ARUNA RAVINDRA CHAUDHARY, MUMBAI V. ITO WD 20(1)(1), MUMBAI

ITA 1804/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8631 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C; 54

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1804 /MUM/ 2017 (ASSESSMENT YEAR 20 10 - 11 ) ARUNA RAVINDRA CHAUDHARY B - 901, VERSOVA SHREE DARSHAN CHS, MHADA PLOT NO. 15, RDP - 2 SVP NAGAR, ANDHERI (W) MUMBAI - 4 00 053. PAN : AMBS1059G V S . ITO WARD 20(1)(1) MUMBAI ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI PIYUSH CHAJED DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 1 .1 1 . 201 7 DATE OF PRONOUNCEMENT 2 . 11 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 21 - 12 - 2016 PASSED BY LD CIT(A) - 39, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2010 - 11. THE SOLITARY ISSUE URGED IN THIS APPEAL RELATES TO THE VALUATION TO BE ADOPTED U/S 50C OF THE ACT FOR THE PURPOSE OF COMPUTAT ION OF CAPITAL GAINS. 2. THE ASSESSEE SOLD A FLAT LOCATED AT B - 902, SHREE DARSHAN CHS, RDP - 2, SVP NAGAR, ANDHERI (W), MUMBAI FOR A CONSIDERATION OF RS.29.45 LAKHS ON 13 - 07 - 2009. THE STAMP DUTY VALUATION OF THE FLAT WAS RS.54,18,535/ - AND HENCE THE AO PROPOSED TO ADOPT THE SAME AS PER THE REQUIREMENTS OF SEC. 50C OF THE ACT. SINCE THE ASSESSEE OBJECTED TO THE SAME, THE AO REFERRED THE MATTER TO DVO. HOWEVER, THE DVO COULD NOT FURNISH HIS REPORT BEFORE THE COMPLETION OF ASSESSMENT AND HENCE THE AO ADOP TED THE SALE CONSIDERATION OF FLAT AS RS.54,18,535/ - AND ACCORDINGLY COMPUTED LONG TERM CAPITAL GAIN. ACCORDING TO THE ASSESSEE, SHE IS ELIGIBLE FOR DEDUCTION U/S 54 OF THE ACT, BUT THE AO DID NOT GRANT THE SAME. ARUNA RAVINDRA CHAUDHARY 2 3. THE ASSESSEE CHALLENGED THE ASSESSM ENT ORDER BY FILING APPEAL BEFORE LD CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE REPORT OF DVO WAS RECEIVED AND HE HAD VALUED THE FLAT AT RS.55,44,000/ - . THE LD CIT(A) CONFRONTED THE SAME WITH THE ASSESSEE AS WELL AS THE AO. THE ASSESSING O FFICER REPORTED THAT THE ISSUE MAY BE DECIDED ON MERITS. THE AO RAISED VARIOUS OBJECTIONS TO THE REPORT OF THE DVO. 4. THE LD CIT(A) REFERRED TO THE PROVISIONS OF SEC. 50C OF THE ACT AND OBSERVED THAT AS PER THE MANDATE OF PROVISIONS OF THE SECTION, THE STAMP DUTY VALUATION HAS TO BE ADOPTED AS SALES CONSIDERATION OF THE VALUE DETERMINED BY DVO, WHICHEVER IS LESS. SINCE THE VALUE DETERMINED BY THE DVO WAS MORE THAN THE STAMP DUTY VALUATION, HE OPINED THE STAMP DUTY VALUATION SHOULD BE TAKEN AS SALE CO NSIDERATION. ACCORDINGLY HE CONFIRMED THE ORDER OF THE AO. REGARDING THE CLAIM FOR DEDUCTION U/S 54, THE LD CIT(A) DIRECTED THE AO TO EXAMINE THE SAME. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL. 5. THE LD A.R SUBMITTED THAT A FLAT WITH DOOR NO. A - 902 LOCATED IN THE SAME HOUSING COMPLEX HAS BEEN SOLD BY A PERSON NAMED MRS. CHARUTA CHANDRAKANT DALVI FOR A CONSIDERATION OF RS.41.00 LAKHS ON 23 - 12 - 2009, I.E., SUBSEQUENT TO THE SALE MADE BY THE ASSESSEE. ACCORDINGLY THE LD A.R SUBMITTED THAT THE STAM P DUTY VALUATION IS VERY MUCH MORE THAN THE MARKET VALUE AND HENCE THE DVO WAS NOT CORRECT IN DETERMINING THE MARKET VALUE AT RS.55.44 LAKHS. 6. SINCE THE ABOVE SAID SALE HAS TAKEN PLACE IN THE VERY SAME RESIDENTIAL COMPLEX AND IN THE VERY SAME YEAR , THE LD D.R WAS DIRECTED TO ASCERTAIN ABOUT THE VIEW TAKEN IN THE CASE OF MRS. CHARUTA CHANDRAKANT DALVI. THE LD D.R SUBMITTED THAT THE ASSESSMENT HAS BEEN COMPLETED IN THE HANDS OF THE ABOVE SAID ASSESSEE ACCEPTING THE CAPITAL GAIN RETURNED BY HER WITHO UT DISCUSSING ABOUT APPLICABILITY OF PROVISIONS OF SEC. 50C. SINCE THE ASSESSING OFFICER HAS NOT CONSIDERED THE APPLICABILITY OF PROVISIONS OF SEC.50C IN THE HANDS OF MRS. CHARUTA CHANDRAKANT DALVI, IN MY VIEW, THE SAID ASSESSMENT ORDER MAY NOT BE HELPFUL TO ADJUDICATE THE ISSUE BEFORE ME. ARUNA RAVINDRA CHAUDHARY 3 7. THE LD D.R SUBMITTED THAT THE DVO HAS ALSO CONSIDERED SALES INSTANCES OF THE FLATS LOCATED IN THE VERY SAME RESIDENTIAL COMPLEX. SHE SUBMITTED THAT FLAT NO.B - 303 LOCATED IN THE SAME COMPLEX HAS BEEN SOLD AT A PRIC E OF RS.6,808/ - PER SQ.FT. ON 8.10.2009. SHE SUBMITTED THAT THIS SALES INSTANCE IS CLOSURE TO THE DATE OF SALE OF FLAT OWNED BY THE ASSESSEE. THE DVO HAS ALSO CONSIDERED THE SALES INSTANCES THAT TOOK PLACE IN 2007, WHICH WERE IN THE RANGE OF RS.3,476/ - T O RS.4,646/ - PER SQ.FT. HENCE THE DVO HAS ADOPTED AN AVERAGE RATE OF RS.6200/ - PER SQ.FT. TO VALUE THE FLAT AND ACCORDINGLY ARRIVED AT THE VALUATION OF RS.55.44 LAKHS. 8. I NOTICE THAT THE FLAT A - 902 HAS BEEN SOLD BY MRS. CHARUTA CHANDRAKANT DALVI, W HICH HAS BEEN RELIED UPON BY THE ASSESSEE, FOR A PRICE OF RS.4,585/ - PER SQ.FT IN DECEMBER, 2009. THE ASSESSEE HAS SOLD HER FLAT NO. B - 902 FOR A PRICE OF RS.3,293/ - IN JULY, 2009. THE DVO HAS GIVEN SALE INSTANCES IN HIS REPORT AND I NOTICE THAT IN FEBRUA RY 2007 ITSELF THE SELLING RATE WAS RS.4,646/ - PER SQ.FT. HENCE IT IS EVIDENT THAT THE SALE CONSIDERATION SHOWN BY THE ASSESSEE IS MUCH LOWER THAN THE PREVAILING MARKET RATE. 9. THE LD CIT(A) HAS TAKEN THE VIEW THAT THE VALUE DETERMINED BY DVO SHOU LD BE COMPARED WITH THE STAMP DUTY VALUE AND THE LOWER OF THE TWO SHOULD BE ADOPTED AS SALE CONSIDERATION U/S 50C OF THE ACT. IT APPEARS THAT THE LD CIT(A) HAS TAKEN THE