Mohmmad Afaque Abdulrazak Bangdiwala, Ahmedabad V. The Income Tax Officer, Ward-5(1), Baroda

ITA 1802/AHD/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6728 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-02-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 05-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Cost of acquisition; Fair market value; Valuation report; Set aside
• Section: 50C; 54F; 55A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT ./ ITA.NO.1802/AHD/2016 / ASSTT. YEAR: 2011-2012 MOHMMAD AFAQUE ABDULRAZAK BANGDIWALA J.M. VILLA, KILLEDAR KANCHA B/H. MES GIRLS SCHOOL GENDIGATE BARODA 390 001 PAN : AVVPB 8654 P VS ITO, WARD-5(1) BARODA. ./ ITA.NO.2036/AHD/2017 / ASSTT. YEAR: 2011-2012 KUM. KULSUM ABDULRAZAK BANGDIWALA J.M. VILLA, KILLEDAR KANCHA B/H. MES GIRLS SCHOOL GENDIGATE BARODA 390 001 PAN : AYLPB 8030 A VS ITO, WARD-5(3) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SMT. KINJAL SHAH, AR REVENUE BY : SHRI DILIP KUMAR, SR.DR / DATE OF HEARING : 06/02/2020 / DATE OF PRONOUNCEMENT: 07/02/2020 $%/ O R D E R ASSESSEES ARE IN APPEALS BEFORE THE TRIBUNAL AGAINS T ORDERS OF THE LD.CIT(A)-1, VADODARA DATED 01.4.2016 AND 9.6.2017 PASSED FOR THE ASSTT.YEAR 2011-12 ON THE RESPECTIVE APPEALS OF THE APPELLANTS. ITA NO.1802 /AHD/2016 AND 2036/AHD/2017 2 2. ISSUE INVOLVED IN BOTH THE APPEALS ARE COMMON, T HEREFORE, WE HEARD THEM TOGETHER AND DEEM IT APPROPRIATE TO DISPOSE OF BOTH THE APPEALS BY THIS COMMON ORDER. 3. FIRST COMMON ISSUE INVOLVED IN BOTH THE APPEALS RELATES TO COMPUTATION OF LONG TERM CAPITAL GAIN ON SALE OF ASSETS. 4. THERE IS A LONG HISTORY EXHIBITING THE FILING OF ADJOURNMENT APPLICATIONS, NON-DISCLOSURE OF THE CAPITAL GAIN AN D NON-FURNISHING OF COMPLETE DETAILS DURING THE ASSESSMENT PROCEEDINGS, AND THEREAFTER FILING OF AN APPLICATION UNDER RULE 46A BEFORE FIRST APPELLATE A UTHORITY FOR PRODUCTION OF ADDITIONAL EVIDENCE. ADDITIONAL EVIDENCE WAS TAKEN ON RECORD. REMAND REPORT WAS CALLED FOR, AND THEREAFTER THE LD.CIT(A) ADJUDICATED THE APPEAL IN THE CASE OF MOHAMMAD AFAQUE ABDULRAZAK BANGDIWALA. THIS ORDER HAS BEEN FOLLOWED IN THE CASE OF KUM. KULSUM ABDULRAZAK BANG ADIWALA. I DO NOT DEEM IT NECESSARY TO TAKE ALL THESE DETAILS IN COMP REHENSIVE MANNER. 5. BRIEF CONTROVERSY IS THAT SHRI AFAQUE ABDULRAZAK BANGDIWALA, SHRI SHAMA ABDUL RAZAK AND KUM. KULSUM WERE CO-OWNERS HA VING EQUAL SHARES IN AN IMMOVABLE PROPERTY SITUATED AT RS NO.230/1, 2 30/2, 232, 233 AT MOJE SAWAD, BARODA. THIS LAND WAS SOLD BY ALL THE CO-OW NERS DURING THE ACCOUNTING PERIOD RELEVANT TO THE ASSTT.YEAR 2011-1 2 AND THEY HAVE DISCLOSED SALE CONSIDERATION OF RS.75 LAKHS. THE STAMP VALUA TION AUTHORITIES HAVE DETERMINED