Uma Reddy , CHENNAI V. ITO Non Corporate Ward 3(5) , CHENNAI

ITA 1870/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5293 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 54F; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY , JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1870/CHNY/2017 / ASSESSMENT YEAR : 2008-09 SMT. UMA REDDY, 22, RUTLAND GATE, 4 TH STREET, THOUSAND LIGHTS, CHENNAI 600 006. [PAN: AAAPU 7292C] VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD -3(5), CHENNAI. ( / APPELLANT) ( '(* /RESPONDENT ) ASSESSEE BY : SHRI. S. SRIDHAR, ADVOCATE REVENUE BY : SHRI GURU BASHYAM, JCIT 2 /DATE OF HEARING : 23.01.2018 2 /DATE OF PRONOUNCEMENT : 20.04.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-4, CHENNAI IN ITA NO 114/20 16-17/AY 2008- 09/CIT(A)-4 DATED 28.06.2017 FOR ASSESSMENT YEAR 2 008-09. :-2-: ITA NO. 1870/CHNY/2017 2. SMT. UMA REDDY, THE ASSESSEE, HAS SOLD A LAND S ITUATED AT PLOT NO. 203, SEASHORE TOWN, SURVEY NO. 12/1, SHOLLINGANALLU R VILLAGE, CHINGLEPET DISTRICT FOR RS. 80 LAKHS ON 10.03.2008. TWO YEARS AFTER THE SALE, SHE FILED HER RETURN FOR ASSESSMENT YEAR 2008-09 ON 17.03.2010, A DMITTING A TOTAL INCOME AT RS. 1,60,560/- AND CLAIMED THE ENTIRE CAPITAL GA IN AS EXEMPT STATING THAT SHE HAD DEPOSITED IN THE CAPITAL GAINS FIXED DEPOSI T SCHEME WITH SBI ON 31.07.2008. THE AO FOUND FROM THE BANK THAT THE DE POSITS WERE MADE ON 26.09.2008 ONLY, WHICH WAS WITHDRAWN ON 20.11.2008 ITSELF AND HENCE HE RE- OPENED THE ASSESSMENT U/S. 147. DURING THE RE-ASSE SSMENT PROCEEDINGS , THE OFFICER INVOKED THE PROVISIONS OF SECTION 50C, ADOPTED THE GUIDELINE VALUE FIXED BY THE PER STAMP VALUATION AUTHORITY AT RS. 1 ,07,06,400/- AS THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF LON G TERM CAPITAL GAINS. SINCE, THE ASSESSEE DEPOSITED IN THE CAPITAL GAI NS SCHEME ON 26.09.2008, WHICH WAS BEYOND THE DUE DATE , I.E., 31.07.2008, OF FILING THE RETURN, RELYING ON THE KERALA HIGH COURT DECISION OF V.R. D ESAI AND OTHERS DATED 26.11.2009 (197 TAXMAN 52(KEL)), THE AO DENIED THE DEDUCTION CLAIMED U/S. 54F. ON AN APPEAL, THE CIT(A) DISMISSED THE ASSESSE ES APPEAL. ON FURTHER APPEAL, THIS ITAT IN ITS ORDER IN ITA NO. 2971/MDS/ 2014 DATED 25.05.2015 SET ASIDE THE ORDER OF THE CIT(A) AND DIRECTED THE A O TO MAKE A REFERENCE TO DEPARTMENTAL VALUATION OFFICER AS PER PROVISIONS OF SECTION 50C(2). ON OTHER GROUNDS, THE ITAT HELD THAT IT IS PREMATURE TO ADJU DICATE THEM. :-3-: ITA NO. 1870/CHNY/2017 3. SUBSEQUENTLY, THE A O MADE A REFERENCE TO THE V ALUATION OFFICER, VALUATION CELL, CHENNAI, OBTAINED THE VALUATION RE PORT AND AFTER CONSIDERING THE ASSESSEES REPLY ETC, ADOPTED THE VALUE DETERMI NED BY THE VALUATION OFFICER AS THE SALE CONSIDERATION FOR THE PURPOSE O F COMPUTING THE LONG TERM CAPITAL GAINS. WITH REGARD TO THE CLAIM OF DEDUCTI ON U/S. 54F, THE AO FOUND THAT THE ASSESSEES CLAIM THAT THE SALE CONSIDER ATION WAS LYING IN SB ACCOUNT AND IT WAS TRANSFERRED TO FD IS NOT CORRECT. THE A O FOUND THAT THE DEPOSITS WERE MADE IN SB ACCOUNT ON 26.09.2008 WHILE THE DAT E OF REGISTRATION WAS 10.03.2008, IT WAS WITHDRAWN ON 20.11.2008 ITSELF AND HENCE HE DENIED THE DEDUCTION U/S. 54F. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) DISMISSED THE APPEAL. AGAINST THE C IT(A) ORDER, THE ASSESSEE FILED THIS APPEAL. 4. THE ASSESSEE PLEADED THAT THE VO HAS VALUED FMV OF THE PROPERTY AT RS. 91,54,588/- BASED ON THE GUIDELINE VALUE AND WI THOUT TAKING INTO ACCOUNT ANY COMPARABLE SALE INSTANCES , EVEN WHEN THE ASSE SSEE, IN ORDER TO SUBSTANTIATE THAT FMV OF HER PROPERTY WAS AT RS. 80 LAKHS ONLY, HAD FURNISHED THREE INSTANCES OF SALES IN WHICH THE ACTUAL SALE C ONSIDERATIONS WERE ADOPTED BY THE REGISTRATION AUTHORITY. RELYING ON THE DECI SION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS CHELLADURAI, THE ASSESS EE PLEADED THAT THE AVERAGE OF THE VALUE GIVEN BY THE ASSESSEE AND THE VALUE ADOPTED BY THE ASSESSING OFFICER SHOULD BE ADOPTED FOR DETERMINING THE FAIR MARKET VALUE OF :-4-: ITA NO. 1870/CHNY/2017 THE PROPERTY. IF THIS RATIO IS FOLLOWED THEN THE A SSESSEE PLEADS THAT THE DEEMED SALE CONSIDERATION WOULD WORK OUT ONLY RS.87 .25 LAKHS INSTEAD OF THE VALUE ARRIVED BY THE VALUATION OFFICER AT RS. 94.51 LAKHS. FURTHER, THE ASSESSEE PLEADED THAT THERE WAS A FRAUDULENT TRANSF ER OF HER LAND. SUBSEQUENTLY, SHE HAD TAKEN LEGAL STEPS TO CANCEL T HE SAID FRAUDULENT TRANSFER THEREAFTER , UNSCRUPULOUS LAND GRABBING STOOD IN TH E WAY OF IDENTIFYING BUYERS FOR THE PROPERTY. THE ASSESSEE HAS PRODUCED DOCUME NTARY EVIDENCE IN SUPPORT OF FRAUDULENT TRANSFER AND SUBSEQUENT CANCE LLATION AND ALSO IN SUPPORT OF RETRACING OF THE OFFER GIVEN BY ONE OF THE PROSP ECTIVE BUYERS IN VIEW OF THE RECORDING OF THE FRAUDULENT TRANSFERS AND CANCELLAT ION IN THE RECORDS OF THE SUB-REGISTRAR. THE VALUATION OFFICER, FURTHER HAS NOT CONSIDERED THE SIZE OF THE PROPERTY, THE RESTRICTION ON THE CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN 500 METERS OF THE SEA SHORE ETC PROPERLY AND FAILED TO TAKE THEM WHILE DETERMINING THE FMV . ALTHOUGH, ALL THESE PLEAS WE RE RAISED BEFORE THE AO AND THE CIT(A), THEY HAVE NOT CONSIDERED THEM AND GIVEN THE DUE RELIEF. WITH REGARD TO THE CLAIM OF DEDUCTION U/S. 54F, THE AR SUBMITTED THAT THE ASSESSEE INVESTED THE SALE CONSIDERATION IN THE CAP ITAL GAINS DEPOSIT SCHEME WITH STATE BANK OF INDIA AND SUBSEQUENTLY WITHDRAWN THE AMOUNT AND UTILISED SUBSTANTIATE PART IE RS. 50,12,500/- TOWARDS THE PA YMENTS OF VACANT SITE AT SHOLLINGANALLUR WHERE SHE HAD PLANNED TO CONSTRUCT THE RESIDENTIAL PROPERTY. HOWEVER, DUE TO LEGAL TANGLES THE DEAL COULD NOT GO THROUGH AND HENCE SHE HAS TO RE- DEPOSITTHE AMOUNT WITHDRAWN ON 27.11.200 8 INTO STATE BANK OF :-5-: ITA NO. 1870/CHNY/2017 INDIA TO PROVE THE BONAFIDE THAT THE MONEY WAS LYIN G ONLY WITH STATE BANK OF INDIA BEFORE IT WAS TRANSFERRED TO CAPITAL GAINS DE POSIT SCHEME. THE AR SUBMITTED THAT THIS WAS BEYOND THE CONTROL OF THE A SSESSEE. SUBSEQUENTLY THIS MONEY WAS WITHDRAWN FOR PURCHASING A PLOT AT N O. 33, RAINBOW DRIVE, HALANAYAKANALLI VILLAGE, VARTHUR HOBLI, BANGALORE O N 24.11.2008 AND SHE CONSTRUCTED THE HOUSE THEREON FOR A TOTAL COST OF R S. 92,86,068/- AND CLAIMED DEDUCTION U/S. 54F. WITHOUT APPRECIATING THE ENTIR E FACTS, THE AO DENIED THE DEDUCTION U/S. 54F PRIMARILY FOR THE REASON THAT TH E CAPITAL GAIN DEPOSITS WERE MADE BEYOND THE TIME LIMIT FOR FILING THE RETURN OF INCOME U/S. 139 I.E., 31.07.2008. THE AR SUBMITTED THAT THE FACT OF UTIL ISATION OF SALE PROCEEDS TOWARDS THE CONSTRUCTION OF RESIDENTIAL PROPERTY WI THIN THE TIME OF THREE YEARS FORM THE DATE OF SALE HAS NEVER BEEN DISPUTED BY TH E ASSESSING OFFICER. THE AR SUBMITTED THAT THE VARIOUS BENCHES OF TRIBUNALS AND HIGH COURTS HAVE TAKEN THE LENIENT VIEW WHEN THE ASSESSEE HAS CONST RUCTED THE RESIDENTIAL HOUSE WITHIN THE THREE YEARS, ALLOWING THE DEDUCTIO N CLAIMED U/S. 54F. FURTHER, THE ASSESSEE RELIED ON THE DECISION OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS JAGTARSINGH CHAWALA 259 CTR 388 (P&H) THIS TRIBUNAL IN ITA NO. 1167/MDS/2016 IN THE CASE OF M R. P. SANKARAN VS ITO, WARD-IX (4), CHENNAI FOR AY 2009-10 DATED 15.09.201 6.PER CONTRA, THE DR SUPPORTED THE ORDERS OF THE AO/CIT(A). :-6-: ITA NO. 1870/CHNY/2017 5. WE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE FACT REMAINS THAT THE ASSESSEE SOLD HER PROPERT Y FOR A CONSIDERATION OF RS. 80 LAKHS, WHILE, THE VALUE OF SALE CONSIDERATION AD OPTED BY THE STAMP DUTY AUTHORITIES WAS AT RS. 98,54,105/-. ON A REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER, HE ARRIVED THE VALUE AT RS. 94,5 1,588/-. THE ASSESSEE PLEADS THAT WHILE DETERMINING THE FMV OF THE PROPER TY, THE DVO HAS ADOPTED THE GUIDELINE VALUE GIVEN BY THE STAMP DUTY AUTHORI TY AS THEY HAVE NOT GIVEN COMPARABLE SALE INSTANCES. THE ASSESSEE HAS FURNIS HED THREE COMPARABLE SALE INSTANCES WHICH WAS ACCEPTED BY THE STAMP DUTY AUTH ORITY IN THOSE CASES AND ON THE BASIS, THE ASSESSEE PLEADS THAT THE FMV OF T HE LAND WOULD BE 87.25 LAKHS. FURTHER, THE ASSESSEE PLEADED THAT THERE WA S ONE DUPLICATION BY SALE BY IMPERSONATION WHICH SHE HAD CORRECTED BY DUE LEG AL ACTION. FURTHER, SHE HAD TO DEAL WITH LAND GRAPPING PROBLEM ETC., WHICH STOOD IN THE WAY OF REALISING MARKET VALUE. APART FROM THAT THE RESTRI CTIONS PLACED ON THE CONSTRUCTION OF RESIDENTIAL HOUSES ALSO WAS AGAINST HER IN REALISING THE FAIR MARKET VALUE. HOWEVER, THE DVO WHILE DEALING WITH THESE ASPECTS HAS GIVEN VERY MINOR RELIEF VIZ., 5% TOWARDS DEPRESSING EFFEC T ON THE VALUE DUE TO DUPLICATION OF OLD SALE DEAL, 8% TOWARDS THE RESTRI CTION PLACED BY THE COASTAL REGULATION ZONE AND 3% ON ACCOUNT OF LARGE SIZE OF PLOT WHICH LIMITED THE NUMBER OF PURCHASERS ETC. AFTER CONSIDERING ALL TH E FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ADOPTION OF THE AVER AGE VALUE OF 3 SALE INSTANCES BROUGHT BY THE ASSESSEE WOULD MEET THE EN DS OF JUSTICE, AS THIS :-7-: ITA NO. 1870/CHNY/2017 VALUE REPRESENTS THE FMV, THE RELIEF SOUGHT ON ALL THE ABOVE ACCOUNTS FROM THE VALUE DETERMINED BY DVO IS AUTOMATICALLY TAKEN CARE OF. ACCORDINGLY, WE DIRECT THE AO TO ADOPT THE FMV OF THE PROPERTY AT R S. 87.25 LAKHS. TO THIS EXTENT, THE ASSESSEES GROUNDS ARE ALLOWED. 6. WITH REGARD TO THE CLAIM OF DEDUCTION U/S. 54F, IT IS CLEAR FROM THE ABOVE THAT THE ASSESSEE ORIGINALLY WANTED TO INVEST IN SHOLINGANALLUR AND PROCEEDED ACCORDINGLY. IN VIEW OF THE LEGAL TANGLE S, SUBSEQUENTLY, SHE HAD TO INVEST IN THE PROPERTY IN BANGALORE. THE INVESTMEN T AND THE CONSTRUCTION HAS BEEN COMPLETED WELL WITHIN THE DUE DATE SPECIFIED U /S. 139(4). SINCE, THE AO HAS NOT DISPUTED THE FACTS OF INVESTMENT AND COMPLE TION OF CONSTRUCTION OF HOUSE WITHIN THE EXTENDED DUE DATE U/S. 139(4), WE DIRECT THE AO TO GRANT THE DEDUCTION SOUGHT U/S. 54F. THE CORRESPONDING G ROUNDS ARE ALLOWED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED ON FRIDAY, THE 20 TH DAY OF APRIL, 2018 AT CHENNAI. SD/- ( . ) (DUVVURU RL REDDY) '# /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) # /ACCOUNTANT MEMBER :-8-: ITA NO. 1870/CHNY/2017 /CHENNAI, 7 /DATED: 20 TH APRIL, 2018 JPV 2 '9: ;: /COPY TO: 1. */ APPELLANT 2. '(* /RESPONDENT 3. = ) (/CIT(A) 4. = /CIT 5. :' /DR 6. @ /GF