ITO, CHENNAI V. Shri R.G.Dushyanth, CHENNAI

ITA 1894/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1299 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-01-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Cost of acquisition; Fair market value; Set aside; Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 1894/MDS/2010 ASSESSMENT YEAR : 2006-07 THE INCOME-TAX OFFICER, MEDIA WARD-I, CHENNAI. V. SHRI R.G. DUSSHYANTH, 12A, BESANT ROAD, ROYAPETTAH, CHENNAI-600 014. (PAN : AHRPD1679E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B. SEKARAN RESPONDENT BY : SHRI B. RAMAKRISHNAN O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-VI, CHENNAI IN ITA NO. 239/08-09 DATED 16-08-2010 FOR THE ASSESSMENT YEAR 2006-07. 2. SHRI P.B. SEKARAN, LEARNED CIT-DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI B. RAMAKRISHNAN, CA REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : I.T.A. NO.1894/MDS/2010 2 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSES SING OFFICER TO ADOPT 1981-82 AS THE BASE YEAR IN COMPUTATION OF LONG TERM CAPITAL GAINS. 2.1. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT AS PER THE PROVISIONS OF SECTION 48(III) THE C OST INDEX NUMBER IS TO BE APPLIED FOR THE YEAR IN WHICH THE A SSESSEE BECAME THE OWNER. 2.2. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE PROVISIONS OF SECTION 49 IS REFERRING TO DEEMED COST OF ACQUISITION BUT IT DOES NOT DEEM THE ASSESSEE T O BE THE PREVIOUS OWNER. 2.3. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THE STATUTE MAKES A CLEAR DISTINCTION BETWEEN THE PREVIOUS OWNER AND THE ASSESSEE AS REGARDS ALLOWING THE B ENEFIT OF INDEXATION WHILE COMPUTING THE LONG TERM CAPITAL GA INS. 3. THE LD CIT(A) ERRED IN FIXING THE FMV AS ON 01- 04-1981 AT ` 14.36 PER SQ.FT. WITHOUT ANY BASIS. 3.1. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE ASSESSING OFFICER HIMSELF HAS TAKEN INTO A CCOUNT THE PREVAILING MARKET VALUE AND AFTER MAKING LOCAL ENQU IRY, WHILE ARRIVING AT THE VALUE OF ` 1.72 PER SQ FT. 3.2. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT IN THE ABSENCE OF ANY SALE INSTANCES, THE APPR OVED VALUER CANNOT CLAIM TO HAVE ADOPTED COMPARABLE SALE VALUE. I.T.A. NO.1894/MDS/2010 3 3.3. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE APPROVED VALUER HAD ADOPTED A VALUE ON AD- HOC BASIS AND SAME CANNOT BE TAKEN TO REPRESENT THE MARKET VA LUE. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 4. GROUND NOS. 1 AND 4 IN THE REVENUES APPEAL ARE FOUND TO BE GENERAL IN NATURE AND THE SAME DO NOT REQUIRE ANY ADJUDICATION . 5. IN REGARD TO GROUNDS 2 TO 2.3 IT WAS SUBMITTED B Y THE LEARNED DR THAT THE ASSESSEE HAD SOLD HIS SHARE IN 4.36 ACRES OF LAND I N MUGALIVAKKAM. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD RECEIVED THE LAND THROUGH THE WILL OF HIS GRANDFATHER CH. SIVAJI GANESAN (SHRI V.C. GANESAN). IT WAS THE SUBMISSION THAT ON THE SALE OF THE PROPERTY THE ASSESSEE HAD ADOPTE D THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1-4-1981 FOR APPLYING THE COST I NFLATION INDEX. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD GOT HIS RIGHT IN THE LAND THROUGH THE WILL DATED 23-06- 1999 HAD APPLIED THE COST INFLATION INDEX FOR THE ASSESSMENT YEAR 2001-02 ON THE GROUND THAT SHRI V.C. GANESAN, THE ASSESSEES GRANDFATHER HAD EXPIRED ON 21-07-2001. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD HELD THAT TH E COST INFLATION INDEX WHICH WAS TO BE APPLIED WAS IN RELATION TO THE ASSESSMENT YEAR 1981-82. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD RELIED UPON THE DECISION OF THE SPECIAL I.T.A. NO.1894/MDS/2010 4 BENCH OF THE I.T.A.T., MUMBAI IN THE CASE OF V. MAN JULA J. SHAH REPORTED IN (2009) 30 DTR 601. IT WAS THE SUBMISSION THAT AS T HE ASSESSEE HAD BECOME THE OWNER OF THE PROPERTY ON THE DEATH OF HIS GRANDFATH ER THE COST INFLATION INDEX THAT WAS LIABLE TO BE APPLIED WAS OF THE ASSESSMENT YEAR 2001-02 AS DONE BY THE ASSESSING OFFICER AND THE ORDER OF THE LEARNED CIT( A) WAS LIABLE TO BE REVERSED. 6. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE DECISION OF THE HON'BLE SPECIAL BENCH WAS A BINDING PRECEDEN T. IT WAS THE FURTHER SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UPHELD ON THE ISSUE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IN THESE GROUNDS ARE SQUARELY COVERED BY THE DECISI ON OF THE SPECIAL BENCH, MUMBAI OF THIS TRIBUNAL AND AS IT IS NOTICED THAT T HE LEARNED CIT(A) HAS FOLLOWED THE JUDICIAL DISCIPLINE IN FOLLOWING THE BINDING PR ECEDENT OF THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS LIABLE TO BE UPHELD AND WE DO SO. 8. IN REGARD TO GROUNDS 3 TO 3.3 IT WAS SUBMITTED B Y THE LEARNED DR THAT THE REVENUE WAS IN APPEAL AGAINST THE ORDER OF THE LEAR NED CIT(A) IN FIXING THE FAIR MARKET VALUE OF THE SAID 4.36 ACRES OF LAND AT ` 14.3 PER S.FT. WITHOUT ANY BASIS. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSM ENT THE ASSESSEE HAD PRODUCED A REPORT OF THE VALUATION OFFICER WHEREIN THE VALUE OF THE LAND AS ON 1.4.1981 WAS ADOPTED AT ` 27/- PER S.FT. IT WAS THE SUBMISSION THAT THIS VA LUE I.T.A. NO.1894/MDS/2010 5 WAS ON THE BASIS OF THE NEIGHBOURHOOD ENQUIRY AS AL SO THE WORKING BACK OF THE SALE CONSIDERATION. IT WAS THE SUBMISSION THAT THI S WAS NOT A SCIENTIFIC BASIS. IT WAS THE FURTHER SUBMISSION THAT THE ASSESSING OFFIC ER HAD OBTAINED A CERTIFICATE FROM THE SUB REGISTRAR OFFICE WHEREIN THE SUB REGIS TRAR HAD GIVEN THE CAPITALIZED VALUE IN REGARD TO THE SAID SURVEY NUMBERS AT ` 40,000/- AND ` 75,000/ PER ACRE. IT WAS THE FURTHER SUBMISSION THAT THE SUB REGISTRA R HAD ALSO CLARIFIED THAT NO SALE HAD TAKEN PLACE DURING THE YEAR 1981-82 AND CO NSEQUENTLY THE REPORT OF THE REGD. VALUER COULD NOT BE SUSTAINED AND IT WAS THE VALUE AS ADOPTED BY THE ASSESSING OFFICER ON THE BASIS OF THE SUB REGISTRAR S VALUATION THAT WAS LIABLE TO BE APPLIED. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD WITHOUT ANY BASIS ESTIMATED THE VALUE OF THE PROPERTY AS ON 1.4.1981 AT ` 14.36 PER S.FT. IT WAS THE SUBMISSION THAT THE AVERAGING AS HAS BEEN DONE BY THE LEARNED CIT(A) WAS NOT A PERMISSIBLE METHOD FOR ARRIVING AT THE FAIR M ARKET VALUE AS ON 1.4.1981. 9. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE PROPERTY SOLD WAS A JOINT OWNERSHIP PROPERTY BETWEE N THE ASSESSEE AND HIS COUSIN BROTHER, SHRI P. VIKRAM. IT WAS THE SUBMISS ION THAT IN THE CASE OF THE ASSESSEES COUSIN BROTHER, THE ASSESSING OFFICER HA D ACCEPTED THE VALUE DISCLOSED BY THE ASSESSEE AT ` 27/- PER S.FT. HE PLACED BEFORE US THE COPY OF TH E ASSESSMENT ORDER IN THE CASE OF SHRI P. VIKRAM FOR THE ASSESSMENT YEAR 2006-07 PASSED ON 30-12-2008 BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-II, CHENNAI WHEREIN THE VALUE OF THE PROPERTY AS ON 1.4 .1981 HAS BEEN ACCEPTED AT I.T.A. NO.1894/MDS/2010 6 ` 51,03,180/- WHICH IS THE SAME FIGURE AS DISCLOSED BY THE ASSESSEE IN HIS RETURN. IT WAS THE SUBMISSION THAT IN VIEW OF THE ASSESSMEN T ORDER IN THE CASE OF THE ASSESSEES COUSIN BROTHER IN RELATION TO THE SAME P ROPERTY, THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 SHOULD BE ADOPTED AT ` 27/- PER S.FT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT T HE OUTSET IT IS NOTICED THAT THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE O RDER OF THE LEARNED CIT(A). IT IS ALSO NOTICED THAT THE ASSESSING AUTHORITY IN THE CASE OF THE ASSESSEES COUSIN BROTHER, SHRI P. VIKRAM, HAS ACCEPTED THE VALUE AS ON 1.4.1981 AT ` 27/- PER S.FT. VIDE AN ORDER DATED 30-12-2008 AND THIS FINDING OF THE ASSESSING OFFICER IN THE ASSESSEES COUSIN BROTHERS CASE HAS NOT BEEN DISTU RBED TILL TODAY. OBVIOUSLY, THE SAME PROPERTY CANNOT HAVE TWO DIFFERENT VALUES AS O N 1.4.1981. IT IS FURTHER NOTICED THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. VEGETABLE PRODUCTS LTD. REPORTED IN 88 ITR 1 92 (SC), WHEN TWO DIFFERENT VIEWS ARE POSSIBLE, THE VIEW IN FAVOUR OF THE ASSES SEE WOULD HAVE TO BE ADOPTED.. EVEN THOUGH WE ARE IN FULL AGREEMENT WITH THE LEARNED DR THAT THE METHOD OF VALUATION AS ADOPTED BY THE REGD. VALUER OF THE ASSESSEE IS NOT A SCIENTIFIC BASIS, HOWEVER, AS THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEES COUSIN BROTHER SHRI P. VIKRAM HAS ACCEPTED THE VALU E OF THE SAME PROPERTY WHILE COMPUTING THE CAPITAL GAINS IN THE CASE OF SHRI P. VIKRAM AT ` 27/- PER S.FT., THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 WO ULD HAVE TO BE THE SAME. AS MENTIONED EARLIER, THE ASSESSEE HAS NOT FILED ANY A PPEAL AGAINST THE ORDER OF THE I.T.A. NO.1894/MDS/2010 7 LEARNED CIT(A) WHO HAS FIXED THE FAIR MARKET VALUE AT ` 14.36 PER S.FT. EVEN THOUGH WE ARE NOT IN AGREEMENT WITH THE METHOD OF A DOPTION OF THE FAIR MARKET VALUE AS ON 1.4.1981 BY THE LEARNED CIT(A) AND IT I S SPECIFICALLY RECORDED THAT THE AVERAGING OF THE TWO VALUES IS NOT A METHOD PERMISS IBLE FOR THE PURPOSE OF VALUING THE FAIR MARKET VALUE OF THE PROPERTY, STIL L WE ARE COMPELLED TO DIRECT THE ASSESSING OFFICER TO ADOPT THE SAID VALUE OF ` 14.36 PER S.FT. AS ON 1.4.1981 IN VIEW OF THE ASSESSMENT ORDER IN THE CASE OF SHRI P. VIKRAM, REFERRED TO SUPRA, AND WE DO SO. IN THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS DISMISSED. 11. THE ORDER WAS PRONOUNCED IN THE COURT ON 06.01. 2011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 06 TH JANUARY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE