Pravin Devidas Kalal, Nashik V. Income - tax Officer,

ITA 1807/PUN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1288 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH DAMOR P SINGH
• Assessee Lawyers: PRAVIN DEVIDAS KALAL
• Keywords: Sale consideration of property below Jantri Value; Valuation report
• Section: 50C

Judgement Text

] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !' # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM / ITA NO.1807/PN/2013 $ % % / ASSESSMENT YEAR : 2008-09 SHRI PRAVIN DEVIDAS KALAL, 1363/M/1, BHAWANI CHOWK, SADHU VASWANI MARG, TRIAMBAK ROAD, NASHIK PAN NO.AMTPK6941R . / APPELLANT V/S ITO, WARD-1(3), NASHIK . / RESPONDENT / APPELLANT BY : SHRI PRAVIN DEVIDAS KALAL (ASSESSEE) / DEPARTMENT BY : SHRI RAJESH DAMOR P. SINGH & / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 12-08-2013 OF THE CIT(A)-I, NASHIK RELATING TO ASS ESSMENT YEAR 2008-09. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY TH E ASSESSEE, HOWEVER, THEY ALL RELATE TO THE ORDER OF THE C IT(A) IN / DATE OF HEARING : 09.07.2015 / DATE OF PRONOUNCEMENT: 12.08.2015 2 ITA NO.1807/PN/2013 CONFIRMING ADDITION OF RS.3,06,001/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAIN. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND DERIVES INCOME FROM WATER SUPPLY AND OTHER INTEREST INCOME. HE FILED HIS RETURN OF INCOME ON 05-08-2008 DECLARING TOTAL IN COME OF RS.1,22,020/-. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE AO NOTED THAT THE ASSESSEE HAS SOLD LAND AT SURVEY NO.806 /3/AK (AREA 1178 SQ.MTRS) FOR RS.14 LAKHS TO ONE SHRI MUKUND DODHAJI K HAIRNAR. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, HE NO TED THAT THE STAMP VALUATION AUTHORITY, I.E., SUB-REGISTRAR, NASHIK HAS SH OWN THE VALUE OF THE PROPERTY AT RS.74 LAKHS. SINCE THE PROVISIONS OF SECTION 50C OF THE I.T. ACT, 1961 ARE APPLICABLE IN THIS CASE, THE A O REFERRED THE MATTER TO THE DVO, THANE FOR VALUATION OF THE PROPER TY ON 22-02- 2010. THE VALUATION OFFICER VIDE HIS REPORT DATED 19-03-20 10 VALUED THE PROPERTY AT RS.21,77,000/-. THE AO ACCORDINGLY DETE RMINED THE LONG TERM CAPITAL GAIN AT RS.17,06,001/-, THE DETAILS OF WHICH ARE AS UNDER: SALE CONSIDERATION AS PER VALUATION REPORT RS.21,77,000/- VALUE OF PROPERTY AS ON 05-02-1990 RS.25,000/- + STAMP RS. 5,000/- ---------------- TOTAL RS.30,000/- INDEXED IMPROVEMENT COST 182/581 RS.95,769/- ----------------- NMC & ULC CHARGES YEAR 2004 RS.3,10,000/- INDEXED IMPROVEMENT COST 480/581 RS.3,75,229/- ----------------- TOTAL INDEXED IMPROVEMENT COST RS.4,70,998/- RS.4,70 ,998/- -------------------- LONG TERM CAPITAL GAIN RS.17,06,001/- -------------------- 3 ITA NO.1807/PN/2013 SINCE THE ASSESSEE HAS MADE INVESTMENT OF RS.14 LAKHS IN PURCHASING OF BONDS OF A COMPANY AND CLAIMED EXEMPTION U/ S.54EC THE AO, AFTER ALLOWING THE SAME, DETERMINED THE TAXABLE LO NG TERM CAPITAL GAIN AT RS.3,06,001/-. 4. BEFORE CIT(A) THE ASSESSEE STRONGLY CHALLENGED THE O RDER OF THE AO IN ACCEPTING THE VALUATION REPORT BY THE DVO. IT WAS ARGUED THAT THE LAND WAS AN EXCESS LAND AND THE ASSESSEE HAD GIVEN HIS LAND FOR DEVELOPMENT AS IT IS AS PER GOVERNMENT RULE UNDER TALEGA ON DABHADI SCHEME. THE NET SALEABLE AREA OF LAND AS PER TH E ORDER IS 865.52 SQ. MTRS WHEREAS THE DVO HAS CALCULATED THE WHOLE AREA, I.E. 1178 SQ. MTRS. THE DIFFERENCE OF ADMEASURING 312.48 SQ. M TRS WAS TO BE SURRENDERED TO THE GOVERNMENT AUTHORITY AT FREE OF COST AS PER ORDER. 5. IT WAS ARGUED THAT THE DVO HAS CALCULATED THE MAR KET VALUE CONSIDERING THE SAME AS FREEHOLD LAND. IT WAS FURTHER STA TED BEFORE THE CIT(A) THAT THERE IS A DARGA ON THE SAID LAND. AS PE R NMC CONDITIONS DARGA SHOULD BE DEMOLISHED AND BECAUSE OF UNAU THORIZED ENCROACHMENTS OF MUSLIM COMMUNITY IT IS NOT POSSIBLE TO DEM OLISH THE DARGA ON THE SAID LAND. THE SLUM AREA IS ALSO NEARBY TO THE LAND. IT WAS ACCORDINGLY ARGUED THAT THE RATE SHOULD BE CALC ULATED FOR AN EXCESS LAND OF MARKET VALUE AS PER GOVERNMENT RULE. 6. HOWEVER, THE CIT(A) WAS ALSO NOT SATISFIED WITH THE AR GUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO IN ACCEPTING DVOS REPORT IN DETERMINING THE VALUE OF THE LA ND AT RS.21,77,000/-. WHILE DOING SO, HE OBSERVED THAT THE DVO H AD GIVEN PROPER OPPORTUNITY TO THE ASSESSEE FOR FURNISHING THE OB JECTIONS FOR PROPOSED ESTIMATED VALUATION. FURTHER, THE DVO HAS INSPE CTED THE 4 ITA NO.1807/PN/2013 PROPERTY IN PRESENCE OF THE ASSESSEE. THE PROPERTY IN QUESTION IS AN OPEN PLOT OF LAND AT SY.NO.806/3/K-1 WITHIN THE LIMITS OF NASH IK MUNICIPAL CORPORATION. FURTHER, THE DVO HAD ADEQUATELY CONSIDERED THE TWO OBJECTIONS FILED BEFORE HIM. THEREFORE, IN VIEW OF TH E DETAILED VALUATION REPORT GIVEN BY THE DVO, THE CIT(A) HELD THAT TH E AO HAS RIGHTLY APPLIED THE PROVISIONS OF SECTION 50C OF THE I.T. AC T AND HAS CORRECTLY DETERMINED THE CAPITAL GAIN OF RS.3,06,000/- AFTER GIVING DEDUCTION OF RS.14 LAKHS U/S.54EC OF THE I.T. ACT. HE ACCO RDINGLY DISMISSED THE GROUNDS RAISED BY THE ASSESSEE. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE ASSESSEE PERSONALLY APPEARED BEFORE THE TRIBUNA L AND EXPLAINED THAT THERE IS A DARGA ON THE SAID LAND AND AS PER NMC CONDITION DARGA HAS TO BE DEMOLISHED. HOWEVER, BECAUSE O F UNAUTHORIZED ENCROACHMENTS OF MUSLIM COMMUNITY, IT IS NOT P OSSIBLE FOR HIM TO DEMOLISH THE DARGA ON THE SAID LAND. HE ACCORD INGLY SUBMITTED THAT WHEN HE HAS NOT RECEIVED ANYTHING OVER AND ABOVE WHAT HAS BEEN SHOWN IN THE RETURN OF INCOME, THE VALUE DETERMINED BY THE DVO CANNOT BE ACCEPTED. HE SUBMITTED THAT THE DVO HAS DETERMINED THE VALUE OF THE LAND AS IF THE SAME IS A FREEHO LD LAND OVERLOOKING THE EXISTENCE OF DARGA ON THE SAID LAND WHICH IS ALSO NEARBY TO A SLUM AREA. HE ACCORDINGLY SUBMITTED THAT T HE SALE PROCEEDS DECLARED BY THE ASSESSEE AT RS.14 LAKHS HAS T O BE CONSIDERED AS AGAINST THE VALUE DETERMINED BY THE DVO A T RS.21,77,000/-. 9. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 5 ITA NO.1807/PN/2013 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM THE STATEMENT OF FACTS AND GROUNDS OF APPEAL BEFORE CIT(A) AND FROM THE WR ITTEN SUBMISSION, WE FIND THE ASSESSEE WAS ARGUING FROM THE VER Y BEGINNING THAT THERE IS A DARGA ON THE SAID LAND AND AS PER NMC CONDITION DARGA SHOULD BE DEMOLISHED AND BECAUSE OF UNAUT HORIZED ENCROACHMENTS OF MUSLIM COMMUNITY IT IS NOT POSSIBLE FOR HIM TO DEMOLISH THE DARGA ON THE SAID LAND. DESPITE THE ABOVE S UBMISSION WE FIND THE CIT(A) OVERLOOKED THE SAME AND DECIDED THE ISS UE ON THE BASIS OF THE REPORT OF THE DVO WHO HAS VALUED THE LAND A S IF THE SAID LAND IS A FREEHOLD LAND. IN OUR OPINION ,WHEN THERE IS A DA RGA ON A LAND BELONGING TO A NON-MUSLIM PERSON ITS MARKET VALUE FALLS DRASTICALLY. THE MARKET VALUE OF A FREEHOLD LAND WILL BE MORE THAN THE MARKET VALUE OF A LAND SITUATED IN THE SAME AREA WITH A D ARGA ON THE LAND THAT TOO BELONGING TO A NON-MUSLIM PERSON. UNDER THE SE CIRCUMSTANCES, WE FIND SOME FORCE IN THE ARGUMENTS OF THE ASSESSEE THAT IN ABSENCE OF ANY CONTRARY MATERIAL BEFORE THE RE VENUE THAT HE HAS RECEIVED MORE THAN RS.14 LAKHS WHICH IS THE SALE PRICE DECLARED BY HIM THE SAME CANNOT BE DETERMINED AT RS.21,77,000/-, I.E . THE VALUE DETERMINED BY THE DVO AS PER THE VALUATION REPORT . WE ACCORDINGLY HOLD THAT THE SALE PRICE IN THE INSTANT CASE SHOULD BE ADOPTED AT RS.14 LAKHS WHICH IS DECLARED BY THE ASSESSEE AS AGAINST RS.21,77,000/- DETERMINED BY THE DVO FOR THE PURPOSE OF DETERMINING THE CAPITAL GAIN. WE HOLD AND DIRECT ACCORDING LY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 6 ITA NO.1807/PN/2013 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-08-2015. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER IQ.KS PUNE ; ! DATED : 12 TH AUGUST, 2015. LRH'K &'()*+,+) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # # $ ( ) -I, ' / THE CIT(A)-I, NASHIK 4. # # $ -I, ' / THE CIT-I, NASHIK 5. ()* ++,- , # ,- , IQ.KS / DR, ITAT, A PUNE; 6. */0 1 / GUARD FILE. &$ / BY ORDER , ( + //TRUE C ( + //TRUE COPY// 234 +5 ,6 / SR. PRIVATE SECRETARY # ,-, IQ.KS / ITAT, PUNE