SAMIRA MERCHANT, MUMBAI V. I.T.O.-19(3)(4)`, MUMBAI

ITA 1804/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4307 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 24-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBEYDR
• Keywords: Retrospective amendment; Cost of acquisition; Fair market value; Valuation report; Tax effect; Revised return
• Section: 148

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI- E,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANDEEP GOSAIN,JUDICIAL MEMBER /.ITA NO.1804/MUM/2011 /ASSESSMENT YEAR-2003-04 /.ITA NO.5797/MUM/2012 /ASSESSMENT YEAR-2005-06 MRS. SAMIRA MERCHANT FLAT NO.1001/1002 VASTU BANDRA, B.J. ROAD/PEREIRA ROAD BANDRA (W),MUMBAI-400 050. PAN:ACZPM 1844 M VS. INCOME TAX OFFICER-19(3)-4 ROOM NO.304, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG PAREL,MUMBAI-400 012. ( / ASSESSEE ) ( / RESPONDENT) /ASSESSEE BY : SHRI SATISH R. MODY / REVENUE BY :SH. SACHIDANAND DUBEY-DR / DATE OF HEARING :18 - 11 -2015 / DATE OF PRONOUNCEMENT : 01.01.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS DATED 28.01.11AND 18.6.12 OF CIT(A)-30 THE ASSESSEE HAS FILED APPEALS FOR THE ABOVE MENTIONED TWO ASSESSMENT YEARS.THE DA TES OF FILING OF RETURNS, RETURNED INCOMES DATES OF ASST ORDER AND ASSESSED INCOME CAN BE SUMMARISED AS UNDER :- A.Y. ROI FILED ON RETURNED INCOME(RS.) ASSESSMENT DT. ASSESSED INCOME (RS.) 2003-04 22.09.2003 78,625/- 29.08.2008 37,36,548/- 2005-06 31.08.2005 1,00,248/- 19.12.2007 21,64,290/ - ITA/1804/MUM/2011 (2003-04): 2. ASSESSEE, AN INDIVIDUAL HAD SHOWN INCOME FROM OTHER SOURCES UNDER THE HEAD LONG TERM CAPITAL GAIN(LTCG)TO THE TUNE OF S.2.63 LACS.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT SHE HAD SOLD TWO PLOTS OF LAND AT KALYAN ,THAT SHE HAD CLAIMED LONG TERM CAPITAL LOSS(LTCL) ON SALE OF ABOVE MENTIONED PLOTS IN THE AY.2005-06.THE AO WAS OF THE OPINION THAT THE SAID LTCG PERTAINED TO AY.03-04,SO HE ISSU ED A NOTICE U/S. 148 OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT VID E DEVELOPMENT AGREEMENT,DT.4.6.02,THE ASSESSEE AND THE OTHER CO-OWNERS HAD SOLD ABOVE PL OTS OF LAND FOR CONSIDERATION OF RS.25.53 LACS AND RS.21.89 LACS RESPECTIVELY, THAT SHE DID N OT OFFER LTCG FOR TAXATION IN HER ORIGINAL RETURN OF INCOME, THAT IN THE REVISED RETURN FILED AFTER ISSUE OF NOTICE U/S. 148 LTCG OFFERED FOR TAXATION.HE FURTHER FOUND THAT FOR THE PURPOSE OF COST OF ACQUISITION THE FAIR MARKET VALUE (FMV) AS ON 1.4.81 HAD BEEN TAKEN AT RS.6.32 LACS A ND RS.5.41 LACS RESPECTIVELY FOR THE SAID PLOTS, THAT FMV HAD BEEN ADOPTED AS PER THE VALUATI ON DONE BY A GOVT. REGISTERED VALUER, THAT THE VALUER HAD ADOPTED FMV OF THE PLOT OF LAND AT 540/SQ.MTR AS ON 1.4.81.THE AO REFERRED THE MATTER TO THE ASSISTANT VALUATION OFFI CER(AVO)TO DETERMINE THE FMV OF THE PLOTS OF LAND,WHO ADOPTED THE RATE OF LAND @ RS.22 PER SQ.METER AS ON 01.04.1981.THE AO ADOPTED THE SAME VALUE FOR DECIDING THE LTCG, AFTER INVITING THE OBJECTIONS FROM THE ASSESSEE 1804/11&5797/12 SAMIRA M 2 .FINALLY,THE AO HELD THAT THE ASSESSEE WAS LIABLE TO PAY TAX ON LTCG OF RS.37.36 LACS (29.05 LACS FOR 1 ST PLOT + 8.31 LACS FOR THE 2 ND PLOT OF LAND). 