BENJAMIN C. MALHOTRA, MUMBAI V. ITO 4(1), MUMBAI

ITA 1946/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78679 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Cost of acquisition; Fair market value; Valuation report; Non passing of speaking order

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND SANJAY ARORA (AM) . . , , ./I.T.A. NO.1946/MUM/2011 ( / ASSESSMENT YEAR : 2007-08) SHRI BENJAMIN C MALHOTRA, C/O DM HARISH AND CO., 305-309, NEELKANTH, 98, MARINE DRIVE, MUMBAI-400002 / VS. INCOME TAX OFFICER 4(1), MUMBAI. ( $ / APPELLANT) .. ( %&$ / RESPONDENT) ./ ./PAN/GIR NO. : ALWPM2426M $ / APPELLANT BY : SHRI PRAKASH JOTWANI %&$ ) /RESPONDENT BY : SHRI S M KESHKAMA T ) - / DATE OF HEARING : 17.4.2014 ) - /DATE OF PRONOUNCEMENT : 17.4.2014 / O R D E R PER I.P.BANSAL, JM: THIS APPEAL IS FILED BY THE ASSESSEE. IT IS DIREC TED AGAINST THE ORDER PASSED BY LD. CIT(A) DATED 10.1.2011 FOR ASSESSMENT YEAR 200 7-08. 2. GROUNDS OF APPEAL TAKEN BY ASSESSEE READ AS UNDE R : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW: A. THE LD. CIT(A) ERRED IN DIRECTING THE AO TO COMPU TE THE LONG TERN CAPITAL GAIN, IN RESPECT OF THE SALE OF THE 50% UNDIVIDED RIGHT, TITLE AND INTEREST IN THE PEDDAR ROAD FLAT AND GARAGE, BY ADOPTING THE CO ST OF ACQUISITION AS ON 1.4.1981 OF THE FLAT AND GARAGE AT RS.400/- PER SQ . FT AND RS.100/- PER SQ. FT, INSTEAD OF RS.1200/- PER SQ. FT AND RS.300 PER SQ. FT. RESPECTIVELY, AS SUBMITTED BY THE APPELLANT IN HIS RETURN OF INCOME, B. THE LD. CIT(A) ERRED IN TAKING INTO CONSIDERATION THE OBJECTION THAT WERE RAISE BY THE APPELLANT IN RESPECT OF THE VALUATION ADOPTED BY THE DVO I.T.A. NO.1946/MUM/2011 2 3. ASSESSEE IS A NON-RESIDENT STAYING IN ITALY. HE WAS OWNER OF SHARE OF FLAT NO.15, AND GARAGE OF 120 SQ.FT. LOCATED AT KAIL ASH CHS, PEDDAR ROAD, MUMBAI- 400026, WHICH WAS INHERITED BY HIM FROM HIS FATHER. FOR COMPUTING CAPITAL GAIN ON THE SALE OF SAID FLAT, THE ASSESSEE TOOK COST OF FLAT AS ON 1.4.1981 AT RS.1200 PER SQ.FT. AND THAT OF GARAGE AT RS.300/- PER SQ.FT., ACCORDING T O WHICH THE CAPITAL GAIN WAS COMPUTED AT RS.49,43,218/-. AN INVESTMENT OF RS.52,60,000 /- WAS MADE IN REC BONDS BY ASSESSEE WHICH WAS ELIGIBLE FOR EXEMPTION U/S 54E A ND THUS TAXABLE CAPITAL GAIN WAS SHOWN AT RS.NIL. 4. ASSESSING OFFICER DID NOT ACCEPT THE SAID CALCUL ATION RENDERED BY ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, THE FATHER OF T HE ASSESSEE DIED ON 2.9.2004 AND THEREFORE FOR THE PURPOSE OF INDEXED COST HE HAS CO NSIDERED THE ASSESSEE TO BECOME OWNER ON 2.9.2004 AND ACCORDINGLY APPLIED COST INF LATION INDEX FOR FINANCIAL YEAR 2004-05 AS BASIS INSTEAD OF FINANCIAL YEAR 1981-8 2 ADOPTED BY ASSESSEE. ACCORDINGLY, AO ARRIVED AT AN INDEXED COST OF ACQUISITION AT RS .18,45,045/-, AGAINST INDEXED COST COMPUTED BY ASSESSEE OF AT A SUM OF RS.83,01,888 /-. IN THIS MANNER, LONG TERM CAPITAL GAIN LIABLE FOR TAXATION IN THE HANDS OF A SSESSEE, AFTER GIVING EXEMPTION OF INVESTMENT IN REC BONDS, WAS COMPUTED AT RS.20,78, 577/- AGAINST NIL CAPITAL GAIN DECLARED BY THE ASSESSEE. RELYING UPON THE DECIS ION OF ITAT MUMBAI (SB) IN THE CASE OF DCIT VS. MANJULA J SHAH, 318 ITR (AT) 417 (SB), THE LD. CIT(A) HAS HELD THAT THE BENEFIT OF INDEXATION IS REQUIRED TO BE GIVEN TO TH E ASSESSEE FROM FINANCIAL YEAR 1981- 82. HOWEVER, FINDING THAT AO HAD REFERRED THE IS SUE OF DETERMINING FAIR MARKET VALUE OF COST OF ACQUISITION AS ON 1.4.1981 TO THE DVO AN D ASSESSMENT WAS COMPLETED WITHOUT OBTAINING THE VALUATION REPORT DUE TO THE FACT THAT ASSESSMENT WAS GOING TO BE TIME BARRED, LD. CIT(A) HAS TAKEN THE VALUE DETERMINED B Y DVO AT RS.5,68,800/- WHEREIN THE DVO HAS TAKEN VALUE OF FLAT AT RS.400/- PER SQ . FT. AND GARAGE AT THE RATE OF 100 PER SQ. FT.. DURING THE COURSE OF APPELLATE PROCEE DINGS, THE ASSESSEE POINTED OUT TO LD. CIT(A) THAT VALUATION DONE BY DVO IS AT LOWER SID E AND ALSO FILED CERTAIN SALE INSTANCES I.T.A. NO.1946/MUM/2011 3 IN THE SUBMISSIONS MADE BEFORE HIM. THE LD. CIT(A ) FINDINGS THAT DVO ALSO HAD GIVEN CERTAIN PARALLEL INSTANCES TO ARRIVE AT FMV OF THE FLAT AS ON 1.4.1981. THEREFORE, THE LD. CIT(A) OBSERVED THAT IT WOULD BE FAIR AND REASONAB LE TO ADOPT THE VALUATION DETERMINED BY DVO AND ACCORDINGLY HE HAS DIRECTED THE AO TO T AKE THE COST OF FLAT AND GARAGE AS ON 1.4.1981 AT RS.5,68,800/- AND IN THIS MANNER, T HE APPEAL FILED BY THE ASSESSEE WAS PARTLY ALLOWED BY LD. CIT(A). THE ASSESSEE IS AGG RIEVED, HENCE HAS FILED AFORE MENTIONED GROUNDS OF APPEAL. 5. AFTER NARRATING THE FACTS, AT THE OUTSET, IT WAS SUBMITTED BY LD. AR THAT ASSESSEE DID NOT GET PROPER OPPORTUNITY TO REBUT THE FMV DE TERMINED BY DVO. HE SUBMITTED THAT DURING THE COURSE OF FIRST APPELLATE PROCEEDIN GS, THE RELIANCE WAS PLACED BY REVENUE ON DVOS REPORT AS THE SAME WAS NOT AVAILA BLE WITH THE AO WHEN THE ASSESSMENT WAS COMPLETED. HE SUBMITTED THAT DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, THE ASSESSEE ALSO HAD SUBMITTED CERTA IN SALE INSTANCES AND LD. CIT(A) WITHOUT SPECIFICALLY DISCUSSING THE SAME HAS HELD THAT THE VALUE DETERMINED BY DVO IS CORRECT. THE LD. AR SUBMITTED THAT ASSESSEE HAS AL SO OBTAINED VALUATION FROM REGISTERED VALUER, COPY OF WHICH IS PLACED AT PAG ES 6 TO 61 OF THE PAPER BOOK. HE SUBMITTED THAT ON THE BASIS OF THAT VALUATION, THE FMV AS ON 1.4.1981 HAS BEEN DETERMINED AT RS.14,14,160/-. HE SUBMITTED THAT THE SAID VALUATION IS BEING FURNISHED AS AN ADDITIONAL EVIDENCE AND THE SAME MAY BE PERM ITTED TO BE FILED AS ASSESSEE DID NOT GET PROPER OPPORTUNITY TO REBUT THE REPORT OF DVO RELIED UPON BY DEPARTMENT. HE SUBMITTED THAT IN THE INTEREST OF JUSTICE THE MATTE R SHOULD BE RESTORED BACK TO THE FILE OF AO FOR RE-ADJUDICATION OF FMV OF THE FLAT AS ON 1. 4.1981. 6. ON THE OTHER HAND, LD. DR OPPOSED TO THE REQUES T OF LD. AR FOR ADMISSION OF REPORT OBTAINED BY THE ASSESSEE FROM REGISTERED VAL UER. 7. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE REPORT OF DVO WAS NOT I.T.A. NO.1946/MUM/2011 4 AVAILABLE TO THE AO. THE SAME WAS TAKEN INTO CONSI DERATION WHILE ADJUDICATING THE APPEAL BY LD. CIT(A) DURING THE COURSE OF FIRST APP ELLATE PROCEEDINGS. THE ASSESSEE HAD ALSO RELIED UPON CERTAIN SALE INSTANCES, AND THIS FACT HAS BEEN ADMITTED BY LD. CIT(A). THE LD. CIT(A) HAS NOT GIVEN ANY REASON TO DEVIATE FROM THE SALE INSTANCES RELIED UPON BY THE ASSESSEE AND HAS SIMPLY OBSERVED THAT THE RE PORT OF VALUATION CARRIED OUT BY DVO IS FAIR AND REASONABLE. IN VIEW OF SUCH NON SPEAKING ORDER OF LD. CIT(A), WE ARE OF THE OPINION THAT IT WILL MEET THE END OF JUSTICE IF THE ADDITIONAL EVIDENCE FILED BY ASSESSEE IS ADMITTED AND THE ISSUE IS RESTORED BACK S TO THE FILE OF AO FOR RE- DETERMINATION OF THE FMV OF THE FLAT AND GARAGE AS ON 1.4.1981 AFTER GIVING ASSESSEE REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCOR DINGLY. FOR STATISTICAL PURPOSES, THE APPEAL FILED BY THE ASSESSEE IS CONSIDERED TO BE AL LOWED IN THE MANNER AFORESAID. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17TH APRIL, 2014. 0 1 17TH APRIL, 2014 ) SD SD ( / SANJAY ARORA) ( . . /I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. $ / THE APPELLANT 2. %&$ / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- CONCERNED 4. 6 / CIT CONCERNED 5. 7 %9 , - 9 , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) - 9 , /ITAT, MUMBAI