Savithri Sundaram, CHENNAI V. ITO, CHENNAI

ITA 1986/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7877 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 03-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2016
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN
• Assessee Lawyers: S G KALYANARAMAN
• Keywords: Fair market value; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1986/MDS/2016 / ASSESSMENT YEAR : 2010-11 MS. SAVITRI SUNDARAM, FLAT C1, ADITYA, OLD NO.22, NEW NO.55, RAJASEKARAN STREET, MYLAPORE, CHENNAI 600004. [PAN : ADWPS 3813 N] V. THE INCOME TAX OFFICER, BUSINESS WARD 2(4), CHENNAI 34. ( /APPELLANT) ( !' /RESPONDENT) # / APPELLANT BY : SHRI S.G. KALYANARAMAN, CA !' # /RESPONDENT BY : SHRI B. SAHADEVAN, JCIT # /DATE OF HEARING : 03.01.2017 # /DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 24.03.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 2, CHENNAI, IN ITA NO.283/ CIT(A)-2/2013-14 FOR THE A.Y.2010-11. 2.0 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL CHALLENGING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S): :-2-: I.T.A. NO. 1986/MDS/2016 1. THE ORDER OF THE COMMISSIONER OF INCOME (APPEALS) 2, CHENNAI DATED 24.03.2016 IN ITA NO.7/CIT (A)-2/ 12-13 FOR THE ABO VE MENTIONED ASST. YEAR IS CONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE COMPUTATI ON OF LONG TERM CAPITAL GAINS MADE BY THE ASSESSING OFFICER IN HER ORDER OF ASSESS MENT DATED 04.03.2013 WITHOUT PROPER JUSTIFICATION. 3. THE CIT (APPEALS) ERRED IN CONFIRMING THE VALUE OF THE LAND MEASURING ABOUT 5954 SQ.FT AT NO.18, 9 TH STREET, DR.R.K. SALAI, CHENNAI 600 004 AS ON 01. 04.1981 AT RS.11.45 PER SQ.FT AS AGAINST THE VALUERS REPORT A T RS.54 PER SQ.FT. THE APPELLANT IS A CO-OWNER HOLDING 25% SHARE OF INTEREST IN THE PROPERTY. THE GUIDELINE FIXED BY THE REGISTRAR IS NOT THE SOLE FACTOR FOR FIXING THE VALUE AS ON 01.04.1981. 4. THE CIT (APPEALS) ALSO ERRONEOUSLY HELD THAT THE AS SESSING OFFICER HAS CONSIDERED THE WHOLE VALUE OF THE BUILDING AS PER THE VALUATIO N REPORT EVEN THOUGH THE VALUATION REPORT COVERS ONLY THE BUILDING THAT EXIS TED AS ON 01.04.1981 AND DID NOT INCLUDE THE ADDITIONS MADE IN 1991-92. THE ASSESSI NG OFFICER DENIED DEDUCTION FOR WANT OF SUBMISSION OF EVIDENCE OF COST OF CONSTRUCT ION. THE CIT(APPEALS) ERRED IN NOT CONSIDERING THE COST OF CONSTRUCTION OF RS.2,67 ,888/- FOR 576 SQ.FT CARRIED OUT IN THE F.Y 91-92 EVEN THOUGH SUBSTANTIAL EVIDENCE W ERE SUBMITTED, THE APPELLANT BEING ELIGIBLE FOR DEDUCTION OF 1/4 TH OF COST WITH INDEXATION THEREOF. 5. THE APPELLANT PRAYS THAT SHE MAY BE PERMITTED TO RA ISE SUPPLEMENTARY AND ADDITIONAL GROUNDS / ARGUMENTS AT THE TIME OF HEARI NG. 3.0 GROUND NOS. 1 & 5 ARE GENERAL IN NATURE WHICH DO N OT REQUIRE ANY SPECIFIC ADJUDICATION. 4.0 GROUND NOS. 2 & 3 ARE RELATED TO THE ADOPTION OF FAIR MARKET VALUE AS ON 01.04.1981. THE ASSESSEE WAS A CO-OWNER OF T HE PROPERTY SITUATED AT NO.18, 9 TH STREET, DR.R.K. SALAI, CHENNAI-4, WHICH WAS PURCHA SED BY HER MOTHER IN 1950 AND INHERITED BY THE ASSESSEE O N THE DEATH OF HER MOTHER ALONG WITH HER SISTERS. THE ASSESSEE WAS HOL DING 1/4 TH OF SHARE IN THE PROPERTY. THE SAID PROPERTY WAS SOLD ON 12.09.2 009 FOR A :-3-: I.T.A. NO. 1986/MDS/2016 CONSIDERATION OF RS.6.00 CRORES. THE ASSESSEE BEIN G 1/4 TH SHARE HOLDER OF THE PROPERTY ADMITTED THE CAPITAL GAIN CLAIMING FA IR MARKET VALUE OF THE PROPERTY @RS.54/- PER SQ.FT. AS ON 01/04/1981 FOR THE LAND OF 5954 SQ.FT, ON THE BASIS OF VALUATION REPORT OBTAINED FROM A RE GISTERED VALUER SHRI P.S.H.Y. RAJU. THE REGISTERED VALUER ARRIVED THE RA TE OF RS.54/- PER SQ.FT. ON THE BASIS OF A TRANSACTION UNDERTAKEN IN SULLIVA N GARDEN ROAD, OFF RADHAKRISHNAN SALAI DURING 1980-81 AT RS.18/- PER SQ.FT. AND MADE ADJUSTMENTS BY ADDING REGISTRATION CHARGES AT 14% A ND ALSO MAKING THE ADDITION FOR PREMIUM PRICE @50% IN VIEW OF LOCATI ONAL ADVANTAGE. THE ASSESSING OFFICER REFERRED THE VALUATION TO THE SUB -REGISTRAR OFFICE AND THE SUB-REGISTRAR OFFICE HAS INFORMED THE GUIDELINE VALUE AT RS.30,000/- PER GROUND FOR UNDIVIDED SHARE OF LAND AND RS.25,00 0/- PER GROUND IN THE CASE OF INDEPENDENT BUNGALOW. WHEN THE GUIDELINE V ALUE OF RS.30,000/- PER GROUND WAS CONFRONTED WITH THE ASSESSEE, THE AS SESSEE OBJECTED AS IT WAS RELATED TO THE UNDIVIDED SHARE OF LAND, HENCE T HE ASSESSING OFFICER MADE THE SECOND REFERENCE FOR BUNGALOW AND THE SU B-REGISTRAR OFFICE HAS INTIMATED RS.25,000/- PER GROUND IN THE CASE OF INDEPENDENT BUNGALOWS. THE ASSESSING OFFICER ADOPTED THE AVERA GE VALUE OF BOTH THE GUIDELINE VALUES AND ADOPTED RS.11.45 PER SQ.FT. AS FAIR MARKET VALUE AS ON 01.04.1981 AND COMPUTED THE CAPITAL GAINS AT RS. 5,57,65,530/- AND THE SHARE OF THE ASSESSEE WORKED OUT RS.1,39,41,382 /- AND ALLOWED THE EXEMPTION U/S.54 AND 54EC. THE ASSESSEE WENT ON APP EAL BEFORE THE :-4-: I.T.A. NO. 1986/MDS/2016 LD.CIT (APPEALS) AND WAS NOT SUCCESSFUL. HENCE, TH E ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 5.0 DURING THE APPEAL, THE LD.AR OF THE ASSESSEE SUBMI TTED THAT NO REGISTERED DOCUMENT WAS AVAILABLE FOR ARRIVING AT T HE FAIR MARKET VALUE OF THE PROPERTY SOLD AND HENCE THE ASSESSEE HAS APPROA CHED THE REGISTERED VALUER FOR VALUING THE FAIR MARKET VALUE OF THE PRO PERTY AND THE REGISTERED VALUER, AS PER THE INFORMATION AVAILABLE , VALUED THE LAND AT RS.54/- PER SQ.FT. WHICH SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER. IN SPITE OF FURNISHING THE REGISTERED VAL UERS REPORT, THE ASSESSING OFFICER ADOPTED THE AVERAGE OF TWO GUIDEL INE VALUES OF SRO FOR ARRIVING THE FMV AS ON 01/04/1981 BY THE AO WHICH I S INCORRECT APPROACH. THE LD.AR SUBMITTED THAT THERE WAS ALWAYS DIFFERENC E BETWEEN THE GUIDELINE VALUE AND THE FAIR MARKET VALUE. GUIDELI NE VALUE CANNOT BE FAIR MARKET VALUE. HE RELIED ON THE DECISION [2013] 30 TAXMANN.COM 130 (COCHIN-TRIB) IN SHRI R. VIDHYADHARAN V. DCIT, COCH IN BENCH AND ALSO JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT V. J. CHELLADURAI [2012] 17 TAXMANN.COM 73 (MAD). 6.0 WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH TH E MATERIAL PLACED BEFORE US. THE ASSESSEE HAS SOLD THE PROPERTY ALONG WITH THRE E CO-OWNERS, CONSISTING OF LAND AND BUILDING ADMEASURING 5954 SQ .FT. IN RK SALAI, :-5-: I.T.A. NO. 1986/MDS/2016 CHENNAI. THE ASSESSING OFFICER ADOPTED THE VALUE O F RS.11.45 PER SQ.FT. AGAINST THE CLAIM OF THE ASSESSEE AT RS.54/- PER SQ .FT. THE VALUATION ADOPTED BY THE ASSESSING OFFICER WAS THE GUIDELINE VALUE BUT NOT THE FAIR MARKET VALUE. THERE WAS NO EVIDENCE TO PROVE THAT FAIR MARKET VALUE WAS RS.11.45 PER SQ.FT AS ON 01.04.1981 AND IT APPEARS THE VALUE OF RS.11.45 PER SQ.FT. WAS MUCH LESSER THAN THE FMV. IT WAS A N ESTIMATED PRICE ON THE BASIS OF THE GUIDELINE VALUES OF THE SURROUNDIN G AREAS AS PER THE INPUTS SUPPLIED BY THE SUB-REGISTRAR OFFICE. THE REGISTERED VALUER HAS VALUED THE FAIR MARKET VALUE AT RS.54/- ON THE BASI S OF A TRANSACTION AND ADJUSTMENTS MADE FOR STAMP DUTY AND PREMIUM AS DISC USSED IN THE ASSESSMENT ORDER. BOTH ARE THE ESTIMATED VALUES, B UT NOT ON THE BASIS OF ANY ACTUAL TRANSACTION. IN THE CIRCUMSTANCE, WE HO LD THAT THE AVERAGE OF THE ESTIMATED GUIDELINE VALUE AND THE FAIR MARKET V ALUE (AS VALUED BY THE REGISTERED VALUER) APPEARS TO BE REASONABLE AND JUS TIFIED AND BOTH THE PARTIES HAVE AGREED FOR SUCH ESTIMATION. ACCORDINGL Y, WE HOLD THAT RS.35/- PER SQ.FT. IS REASONABLE ESTIMATE FOR VALUI NG THE LAND OF 5954 SQ.FT. THIS VIEW ALSO SUPPORTED BY HONBLE JURISDI CTIONAL HIGH COURT ORDER IN THE CASE OF SHRI J. CHELLADURAI CITED SUPRA . ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ADOPT THE RATE OF RS.35/- PER SQ.FT AS ON 01.04.1981 AS FMV AND RE-COMPUTE THE CAPITAL GAINS. THE APPE AL OF THE ASSESSEE IN GROUND NOS. 2 & 3 ARE PARTLY ALLOWED. :-6-: I.T.A. NO. 1986/MDS/2016 7.0 GROUND NO.4 IS RELATED TO THE ADDITIONAL COST OF C ONSTRUCTION OF RS.2,67,888/- FOR 576 SQ.FT. CARRIED OUT IN THE F.Y . 1981-82. THE ASSESSEE CLAIMED 1/4 TH OF THE ADDITIONAL COST OF CONSTRUCTION. FOR CONSTRUCTION OF 576 SQ.FT. IN 1991-92, THE ASSESSEE S SHARE 1/4 TH BEING WORKED OUT TO RS.66,972/-. THE ASSESSING OFFICER R EJECTED THE CLAIM OF THE ASSESSEE FOR NON-SUBMISSION OF THE DOCUMENTARY EVIDENCE. THE LD. CIT(APPEALS) CONFIRMED THE ORDER OF THE ASSESSING O FFICER. THE CIT (APPEALS) OBSERVED THAT IN THE ABSENCE OF BILLS AND VOUCHERS, IT IS NOT POSSIBLE TO ACCEPT THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS SUBMITTED BY THE ASSESSEE. 8.0 AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), TH E ASSESSEE APPEALED BEFORE US. APPEARING FOR THE ASSESSEE, THE LD. AR ARGUED THAT THE ASSESSEE HAS INCURRED ADDITIONAL COST OF CONSTRUCTION OF RS. 2,67,888/- FOR CONSTRUCTION OF 576 SQ.FT. IN 1991 AND THE ASSESSEE SHOULD BE ALLOWED THE INDEXED COST OF CONSTRUCTION FOR HER 1/4 TH SHARE FROM THE FY 1991-92. IN SUPPORT OF THE ASSESSEES CLAIM, THE LD.AR PRODUCED THE NOTE BOOK CONTAINING THE DETAILS OF COST OF CONSTRUCTION AND BUILDING PLAN APPROVALS WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER AN D PLEADED TO ALLOW THE ADDITIONAL COST OF CONSTRUCTION. :-7-: I.T.A. NO. 1986/MDS/2016 9.0 ON THE OTHER HAND, THE LD. DR ARGUED THAT THE ASSE SSING OFFICER HAS ALLOWED THE COST OF CONSTRUCTION AS PER THE VALUATI ON REPORT PRODUCED BY THE ASSESSEE IN THE ASSESSMENT ORDER AND HENCE NO F URTHER ADDITIONAL COST OF CONSTRUCTION REQUIRED TO BE ALLOWED. ACCOR DING TO THE LD.DR, THE ADDITIONAL COST OF CONSTRUCTION WAS ALREADY CONSID ERED BY THE REGISTERED VALUER WHILE VALUING THE PROPERTY AND ALLOWING THE ADDITIONAL COST OF CONSTRUCTION SEPARATELY TANTAMOUNT TO DOUBLE ALLOWA NCE OF SAME EXPENDITURE. THEREFORE, THE LD.DR VEHEMENTLY OPPOS ED THE CONTENTIONS OF THE REPRESENTATIVE OF THE ASSESSEE. 10.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. THE ASSESSEE HAS SUBMITTED THE VALUATION REPORT FR OM SHRI P.S.H.Y. RAJU, A REGISTERED VALUER, WHO HAS VALUED THE ENTIR E SUPER STRUCTURE OF THE BUILDING AT RS.6,02,135/-. NO SEPARATE VALUATI ON WAS MADE BY THE REGISTERED VALUER FROM WHOM THE ASSESSEE HAS SUBMIT TED VALUATION REPORT. THEREFORE, IT WAS IMPLIED THAT THE COST OF CONSTRUCTION OF THE BUILDING WAS INCLUDED IN THE VALUATION MADE BY THE VALUER. ANY FURTHER ALLOWANCE AMOUNTS TO DOUBLE DEDUCTION OF THE SAME A MOUNT. THE ASSESSING OFFICER DULY CONSIDERED THE VALUE OF THE BUILDING AS PER VALUATION REPORT ALSO. THEREFORE, WE ARE OF THE CON SIDERED OPINION THAT NO SEPARATE DEDUCTION NEEDS TO BE ALLOWED ON ACCOUNT O F ADDITIONAL COST OF :-8-: I.T.A. NO. 1986/MDS/2016 CONSTRUCTION RELATING TO 576 SQ.FT. CLAIMED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND OF THE APPEAL IS DISMISSED. 11.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . . ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 31 ST JANUARY, 2017. TLN !' #$!% /COPY TO: 1. #'&'( /APPELLANT 4. ) /CIT 2. * '( /RESPONDENT 5. !+,& -. /DR 3. ) ( #'& ) /CIT(A) 6. 1 2 /GF