Banabir Dasgupta, Kolkata V. Income Tax Officer-Ward-50(4), Kolkata, Kolkata

ITA 2579/KOL/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0151 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 12-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: BANABIR DASGUPTA
• Keywords: Cost of acquisition; Fair market value; Valuation report; Assessment record; Reassessment proceedings
• Section: 147; 131; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.2579/KOL/2013 ( / ASSESSMENT YEAR:2003-04) BANABIR DASGUPTA 119/28A, SARAT GHOSH, GARDEN ROAD, (KAMALA PARK), GROUND FLOOR, KOLKATA-31. VS. ITO, WARD-50(4), KOLKATA ./ ./PAN/GIR NO.: AFBPD 8584 N (ASSESSEE) .. (REVENUE) ASSESSEE BY :SHRI BANABIR DASGUPTA, RESPONDENT BY : SHRI ROBIN CHOWDHURY, ADDL. CIT SR. DR / DATE OF HEARING : 06/03/2019 /DATE OF PRONOUNCEMENT : 29/03/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAIN ING TO ASSESSMENT YEAR 2003-04, IS DIRECTED AGAINST AN ORDER PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA (IN SHORT THE LD. CIT(A)], WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE AS SESSING OFFICER U/S 144 / 147 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 30.12.2009. 2. HOWEVER IN THIS APPEAL, THE ASSESSEE HAS RAISED A MULTIPLE GROUNDS OF APPEAL BUT AT THE TIME OF HEARING, THE MAIN GRIEVANCE OF THE A SSESSEE HAS BEEN CONFINED TO THE BANABIR DASGUPTA ITA NO.2579/KOL/2013 ASSESSMENT YEAR:2003-04 P PP PA AA AG GG GE EE E | || | 2 22 2 ISSUE OF COMPUTATION OF LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS TAKEN THE INDEXED COST OF ACQUISITION OF RS. 1,68,570/- INSTEAD OF RS. 14, 40,000/- BEING THE VALUATION REPORT FILED BY THE ASSESSEE. 3. BRIEF FACTS QUA THE ISSUE ARE THAT OWING TO THE DEMISE OF SMT. NILIMA DASGUPTA AND THE FACT THAT SHRI BANABIR DASGUPTA DID NOT SUB MIT RELEVANT DETAILS AT ANY STAGE AND DUE TO THE FACT THAT THE MATTER IS VERY OLD, TH E ACTUAL FACTS OF THE CASE ARE NOT COLLATED ANYWHERE. THEREFORE, THE RELEVANT FACTS AR E CULLED OUT FROM THE ASSESSMENT RECORDS, COURT PROCEEDINGS, BANK INQUIRIES AND ALSO FROM INFORMATION GATHERED U/S 131 OF THE ACT ETC. BY THE ASSESSING OFFICER. THE A SSESSEE IS THIS CASE WAS LATE SMT. NILIMA DASGUPTA, WIFE OF LATE SACHINDRA MOHAN DASGUPTA. IN THE REASSESSMENT PROCEEDINGS AS WELL AS IN THE APPELLAT E PROCEEDINGS, HER ESTATE IS BEING REPRESENTED BY HER SON SH. BANABIR DASGUPTA. THE FACTS DETAILED ABOVE MAKE IT CLEAR THAT LATE SMT. NILIMA DASGUPTA HAD SOLD HE R PROPERTY AND THERE WAS AN ELEMENT OF LONG TERM CAPITAL GAINS INVOLVED. AS SHE HAS NOT DISCLOSED THIS TRANSACTION IN HER INCOME TAX RETURNS, REASSESSMENT PROCEEDINGS WERE DULY INITIATED AND THE CAPITAL GAINS WERE REQUIRED TO BE TAXED. SI NCE SMT NILIMA DASGUPTA HAS EXPIRED, HER SON AND THE INHERITOR TO THE ESTATE SH . BANABIR DASGUPTA WAS RIGHTLY SUBSTITUTED AS THE LEGAL HEIR/REPRESENTATIVE. HOWEV ER THE A.O. COMMITTED AN ERROR OF JUDGMENT IN HOLDING THE REASSESSMENT ORDER AS PR OTECTIVE. THE CAPITAL GAINS ARE NOT REQUIRED TO BE TAXED IN THE HANDS OF ANY OTHER PERSON. THEREFORE IT IS HELD AND DIRECTED THAT THE A. O. SHOULD CONSIDER THE REASSES SMENT ORDER AS HAVING PASSED IN THE HANDS OF SH BANABIR DASGUPTA AS LEGAL HEIR/REP RESENTATIVE OF LATE SMT. NILIMA DASGUPTA IN SUBSTANTIVE CAPACITY ONLY. 4. COMPUTATION OF LONG TERM CAPITAL GAINS BY ASSESS ING OFFICER. THE ASSESSING OFFICER NOTED THAT THE FACT THAT SMT NILIMA DASGUPT A ENTERED INTO AN AGREEMENT TO SALE ON 13.7.1971 IS NOT RELEVANT TO THE COMPUTATIO N OF CAPITAL GAINS AS NO TRANSFER OF PROPERTY TOOK PLACE EVEN UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. ON THIS DATE ONLY AN INCHOATE RIGHT WAS AVAILABLE TO THE BUYER TO EITHER FORCE SPECIFIC PERFORMANCE OR CLAIM COMPENSATION OR EVEN CANCEL THE AGREEMENT. BANABIR DASGUPTA ITA NO.2579/KOL/2013 ASSESSMENT YEAR:2003-04 P PP PA AA AG GG GE EE E | || | 3 33 3 LATER ON, COURT REVERSES AND SUCCESS IN APPEAL LED TO REGISTRATION OF THE SAID PROPERTY IN THE HANDS OF SMT NILIMA DASGUPTA ONLY O N 21.9.1981 WHICH IS THE DAY WHEN SMT. NILIMA DASGUPTA BECAME THE LEGAL OWNER OF AN IMMOVABLE PROPERTY IN THE REAL SENSE AND AS PER THE INDIAN REGISTRATION A CT, 1908. HERE IT IS NECESSARY TO MENTION THAT SMT NILIMA DASGUPTA HAD FILED A MONEY APPEAL NO. 1 OF 1991 BEFORE THE 12TH COURT OF THE ADDITIONAL DISTRICT JUDGE AT ALIPORE ARISING OUT OF A MONEY SUIT NO 22 OF 1982 DATED 8.9.1990. THE MONEY SUIT W AS FILED BY SMT NILIMA DASGUPTA TO GET MESNE PROFITS IN THE SHAPE OF, RENT FROM THE PROPERTY'S TENANTS FROM 2.8.1979 TO AUGUST 1982. ON APPEAL, COURT HAS HELD THAT SMT NILIMA DASGUPTA ACQUIRED PERFECT RIGHT, TITLE AND INTEREST IN THE S UIT PROPERTY FROM THE DATE OF EXECUTION OF THE THREE SALE DEEDS ON 16.9.1981 AND THE LATE SMT NILIMA DASGUPTA WAS GRANTED MESNE PROFITS FOR THE PERIOD RUNNING FR OM 16.9.1981 TO 3.6.1982 I.E. DATE OF FILING OF THE MONEY SUIT. THEREFORE THE APP EAL SUIT ALSO CONFIRMS THAT SMT NILIMA DASGUPTA BECAME THE OWNER OF THE JODHPUR PAR K PROPERTY ONLY AFTER THE THREE SALE DEEDS WERE EXECUTED BY THE COURT AND NOT EARLIER. THE COST OF THE JODHPUR PARK PROPERTY IS COMPUTED AS UNDER: PURCHASE CONSIDERATION: RS. 1,52,000/- COST OF STAMP RS. 16,570/- TOTAL RS.1,68,570/- 5. SINCE THE LATE SMT. NILIMA DASGUPTA BECAME THE O WNER OF THE PROPERTY ONLY AFTER THE CUT OFF DATE OF 1.4.1981 SHE WAS NOT ENTI TLED TO ANY BENEFIT OF SUBSTITUTING THE FAIR MARKET VALUE AS PROVIDED BY SECTION 55(2)( B) OF THE ACT. FOR THIS REASON, THE CLAIM OF THE ASSESSEE THAT THE VALUATION OF THE PROPERTY BE TAKEN AS PER THE VALUATION REPORT FILED BY THE ASSESSEE DECLARING TH E FAIR MARKET VALUE OF THE JODHPUR PARK PROPERTY AT RS. 14,40,000/- ON 1.4.198 1 CANNOT BE ACCEPTED. THE INDEXED COST OF ACQUISITION AS PER' SECTION 48 OF T HE ACT COMES TO RS. 1,68,570/- * 406/100 I.E. RS. 684394/-. THE SALE CONSIDERATION O F THE PROPERTY IS RS. 43,50,000/- AS DETAILED ABOVE. 6. THEREFORE THE CALCULATION OF LONG TERM CAPITAL G AINS WAS MADE BY ASSESSING OFFICER AS UNDER: BANABIR DASGUPTA ITA NO.2579/KOL/2013 ASSESSMENT YEAR:2003-04 P PP PA AA AG GG GE EE E | || | 4 44 4 SALE CONSIDERATION RS.43,50,000/- LESS: INDEXED COST OF ACQUISITION RS. 6,84,394/- LONG TERM CAPITAL GAINS RS. 36,65,606/- 7. THE ASSESSING OFFICER THEN COMPUTED DEDUCTION U/S 5 4 OF THE ACT.AS THE ASSESSEE HAD WITHIN ONE YEAR FROM THE DATE OF TRANS FER OF THE JODHPUR PARK PROPERTY ON 19.10.2001 BOUGHT/ACQUIRED A FLAT NO. 2 ALONGWIT H THE UNDIVIDED IMPARTIBLE PROPORTIONATE SHARE OF LAND MEASURING 1 COTTAH 12 C HITTAKS AT SE, RAIPUR ROAD EAST, KOLKATA 700 032 FOR A TOTAL CONSIDERATION OF RS. 6,30,000/- AS PER THE REGISTERED DEED OF CONVEYANCE DATED 29.1.2002, THE DEDUCTION U/S 54 IS COMPUTED AS UNDER: PURCHASE CONSIDERATION OF THE RAIPUR ROAD (EAST) FL AT RS.6,30,000/- STAMP DUTY PAID AS PER THE REGISTERED DEED RS. 44,160/- TOTAL RS. 6,74,160/- THE BENEFIT OF OTHER REGISTRATION EXPENSES ARE NOT GIVEN IN THE ABSENCE OF EVIDENCE THEREOF. (IN THE REASSESSMENT ORDER THE A.O. HAD TA KE AN ESTIMATED COST OF ACQUISITION OF RS. 10,22,500/- WHICH WAS RECTIFIED BASED ON ACTUAL FIGURES BY ASSESSING OFFICER IN REASSESSMENT PROCEEDINGS.) TH E ASSESSING OFFICER THEN COMPUTED LONG TERM CAPITAL GAIN AS FOLLOWS: CAPITAL GAIN COMPUTED IN PARA 6 OF THIS ORDER RS . 36,65,606/- LESS: DEDUCTION U/S 54 RS. 6,74,160/- LTCG RS. 29,91,446/- 8. ON APPEAL, THE LD. CIT(A) CONFIRMED THE FINDINGS OF ASSESSING OFFICER, WITH SOME MODIFICATION. AGGRIEVED THE ASSESSEE IS IN APP EAL BEFORE US. 9. THE LD. THE LD. DR HAS PRIMARILY REITERATED THE STANDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE DISCUSSED IN OUR EARLIER PARA AND THE SAME IS NOT BEING BANABIR DASGUPTA ITA NO.2579/KOL/2013 ASSESSMENT YEAR:2003-04 P PP PA AA AG GG GE EE E | || | 5 55 5 REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER H AND THE LD. AR HAS DEFENDED THE ORDER OF THE ASSESSING OFFICER. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT AS PER THE COMPUTATION FILED BEFORE TH E BENCH AND TAKING INTO ACCOUNT THE COST OF ACQUISITION OF RS. 14,40,000/- THE ASSE SSEE HAS SUBMITTED THE FOLLOWING COMPUTATION OF LONG TERM CAPITAL GAIN WHICH READS A S FOLLOWS: SALE CONSIDERATION RS. 43,50,000/- LESS: INDEXED COST OF ACQUISITION 14,40,000/100X406 = RS. 58,46,400/- RESTRICTED TO RS. 43,50,000/- LONG TERM CAPITAL GAIN NIL WE NOTE THAT THE ASSESSEE HAS SUBMITTED THE INDEXED COST OF ACQUISITION AT RS. 14,40,000/- WHICH HAS BEEN DISPUTED BY THE ASSESSIN G OFFICER WITHOUT BRINGING ANY COGENT EVIDENCE ON RECORD. THE ASSESSING OFFICE R HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO SHOW THAT THE FAIR VALUE OF T HE PROPERTY FOR INDEXED COST OF ACQUISITION AT RS. 14,40,000/- SUBMITTED BY THE ASS ESSEE WAS NOT CORRECT. PER CONTRA, THE LD. DR FOR THE REVENUE SUBMITTED THAT T HE ASSESSEE HAD DIED AND THE ASSESSMENT WAS BEING MADE IN THE HANDS OF THE LEGAL HEIR THEREFORE THE INDEXED COST OF ACQUISITION SHOULD BE TAKEN, AFTER TAKING I NTO ACCOUNT ALL THE CIRCUMSTANCES, THEREFORE LD. DR FAIRLY AGREED THAT THE COST OF ACQ UISITION SHOULD BE RS. 14,40,000/- AND HENCE THE INDEXED COST OF ACQUISITION SHOULD BE WORKED OUT BASED ON RS. 14,40,000/- WHICH COMES TO THE TUNE OF RS. 58,46,40 0/- . WE NOTE THAT THE ASSESSING OFFICER HAS FAILED TO BRING ANY COGENT EV IDENCE ON RECORD TO PROVE THAT THE COST OF ACQUISITION SUBMITTED BY THE ASSESSEE I S FALSE AND NOT BASED ON THE EVIDENCE THEREFORE TO MEET THE END OF JUSTICE WE TA KE INTO ACCOUNT THE COST OF ACQUISITION OF RS. 14,40,000/- FOR COMPUTATION OF LONG TERM CAPITAL GAIN. THE INDEXED COST OF ACQUISITION TAKING INTO ACCOUNT THE COST OF ACQUISITION OF RS. 14,40,000/- COMES TO RS. 58,46,400/- HOWEVER THE SA LE CONSIDERATION OF RS. 43,50,000/- IS LESS THAN INDEXED COST OF ACQUISITIO N THEREFORE THE INDEXED COST OF ACQUISITION WILL BE RESTRICTED TO RS. 43,50,000/- A ND AS A RESULT THERE WOULD NOT BE BANABIR DASGUPTA ITA NO.2579/KOL/2013 ASSESSMENT YEAR:2003-04 P PP PA AA AG GG GE EE E | || | 6 66 6 ANY LONG TERM CAPITAL GAIN. HENCE WE DELETE THE ADD ITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) ON ACCOUNT OF LONG TERM CAPITAL GAIN. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AS PER THE DISCUSSION MADE (SUPRA). ORDER PRONOUNCED IN THE COURT ON 29.03.2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 29/03/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. BANABIR DASGUPTA 2. ITO, WARD-50(4), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES