The ACIT, Circle-5, Baroda V. Shri Mahesh Chunilal Shah, Baroda

ITA 210/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80288 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 27-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Cost of acquisition; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-5, 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA-390007 (APPELLANT) VS SHRI MAHESH CHUNILAL SHAH, C/O SHAH ENTERPRISE, LAHERIPURA NEW ROAD, BARODA-390001 PAN NO. AKZPS 6615 E (RESPONDENT) REVENUE BY: SRI M.K. SINGH, SR. D.R. ASSESSEE BY: SRI. M. J. SHAH, A.R. DATE OF HEARING : 05-08-2014 DATE OF PRONOUNCEMENT : 27-08-20 14 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY REVENUE AGAINST THE ORDER OF LD. CIT(A)-IV, BARODA DATED 30-11-2010 FOR A.Y. 2007-08. ITA NO. 210/AHD/2011 ASSESSMENT YEAR 2007-08 I.T.A NO. 210/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. MAHESH CHUNILAL SHAH 2 2. ASSESSEE IS AN INDIVIDUAL AND STATED TO BE DERIV ING INCOME FROM CAPITAL GAINS, HOUSE PROPERTY AND OTHER SOURCES. A SSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2007-08 ON 15-04-2009 DECLARING INCOME OF RS. 7,82,950/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 30-12-2009 AND TOTAL INCOME WAS DETERMINED AT RS. 45,26,558/-. AGGRIEVED BY THE OR DER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) V IDE ORDER DATED 30-11- 2010 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND RAIS ED THE FOLLOWING GROUNDS: 1(II). ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW , THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 37,43,606/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF GODOWN SITUATED AT CUTTAK. 1(II). THE CIT(A) ERRED IN NOT APPRECIATING THE FAC TS THAT WITHOUT PURCHASE DOCUMENT AN INFERENCE CANNOT BE DRAWN; MOR EOVER, THE VALUATION OF THE PROPERTY WAS TAKEN ON 04.04.2001, WHEREAS THE GODOWN WAS PURCHASED ON 16.11.1996. THEREFORE, RE-V ALUATION NEEDS TO BE DONE. FURTHER, AS PER LOAN PAPERS, THE LOANS WERE GRANTED BY THE STATE BANK OF INDIA ON 11.08.1997 WH EREAS THE ASSESSEE HAS CLAIMED INDEXATION FROM 16.11.1996 WHI CH IS NOT APPRECIABLE. MOREOVER, THE SALE PRICE AS PER SALE D EED DTD. 14.02.2007 IS OF RS, 12500000/- LAKHS; 1/2 SHARE OF THE ASSESSEE SHOULD BE OF RS. 6250000/- WHEREAS IT IS SHOWN BY T HE ASSESSEE AT RS. 5334000/- ONLY. HENCE, THE ADDITION MADE BY THE AO SHOULD HAVE BEEN UPHELD BY THE CIT(A). 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAD SOLD A GODOWN SITUATED AT CUTTAK AND H AD CLAIMED CAPITAL GAINS. ASSESSEE WAS ASKED TO FURNISH THE PURCHASE DEED OF THE GODOWN THAT WAS SOLD. AO NOTED THAT ASSESSEE DID NOT FILE THE PURCHASE DEED. HE ALSO NOTED THAT ASSESSEE HAS SHOWN HIS SHARE OF PUR CHASE PRICE AT RS. 27 LACS AND THE INDEXED COST OF ACQUISITION WAS WORKED OUT AT RS. 45,94,426/- I.T.A NO. 210/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. MAHESH CHUNILAL SHAH 3 AND ASSESSEE HAD RECEIVED HIS SHARE OF RS. 53,34,00 0/-. AO WAS OF THE VIEW THAT SINCE THE ESCALATION IN THE LAND PRICES W AS BY MORE THAN 300 TO 400% IT WAS IMPROBABLE THAT IN CASE OF ASSESSEE THE PRICE HAS JUST INCREASED BY RS. 26,34,000/- IN 10 YEARS. IN THE A BSENCE OF EVIDENCE OF COST OF ACQUISITION, HE ESTIMATED THE COST OF ACQUI SITION AT RS. 5 LACS INSTEAD OF 27 LACS AS SHOWN BY THE ASSESSEE AND THE REAFTER WORKED OUT THE LONG TERM CAPITAL GAIN AT RS. 44,83,180/- AND AFTER GIVING THE CREDIT FOR THE CAPITAL GAIN OF RS. 7,39,574/- SHOWN BY THE ASSESSE E, THE BALANCE AMOUNT OF RS. 37,43,606/- WAS ADDED TO THE TOTAL INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ). LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT RECEIVED FROM AO DELETED THE ADDITION BY HOLDING AS UNDER:- 4.3. I HAVE CAREFULLY CONSIDERED THE FAC TS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT, THE ASSESSME NT ORDER AND REMAND REPORT. THE APPELLANT HAD CONSTRU CTED THE GODOWN DURING APRIL 1995-NOVEMBER, 1996. THE GODOWN WA S RENTED OUT TO HLL AND THE RENT FROM THE GODOWN IS ALSO DECLARED I N THE RETURN FROM AY 1998-99 ONWARDS. FURTHER, THE INTEREST PAID ON U NSECURED LOANS AND THE SBI LOAN ARE ALSO CLAIMED AGAINST THE HOUSE PROPERTY INCOME. THE INTEREST IS ON UNSECURED LOANS OF ABOU T RS. 30 LAKHS AND THE BANK LOAN IS RS,24 LAKHS. THE VALUATION REP ORT ALSO ESTIMATES THAT THE INVESTMENT ON THE CONSTRUCTION O F GODOWN IS ABOUT RS. 54 LAKHS. THUS, THE COST OF ACQUISITION OF RS. 27 LAKHS (APPELLANT'S SHARE) SEEMS TO BE IN ORDER. THE ASSUM PTION OF COST OF ESTIMATION AT RS.5 LAKHS BY AO IS WITHOUT ANY BASIS AS IN THAT CASE THE COST OF CONSTRUCTION WOULD WORK OUT TO ABOUT RS . 30.74 PER SQ . FT WHICH APPEARS TO BE TOO LOW TO BE REALISTIC. THE AD DITION OF RS.37,43,606/- AS LONG TERM CAPITAL GAIN IS THUS DI RECTED TO BE DELETED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. I.T.A NO. 210/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. MAHESH CHUNILAL SHAH 4 5. BEFORE US LD. DR RELIED ON THE ORDER OF AO. ON THE OTHER HAND, LD. AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD . CIT(A). HE FURTHER SUBMITTED THAT THE PROPERTY WAS OWNED BY THE ASSESS EE ALONG WITH HIS BROTHER AND HIS PORTION OF CAPITAL GAINS HAS BEEN A CCEPTED BY THE DEPARTMENT. HE THEREFORE SUBMITTED THAT SINCE THE PROPERTY IS THE SAME A DIFFERENT VIEW ON THE COST OF THE ASSET CANNOT BE T AKEN IN THE CASE OF ASSESSEE. HE FURTHER PLACED RELIANCE ON THE DECISI ON OF MADRAS HIGH COURT IN THE CASE OF CIT VS. KUMARARANI SMT. MEENAK SHI ACHI [2007] 292 ITR 0624 AND THE DECISION OF HONBLE PUNJAB AND HAR YANA HIGH COURT IN THE CASE OF JASWANT RAI VS. COMMISSIONER OF WEALTH- TAX [1977] 107 ITR 0477. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACT THAT THE GODOWN WAS CONSTRUCTED I N F.Y. 1995-96 IS NOT IN DISPUTE. THE DISPUTE IS ABOUT THE COST OF CONSTRUC TION. ASSESSEE AFTER CONSIDERING THE COST OF ACQUISITION AT RS. 27 LACS HAD WORKED OUT THE CAPITAL GAINS WHICH WAS NOT ACCEPTABLE TO AO, LD. C IT(A) WHILE ALLOWING THE APPEAL OF ASSESSEE HAS NOTED THAT THE VALUATION REPORT OF THE VALUER HAD ALSO ESTIMATED THE COST OF CONSTRUCTION OF THE GODOWN AT RS. 54 LACS AND THEREFORE THE ASSESSEES SHARE OF WORKED OUT TO RS. 27 LACS AND THUS HE HAS CONSIDERED THE COST OF ACQUISITION OF R S. 27 LACS CONSIDERED BY ASSESSEE TO BE IN ORDER. BEFORE US, REVENUE HAS NO T BROUGHT ANY MATERIAL TO CONTROVERT THE FINDING OF LD. CIT(A). FURTHER, ASSESSEE HAS SUBMITTED THAT THE BALANCE SHARE WHICH BELONGED TO HIS BROT HER AND IN HIS ASSESSMENTS, THE COST OF ACQUISITION OF THE SAME GO DOWN HAS BEEN ACCEPTED BY THE REVENUE. BEFORE US, NO MATERIAL HA S BEEN BROUGHT ON RECORD TO SHOW THAT THE VALUATION OF THE GODOWN IN THE CASE OF ASSESSEES BROTHER HAS BEEN CHALLENGED IN APPEAL BEFORE TRIBUN AL. WE FURTHER FIND I.T.A NO. 210/AHD/2011 A.Y. 2007-08 PAGE NO ACIT VS. MAHESH CHUNILAL SHAH 5 THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF C IT VS. KUMARARANI MEENAKSHI ACHI (SUPRA) HAS HELD THAT THE DIFFERENTI AL TREATMENT CANNOT BE METED OUT TO ANOTHER CO-OWNER WHILE MAKING THE ASSE SSMENT OF SAME PROPERTY OR WHILE VALUING THE SAME PROPERTY. IN VI EW OF THE AFORESAID FACTS AND RELYING ON THE AFORESAID DECISION OF HONBLE MA DRAS HIGH COURT, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. C IT(A) AND THUS THESE GROUNDS OF REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 27/08/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,