S.K.Kannappan, Coimbatore V. ACIT, Coimbatore

ITA 2392/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7792 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 24-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-09-2014
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 50C; 54

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2392/MDS/2014 / ASSESSMENT YEAR :20 1 0 - 1 1 SHRI S.K. KANNAPPAN, NO. 11, SRI RAM AVENUE (BEHIND KTVR APARTMENTS), AVINASHI ROAD, PAPPANAICKENPALAYAM, COIMBATORE 641 037. [PAN: A K JPK2452R ] VS. THE ASSISTA NT COMMISSIONER OF INCOME TAX , CIRCLE III, C OIMBATORE. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR, C.A. / RESPONDENT BY : DR. B. NISCHAL, J CIT / DATE OF HEARING : 24 . 0 2 .201 6 / DATE OF P RONOUNCEMENT : 09 . 0 3 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) I , COIMBATORE , DATED 06 . 05 .20 14 RELEVANT TO THE ASSESSMENT YEAR 2010 - 11. THE FIRST EFFECTIVE GROUND RAISED IN THE APPEAL RELATES TO CONFIRMATION OF DISALLOWANCE UNDER SECTION 50C OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AND THE SECOND GROUND I S WITH REGARD TO CONFIRMATION OF DENIAL OF EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT. I.T.A. NO. 2392/M/14 2 2. THE APPEAL OF THE ASSESSEE IS FOUND TO HAVE BEEN FILED LATE BY 47 DAY S . THE ASSESSEE HAS FILED AN AFFIDAVIT IN SUPPORT HIS CONDONATION PETITION FOR CONDONATION OF DELAY. BY PLEADING THE REASONS STATED IN THE AFFIDAVIT, THE LD. COUNSEL FOR THE ASSESSEE HAS REQUESTED FOR CONDONING THE DELAY AND TO ADMIT THE APPEAL FOR HEARING. THE LD. DR DID NOT SERIOUSLY OBJECT TO THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESS EE . WE HAVE CONSIDERED THE AFFIDAVIT FILED BY THE ASSESSEE AND FIND THAT THERE IS SUFFICIENT CAUSE FOR CONDONING DELAY. ACCORDINGLY, WE CONDONE THE DELAY OF ONE DAY IN FILING THE APPEAL AND ADMIT THE APPEAL FOR HEARING. 3 . BRIEFLY STATED FACTS OF THE CA SE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVING INCOME FROM BUSINESS, HOUSE PROPERTY, CAPITAL GAINS AND OTHER SOURCES; E - FILED HIS RETURN FOR THE ASSESSMENT YEAR 2010 - 11 ON 29.09.2010 ADMITTING TOTAL INCOME OF .41,96,920/ - . THE RETURN FILED BY THE ASS ESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 07.05.2011 AND SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT DATED 26.08.2011 WAS SERVED ON THE ASSESSEE ON 05.09.2011. IN RESPONSE TO 143(2) NOTICE, THE A SSESSEE HAS FILED ALL THE DETAILS CALLED FOR. AFTER EXAMINING THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ASSESSING TOTAL INCOME OF THE ASSESSEE AT .1,35,78,412/ - BY MAKING VARIOUS ADDITIONS. I.T.A. NO. 2392/M/14 3 4. 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 OF THE ASSESSEE. 5. AGGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE FIRST EFFECTIVE GROUND RAISED BEFORE THE TRIBUNAL IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE UNDER SECTION 50C OF THE ACT. THE ASSESSEE ALONG WITH HIS WIFE AND TWO SONS HAVE EXECUTED A SALE DEED FOR .3,00,00,000/ - ON 30.11.2009. THE ASSESSEE HELD 3/8 TH SHARE IN THE SAID PROPERTY. ON VERIFICATION OF THE SALE DEED, IT WAS NOTICED THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY WAS MORE THAN THE CONSIDERATION SAID T O HAVE BEEN RECEIVED ON TRANSFER OF CAPITAL ASSET. FINDING THAT THE SALE CONSIDERATION WAS UNDER - REPORTED, A LETTER WAS SENT TO THE SUB - REGISTRAR, PEELAMEDU, COIMBATORE ON 03.12.2012 REQUESTING HIM TO FURNISH THE GUIDELINE VALUE OF THE PROPERTY AND COPY OF THE SALE DEED TO ASCERTAIN THE VALUE ADOPTED FOR REGISTRATION PURPOSE. VIDE LETTER DATED 05.12.2012, IT WAS INFORMED THAT THE GUIDELINE VALUE OF THE PROPERTY AT .3,65,11,810/ - WAS ADOPTED BY THE SUB - REGISTRAR, PEELAMEDU FOR REGISTRATION PURPOSE. THE AR OF THE ASSESSEE GAVE A WRITTEN SUBMISSION ON 07.02.2013 STATING HIS OBJECTIONS FOR ADOPTING 50C VALUES AND REQUESTED TO REFER TO DEPARTMENT VALUATION OFFICER. I.T.A. NO. 2392/M/14 4 7. IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50C(2)(B) OF THE ACT, TO ASCERTAIN AS TO WHETHER, THE VALUE FIXED BY THE STAMP VALUATION AUTHORITY WAS DISPUTED BY THE PARTIES CONCERNED IN ANY APPEAL OR REVISION OR REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUT HORITY, A LETTER WAS ADDRESSED TO SUB - REGISTRAR, PEELAMEDU. ACCORDINGLY, VIDE HIS LETTER DATED 06.03.2013, THE SUB - REGISTRAR HAS REPLIED THAT THE BUYER HAS DISPUTED THE GUIDELINE VALUE AND THEREFORE, THE DOCUMENT WAS REFERRED TO THE DISTRICT REVENUE OFFICE R (STAMP) FOR FIXING THE CORRECT VALUE. THE DRO (STAMP) FIXED THE VALUE AT .3,65,11,810/ - AND THE BUYER PAID THE DIFFERENCE IN STAMP DUTY AND COLLECTED THE DOCUMENT. 8. IN VIEW OF THE SPECIFIC WRITTEN REQUEST MADE BY THE AR OF THE ASSESSEE ON 07.02.201 3, THE ASSESSING OFFICER HAS REFERRED THE PROPERTY FOR VALUATION TO THE DEPARTMENTAL VALUATION OFFICER AND THE DVO VALUED THE PROPERTY AT .3,05,54,500/ - VIDE HIS REPORT DATED 07.03.2013. 9. WITH REGARD TO VALUATION OF THE PROPERTY, THE ASSESSING OFFICE R HAS ADOPTED THE GUIDELINE VALUE AS FIXED BY THE DRO (STAMPS) FOR THE PURPOSE OF VALUATION OF STAMP DUTY AT . 3,65,11,810/ - FOR THE PURPOSE 50C VALUE ALSO. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 10. BY RELYING ON THE D ECISION IN THE CASE OF CIT V. DR. INDRA SWAROOP BHATNAGAR [2012] 349 ITR 210 (RAJ), THE LD. COUNSEL FOR THE ASSESSEE HAS I.T.A. NO. 2392/M/14 5 SUBMITTED THAT THE VALUE DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER SHOULD BE ADOPTED SINCE THE VALUE DETERMINED BY THE DISTRICT REVENUE OFFICER (STAMPS) FIXING THE VALUE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY ONLY. BY RELYING ON THE DECISION OF THE PUNE BENCHES OF THE TRIBUNAL IN THE CASE OF RAHUL CONSTRUCTION 38 DTR 19, WHICH HAS FOLLOWED THE RATIO LAID DOWN BY THE HON BLE SUPRE ME COURT IN THE CASE OF C.B. GAUTHEM 199 ITR 530, WHEREIN THE TRIBUNAL HAS HELD THAT THERE SHOULD NOT BE ADDITION TO THE CONSIDERATION RECEIVED WHEN THE DIFFERENCE BETWEEN THE APPARENT CONSIDERATION AND THE FAIR MARKET VALUE OF THE PROPERTY FIXED IS LESS T HAN 15%, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN THE ASSESSEE S CASE, THE APPARENT CONSIDERATION IS .3,00,00,000 AND THE VALUE FIXED BY THE DVO IS .3,05,54,500/ - . SINCE THE DIFFERENCE IS LESS THAN 15%, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT GOING BY THE RATIO LAID DOWN BY THE PUNE BENCHES OF THE TRIBUNAL; THERE SHOULD NOT BE ANY ADDITION. IT WAS FURTHER ARGUED THAT IN THE CASE OF SMT. BHARTI JAYESH SANGANI V. ITO 138 TTJ 661 (MUM) AND IN THE CASE OF ITO V. MRS. GITA ROY 17 ITR 431 (KOL - TRIB), BOTH THE BENCHES OF THE TRIBUNAL HAVE HELD THAT WHEN THE VALUE FIXED BY THE DVO IS LESS THAN THE ONE DETERMINED IN THE STAMP DUTY PROCEEDINGS, THE VALUE FIXED BY THE DVO IS TO BE ADOPTED BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL FO R THE ASSESSEE. WE HAVE PERUSED THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE I.T.A. NO. 2392/M/14 6 ASSESSEE IN THE CASE OF CIT V. DR. INDRA SWAROOP BHATNAGAR (SUPRA), WHEREIN, THE HON BLE RAJASTHAN HIGH COURT HAS OBSERVED AND HELD AS UNDER: SECTION 50C OF THE INCOME - TAX A CT, 1961, WAS INSERTED WITH EFFECT FROM APRIL 1, 2003. IT PROVIDES THAT WHERE THE CONSIDERATION DECLARED TO BE RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STA TE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION, AND CAPITAL GAINS SHALL BE COMPUTED ACCORDINGLY UNDER SECTION 48 OF THE ACT. IT IS FURTHER PROVIDED THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE RELEVANT ASSET TO A VALUATION OFFICER IN ACCORDANCE WITH SECTION 55A. GENERALLY, WHEN THE ASSESSING OFFICER HAS OBTAINED THE REPORT OF THE DISTRICT VALUATION OFFICER IT IS BINDING ON HIM. THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF HIS PROPERTY IN DECEMBER 2001. THE S ALE DEED WAS REGISTERED ON APRIL 27, 2002. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 50C FOR SUBSTITUTION OF THE RECORDED SALE CONSIDERATION OF RS. 51,75,000 WITH RS. 1,38,00,000 BEING THE VALUATION DONE BY THE STAMP VALUATION AUTHORITIES. TH E ASSESSEE TOOK THE PLEA UNDER SECTION 50C(2) OF THE ACT AND CLAIMED THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES EXCEEDED THE FAIR MARKET VALUE AS ON THE DATE OF THE TRANSFER. THE ASSESSEE ALSO SUBMITTED A REPORT OF THE ASSESSEE'S REGISTERED VALUE R WHO VALUED THE PROPERTY AT RS. 48,37,500 AS ON THE DATE OF TRANSFER. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED AND HE REJECTED THE REPORT SUBMITTED BY THE ASSESSEE'S VALUER AND FINALLY REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER TO O BTAIN THE FAIR MARKET VALUE. THE DEPARTMENTAL VALUATION OFFICER VALUED THE PROPERTY IN QUESTION AT RS. 58,50,000 BUT THE ASSESSING OFFICER REJECTED THE DEPARTMENTAL VALUATION OFFICER'S REPORT. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HELD THAT THE VALUA TION BY THE DEPARTMENTAL VALUATION OFFICER HAD TO BE ADOPTED. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER HAD TO BE ADOPTED. 11. FURTHER, THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF SMT. BHARTI JAYESH SANGANI V. ITO (SUPRA) HAS HELD AS UNDER: I.T.A. NO. 2392/M/14 7 11. THE MOOT QUESTION IS - CAN THE AO DISREGARD THE VALUE DETERMINED BY THE DVO AND PROCEED TO COMPUTE LONG TERM CAPITAL GAIN IN ACCORDANCE WITH THE VALUE DETERMINED BY STAMP VALUATION AU THORITY ? THE ANSWER TO THIS QUESTION IS EMBEDDED IN SUB - S. (2) OF S. 50C ITSELF WHICH PROVIDES THAT : ' WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB - SS. (2), (3), (4), (5) AND (6) OF S. 16A, .OF THE WT ACT, 1957 (27 OF 1957), SHALL, WITH N ECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE AO UNDER SUB - S. (1) OF S. 16A OF THE ACT'. LET US FIND OUT THE DIRECTIVE OF SUB - SS. (2) TO (6) OF S. 16A OF THE WT ACT, 1957, WHICH CAN BE CULL ED OUT FROM THE TEXT OF THE PROVISION, AS UNDER : '16A. REFERENCE TO VALUATION OFFICER. (1) .. (2) FOR THE PURPOSE OF ESTIMATING THE VALUE OF ANY ASSET IN PURSUANCE OF A REFERENCE UNDER SUB - S. (1), THE VALUATION OFFICER MAY SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM TO PRODUCE OR CAUSE TO BE PRODUCED ON A DATE SPECIFIED IN THE NOTICE SUCH ACCOUNTS, RECORDS OR OTHER DOCUMENTS AS THE VALUATION OFFICER MAY REQUIRE. (3) WHERE THE VALUATION OFFICER IS OF OPINION THAT THE VALUE OF THE ASSET HAS BEEN CORRECTLY DECLARED IN THE RETURN MADE BY THE ASSESSEE UNDER S. 14 OR S. 15, HE SHALL PASS AN ORDER IN WRITING TO THAT EFFECT AND SEND A COPY OF HIS ORDER TO THE (AO) AND TO THE ASSESSEE. (4) WHERE THE VALUATION OFFICER IS OF OPINION THAT THE VALUE OF THE ASSET IS H IGHER THAN THE VALUE DECLARED IN THE RETURN MADE BY THE ASSESSEE UNDER S. 14 OR, S. 15, OR WHERE THE ASSET IS NOT DISCLOSED; OR THE VALUE OF THE ASSET IS NOT DECLARED IN SUCH RETURN OR WHERE NO SUCH RETURN HAS BEEN MADE, THE VALUATION OFFICER SHALL SERVE A NOTICE ON THE ASSESSEE INTIMATING THE VALUE WHICH HE PROPOSES TO ESTIMATE AND GIVING THE ASSESSEE AN OPPORTUNITY TO STATE, ON A DATE TO BE SPECIFIED IN THE NOTICE, HIS OBJECTIONS EITHER IN PERSON OR IN WRITING BEFORE THE VALUATION OFFICER AND TO PRODUCE O R CAUSE TO BE PRODUCED ON THAT DATE SUCH EVIDENCE AS THE ASSESSEE MAY RELY IN SUPPORT OF HIS OBJECTIONS. (5) ON THE DATE SPECIFIED IN THE NOTICE UNDER SUB - S. (4), OR AS SOON THEREAFTER AS MAY BE, AFTER HEARING SUCH EVIDENCE AS THE ASSESSEE MAY PRODUCE AND AFTER CONSIDERING SUCH EVIDENCE AS THE VALUATION OFFICER MAY REQUIRE ON ANY SPECIFIED POINTS AND AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED, THE VALUATION OFFICER SHALL, BY ORDER IN WRITING, ESTIMATE THE VALUE OF THE ASSET AND SE ND A COPY OF HIS ORDER TO THE (AO) AND TO THE ASSESSEE. (6) ON RECEIPT OF THE ORDER UNDER SUB - S. (3) OR SUB - S. (5) FROM THE VALUATION OFFICER, THE (AO) SHALL, SO FAR AS THE VALUATION OF THE ASSET IN QUESTION IS CONCERNED, PROCEED TO COMPLETE THE ASSESSMENT IN CONFORMITY WITH THE ESTIMATE OF THE VALUATION OFFICER.' 12. AS PER SUB - S. (1) OF S. 16A, THE AO HAS BEEN EMPOWERED TO REFER THE VALUATION OF ANY ASSET TO THE VALUATION OFFICER WHERE THE VALUE OF THE ASSET AS RETURNED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER BUT THE AO IS OF THE OPINION THAT THE VALUE SO RETURNED IS LESS THAN ITS FAIR MARKET VALUE. CLAUSE (B) OF SUB - S. (1) FURTHER EMPOWERS THE AO TO MAKE REFERENCE FOR THE VALUATION OF ANY ASSET WHERE THE AO IS O F I.T.A. NO. 2392/M/14 8 THE OPINION THAT THE FAIR MARKET VALUE EXCEEDS THE VALUE OF THE ASSET AS RETURNED BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS RETURNED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF. APART FROM THAT, THE AO IS ALSO AUTHORIZ ED TO MAKE REFERENCE TO THE DVO WHERE HE IS OF THE OPINION THAT IT IS NECESSARY SO TO DO CONSIDERING THE NATURE OF ASSET AND OTHER RELEVANT CIRCUMSTANCES. THUS SUB - S. (1) OF S. 16A EMPOWERS THE AO TO MAKE REFERENCE TO THE DVO IN CERTAIN CIRCUMSTANCES. AS P ER SUB S. (2) OF S. 16A, THE DVO MAY SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM TO PRODUCE ACCOUNTS, RECORDS OR OTHER DOCUMENTS AS HE MAY REQUIRE. SUB - S. (3) REQUIRES THE DVO TO PASS AN ORDER ACCEPTING THE VALUE OF THE ASSET AS CORRECTLY DECLARED IN THE RETURN, IN A CASE WHERE HE IS SO SATISFIED. SUB - S. (4) AUTHORIZES THE DVO TO PROCEED TO ESTIMATE THE VALUE, WHERE HE IS OF THE OPINION THAT THE VALUE OF ASSET IS HIGHER THAN THAT DECLARED IN THE RETURN AND THEN CALL FOR OBJECTIONS OF THE ASSESSEE. SUB - S. ( 5) PROVIDES THAT THE VALUATION OFFICER SHALL ESTIMATE THE VALUE OF THE ASSET CONSIDERING THE EVIDENCE PRODUCED BY THE ASSESSEE BEFORE HIM AND THEN SEND A COPY OF HIS ORDER TO THE AO AS WELL AS THE ASSESSEE. IT CAN BE NOTICED THAT THE VALUATION OFFICER CAN PASS ORDER EITHER UNDER SUB - S. (3) WHERE HE AGREES WITH THE VALUE RETURNED BY THE ASSESSEE OR UNDER SUB - S. (5) WHERE HE IS NOT SO SATISFIED. IN THE LATER CASE, HE SHALL PASS ORDER DETERMINING THE VALUE IN THE LIGHT OF MATERIAL AND EVIDENCE BEFORE HIM AFTER ALLOWING AN OPPORTUNITY TO THE ASSESSEE. SUB - S. (6) OF S. 16A, WHICH IS MATERIAL FOR OUR PURPOSE, PROVIDES THAT ON THE RECEIPT OF ORDER UNDER SUB - S. (3) OR SUB - S. (5) FROM THE VALUATION OFFICER, THE AO SHALL, SO FAR AS VALUATION OF ASSET IN QUESTION IS CO NCERNED, 'PROCEED TO COMPLETE THE ASSESSMENT IN CONFORMITY WITH THE ESTIMATE OF THE VALUATION OFFICER'. SUB - S. (6) PROVIDES IN UNEQUIVOCAL TERMS THAT THE AO SHALL COMPLETE THE ASSESSMENT IN CONFORMITY WITH THE ESTIMATE OF DVO. THE TERM 'SHALL' USED IN SUB - S. (6) REQUIRING THE AO TO COMPLETE THE ASSESSMENT, WHEN SEEN IN JUXTAPOSITION TO THE EXPRESSION 'IN CONFORMITY WITH' THE ESTIMATE OF VALUATION OFFICER, MAKES IT ABUNDANTLY CLEAR THAT THE ASSESSMENT HAS TO BE DONE IN CONFORMITY WITH AND NOT IN DISREGARD TO THE ESTIMATE MADE BY THE VALUATION OFFICER. THE USAGE OF THE TERM 'SHALL' IN SUB - S. (6) EVIDENCES THAT THE AO HAS NO OPTION BUT TO GO BY THE ESTIMATE OF VALUATION OFFICER. IT IS NATURALLY SO FOR THE REASON THAT THE DVOS ARE EXPERTS IN THE MATTER OF VALUAT ION BY VIRTUE OF SPECIAL QUALIFICATION HELD BY THEM IN THIS FIELD. IT IS NOT OPEN TO THE AO TO SET ASIDE THE REPORT OF THE VALUATION OFFICER AND THEN GO BY HIS OWN WHIMS AND FANCIES. IF THE AO IS GIVEN LIBERTY TO DISREGARD THE REPORT OF DVO AND SUBSTITUTE HIS OWN ESTIMATE FOR THE PURPOSE OF COMPLETING ASSESSMENT, THEN THE ENTIRE SET OF PROVISIONS IN THIS REGARD WOULD BECOME OTIOSE. 13. OUR VIEW ABOUT THE BINDING NATURE OF THE REPORT OF THE DVO IN THE MATTER OF FRAMING ASSESSMENT BY THE AO IS FORTIFIED BY CIRCULAR NO. 96, DT. 25TH NOV., 1972. RELEVANT PART OF PARA 32 OF THE CIRCULAR READS AS UNDER I.T.A. NO. 2392/M/14 9 :'32. THE VALUATION OFFICERS WILL BE ASSOCIATED WITH THE VALUATION OF ASSETS AT THE STAGE OF ASSESSMENT OF WEALTH - TAX. FOR THIS PURPOSE, THE WTO MAY REFER THE MA TTER OF VALUATION OF ANY ASSET TO THE VALUATION OFFICER. THE LATTER WILL THEREUPON PROCEED TO DEAL WITH THE MATTER AND FOR THIS PURPOSE, HE WILL GIVE AN OPPORTUNITY TO THE ASSESSEE TO PRESENT HIS CASE REGARDING VALUATION OF THE ASSET. THE VALUATION WILL TH EREAFTER BE FINALISED BY THE VALUATION OFFICER AFTER CONSIDERING THE ASSESSEE S OBJECTIONS AND OTHER EVIDENCE. THE VALUATION AS MADE BY THE VALUATION OFFICER WILL BE BINDING ON THE WTO WHO WILL MAKE THE ASSESSMENT IN CONFORMITY WITH THE SAID VALUATION ' 14. IT IS CLEARLY BORNE OUT FROM THIS CIRCULAR THAT THE VALUATION MADE BY THE VALUATION OFFICER IS BINDING ON THE WTO WHO WILL MAKE THE ASSESSMENT IN CONFORMITY WITH THE SAID VALUATION. SIMILAR VIEW HAS BEEN TAKEN BY SEVERAL COURTS INCLUDING THE HON BLE ALLAHABAD HIGH COURT IN M.C. KHUNNAH VS. UNION OF INDIA & ORS. (1979) 10 CTR (ALL) 275 : (1979) 118 ITR 414 (ALL) WHICH HAD THE OCCASION TO DEAL WITH SUB - S. (6) OF S. 16A IN THE FOLLOWING WORDS : 'UNDER SUB - S. (6) OF S. 16A, THE WTO HAS NO OPTION BUT T O PASS AN ORDER IN CONFORMITY WITH THE VALUATION REPORT SUBMITTED BY THE VALUATION OFFICER. EVEN IF THE ASSESSEE SUCCEEDS IN CROSS - EXAMINATION IN ESTABLISHING THAT THE VALUATION REPORT IS INCORRECT, IT WILL NOT BE OPEN TO THE WTO TO DISREGARD THE ESTIMATE OF THE VALUATION GIVEN BY THE VALUATION OFFICER IN HIS REPORT.' 15. IN LIGHT OF THE ABOVE DISCUSSION, IT IS VIVID THAT THE REPORT OF THE DVO IS BINDING ON THE AO AND THE LATTER HAS NO AUTHORITY TO SIT OVER THE JUDGMENT OF THE FORMER. IT IS BEYOND OUR CO MPREHENSION AS TO HOW THE AO CAN REFUSE TO ACCEPT THE REPORT OF DVO. WHEN THE LEGISLATURE HAS CARVED OUT SPECIFIC PROVISIONS NECESSITATING THE CREATION OF EXPLICIT WING TO DEAL WITH THE MATTER OF VALUATION OF CAPITAL ASSETS WITH THE TACIT UNDERSTANDING THA T IT IS NOT THE CUP OF TEA OF THE AOS, IT IS BUT NATURAL FOR THE ASSESSING AUTHORITIES TO RECOGNIZE AND ACCEPT THIS FACT. ALBEIT THE AO HAS EVERY RIGHT TO QUESTION THE VERACITY OF THE REPORT OF THE REGISTERED VALUER, BUT HE CANNOT DOUBT THE WORK DONE BY TH E DVO. IF THE AO IS ALLOWED TO FIND FAULTS WITH THE REPORT OF DVO AND CONSEQUENTLY IGNORE IT, AS HAS BEEN DONE IN THIS CASE, IT WOULD HAVE SERIOUS REPERCUSSION ON THE WORKING OF THE DEPARTMENT IN AS MUCH AS IT WOULD AMOUNT TO ONE WING OF THE DEPARTMENT DOU BTING THE RELIABILITY OF THE WORK ASSIGNED TO ANOTHER WING, WHICH HAS BEEN CREATED ONLY FOR THIS PURPOSE. 16. WHEN WE GO THROUGH THE MANDATE OF SUB - S. (2) OF S. 50C IT CAN BE NOTICED THAT WHERE THE ASSESSEE DISPUTES THE VALUATION OF STAMP VALUATION AUTH ORITY, THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSETS TO A VALUATION OFFICER . BUT WHEN SUCH A REFERENCE IS MADE TO THE VALUATION OFFICER, THE PROVISIONS OF SUB - SECTIONS . (6) OF S. 16A OF THE WT ACT, I.T.A. NO. 2392/M/14 10 1957 SHALL, WITH NECESSARY MODIFICATIONS, APP LY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE AO UNDER SUB - S. (1) OF S. 16A OF THAT ACT . IT IS, THEREFORE, DISCERNIBLE THAT ONCE REFERENCE IS MADE BY THE AO TO THE DVO, THEN THE SPIRIT OF S. 16A OF THE WT ACT, THAT IS, MAKING THE REPORT OF THE DVO AS BINDING ON THE AO, SHALL APPLY TO SUCH REFERENCE. THE AMBIT OF EXPRESSION WITH NECESSARY MODIFICATIONS IMPLIES STRIKING OUT THE INAPPLICABLE FRACTIONS OF THE PROVISION WHICH ALIGN STRICTLY WITH THE SPECIFICS OF THE WT ACT. IT DOES NOT AND CANNOT OUST THE APPLICATION OF THE SOUL OF S. 16A, WHICH IS THE PROCESS OF DETERMINATION OF THE VALUE OF CAPITAL ASSET BY THE DVO AND THEN MAKING SUCH REPORT AS BINDING ON THE AO. 17. THE ABOVE REFERRED PART OF S. 50C(2) REFERRING T O S. 16A OF THE WT ACT IS A PIECE OF LEGISLATION BY INCORPORATION. THE EFFECT OF LEGISLATION BY INCORPORATION IS THAT THE PROVISIONS OF THE FIRST ACT WHICH HAVE BEEN REFERRED TO IN THE SECOND ACT, BECOME PART AND PARCEL OF THE SECOND ACT. THE INTERPRETATIO N GIVEN TO SUCH PROVISION OF THE SECOND ENACTMENT BY THE COURTS HOLDS GOOD IN THE INTERPRETATION OF THE FIRST ENACTMENT. AS SUCH, THE PROVISIONS OF SUB - S. (6) OF S. 16A STIPULATING THAT THE REPORT OF DVO IS BINDING ON THE AO, IS BODILY LIFTED FROM THE WT A CT, 1957, AND STANDS INCORPORATED INTO S. 50C(2). IN THAT VIEW OF THE MATTER THE CONSTRUCTION GIVEN TO SUCH PROVISION IN THE CONTEXT OF THE WT ACT ALONG WITH THE CLARIFICATIONS GIVEN BY THE BOARD, AS DISCUSSED ABOVE, SHALL AUTOMATICALLY BECOME APPLICABLE T O THE IT ACT FOR THE LIMITED PURPOSE OF S. 50C. ONCE WE READ THE MANDATE OF SUB - S. (6) OF S. 16A IN SUB - S. (2) TO S. 50C, THERE REMAINS NO DOUBT WHATSOEVER THAT THE REPORT OF DVO IS BINDING ON THE AO. 18. NOW WE ESPOUSE THE CONTENTION MADE BY THE LEARNE D DEPARTMENTAL REPRESENTATIVE ACCENTUATING THAT SUB - S. (3) OF S. 50C CONTAINS A PROVISION AUTHORIZING THE AO TO DEPART FROM THE VALUATION REPORT. IT IS NOTED THAT THE AO HAS ALSO RELIED ON SUB - S. (3) OF S. 50C IN CANVASSING THE VIEW THAT THE REPORT OF DVO IS NOT BINDING ON HIM. AT THIS JUNCTURE IT WOULD BE RELEVANT TO TAKE NOTE OF THE PROVISIONS OF SUB - S. (3) OF S. 50C AS UNDER : '(3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB - S. (2), WHERE THE VALUE ASCERTAINED UNDER SUB - S. (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB - S. (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.' 19. FROM THE ABOVE PROVISIO N IT CAN BE NOTICED THAT WHERE THE VALUE ASCERTAINED IN SUB - S. (2), THAT IS, THE VALUE AS DETERMINED BY THE DVO ON REFERENCE MADE BY THE AO, EXCEEDS THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB - S. (1), THE N THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE BY SUCH AUTHORITY HAS TO BE TAKEN AS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF I.T.A. NO. 2392/M/14 11 THE TRANSFER. THIS SUB - SECTION APPLIES TO A SITUATION WHEREIN THE VALUE DETERMINED BY THE DVO UNDER SU B - S. (2) IS MORE THAN THE VALUE ADOPTED, ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB - S. (1). IN SUCH A SITUATION, SUBS. (3) OF S. 50C COMES TO THE RESCUE OF THE ASSESSEE BY PROVIDING THAT THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB - S. (1) SHALL BE TAKEN AS THE FULL VALUE OF CONSIDERATION. FOR EXAMPLE, IF THE SALE CONSIDERATION OF A CAPITAL ASSET IS RS. 100 AND THE VALUE AS PER STAMP VALUATION IS RS. 150. IF THE ASSESSEE OBJECTS TO THE STAMP VALUE OF RS. 150 AND EVENTUALLY REFERENCE IS MADE TO THE DVO UNDER S. 50C(2), WHO ESTIMATES THE VALUE AT RS. 160, THE VALUE UNDER SUB - S. (1), NAMELY, RS. 150 SHALL BE CONSIDERED AS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSF ER OF CAPITAL ASSET AND THE COMPUTATION OF CAPITAL GAIN UNDER S. 48 SHALL BE MADE ACCORDINGLY. IN THIS SITUATION, THE HIGHER VALUE DETERMINED BY DVO AT RS. 160 SHALL BE DISREGARDED BY VIRTUE OF THE PROVISIONS OF SUB - S. (3). 20. SUB - S. (3) OPENS WITH THE EXPRESSION SUBJECT TO THE PROVISIONS CONTAINED IN SUB - S. (2) . THE EFFECT OF THIS EXPRESSION IN THE BEGINNING OF SUB - S. (3) IS THAT THE APPLICATION OF SUB - S. (2) IS OTHERWISE UNBRIDLED BUT FOR THE SITUATION VISUALIZED IN THE AMBIT OF SUB - S. (3), VIZ., WHE RE THE VALUE AS ASCERTAINED IN SUB - S. (2) IS HIGHER THAN THE VALUE AS PER SUB - S. (1). ORDINARILY WHERE A REFERENCE IS MADE TO DVO UNDER SUB - S. (2), THE VALUE SO DETERMINED BY THE DVO IS BINDING ON THE AO. IF SUCH VALUE IS HIGHER THAN THE VALUE ADOPTED, ASS ESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY, THEN THE HIGHER VALUE SHALL BE IGNORED. IN SUCH A SITUATION, THE PROVISIONS OF SUB - S. (3) SHALL OVERRIDE THE MANDATE OF SUB - S. (2). THE LEGISLATURE IN ITS WISDOM HAS CONTEMPLATED ONLY ONE SITUATION IN S UB - S. (3) IN WHICH THE PROVISIONS OF SUB - S. (2) OF S. 50C HAVE BEEN DISPENSED WITH. IT IS ONLY WHERE THE VALUE UNDER SUB - S. (2) IS HIGHER THAN THE VALUE UNDER SUB - S. (1) THAT THE PROVISIONS OF SUB - S. (3) SHALL COME INTO PLAY. ONLY IN SUCH A SITUATION THE C OMMAND OF SUB - S. (3) IS ACTIVATED TO TAKE NO NOTICE OF THE VALUE AS DETERMINED BY THE DVO. BUT FOR THAT, THE DIRECTIVE OF SUB - S. (2) IS APPLICABLE IN ALL OTHER CASES. IN A CONVERSE SITUATION, VIZ., WHERE THE VALUE UNDER SUBS. (2) IS LOWER THAN THE VALUE UN DER SUB - S. (1), THE PROVISIONS OF SUB - S. (3) OF S. 50C HAVE NOT BEEN MADE APPLICABLE TO. THE NATURAL COROLLARY WHICH, THEREFORE, FOLLOWS IS THAT IF THE VALUE DETERMINED BY THE DVO UNDER SUB - S. (2) IS LOWER THAN THAT OF THE VALUE ADOPTED, ASSESSED OR ASSESS ABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB - S. (1), THE VALUE SO ESTIMATED UNDER SUB - S. (2) SHALL BE BINDING ON THE AO AND THE ASSESSMENT SHALL BE MADE ACCORDINGLY. IN OUR CONSIDERED OPINION BOTH THE AUTHORITIES BELOW ERRED IN TAKING SHELTER OF THE PRO VISIONS OF SUB - S. (3) OF S. 50C IN DISREGARDING THE VALUE DETERMINED BY THE DVO. COMING BACK TO THE FACTS OF THE INSTANT CASE WE FIND THAT THE ASSESSEE DECLARED SALE CONSIDERATION OF RS. 35 LAKHS ON WHICH BASIS SHE I.T.A. NO. 2392/M/14 12 DECLARED SHORT - TERM CAPITAL GAIN AT RS. 2,76,250. ON THE OTHER HAND THE DVO DETERMINED FAIR MARKET VALUE AT RS. 46.48 LAKHS, WHICH IS LOWER THAN THE VALUE FOR THE PURPOSE OF STAMP DUTY AT RS. 1.18 CRORE. AS PER THE PROVISIONS OF S. 50C(2), THE CAPITAL GAIN IS REQUIRED TO BE COMPUTED BY CONSIDER ING THE FAIR MARKET VALUE OF THE PROPERTY AT RS. 46,48,781 AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING TO THE ASSESSEE AS A RESULT OF THE TRANSFER OF CAPITAL ASSET. WE, THEREFORE, DIRECT THE AO TO COMPUTE CAPITAL GAIN ACCORDINGLY. 12. SIM ILARLY, THE KOLKATA BENCHES OF THE TRIBUNAL IN THE CASE OF MRS. GITA ROY HAS HELD AS UNDER: DURING THE ASSESSMENT YEAR 2005 - 06, THE ASSESSEE SOLD PROPERTY AND DISCLOSED SALE CONSIDERATION IN THE SALE DEED FOR HER HALF SHARE AT RS. 20 LAKHS AND COMPUTED LO NG - TERM CAPITAL GAINS AT NIL TAKING THE INDEXED COST OF ACQUISITION AT RS. 30,81,600. THE ASSESSING OFFICER NOTICED FROM THE SALE DEED THAT THE STAMP VALUATION OF THE PROPERTY WAS AT RS. 1,32,22,327. THE ASSESSING OFFICER COMPUTED THE LONG - TERM CAPITAL GAI N AT RS. 50,70,364. THE COMMISSIONER (APPEALS) DIRECTED THE ASSESSING OFFICER TO ADOPT THE VALUE OF THE PROPERTY SOLD ACCORDING TO THE DEPARTMENTAL VALUATION OFFICER REPORT FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. ON APPEAL: HELD, DISMISSING THE APPEA L, THAT THE COMMISSIONER (APPEALS) HAD REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER FOR ASCERTAINING THE FAIR MARKET VALUE, WHO ASCERTAINED THE FAIR MARKET VALUE AT RS. 30,87,675 AS AGAINST THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES AT RS . 1,33,22,222. IN VIEW OF THE PROVISIONS OF SECTION 50C(2) OF THE INCOME - TAX ACT, 1961, SINCE THE FAIR MARKET VALUE AS ASSESSED BY THE DEPARTMENTAL VALUATION OFFICER WAS LOWER THAN THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES FOR COLLECTING STAMP DUTY T HE VALUE SO ADOPTED BY THE DEPARTMENTAL VALUATION OFFICER HAD TO BE ADOPTED BY THE ASSESSING OFFICER FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS. THERE WAS NO FAULT IN THE ORDER OF THE COMMISSIONER (APPEALS). 13. IN VIEW OF THE ABOVE JUDICI AL PRONOUNCEMENTS OF THE TRIBUNAL AS WELL AS THE DECISION IN THE CASE OF CIT V. DR. INDRA SWAROOP BHATNAGAR (SUPRA), WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER BY DIRECTING THE ASSES SING OFFICER TO ADOPT THE VALUE DETERMINED BY THE DVO. I.T.A. NO. 2392/M/14 13 14. THE NEXT ISSUE RAISED IN THE GROUNDS OF APPEAL OF THE ASSESSEE RELATES TO CONFIRMATION OF DISALLOWANCE OF CLAIM OF DEDUCTION MADE UNDER SECTION 54 OF THE ACT. THE ASSESSEE HAS CLAIMED EXEMPTION OF . 55,67,882/ - UNDER SECTION 54 OF THE ACT. ACCORDINGLY, THE ASSESSEE WAS ASKED TO FURNISH DETAILS ON THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT AND THE ASSESSEE ALSO FURNISHED THE DETAILS. FROM THE HOUSE PROPERTY TAX FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS PAID PROPERTY TAX RIGHT FROM THE FINANCIAL YEAR 2007 - 08, WHICH SHOWS THAT THE CONSTRUCTION OF HOUSE WAS COMPLETED PRIOR TO 01.04.2007, I.E . , BEFORE THE TRANSFER TOOK PLACE. THE ASSESSING OFFICER HAS OBS ERVED THAT THE SALE DEED WAS EXECUTED DURING THE FINANCIAL YEAR 2009 - 10, BUT THE CONSTRUCTION OF HOUSE WAS COMPLETED DURING THE FINANCIAL YEAR 2007 - 08 ITSELF. WITH REGARD TO THE ABOVE, THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ASSESS EE HAS ENTERED INTO ORAL AGREEMENT WITH REAL VALUE PROMOTERS PVT. LTD. FOR SALE OF 3/8 TH SHARE OF THE PROPERTY, WHICH WAS OWNED BY THE ASSESSEE ONLY ON 03.12.2008 AS PER SETTLEMENT DEED DATED 03.12.2008 [I.E. MUCH BEFORE BECOMING OWNER OF THE SAID PROPERTY , THE ASSESSEE ENTERED INTO ORAL AGREEMENT FOR SALE OF THE PROPERTY] AND RECEIVED AMOUNTS, WHICH WAS UTILIZED FOR THE CONSTRUCTION OF THE HOUSE IN THE FINANCIAL YEAR 2007 - 08. THE ASSESSING OFFICER HAS NOT ACCEPTED THE ABOVE PECULIAR SUBMISSIONS MADE BY THE ASSESSEE AND ACCORDINGLY, DISALLOWED THE CLAIM OF .55,67,882/ - I.T.A. NO. 2392/M/14 14 MADE UNDER SECTION 54 OF THE ACT. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 15. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS TRIED TO CONVINCE TO BELIEVE T HAT PRIOR TO BECOMING OWNER OF THE PROPERTY [I.E. 03.12.2008], THE ASSESSEE HAS RECEIVED THE CONSIDERATION OF .1,80,00,000/ - ONLY BASED ON THE ORAL AGREEMENT AND CONSTRUCTED THE HOUSE PRIOR TO 01.04.2007 AND TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 5 4 OF THE ACT WHEN THE ACTUAL SALE WAS TOOK PLACE VIDE SALE DEED DATED 30.11.2009. 16. IN THIS CASE, THE ASSESSEE GOT 3/8 TH SHARE OF THE PROPERTY AS PER THE SETTLEMENT DEED EXECUTED ON 03.12.2008. THE ASSESSEE IS STATED TO HAVE ENTERED INTO ORAL AGREEMENT WITH REAL VALUE PROMOTERS PVT. LTD. FOR SALE OF THE PROPERTY AND RECEIVED ADVANCE OF .1,80,00,000/ - AND WITH THIS ADVANCE MONEY, THE ASSESSEE HAS STATED TO HAVE CONSTRUCTED THE HOUSE PRIOR TO 01.04.2007 AS REVEALED FROM THE HOUSE PROPERTY TAX RECEIPT FUR NISHED BY THE ASSESSEE. IT IS BEYOND IMAGINATION TO BELIEVE THAT THE ASSESSEE HAS STATED TO HAVE RECEIVED .1,80,00,000/ - ON AN ORAL AGREEMENT FOR THE SALE OF PROPERTY, WHICH WAS NOT OWNED BY HIM PRIOR TO 03.12.2008. IT IS AN UNDISPUTED FACT THAT THE ASSE SSEE BECOME OWNER OF 3/8 TH SHARE OF THE PROPERTY AS PER THE SETTLEMENT DEED DATED 03.12.2008. THE ASSESSEE SOLD THE ABOVE PROPERTY TO M/S. DAISON LAND AND DEVELOPMENT (P) LTD. VIDE SALE AGREEMENT DATED 30.11.2009. THEREFORE, IN THIS CASE THERE WAS NO TRANS FER OF CAPITAL ASSET AS I.T.A. NO. 2392/M/14 15 PER THE PROVISIONS OF SECTION 2(47) OF THE ACT PRIOR TO THE EXECUTION OF SALE DEED ON 30.11.2009. HENCE, AS THE CONSTRUCTION OF THE HOUSE WAS COMPLETED EVEN BEFORE THE ASSESSEE BECAME THE OWNER OF THE PROPERTY AND BEFORE THE SALE OF PROPERTY, WE ARE OF THE OPINION THAT THE ASSESSEE CANNOT CLAIM DEDUCTION UNDER SECTION 54 OF THE ACT. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 17 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED O N THE 9 TH MARCH , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 09 . 0 3 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.