ITO 19(3)(4), MUMBAI V. SHRI SAYED S. HUSAINI, MUMBAI

ITA 2024/MUM/2011

• Counselvise Citation: 202419914 RSA 2011
• Duration Of Justice: 3 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: K R LAKSHMINARAYANN
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report
• Section: 54; 143(3); 50C; 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA U , JUDICIAL MEM BER . / ITA NO. 2024 /MUM./ 2011 ( / ASSESSMENT YEAR : 20 07 08 ) INCOME TAX OFFICER WARD 19(3)(4) PIRAMAL CHAMBERS LALBAUG, MUMBAI 400 012 .. / APPELLANT V/S SHRI SAYED S. HUSAINI BUILDING N O.9, LUCKY MANSION S.V. ROAD, BANDRA (W) MUMBAI 400 050 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AABPH5518H / REVENUE BY : SHRI PITAMBAR DAS / ASSESSEE BY : SHRI K.R. LAKSHMINARAYANN / DATE OF HEARING 2 3 . 07 .2014 / DATE OF ORDE R 31.07.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN PREFERRED BY THE REVENUE CHALLENGING TH E IMPUGNED ORDER DATED 13 TH DECEMBER 2010 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) X XX , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) , OF THE INCOME TAX ACT, 1961 SHR I SAYED S. HUSAINI 2 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 07 08 , ON THE FOLLOW ING GROUNDS: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) WAS RIGHT IN ALLOWING THE DEDUCTION U/S 54F AGAINST THE LONG TERM CAPITAL GAIN AT THE TIME OF APPELLATE PROCEEDINGS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION U/S 54 AT THE TIME OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. 2 . FACTS IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL AND DURING THE RELEVANT PREVIOUS YEAR, HAS SOLD IMMOVABLE PROPERTY BEING OPEN LAND WITH GROUND FLOOR AT CTS NO.59, 5(1 11); 102: 102(8 1) OF GOREGAON WARD P SOUTH, GOREGAON MULUND LINK ROAD AND CHINCHOLI GATE ROAD, MUMBAI FOR A TOTAL CONSIDERATION OF ` 10 CRORES VIDE AGREEMENT DATED 10 TH JULY 2006. THE STAMP DUTY VALUATION OF THE SAID PROPERT Y AS ON DATE OF SALE WAS SHOWN AT NIL IN THE SAID AGREEMENT DATED 10 TH JULY 2006. THE MARKET VALUE OF THE LAND AND STRUCTURE STANDING ON THE SAID PROPERTY WAS TAKEN AT ` 2.24 CRORES AS ON 1 ST APRIL 1981, FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITA L GAIN, WHICH WAS BASED ON VALUATION REPORT OF AN A PPROVED V ALUER DATED 20 TH JANUARY 2007. THE ASSESSING OFFICER HAD REFERRED THE VALUATION OF THE PROPERTY TO THE DVO FOR ASCERTAINING THE VALUE OF THE PROPERTY AS ON 1 ST APRIL 1981 , AND ALSO AS ON 10 TH JULY 2007 , VIDE REFERENCE DATED 29 TH JUNE 2009. HOWEVER, TILL THE FINALISATION OF THE ASSESSMENT UNDER SECTION 143(3), NO REPORT FROM SHR I SAYED S. HUSAINI 3 THE DVO WAS RECEIVED. UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER DETERMINED THE VALUE OF THE PROPERTY AS ON 10 TH JULY 2006 UNDER SECTION 50C OF THE ACT AS PER THE STAMP DUTY READY RECKNOR WHICH WAS AT ` 43,77,29,200 . AS REGARDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1 ST APRIL 1981, THE ASSESSING OFFICER COMPUTED THE SAME AT ` 1,32,67,520, BASED ON INDIAN VALUERS DICTIO NARY AND REFERENCE BOOK. ACCORDINGLY, HE WORKED OUT THE LONG TERM CAPITAL GAIN AT ` 36,61,88,692, IN THE FOLLOWING MANNER: FMV OF THE LAND AS ON 1.4.1981 ` 1,37,84,353 INDEXED COST OF ACQUISITION ` 1,37,84,353 TOTAL: ` 7,15,40,792 (A) SALE CONSIDERA TION ` 10,00,00,000 MARKET VALUE AS DETERMINED ABOVE ` 43,77,29,484 SALE CONSIDERATION AS PER SECTION 50 ` 43,77,29,484 (B) LTCG ON THE SAID PROPERTY (B) (A) = ` 36,61,88,692 SINCE THE ASSESSEES SHARE ON THE PROPERTY WAS 1/8 TH , THE LONG TERM C APITAL GAIN IN THE HANDS OF THE ASSESSEE WAS ARRIEVED AT ` 4,57,73,586. SHR I SAYED S. HUSAINI 4 3 . DURING THE COURSE OF THE FIRST APPELLATE PROCEEDINGS, A REMINDER WAS SENT TO THE DVO FOR SUBMITTING THE VALUATION REPORT, INSTEAD, THE DVO SUBMITTED A PRELIMINARY REPORT , WHEREIN HE HAS VALUED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1 ST APRIL 1981, AT ` 204.53 LAKHS AND AS ON 10 TH JULY 2006 AT ` 1485.67 LAKHS. IN THE REMAND REPORT, THE ASSESSING OFFICER REQUESTED THAT NO COGNIZANCE OF SUCH VALUATION REPORT OF THE DVO SHOULD BE TAK EN. THE LEARNED COMMISSIONER (APPEALS), HOWEVER, AFTER DISCUSSING THE ENTIRE ISSUE AT LENGTH, DIRECTED THE ASSESSING OFFICER TO ADOPT THE VALUE OF THE PROPERTY GIVEN BY THE DVO AS ON 1 ST APRIL 1981 AND 10 TH JULY 2006. 4 . NOW, SO FAR AS THE VALUATION PART IS CONCERNED OR COMPUTATION OF THE LONG TERM CAPITAL GAIN, THERE IS NO DISPUTE. 5 . BEFORE THE LEARNED COMMISSIONER (APPEALS), AN ADDITIONAL GROUND WAS RAISED BY THE ASSESSEE THAT DEDUCTION UNDER SECTION 54F SHOULD BE ALLOWED , AS THE ASSESSEE HAS INVESTED PART O F THE SAID AMOUNT OF CAPITAL GAIN ON A PURCHASE OF A FLAT ON 8 TH JANUARY 2007 FOR ` 56 LAKHS. THIS WAS MADE ON THE GROUND THAT IN THE RETURN OF INCOME, LONG TERM CAPITAL GAIN WAS IN NEGATIVE FIGURE AND, THEREFORE, SUCH A CLAIM OF 54F, WAS NOT MADE. NOW THA T THERE IS A POSITIVE INCOME UNDER THE COMPUTATION OF LONG TERM CAPITAL GAIN, THE DEDUCTION UNDER SECTION 54F , SHOULD BE ALLOWED. THE LEARNED COMMISSIONER (APPEALS) ACCEPTED THE ASSESSEES SHR I SAYED S. HUSAINI 5 ADDITIONAL GROUND AND DIRECTED THE ASSESSING OFFICER TO VERIFY THE ASSESSEES CONTENTION AND ALLOW THE DEDUCTION UNDER SECTION 54F. THE RELEVANT DIRECTION OF THE LEARNED COMMISSIONER (APPEALS) IS AS UNDER: 8. AS REGARDS TO THIS ADDITIONAL GROUND OF APPEAL THE A.O. IS DIRECTED TO VERIFY THE AFORESAID CONTENTION OF THE A PPELLANT FROM RECORD AND ALLOW THE DEDUCTION UNDER SECTION 54F, IF THE CONDITIONS FOR THE ALLOWANCE OF THE SAME ARE FULFILLED AS PER THE I.T. ACT. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE . 6 . IN THE PRESENT APPEAL, THE REVENUE HAS ONLY CHAL LENGED THE CLAIM UNDER SECTION 54F ONLY, THEREFORE, WE ARE CONFINING OURSELVES TO THE ALLOWABILITY OF SECTION 54F. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DIRECTION OF THE LEARNED COMMISSIONER (APPEALS) AMOUNTS TO SETTING ASIDE OF THE ISSUE TO THE FILE OF THE ASSESSING OFFICER, WHICH IS NOT PERMISSIBLE IN LAW AND, THEREFORE, THE LEARNED COMMISSIONER (APPEALS) WAS OBLIGED TO EXAMINE THE DEDUCTION O N ITS OWN. HENCE, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) SETTING ASIDE THE ISSUE T O THE ASSESSING OFFICER IS LEGALLY NOT PERMISSIBLE. 8 . THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT THE DEDUCTION UNDER SECTION 54F, WAS NOT CLAIMED IN THE RETURN OF INCOME OR BEFORE THE ASSESSING OFFICER FOR THE REASON THAT , THE A SSESSEES INCOME FROM THE LONG TERM CAPITAL GAIN WAS NEGATIVE, THEREFORE, IT WAS RAISED BEFORE THE LEARNED COMMISSIONER (APPEALS). SHR I SAYED S. HUSAINI 6 THE LEARNED COMMISSIONER (APPEALS) HAS ONLY DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM AND ALLOW THE DEDUCTION IN ACC ORDANCE WITH THE LAW. HE FURTHER BROUGHT TO OUR NOTICE THAT IN PURSUANCE OF SUCH A DIRECTION OF THE LEARNED COMMISSIONER (APPEALS), THE ASSESSING OFFICER, VIDE ORDER DATED 15 TH JUNE 2011, HAS ALLOWED THE DEDUCTION UNDER SECTION 54F @ ` 53,01,991. THEREFORE , THE ASSESSEES CLAIM HAS BEEN FOUND TO BE CORRECT. 9 . AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIONS AND ALSO ON PERUSAL OF THE MATERIAL PLACED ON RECORD, WE FIND THAT INSOFAR AS THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 54F IS CONCERNED, THE SAM E HAS BEEN FOUND TO BE ADMISSIBLE BY THE ASSESSING OFFICER IN THE ORDER GIVING EFFECT TO THE LEARNED COMMISSIONER (APPEALS). AS REGARDS THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE, WE DO NOT FIND ANY MERIT , FIRSTLY, BECAUSE, THE LEARNED COMM ISSIONER (APPEALS) IS EMPOWERED TO ADMIT THE ADDITIONAL GROUND AND ALLOW THE CLAIM FOR DEDUCTION IF IT IS PERMISSIBLE IN ACCORDANCE WITH LAW AND SECONDLY, THE LEARNED COMMISSIONER (APPEALS) HAS MERELY DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM OF T HE ASSESSEE AND ALLOW THE CLAIM IN ACCORDANCE WITH THE LAW WHICH, IN TURN, HAS BEEN FOUND TO BE ADMISSIBLE. THUS, THERE IS NO INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) AND ACCORDINGLY WE DO NOT FIND ANY MERITS IN SHR I SAYED S. HUSAINI 7 THE G ROUND RAISED BY THE REVENUE AND, THEREFORE, THE SAME IS DISMISSED. 10 . 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 31 ST JULY 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 31 ST JULY 2014 SD/ - SANJAY ARORA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 31 ST JULY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI SHR I SAYED S. HUSAINI 8 DATE INITI AL ORIGINAL DICTATION PAID IS ENCLOSED AT THE END OF FILE 1. DRAFT DICTATED ON 29 .7.2014 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 30 31.7.2014 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 31.7.2014 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 31.7.2014 JM/AM 5. APPROVE D DRAFT COMES TO THE SR.PS/PS 31.7.2014 SR.PS 6. DATE OF PRONOUNCEMENT 31.7.2014 SR.PS 7. FILE SENT TO THE BENCH CLERK 31.7.2014 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER , / / 19997 98 2000 01 / / / / / / / / / /