2.1. AGGRIEVED BY THE ORDER THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSION OF ASSESSEE AND THE ASSESSMENT ORDER, HE HELD THAT REGISTERED VALUER HAD ADOPTED THE FMV @ 5 40 PERSQ.MTR.AS ON 1981, THAT THE ASSESSEE HAD PURCHASED THE LAND @ RS.7.00 PER SQ.MT R IN 1979,THAT THE AVO HAD RIGHTLY ADOPTED THE RATE AT RS.22/- PER SQ.MTR AS FMV.FINAL LY,THE FAA UPHELD THE ORDER OF THE AO. 2.2. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) STATED THAT THE AO HAD WRONGLY REFERRED THE MATTER TO THE AVO F OR DETERMINING THE FMV, THAT THE VALUE SHOWN BY THE REGISTERED VALUER WAS MORE THAN THE PU RCHASE PRICE, THAT THE REFERENCE TO THE AVO AND RESULTANT ADDITION WAS AGAINST THE PROVISIO N OF THE ACT .HE REFERRED TO THE CASE OF PUJA PRINTS(360 ITR 697). DEPARTMENTAL REPRESENTATI VE (DR) SUPPORTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE PLOTS OF LAND WERE PURCHASED IN 1979, THAT THEY WER E SOLD IN THE YEAR UNDER APPEAL, THAT THE ASSESSEE HAD HIRED THE SERVICES OF A REGISTERED VAL UER FOR DETERMINING THE FMV AS ON 1.4.81, THAT THE AO HAD REFERRED THE MATTER TO THE AVO AND HAD DETERMINED THE LTCG . WE FIND THAT THE ISSUE HAS BEEN CONCLUSIVELY DECIDE D BY THE HONBLE HIGH COURT IN THE CASE OF PUJA PRINTS(SUPRA) AS WELL AS IN THE CASE OF DAU LAL MEHTA(HUF). THE AMENDMENT TO SECTION 55A(A) IS NOT RETROSPECTIVE AND THEREFORE, NO REFER ENCE CAN BE MADE IF THE VALUE SHOWN BY THE ASSESSEE AS ON 1.4.81 IS HIGHER THAN THE PURCHASE PRICE.HERE WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE DECISION OF PUJA PRINTS(SU PRA).BEFORE THAT WE WOULD LIKE TO NARRATE THE FACTS.IN THAT MATTER THE ASSESSEE, FOR THE AY.2006- 07,CLAIMED LTCG OF RS. 11.20 LAKHS IN RESPECT OF SALE OF ITS PROPERTY FOR A CONSIDERATION OF RS. 2 CRORES. THE ASSESSEE ALSO CLAIMED A DEDUCTION ON ACCOUNT OF BROKERAGE OF RS. 5 LAKHS AN D THE INDEXED COST AT RS. 1.78 CRORES, ON THE BASIS OF THE VALUE OF THE PROPERTY BEING RS. 35 .99 LAKHS AS ON APRIL 1, 1981. THIS VALUATION OF RS. 35.99 LAKHS AS A FAIR MARKET VALUE AS ON APRIL 1, 1 981, OF THE PROPERTY WAS ON THE BASIS OF A VALUATION REPORT.THE AO REFERRED THE ISSUE OF VALUATION TO THE DEPARTMENTAL VALUATION OFFICER WHO VALUED THE PROPERTY AT RS. 6. 68 LAKHS AS ON APRIL 1, 1981, AND THE INDEXED COST AT RS. 33.20 LAKHS. CONSEQUENTLY,HE EN HANCED THE CAPITAL GAINS OF THE ASSESSEE FROM RS. 11.20 LAKHS TO RS. 1.61 CRORES.THE FAA HEL D AGAINST THE ASSESSEE. THE TRIBUNAL HELD THAT IN VIEW OF SECTION 55A(A) IT WAS NOT PERMISSIB LE FOR THE AO TO MAKE A REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER FOR THE PURPOSE OF V ALUATION, AS THE VALUE OF THE PROPERTY DECLARED BY THE ASSESSEE WAS NOT LESS THAN ITS FAIR MARKET VALUE.DECIDING THE MATTER IN FAVOUR OF THE ASSESSEE,THE HONBLE COURT HELD AS UNDER :- (II) THAT THE AMENDMENT TO SECTION 55A(A) OF THE AC T IN 2012 BY WHICH THE WORDS IS LESS THEN ITS FAIR MARKET VALUE WERE SUBSTITUTED BY THE WORDS I S AT VARIANCE WITH ITS FAIR MARKET VALUE WAS MADE EFFECTIVE ONLY FROM JULY 1, 2012. PARLIAMENT H AS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE ASSESSEES CASE WAS SECTION 55A(A) AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2 006-07. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO THE DEPARTMENTAL VALUATI ON OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE WAS IN THE OPINION OF ASSESSING OFFICER LE SS THAN ITS FAIR MARKET VALUE. (III) THAT SECTION 55A(B) STATES THAT IT WOULD APPL Y IN ANY OTHER CASE, I.E., A CASE NOT COVERED BY SECTION 55A(A) . THERE WAS NO DISPUTE THAT THE ISSU E WAS COVERED BY SECTION 55A(A) . THEREFORE, RECOURSE COULD NOT BE HAD TO THE RESIDUARY CLAUSE P ROVIDED IN SECTION 55A(B)(II) . THEREFORE, THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR DATED NOVEMB ER 25 1972 (SEE [1973] 91 ITR (ST.) 1), COULD HAVE NO APPLICATION IN THE FACE OF THE CLEAR POSITI ON IN LAW. HENCE, THE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFF ICER WAS NOT SUSTAINABLE IN VIEW OF SECTION 55A(A)(II) . 1804/11&5797/12 SAMIRA M 3 RESPECTFULLY FOLLOWING THE ABOVE,EFFECTIVE GROUND O F APPEAL IS DECIDE IN FAVOUR OF THE ASSESSEE . ITA 5797/MUM/2007 -AY.05-06: 3. DURING THE COURSE OF HEARING BEFORE US, THE AR STAT ED THAT CONSIDERING THE SMALLNESS OF TAX EFFECT THE ASSESSEE WAS NOT INTERESTED IN PURSUING GROUND NO.5.HENCE, THE GROUND NO.5 STAND DISMISSED AS NOT PRESSED.GROUND NO.3 AND 4 ARE ABOU T THE REFERENCE MADE BY THE AO TO THE VALUATION OFFICER U/S.55A OF THE ACT.IT WAS STATED THAT THE AO HAD MADE PROTECTIVE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION.WHILE DECIDING THE APPEAL FOR THE AY 2003-04 WE HAD DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE.FOLLOWIN G THE SAME, GROUND NO.3 AND 4 ARE DECIDED IN HER FAVOUR. 3.1. THE EFFECTIVE GROUND OF APPEAL IS ABOUT CONFIRMING THE ORDER OF THE AO IN ASSESSING THE CAPITAL GAIN ON SALE OF A FLAT UNDER THE HEAD STCG INSTEAD OF LTCG. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD CLAIMED LTCG OF RS.2.08 LAKHS ON SALE OF A FLAT AT MIRA ROAD,THAT S HE HAD PURCHASED THE PROPERTY VIDE AGREEMENT ON 08.10.2004,THAT THE FLAT WAS SOLD ON 2 6.02.2005.THE AO WAS OF THE OPINION THAT PROFIT ARISING OUT OF THE TRANSACTION WAS TO BE ASS ESSED UNDER THE HEAD STCG. HE CALLED FOR AN EXPLANATION FROM THE ASSESSEE IN THAT REGARD,WHO ST ATED THAT SHE HAD PURCHASED THE PROPERTY IN THE YEAR 1995-96,THAT SHE HAD PAID ENTIRE CONSIDERA TION EXCEPT FOR RS.5,000/-,THAT THE DEVELOPER ISSUED ALLOTMENT LETTER TO HER.HOWEVER,TH E AO HELD THAT THE AGREEMENT WAS ENTERED INTO ON 08.10.2004, THAT THE PROFIT HAD TO ASSESSED AS STCG. 3.2. IN THE APPELLATE PROCEEDINGS,BEFORE THE FAA,THE ASS ESSEE RELIED UPON VARIOUS CASES AND STATED THAT THE FLAT WAS ACQUIRED IN 1995-96. THE F AA CONFIRMED THE ORDER OF THE AO.BEFORE US, THE AR STATED THAT WHILE DECIDING THE APPEAL TH E FAA SIMPLY ENDORSED THE FINDING OF THE AO, THAT HE HAD NOT GIVEN ANY REASONING FOR CONFIRM ING THE ORDER, THAT THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT AT ALL CONSIDERED WHILE AD JUDICATING THE APPEAL.THE DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS WE FIND THAT TH E FAA HAD SUPPORTED THE ORDER OF THE AO WITHOUT ASSIGNING ANY REASON AND WITHOUT CONSIDE RING THE BASIC FACTS.THEREFORE, WE ARE OF THE OPINION THAT,IN THE INTEREST OF JUSTICE,THE MAT TER SHOULD BE RESTORED BACK TO THE FILE OF THE FAA FOR FRESH ADJUDICATION,WHO WILL AFFORD A REASON ABLE OPPORTUNITY OF HEARING TO THE ASSESSEE .GROUND NO. 1 IS DECIDED IN FAVOUR OF THE ASSESSEE IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE FOR AY 2 003-04 STANDS ALLOWED AND THE APPEAL FOR ASSESSMENT YEAR 2005-06 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2016. 01 , 2016 SD/- SD/- ( /SANDEEP GOSAIN ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI, DATE: 01.01.2016 . . . JV.SR.PS. 1804/11&5797/12 SAMIRA M 4 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.