LAXMAN PANDURANG DUDHE, Nagpur V. PRINCIPAL C.I.T. -2, Nagpur

ITA 177/NAG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9661 (ITAT-NAGPUR)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GITESH KUMAR SENIOR
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Corroborative evidences; Valuation report; Assessment record
• Section: 143(3); 50C; 263

Judgement Text

1 ITA - 177/NAG/2017 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI G.D. AGRAWAL, PRESIDENT AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO . 177/NAG/2017 ASSESSMENT YEAR : 2009 - 10 SHRI LAXMAN PANDURANG DUDHE, PLOT NO.1064, PRASAD APARTMENT, SAURABH NAGAR, LANE NO.1, SHUKRAWAR PETH, PUNE 411 002. PAN : AAOPD6782G. VS. PRINCIPAL COMMISSIONER OF INCOME - TAX - 2, NAGPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL HIRANI, CA. RESPONDENT BY : SHRI GITESH KUMAR, SENIOR DR. DATE OF HEARING : 05 .03.2018 DATE OF PRONOUNCEMENT : 05. 03.2018 O R D E R PER BENCH : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE REVISION ORDER OF PRINCIPAL COMMISSIONER OF INCOME TAX - 2, NAGPUR UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER THE ACT) DATED 9 TH MARCH, 2017. ASSESSMENT WAS FRAMED BY THE ITO, WARD - 1, WARDHA UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEAR 2009 - 10 VIDE HIS ORDER DATED 4 TH FEBRUARY, 2015. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSE E IS AGAINST THE REVISION ORDER OF PRINCIPAL CIT - 2, NAGPUR PASSED U/S 263 OF THE ACT REVISING THE ASSESSMENT IN RELATION TO LONG TERM CAPITAL GAIN VALUING THE 2 ITA - 177/NAG/2017 PROPERTY AS ON 1.4.1981 AND ALSO REGARDING DISALLOWANCE OF DALALI EXPENSES. FOR THIS, THE ASSESS EE HAS RAISED FOLLOWING SIX GROUNDS : - 1. THE NOTICE ISSUED U/S 263 AND THE ORDER PASSED U/S 263 ARE ILLEGAL AS THE SAME ARE NOT IN CONFORMITY TO THE BASIC REQUIREMENTS OF SECTION 263. 2. WITHOUT PREJUDICE TO ABOVE, THE NOTICE AND PROCEEDINGS U/S 263 AR E INVALID AS THE ORDER PASSED BY AO U/S 143(3) R.W.S. 147 WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THE LD.AO HAVING EXAMINED THE CLAIM OF THE APPELLANT IN RELATION TO THE LONG TERM CAPITAL GAINS AND FURTHER MADE AN ADDITION OF RS.15,41,716/ - AFTER INDEPENDENTLY RECOMPUTING THE CAPITAL GAINS, THE ORDER OF THE AO IS NOT AMENABLE TO BE REVISED U/S 263. 4. THE PR. COMMISSIONER OF INCOME TAX - 1 GROSSLY ERRED IN HOLDING THAT THE LD.AO OUGHT TO HAVE REFERRED THE PROPERTY SOLD TO DVO FOR VALUATION AND FURTHER ERRONEOUSLY BASING THE REVISION U/S 263 ON THE SAME. THE AO HAS BEEN GRANTED AN OPTION TO REFER THE VALUATION OF PROPERTY TO THE DVO IN CASES WHERE THE AO FEELS THE NEED TO DO SO. THE AO IN THE PRESENT CASE BEING SATISFIED WITH THE VALUATION AS SUBMITTED BY THE APPELLANT ACCEPTED THE VALUATION AND ASSESSED THE CAPITAL GAINS. THE LD.AO HAVING TAKEN A VIEW IN ACCORDANCE WITH LAW, THE ORDER OF THE AO CANNOT BE HELD TO BE AMENABLE TO BE REVISED U/S 263 FOR FAILURE TO REFER THE VALUA TION TO THE DVO. 5. THE AO WHILE PASSING HIS ORDER U/S 143(3) R.W.S. 147 HELD THE VALUATION AS PER THE VALUATION REPORT TO BE PROPER AND THUS ADOPTED ONE OF THE POSSIBLE TWO VIEWS AND THEREFORE HIS ORDER CANNOT BE TERMED AS ERRONEOUS AND IS NOT AMENABLE T O BE REVISED U/S 263. 6. THE LD.AO HAVING EXAMINED THE CLAIM OF THE APPELLANT IN RELATION TO THE LONG TERM CAPITAL GAINS INCLUDING THE TRANSFER EXPENSES OF RS.3,40,000/ - WHILE INDEPENDENTLY CALCULATING THE LONG TERM CAPITAL GAINS IN THE ASSESSMENT ORDER A ND SPECIFICALLY GRANTING THE BENEFIT OF THE TRANSFER EXPENSES OF RS.3,40,000/ - , THE ORDER OF THE AO IS NOT AMENABLE TO BE REVISED U/S 263 3 ITA - 177/NAG/2017 ON THE GROUND OF INSUFFICIENT ENQUIRY RELATING TO ALLOWANCE OF RS.3,40,000/ - . 3. BRIEFLY STATED, FACTS ARE THAT THE ASSESSEE ALONG WITH TWO OTHER CO - OWNERS SOLD AN IMMOVABLE PROPERTY SITUATED AT PLOT NO.2/3, MUNICIPAL NO.192, BLOCK NO.11, JAGANNATH WARD, HINGANGHAT, DISTRICT WARDHA, KNOWN AS SHRIRAM TALKIES. ADMITTEDLY, THIS PROPERTY WAS ACQUIRED BY THE ASSESSEE ALONG WITH OTHER CO - OWNERS BEFORE 1981. THE ASSESSEE HAS 59% SHARE IN THE ABOVE SOLD PROPERTY. ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FILED VALUATION REPORT FROM THE REGISTERED VALUER N.V. TIWASKAR DATED 6 TH NOV EMBER, 2008 ESTIMATING THE VALUE OF THE PROPERTY AS ON 1.4.1981 AT `23.62 LAKHS. THE ASSESSEE FURTHER CLAIMED THAT HE HAS INCURRED AN AMOUNT OF `15.11 LAKHS TOWARDS IMPROVEMENT EXPENSES IN THE YEAR 1998 - 99 AND ASSESSING OFFICER HAS ACCORDINGLY VALUED THE LONG TERM CAPITAL GAIN VIDE HIS ASSESSMENT ORDER DATED 4 TH FEBRUARY, 2015 PASSED U/S 143(3) READ WITH SECTION 147 OF THE ACT. THE ASSESSING OFFICER COMPUTED THE LONG TERM CAPITAL GAIN AS UNDER : - TOTAL SALE CONSIDERATION AS PER SECTION 50C : RS.1,70,00,000/ - AS PER DETAILS SUBMITTED BY YOU THE COST OF ACQUISITION VALUED AT : RS.19,32,000/ - ON 01.04.1981 INDEXED COST OF ACQUISITION : RS.1,12,44,240/ - COST OF IMPROVEMENT (AS SHOWN IN VALUATION REPORT) : RS.15,11,000/ - IN 1998 - 99 INDEXED COST OF IMPROVEMENT : RS.23,08,141/ - EXPENSES ON TRANSFER : RS.03,40,000/ - LONG TERM CAPITAL GAIN : RS.31,07,619/ - YOUR SHARE (59%) : RS.18,33,495/ - 4. SUBSEQUENTLY, CIT, ON EXAMINATION OF RECORDS, NOTED THAT THE ASSESSEE HAS CLAIMED INDEXED COST OF IMPROVEMENT AT `24,18,690/ - BUT ASSESSEE HAS NOT SUBMITTED ANY SUPPORTING EVIDENCE IN RESPECT OF THESE EXPENSES. FURTHER, CIT WAS OF THE VIEW THAT THE ASSESS ING OFFICER HAS ERRONEOUSLY ALLOWED DALALI EXPENSES OF `3.40 LAKHS WITHOUT ANY 4 ITA - 177/NAG/2017 DOCUMENTARY EVIDENCE. FURTHERMORE, ACCORDING TO CIT, THE ASSESSING OFFICER HAS PASSED ASSESSMENT ORDER WITHOUT MAKING ANY ENQUIRY OR VERIFICATION IN REGARD TO COMPUTATION OF CA PITAL GAIN RELYING UPON REGISTERED VALUERS REPORT ASCERTAINING THE CORRECT FAIR MARKET VALUE AS ON 1.4.1981. ACCORDINGLY, THE CIT DIRECTED THE ASSESSING OFFICER TO REVISE THE ASSESSMENT ACCORDINGLY. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. ADMITTED FACTS ARE THAT THE ASSESSEE ALONG WITH OTHER CO - OWNERS SOLD AN IMMOVABLE PROPERTY FOR A TOTAL CONSIDERATION OF `1.70 CRORES. ADMITTEDLY, THE ASS ESSEE BECAME OWNER OF THE SAID PROPERTY BEFORE 1981. ADMITTED FACTS ARE THAT THE REGISTERED VALUERS REPORT DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981, WHICH IS DETERMINED AT `23.62 LAKHS WAS FILED BEFORE HIM. ADMITTEDLY, THE ASSESS EE INCURRED AN AMOUNT OF `3.40 LAKHS TOWARDS EXPENSES ON SALE OF THIS PROPERTY I.E., DALALI EXPENSES AND ASSESSEE, IN REGARD TO ABOVE DETAILS AND AS PER LAW, COMPUTED THE CAPITAL GAIN ON SALE OF THE PROPERTY. DURING ASSESSMENT PROCEEDINGS, ALL THE DETAILS AS DESIRED BY THE ASSESSING OFFICER WERE FURNISHED FROM TIME TO TIME AND ASSESSING OFFICER, VIDE HIS ORDER DATED 4 TH FEBRUARY, 2015 U/S 143(3) READ WITH SECTION 147 OF THE ACT, ENHANCED THE LONG TERM CAPITAL GAIN TO THE ASSESSEE TO `18,33,495/ - THEREBY MA KING AN ADDITION OF `15,41,716/ - . THIS ADDITION IS UNDER CHALLENGE BEFORE CIT(A) AS INFORMED BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT WAS EXPLAINED BEFORE US AND WE HAVE ALSO GONE THROUGH THE RECORDS AND NOTICED THAT THE CITS FIRST OBSERVATION THAT T HE ASSESSEE HAS CLAIMED INDEXED COST OF IMPROVEMENT OF `24,18,619/ - IS TOTALLY WRONG BECAUSE THE ASSESSING OFFICER HAS TAKEN COST OF IMPROVEMENT AT `15,11,000/ - AND NOT `24,18,619/ - AS ALLEGED BY THE CIT. HOWEVER, ANOTHER OBSERVATION OF CIT THAT THE VALUA TION REPORT NEITHER CONTAINED ANY SUCH VALUE OF `15,11,000/ - , LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO 5 ITA - 177/NAG/2017 THE VALUATION REPORT DATED 6 TH NOVEMBER, 2008 OF THE REGISTERED VALUER AT PAGE 29 OF THE ASSESSEES PAPER BOOK, INNER PAGE 10 OF THE REPORT , ITEM NO.4.6, WHEREIN VALUE AS ON 1.4.1981 IS TAKEN AT `15,11,000/ - . THIS FACT IS PROVED BY THE ASSESSEE BEFORE US. 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND THAT FIRST WITH RESPECT TO THE INDEXED COST OF ACQUISITION OF ` 24,18,619/ - , WE A RE OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT ALLOWED THE ABOVE STATED CLAIM, RATHER THE ASSESSING OFFICER HAS TAKEN THE COST OF IMPROVEMENT AT `15,11,000/ - IN THE YEAR 1998 - 99 AS SUPPORTED BY THE VALUATION REPORT OF THE REGISTERED VALUER. WITH RESPEC T TO GRANT OF INDEXED COST OF IMPROVEMENT, CONSIDERING THE AMOUNT OF `15,11,000/ - PERTAINING TO CONSTRUCTION OF SHOPS IN 1998 - 99, THE ASSESSING OFFICER HIMSELF HAS RECORDED THIS FACT IN THE ASSESSMENT RECORD AND THE RELEVANT COMPUTATION WE HAVE ALREADY REP RODUCED ABOVE. WITH RESPECT TO THE AMOUNT OF `3.40 LAKHS TOWARDS EXPENSES ON TRANSFER I.E., DALALI EXPENSES, ASSESSING OFFICER HAS ALLOWED THE SAID CLAIM AFTER GOING THROUGH THE DOCUMENTS AND AFTER BEING SATISFIED ABOUT THE CLAIM. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEES ISSUE IS SQUARELY COVERED IN HIS FAVOUR BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LTD. (2007) 213 CTR 266 (SC). ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THIS IS NOT A FIT CASE FOR REVISION AS THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 05. 03.2018. SD/ - SD/ - (G.D. AGRAWAL) ( MAHAVIR SINGH ) PRESIDENT JUDICIAL MEMBER DATED : 05 .03.2018 VK. 6 ITA - 177/NAG/2017 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CONCERNED CIT 4. THE CIT(A) 5. D.R. ASSISTANT REGISTRAR