VIEW THAT THE VALUE DETERMINED BY DVO SHOULD NOT BE TINKERED WITH. I AM UNABLE TO AG REE WITH THIS VIEW. THE VALUE DETERMINED BY DVO IS BASED ON CERTAIN MATERIALS AND INFORMATION. HENCE, IF THE ASSESSEE OBJECTS TO THE SAME AND IF THERE IS MERIT IN SUCH OBJECTIONS, THEN THE VALUE DETERMINED BY DVO MAY BE REVISED BY CONSIDERING THE OBJECTI ONS. AFTER THE DETERMINATION OF FAIR VALUE BY DULY CONSIDERING VARIOUS ASPECTS, THE FAIR MARKET VALUE SO DETERMINED SHOULD BE COMPARED WITH STAMP DUTY VALUATION AND THEN THE PROVISIONS OF SEC. 50C SHOULD BE APPLIED THERETO. 10. IN THE INSTANT CASE, T HE NEAREST SALES HAS TAKEN PLACE AT A PRICE OF RS.6,808/ - AND RS.4,585/ - PER SQ.FT. THE SELLING PRICE OF RS.6,808/ - RELATES TO ARUNA RAVINDRA CHAUDHARY 4 A FLAT HAVING BUILT UP AREA OF 567 SQ.FT., WHERE AS THE SELLING PRICE OF RS.4,585/ - IS FOR A FLAT HAVING BUILT UP AREA OF 894.1 7 SQ.FT.. HOWEVER, THE STAMP DUTY VALUATION WORKS OUT TO RS.6,059/ - PER SQ.FT. IT IS IN THE COMMON KNOWLEDGE THAT THE FLAT WITH LESS AREA MAY FETCH HIGHER PRICE. WE CAN NOTICE THAT THE SELLING PRICE OF SMALLER FLAT AT RS.6,808/ - IS HIGHER THAN THE STAM P DUTY VALUE OF RS.6,059/ - . FURTHER, THE PRICE OF FLAT IS ALSO DEPENDENT UPON VARIOUS OTHER FACTORS SUCH AS, AMENITIES AVAILABLE IN THE FLAT, ITS INTERIORS, VIEW POINT, LOCATION ETC. 11. ACCORDINGLY, I AM OF THE VIEW THE SALE PRICE OF SMALLER FLAT AT RS.6,808/ - PER SQ.FT. SHOULD BE IGNORED. HENCE I AM OF THE VIEW THAT THE FAIR MARKET VALUE OF THE FLAT MAY BE DETERMINED IN BETWEEN RS.4,585/ - AND RS.6,059/ - . THE AVERAGE OF BOTH THE PRICES WORKS OUT TO RS.5,322/ - PER SQ.FT. I AM OF THE VIEW THAT THE P RESENT DISPUTE WOULD BE PUT TO REST, IF THE FAIR MARKET VALUE IS DETERMINED AT RS.5,200/ - PER SQ.FT. ACCORDINGLY THE FAIR MARKET VALUE OF THE FLAT SOLD BY THE ASSESSEE WOULD WORK OUT TO RS.46,49,528/ - . ACCORDINGLY I MODIFY THE ORDER PASSED BY LD CIT(A) A ND DIRECT THE AO TO ADOPT THE SALE CONSIDERATION U/S 50C OF THE ACT AT RS.46,49,528/ - AND COMPUTE CAPITAL GAINS ACCORDINGLY. 12. THE ASSESSEE HAS ALSO RAISED A GROUND FOR ALLOWING DEDUCTION U/S 54 OF THE ACT. THE LD CIT(A) HAS ALREADY DIRECTED THE AO TO EXAMINE THE SAME CLAIM AND HENCE NO FURTHER DIRECTION IS REQUIRED ON THIS MATTER. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 .11 . 201 7. SD/ - (B.R.BASK ARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 11 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT ARUNA RAVINDRA CHAUDHARY 5 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITA T, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSTT. REGISTRAR /SENIOR PS ) PS ITAT, MUMBAI