Shardaben Chimanlal Patel, Vadodara V. ITO, Ward-1(2) (5), Vadodara

ITA 1754/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8608 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value; Valuation report

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.902/AHD/2017 / ASSTT. YEAR: 2009-10 SMT. DHIRAJBEN PRAVINBHAI PATEL RAMIPOURA, DAKOR DIST. KHEDA NADIAD 388 225 PAN : BGWPP 6338 R VS. ITO, WARD-3 NADIAD. ITA NO.1754/AHD/2017 / ASSTT. YEAR: 2009-10 SHARDABEN CHIMANLAL PATEL KAL BHAIRAV MANDIR SEVASI VADODARA. PAN : BOBPP 2349 F VS. ITO, WARD-1(2)(5) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SUNIL TALATI, AR REVENUE BY : SHRI JAYANT JHAVERI, SR.DR ! / DATE OF HEARING : 08/04/2019 '#$ ! / DATE OF PRONOUNCEMENT: 10 /04/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEES AGAINST THE ORDERS OF THE LD.CIT(A)-2, VA DODARA DATED 13.1.2017 AND 3.4.2017 PASSED FOR THE ASSTT.YEAR 20 09-10 ON THE RESPECTIVE APPEALS OF THE ASSESSEES. ITA NO.902 AND 1754/AHD/2017 2 2. SOLITARY SUBSTANTIAL GRIEVANCE OF BOTH THE APPEL LANTS RELATES TO DETERMINATION OF LONG TERM CAPITAL GAIN ASSESSAB LE IN THEIR HANDS ON TRANSFER OF ASSETS. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. 4. AS FACTS EMERGE OUT FROM THE RECORD, BOTH THE AP PELLANTS ARE CO-OWNERS OF THE LAND BEARING RS/BLOCK NO.315, 312, 306, VILLAGE GORVA, VADODARA. THEY HAVE SOLD THIS PIECE OF LAND DURING THE ACCOUNTING YEAR RELEVANT TO THIS ASSESSMENT ORDER. THE SALE CONSIDERATION HAS BEEN RECEIVED AS UNDER: I) SHARDABEN CHIMANBHAI PATEL RS.53,50,000/- II) SURESHBHAI CHIMANBHAI PATEL RS.53,50,000/- III) LATE HANSABEN SHANKARBHAI RS.67,50,000/- I) SHIRISHBHAI SHANKARBHAI PATEL II) JIGNESHBHAI SL PATEL III) ANILBHAI S. PATEL EACH 1/3 IV) DHIRAJBEN PRAVINBHAI PATEL RS.63,50,000/- 5. SMT. DHIRAJBEN PRAVINBHAI PATEL HAS SHOWN HER SH ARE IN THE SALE PROCEEDS AT RS.63,50,000/- IN HER COMPUTATION OF INCOME. SHE HAS TAKEN THE VALUE OF SAID LAND AT RS.37,71,87 0/- AS ON 1.4.1981. HER SHARE WAS 1/5 TH . SHE HAD COMPUTED INDEXED COST OF ACQUISITION AT RS.58,56,870/- AND COMPUTED LONG TERM CAPITAL AT RS.4,93,130/-. SIMILARLY, SMT. SHARDABEN CHIMANBHA I PATEL HAS ALSO SHOWN LONG TERM CAPITAL GAIN OF RS.4,15,129/-. THE LD.AO HAS MADE A REFERENCE TO THE VALUATION OFFICER WHO DETER MINED THE VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS.24,72,50 0/- AS AGAINST THE DECLARED VALUE OF RS.37,71,870/- BY THE ASSESSE E. THE LD.AO HAS COMPUTED THE LONG TERM CAPITAL GAIN ASSESSABLE IN THE HANDS ITA NO.902 AND 1754/AHD/2017 3 OF BOTH THE ASSESSEES ON THE BASIS OF VALUE DETERMI NED BY VALUATION OFFICER AS ON 1.4.1981. IN OTHER WORDS, HE TOOK INDEXED COST FOR THE PURPOSE OF ACQUISITION ON THE STRENGTH OF VALUE DETERMINED BY THE DVO AS ON 1.4.1981. APPEALS TO T HE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEES. 6. THE QUESTION BEFORE US IS, WHETHER REFERENCE UND ER SECTION 55A COULD BE MADE FOR DETERMINING THE FAIR MARKET V ALUE OF THE PROPERTY AS ON 1.4.1981. ACCORDING TO THE LD.COUNS EL FOR THE ASSESSEES, THE VALUE DECLARED BY BOTH THE APPELLANT S ON THE BASIS OF REGISTERED VALUATION REPORT WAS MORE THAN THE FA IR MARKET VALUE SOUGHT TO BE DETERMINED BY THE AO. IF THE VALUE WA S MORE THAN THE VALUE BEFORE 1.7.2012, THE LD.AO CANNOT MAKE A REFERENCE TO THE DVO FOR DETERMINING FAIR MARKET VALUE OF THE PR OPERTY AS ON 1.4.1981. FOR BUTTRESSING HIS CONTENTION, HE RELIE D UPON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. GAURANGINIBEN S. SHODHAN INDL. VS. CIT, 45 TAXMANN. COM 356 (GUJ) AND ORDER OF ITAT IN THE CASE OF SHRI DEVENDR A RASIKLAL SHAH, ITA NO.2027/AHD/2015. HE PLACED ON RECORD CO PIES BOTH THESE DECISIONS. 7. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE FIND THAT THE ITAT IN THE CASE OF SHRI DEVENDRA RASIKLAL SHAH (SU PRA) HAS CONSIDERED JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GAURANGINIBEN S. SHODHAN (SUPRA) AND HAS HE LD THAT IF THE VALUE DECLARED BY AN ASSESSEE AS ON 1.4.1981 ON THE STRENGTH OF REGISTERED VALUERS REPORT IS MORE THAN THE FAIR MA RKET VALUE SOUGHT TO BE DETERMINED BY THE AO, THEN REFERENCE U NDER SECTION ITA NO.902 AND 1754/AHD/2017 4 55A FOR DETERMINING FAIR MARKET VALUE BY THE DVO CA NNOT BE SENT. THE DISCUSSION MADE BY THE TRIBUNAL READS AS UNDER: 10. I HAVE DULY CONSIDERED THE RIVAL CONTENTION AN D GONE THROUGH THE RECORD. SHORT ISSUE FOR MY ADJUDICATION IS, WHETHER REFERENCE TO THE DVO MADE BY THE ASSESSING OFFICER WAS WITHIN THE PARAMETER OF LAW OR NOT ? BEFORE I AD VERT TO THE FACTS OF PRESENT CASE, I WOULD LIKE TO MAKE REF ERENCE TO RELEVANT PART OF THE DECISION OF HONBLE GUJARAT H IGH COURT IN THE CASE OF GAURANGINIBEN S. SHODHAN ON THIS ISS UE WHICH READS AS UNDER:- 15. COMING TO THE QUESTION OF REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE AS ON 1.4.1981 A LSO, WE FIND THAT SUCH REFERENCE WAS NOT COMPETENT. WE HAVE NOTICED THAT PRIOR TO THE AMENDMENT IN SECTION 55A WITH EFFECT FROM 1.7.2012 IN A CASE, THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MARKET VALUE AS ON 1.4.1981. IT WOULD NOT BE THE CASE OF THE ASSESSING OFFICER THAT THE VALUE OF THE ASSET SHOWN AS ON 1.4.1981 WAS LESS THAN THE FAIR MARKET VALUE. SUCH CLAUSE, 'THEREFORE, AS IT STOOD AT THE RELEVANT TIM E, HAD NO APPLICATION TO THE VALUATION AS ON 1.4.1981. WE ARE CONSCIOUS THAT WITH EFFECT FROM 1.7.2012, THE EXPRESSION NOW USED IN CLAUSE (A) OF SECTION 55A IS 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE'. THE SITUAT ION MAY, THEREFORE, BE DIFFERENT AFTER 1.7.2012. WE ARE , HOWEVER, CONCERNED WITH THE PERIOD PRIOR THERETO. CLAUSE (B) OF SECTION 55 A IS IN TWO PARTS AND PERM ITS A REFERENCE TO DVO IF THE ASSESSING OFFICER IS OF THE OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET SO CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVI NG ITA NO.902 AND 1754/AHD/2017 5 REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVAN T CIRCUMSTANCES, IT IS NECESSARY SO TO DO. SUB-CLAUSE (I) OF CLAUSE (B) ALSO FOR THE SAME REASONS RECORDED ABOVE , WOULD HAVE NO BEARING ON THE FAIR MARKET VALUE AS O N 1,4.1981. THE ASSESSING OFFICER HAD NOT RESORTED TO SUB-CLAUSE(II) OF CLAUSE (B). IN ANY CASE, CLAUSE ( B) WOULD APPLY WHERE CLAUSE(A) DOES NOT APPLY SINCE IT STARTS WITH THE EXPRESSION 'IN ANY OTHER CASE'. IN OTHER WORDS IF ASSESSEE HAS RELIED UPON A REGISTERED VALU ER'S REPORT, ASSESSING OFFICER CAN PROCEED ONLY UNDER CLAUSE (A) AND CLAUSE (B) WOULD NOT BE APPLICABLE, 16. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSEE HA D RELIED ON THE ESTIMATE MADE BY THE REGISTERED VALUE R FOR THE PURPOSE OF SUPPORTING ITS VALUE OF THE ASSE T. ANY SUCH SITUATION WOULD BE GOVERNED BY CLAUSE (A) OF SECTION 55A OF THE ACT AND THE ASSESSING OFFICER CO ULD NOT HAVE RESORTED TO CLAUSE (B) THEREOF AS HELD BY THE DIVISION BENCH OF THIS COURT IN THE CASE OF HIABEN JAYANTILAL SHAH V. ITO [20091 310 1TR 31/181 TAXMAN 191 (GUJ.). IN THE SAID DECISION, IT WAS HELD AND OBSERVED AS UNDER: '10. UNDER CLAUSE(A) OF SEC. 55A OF THE ACT UNDER THE ASSESSING OFFICER IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE, AS PROVIDED UNDER CLAUSE(B) OF SEC. 55 A OF THE ACT, THE ASSESSING OFFICER HAS TO RECORD AN OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY TO MAKE SUCH A REFERENCE.' ITA NO.902 AND 1754/AHD/2017 6 17. IN THE RESULT, WE SEE NO REASON TO INTERFERE. HOWEVER, WE HAVE GIVEN OUR INDEPENDENT REASONS AND SHOULD NOT BE SEEN TO HAVE CONFIRMED THE REASONINGS ADOPTED BY THE TRIBUNAL IN THE IMPUGNED JUDGMENT. TAX APPEAL IS DISMISSED. 11. THE HONBLE HIGH COURT HAS SPECIFICALLY HELD TH AT PRIOR TO THE AMENDMENT IN SECTION 55A WITH EFFECT FROM 01.07.2012 IN A CASE, THE VALUE OF THE ASSETS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MA RKET VALUE AS ON 01.04.1981 THAN REFERENCE CAN BE MADE. IN THE PRESENT CASE THE VALUE ADOPTED BY THE ASSESSEE ON T HE BASIS OF REGISTERED VALUER WAS NOT LESS THAN FAIR MARKET VALUE RATHER IT WAS ON THE HIGHER SIDE. THE ASSESSING OFF ICER WANTS TO REDUCE THE VALUE I.E COST OF ACQUISITION AS ON 0 1.04.1981. IT IS NOT PERMISSIBLE PRIOR TO THE AMENDMENT CARRIE D OUT IN THE SECTION 55A. WHETHER THIS AMENDMENT CAN BE TAKE N INTO CONSIDERATION FOR THIS ASSESSMENT YEAR I.E 2008-09 IS CONCERNED. THIS ASPECT COVERED BY THE DECISION OF BO MBAY HIGH COURT EXTRACTED (SUPRA). 11. RESPECTFULLY FOLLOWING THESE TWO DECISIONS I AL LOW THE APPEAL OF ASSESSEE AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE CAPITAL GAIN ARISEN TO THE ASSESSEE W ITHOUT TAKING COGNIZANCE OF THE REPORT OF DVO. 8. THERE IS NO DISPARITY ON FACTS IN THE PRESENT AP PEALS. BOTH THE ASSESSEES HAVE DECLARED COST OF ACQUISITION FOR THE PURPOSE OF INDEXATION AS ON 1.4.1981 MORE THAN THE ONE DETERMI NED BY THE DVO. THUS, THE AO WAS NOT POSSESSING ANY MATERIAL WHICH CAN SUGGEST THAT THE VALUE DECLARED BY THE ASSESSEES WA S LESS THAN THE FAIR MARKET VALUE AS ON 1.4.1981. THEREFORE, I T REQUIRES TO BE RE-DETERMINED. IN THE ABOVE SITUATION, HE CANNOT M AKE A REFERENCE UNDER SECTION 55A TO THE DVO, AND IF THE REFERENCE CANNOT BE MADE, THEN COGNIZANCE OF THAT CANNOT BE T AKEN FOR ITA NO.902 AND 1754/AHD/2017 7 DETERMINING LONG TERM CAPITAL GAIN ASSESSABLE IN TH E HANDS OF BOTH THE APPELLANTS. IN VIEW OF THE ABOVE DISCUSSION, W E ALLOW THIS FOLD OF GRIEVANCE AND DIRECT THE AO TO ACCEPT LONG TERM CAPITAL GAIN DISCLOSED BY BOTH THE APPELLANTS ON THE BASIS OF RE GISTERED VALUERS REPORT. 9. IN THE RESULT, BOTH APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH APRIL, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER