Nasheman Taherbhai Millwala, Kolkata V. ACIT, CHENNAI

ITA 2055/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7645 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-07-2016
• Court: TRIBUNAL
• Department Lawyers: H KABILA
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 92A; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , ! '#.. $ %!& , ( )* BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ! ./ ITA NO.2055/MDS/2016 + ,+ /ASSESSMENT YEAR: 2010-11 SMT. NASHEMAN TAHERBHAI MILLWALA, 25-B, ROYD STREET, GROUND FLOOR, KOLKATA- 700 016. VS. THE ASST. COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-IX, CHENNAI. [PAN: AEBPM 3761 R ] ( -. /APPELLANT) ( /0-. /RESPONDENT) -. 1 2 / APPELLANT BY : MR.V.S.JAYAKUMAR, ADV. /0-. 1 2 /RESPONDENT BY : MR.H.KABILA, JCIT $ 1 3( /DATE OF HEARING : 02.02.2017 45, 1 3( /DATE OF PRONOUNCEMENT : 22.02.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST AN ORDER DATED 02.03.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 13, CHENNAI, IN ITA NO.262 /CIT(A)-13/2010-11 FOR THE AY 2010-11 AND RA ISED THE FOLLOWING GROUNDS: ITA NO.2055/MDS/2016 :- 2 -: 1. THE ORDER U/S 250(6) PASSED BY THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS)-13 CHENNAI [CIT (A)] DATED 2/03/2016 IN ITA NO.262/CIT (A)-13/2010-11 DISMISSING THE APPELLANTS VALID GROUNDS RAISED IN THE APPEAL FOR THE ASSESSMENT YEAR 2010-11 FOR DETERMINING THE APPELLANTS 1/5 TH SHARE OF THE CAPITAL GAINS ON TRANSFER OF THE PROPERTIES AT BUDDI SAHEB STREET AND ACHARAPPAN STR EET, CHENNAI DURING THE RELEVANT FINANCIAL YEAR IS ERRONEOUS AND CONTRARY TO LAW, FA CTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (A) ERRED IN DISMISSING THE APPELLA NTS GROUND FOR ADOPTING THE VALUE OF THE ABOVE SAID PROPERTIES U/S.48(II) OF THE INCOME TAX ACT, 1961 BY SUBSTITUTING THE COST OF ACQUISITION DECLARED AS PER THE RETURN OF I NCOME WITH THE VALUATION MADE BY A REGISTERED VALUER AS PER HIS REPORT WITHOUT ASSIGNI NG ANY VALID GROUNDS OR REASONINGS IN HIS APPELLATE ORDER. 3. THE LEARNED CIT (A) ALSO ERRED IN REJECTING THE VAL ID GROUND OF THE APPELLANT THAT THE ASSESSING OFFICER (AO) HAD WRONGLY ADOPTED THE SALE CONSIDERATION IN RESPECT OF THE TRANSFER OF THE SAID PROPERTIES AT AN UNIFORM RATE OF 3,000/- PER SQUARE FEET FOR COMPUTATION OF CAPITAL GAINS FOR ALL THE SALE DEEDS RELATING TO THE ABOVE SAID PROPERTIES WITHOUT ADOPTING THE DIFFERENT GUIDELINE VALUES ADO PTED FOR THE PURPOSES OF STAMP DUTY FOR DIFFERENT SALE DEEDS AS MANDATED U/S.50C THUS W RONGLY ASSESSING A HIGHER CAPITAL GAINS THAN LEGALLY WARRANTED. 4. THE LEARNED CIT (A) FURTHER ERRED IN REJECTING THE APPELLANTS VALID GROUND FOR ADOPTION OF THE INDEXED COST OF ACQUISITION OF THE SAID PROP ERTIES FOR COMPUTATION OF CAPITAL GAINS AT 3,16,000/- AS AGAINST THE AMOUNT OF 89,533/- ARRIVED AT BY THE AO. 5. FOR THE ABOVE GROUND AND SUCH OTHER GROUND(S) THAT MAY BE ADDUCED AT THE TIME OF HEARING OF APPEAL, IT IS PRAYED THAT THE ORDER OF T HE LEARNED CIT (A) BE QUASHED IN TOTO, THE INDEXED COST OF ACQUISITION OF THE SAID PROPERT IES BE DIRECTED TO BE DETERMINED AS CLAIMED BY THE APPELLANT, THE APPELLANTS SHARE OF CAPITAL GAINS BE ADOPTED IN ACCORDANCE WITH LAW AS CLAIMED IN THE GROUNDS ABOVE AND JUSTICE RENDERED. 2.0 GROUND NOS.1 & 5 ARE GENERAL IN NATURE WHICH DO NO T REQUIRE SPECIFIC ADJUDICATION. 3.0 GROUND NOS.2 & 4 ARE RELATED TO THE COST OF ACQUIS ITION OF THE CAPITAL ASSEST AND THE INDEXED COST OF ACQUISITION FOR COMP UTING THE CAPITAL GAINS. DURING THE PREVIOUS YEAR RELEVANT TO THE AY 2010-11 , THE ASSESSEE FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF 27,80,670/- WHICH INCLUDED CAPITAL GAINS OF 22,84,000/- IN RESPECT OF 1/5 TH SHARE OF PROPERTIES AT 75, ACHARAPPAN STREET, SOWCARPET, CHENNAI. THE ASSESSE E HAS ADMITTED THE SALE PROCEEDS OF 40 LAKHS AFTER AVAILING INDEXATION BENEFIT ON THE C OST OF ACQUISITION. THE CAPITAL GAINS WAS WORKED OUT TO 22,84,000/- THE ITA NO.2055/MDS/2016 :- 3 -: ASSESSEE CLAIMED DEDUCTION U/S.54F OF 14 LAKHS AND THE REMAINING BALANCE WAS OFFERED TO TAX. 4.0 IN THE RETURN OF INCOME FILED BY THE ASSESSEE, TH E ASSESSEE CLAIMED THE INDEXED COST OF ACQUISITION AT 3,16,000/- IN THE COMPUTATION OF INCOME. THE ASSESSING OFFICER (HEREINAFTER REFER RED TO AS AO) CALLED FOR THE PURCHASE DEEDS AND AS PER PURCHASE DEEDS, IT WA S NOTICED BY THE AO THAT THE PROPERTY WAS PURCHASED IN 1975 FOR 70,000/- AND PAID STAMP DUTY OF 830/- AND THE TOTAL COST OF THE PROPERTY WAS 70,830/-. THE INDEXED COST OF ACQUISITION THE TOTAL PROPERTY WAS WORKED TO 4,47,665/- AND THE INDIVIDUAL SHARE OF ACQUISITION WAS 89,355/-(4,47,665/5) AS AGAINST THE CLAIM OF THE ASSESSEE 3,16,000/-.THEREFORE THE AO DISALLOWED THE DIFFERENCE AMOUNT OF 2,26,467/-(316000-89533). 5.0 DURING THE PENDENCY OF PROCEEDINGS, THE ASSESSEE FURNISHED THE VALUATION REPORT FROM THE REGISTERED VALUER VALUING THE PROPERTY AT 9,59,747/- IN RESPECT OF BUDDI SAHEB STREET AND 16,53,726/- IN RESPECT OF THE PROPERTY OF ACHARAPPAN STREET, AND REQUESTED THE AO TO ALLOW THE COST OF ACQUISITION AT RS. 9,59,747/- AND 16,53,726/- FOR BUDDI SAHIB STREET PROPERTY AND ACHARAPPAN STREET PROPERTIES RE SPECTIVELY AS ON 01/04/1981 INSTEAD OF 89,833/-. THE AO REJECTED THE VALUATION REPORT SUBMITTED BY THE ASSESSEE AND ADOPTED THE INDEXED C OST OF 89,833/- I.E.1/5 TH SHARE OF 4,47,665/- AS PER THE PURCHASE DEED. ITA NO.2055/MDS/2016 :- 4 -: 6.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) DISMISSED TH E ASSESSEES APPEAL. THEREFORE, THE ASSESSEE IS ON APPEAL BEFORE US. 7.0 APPEARING FOR THE ASSESSEE, THE LEARNED AUTHORIZED REPRESENTATIVE (HEREINAFTER REFERRED TO AS LD.AR) ARGUED THAT TH E ASSESSEE HAS ADOPTED THE INDEXED COST OF ACQUISITION AT 3,16,000/- AND DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMIT TED THE VALUATION REPORT VALUING THE PROPERTY AT 9,59,741/- AND 16,53,726/- IN RESPECT OF BUDDI SAHEB AND ACHARRAPPAN STREET PROPERTIES RESPE CTIVELY. SINCE THE ASSESSEE HAS SUBMITTED THE VALUATION REPORT FROM TH E REGISTERED VALUER, THE AO HAS TO ACCEPT THE FAIR MARKET VALUE AS ON 19 81 AS PER THE VALUERS REPORT AND COMPUTE THE CAPITAL GAINS. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE (HEREINAFTER REFERRED T O AS LD.DR) RELIED ON THE LOWER AUTHORITIES ORDERS. 8.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. THE CONTENTION OF THE LD.A.R WAS THAT THE LD.AO SH OULD HAVE ACCEPTED THE FAIR MARKET VALUE AS PER THE APPROVED VALUER AND COMPUTED THE CAPITAL GAINS.. THE ASSESSEE HAS ADMITTED INDE XED COST OF ACQUISITION OF 3,16,000/- IN THE COMPUTATION OF INCOME. THE BASIS FOR ADOPTING THE ITA NO.2055/MDS/2016 :- 5 -: INDEXED COST OF ACQUISITION AT 3,16,000/- WAS NOT EXPLAINED BY THE ASSESSEE. AS PER THE PROVISIONS OF SEC.48(2), THE COST OF ACQUISITION OF THE ASSET REQUIRED TO BE ALLOWED AS DEDUCTION. IN THE CASE OF THE ASSESSEE, THE ASSET WAS PURCHASED IN 1975 FOR A CONSIDERATION OF 70,000/- AND THE STAMP DUTY WAS PAID AT 830/- AND THE TOTAL COST OF THE PROPERTY WAS 70,830/-. THE ASSESSEE HAS FURNISHED THE FAIR MARK ET VALUE AND CONSEQUENT INDEXED COST OF ACQUISITION AS ON 01.04. 