THE VALUE OF THE PROPERTY AT RS.1,26,23, 100/- FOR THE PURPOSE OF STAMP DUTY PAYMENT. THUS, THIS VALUE WAS ADOPTED A S FULL SALE CONSIDERATION BY INVOKING SECTION 50C OF THE INCOME TAX ACT. AS FAR AS ADOPTION OF THIS VALUE IS CONCERNED, THE APPELLANTS HAVE NOT DISPUTE D. THEIR MAIN THRUST OF THE DISPUTE IS THAT FOR THE PURPOSE OF DETERMINING LONG TERM CAPITAL GAIN, THE COST OF ACQUISITION AS ON 1.4.1981 WAS REQUIRED TO BE DE TERMINED. ON THE BASIS OF ITA NO.1802 /AHD/2016 AND 2036/AHD/2017 3 REGISTERED VALUERS REPORT, THE ASSESSEES HAVE ADOP TED THE COST OF ACQUISITION AFTER TAKING BENEFIT OF INDEXATION AT RS.90/- PER S Q.YARD. THE AO IN THE REMAND PROCEEDINGS ANALYSISED THE REPORT, AND THERE AFTER WORKED OUT COST OF ACQUISITION AS ON 1.4.1981 AT RS.58 PER SQ.METER. THIS HAS BEEN MADE BY THE AO AFTER TAKING BENEFIT OF INDEXATION. THE LD.CIT( A) IN THE CASE OF SHRI MOHMED A. BANGDIWALA HAS GIVEN THE FOLLOWING DIRECT IONS: 7.8 IN VIEW OF THE DISCUSSION AS MADE IN PRECEDING PARAGRAPHS OF THIS APPEAL ORDER, THE AO IS DIRECTED TO ADOPT THE VALUE OF THE LAND AT RS. 1,26,23,100/- ON THE BASIS OF PAYMENT OF STAMP DUTY AS PER PROVISIONS OF SECTION 50C OF THE IT ACT. THE AO IS DIRECTED TO CONSIDER THE SHARE OF THE APPELLANT AS 27% OF THE SALE CONSIDERATION OF R S.L,26,23,100/- WHICH S , ADOPTED AS PER STAMP DUTY VALUATION. THE AO IS FURTHER DIRECTED TO WORK OUT THE COST OF PROPERTY IN THE YE AR 1981 BY ADOPTING THE RATE OF RS. 58/-PER SQ.MTR. AND THE VALUE AS WO RKED OUT AS A RESULT OF THE SAME WOULD BE CONSIDERED AS COST OF THE ACQUISI TION OF THE PROPERTY IN 1981 FOR THE PURPOSE OF CALCULATING THE CAPITAL GAIN. THE AO WHILE CALCULATING THE CAPITAL GAIN IN THE CASE OF APPELLA NT WILL CONSIDER 27% OF THE VALUE AS WORKED OUT FOR THE YEAR 1981 BY ADO PTING THE RATE OF THE PROPERTY AT RS. SB/- PER SQ.MTR. AND SUCH 27% OF TH E VALUE OF THE PROPERTY IN 1981 WOULD BE CONSIDERED AS COST OF ACQ UISITION OF THE PROPERTY FOR THE PURPOSE OF CALCULATING THE CAPITAL GAIN IN THE CASE OF APPELLANT. AGAIN, THE AO IS DIRECTED NOT TO GIVE AN Y DEDUCTION U/S 54F OF THE ACT WHILE CALCULATING THE CAPITAL GAIN AS TH E APPELLANT HAD FAILED TO PROVE THAT THE CONSTRUCTION OF NEW HOUSE AFTER T HE PURCHASE OF LAND AT LAKODARA WAS MADE WITHIN THREE YEARS FROM THE DA TE ON WHICH THE PROPERTY WAS SOLD OR TRANSFERRED. THUS THE GROUND O F APPEAL NO. 2 OF THE APPELLANT AS REPRODUCED IN INITIAL PARAGRAPH OF THIS APPEAL ORDER IS PARTLY ALLOWED. 