Smt. Nandamudi Tulasi, Secunderabad V. The DCIT, Kakinada

ITA 284/VIZ/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0287 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V MINI CHANDRAM
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Cost of acquisition; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 283 / VIZ /201 5 (ASST. YEAR : 20 1 0 - 1 1 ) S HRI PASALA VENKATA CHALAPATHI, C/O M. ANANDAM & CO., CAS, 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD. V S . D CIT, CIRCLE - 1, KAKINADA . PAN NO. BEVPP 6404 H (APPELLANT) (RESPONDENT) ITA NO. 284 / VIZ /201 5 (ASST. YEAR : 2010 - 11 ) SMT. NANDAMUDI TULASI, C/O M. ANANDAM & CO., CAS, 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD. VS. DCIT, CIRCLE - 1, KAKINADA . PAN NO. AKCPN 9493 L (APPELLANT) (RESPONDENT) ITA NO. 2 90 / VIZ /201 5 (ASST. YEAR : 2010 - 11 ) S HRI PASALA NAGA RATNA MOULI , C/O M. ANANDAM & CO., CAS, 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD. VS. DCIT, CIRCLE - 1, KAKINADA . PAN NO. BFRPP 5963 G (APPELLANT) (RESPONDENT) 2 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) ITA NO. 291 / VIZ /201 5 (ASST. YEAR : 2010 - 11 ) SMT. PASALA NAGA VENI , C/O M. ANANDAM & CO., CAS, 7A, SURYA TOWERS, S.P. ROAD, SECUNDERABAD. VS. DCIT, CIRCLE - 1, KAKINADA . PAN NO. BFQPP 7293 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.V. ANIL KUMAR , ADV ., DEPARTMENT BY : SMT. V. MINI CHANDRAM, SR. DR DATE OF HEARING : 20 / 0 8 /201 8 . DATE OF PRONOUNCEMENT : 0 5 / 09 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH E S E APPEAL S BY THE DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , VISAKHAPATNAM , ALL DATED 23 /0 3 /201 5 FOR THE ASSESSMENT YEAR 20 10 - 11 . 2. THERE IS A DELAY OF 24 DAYS IN ITA NOS. 283 & 284/VIZ/2015 AND 28 DAYS IN ITA NOS. 290 & 291/VIZ/2015 . IN ALL THE APPEALS , ASSESSEES ARE FILED AFFIDAVITS EXPLAINING THE DELAY. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE DELAY IN FILING THE APPEALS HAS BEEN EXPLAINED IN THE AFFIDAVITS AND PRAYED TH AT SAME MAY BE CONDONED. 3 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) 3 . ON THE OTHER HAND, L D. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOSED THE CONDONATION OF DELA Y . 4 . WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE AFFIDAVITS FILED IN EACH OF THE CASE AND FIND THAT THERE IS A SUFFICIENT CAUSE TO CONDONE THE DELAY. ACCORDINGLY, WE CONDONE THE DELAY IN ALL THE APPEALS FILED BY THE ASSESSEES AND ARE ADMITTED FOR HEARING. 5. IN ALL THE APPEALS , SIMILAR GROUNDS HAVE BEEN RAISED BY THE ASSESSEES . FOR THE SAKE OF CONVENIENCE, GROUNDS RAISED IN ITA NO. 283/VIZ/2015 ARE EXTRACTED AS UNDER: - 1. YOUR APPELLANT SUBMITS THAT THE CIT (A) AS WELL AS ASSESSING OFFICER ERRED IN LAW AND FACTS OF THE CASE IN ADOPTING VALUES AS ON 1 - 4 - 1981 AS PER THE SUB - REGISTRAR FOR COMPUTATION OF CAPITAL GAINS, WHICH IS NOT CORRECT. 2. YOUR APPELLANT SUBMITS THAT THE C IT (A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN TAKING RS. 45 / - PER SQ. YARD FOR THE LAND AND RS. 34.10 SQ. FT. FOR BUILDING AS PER SRO, OUGHT TO HAVE ACCEPTED RS. 100/ - PER SQ. YARD AND RS. 200/ - PER SQ. FT. AS CLAIMED IN THE RETURN OF INCOM E BASED ON A VALUATION REPORT. 3. YOUR APPELLANT SUBMITS THAT THE CIT (A) OUGHT TO HAVE ACCEPTED THE CONTENTION THAT CORRECT SHARE OF YOUR APPELLANT ONLY OUGHT TO HAVE BEEN TAXED AS LONG TERM CAPITAL GAINS AND NOT 25% AS CONTENTED BY THE ASSESSING OFFICER. 4. YOUR APPELLANT SUBMITS THAT THE CIT (A) ERRED IN LAW AND FACTS OF THE CASE IN NOT ACCEPTING THE ENTIRE IMPROVEMENT COST INCURRED AND RECORDED IN THE BOOKS OF ACCOUNT. 5. THE CIT (A) ERRED IN ALLOWING ONLY 50%,OF THE ENTIRE COST OF IMPROVEMENT AS CLAIMED BY YO UR APPELLANT AND SUBMITS THAT INDEX COST SHOULD BE ALLOWED WHILE COMPUTING THE LONG TERM CAPITAL GAINS. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, YOUR APPELLANT PRAY THAT THE INCOME MAY BE CONSIDERED 4 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) AS CAPITAL G AINS. 6 . GROUND NOS. 1 & 2 RELATE TO INDEXED COST OF ACQUISITION ON 01/04/1981 AND ALSO COST OF CONSTRUCTION OF THE BUILDING. 7. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED IN RESPECT OF COST OF LAND AS ON 01/04/1981 AS UNDER: - THE PROPERTY TRANSFERRED BY THE ASSESSEE INCLUDES A SITE OF 2981.30 SQ.YDS. FOR ARRIVING AT THE LONG TERM CAPITAL GAIN, THE ASSESSEE HAS TAKEN THE COST IN 1981 - 82 @ RS.100 PER SQ . YD . THE ASSESSEE HAS NOT FURNISHED ANY BASIS WHATSOEVER IN SUPPORT OF THE COS T ADOPTED @ RS.100 PER SQ.YD. BUT ADOPTED THIS RATE AS PER THE CERTIFICATE FROM THE CHARTERED ENGINEER, SRI GANTI SUBBA RAO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE RELIED ON THE COST INFLATION INDEX OF 100 AS ON 1.04.1981 TO ADOPT THE COS T AT RS.100 PER SQ.YDS. FROM THE PHOTOSTAT COPY OF THE SALE - DEED AND ITS ENCLOSURES, IT IS SEEN THAT IN ANNEXURE - 11 TO THE SALE - DEED, A NOTE HAS BEEN APPENDED TO THE EFFECT THAT THE MARKET VALUE OF THE SITE AT D.NO.2 - 12 - 17, TADEPALLIGUDEM IN THE YEAR 1981 WAS RS.65 PER SQ . YD. AS PER THE MARKET VALUE GUIDELINES'. THIS NOTE APPEARS TO BE AN UNDERMINING ONE. IN FACT, THERE IS NO SPECIFIC COLUMN PRESCRIBED FOR THE SRO TO APPEND SUCH NOTE IN ANNEXURE II. THEREFORE, IN ORDER TO GET A CLEAR PICTURE ABOUT THE MARK ET VALUE OF THE SITE IN THE YEAR 1981, A REFERENCE HAS BEEN MADE TO THE SUB - REGISTRAR, TADEPALLIGUDEM REQUESTING HIM TO FURNISH THE VALUE OF THE LAND AS ON 01 - 04 - 1981. ON BEING PURSUED, THE SRO, VIDE HIS LETTER, DATED 26 - 11 - 2012, STATED THAT THE VALUE OF T HE SITE @ RS.45 PER SQYD. THEREFORE, THE COST OF SITE IN RESPECT OF 2981.30 SQ.YDS. UNDER CONSIDERATION HAS TO BE ADOPTED @ RS.45 FOR COMPUTING THE LONG TERM CAPITAL GAIN. . 8 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 9. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS DREW OUR ATTENTION AT PAGE NO. 33 OF THE PAPER BOOK AND SUBMITTED THAT 5 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) ASSESSEE HAS OBTAINED FAIR MARKET VALUE AS PER THE CERTIFICATE ISSUED BY THE GOVERNMENT REGISTERED VALUER. THE ASSESSING OFFICER IGNORING TH E SAME, CONSIDERED THE SRO VALUE WHICH IS NOT A FAIR MARKET VALUE AND THEREFORE, THE RATE ADOPTED BY THE ASSESSING OFFICER IS NOT CORRECT. 10 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS CONSIDERED THE V ALUA TION CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER (RE TD.) GOVERNMENT REGISTERED VALUER AND ALSO CALLED REPORT FROM THE SRO, TADEPALLIGUDEM . B ASED ON THE CERTIFICATE ISSUED BY THE SRO, TADEPALLIGUDEM, VALUE IS ADOPTED AT RS. 45 PER SQ. YRD AND STRONGLY SUPPORTED THE ORDERS PASSED BY THE AUTHORITIES BELOW. 11 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 12. THE ASSESSEE SOLD THE PROPERTY ALONG WITH 3 OTHER S . F OR THE PURPOSE OF CALCULATION OF LONG TERM CAPITAL GAIN , THE ASSESSEE HAS TAKEN THE COST OF LAND AS ON 01/04/1981 AT RS. 100/ - PER SQ.YRD. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS FILED CERTIFICATE ISSUED BY THE GOVERNMENT REGISTERED VALUER TO SUPPORT HIS CLAIM, HOWEVER, THE ASSESS ING OFFICER HAS NOT ACCEPTED THE VALUATION CERTIFICATE AND OBTAINED REPORT FROM THE SRO, TADEPALLIGUDEM. AS PER THE REPORT OF THE SRO, THE VALUE OF THE SITE WAS AT RS. 45/ - PER 6 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) SQ.YRD., THE SAME WAS ADOPTED FOR COMPUTING LONG TERM CAPITAL GAIN. WE FIND T HAT FOR THE PURPOSE OF ASCERTAINING THE VALUE OF THE LAND AS ON 01/04/1981, THE FAIR MARKET VALUE HAS TO BE ADOPTED BY THE ASSESSING OFFICER . IN OUR OPINION, THE FAIR MARKET VALUE IS NOT THE SRO VALUE . THE ASSESSING OFFICER IGNORING THE ABOVE FACT, SIMPL Y ACCEPTED THE VALUE OF THE LAND BASED ON THE CERTIFICATE ISSUED BY THE SRO, TADEPALLIGUDEM. THE ASSESSING OFFICER TOTALLY OVERLOOKED THE VALUATION CERTIFICATE ISSUED BY THE GOVERNMENT REGISTERED VALUER, WHEREIN HE HAS VALUED THE LAND AT RS. 100/ - PER SQ.YRD. THE ASSESSEE HAS ALSO NOT FILED ANY SALE DEED BEFORE US WHICH SHOWS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 . HE SIMPLY RELIED ON THE CERTIFICATE ISSUED BY THE GOVERNMENT REGISTERED VALUER . UNDER THESE FACTS AND CIRCUM STANCES OF THE CASE, WE ARE OF THE OPINION THAT THE FAIR MARKET VALUE OF THE LAND AS ON 01/04/1981 WOULD BE OF RS. 65/ - PER SQ.YRD. AND ACCORDINGLY DIRECT THE ASSESSING OFFICER TO ADOPT THE SAME AND RECALCULATE THE CAPITAL GAINS . 13. SO FAR AS COST OF BUILDING AS ON 01/04/1981 IS CONCERNED, THE ASSESSING OFFICER HAS OBSERVED AS UNDER: - SIMILARLY, THE ASSESSEE HAS ADOPTED THE VALUE OF CONSTRUCTION OF THE BUILDING RS.200 PER SFT. IN RESPECT OF 7900 SFT. OF BUILT - UP AREA. THIS IS VERY MUCH ON THE HIGHER SIDE. EVIDENTLY, THIS VALUE IS ADOPTED BY THE ASSESSEE AS PER THE CERTIFICATE GIVEN BY THE CHARTERED ENGINEER, SRI GANTI 7 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) SUBBA RAO. AS DISCUSSED ABOVE, THE VALUE OF SITE AS ON 01 - 04 - 1981 WAS RS.65 PER SYD. AS PER THE NOTE APPENDED TO ANNEXURE - 11 TO THE SALE - DEED AND AS PER THE CERTIFICATE FROM THE CHARTERED ENGINEER, SRI GANTI SUBBA RAO, THE VALUE OF THE SAID SITE IN THE YEAR 1980 - 81 WAS CERTIFIED AT RS.100 PER SQ.YD AND THE SAME WAS ADOPTED AS THE VALUE OF SITE AT RS.100 PER SQ.YD. FOR COMPUTATION O F LONG TERM CAPITAL GAIN. HOWEVER, THE VALUE OF SITE WAS FINALLY CERTIFIED BY THE SRO, T ADEPALLIGUDEM AT RS.45, AS STATED ABOVE. I N VI EW OF THE ABOVE CONTRADICTIONS WITH REGARD TO THE VALUE OF SITE, THE VALUE @ 200 PER SFT. M RESPECT OF THE BUILT - UP AREA A DOPTED BY THE ASSESSEE AS CERTIFI ED BY THE CHARTERED ENGINEER CANNOT BE RELIED UPON. THEREFORE, A LETTER HAS - BEEN ISSUED TO THE SRO TADEPALLIGUDEM REQUESTING HIM TO FURNISH THE VALUES OF THE BUILDING AS ON 01 - 04 - 1981. THE SRO VIDE HIS CERTIFICATE DATED 20. 12.2012 HAS CERTIFIED THE VALUE OF THE, BUILT - UP AREA RS.34.1 0 PER SFT. ACCORDINGLY, THIS HAS TO BE ADOPTED FOR COMPUTATION OF LONG TERM CAPITAL GAI N . 14. ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 15. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS R E LIED ON THE PAPER BOOK AT PAGE NO. 33 WHEREIN CERTIFICATE ISSUED BY THE GOVERNMENT REGISTERED VALUER IS PLACED. ACCORDING TO THE CERTIFICATE , COST OF CONSTRUCTION OF VALUE IS AT RS. 200/ - PER SQ. FT. A S ON 01/04/1981 AND SUBMITTED THAT CERTIFICATE ISSUED BY THE REGISTERED VALUER MAY BE CONSIDERED. 16. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT ASSESSING OFFICER CALLED THE REPORT FROM THE SRO, 8 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) TADEPALLIGUDEM AND AS PER THE CERTIFICATE ISSUED BY THE SRO, THE ASSESSING OFFICER HAS ADOPTED THE VALUE AT RS. 34.10 PS. PER SQ.FT. 17. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 18. IN THIS CASE, THE ASSESSEE HAS ADOPTED THE COST OF CONSTRUCTION OF BUILDING AT RS. 200/ - PER SQ.FT. BASED ON THE CERTIFICATE ISSUED BY THE GOVERNMENT REGISTERED VALUER . THE ASSESSING OFFICER HAS NOT CONSIDERED THE SAME AND CALLED THE REPORT FROM THE SRO, TADEPALLIGUDEM. BASED ON THE CERTIFICATE ISSUED BY THE SRO, HE ADOPTED THE COST OF BUILDING AT RS. 34.10 PS. PER SQ.FT. AND THE SAME IS ADOPTED FOR COST OF CONSTRUCTION. WE FIND THAT THERE IS A LOT OF VARIATION BETWEEN THE CERTIFICATE ISSUED BY THE GOVERNMENT REGISTERED VALUER AND SRO, TADEPALLIGUDEM . THEREFORE, IN THE INTEREST OF JUSTICE, T H E C O S T O F C O N S T R U C T I O N AS ON 01/04/1981 WOULD BE OF RS. 65/ - . ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE LONG TERM CAPITAL GAIN. THUS, THE S E GROUND S OF APPEAL RAISED BY THE ASSESSEE ARE PARTLY ALLO WED. 19. GROUND NO. 3 RELATES TO SHARE OF THE ASSESSEE IN THE PROPERTY , WHICH IS NOT PRESSED BEFORE THE LD. CIT(A) , T HEREFORE, SAME IS DISMISSED. 20. GROUND NOS. 4 & 5 RELAT E TO COST OF IMPROVEMENT . 9 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) 21. THE ASSESSEE HAS CLAIMED HUGE EXPENDITURE RELATING TO IMPROVEMENT OF THE BUILDING , WHICH IS AS UNDER: - THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE DETAILS OF THE EXPENDITURE . THE ASSESSEE HAS NOT FILED ANY BILLS/VOUCHERS, THEREFOR E THE ASSESSING OFFICER DISALLOWED THE ENTIRE CLAIM MADE BY THE ASSESSEE. 22 . ON APPEAL, LD. CIT(A) HAS ALLOWED 50% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO RE - COMPUTE THE LONG TERM CAPITAL GAIN. EVEN BEFORE US, ASSESSEE IS NOT ABLE TO FILE ANY BILLS/VOUCHERS TO SUBSTANTIATE THE EXPENDITURE INCURRED FOR DEVELOPMENT AND MAINTENANCE OF THE PROPERTY. IN OUR OPINION, THE LD. CIT(A) HAS FAIRLY AND REASONABLY CONSIDERED THE CLAIM OF THE ASSESSEE AND IS ALLOWED TO THE EXTENT OF 50%. IN ABSENCE OF THE BILLS AND VOUCHERS, THE ORDER PASSED BY THE LD. CIT(A) IS FAIR, REASONABLE AND JUSTIFIABLE AND OUR INTERFERENCE IS NOT CALLED FOR. THUS, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. FINANCIAL YEAR AMOUNT S PER COMPUTATION STATEMENT AMOUNT AS PER DETAILS FURNISHED DURING ASSESSMENT PROCEEDINGS 1983 - 84 4,00,000 4,15,390 1984 - 8 5 1,50,000 1,73,486 1985 - 8 6 5,00,000 5,06,568 1990 - 91 8,00,000 8,11,250 1995 - 96 3,00,000 3,08,563 10 ITA NO S . 283, 284, 290 & 291/VIZ/2015 ( SMT. PASALA VENKATA CHALAPATHI & ORS. ) 23. SO FAR AS ITA NOS. 284, 290 & 291/VIZ/2015 ARE CONCERNED, FACTS AND CIRCUMSTANCES ARE SIMILAR TO THE FACTS INVOL V ED IN ITA NO. 283/VIZ/2015 . IN VIEW OF OUR ABOVE DECISION, THE ASSESSING OFFICER IS DIRECTED TO RE - COMPUTE THE CAPITAL GAINS AS DIRECTED IN ITA NO. 283/VIZ/2015 . THUS, THESE APPEALS FILED BY THE ASSESSEES ARE PARTLY ALLOWED. 24. IN THE RESULT, ALL APPEAL S FILED BY THE ASSESSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 5 T H DAY OF SEP . , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 5 T H SEP. , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.