ACIT 10(2), MUMBAI V. MAMAL CAPACITORS P. LTD, MUMBAI

ITA 1786/MUM/2010

• Counselvise Citation: 178619914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SONDE
• Assessee Lawyers: PARTHA SARATHI NAIK
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO. 2270/MUM/2008 ASSESSMENT YEAR- 2004-05 SMT. MEENAKUMARI RANKA, C/O KARNAVAT & CO., 2A KITAB MAHAL, 1 ST FLOOR, 192 DR. D.N. ROAD, MUMBAI-400 001 PAN-AACPR 1122J VS. THE ACIT, RANGE 24(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.V. SONDE RESPONDENT BY: SHRI PARTHA SARATHI NAIK O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 21.1.2008 PASSED BY THE LD. CIT(A)-XXIV FOR T HE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE IS AN INDIVIDUAL AND THE INCOME CON SISTED OF INTEREST INCOME AND CAPITAL GAIN. DURING THE YEAR, THE ASSES SEE SOLD ITS OFFICE PREMISES AT MITTAL COURT. THE ASSESSEE HAS WORKED O UT THE CAPITAL GAIN ON SALE OF THIS PROPERTY AT RS.64,34,568/- AND THER EAFTER CLAIMED DEDUCTION UNDER SEC.54EC OF THE I.T ACT INVESTING T HE CAPITAL GAIN IN NATIONAL HOUSING BANK BONDS. FROM THE DETAILS FILED , IT IS NOTICED THAT THE CONSIDERATION SHOWN IN THE AGREEMENT WAS RS.81, 00,000/- WHEREAS THE STAMP AUTHORITY FOR REGISTRATION PURPOSES ADOPT ED THE VALUE AT RS.1,28,59,000/-. IN THE LIGHT OF THE PROVISIONS OF SEC.50C, THE ASSESSEE WAS ASKED TO SHOW-CAUSE WHY THIS VALUE OF RS.128590 00 SHOULD NOT BE ITA NO. 2270/M/08 2 CONSIDERED FOR THE PURPOSE OF COMPUTATION OF CAPITA L GAIN. THE ASSESSEE OBJECTED TO THE SAME SUBMITTING AS UNDER: PARA 3)II. THE STAMP VALUATION AUTHORITY HAS TAKEN THE MARKET VALUE OF THE PREMISES AT MITTAL COURT FOR STAMPING PURPOS E AT RS.1,28,59,000/-AS AGAINST THE ASSESSEES ACTUAL SA LE CONSIDERATION OF RS.81,00,000/-. AS SUCH, MARKET VALUE TAKEN BY T HE STAMP VALUATION AUTHORITY IS EXCEEDING THE FAIR MARKET VA LUE OF THE PROPERTY. IN THIS CONNECTION, WE ARE ENCLOSING HERE WITH A COPY OF THE VALUATION REPORT OF GOVT. REGISTERED VALUER, MR. V. R. SHAH, FOR MARKET VALUE OF THE PROPERTY AS ON 8.9.2003 (DATE O F SALE). AS SUCH, WE WOULD REQUEST YOU TO KINDLY TAKE THE ACTUAL SALE CONSIDERATION OF RS.81,00,000/- RECEIVED BY THE ASSESSEE FOR THE PUR POSE OF COMPUTING LOG TERM CAPITAL GAIN UNDER THE HEAD CAP ITAL GAINS. EVEN STILL YOUR HONOUR IS NOT AGREE WITH OUR CONTEN TION, THEN THE MATTER MAY BE REFERRED TO THE VALUATION OFFICER FOR THE PURPOSE OF VALUATION AS PROVIDED IN SECTION 50C(2) OF THE I.T. ACT, 1961. 3. THE AO HELD AS FOLLOWS: SINCE THE ASSESSEE HAS OBJECTED TO THE COMPUTATION OF CAPITAL GAIN TAKING THE CONSIDERATION OF RS.12859000/-, THE MATTER WAS REFERRED TO THE DISTRICT VALUATION OFFICER, -I. MUM BAI ON 12.6.2006 FOR VALUATION OF THE PROPERTY AS PER SEC.50C OF THE ACT . THE REPORT OF THE DVO HAS NOT BEEN RECEIVED SO FAR. SINCE THE ASSESSM ENT IS GETTING BARRED BY LIMITATION, THE ASSESSMENT IS BEING COMPL ETED ON THE BASIS OF VALUE AS ADOPTED BY THE STAMP AUTHORITY, I.E. RS .1,28,59,000 AND THE CAPITAL GAIN IS COMPUTED ACCORDINGLY. 4. THE ASSESSING OFFICER DETERMINED THE TOTAL INCOM E AT RS. 1,55,47,870/-. THE REPORT OF THE DVO DT. 24.10.200 7 WAS OBTAINED DURING THE APPELLATE PROCEEDINGS AND THE ASSESSING OFFICER SENT THE REPORT OF THE DVO TO THE LD. CIT(A). THE DVO ASSES SED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 8.9.2003 I.E. THE DATE OF TRANSFER AT RS.1,29,56,300/- AT RS. 11,150 PER SQ. FT. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). THE LD. CIT(A) HELD AS FOLLOWS: ITA NO. 2270/M/08 3 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMIS SIONS OF LD. A.R. OF THE APPELLANT CAREFULLY. AS PER THE PRO VISIONS OF SECTION 50C(1) OF THE INCOME-TAX ACT, 1961, THE STAMP DUTY VALUATION SHALL BE DEEMED TO BE THE FULL VALUATION OF CONSIDERATION IF THE CONSIDERATION RECEIVED IS LESS THAN THE STAMP DUTY VALUATION. AS PER SECTION 50C(2) OF THE INCOME-TAX ACT, 1961, THE ASS ESSING OFFICER MAY REFER THE VALUATION OF THE PROPERTY TO THE VALU ATION OFFICER IF THE ASSESSEE CLAIMS BEFORE HIM THAT THE STAMP DUTY VALU ATION WAS MORE THAN THE FAIR MARKET VALUE OF THE PROPERTY AND HE W ILL APPLY THE VALUATION MADE BY THE VALUATION OFFICER. HOWEVER, A S PER SECTION 50C(3) IF THE VALUATION MADE BY THE VALUATION OFFIC ER IS HIGHER THAN THE STAMP DUTY VALUATION, THE STAMP DUTY VALUATION SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION. IN THIS CAS E AS THE STAMP DUTY VALUATION IS MORE THAN THE CONSIDERATION RECEIVED A ND FURTHER AS THE VALUATION MADE BY THE DISTRICT VALUATION OFFICER IS MORE THAN THE STAMP DUTY VALUATION, THE STAMP DUTY VALUATION HAS TO BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION AS PER SECTION 50C OF THE ACT. THE ASSESSING OFFICER COMPUTED THE CAPITAL GAIN BY TAKI NG THE STAMP DUTY VALUATION AS THE FULL VALUE OF CONSIDERATION. THE ASSESSMENT MADE BY HIM WAS PERFECTLY AS PER LAW. I, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE THEREWITH. THIS GROUND IS REJEC TED. 6. THE LD. COUNSEL FOR THE ASSESSEE SHRI A.V. SONDE BROUGHT OUT THE FACTS OF THE CASE CLEARLY AS FOLLOWS: 1) THE VALUATION REPORT DT. 24.10.2007 WAS ISSUED BY T HE DISTRICT VALUATION OFFICER WHICH ARE REPRODUCED AT PAGES 26 TO 38 OF THE PAPER BOOK. TO THIS VALUATION REPORT REPLY WAS GIV EN BY THE ASSESSEE TO THE DVO AGAINST THE PRIMARY VALUATION R EPORT AND ALSO COPIES OF SALE INSTANCES. 2) CERTIFICATE ISSUED FROM THE INCOME TAX AUTHORITY UN DER SECTION 269UL(3) IN RESPECT OF PREMISES NO. 154 OF MITTAL COURT. 7. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THA T IN OBJECTION TO THE PRELIMINARY REPORT PREPARED BY THE DVO, THE ASS ESSEE HAS RAISED THE FOLLOWING: ITA NO. 2270/M/08 4 IN THE STAMP DUTY RECKONER OF 2002, THE RATES OF O FFICE PREMISES IS CONSIDERED AT 2,25,000 PER SQ. MTS. WHI CH HAS REDUCED TO 1,54,500 PER SQ. MTRS. IN THE STAMP DUTY RECKON ER OF 2003 (ANNEXURE-B) AND 2004 (ANNEXURE-C). THE ABOVE TREND CLEARLY INDICATES THAT AS COMPARED TO 2002, THE PRICE IN 20 03 HAVE FALLEN BY AROUND 1/3 RD . AS SUCH, IT IS ABUNDANTLY CLEAR THAT THERE WAS A DEPRESSION IN THE PROPERTY IN NARIMAN POINT TILL 20 04, WHICH HAVE EVEN BEEN ACKNOWLEDGED BY STAMP DUTY RECKONER. EVEN THE APPROPRIATE AUTHORITY (INCOME TAX DEPARTM ENT), A WING, 3 RD FLOOR, MITTAL COURT, NARIMAN POINT, MUMBAI-400 021 VIDE THEIR ORDER NO.A.A./23739/MUM/CERT./2002-03 DATED 2 6.07.2002 HAS ACCEPTED SALE TRANSACTION IN RESPECT OF PREMISE S NO.154 OF MITTAL COURT IN THE MONTH OF MAY, 2002 FOR A TOTAL SUM OF RS.97 LAKHS FOR BUILT UP AREA OF 1282 SQ. FT. WHICH GIVES RATE OF R S.7,560/- PER SQ. FT. AND HAS ISSUED CERTIFICATE U/S.269UL(3) OF THE I.T. ACT, 1961 (ANNEXURE-D). 8. THE LD. COUNSEL FOR THE ASSESSEE FURTHER TOOK US THROUGH ANNEXURE-I RECORDING THE SALE INSTANCES. SR. NO REGISTR ATION NO./A.A . CASE NO. & DATE DATE OF AGREEMENT / CONVEYANCE PROPERTY TRANSFEROR/TR ANSFEREE CONSIDERATION BUILT UP AREA RATE 1 23740 23.05.2002 OFFICE UNIT NO.74 A, MITTAL COURT A WING, NARIMAN POINT, MUMBAI-21 BRIHAN MAHARASHTRA IND. POWERICA LTD. 1,00,00,000/- 1194 SQ.FT. 8,375/- 1 22739 23.05.2002 OFFICE UNIT NO.154 C, MITTAL COURT C WING, NARIMAN POINT, MUMBAI-21. 97,00,000/- 1399 SQ. FT. 6,933/- 1 2360 08.03.2002 OFFICE UNIT NO.78 A & 78 B, JOLLY MAKER CHAMBERS NO.2, NARIMAN POINT, MUMBAI-21. 1,32,46,000/- 1610 SQ. FT. 8,227/- 9. FROM THE CHART HE POINTED OUT THAT THE AVERAGE R ATE WORKED OUT AT RS. 7854 FOR 2002 AND ACCORDING TO THE STAMP RECKON ER 2003 VALUE IS 68.66% OF 7845 WHICH IS 5386 AND THE ASSESSEE HAD A DOPTED THE VALUE OF ITA NO. 2270/M/08 5 RS. 6965/-. THE LD. COUNSEL FURTHER POINTED OUT AT PAGE 36 OF THE PAPER BOOK THAT THE DVO HAS GIVEN SOME SALE INSTANCES IN THE MITTAL COURT PREMISES ITSELF AND THE HIGHEST RATE APPEARS TO BE 7566/- AND NOWHERE NEAR 11,150/- PER SQ. FT. WHICH HAS BEEN ADOPTED BY THE DVO. 10. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARG UED THAT THE LD. CIT(A) HAS IGNORED THE WRITTEN SUBMISSIONS FILED FROM PAGES 1 TO 13 OF THE PAPER BOOK WHEREIN THE ASSESSEE HAD PREPARED EL ABORATELY TAKING INTO CONSIDERATION THE SALES REGISTERED ON 30.6.200 3, 21.1.2003 AND 23.5.2002 AND ALSO INSTANCES WERE CITED OF SALES ON E YEAR LATER I.E. ON 11.3.2004. THE LD. COUNSEL POINTED OUT THAT THE AV ERAGE RATE PER SQ.FT ONE YEAR LATER WAS AT RS. 6467/-. THE LD. COUNSEL WAS EXTREMELY AGGRIEVED AT THE SUMMARY MANNER IN WHICH THE LD. CI T(A) HAD DISPOSED OF THE APPEAL WITHOUT TAKING INTO CONSIDERATION TH E OBJECTIONS RAISED BY THE ASSESSEE TO THE VALUATION MADE BY THE DVO. THE LD. CIT(A) HAD ALSO NOT CONSIDERED THE VALUATION REPORT SUBMITTED BY TH E ASSESSEES APPROVED VALUER SHRI V.R. SHAH DT. 22.2.2006. IN THESE CIRCU MSTANCES, WE FIND THAT THE LD. CIT(A) HAS GROSSLY ERRED IN NOT TAKIN G COGNIZANCE TO THE OBJECTIONS RAISED BY THE ASSESSEE TO THE VALUATION MADE BY THE DVO AND THE SALE INSTANCES RELIED ON BY THE ASSESSEE HIMSEL F AS WELL AS VALUATION REPORT OF THE APPROVED VALUER. MOREOVER, THE SUBMI SSIONS MADE BY THE ASSESSEE AT PAGES 1 TO 13 OF THE PAPER BOOK BRING O UT CLEARLY THAT THE DVO HAS NOT GIVEN EVEN A SINGLE SALE EXAMPLE WHIC H SUGGEST THAT THE PREVAILING MARKET RATE WAS RS. 11,150/- PER SQ. FT. NEAR ABOUT THE SALE I.E. 8.9.2003. THEREFORE, WE SET ASIDE THE ISSUE T O THE FILE OF THE LD. CIT(A) TO GO THROUGH THE ENTIRE MATERIAL WITH RESPE CT TO THE VALUATION AND DECIDE THE ISSUE AFTER CONSIDERING THE SUBMISSIONS/ OBJECTIONS OF THE ASSESSEE TO THE VALUATION BY THE DVO AND AFTER GIV ING AN OPPORTUNITY TO THE ASSESSEE TO SUPPORT ITS CASE. ITA NO. 2270/M/08 6 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 22 ND DAY OF JUNE, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEM BER MUMBAI, DATED 22 ND JUNE, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 2270/M/08 7 DATE INITIALS 1 DRAFT DICTATED ON: 9 . 0 6 . 201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 10 .0 6 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______