S. Prabhavathi Srinivasan, CHENNAI V. DCIT, CHENNAI

ITA 2327/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8041 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S. SRINIVASAN
• Keywords: Business income; Opportunity of being heard; Fair market value; Revised return; Set aside; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 142(1); 201; 143(2)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2327 /MDS/2016 / ASSESSMENT YEAR :20 11 - 1 2 SMT. S. PRABHAVATHI SRINIVASAN, KUMARA VILAS , 21, VISWESWARAPURAM STREET, MYLAPORE, CHENNAI 600 004. [PAN: A ASPS4705Q ] VS. THE DEPUTY COMMISSIONER OF INC OME TAX , BUSINESS CIRCLE II, CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRINIVASAN / RESPONDENT BY : S HRI S HIVA SRINIVAS , J CIT / DATE OF HEARING : 1 0 . 1 1 .201 6 / DATE OF P RONOUNCEMENT : 20. 01 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) 2 , C HENNAI DATED 3 0 . 03 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 11 - 1 2 . THE ASSESSEE HAS RAISED HE FOLLOWING GROUNDS: IT IS RESPECTFULLY SUBMITTED THAT THE RESPONDENT AUTHORITY FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAS ERRED IN, I.T.A. NO . 2327 / M/ 1 6 2 1 RECKONING FAIR MARKET VAL UE (FMV) TO BE GUIDE LINE VALUE (GLV) AS WELL, WHEN FAIR MARKET VALUE (FMV) IN RESPECT OF LAND VALUE AS OF 01.04.1981 WAS NOT ASCERTAINED DUE TO NO EFFORTS TAKEN TO GATHER SAME. 2. EVEN IN FACE OF HAVING ARRIVED AT THE GUIDE LINE VALUE (GLV) AS OF 18.11 .2010 AT RS. 36,51,501 FROM THE INFORMATION OBTAINED FROM SUB REGISTRAR, COIMBATORE HOWEVER HAVING NOTED THAT THE SALE TRANSACTION HAS GOT REGISTERED THAT DAY AT RS. 2,65,50,000 WHICH IS 7.27 TIMES THE GUIDE LINE VALUE (GLV) ADOPTED FOR STAMP DUTY PURPOSES AND WHICH APPLES TILL DATE, NOT TAKING COGNISANCE OF FACT THAT GUIDE LINE VALUE (GLV) DOES NOT AT ALL REFLECT THE 'FAIR MARKET PRICE' (FMV) REFERRED TO, TO ARRIVE AT CAPITAL GAIN. 3. EVEN SO, TAKING THE FAIR MARKET VALUE (FMV) AS ON 01.04.1981 TO BE TH E SAME AS GUIDE LINE VALUE WITHOUT APPLYING THE FACTOR 7.27 AS EXPLAINED IN (1) ABOVE OR ANY OTHER APPROPRIATE FACTOR TO ARRIVE AT THE FAIR MARKET VALUE (FMV). 4. NOT TAKING COGNISANCE OF THE PRACTICE OF FIXING GUIDE LINE VALUE (GLV) TO BE FAR LOWER THA N FAIR MARKET VALUE (FMV) HOWEVER APPLYING SUCH LOW FIGURE TO ARRIVE AT A FICTIONAL COST AS ON 01.04.1981, THUS UNDULY PENALISING THE ASSESSEE. 5. NOT RECKONING THAT SAID PROPERTY BEING ON THE MAIN ARTERIAL ROAD IN COIMBATORE ITS FAIR MARKET VALUE AT AL L TIMES IS FAR HIGHER THAN IN INTERIOR AREAS WHICH ARE IN TURN ALSO HIGHER THAN GUIDE LINE VALUE(GLV) FIXED FOR PURPOSE OF STAMP DUTY. 6. GIVING VALUE TO BUILDING AS OF 01.04.1981 AT A INSIGNIFICANT RS. 100 PER SQ. FT. WHICH IS NOT APPROPRIATE FOR ONE I N USE AS A SURGICAL CLINIC / EYE HOSPITAL. 