OF THE BUILDING, THE LD.COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(APPEALS) FOUND THAT THE REMAINS OF THE BUILDING WHEN DEMOLISHED WOULD HAVE FETCHED ` 15 LAKHS IN THE YEAR 1982. WHEN THE REMAINS OF THE BUILDING WOULD HAVE FETCHED ` 15 LAKHS, THE ASSESSING OFFICER, SHOULD TAKE ENTIRE ` 15 LAKHS AS MARKET VALUE. IN FACT, ACCORDING TO THE LD. COUNSE L, THE ASSESSEE IS CLAIMING 46% OF ` 15 LAKHS, WHICH WAS FOUND TO BE REASONABLE. THE VALUE OF THE BUILDING HAS TO BE DETERMINED ON THE B ASIS OF MARKET VALUE AND NOT AFTER REDUCING THE DEPRECIATION. ACC ORDING TO THE LD. COUNSEL, WHAT IS REQUIRED TO DETERMINE IS MARKET VA LUE AS ON 01.04.1981 AND NOT THE BOOK VALUE. 6 I.T.A. NO.1698/MDS/13 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ESTIMATION OF FAIR MARK ET VALUE AS ON 01.04.1981. FOR THE PURPOSE OF COMPUTING THE CAPIT AL GAIN, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE ON THE BASIS OF GUIDELINE VALUE OF SUB-REGISTRAR. THE GUIDELINE VALUE OF THE SUB- REGISTRAR WAS ` 27,000/- PER GROUND AS ON 01.04.1981. THE ASSESSING OFFICER, ADOPTED THE FAIR MARKET VALUE AS ON 01.04.1981 AT ` 27,000/- PER GROUND. THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE ASSESSING OFFICER WAS EXPECTED TO DETERMIN E THE FAIR MARKET VALUE AS ON 01.04.1981. FAIR MARKET VALUE I S NOTHING BUT A PRICE THAT MAY BE AGREED BETWEEN THE WILLING PURCHA SER AND WILLING SELLER. GUIDELINE VALUE WILL NOT ALWAYS REFLECT TH E MARKET VALUE. THE GUIDELINE VALUE IS ONLY TO GUIDE THE SUB-REGISTRAR TO DETERMINE THE MARKET VALUE FOR THE PURPOSE OF COLLECTING STAMP DU TY. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE GUIDELINE VALUE OF SUB-REGISTRAR IS ONE OF THE FACTORS TO BE TAKEN INT O CONSIDERATION FOR THE PURPOSE OF DETERMINING THE FAIR MARKET VALUE AS ON 01.04.1981. MOREOVER, THE LOCATION OF THE PROPERTY, INFRASTRUC TURE FACILITIES AVAILABLE AROUND THE PROPERTY, PUBLIC ACCESS TO THE PROPERTY, 7 I.T.A. NO.1698/MDS/13 DISTANCE BETWEEN THE BUS STAND, RAILWAY STATION, AI RPORT FROM THE PROPERTY, POTENTIAL FOR FUTURE DEVELOPMENT, PROXIMI TY TO THE SCHOOLS, COLLEGES AND OTHER PUBLIC INSTITUTIONS, ETC. ARE NE EDED TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF DETERMINING T HE FAIR MARKET VALUE. IN THE CASE BEFORE US, THE PROPERTY IS ADMI TTEDLY LOCATED AT SARANGAPANI STREET, T. NAGAR, WHICH IS ONE OF THE P RIME AREAS IN THE CITY OF CHENNAI AND THERE ARE SEVERAL INFRASTRUCTUR E FACILITIES SUCH AS RAILWAY STATION, BUS STAND, MARKET AROUND THE LOCAL ITY. THERE ARE SCHOOLS, INSTITUTIONS AND BUSINESS ESTABLISHMENTS A RE AVAILABLE AROUND THE LOCALITY. WHILE TAKING INTO CONSIDERATI ON ALL THE FACILITIES AVAILABLE IN THE LOCALITY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE FA IR MARKET VALUE ESTIMATED BY THE ASSESSEE AS ON 01.04.1981 IS REASO NABLE AND ACCEPTABLE ONE. THIS TRIBUNAL DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY THE SAME IS CONFIRMED. 8. NOW COMING TO THE VALUE OF THE BUILDING, IF THE PROPERTY WAS DEMOLISHED AS ON 01.04.1981, IT WOULD HAVE FETCHED ` 15 LAKHS IN RESPECT OF DEBRIS AND OTHER MATERIAL USED IN CONSTR UCTION. THE ASSESSEE HAS CLAIMED ONLY 46% OF ` 15 LAKHS ESTIMATED. THEREFORE, 8 I.T.A. NO.1698/MDS/13 THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE CLAIM OF THE ASSESSEE IS REA SONABLE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 6 TH SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 6 TH SEPTEMBER, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-VI, CHENNAI 4. 1 92 /CIT-IV, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.