Shri Alpesh Thakorbhai Patel, Surat V. The Income Tax Officer, Ward-6(1), Surat

ITA 2230/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94730 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 27-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Capital asset; Cost of acquisition; Fair market value; Corroborative evidences; Valuation report

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.2230/AHD/2015 / ASSTT. YEAR: 2011-2012 SHRI ALPESH THAKORBHAI PATEL NR. PRIMARY SCHOOL AT & PO. PAL CHORIYASI TALUKA, SURAT PAN : AJXPP 2162 J VS ITO, WARD-6(1) SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH REVENUE BY : SMT. SMITI SAMANT, SR.DR ! / DATE OF HEARING : 22/09/2015 '#$ ! / DATE OF PRONOUNCEMENT: 27/11/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE CIT(A)-I, SURAT DATED 30.4.2015 PASSED FOR THE ASST T.YEAR 2011-12. 2. THE ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, B UT HIS GRIEVANCE REVOLVES AROUND TWO ISSUES VIZ. (A) THAT THE AO HAS ERRED IN WORKING OUT LONG TERM CAPITAL GAIN AT RS.2,56,717/- INSTEAD OF LONG TERM LOSS OF RS.4,4,61,272/- SHOWN BY THE ASSESSEE, AND (B) THE LD.COMMISSIONER HAS ERRED IN UPHOLDING THE ACTION OF THE AO FOR APP LYING THE PROVISION OF SECTION 55A(A) WHICH IS APPLICABLE W.E.F. 1-7-2012. ITA NO.2230/AHD/2015 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ELECTRONICALLY ON 21.7.2011 DECLARING TOTAL INCOME AT RS.1,20,570/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE I NCOME TAX ACT WAS ISSUED ON 2.8.2012 WHICH WAS DULY SERVED UPON THE A SSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THA T DURING THE YEAR THE ASSESSEE ALONG HIS FAMILY MEMBERS HAS SOLD NON-AGRI CULTURAL LAND SITUATED 607, BLOCK NO.401/B, VILLAGE PA, SURAT FOR A CONSIDERATION OF RS.53,83,000/-. THE ASSESSEE HAS 1/3 RD SHARES IN THE LAND. THUS, HE RECEIVED A CONSIDERATION OF RS.17,94,333/-. THE AS SESSEE HAS SHOWN LONG TERM CAPITAL LOSS OF RS.4,61,272/-. AFTER CLAI MING PURCHASE COST AS WELL AS COST OF IMPROVEMENT. ON DEEPER PROBE, THE LD.AO HAS FOUND THAT THE ASSESSEE HAS TAKEN FAIR MARKET VALUE OF TH E PROPERTY AS ON 1.4.1981 AT RS.1,15,350/- AT THE RATE OF RS.225/- P ER SQ.METER. ACCORDING TO THE AO THIS VALUE WAS FOUND TO BE ON A HIGHER SIDE, WHEN HE ANALYZED THE AREA AND NATURE OF THE PROPERTY, AC CORDING TO HIS KNOWLEDGE OF THE AREA. HE DIRECTED THE ASSESSEE TO FURNISH VALUATION REPORT AND SUBMIT THE BASIS FOR CALCULATION OF THE VALUE OF THE PROPERTY AT THE RATE OF RS.225/- PER SQ.METER. THE AO HAS A LSO CALLED FOR VALUATION REPORT FROM THE DVO UNDER SECTION 55A(B)( II) R.W.S 131(1)(D) OF THE ACT. THE DVO HAS VALUED THE PROPERTY AT RS .43,100/- AT THE RATE OF RS.28/- PER SQ.METER. THE VALUER OF THE ASSESSE E HAS DETERMINED THE VALUE OF THE PROPERTY AT RS.600/- PER SQ.METER. TH E LD.AO HAS ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.198 1 AT RS.28/- PER SQ.METER ON THE BASIS OF THE DVOS REPORT. HE COMP UTED THE LONG TERM CAPITAL GAIN OF RS.2,56,717/- AGAINST THE LONG TERM CAPITAL LOSS DECLARED BY THE ASSESSEE AT RS.4,61,272/-. 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. ITA NO.2230/AHD/2015 3 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE HAS C ONTENDED THAT THE AO WAS NOT COMPETENT TO MAKE A REFERENCE TO THE DVO UNDER SECTION 55A OF THE INCOME TAX ACT. THE AMENDMENT IN SECTIO N 55A HAS BEEN EFFECTED W.E.F. 1-7-2012. THEREFORE, THE AO CANNOT COMPUTE THE LONG TERM CAPITAL GAIN ON THE BASIS OF THE DVOS REPORT. HE RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. GAURANGINIBEN SHODHAN, 367 ITR 238. THE HONBLE HIG H COURT HAS HELD THAT PRIOR TO THE AMENDMENT IN SECTION 55A W.E.F. 1 .7.2012 IN A CASE, THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS I N ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE AO W AS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MA RKET VALUE AS ON 1.4.1981, THEN, THE AO WOULD NOT BE AUTHORIZED TO M AKE REFERENCE TO THE DVO UNDER SECTION 55A. ON THE STRENGTH OF THIS DECISION, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT COGNIZAN CE OF THE VALUERS REPORT CANNOT BE TAKEN. 6. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE IN SUPPORT OF HIS WORKIN G OF COST OF ACQUISITION AND THE VALUE AS ON 1.4.1981. HE FAILE D TO DISCLOSE THE BASIS FOR ADOPTING THE FIGURE OF RS.225/- PER SQ.METER. DURING THE COURSE OF ASSESSMENT PROCEEDING, WHEN THE SUPPORTING EVIDENCE WAS CALLED FOR BY THE AO, THEN HE PRODUCED THE VALUATION MADE BY THE REGISTERED VALUER, WHO VALUED THE PROPERTY AT RS.600 PER SQUARE METERS . THE METHOD OF VALUATION ADOPTED BY THE ALLEGED REGISTERED VALUER IS ALTOGETHER DIFFERENT THAN ANY RECOGNIZED METHOD. THE VALUER H AS GIVEN THE VALUATION BASED ON GOLD RATES WHICH IS A DIFFERENT CLASS OF PROPERTY. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE INCOME TAX ACT PROVIDES MODE OF ITA NO.2230/AHD/2015 4 COMPUTATION OF CAPITAL GAINS. IT CONTEMPLATES THAT THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET TH E FOLLOWING AMOUNTS, NAMELY, (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSI VELY IN CONNECTION WITH SUCH TRANSFER, (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. IN THE INSTANT CASE, TH E ASSESSEE HAS SOLD A PIECE OF LAND IN WHICH HE HAS 1/3 RD SHARE. THE TOTAL SALE CONSIDERATION RECEIVED FROM THE VENDEE WAS RS.53,83,000/-. THE A MOUNT FALLEN TO THE SHARE OF THE ASSESSEE WAS RS,17,94,333/-. THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL LOSS OF RS.4,61,272/-, A FTER CLAIMING PURCHASE COST AS WELL AS COST OF IMPROVEMENT. SECT ION 48 AUTHORISES THE ASSESSEE TO CLAIM PURCHASE COST. THE ASSESSEE HAS WORKED OUT FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS.1 ,15,350/-. THIS AMOUNT WAS DETERMINED BY ADOPTING THE RATE OF RS.22 5/- PER SQ.METER. NOW IT IS FOR THE ASSESSEE TO BUTTRESS THE ADOPTION OF THIS RATE. HE HAS JUST PICKED UP THE FIGURE. THE ASSESSEE OUGHT TO HA VE OBTAINED SALE DEEDS OF THE AREAS AND THEN WORK OUT THE MARKET PRI CE OF AGRICULTURE/NON AGRICULTURAL LAND IN THAT YEAR. NO SUCH EXERCISE WAS DONE BY THE ASSESSEE. WHEN THE AO CONFRONTED THE A SSESSEE TO SHOW SUPPORTING MATERIAL, THEN THE ASSESSEE SUBMITTED RE PORT OF THE REGISTERED VALUER, WHO DETERMINED THE VALUE OF THE PROPERTY AT RS.600/- PER SQ.YARD. BUT THIS VALUE WAS ARRIVED AT COMPARI NG THE GOLD RATES IN THAT YEAR WITH THE CURRENT RATES. THE LD.CIT(A) OB SERVED THAT IT IS NOT FAIR METHOD TO DETERMINE THE FAIR MARKET VALUE OF T HE AGRICULTURE LAND. THE DVO HAS DETERMINED THE VALUE ON THE BASIS OF SA LE DEED AVAILABLE OF THE SURROUNDING PIECE OF LAND. AS FAR AS OBJECT ION OF THE ASSESSEE THAT THE AO OUGHT TO HAVE NOT MADE A REFERENCE TO T HE DVO, THE LD.CIT(A) HAS OBSERVED THAT REFERENCE HAS BEEN MADE AFTER INSERTION OF ITA NO.2230/AHD/2015 5 SECTION 55A IN THE ACT W.E.F. 1.7.2012. THUS, IT I S APPLICABLE IN THE CASE OF THE ASSESSEE. AFTER LOOKING INTO THE FINDINGS O F THE REVENUE AUTHORITIES, WE DO NOT FIND ANY MERIT IN THIS APPEA L. IT IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 27 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER