Income-tax Officer, V. Dr. Rajendra Nilkanth Pingale, Jalgaon

ITA 193/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1806 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report; Assessment record; Tax effect

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.01/PN/2014 ASSESSMENT YEAR : 2010-11 DR. RAJENDRA N. PINGALE, HOMOEOPATHY CLINIC, DAULAT PLAZA, II-FLOOR, BLOCK NO.12, 13, TOWER CHOWK, NAVI PETH, JALGAON 425 001. PAN : ANAPP2690L . APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(2), JALGAON. . RESPONDENT ITA NO.193/PN/2014 ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, WARD 1(2), JALGAON. . APPELLANT VS. DR. RAJENDRA N. PINGALE, HOMOEOPATHY CLINIC, DAULAT PLAZA, II-FLOOR, BLOCK NO.12, 13, TOWER CHOWK, NAVI PETH, JALGAON 425 001. PAN : ANAPP2690L . RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO DEPARTMENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 25.05.2016 / DATE OF PRONOUNCEMENT: 27.05.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE AFORESAID CAPTIONED CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST THE ORDER OF CIT(A)-2, NASHIK, DATED 07.11.2013 RELATING 2 ITA NO.01/PN/2014 ITA NO.193/PN/2014 TO ASSESSMENT YEAR 2010-11 PASSED UNDER SECTION 143 (3)(II) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER. ITA NO.01/PN/2014 (BY ASSESSEE) : 3. FIRST, WE SHALL TAKE-UP THE APPEAL OF THE ASSESS EE FOR ADJUDICATION. THE FIRST ISSUE INVOLVED IN THIS APPEAL CONCERNS THE AC TION OF THE CIT(A) IN REFUSING TO ADMIT THE REVISED COST OF ACQUISITION OF PROPERT Y AT RS.2,84,300/- AS ON 01.04.1981, INSTEAD OF RS.1,00,000/- SUO-MOTU CLAIMED IN THE EARLIER ASSESSMENT YEAR ON ESTIMATED BASIS, WHILE CALCULATI NG THE CAPITAL GAIN UNDER THE PROVISIONS OF THE ACT. 4. BRIEFLY STATED, THE RELEVANT FACTS OF THE CASE A RE THAT THE ASSESSEE AN INDIVIDUAL IS A HOMOEOPATH DOCTOR. HE HAS INTER-ALIA DECLARED CAPITAL GAINS ON SALE OF PLOTS. THE ASSESSEE STATES TO HAVE ANCE STRAL LAND AT GAT NO.61/2, KASODA WHICH WAS CONVERTED BY HIM INTO PLOTS. 38 P LOTS WERE SOLD DURING THE YEAR AND LONG TERM CAPITAL GAIN (LTCG) THEREON WAS COMPUTED AT RS.4,93,050/-. THE ASSESSING OFFICER NOTICED THAT AS THE ASSESSEE HAS INHERITED THE AFORESAID PROPERTY PRIOR TO 01.04.1981, THE COS T OF ACQUISITION OF THE PROPERTY FOR THE PURPOSE OF COMPUTATION OF LTCG WAS ADOPTED AT RS.2,84,300/- BEING FAIR VALUE AS ON 01.04.1981. H OWEVER, IN THE EARLIER YEAR RELEVANT TO ASSESSMENT YEAR 2009-10, THE COST OF AC QUISITION OF THE SAME PLOT AS ON 01.04.1981 WAS TAKEN AT A DIFFERENT FIGURE I.E. ESTIMATED SUO-MOTU AT RS.1,00,000/- BY THE ASSESSEE. THEREFORE, THE ASSE SSING OFFICER ADOPTED THE COST OF ACQUISITION AT RS.1,00,000/- AS AGAINST THE CLAIM OF THE ASSESSEE FOR REVISED FIGURE OF RS.2,84,300/- FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN. 5. THE CIT(A) IN APPEAL BEFORE IT ALSO REJECTED THE CONTENTIONS OF THE ASSESSEE FOR THE CHANGE IN COST ONCE ADOPTED IN THE EARLIER YEAR WITH REFERENCE 3 ITA NO.01/PN/2014 ITA NO.193/PN/2014 TO 01.04.1981. THE RELEVANT FINDINGS OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER :- AS REGARDS COST AS ON 1-04-L981, I FIND FROM THE A SSESSMENT ORDER THAT THE A.O. OBSERVED FROM THE EARLIER ASSESSMENT RECORD THAT TH E APPELLANT HAD ALREADY EXERCISED HIS RIGHT TO ADOPT THE COST AS ON 01-04-1 981 IN THE EARLIER YEARS, WHILE CALCULATING THE CAPITAL GAIN IN RESPECT OF PLOTS OF SAME GAT NO. THE APPELLANT TRIED AT HIS BEST TO SAY THAT THE COST AS ON 1/4/19 81 WAS ESTIMATED AT LOWER SIDE AND THIS YEAR THEY HAVE CORRECTED IT AND ADOPTED AT RS.2,84,300/- INSTEAD OF RS.1,00,000/-. I HAVE GONE THROUGH THE SUBMISSION A ND ALSO CONSIDERED THE ARGUMENTS OF COUNSELS AND VARIOUS DECISIONS RELIED UPON BY THE APPELLANT CITED SUPRA. HOWEVER, I FIND NONE OF THE DECISION IS IDEN TICAL TO THE FACTS OF THE CASE AND LAID DOWN THAT CHANGE IN COST ONCE ADOPTED AS O N 1/4/1981 IS PERMISSIBLE. UNDER THE CIRCUMSTANCES, I AM NOT CONVINCED BY THE REASONS SUBMITTED BY THE APPELLANT AND I AM OF THE OPINION THE A.O. IS JUSTI FIED IN REJECTING THE REVISED COST CLAIMED BY THE APPELLANT. NO INTERFERENCE IS T HEREFORE CALLED FOR IN THE DECISION OF THE A.O. IN THIS REGARD. 6. AGGRIEVED BY THE ORDER OF THE AUTHORITIES BELOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. SHRI SUNIL GANOO, THE LD. AUTHORIZED REPRESENTAT IVE (AR) FOR THE ASSESSEE, AT THE OUTSET, ADVERTED OUR ATTENTION TO PAGE NOS.116 TO 118 OF THE PAPER BOOK FILED WHEREIN THE COPY OF THE VALUATION REPORT IN RESPECT OF GAT NO.61/2 OF PLOT NO.1 TO 48 SITUATED AT KASODA TQ. E RANDOL, DIST. JALGAON IS PLACED ON RECORD AND SUBMITTED THAT THERE IS NO QUA RREL THAT FAIR VALUE WERE ADOPTED AT RS.1,00,000/- AS ON 01.04.1981 IN THE PR ECEDING YEAR. HOWEVER, ON THE BASIS OF VALUATION REPORT OBTAINED SUBSEQUENTLY DATED 29.04.2013, THE FAIR MARKET VALUE FOR THE PURPOSES OF DETERMINATION OF C OST OF ACQUISITION AS ON 01.04.1981 IN TERMS OF SECTION 48 OF THE ACT WORKS OUT TO RS.2,84,300/-. THEREFORE, THE CORRECT LTCG CAN BE DETERMINED ONLY WITH REFERENCE TO THE FAIR MARKET VALUE AS APPROVED BY THE CIVIL ENGINEER IN T HE AFORESAID REPORT. HE SUBMITTED THAT MERELY BECAUSE LOWER VALUE WAS ADOPT ED IN THE EARLIER YEAR IN RESPECT OF THE AFORESAID PROPERTY, THAT BY ITSELF, WILL NOT OPERATE AS ESTOPPEL FOR THE PURPOSES OF DETERMINATION OF CORRECT TAX LIABIL ITY IN THE LATER YEAR. NO EXCESS TAX CAN THUS BE COLLECTED. THE ASSESSEE IS AT LIBERTY TO JUSTIFY HIS CASE BY DOCUMENTARY EVIDENCE. IN THE PRESENT CASE, THE VALUATION REPORT BY CIVIL ENGINEER PROVES THE CASE OF THE ASSESSEE FOR FAIR V ALUATION. 4 ITA NO.01/PN/2014 ITA NO.193/PN/2014 8. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE, ON THE OTHER HAND, SUBMITTED THAT FOR THE SAME VERY PROPER TY, A PART OF WHICH WAS SOLD IN THE EARLIER YEAR, THE COST OF ACQUISITION FOR TH E PURPOSES OF DETERMINATION OF CAPITAL GAIN WAS SUO-MOTU ADOPTED AT RS.1,00,000/- BY THE ASSESSEE HIMSELF AN D THEREFORE HE CANNOT CHANGE HIS STAND IN THE SUBSEQU ENT YEAR FOR THE PURPOSE OF DETERMINATION ON FAIR MARKET VALUE AS ON 01.04.1981 . 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THE ISSUE. THE DISPUTE REVOLVES AROUND THE COST OF ACQUISITION TO BE ADOPTED FOR THE PURPOSES OF DETERMINATION OF LTCG. THE COST OF ACQUISITION OF THE PROPERTY WAS ESTIMATED AND ADOPTED AT RS.1,00,000/- IN THE PRECE DING YEAR BY THE ASSESSEE BEING FAIR VALUE AS ON 01.04.1981. HOWEVER, THE AS SESSEE HAS SOUGHT TO SUBSTITUTE THE AFORESAID FAIR VALUE OF COST OF ACQU ISITION AS ON 01.04.1981 AT RS.2,84,300/- AS AGAINST RS.1,00,000/- ADOPTED IN T HE EARLIER YEAR. WE ARE IN AGREEMENT WITH THE CONTENTIONS OF THE LD. AR THAT F AIR VALUE OF COST OF ACQUISITION AS ON 01.04.1981 ADOPTED AT A PARTICULA R VALUE IN THE EARLIER YEAR WILL NOT OPERATE AS A BAR TO ADOPT DIFFERENT VALUE IN THE SUBSEQUENT YEAR PROVIDED THE DEPARTURE IN ADOPTING THE VALUE IS JUS TIFIED BY THE DOCUMENTARY EVIDENCES. HAVING REGARD TO THE FACTS, IN OUR CONS IDERED VIEW, THE ASSESSEE WILL BE ENTITLED TO ADOPT A FAIR VALUE AS ON 01.04. 1981 FOR THE PURPOSES OF DETERMINATION OF COST OF ACQUISITION AT A VALUE, WH ICH MAY BE DIFFERENT FROM THE VALUE ADOPTED IN THE EARLIER YEAR PROVIDED THIS ACT ION IS JUSTIFIED BY DOCUMENTARY EVIDENCES. IT IS THE CASE OF THE ASSES SEE THAT IN THE EARLIER YEAR, THE FAIR VALUE WAS ADOPTED ON AD-HOC BASIS BASED ON HEARSAY. IN JUSTIFICATION OF THE ADOPTION OF A HIGHER VALUE OF COST OF ACQUISITI ON IN THIS YEAR, THE ASSESSEE HAS SOUGHT TO DRAW SUPPORT FROM THE VALUATION REPOR T WHICH WAS OBTAINED AFTER THE ASSESSMENT WAS FRAMED. WE ALSO NOTE FROM THE R EMAND REPORT THAT THE ASSESSING OFFICER WAS PROVIDED WITH THE COPY OF THE AFORESAID VALUATION REPORT WHERE AS PER THE VALUERS REPORT THE NET VALUE IS E STIMATED AT RS.3,06,138/- FOR THE YEAR 1981 82. HOWEVER, THE ASSESSING OFFICER PERSISTED FOR THE ESTIMATED COST OF ACQUISITION AT RS.1,00,000/- AS DISCLOSED I N THE EARLIER YEARS RETURN OF INCOME. THE ASSESSING OFFICER, THEREFORE, IN THE R EMAND PROCEEDINGS DOES NOT 5 ITA NO.01/PN/2014 ITA NO.193/PN/2014 APPEAR TO HAVE VERIFIED THE CONTENTS OF THE VALUATI ON REPORT NOR HAS ATTEMPTED TO ASCERTAIN THE VALUE OF THE PROPERTY AS ON 01.04. 