Shri Jethanand T. Datwani, Surat V. Income Tax Officer (International taxation), Surat

ITA 264/SRT/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2668 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 24-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPMA SINGLA
• Keywords: Fair market value; Valuation report
• Section: 22; 147; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO. 264/SRT/2017 (AY 2009-10) (H EARING IN VIRTUAL COURT) SHRI JETHANAND T. DATWANI, 401, ALAY APARTMENT, ANCHAL PLOT, CITYLIGHT ROAD, SURAT. PAN : AKMPD4805C VS THE ITO (INTERNATIONAL TAXATION), ANAVIL BUSINESS CENTER, ROOM NO. 107, ADAJANHAJIRARAOD, SURAT. ASSESSEE / APPELLANT REVENUE /RESPONDENT ASSESSEE BY SH. BHARAT JHAVERI- ADVOCATE REVENUE BY MS. ANUPMA SINGLA SR. DR DATE OF HEARING 18.06.2021 DATE OF PRONOUNCEMENT 22 .06.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-13, AHMEDABADDATED 08.09.2018 FOR ASSESSMENT YEAR (AY) 2008-09 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON FACTS AND IN LAW, THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN CONFIRMING THE ASSESSMENT ORDER MADE BY THE ASSESSING OFFICER. 2. ON THE FACT & CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, YOUR APPELLANT PRAYS THAT THE ASSESSING OFFICER MAY BE DIRECTED TO TAKE THE DATED OF ALLOTMENT FOR THE PURPOSE OF LONG TERM CAPITAL GAIN. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON-RESIDENT INDIAN (NRI). NO RETURN OF INCOME WAS FILED BY ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ITA NO. 264/SRT/2017 SHRI JETHANAND T. DATWANI(AY 2009-10) 2 THE CASE OF ASSESSEE WAS RE-OPENED UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT]. NOTICE UNDER SECTION 148 OF THE ACT DATED 28.04.2014 WAS SERVED UPON THE ASSESSEE. THE CASE OF ASSESSEE WAS RE-OPENED ON THE BASIS OF INFORMATION RECEIVED THAT ASSESSEE HAS SOLD A PROPERTY ON 22.07.2008 FOR A CONSIDERATION OF RS. 72,00,000/- AGAINST THE MARKET VALUE AT RS. 1.34 CRORE, DETERMINED BY STAMP VALUATION AUTHORITY. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER (AO) RECORDED THE REASONS FOR RE-OPENING BY TAKING VIEW THAT THE CASE OF ASSESSEE REQUIRES DEEP INVESTIGATION. THE ASSESSEE REQUESTEDFOR REASONS RECORDED, THE REASONS RECORDED WERE SUPPLIED TO THE ASSESSEE ON 18.12.2014. IN RESPONSE TO THE NOTICE UNDER SECTION 148, THE ASSESSEE FILED HIS RETURN OF INCOME ON 27.11.2014 DECLARING INCOME OF RS. 1.35 LAKHS AND DECLARED LONG TERM CAPITAL LOSS (LTCL) OF RS. 15,80,021/-. THE AO ISSUED CERTAIN QUESTIONNAIRE FOR SEEKING CLARIFICATION ON WORKING OF LTCL ON SALE OF PROPERTY AT RS. 72,00,000/- AGAINST THE STAMP DUTY VALUATION OF RS. 1.34 CRORE. THE AO ALSO PROPOSED TO REFER THE MATTER TO THE DEPARTMENTS VALUATION OFFICER (DVO). THE AO RECORDED THAT VALUATION REPORT WAS RECEIVED ON 19.10.2015, THE VALUER DETERMINED THE FAIR MARKET VALUE (FMV) ON THE SALE OF FLAT AT RS. 80,99,000/- AGAINST THE VALUE SHOWN BY ASSESSEE IN HIS SALE-DEED AT RS. 72,00,000/-. THE AO NOTED THAT ASSESSEE WAS ALLOTTED A FLAT VIDE ALLOTMENT ITA NO. 264/SRT/2017 SHRI JETHANAND T. DATWANI(AY 2009-10) 3 LETTER DATED 25.02.1997 IN PROPOSED PROJECT OF LOKNIRMAN,NEAR AMBEDKAR ROAD, KHAR (WEST), MUMBAI. THE ASSESSEE PAID ADVANCE OF RS. 6,54,000/- AT THE TIME OF ALLOTAMENT. AS PER THE ALLOTMENT LETTER, TOTAL SALE CONSIDERATION WAS OF RS. 42,12,000/-. THE AO ON FURTHER VERIFICATION OF FACTS AND THE EVIDENCE FURNISHED BY ASSESSEE FIND THAT MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) ISSUED OCCUPANCY CERTIFICATE ON 20.09.2000. ON THE BASIS OF OCCUPANCY CERTIFICATE, THE AO TOOK HIS VIEW THAT ASSESSEE OBTAINED THE POSSESSION OF PROPERTY IN FINANCIAL YEAR 2000-01 ON THE BASIS OF AFORESAID FACT, THE AO HAS TAKEN FURTHER VIEW THAT THE LONG TERM CAPITAL GAIN (LTCG) DECLARED BY ASSESSEE IS NOT CORRECT AND ACCEPTABLE. THE AO ON THE BASIS OF VALUE DETERMINED BY DVO WORKED OUT THE LTCG IN THE FOLLOWING MANNER; SALE CONSIDERATION AS PER DVO RS. 80,99,000/- LESS : INDEXED COST OF ADVANCE PAYMENT OF RS. 6,54,000/- ON 25/02/1997 = RS. 654,000 X 582/305 RS.12,47,960/- RS. 68,51,040/- LESS: TOTAL COST AS PER ALLOTMENT LETTER RS. 42,12,000/- MINUS ADVANCE PAYMENT RS. 654,000/ =RS. 35,58,000/- INDEXED COST RS. 35,58,000/-X 582/406 RS. 51,00,380/- RS. 17,50,660/- LESS : EXPENSES CLAIMED BY THE ASSESSEE RS. 7,12,550/- LTCG RS. 10,29,110/- ITA NO. 264/SRT/2017 SHRI JETHANAND T. DATWANI(AY 2009-10) 4 3. ON THE BASIS OF ABOVE WORKING THE AO ADDED RS. 10,29,110/- ON ACCOUNT OF LTCG. 4. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT THE FLAT WAS ACQUIRED IN THE YEAR 1996-97. THE ASSESSEE IS A NON-RESIDENT COULD NOT COME TO MUMBAI TO REGISTER THE CONVEYANCE DEED OF THE PROPERTY. THE CONVEYANCE DEED OF FLAT WAS REGISTERED IN THE YEAR 2000. THE ASSESSEE PRAYED THAT THE INDEX COST FOR THE PURPOSE OF WORKING OF LTCG SHOULD BE ADOPTED FROM THE DATE OF ALLOTMENT. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY LD. CIT(A) AS WELL. THE LD. CIT(A) HELD THAT ASSESSEE FAILED TO FURNISH THE FACTUAL EVIDENCE AND HIS CLAIM CANNOT BE ALLOWED. FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. SR. DEPARTMENTAL REPRESENTATIVE (SR.DR) FOR THE REVENUE AND PERUSED THE ORDERS OF LOWER AUTHORITIES CAREFULLY. THE LD. AR OF THE ASSESSEE SUBMITS THAT A VERY SHORT DISPUTE IS INVOLVED IN THE PRESENT APPEAL IS WHETHER THE ACQUISITION OF PROPERTY SHOULD BE TAKEN FROM THE DATE OF ALLOTMENT ORDER FROM THE DATE OF OCCUPATION OF THE PROPERTY. THE LD. AR FURTHER SUBMITS THAT ASSESSEE PURCHASED A FLAT BEARING A-1, LOKNIRMAN SOCIETY, NEAR AMBEDKAR ROAD, KHAR (WEST), MUMBAI. THE ASSESSEE WAS ALLOTTED FLAT VIDE ALLOTMENT LETTER DATED 25.02.1997. BEFORE THE OCCUPATION OF ITA NO. 264/SRT/2017 SHRI JETHANAND T. DATWANI(AY 2009-10) 5 FLAT, THE ASSESSEE HAS MADE SUBSTANTIAL AMOUNT OF CONSIDERATION. THE ASSESSEE SOLD A FLAT ON 22.07.2008. ON SALE CONSIDERATION OF RS. 72,00,000/-. THE ASSESSEE WORKED OUT THE LTCL BY TAKING THE DATE OF ACQUISITION IN 1997. HOWEVER, THE AO DETERMINED THE LTCG ON THE BASIS OF VALUE DETERMINED BY DVO AND FURTHER ON THE BASIS OF INDEX COST FOR AY 2000-01 INSTEAD OF 1997- 98. THE LD. AR SUBMITS THAT WORKING OF LTCG, INDEX COST TO BE TAKEN FOR AY 1997-98 AS PER THE ALLOTMENT LETTER. THE ASSESSEE BOOKED THE FLAT IN JOINT NAMES AND THE NAME OF HIS WIFE NAME IS MENTIONED AT FIRST HOLDER. WHEREAS ALL PAYMENTS WERE MADE BY ASSESSEE FROM HIS BANK ACCOUNT. ALL THE PAYMENTS WERE VERIFIED BY THE AO DURING THE COURSE OF ASSESSMENT. THE PAYMENTS MADE BY THE ASSESSEE IS NOT DISPUTED BY THE AO. THE LD. AR SUBMITS THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN A NUMBER OF CASES HELD THAT HOLDING PERIOD/ACQUISITION WAS TO BE TAKEN FROM THE DATE OF ALLOTMENT LETTER, THE LD. AR FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: CIT VS. ANILABENUPENDRA SHAH [262 ITR 657 (GUJ.)] CIT VS. JINDAL PANCHAND GANDHI (GUJ.), NANDITAPATODIA VS. ITO (MUMBAI) [ITA NO. 5982/M/2013] , ANUPAMA AGRAWAL VS. DCIT [ITA NO. 472/M/2015 DATED 23.09.20120], MADHUKAUL VS. CIT [363 ITR 54 (P & H)] , CIT VS. S.R.JAYSHANKAR [ 373 ITR 120 (MAD.)], ANITA D. KANJANI VS. ACIT [ITA NO. 2291/M/2015 DATED 13.02.2017] , ACIT VS. KEYUR HEMANT SHAH [ITA NO. 6710/M/2013 , 199 TTJ 388], PR.CIT VS. VEMBUVAIDYANATHAN [ITA NO. 1459 OF 2016 (BOM. HC)] ITA NO. 264/SRT/2017 SHRI JETHANAND T. DATWANI(AY 2009-10) 6 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT THE CONVEYANCE DEED OF THE PROPERTY/ FLAT WAS REGISTERED IN 2000-01. AS PER THE OCCUPATION CERTIFICATE ISSUED BY MCGM, THE PROPERTY WAS OCCUPIED ONLY IN THE YEAR 2000. THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT THE LOWER AUTHORITY HAS RIGHTLY TREATED THE HOLDING PERIOD FROM THE CERTIFICATE OF OCCUPATION CERTIFICATE ISSUED BY LOCAL AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE ORDERS OF LOWER AUTHORITIES CAREFULLY. IN OUR CONSIDERED VIEW IS VERY NARROW DISPUTE INVOLVED IN THE PRESENT APPEAL IS WHETHER THE HOLDING PERIOD IS TREATED FROM THE DATE OF ALLOTMENT OR FROM THE DATE OF OCCUPATION OF THE PROPERTY. THERE IS NO DISPUTE ABOUT THE DATE OF ALLOTMENT LETTER DATED 25.09.1997. FURTHER, WE FIND THAT AO IN PARA-6 OF THE ASSESSMENT ORDER HAS RECORDED THAT AT THE TIME OF ALLOTMENT, THE ASSESSEE PAID RS. 6,52,000/-. THE ASSESSEE VEHEMENTLY CONTENDED THAT SUBSTANTIAL PART OF THE SALE CONSIDERATION WAS PAID FROM THE DATE OF POSSESSION. THIS FACT IS NOT DISPUTED BY LOWER AUTHORITIES. FURTHER, THE DATE OF TRANSFER OF ASSET/FLAT IS ALSO NOT IN DISPUTE. WE FIND THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN MADHUKAUL V/S. CIT [363 ITR 54 (P & H)], [HONBLE MADRAS HIGH COURT IN CIT V/S. S.R. JAYSHANKAR [373 ITR 120 (MAD.)], HELD THAT THE DATE OF ALLOTMENT LETTER IS TO BE CONSIDERED TO ITA NO. 264/SRT/2017 SHRI JETHANAND T. DATWANI(AY 2009-10) 7 DETERMINE THE HOLDING PERIOD TO ASCERTAIN THE ENTITLEMENT OF SECTION 54 OF THE ACT. WE FIND THAT THE DECISION OF MADHUKAUL V/S. CIT AND CIT V/S. S.R. JAYSHANKAR (SUPRA) WERE FOLLOWED BY CO-ORDINATE BENCH OF TRIBUNAL IN NANDITAPATODIA V/S. ITO AND ALLOW THE HOLDING PERIOD FROM THE DATE OF ALLOTMENT LETTER TO DETERMINE THE LTCG. 8. IN VIEW OF THE AFORESAID FACTUAL AND LEGAL DISCUSSION, THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE HOLDING PERIOD FROM THE DATE OF ALLOTMENT OF THE FLAT. ORDER ANNOUNCED AT THE TIME OF HEARING OF APPEAL ON 22 ND JUNE, 2021 IN THE VIRTUAL COURT HEARING. SD/- SD/- ( DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 22/06/2021 SK, PS COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE TRUE COPY/ BY ORDER ASSISTANT REGISTRAR, ITAT, SURAT