7. DISALLOWING COST OF IMPROVEMENTS CARRIED OUT SINCE 01.04.1981 ON THE GROUND OF NON PRODUCTION OF BILLS RELATING TO PAST THREE DECADES. HOWEVER THIS OMISSION HAS NO IMPACT ON THE CAPITAL GAIN ADMITTED BY THE ASSESSEE IN THE RETURN. HOWEVER IF TAKEN WILL RESULT IN REFUND OF THE TAX PAID. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME ON 30.07.2011 DECLARING TOTAL INCOME OF .17,33,205/ - I.T.A. NO . 2327 / M/ 1 6 3 CONSISTING SALARY INCO ME, INCOME FROM HOUSE PROPERTY, BANK INTEREST INCOME, BUSINESS INCOME AND INCOME FROM CAPITAL GAINS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] DATED 11.08.2012 WAS SERVED ON THE ASSESSEE. FURTHER, NOTICE UNDER SECTION 142(1) OF THE ACT DATED 16.08.2013 WAS ALSO SERVED ON THE ASSESSEE. AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 26.02.2014 BY ASSESSING T OTAL INCOME OF THE ASSESSEE AT .33,96,853/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FACTS OF THE CASE, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS MAINLY CONTENDED THAT THE ASSESSING OFFICER HAS WRONGLY ADOPTED THE GUIDELINE VALUE AS FAIR MARKET VALUE FOR WORKING OUT THE CAPITAL GAINS AND THE L D. CIT(A) ALSO ERRED IN CONFIRMING FINDINGS OF THE ASSESSING OFFICER . HE STRONGLY ARGUED THAT THE ASSESSING OFFICER SHOULD HAVE AT LEAST REFERRED THE MATTER TO THE DVO TO ASSESS THE FAIR MARKET VALUE INSTEAD OF ADOPTING THE GUIDELINE VALUE, WHICH IS MEANT FOR STAMP DUTY PURPOSES, AS FAIR MARKET VALUE AND THEREFORE, PRAYED THAT THE ADDITION MADE ON THIS ACCOUNT SHOULD BE DELETED. I.T.A. NO . 2327 / M/ 1 6 4 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIA LS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS RETURNED INCOME FROM LONG TERM CAPITAL GAIN AT .14,00,000/ - . THE ASSESSEE HAS ADMITTED THE LONG TERM CAPITAL GAIN ON SALE OF HER 1/8 TH SHARE OF LAND AND BUILDING AT COIMBATORE INHERITED BY HER FROM HER FATHER LATE DR. D. SUNDARESWARAN, WHICH WAS IN USE AS EYE SURGERY CLINIC. UPON THE SALE OF SAID PROP ERTY THE SALE DEED WAS REGISTERED ON 18.11.2010 AT .2,65,50,000/ - AND THE ASSESSEE HAS RECEIVED HER 1/8 TH SHARE OF .33,18,750/ - BY CHEQUES AND THE DOCUMENTS WERE FILED BEFORE THE ASSESSING OFFICER. THE FAIR MARKET VALUE OF HER 1/8 TH SHARE OF SAID PROPERT Y SITUATED ON THE MAIN ROAD IN A PROMINENT LOCATION WAS ESTIMATED TO BE .2,70,000/ - AS OF 01.04.1981 AND AFTER INDEXATION TAKING 7.11 FOR THE ASSESSMENT YEAR 2011 - 12, THE LONG TERM CAPITAL GAIN WITH INDEXATION WAS ARRIVED AT .13,99,050/ - AND THE CAPITAL GAIN TAX THEREON @ 20% WAS DULY PAID BY THE ASSESSEE. 