6. SIMILAR LINE OF REASONING AND DIRECTIONS ARE GIV EN IN THE CASE OF KUM. KULSUM ABDULRAZAK BANGADIWALA. THE SOLE ISSUE WHIC H HAS BEEN AGITATED BEFORE ME IS THAT THE LD.AO WAS NOT JUSTIFIED IN DE TERMINING THE VALUE AFTER INDEXATION AS ON 1.4.1981 AT RS.58 PER SQ.METER. T HE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE VALUE TAKEN BY THE ASSE SSEE OUGHT TO BE ADOPTED. SHE TOOK ME THROUGH THE VALUATION REPORT WHICH IS A VAILABLE ON PAGE NO.19 TO ITA NO.1802 /AHD/2016 AND 2036/AHD/2017 4 23 OF THE PAPER BOOK. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 7. I HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GON E THROUGH THE RECORD CAREFULLY. THE LD.AO IS SUCCESSFUL IN REDUCING THE VALUE ADOPTED BY THE ASSESSEE FOR THE PURPOSE OF COST OF ACQUISITION AS ON 1.4.1981 IN THE GARB OF DETERMINING FAIR MARKET VALUE AS ON 1.4.1981. HON BLE GUJARAT HIGH COURT HAS CONSIDERED SIMILAR ASPECT WHEREIN IT HAS BEEN P ROPOUNDED BY THE HONBLE COURT THAT THE LD.AO HAS NO POWER TO MAKE REFERENCE TO THE DVO UNDER SECTION 55A FOR TRANSACTIONS WHICH HAVE BEEN EXECUT ED BEFORE 1.7.2012, IF THE AO IS OF THE OPINION THAT VALUE SO CLAIMED BY THE A SSESSEE IS LESS THAN ITS FAIR MARKET VALUE. IN OTHER WORDS, THE AO CANNOT REDUCE THE VALUE ADOPTED BY THE ASSESSEE ON THE BASIS OF REGISTERED VALUER REPORT. THE DISCUSSION MADE BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. GAURANGIN IBEN S. SHODHAN INLD. VS. CIT, 45 TAXMANN.COM 356 (GUJ) READS AS UNDER: 15. COMING TO THE QUESTION OF REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE AS ON 1.4.1981 ALSO, WE FIND THAT SUCH REFERENCE WAS NOT COMPETENT. WE HAVE NOTICED THAT PRIOR TO THE AM ENDMENT 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 VALU E 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 M ARKET VALUE. SUCH CLAUSE, THEREFORE, AS IT STOOD AT THE RELEVANT TIME , 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 SITUATION MAY, THEREFORE, BE DIFFERENT AFTER 1.7.2012. WE ARE, HOWEVER, CONCERNE D WITH THE PERIOD PRIOR THERETO. CLAUSE (B) OF SECTION 55A IS IN TWO PARTS AND PERMITS 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 PR ESCRIBED IN THIS ITA NO.1802 /AHD/2016 AND 2036/AHD/2017 5 BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. S UB-CLAUSE(I) OF CLAUSE (B) ALSO FOR THE SAME REASONS RECORDED ABOVE, WOULD HAVE NO BEARING ON THE FAIR MARKET VALUE AS ON 1.4.1981. THE ASSESS ING OFFICER HAD NOT RESORTED TO SUB-CLAUSE(II) OF CLAUSE (B). IN ANY CA SE, CLAUSE(B) WOULD APPLY WHERE CLAUSE(A) DOES NOT APPLY SINCE IT START S WITH THE EXPRESSION IN ANY OTHER CASE. IN OTHER WORDS IF ASSESSEE HAS RELIED UPON A REGISTERED VALUERS REPORT, ASSESSING OFFICER CAN P ROCEED 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 VALUER FOR THE PURP OSE OF SUPPORTING ITS VALUE OF THE ASSET. ANY SUCH SITUATION WOULD BE GOVERNED BY CLAUSE (A) OF SECTION 55A OF THE ACT AND THE ASSESSING OFF ICER COULD NOT