1981 THROUGH ANY INDEPENDENT SOURCE. IN THE CIRCUMSTANCES, WE CONSI DER IT EXPEDIENT THAT THE MATTER IS SENT BACK TO THE FILE OF THE ASSESSING OF FICER WITH A DIRECTION TO VERIFY THE ISSUE OF FAIR VALUE OF COST OF ACQUISITION OF T HE PROPERTY AS ON 01.04.1981 DE NOVO IN ACCORDANCE WITH LAW AFTER TAKING INTO ACCOUNT T HE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD. THE ASSESSING OFFICER FOR THE PURPOSES OF DETERMINATION OF FAIR VALUE OF PROPERTY AS ON 01.04 .1981 SHALL BE AT LIBERTY TO TAKE RECOURSE TO THE PROVISIONS OF THE ACT AND OBTA IN INDEPENDENT VALUATION REPORT FROM THE DEPARTMENTAL VALUER IF HE SO DESIRE S. WE DIRECT ACCORDINGLY. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON THE FI RST ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. 10. THE NEXT ISSUE RELATES TO THE ACTION OF THE CIT (A) IN GRANTING PARTIAL RELIEF AND RESTRICTING THE COST OF IMPROVEMENT ON P ROPERTY TO 50% OF THE AMOUNT CLAIMED. 11. IT IS THE CASE OF THE ASSESSEE BEFORE THE CIT(A ) THAT THE ASSESSING OFFICER HAS NOT GIVEN DUE CREDIT TO THE CLAIM OF TH E IMPROVEMENT OF COST OF RS.2,40,592/- MADE BY THE ASSESSEE IN THE YEAR 2000 -01. THE ASSESSEE HAS INCURRED TOTAL EXPENSES AT RS.2,40,592/- WHEREAS TH E ASSESSING OFFICER CONSIDERED ONLY RS.22,812/-. SIMILARLY, IN THE YEA R 2008-09, THE ASSESSEE HAS INCURRED TOTAL EXPENSES AT RS.55,643/- WHEREAS THE ASSESSING OFFICER CONSIDERED ONLY RS.3,266/-. IT IS THE CASE MADE OU T ON BEHALF OF THE ASSESSEE THAT THE EVIDENCES OF EXPENSES WERE FILED AND PLACE D ON RECORD BEFORE THE CIT(A). ON APPRECIATION OF EVIDENCES, THE CIT(A) H AS RESORTED TO ESTIMATION OF EXPENSES AT 50% OF THE COST OF IMPROVEMENT CLAIM ED BY THE ASSESSEE AND DISALLOWED THE BALANCE AT 50% WHICH ACCORDING TO AS SESSEE IS HIGHLY EXCESSIVE. 12. THE CIT(A) HAS ADDRESSED THE ISSUE AS UNDER :- AS REGARDS DEDUCTION OF IMPROVEMENT EXPENSES CLAIM ED BY THE APPELLANT AT RS.2,40,492/- IN THE YEAR 2001-02 AND RS.55,643/- I N THE YEAR 2008-09, I FIND IT IS NOT FULLY SUPPORTED BY VALID VOUCHERS AND BILLS. NO DOUBT THERE ARE COSTS 6 ITA NO.01/PN/2014 ITA NO.193/PN/2014 ALWAYS ASSOCIATED WITH ANY KIND OF SUCH BUSINESS FO R DEVELOPMENT. THE HON GUJARAT HIGH COURT IN THE CASE OF CIT VS GURBACHAN SINGH JUNEJA (215 CTR 509) HAS HELD THAT: 'IN ORDER TO JUSTIFY THAT, THE RE ARE COSTS ALWAYS ASSOCIATED WITH ANY KIND OF REAL ESTATE DEVELOPMENT, BE IT PLO TTED DEVELOPMENT OR OTHERWISE AND THAT THE MATCHING PRINCIPLES OF REVEN UE AND COST IS UNIVERSALLY RECOGNIZED IN ACCOUNTING THEORY AND HENCE WHENEVER REVENUE IS SHOWN TO HAVE BEEN EARNED AND IS RECOGNIZED FOR THE PURPOSE OF TA XING THE SAME, THE ASSOCIATED AND MATCHING COST WOULD ALSO HAVE TO BE ALLOWED AS A DEDUCTION THERE FROM AND SUCH COSTS ARE DEEMED TO HAVE BEEN I NCURRED IRRESPECTIVE OF THE MATERIAL FOUND DURING SEARCH. THEREFORE, FOLLOWING THE PRINCIPLE LAID DOWN IN THE ABOVE CITED DECISION AND CONSIDERING ALL THE RELEVANT FACTS, AND EVIDENCES O F EXPENSES FILED ON RECORD AND TO MEET THE END OF JUSTICE, THE 50% EXPENSES ARE CO NSIDERED APPROPRIATE AND HENCE IT IS HEREBY ALLOWED I.E. RS.1,20,246/- [ 50% OF RS.2,40,492.] IN THE YEAR 2001- 02 AND RS. 27,821/- [50% OF RS.55643] IN THE YEAR 2 008-09. THEREFORE, LONG TERM CAPITAL GAIN U/S.50 C WOULD BE WORKED OUT AS UNDER: PARTICULARS AMOUNT RS. SALES CONSIDERED AS PER STAMP DUTY VALUATION U/S.50 C 22,34,936 LESS :. 1] COST 1/4/1981 AS SHOWN IN EARLIER YEAR RS.100000 . INDEX: 632/182= 347253 RS.347253. 2] EXP. IN 2001-02=RS.1,20,246 INDEX: 632/406=187180RS.187180. 3] EXP. IN 2008-09=RS.27821. INDEX:632/587=30211.RS.30211. LESS: TOTALRS.564644 5,64,644 LONG TERM CAPITAL GAIN U/S.50C 16,70,292 IN VIEW OF THE ABOVE, THE APPELLANT GET THE RELIEF AT RS.1,78,378/- [ 18,48,670.(-) 16,70,292]. THE A.O. IS DIRECTED ACCORDINGLY. THERE FORE, THE GROUND NO.2 IS PARTLY ALLOWED. 13. THE LD. AR THEREFORE, PLEADED THAT SUITABLE REL IEF MAY BE GRANTED ON THIS SCORE. 14. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR TH E REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 15. WE FIND THAT THE IMPROVEMENT HAS BEEN ESTIMATED AT 50% ON ESTIMATION BASIS HAVING REGARD TO THE FACTS THAT THE CERTAIN E VIDENCES OF EXPENSES PLACED BEFORE THE CIT(A) CANNOT BE FULLY VOUCHED AND SUPPO RTED. ON CONSIDERATION OF ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL PLACED ON RECORD, WE FEEL THAT THE COST OF IMPROVEMENT BE TAKEN AT 75% OF THE EXPE NSES CLAIMED AS AGAINST 7 ITA NO.01/PN/2014 ITA NO.193/PN/2014 50% DISALLOWED BY THE CIT(A) WHICH IN OUR VIEW WILL MEET THE ENDS OF JUSTICE. THUS, THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS P ARTLY ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ITA NO.193/PN/2014 (BY REVENUE) : 17. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE FAIRLY ADMITTED THAT THE APPEAL OF THE REVENUE IS COVERED BY RECENT CBDT CIRCULAR NO.21 OF 2015 DATED 10 TH DECEMBER, 2015. SINCE THE TAX EFFECT IN RESPECT OF DISPUTED ISSUES RAISED BY THE REVENUE IN ITS APPEAL IS LESS THAN THE REVISED MONETARY LIMIT OF RS.10 LAKHS PRESCRIBED BY THE CBDT CIRCULA R, THE AFORESAID APPEAL OF THE REVENUE IN ITA NO.193/PN/2014 IS NOT MAINTAINAB LE. 18. IN VIEW OF EXPRESS CIRCULAR OF THE CBDT (SUPRA) , THE APPEAL OF THE REVENUE CANNOT BE ENTERTAINED AND THUS STANDS DISMI SSED. 19. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF MAY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 27 TH MAY, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-2, NASHIK; 4) THE CIT- 2, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' , / ITAT, PUNE