6.1 HOWEVER, BY GOING THROUGH THE COMPUTATION OF CAPITAL GAINS, THE ASSESSING OFFICER HAS ASCERTAINED THE MARKET VALUE OF THE ABOVE PROPERTY AS ON 01.04.1981, BY OBTAINING THE GUIDELINE VALUE OF THE P ROPERTY FROM THE SRO, COIMBATORE TO BE .14,000/ - PER CENT AS ON 01.04.1981. THE EXTENT OF I.T.A. NO . 2327 / M/ 1 6 5 LAND OCCUPIED BY THE PROPERTY WAS 1484.35 SQ.FT. APPLYING THE GUIDELINE VALUE FURNISHED BY THE SRO, THE ASSESSING OFFICER HAS WORKED THE MARKET VALUE AS ON 01.04.1981 OF THE LAND CONSISTING OF 1484.35 SQ. FT. OF LAND AT .48,104/ - [VALUE OF ONE SQ.FT. @ .32.40 AND 32.40 X 1484.35] . ACCORDINGLY THE ASSESSING OFFICER INDEXED THE VALUE OF THE LAND AS ON 01.04.1981 AT .3,42,020/ - [48104 X 7.11] AND ARRIVED 1/8 TH SHARE OF THE LAND VALUE AT .42,752/ - . 6.2 SI MILARLY WITH REGARD TO THE COST OF BUILDING, THE ASSESSEE HAS FILED A REVISED CALCULATION FOR CAPITAL GAINS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEREIN THE ASSESSEE HAS MADE A CLAIM FOR DEDUCTION OF COST OF RENOVATION CLAIMED TO HAVE BEEN CARRIED OUT BETWEEN 1981 AND 2001. THE ASSESSEE S 1/8 TH SHARE OF SUCH RENOVATION EXPENSES OF .9,50,000/ - WAS CLAIMED T .1,18,750/ - AND THE INDEXED COST OF RENOVATION WAS CLAIMED AT .4,90,437/ - . THE ASSESSEE HAS CLAIMED BY WAY OF A NOTE THAT THE VALUE OF BARE BUILDING OF 2400 SQ. FT. IN 1981 WAS TAKEN @ .200/ - PER SQ. FT. AND IMPROVEMENTS BY WA Y OF TILING OF FLOORS, WALLS, ETC. FOR USE AS A SURGICAL UNIT @ .400/ - PER SQ.FT. AS REASONABLE AND REALISTIC. THE ASSESSING OFFICER HAS REJECTED THE ABOVE REVISED CLAIM OF DEDUCTION IN VIEW OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF GOET ZE INDIA LTD. V. CIT 284 ITR 323, WHEREIN IT WAS HELD THAT AN ASSESSEE CANNOT AMEND A RETURN FILED BY HIM FOR MAKING A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN. I.T.A. NO . 2327 / M/ 1 6 6 6.3 CONSIDERING THE AGE OF THE BUILDING, AS IT WOULD AROUND 50 YEARS OLD, THE ASSESSING OFFICER HAS ESTIMATED THE MARKET VALUE AS ON 01.04.1981 AT .100/ - PER SQ. FT. AND THE VALUE OF BUILDING OF 2400 SQ. FT. WAS ARRIVED AT .2,40,000/ - . APPLYING THE COST INFLATION INDEX, THE COST OF BUILDING COMES TO .17,06,400/ - AND ASSESSEE S 1/8 TH SHARE THEREON WAS .2,13,300/ - . ACCORDINGLY, THE ASSESSING OFFICE R WORKED OUT THE TAXABLE CAPITAL GAINS AT .30,62,698/ - . THE LD. CIT(A) ACCEPTED THE ABOVE FINDINGS OF THE ASSESSING OFFICER IN TOTO. 6.4 AFTER CAREFULLY GOING THROUGH THE ORDERS OF AUTHORITIES BELOW, WE DO NOT FIND ANY BASIS FOR ESTIMATING THE FAIR MARK ET VALUE OF THE LAND BY THE ASSESSEE AT .2,70,000/ - . MOREOVER, BY NO STRETCH OF IMAGINATION, THE LAND AT DR. NANJAPPA ROAD COULD BE SOLD OR BOUGHT AT .32.40 PER SQ. FT., WHICH WAS ADOPTED BY THE ASSESSING OFFICER AS PER THE GUIDELINE VALUE OF THE PROPERT Y OBTAINED FROM THE SRO, COIMBATORE. THE ASSESSING OFFICER ADOPTED FAIR MARKET VALUE AS ON 01.04.1981 BASED ON THE GUIDELINE VALUE OF THE LOCALITY OBTAINED FROM THE SRO, COIMBATORE. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MRS. N. MEENA KSHI (319 ITR (AT) 262) HAS HELD THAT GUIDELINE VALUE COULD NOT BE A CONCLUSIVE PROOF AND FAIR MARKET VALUE COULD BE DIFFERENT FROM THE VALUE ADOPTED BY THE REGISTRATION AUTHORITY. IN THE CASE OF THULASIM ANI AMMAL V. CIT (158 CTR 5) THE HON BLE JURISDICTIONAL HIGH COURT HAS DIRECTED THE ASSESSING OFFICER TO ADOPT THE I.T.A. NO . 2327 / M/ 1 6 7 MARKET VALUE OF THE LAND. SINCE IT POSTULATES THAT THE FAIR MARKET VALUE MAY BE DIFFERENT FROM THE VALUE ADOPTED BY THE REGISTRATION AUTHORI TY AND IN SUCH CASES, PROCEDURE FOR REFERENCE TO THE VALUATION CELL WAS PROVIDED. HOWEVER, IN THIS CASE, THE ASSESSING OFFICER HAS NOT REFERRED THE MATTER TO THE VALUATION CELL. IT IS ALSO NOT CLEAR FROM THE ASSESSMENT ORDER AS TO WHETHER THE ASSESSEE HAS FURNISHED ANY FAIR MARKET VALUE OBTAINED FROM THE REGISTERED VALUER. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE CIT(APPEALS) AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO CONSIDER THE FAIR MARKET VALUE AFTER OBTAINING THE SAME FROM THE DVO AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. MOREOVER, THE ASSESSEE IS ALSO DIRECTED TO OBTAIN ANY COMPARABLE VALUE OF THE NEARBY PROPERTY SOLD BEFORE FINALIZING THE FAIR MARKET VALUE BY THE ASSESSING OFFICER FOR HIS CONSIDERATION. 6.5 WITH REGARD TO VALUATION OF BUILDING, JUST BECAUSE IT WAS ESTIMATED AS IF IT IS 50 YEARS OLD, THE ASSESSING OFFICER HAS ESTIMATED THE MARKET VALUE OF THE BUILDING AS ON 01.04.1981 AT .100 PER SQ. FT. HOWEVER, THE ASSESSING OFFICER DID NOT REFUTE AS TO WHY THE OLD BUILDING COULD NOT FETCH EVEN .200/ - PER SQ. FT. HE HAS NOT GIVEN ANY FINDING AS TO WHETHER HE HAS INSPECTED THE BUILDING OR THE BUILDING IS IN DILAPIDATED CONDITION TO FIX THE LOWER PRICE . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS N OT DISPUTED ABOUT THE USAGE OF BUILDING AS EYE SURGERY CLINIC AND IT IS QUITE COMMON TO MAKE I.T.A. NO . 2327 / M/ 1 6 8 IMPROVEMENT TO THE STRUCTURE AS NEED TO SUIT TO USE AS OPHTHALMIC SUR GER Y. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO ADOPT THE MARKET VALUE AS ON 01.04.1981 AT .200/ - PER SQ. FT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO WORK OUT THE TAXABLE CAPITAL GAINS AFTER OBTAINING THE RATES FOR THE LAND AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSE SSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PART ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 20 TH JANUARY , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 20 . 0 1 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.