HAVE RESORTED TO CLAUSE (B) THEREOF AS HELD BY THE DIVIS ION BENCH OF THIS COURT IN THE CASE OF HIRABEN JAYANTILAL SHAH VS. IN COME-TAX OFFICER AND ANOTHER REPORTED IN [2009] 310 ITR 31(GUJ).IN T HE SAID DECISION, IT WAS HELD AND OBSERVED AS UNDER:- 10. UNDER CLAUSE(A) OF SEC. 55A OF THE ACT UNDER T HE ASSESSING OFFICER IS ENTITLED TO MAKE THE REFERENCE TO THE VA LUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED B Y THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGI STERED 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. 55A OF THE ACT, TH E 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 TH AN SUCH AN AMOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT I S NECESSARY TO MAKE SUCH A REFERENCE. 17. IN THE RESULT, WE SEE NO REASON TO INTERFERE. H OWEVER, WE HAVE GIVEN OUR INDEPENDENT REASONS AND SHOULD NOT BE SEEN TO H AVE CONFIRMED THE REASONINGS ADOPTED BY THE TRIBUNAL IN THE IMPUGNED JUDGMENT. TAX APPEAL IS DISMISSED. 8. APART FROM THE ABOVE, A PERUSAL OF THE REMAND RE PORT ON PAGE NO.22 WOULD REVEAL THAT ON THE BASIS OF SALE INSTANCE, LD .REGISTERED VALUER POINTED ITA NO.1802 /AHD/2016 AND 2036/AHD/2017 6 THAT THERE 10% TO 15% INCREASE IN THE PRICE FROM 19 81 UPTO DAY. HE WORKED OUT THE VALUE AT RS.21 PER SQ.METER AS WELL AS 28.6 8 PER SQ.METER. THESE VALUES HAVE BEEN ADOPTED BY THE REGISTERED VALUER A FTER TAKING INTO CONSIDERATION VARIOUS SURROUNDING CIRCUMSTANCES COU PLED WITH SALE INSTANCE IN THIS AREA BETWEEN 1979 TO 1981. THEREAFTER, THE AO HAS TAKEN BENEFIT OF INDEXATION FOR ARRIVING AT THE VALUE PER SQ.METER A T RS.90/-. THE AO HAS RE- APPRECIATED THIS VERY SALE INSTANCE AND REDUCED TO RS.58/-. ASSESSING OFFICER IS NOT AN EXPERT. THE REPORT OF THE REGISTERED VAL UER IS BASED UPON THE OPINION OF THE EXPERT PERSON IN THIS AREA, AND IT COULD NOT HAVE BEEN DISBELIEVED WITHOUT GIVING ANY JUSTIFIABLE REASONS. THEREFORE, REVENUE AUTHORITIES ARE NOT JUSTIFIED IN TAKING COST OF ACQUISITION AT RS.58/- PER SQ.METER. I SET ASIDE THE FINDING OF THE LD.REVENUE AUTHORITIES TO THIS EXTEN T, AND DIRECT THE AO TO RECOMPUTE THE CAPITAL AGAIN AFTER TAKING COST OF AC QUISITION AT RS.90/- PER SQ.METER. THE AO THEREAFTER WORK OUT IF ANY CAPITA L GAIN ASSESSABLE IN THE HANDS OF THE ASSESSEES. ANY OTHER CONSEQUENTIAL BE NEFITS IF AVAILABLE TO THE ASSESSEE, VIZ. SECTION 54F ON ACCOUNT OF LONG TERM INVESTMENT ETC. BE GRANTED TO THE ASSESSEE. THIS EXERCISE BE DONE AFTER PROVI DING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULTS, APPEALS OF THE ASSESSEES ARE ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 7 TH FEBRUARY, 2020 AT AHMEDABAD. SD/- (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 07/02/2020