1981 AT RS.316000/- IN THE RETURN OF INCOME. THE BASIS OF ADOPTING THE INDEXED COST OF FMV AT 3,16,000/- WAS NOT EXPLAINED BY THE ASSESSEE. SUBSE QUENTLY, WHEN THE AO HAS CALLED FOR THE BASIS OF FMV AT RS.316000/- T HE ASSESSEE APPROACHED THE REGISTERED VALUER AND OBTAINED THE R EPORT VALUING THE PROPERTIES AT RS. 9,59,741/- AND 16,53,726/- AND THE ASSESSEE HAS RELIED ON THE VALUATION REPORT WHICH WAS SUBMITTED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. WE HAVE GONE THROUGH T HE VALUATION REPORT, THE VALUATION REPORT IS NOT BASED ON ANY AC TUAL TRANSACTION IN THE AREA DURING 1981. IT WAS WORKED OUT ON THE BASIS OF VALUE OF PROPERTY AS ON THE DATE OF SALE REDUCED BY PERCENTAGE ESCALATIO N BACKWARDS WHICH IS UNSCIENTIFIC AND UNACCEPTABLE METHOD. THE VALUATIO N OF FMV ALWAYS SHOULD BE MADE ON THE BASIS OF ACTUAL TRANSACTIONS TOOK PLACE IN THE AREA IN 1981 OR THE MARKET VALUE AS ON 01.04.1981 FROM A NY RELIABLE SOURCE. THE VALUATION REPORT GIVEN BY THE REGISTERED VALUER WAS A PURE GUESS WORK AND NOT SCIENTIFIC AND NOT BASED ON THE ACTUAL TRANSACTION HENCE NOT ITA NO.2055/MDS/2016 :- 6 -: ACCEPTABLE. THEREFORE, WE HOLD THAT THE LD.CIT(A) HAS RIGHTLY REJECTED THE ASSESSEES CONTENTION AND THIS GROUND OF THE APPEAL IS DISMISSED . 9.0 THE ASSESSEE HAS ARGUED IN GROUND NO.4 TO ADOPT 3,16,000/- AS INDEXED COST OF ACQUISITION FOR COMPUTATION OF CAPI TAL GAIN. THE AO ADOPTED THE AMOUNT OF 89,533/- AS INDEXED COST OF ACQUISITION. A SUM OF 89,533/- WAS 1/5 TH SHARE OF INDEXED COST OF ACQUISITION OF THE PROPER TY DISCUSSED IN PARAGRAPH NO.4 OF THIS ORDER. THE FMV AS ON 01.04.1981 HAS TO BE TAKEN AND THE INDEXED COST OF ACQUISITION SHO ULD BE ALLOWED AS DEDUCTION. THE AO HAS NOT MADE ANY EFFORT TO VERIF Y THE COST OF ACQUISITION AS ON 01.04.1981 BUT MERELY SUBSTITUTED THE SAME WITH 17,830/- WHICH WAS THE 1/5 TH SHARE OF PURCHASE COST AS PER THE SALE DEED INSTEAD OF FAIR MARKET VALUE AS ON 01.04.1981 AND I NCREASED BY THE COST OF INDEXATION. THE ASSESSEE HAS CLAIMED COST OF AC QUISITION AT 3,16,000/- . THOUGH, THERE WAS NO EVIDENCE FOR FMV AND INDEXE D COST OF ACQUISITION AT 3,16,000/-, SINCE THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE INDEXED COST OF ACQUISITION WAS LESS THAN RS.3,16,000/- WE DIRECT THE AO TO ADOPT 3,16,000/- AS INDEXED COST OF ACQUISITION FOR COMPUTING CAPITAL GAINS AS CLAIMED BY THE ASSESSEE. THIS GROUND OF APPEAL IS ALLOWED. 10.0 GROUND NO.3 IS RELATED TO ADOPTION OF UNIFORM RATE @ 3,000/- PER SQ.FT. FOR ALL THE SALE DEEDS INSTEAD OF THE VALUE ADOPTED BY THE SUB- ITA NO.2055/MDS/2016 :- 7 -: REGISTRAR FOR EACH OF THE SALE DEED INDEPENDENTLY. THE LD.AR OF THE ASSESSEE ARGUED THAT THE AO HAS ADOPTED THE SALE OF DIFFERENT PLOTS AT UNIFORM RATE @ 3,000/- PER SQ.FT. FOR ALL THE SALE DEEDS INSTEAD O F THE ACTUAL AMOUNT OF TRANSACTION FOR EACH DEED INDEPEND ENTLY OR THE GUIDELINE VALUE OF THE PROPERTY OF EACH PROPERTY SEPARATELY. THE LD.AR ARGUED THAT THE APPROACH OF THE AO WAS ARBITRARY AND TOTALLY WR ONG. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDERS OF THE LOWER A UTHORITIES. 11.