Shri Madhukumaran, CHENNAI V. ITO, CHENNAI

ITA 2835/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6030 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PALANICHAMY JCIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift; Cost of acquisition; Fair market value; Valuation report; Retraction

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO.2165/MDS/2016 / ASSESSMENT YEAR : 2010-2011 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 1(1) FORMERLY KNOWN AS BUSINESS CIRCLE I, CHENNAI VS. SHRI. MADHUKUMARAN, NO.22, II MAIN ROAD, KOTTUR GARDENS, CHENNAI 600 085. ./I.T.A. NO.2835/MDS/2016 / ASSESSMENT YEAR : 2010-2011 SHRI. MADHUKUMARAN, NO.22, II MAIN ROAD, KOTTUR GARDENS, CHENNAI 600 085. VS. THE INCOME TAX OFFICER, NON CORPORATE WARD I(3) CHENNAI. [PAN AAIPM 5745L] ( / APPELLANT) ( !'# /RESPONDENT) ASSESSEE BY : SHRI. S. SRIDHAR, ADVOCATE DEPARTMENT BY : SHRI. PALANICHAMY, JCIT. $ % & '( /DATE OF HEARING : 11-10-2017 )* & '( /DATE OF PRONOUNCEMENT : 12-10-2017 ITA NOS.2165 &2835/16 :- 2 -: / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE RESPECTIVELY DIRECTED AGAINST AN ORDER DATED 31.03. 2016 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI. 2. APPEAL OF THE REVENUE IS TAKEN UP FIRST FOR DISPOSA L. GROUNDS TAKEN BY THE REVENUE READ AS HEREUNDER:- 1. THE ORDER OF THE LEARNED CIT (A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.THE LEARNED CIT (A) FAILED TO APPRECIATE THAT AS PER EXPLANATION (III) TO SECTION 48 OF THE ACT THE BASE YEAR TO BE ADOPTED FOR COST INDEXING SHOULD BE THE COST INF LATION INDEX RELEVANT TO THE YEAR OF ACQUISITION OF THE PR OPERTY AND NOT BY THE PREVIOUS OWNER 3.FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED . 3. LD. ASSESSING OFFICER HAD ADOPTED COST INFLATION I NDEX RELATING TO FINANCIAL YEARS 2009-2010 AND 2008-2009 FOR COMPUTING LONG TERM CAPITAL GAINS WITH RESPECT TO TWO PIECES OF LAND SOLD BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. FIRST P IECE OF LAND WAS OF 8.53 ACRES AT SURVEY NO.534 B-2. THIS WAS ORIGINA LLY PURCHASED BY ONE MS. A. SUSEELA AMMAL ON 07.05.1960 AND LATER GI FTED TO THE ASSESSEE ON 29.07.2009. SECOND PIECE OF LAND WAS OF TWO ACRES AT SURVEY NO.534-B, AND THIS WAS ORIGINALLY PURCHASE D BY ONE MS. A. ITA NOS.2165 &2835/16 :- 3 -: MURALIDHARAN ON 13.06.1985, LATER GIFTED TO MS. A. SUSEELA AMMAL ON 12.01.2005, WHO IN TURN GIFTED IT TO THE ASSESSEE O N 15.04.2008. LD. ASSESSING OFFICER HAD RELIED ON EXPLANATION (III) TO SEC. 48 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR TAK ING THE YEAR OF ACQUISITION AS 2009-10 AND 2008-09 RESPECTIVELY FO R WORKING OUT LONG TERM CAPITAL GAINS IN RESPECT OF THE ABOVE TWO LAND TRANSACTIONS. ASSESSEE HAD ADOPTED 1981 AS THE BASE YEAR FOR THE FIRST PROPERTY AND 1985 HAS THE BASE YEAR FOR SECOND PROPERTY. WHE N THE MATTER REACHED LD. COMMISSIONER OF INCOME TAX (APPEALS), HE HELD IN FAVOUR OF THE ASSESSEE RELYING ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J.SHAH, 355 ITR 474. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT TH E LAND HAVING GIVEN TO THE ASSESSEE BY VIRTUE OF GIFTS, PERIOD OF HOLDING OF THE PREVIOUS OWNER WAS ALSO TO BE INCLUDED FOR INDEXIN G THE COST OF ACQUISITION. 4. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE ASSA ILING THE VIEW TAKEN BY THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) SUBMITTED THAT EXPLANATION (III) TO SEC. 48 OF THE ACT DID NOT ALLOW THE TYPE OF INTERPRETATION GIVEN BY THE LD. COMMISSIONE R OF INCOME TAX (APPEALS). 5. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. RELIANCE WAS A LSO PLACED ON THE ITA NOS.2165 &2835/16 :- 4 -: JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. KAVERI THIMMAIAH, 369 ITR 81. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D THAT FIRST PIECE OF LAND NAMELY 8.53 ACRES AT SURVEY NO.534 B-2, CAME INTO ASSESSEES OWNERSHIP THROUGH A GIFT ON 29.07.2009. MS. A. SU SEELA AMMAL HAD ACQUIRED THE SAID PROPERTY ON 07.05.1960. THE SECO ND PIECE OF LAND HAD COME TO THE OWNERSHIP OF THE ASSESSEE ON 15.04. 2008 AGAIN THROUGH A GIFT FROM MS. A. SUSEELA AMMAL. MS. A. SU SEELA AMMAL HAD IN TURN RECEIVED IT AS A GIFT FROM ONE MS. A. MUR ALIDHARAN ON 12.01.2005. MS. A. MURALIDHARAN HAD PURCHASED THE ABOVE LAND ON 13.06.1985. BY VIRTUE OF JUDGMENTS OF HONBLE BOM BAY HIGH COURT IN THE CASE OF MANJULA J.SHAH (SUPRA) AS WELL AS HONBLE KARNATAKA HIGH COURT IN THE CASE OF KAVERI THIMMAIAH (SUPRA), PERIOD OF HOLDING OF THE EARLIER OWNER HAD TO BE CONSIDERED FOR INDEXING THE COST OF ACQUISITION WHERE THE PROPERTY HAD COME TO THE ASSESSEE THROUGH GIFTS. LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN H OLDING SO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD. 7. NOW, WE TAKE UP APPEAL OF THE ASSESSEE. ASSESSEE T HROUGH ITS GROUNDS NUMBERED AS 1 TO 9 HAS EFFECTIVELY RAI SED TWO GRIEVANCES. FIRST GRIEVANCE IS REGARDING ADOPTION OF FAIR MARKE T VALUE AS ON ITA NOS.2165 &2835/16 :- 5 -: 01.04.1981 FOR 8.53 ACRES OF LAND AT SURVEY NO.534 B-2 AT RS.3000/- PER CENT. AS PER THE ASSESSEE IT SHOULD BE RS.6000 /- PER CENT FOR WHICH CHARTERED ENGINEERS REPORT WAS AVAILABLE. 8. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT FAIR MARKET VALUE OF 8.35 ACRES OF LAND AS ON 01.04.1981 SHOULD HAVE BEEN CONSIDERED AT THE RATE OF RS.6,000/- PER CENT BASED ON THE VALUATION REPORT OF THE CHARTERED ENGINEER. ACCORDING TO HIM , LD. COMMISSIONER OF INCOME TAX (APPEALS) FELL IN ERROR IN RELYING ON THE REPORT GIVEN BY THE SUB-REGISTRAR, KELUR, TUTICORIN WHEREIN IT WA S STATED THAT GUIDELINE VALUE OF THE PROPERTY AS ON 01.04.1981 W AS RS.3000/- PER CENT ONLY. AS PER THE LD. AUTHORISED REPRESENTATIV E, THE SUB- REGISTRAR, KELUR, TUTICORIN HAD NOT REPORTED ANY TRANSACTION BASED ON WHICH HE HAD REACHED THIS CONCLUSION. AS AGAINST THIS, CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT REPORT O F THE CHARTERED ENGINEER WAS IGNORED WITHOUT ASSIGNING ANY REASON. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. J. CHELLADURAI, (2012) 204 TAXMAN 0258. 9. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS), SUBMITTED THAT THE CASE OF J. CHELLADURAI (SUPRA) RELIED ON BY THE LD. AUTHORISED REPRESENTATIVE WAS ON A DIFFERENT SET OF FACTS . AS PER THE LD. DEPARTMENTAL REPRESENTATIVE IN THE SAID CASE, T HE GUIDELINE VALUE ITA NOS.2165 &2835/16 :- 6 -: GIVEN BY THE SUB-REGISTRAR WAS DISOWNED BY VERY S AME SUB- REGISTRAR. AS AGAINST THIS, AS PER THE LD. DEPARTM ENTAL REPRESENTATIVE HERE THERE WAS NO SUCH RETRACTION BY THE SUB-REG ISTRAR. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. SUB-REGISTRAR, K ELUR, TUTICORIN HAD GIVEN THE GUIDELINE VALUE OF THE PROPERTY AS ON 01. 04.1981 RS.3000/- PER CENT. AS AGAINST THIS, ASSESSEE HAD FILED A V ALUATION REPORT OF CHARTERED ENGINEER WHICH MENTIONED RS.6000/- PER CE NT. NO DOUBT IN THE CASE OF J. CHELLADURAI (SUPRA), HONBLE JURISDICTIONAL HIGH COURT HAD HELD THAT AVERAGE OF THE VALUE DETERMINED BY THE LD . ASSESSING OFFICER AND THE VALUE ADOPTED BY THE ASSESSEE COULD BE CON SIDERED AS FAIR MARKET VALUE AS ON 01.04.1981. HOWEVER, IN THE SAI D CASE THERE WAS A VERY CLEAR FINDING BY THE LD. ASSESSING OFFICER T HAT THE CERTIFICATE ISSUED BY SUB-REGISTRAR WAS DISOWNED BY THE SUB-REG ISTRAR HIMSELF. IT WAS FOR THIS REASON THAT THE HONBLE JURISDICTIONAL HIGH COURT DIRECTED AVERAGING OF THE RATES. HOWEVER, IN THE CASE BEFOR E US, THE SUB REGISTRAR HAD FIXED THE PRICE OF THE LAND AT RS.30 00/- PER CENT AS ON 01.04.1981. ASSESSEE COULD NOT DEMONSTRATE WHY P REFERENCE SHOULD BE GIVEN TO THE CHARTERED ENGINEERS VALUATION REPO RT OVER THE CERTIFICATE ISSUED BY THE SUB-REGISTRAR. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. COMMISSIO NER OF INCOME TAX (APPEALS) IN THIS REGARD. ITA NOS.2165 &2835/16 :- 7 -: 11. OTHER GRIEVANCE RAISED BY THE ASSESSEE IS WITH REGA RD TO ITS CLAIM ON EXPENDITURE ON LAND FILLING WHICH WAS CUR TAILED TO RS.21,92,000/-. 12. ASSESSEE HAD CLAIMED LAND FILLING EXPENDITURE OF RS.27,40,000/- WHILE COMPUTING LONG TERM CAPITAL G AINS. HOWEVER, THE LD. ASSESSING OFFICER HAD NOTED CERTAIN DISCRE PANCIES IN THE VOUCHERS AND DISALLOWED 20% OF SUCH CLAIM. EVEN B EFORE US, LD. AUTHORISED REPRESENTATIVE WAS UNABLE TO DEMONSTRATE THAT HE HAD COMPLETE VOUCHERS FOR THE EXPENDITURE OF RS.27,40 ,000/- CLAIMED FOR LAND FILLING. WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE ORDERS OF THE LOWER AUTHORITIES IN THIS REGARD AS WELL. 13. IN THE RESULT, APPEALS OF THE REVENUE AS WELL AS T HE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 12TH DAY OF OCTOB ER, 2017, AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) / JUDICIAL MEMBER ( . ! ' ) (ABRAHAM P. GEORGE) # $% / ACCOUNTANT MEMBER , % / CHENNAI - / DATED:12 TH OCTOBER, 2017. KV . & !'/ 0 1 0 ' / COPY TO: 1. # / APPELLANT 3. $ 2' ( ) / CIT(A) 5. 056 !'7 / DR 2. !'# / RESPONDENT 4. $ 2' / CIT 6. 68 9% / GF