THE ACIT, 3(1), V. SHRI SURENDRA MALOHTRA,

ITA 268/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2940 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 16-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Gift; Cost of acquisition; Capital Gains
• Section: 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER ITA NO. 268/IND/08 A.Y. 2004-05 ASSTT. COMMR. OF INCOMETAX 3(1) BHOPAL APPELLANT VS SURENDRA MALHOTRA NEW DELHI PAN ABKPM-1647G RESPONDEN T DEPARTMENT BY SMT. APARNA KARAN, SR. DR ASSESSEE BY SHRI PRAKASH JAIN O R D E R PER V.K. GUPTA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DATED 2 4 TH MARCH, 2008 FOR THE ASSESSMENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL ON RECORD. 3. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE DECISION 2 OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN DELETING THE ADDITION OF RS. 22,25,842/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF LONG TERM CAPITAL G AINS COMPUTED BY THE ASSESSING OFFICER AS AGAINST LONG T ERM CAPITAL LOSS CLAIMED BY THE ASSESSEE AT RS. 11,62,2 27/-. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPA NY SOLD CERTAIN BUILDINGS AND STRUCTURES DURING THE YEAR, U NDER CONSIDERATION. THE ASSESSEE ARRIVED AT THE COST OF ACQUISITION ON THE BASIS OF THE MARKET VALUE OF THE SAID BUILDING AS ON 1.4.1981 AS THE SAME HAD BEEN RECEIV ED BY HIM AS GIFT FROM HIS FATHER. THE ASSESSEE ESTIMA TED THE VALUE OF THE LAND AT RS.289/- PER SQ.FT. WHICH WAS DIVIDED IN THREE EQUAL PORTIONS TO ARRIVE AT THE CO ST OF LAND PER FLOOR. THE BASIS OF SUCH VALUATION WAS THE PRICE OF GOLD AT THE RELEVANT POINT OF TIME AS INCREASE I N THE PRICE OF GOLD AND LAND WAS ON SIMILAR PATTERN OVER THE YEARS. THE ASSESSING OFFICER, HOWEVER, REJECTED TH IS PLEA OF THE ASSESSEE AND BASED UPON A SALE DEED OF LAND IN THE NEARBY AREA ARRIVED AT THE COST OF LAND AT RS.9.50 PER SQ.FT. THE ASSESSING OFFICER ALSO TOOK THE COST OF CONSTRUCTION AT RS. 40/- PER SQ. FT. AS PER THE 3 CURRENT SCHEDULE OF RATES OF PWD DEPARTMENT FOR THE YEAR 1981. THUS, HE WORKED OUT THE COST OF ACQUISI TION AT RS. 49.50. THE ASSESSEE ALSO SUBMITTED THE VALU ERS REPORT AND AS PER HIS REPORT, THE VALUATION CAME TO RS. 150/-, RS. 126.67 AND RS. 95/- PER SQ. FT. FOR FIRS T, SECOND AND THIRD FLOORS, RESPECTIVELY. THE ASSESSING OFFI CER, HOWEVER, PREFERRED TO RELY ON THE DETAILS/INFORMATI ON COLLECTED BY HIM AND RE-WORKED OUT THE AMOUNT OF CA PITAL GAINS. THE ASSESSING OFFICER FURTHER FOUND THAT IN RESPECT OF CERTAIN PROPERTIES, THE ASSESSEE HAD GIV EN THE POSSESSION OF THE PROPERTY AND HAD ALSO RECEIVE D SALE PROCEEDS, BUT HAD NOT SHOWN THE CAPITAL GAIN I N RESPECT OF SUCH TRANSACTIONS FOR THE REASON THAT NO SALE DEED HAD BEEN EXECUTED. THE ASSESSING OFFICER ALSO CONSIDERED THESE TRANSACTIONS AS LIABLE FOR CAPITAL GAIN IN THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICE R ACCORDINGLY WORKED OUT THE LONG TERM CAPITAL GAIN A T RS. 22,42,297/- AND AFTER SETTING OUT, CARRIED FORWARD CAPITAL LOSS, COMPUTED THE LONG TERM CAPITAL GAINS AT RS. 22,25,842/-. 5. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED APPEAL BEFORE 4 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), WHEREIN DETAILED SUBMISSIONS WERE MADE BY THE ASSESSEE. IT WAS SPECIFICALLY POINTED OUT THAT COMPARABLE TRANSACTION WAS NOT OF THE SAME LOCALITY AND THE OTHER DETAILS COLLECTED BY THE ASSESSING OFFICE R WERE ALSO NOT CONFRONTED TO THE ASSESSEE SO AS TO ENABLE THE ASSESSEE TO REBUT THE SAME. THE ASSESSEE ALSO CHALLENGED THE ACTION OF THE ASSESSING OFFICER IN R ESPECT OF THE PROPERTIES WHEREIN SALE DEED HAD NOT BEEN EXECUTED. 6. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE, HELD THAT THE COST OF ACQUISITION, AS SUBMITTED BY THE ASSESSEE, AS PER THE REGISTERED VALUERS REPORT, WA S LIABLE TO BE ACCEPTED AND THE DETAILS/INFORMATION, RELIED UPON BY THE ASSESSING OFFICER, WITHOUT CONFRONTING TO THE ASSESSEE, WERE NOT TO BE CONSIDERED. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO HELD THAT SINCE SOME PROPERTIES WHOSE POSSESSION WAS GIVEN IN THE YEAR, UNDER CONSIDERATION, BUT THEIR CONVEYANCE DEEDS WERE NOT REGISTERED, HENCE, THESE TRANSACTION S 5 COULD ALSO NOT BE CONSIDERED IN THE YEAR , UNDER CONSIDERATION. AGGRIEVED BY THIS, THE REVENUE IS I N APPEAL BEFORE US. 7. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE NARRATED THE FACTS AND PLACED STRONG RELIANCE ON TH E ORDER OF THE ASSESSING OFFICER. 8. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSED PLACED STRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED A C OPY OF THE ASSESSMENT ORDER IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 PASSED UNDER SECTION 143(3) OF THE ACT WHEREIN THE COST OF ACQUISITION WORKED OUT BY THE ASSESSEE HAD BEEN ACCEPTED AND THIS BEIN G THE CONDITION OF THE SAME TRANSACTION, THE SAME WAS LIABLE TO BE ACCEPTED IN THE YEAR, UNDER CONSIDERAT ION. THE LEARNED COUNSEL FOR THE ASSESSEE, HOWEVER, ON BEING POINTED OUT THAT IN CASE OF TRANSACTIONS WERE THE POSSESSION HAD BEEN GIVEN, THE ASSESSEE WAS LIABLE TO PAY THE CAPITAL GAINS TAX THEREON IN THE YEAR, UNDE R CONSIDERATION, FAIRLY ACCEPTED THIS POSITION IN VIE W OF THE 6 SAID PROVISIONS OF SECTION 2(47) AND 2(47)(VI). 9. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOTED THAT THE ASSESSEE HA S WORKED OUT THE COST OF ACQUISITION AS PER THE REGIS TERED VALUERS REPORT AND THE SAME HAS BEEN ACCEPTED BY T HE DEPARTMENT IN THE EARLIER ASSESSMENT YEAR 2003-04, HENCE, ON THE SAME SET OF FACTS, IN OUR OPINION, TH E SAME SHOULD BE ADOPTED IN THE YEAR UNDER CONSIDERAT ION AS WELL. WE FURTHER FIND THAT THE EVIDENCE/DOCUMEN TS RELIED UPON BY THE ASSESSING OFFICER HAVE NOT BEEN CONFRONTED TO THE ASSESSEE, HENCE, THE SAME CANNOT BE HELD AS CORRECT METHODOLOGY AND CONSEQUENTLY NO COGNIZANCE THEREOF CAN BE TAKEN. AS REGARDS THE SA LE TRANSACTION WHERE THE POSSESSION HAS BEEN GIVEN, WE FIND THAT SUCH TRANSACTIONS RESULT INTO ACCRUAL OF CAPITAL GAINS TAX LIABILITY IN THE YEAR UNDER CONSIDERATIO N HENCE, THE SAME SHOULD BE TAXED IN THE YEAR UNDER CONSIDERATION. IN THIS REGARD, IT IS ALSO WORTHWHI LE TO NOTE THAT THE ASSESSEE HAS NOT SHOWN ANY CAPITAL GA IN ON SUCH TRANSACTION IN THE SUBSEQUENT YEARS. THUS, WE 7 CONFIRM THE ACTION OF THE ASSESSING OFFICER IN THIS REGARD AND THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) STANDS MODIFIED TO THIS EXTENT. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 22ND APRIL, 2010. SD SD (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER APRIL 22 , 2010 COPY TO APPELLANT, RESPONDENT, CIT, CIT (A), DR, GU ARD FILE DN/2223