BHARAT P. SHAH, MUMBAI V. ITO 16(1)(1), MUMBAI

ITA 1717/MUM/2010

• Counselvise Citation: 171719914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 05-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B : MUMBAI BEFORE SHRI D.K. AGARWAL, (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.1717/MUM/2010 ASSESSMENT YEAR :2005-06 BHARAT P. SHAH 11, LEJARDIN, KASHIBAI NAVRANGE MARG GAMDEVI MUMBAI-400 007. ..( APPELLANT ) P.A. NO. (AAHPS 4943 H) VS. INCOME TAX OFFICER WARD 16(1)(1) MATRU MANDIR TARDEO MUMBAI. ..( RESPONDENT ) ITA NO.1718/MUM/2010 ASSESSMENT YEAR :2005-06 BHAVIN PANKAJ SHAH(HUF) 804, SHIVTIRTH NO.2, WEST WING 4/6, BHULABHAI DESAI ROAD MUMBAI-400 026. ..( APPELLANT ) P.A. NO. (AAMHS 8285 B) VS. INCOME TAX OFFICER WARD 16(1)(1) MATRU MANDIR TARDEO MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI REEPAL G. TRALSHAWALA RESPONDENT BY : SHRI P. C. MAURYA DATE OF HEARING : 9.8.2011 DATE OF PRONOUNCEMENT : 12 TH AUGUST, 2011 ITA NO.1717 & 1718/M/10 A.Y:05-06 2 O R D E R PER RAJENDRA SINGH (AM). THESE APPEALS BY THE TWO ASSESSEES ARE DIRECTED AGAINST DIFFERENT ORDERS BOTH DATED 8.1.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSEES IN THESE APPEALS HAVE RAISED DI SPUTES ON TWO DIFFERENT GROUNDS. AS DISPUTES RAISED ARE IDENTICAL, THESE APPEALS ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST DISPUTE IS REGARDING THE SALE VALUE OF THE PLOT SOLD BY THE ASSESSEES DURING THE YEAR FOR THE PURPOSE OF COMPUTATI ON OF CAPITAL GAIN. BOTH THE ASSESSEES WERE CO-OWNERS OF THE PRO PERTY SITUATED AT PLOT NO. 10 B(E) ON THE SION MATUNGA EST ATE, MUMBAI. DURING THE RELEVANT ASSESSMENT YEAR, THE PROPERTY WAS SOL D FOR A TOTAL CONSIDERATION OF RS.4.21 CRORES BUT FOR THE PURPOSE OF STA MP DUTY, THE PROPERTY HAD TO BE VALUED AT RS.4.94 CRORES. THE AO T HEREFORE ADOPTED STAMP DUTY VALUATION UNDER SECTION 50C OF THE INCOME TAX ACT, 1961 (THE ACT) WHILE COMPUTING CAPITAL GAIN WHICH WAS DISPUTED BY THE ASSESSEE. IN APPEAL THE ASSESSEE SUBMITTED THAT THE PROPERTY WAS TENANTED AND THEREFORE, MARKET VALUE WAS LOWER TH AN STAMP DUTY VALUATION. THE ASSESSEE HAD MADE SPECIFIC REQUEST TO THE A O FOR REFERRING THE VALUATION TO DVO WHICH HAD NOT BEEN DO NE. THE CIT(A) ITA NO.1717 & 1718/M/10 A.Y:05-06 3 HOWEVER, DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS O BSERVED BY HIM THAT, STATUTORILY, THE AO WAS NOT BOUND TO REFER THE MATTER TO THE VALUATION CELL AND THAT THE AO HAD BEEN GIVEN DISCRETI ON TO MAKE THE REFERENCE ONLY IN APPROPRIATE CASES. HE, THEREFORE, UPH ELD THE ORDER OF THE AO AGGRIEVED BY WHICH THE ASSESSES ARE IN APPEAL BEF ORE THE TRIBUNAL. 3. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTED THAT T HE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF TH E TRIBUNAL IN THE CASE OF MRS. ASHA BHARAT SHAH IN ITA NO.1716/M/2 010, WHO WAS ONE OF THE CO-OWNER IN THE SAME PROPERTY. THE LD. DR FAIRLY CONCEDED THAT THE ISSUE WAS COVERED. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING THE SALE VALUE OF THE PROPERTY SOLD BY THE ASSESSEES DURING THE YEAR. UNDER THE PROVISIONS O F SECTION 50C, IN CASE OF TRANSFER OF LAND OR BUILDING, IF THE SA LE VALUE DECLARED BY THE ASSESSEE IS LOWER THAN THE VALUATION MADE FOR STA MP DUTY PURPOSE AND THE STAMP DUTY VALUATION IS NOT FURTHER DI SPUTED THEN FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN STAMP DUTY V ALUE WILL BE DEEMED TO BE SALE VALUE. HOWEVER, UNDER THE PROVISIO NS OF SUB- SECTION (2) OF SECTION 50, IN CASE, THE ASSESSEE CLAIMS BEFORE THE AO THAT STAMP DUTY VALUE IS MORE THAN MARKET VALUE AND THE STAMP DUTY ITA NO.1717 & 1718/M/10 A.Y:05-06 4 VALUE IS NOT DISPUTED IN ANY LEGAL PROCEEDINGS, THE AO MAY REFER THE CASE TO THE VALUATION OFFICER. IN THIS CASE THE CLAIM OF THE ASSESSEE IS THAT IT HAD MADE SPECIFIC REQUEST TO THE AO FOR REFERRI NG THE MATTER TO THE VALUATION CELL AND THIS CLAIM IS NOT CONTROVERTED BEFORE US. IT HAS BEEN HELD BY THE JODHPUR BENCH OF THE TRIBUNAL IN CASE OF MEGHRAJ BAID VS. ITO (114 TTJ 814)(JD.) THAT THE WORD MAY USED IN SUB- SECTION (2) OF SECTION 50C SIGNIFIES THAT IN CASE AO IS N OT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THEN HE SHOULD REFER THE MATTER TO THE DVO FOR VALUATION. FOLLOWING THE SAID DECISION, THE TR IBUNAL IN CASE OF MRS. ASHA BHARAT SHAH ONE OF THE CO-OWNERS IN ITA NO.1 716/M/10 DIRECTED THE AO TO REFER THE MATTER TO THE DVO FOR D ETERMINING THE FAIR MARKET VALUE UNDER THE PROVISIONS OF SECTION 50C(2). THE FACTS IN THE PRESENT CASE ARE IDENTICAL AND THEREFORE, RESPECTFULLY FO LLOWING THE DECISION OF THE TRIBUNAL (SUPRA) IN CASE OF THE CO-OWNER, WE RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO REFER THE MATTER TO DVO AND PASS FRESH ORDER AFTER CONSIDERING THE SAID VALUATI ON OF DVO REFERENCE AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. THE SECOND DISPUTE IS REGARDING THE COST OF ACQUISITION OF THE PROPERTY. SINCE PROPERTY HAD BEEN ACQUIRED PRIOR TO 1.4.1981, THE COST THE UNDER THE PROVISIONS OF THE ACT IS DEEMED TO B E MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. THE ASSESSEE HAD DECLARE D VALUE OF PROPERTY AS ON 1.4.1981 AT RS.43,10,000/- ON THE BASIS OF REGISTERED ITA NO.1717 & 1718/M/10 A.Y:05-06 5 VALUERS REPORT AND INDEXED COST HAD BEEN COMPUTED AT RS.2,06,88,000/-. THE AO HOWEVER DID NOT ACCEPT THE VA LUE DECLARED BY THE ASSESSEE. HE REFERRED THE MATTER TO VALUATION CEL L UNDER SECTION 55(2)(II) OF THE ACT. THE ASSESSEE DISPUTED THE DE CISION OF THE AO IN MAKING REFERENCE TO THE VALUATION CELL. IN APP EAL THE CIT(A) HELD THAT IN CASE THE AO WAS NOT SATISFIED ABOUT VALUATI ON MADE BY APPROVED VALUER, HE WAS EMPOWERED TO REFER THE MATTE R TO THE VALUATION CELL. ACCORDINGLY, ACTION OF THE AO WAS UPHE LD, AGGRIEVED BY WHICH BOTH THE ASSESSEES ARE IN APPEAL BEFORE THE TRIBUNA L. 6. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M RS. ASHA BHARAT SHAH IN ITA NO.1716/M/10 WHO WAS ONE OF THE CO-OWNERS. THE TRIBUNAL NOTED THAT THE MARKET VALUE OF THE PROPERT Y AS ON 1.4.1981 AS PER REGISTERED VALUERS REPORT WAS RS.43,10,000/- WHER EAS THE DVO HAD DETERMINED FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS.29.62 LACS. THE TRIBUNAL ALSO REFERRED TO THE DECISIO N OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SARLA N. SAKRANEY VS. ITO 46 DTR(MUM.)(TRIB.) 208 IN WHICH THE TRIBUNAL HELD THAT WHEN THE VALUE DETERMINED BY THE REGISTERED VALUER WAS MOR E THAN THE VALUATION MADE BY THE DVO, THE REFERENCE MADE TO THE DVO WAS NOT VALID. ACCORDINGLY THE TRIBUNAL DIRECTED BY AO TO ACCEPT THE VALUE DECLARED BY THE ASSESSEE AS PER REPORT OF THE REGISTERED VALUER. THE ITA NO.1717 & 1718/M/10 A.Y:05-06 6 FACTS IN CASE OF THE ASSESSEES UNDER REFERENCE ARE SAME AS THEY ARE CO-OWNERS OF THE SAME PROPERTY. WE, THEREFORE, RESPECTF ULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF MRS. ASHA BH ARAT SHAH IN ITA NO.1716/M/10 DIRECT THE AO TO ACCEPT THE VALUATIO N DECLARED BY THE ASSESSEE AS ON 1.4.1981. 7. IN THE RESULT, APPEALS OF BOTH THE ASSESSES ARE ALLOWED IN TERMS OF THE ORDER ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 12.8.2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12.8.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.