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. THE ASSESSEE ALONG WITH FIVE OTHER CO-OWNERS SOLD SIX PLOTS AND ONE OF WHICH PROPERTY WAS SOLD @ 3,000/- PER SQ.FT. THE AO HAS NOT FURNISHED ANY INFORMATION REGARDING THE STAMP DUTY VALUATION/GUIDELINE VALUE FIXED BY THE STAMP VALUATION AUTHORITIES ON T HE REMAINING FIVE PLOTS. THE AO HAS TO ADOPT THE GUIDELINE VALUE FIXED BY TH E STAMP VALUATION AUTHORITY AS PER SEC.50C OF INCOME TAX ACT PER EACH PLOT INDEPENDENTLY. IN THIS CASE, THE AO STATED THAT THE CASE WAS REFER RED TO THE DISTRICT REVENUE OFFICER FOR UNDER VALUATION BY THE SRO, SOW CARPET. HOWEVER, THE PROCEEDINGS OF THE DISTRICT REVENUE OFFICER WAS NOT RECEIVED BY THE SRO. THEREFORE, THE AO ADOPTED THE RATE OF RS.3,000/- PE R SQ.FT. WE PRODUCE HERE UNDER SEC.50C OF INCOME TAX ACT: [ SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION I N CERTAIN CASES. 91 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED 92 [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNM ENT (HEREAFTER IN THIS ITA NO.2055/MDS/2016 :- 8 -: SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORI TY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED 92 [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1), WHERE ( A ) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THA T THE VALUE ADOPTED OR ASSESSED 92A [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UN DER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; ( B ) THE VALUE SO ADOPTED OR ASSESSED 92A [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB- SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE ( I ) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) O F SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTIO N 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODI- FICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB- SECTION (1) OF SECTION 16A OF THAT ACT. 93 [ EXPLANATION 1 ]. FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER ' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R ) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1 957). 94 [ EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'A SSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAV E, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BE ING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED 94 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTIO N (1), THE VALUE SO ADOPTED OR ASSESSED 94 [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER.] 12.0 IN THIS CASE, THE ASSESSEE OBJECTED FOR VALUATION OF ALL THE PROPERTIES @ 3,000/- PER SQ.FT. AS PER THE PROVISIONS OF SEC.5 0C OF INCOME TAX ACT, THE AO HAS NO OPTION EXCEPT TO ADOPT THE ACTUA L CONSIDERATION/GUIDELINE VALUE AS PER THE VALUATION FIXED BY THE STAMP VALUATION AUTHORITY ON THE REMAINING FIVE PLOTS. TH EREFORE, ON THIS ISSUE WE REMIT THE MATTER BACK TO THE FILE OF AO TO VERIF Y THE VALUATION FIXED BY THE STAMP VALUATION AUTHORITIES/GUIDELINE VALUE FOR THE REMAINING PROPERTIES AND COMPUTE THE CAPITAL GAINS AS PER SEC .50C OF INCOME TAX ACT. ITA NO.2055/MDS/2016 :- 9 -: 13.0 IN THE RESULT, THIS GROUND OF THE APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( '# . . $ %!& ) (D.S.SUNDER SINGH) ( /ACCOUNTANT MEMBER /CHENNAI, 6! /DATED: 22 ND FEBRUARY, 2017. TLN 1 /3%7 8 7,3 /COPY TO: 1. -. /APPELLANT 4. $ 93 /CIT 2. /0-. /RESPONDENT 5. 7 : /3 /DR 3. $ 93 ( ) /CIT(A) 6. #+ = /GF