A. Jagannathan, Coimbatore V. ITO, Coimbatore

ITA 1877/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73665 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2013
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Capital asset; Cost of acquisition; Fair market value; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1877/MDS/2013 ASSESSMENT YEAR : 2009-10 SHRI A. JAGANNATHAN, NO.50A, PALANISAMY ST., NO.2, SAIBABA COLONY, K.K.PUDUR, COIMBATORE 641 038 [PAN: ADAPJ 9812 G] (APPELLANT) VS INCOME TAX OFFICER, WARD-II(5), COIMBATORE (RESPONDENT) APPELLANT BY : SHRI K. BALASUBRAMANIAN, ADV. RESPONDENT BY : SHRI T.N.BETGERI, JCIT DATE OF HEARING : 09-01-2014 DATE OF PRONOUNCEMENT : 28-01-2014 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMB ATORE DATED 04-12-2012 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 9-10. I.T.A. NO. 1877/MDS/2013 2 2. THE APPEAL HAS BEEN FILED WITH A DELAY OF 264 DA YS. THE ASSESSEE-APPELLANT HAS FILED AN APPLICATION ACCOMPA NIED BY AN AFFIDAVIT FOR CONDONATION OF DELAY IN FILING OF THE APPEAL. IN THE AFFIDAVIT, THE ASSESSEE HAS CITED REASONS FOR THE D ELAY IN FILING OF THE APPEAL. THE ASSESSEE WAS WRONGLY ADVISED TO FI LE WRIT PETITION BEFORE THE HONBLE MADRAS HIGH COURT AGAINST THE OR DER OF CIT(APPEALS). THE SAID WRIT PETITION WAS LATER WIT HDRAWN WITH A LIBERTY TO AVAIL THE REMEDY OF APPEAL BEFORE THE TR IBUNAL. WE ARE SATISFIED THAT THE DELAY IN FILING OF THE APPEAL IS NOT WILLFUL OR INTENTIONAL BUT IS FOR THE REASONS STATED IN THE AF FIDAVIT. THE DELAY OF 264 DAYS IN FILING OF THE APPEAL IS CONDONED. T HE APPEAL IS ADMITTED TO BE HEARD AND DECIDED ON MERITS. 3. THE BRIEF FACTS OF THE CASE ARE: THE ASSESSEE HA D FILED HIS RETURN OF INCOME FOR THE AY. 2009-10 ON 30-07-2009 DECLARING HIS TOTAL INCOME AS ` 3,26,691/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS IS SUED TO THE ASSESSEE ON 03-09-2009. THE ASSESSEE HAD CARRIED F ORWARD CURRENT YEAR LOSS UNDER THE HEAD LONG TERM CAPITAL GAINS IN HIS I.T.A. NO. 1877/MDS/2013 3 RETURN OF INCOME. THE ASSESSEE HAD INHERITED TWO PROPERTIES VIDE REGISTERED WILL DT. 24-05-1948: I. SITUATED AT GANDHIPURAM, COIMBATORE; AND II. SITUATED AT KALINGA STREET, R.S.PURAM, COIMBATO RE. THE ASSESSEE SOLD ABOVE MENTIONED PROPERTIES IN SEP TEMBER, 2008 AND WORKED LONG TERM CAPITAL LOSS OF ` 20,38,225/-. WHILE DETERMINING CAPITAL LOSS, THE ASSESSEE HAD ADOPTED FAIR MARKET VALUE [FMV] AS ON 01-04-1981 DETERMINED ON THE BASI S OF UN- REGISTERED AGREEMENT OF SALE. THE ASSESSING OFFICE R REJECTED THE FMV ADOPTED BY THE ASSESSEE AND ADOPTED THE GUIDE L INE VALUE OBTAINED FROM THE SUB-REGISTRARS OFFICE FOR ARRIVI NG AT THE COST OF ACQUISITION OF PROPERTY AS ON 01-04-1981. THE ASS ESSEE MADE PETITION U/S.144A ON 27-12-2011 FOR FIXING THE FMV FOR ARRIVING AT THE COST OF ACQUISITION. THE JOINT COMMISSIONER OF INCOME TAX, RANGE-II, COIMBATORE DETERMINED THE FMV OF THE LAND SITUATED AT GANDHIPURAM AS ` 10,000/- PER - CENT AND FOR LAND SITUATED AT KALINGA STREET AS ` 20,000/- PER - CENT. THE ASSESSING OFFICER ADOPTED THE FMV AS DETERMINED BY THE JOINT COMMISSI ONER OF INCOME TAX U/S.144A. I.T.A. NO. 1877/MDS/2013 4 4. THE ASSESSEE HAD ALSO CONSTRUCTED A BUILDING OVE R THE LAND SITUATED AT GANDHIPURAM DURING THE YEAR 2007-08, FO R WHICH THE ASSESSEE HAD TAKEN A HOUSING LOAN FROM STATE BANK O F TRAVANCORE. THE SAID BUILDING WAS SOLD BY THE ASSE SSEE TO ONE SHRI K. KRISHNA MURTHY AND OTHERS DURING THE YEAR 2 008-09. THE ASSESSING OFFICER AFTER VERIFICATION OF THE MUNICIP AL RECORDS, CAME TO THE CONCLUSION THAT THE BUILDING WAS A SHORT TER M CAPITAL ASSET AS IT WAS SOLD BEFORE THE COMPLETION OF THREE YEARS OF CONSTRUCTION. THE AR OF THE ASSESSEE CONCEDED BEFORE CIT(APPEALS) THAT THE GAIN ARISING FROM THE SALE OF BUILDING IS A SHORT T ERM CAPITAL GAIN. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 30-12 -2011, PASSED U/S.143(3) R.W.S 144A OF THE ACT, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). IN THE LIGHT O F THE FACTS NARRATED ABOVE, THE CIT(APPEALS) GAVE PARTIAL RELI EF TO THE ASSESSEE BY ADOPTING FMV OF PROPERTY SITUATED AT GA NDHIPURAM AS ` 20,000/- PER - CENT AND IN RESPECT OF PROPERTY SITU ATED AT KALINGA STREET, R.S.PURAM AS ` 30,000/- PER - CENT. THE ASSESSEE STILL AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), H AS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. I.T.A. NO. 1877/MDS/2013 5 5. SHRI K. BALASUBRAMANIAN, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW IN AN ARBITRARY AND UNJUSTIFIED MANNER HAVE BRUSHED ASIDE THE APPROVED VALUERS REPORT DETERMINING THE VALUE OF BOTH THE PROPERTIES ON 01-04-1981. THE APPROVED VALUER HAD DETERMINED THE VALUE OF PRO PERTY SITUATED AT GANDHIPURAM AS ` 10,74,000/- AND PROPERTY AT KALINGA STREET AS ` 5,34,000/-. THE LD.AR FURTHER SUBMITTED THAT THE B ENEFIT OF INDEXATION WAS NOT GIVEN ON THE OLD BUILDING CONSTR UCTED OVER THE LAND SITUATED AT GANDHIPURAM AS WELL AS KALINGA STR EET, COIMBATORE. 6. ON THE OTHER HAND, SHRI T.N.BETGERI, APPEARING O N BEHALF OF THE REVENUE STRONGLY SUPPORTED THE ORDER OF CIT(APP EALS) AND SUBMITTED THAT THE APPEAL OF THE ASSESSEE BE DISMIS SED. 7. BOTH SIDES HEARD. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE LD.AR OF THE ASSESSEE HAS P LACED HEAVY RELIANCE ON AN UN-REGISTERED SALE AGREEMENT WHEREIN THE VALUE OF PROPERTIES IS ALLEGEDLY BASED ON THE REPORT OF APPR OVED VALUER. SINCE THE DOCUMENT IS NOT REGISTERED, RELIANCE CANN OT BE PLACED ON THE SAME. THE ASSESSEE HAD OPTED FOR THE VALUE TO BE DETERMINED I.T.A. NO. 1877/MDS/2013 6 BY JOINT COMMISSIONER OF INCOME TAX, COIMBATORE BY FILING OF PETITION U/S.144A. THE JOINT COMMISSIONER OF INCOM E TAX DETERMINED THE FMV AT ` 10,000/- PER - CENT FOR THE PROPERTY SITUATED AT GANDHIPURAM, COIMBATORE AND ` 20,000/- PER - CENT FOR THE PROPERTY SITUATED AT KALINGA STREET, COIMBATORE . THE ASSESSING OFFICER ADOPTED THE VALUE OF PROPERTY AS DETERMINED BY THE JOINT COMMISSIONER OF INCOME TAX, U/S.144A. EV EN IN APPEAL BEFORE THE CIT(APPEALS), THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY COGENT EVIDENCE IN SUPPORT OF FMV ADOPTED BY HI M. HOWEVER, THE CIT(APPEALS) AFTER TAKING INTO CONSIDERATION TH E LOCATION OF THE PROPERTY, ENHANCED THE FMV FROM ` 10,000/- TO ` 20,000/- PER - CENT FOR THE PROPERTY SITUATED AT GANDHIPURAM AND ` 20,000/- TO ` 30,000/- PER - CENT FOR THE PROPERTY SITUATED AT KA LINGA STREET, R.S.PURAM, COIMBATORE. WE ARE OF THE VIEW, THAT TH E CIT(APPEALS) HAS TAKEN A FAIR AND REASONABLE VIEW. AS FAR AS BUILDING IS CONCERNED, THE AR OF THE ASS ESSEE HAS CONCEEDED THAT THE GAIN ARISING FROM THE SALE OF BU ILDING IS A SHORT TERM CAPITAL GAIN. ONCE THE ASSET IS HELD TO BE SH ORT TERM CAPITAL ASSET, THE QUESTION OF INDEXATION ON THE SAID ASSET DOES NOT ARISE. I.T.A. NO. 1877/MDS/2013 7 8. THE LD. AR HAS NOT BEEN ABLE TO SHOW ANY INFIRMI TY IN THE IMPUGNED ORDER. THE ORDER OF CIT(APPEALS) IS CONFI RMED AND THE APPEAL OF THE ASSESSEE IS DISMISSED BEING DEVOID OF MERITS. ORDER PRONOUNCED ON TUESDAY, THE 28 TH JANUARY, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 28 TH JANUARY, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR