SHRI MOHAN LAL SAINI, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 205/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1756 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA JCIT DHK
• Keywords: Corroborative evidences; Valuation report
• Section: 54

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 205/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. SHRI MOHAN LAL SAINI, 407, DBC TOWER, OPP. HOTEL GANGAUR, NEAR PINKCITY PETROL PUMP, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 5(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AEMPS 8485 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ANIL SHARMA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROSHANTA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12.11.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 12/11/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 10 TH NOVEMBER, 2017 OF LD. CIT (A)-2, JAIPUR FOR THE A SSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEAL) IS NOT JUSTIFIED IN CONFIRMING THE ADDITIO N OF RS. 17,12,305/- TOWARDS ALLEGED LONG TERM CAPITAL GAIN ARISING FROM SALE OF RELEVANT RESIDENTIAL PROPERTY. 2. THEREFORE IT IS PRAYED TO DELETE THE RELEVANT AD DITION MADE TO RETURNED INCOME. 2 ITA NO. 205/JP/2018 SHRI MOHAN LAL SAINI, JAIPUR. 2. THE ONLY ISSUE ARISES FOR OUR CONSIDERATION AND ADJUDICATION IS THE ADDITION MADE BY THE AO IN THE LONG TERM CAPITAL GAIN ARISIN G FROM SALE OF RESIDENTIAL PROPERTY. THE ASSESSEE IS AN INDIVIDUAL AND ENGAGE D IN THE BUSINESS OF RUNNING HOTEL AND RESTAURANT. THE ASSESSEE FILED HIS RETUR N OF INCOME ON 28 TH MARCH, 2012 DECLARING TOTAL INCOME OF RS. 2,63,500/-. THE AO N OTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SOLD A PROPERTY VIDE SALE DEED DATED 21 ST MAY, 2010 FOR A CONSIDERATION OF RS. 69,00,000/-. HOWEVER, TH E ASSESSEE HAS NOT DISCLOSED THE CAPITAL GAIN ARISING FROM THE SALE OF THE PROPERTY. THE AO ACCORDINGLY ISSUED SHOW CAUSE NOTICE ASKING AS TO WHY THE CAPITAL GAIN ARIS ING FROM SALE OF THE PROPERTY SHALL NOT BE ASSESSED TO TAX. THE ASSESSEE CLAIMED THAT THERE WAS NO CAPITAL GAIN ARISING FROM THE SALE OF THE PROPERTY AS THE INDEXED COST O F ACQUISITION AND CONSTRUCTION IS TAKEN INTO CONSIDERATION AND FURTHER THE ASSESSEE H AS ALSO PURCHASED A NEW RESIDENTIAL HOUSE FOR WHICH A CLAIM OF RS. 34,75,52 6/- IS ALLOWABLE UNDER SECTION 54 OF THE IT ACT. THE AO WHILE COMPLETING THE ASSESSM ENT HAS CONSIDERED THE COST OF CONSTRUCTION AT RS. 10,81,360/- AS AGAINST RS. 32,9 1,997/- AND CONSEQUENTLY MADE AN ADDITION OF RS. 17,12,305/- BEING LONG TERM CAPI TAL GAIN. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 3. BEFORE US THE LD. A/R OF THE ASSESSEE HAS SUBMIT TED THAT THE PROPERTY IN QUESTION WAS PURCHASED BY THE ASSESSEE IN THE YEAR 1992 FROM THE HOUSING SOCIETY WHICH WAS SUBSEQUENTLY REGULARIZED BY THE JDA FOR AN AREA OF 92 SQ. METER (110 SQ. YARD). HE HAS FURTHER SUBMITTED THAT INITIALLY THE PROPERTY WAS CONSTRUCTED IN THE YEAR 1992-93, HOWEVER, IT WAS AGAIN RE-CONSTRUCTED IN THE YEAR 2003 AND, THEREFORE, THE ASSESSEE HAS FILED THE VALUATION REPORT IN SUPP ORT OF THE COST OF CONSTRUCTION. IN 3 ITA NO. 205/JP/2018 SHRI MOHAN LAL SAINI, JAIPUR. THE VALUATION REPORT, THE VALUER HAS ESTIMATED THE COST OF CONSTRUCTION AT RS. 24,51,426/- INCLUDING THE INDEXED COST AS WELL AS C OST OF EXTRA ITEMS BEING ELECTRICITY, WATER SUPPLY, SEWERAGE LINE ETC. AND F URTHER COST OF LAND WAS ALSO TAKEN AT RS. 5,98,000/-. THUS TOTAL CLAIM OF COST OF EXI STING PROPERTY WAS MADE AT RS.30,49,000/- WHICH INCLUDES COST FOR THE CONSTRUC TION MADE IN THE YEAR 2003-04. THE ASSESSEE HAS ALSO CLAIMED THE CONSTRUCTION COST FOR THE CONSTRUCTION MADE IN THE YEAR 1992-93 WHICH WAS DEMOLISHED PRIOR TO RE-CONST RUCTION OF THE BUILDING IN THE YEAR 2003-04. THE LD. A/R HAS SUBMITTED THAT THE ON LY DISPUTE IN THIS APPEAL IS REGARDING INDEXED COST OF CONSTRUCTION WHICH WAS CL AIMED BY THE ASSESSEE BUT THE AO WHILE DETERMINING THE COST OF CONSTRUCTION HAS T AKEN ONLY RS. 10,81,360/- WITHOUT GIVING THE BENEFIT OF INDEXED COST AND FURT HER THE AO HAS ALSO RESTRICTED THE COST OF CONSTRUCTION AT 1 ST FLOOR TO 92 SQ. METERS INSTEAD OF 94.21 SQ. METERS CLAIMED BY THE ASSESSEE AND ALSO CONSIDERED BY THE VALUER I N THE VALUATION REPORT. THEREFORE, THE LD. A/R HAS SUBMITTED THAT THE ONLY DISPUTE IS REGARDING THE LESS CONSTRUCTED AREA WAS CONSIDERED BY THE AO AT FIRST FLOOR AND THE DENIAL OF INDEX COST. 4. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS CONSIDERED THE RATE AND AREA AS GIVEN IN THE VALUATION REPORT. SINCE THE ASSESSEE HAS NOT PRODU CED ANY SUPPORTING EVIDENCE FOR THE COST OF CONSTRUCTION, THEREFORE, THE AO HAS EST IMATED THE COST OF CONSTRUCTION FROM THE DETAILS GIVEN IN THE VALUATION REPORT. TH E LD. D/R HAS CONTENDED THAT IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE IN SUPPORT OF T HE CLAIM, THE AO IS JUSTIFIED IN DETERMINING THE COST OF CONSTRUCTION AS PER THE RAT ES ADOPTED BY THE AUTHORIZED VALUER. 4 ITA NO. 205/JP/2018 SHRI MOHAN LAL SAINI, JAIPUR. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS CLAIMED THE COST OF CONS TRUCTION AS PER THE VALUATION REPORT AND FURTHER MADE AN ADDITION TO THE COST OF CONSTRUCTION ON ACCOUNT OF CONSTRUCTION CLAIMED TO HAVE BEEN MADE IN THE YEAR 1992 WHICH WAS DEMOLISHED AND RE-CONSTRUCTION WAS MADE IN THE YEAR 2003-04. THUS THERE IS NO DISPUTE THAT AT THE TIME OF SALE, THE ASSESSEE SOLD THE PROPERTY WHICH WAS CONSTRUCTED IN THE YEAR 2003- 04 AND HENCE THE SUBJECT MATTER OF SALE WAS ONLY TH E CONSTRUCTION IN EXISTENCE AT THE TIME OF SALE. THE CLAIM OF COST OF CONSTRUCTIO N WHICH WAS NOT EXISTING AT THE TIME OF SALE CANNOT BE ALLOWED AS A DEDUCTION FROM THE CAPITAL GAIN. ACCORDINGLY, WE DO NOT FIND ANY MERIT OR SUBSTANCE IN THE CLAIM OF COST OF CONSTRUCTION WHICH WAS NOT EXISTING AT THE TIME OF SALE OF THE PROPERTY. THE AO HAS ACCEPTED THE CLAIM OF THE ASSESSEE TO THE EXTENT THAT THE EXISTING STRUCTURE WAS CONSTRUCTED IN THE YEAR 2003- 04. THE AO HAS ALSO ACCEPTED THE RATE WHICH WAS AD OPTED BY THE VALUER. HOWEVER, THE ONLY DIFFERENCE IS IN THE CONSTRUCTED AREA OF 1 ST FLOOR WHICH WAS CLAIMED BY THE ASSESSEE AT 94.21 SQ. METER AS AGAINST THE AREA OF PLOT OF 92 SQ. METER. THE AO RESTRICTED THE CLAIM TO 92 SQ. METER ON THE GROUND THAT THE AREA OF CONSTRUCTION CANNOT BE MORE THAN THE PLOT. HOWEVER, THE ASSESSE E HAS CLAIMED THAT THERE IS A ELEVATED BALCONY AT THE FIRST FLOOR AND, THEREFORE, THERE IS AN EXTRA AREA OF CONSTRUCTION OF 2.21 SQ. METER, TOTAL COMES TO 94.2 1 SQ. METER. ACCORDINGLY, TO THE EXTENT OF THE AREA, WHEN THE AO HAS NOT DISPUTED TH E YEAR OF CONSTRUCTION AND PARTICULARS OF CONSTRUCTION GIVEN IN THE VALUATION REPORT, THEN THE AREA OF CONSTRUCTION AT FIRST FLOOR AS GIVEN IN THE VALUATI ON REPORT AT 94.21 SQ. METER OUGHT TO HAVE BEEN ACCEPTED BY THE AO. THE AREA OF CONSTRUC TION CAN BE MORE THAN THE AREA 5 ITA NO. 205/JP/2018 SHRI MOHAN LAL SAINI, JAIPUR. OF PLOT. IT MAY BE AGAINST THE BUILDING BY-LAWS OR SANCTION PLAN BUT THE AO HAS TO ALLOW THE CLAIM AS PER THE EXISTING STRUCTURE AND N OT AS PER THE PERMISSIBLE AREA OF CONSTRUCTION. HENCE, TO THE EXTENT OF THE AREA WE A LLOW THE CLAIM OF CONSTRUCTION AT 94.21 SQ. METER AT FIRST FLOOR. AS REGARDS THE CLA IM OF INDEX COST AND EXTRA ITEMS, WE FIND THAT THE VALUER HAS TAKEN THE INDEX COST BY IN CREASING 47.65% BASED ON THE PWD BSR 1998, 2004 AS ON 31 ST MARCH, 2004 WHEREAS THE AO HAS NOT DISCUSSED THIS ASPECT OF INDEX COST WHILE COMPUTING THE COST OF CO NSTRUCTION. AS REGARDS THE EXTRA ITEMS, SINCE THE ASSESSEE HAS NOT PRODUCED ANY EVID ENCE IN SUPPORT OF THE EXTRA ITEMS AND IT IS ONLY THE ESTIMATION OR GUESS WORK O F THE VALUER WITHOUT GIVING A SPECIFICATION OF THE EXTRA ITEMS, THEREFORE, THE SA ME CANNOT BE ACCEPTED FOR WANT OF EVIDENCE FOR THE SAID EXPENDITURE AS WELL AS IN THE ABSENCE OF SPECIFIC WORK AND MEASUREMENTS IN THE VALUATION REPORT. THEREFORE, THE SAID CLAIM IS REJECTED. HENCE, THE AO IS DIRECTED TO RECONSIDER THE CLAIM O F INDEXED COST WHILE DETERMINING THE COST OF CONSTRUCTION. ACCORDINGLY THE ISSUE OF INDEXED COST OF CONSTRUCTION IS SET ASIDE TO THE RECORD OF THE AO FOR RE-CONSIDERATION AND ADJUDICATION AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER CO NSIDERING THE VALUATION REPORT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 12/11/201 8. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 12/11/2018. DAS/ 6 ITA NO. 205/JP/2018 SHRI MOHAN LAL SAINI, JAIPUR. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI MOHAN LAL SAINI, JAIPUR. 2. THE RESPONDENT THE ITO WARD 5(1), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 205/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 205/JP/2018 SHRI MOHAN LAL SAINI, JAIPUR.