Sri Arijit Chakraborty., Howrah V. I.T.O Wd - 46(1),kolkata., Kolkata

ITA 287/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5007 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 16-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 11-02-2013
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN CI
• Assessee Lawyers: SOUMITRA CHOUDHURY LD
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 234B

Judgement Text

ITA NOS.287 & 404/KOL/2013-A-AM SRI ARIJIT CHAKRABORTY 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO.287/KOL/2013 A.Y 2005-06 SRI ARIJIT CHAKRABORTY VS. I.T.O WARD 46(1), KOL KATA PAN:AETPC 6433L (APPELLANT/ASSESSEE) ( RESPONDENT) ITA NO.404/KOL/2013 A.Y 2005-06 I.T.O WARD 46(1), KOLKATA VS. SRI ARIJIT CHAKRAB ORTY (DEPARTMENT) (RESPONDENT/ASSESSEE) FOR THE APPELLANT/ASSESSEE: SHRI SOU MITRA CHOUDHURY, ADVOCATE, LD.AR FOR THE RESPONDENT/DEPARTMENT: S HRI SALLONG YADEN, ADDL.CIT, LD.DR DATE OF HEARING: 16-03-2016 DATE OF PRONOUNCEMENT: 13-4 -201 6 ORDER SHRI M.BALAGANESH, AM THESE APPEALS OF THE ASSESSEE AS WELL AS THE REVE NUE ARISE OUT OF THE ORDER OF THE LEARNED CIT(A), XXX, KOLKATA IN APPEAL NO. 213/ CIT(A)-XXX/WD-46(1)/2011- 12 DATED 29.10.2012 AGAINST THE ORDER OF ASSESSMENT FOR THE ASST YEAR 2005-06 FRAMED BY THE LEARNED AO U/S 143(3) READ WITH SECTION 254 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THI S APPEAL. BUT DURING THE COURSE OF HEARING, HE STATED THAT THE ONLY GROUND THAT REQUIR ES TO BE ADJUDICATED IS DETERMINATION OF FAIR MARKET VALUE AS ON 1.4.1981 FOR THE PURPOSE OF GRANTING DEDUCTION WHILE COMPUTING CAPITAL GAINS. THE REVENUES GROUND IS ONLY ON THE FINANCIAL YEAR FROM ITA NOS.287 & 404/KOL/2013-A-AM SRI ARIJIT CHAKRABORTY 2 WHICH INDEXATION BENEFIT HAS TO BE GRANTED TO THE A SSESSEE. BOTH THE APPEALS ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 3. THE FACTS IN BRIEF ,IN THE INSTANT CASE, ORDE R U/S. 143(3)/147 WAS POSTED ON 31/12/2008 DETERMINING INCOME OF THE ASSESSEE AT RS . 90,41,369/- ( COMPRISING OF LONG TERM CAPITAL GAIN OF RS. 89,73,425/- AND OTHER SOURCE INCOME OF RS. 67,944/-). THE RETURNED INCOME OF THE ASSESSEE WAS RS. 86,940/ - AND THE GROSS TOTAL INCOME OF THE ASSESSEE COMPRISED OF PART TIME JOB INCOME OF R S.24,000 / -AND INCOME FROM OTHER SOURCE OF RS. 74,944/- THE ASSESSEE HAS ALSO CLAIMED CAPITAL LOSS OF RS. 6,00,000/.-, IN THE RETURN ). IN THE ASSESSMENT ORD ER DT. 31/12/2008, THE SALE CONSIDERATION OF THE ASSESSEE'S IMMOVABLE PROPERTY ( ON WHICH THE ASSESSEE HAS CLAIMED LOSS OF RS.6,00,000/-) SITUATED AT 82/1 NAR ASINGHA DUTTA ROAD, HOWRAH- 711101 WAS DETERMINED BY THE A.O. AT RS.91,57,930/ -. THE INDEXED COST OF ACQUISITION OF THE. SAID PROPERTY WAS DERIVED AT RS 1,84,505/ - BY THE A.O. THEREFORE, THE LONG TERM CAPITAL GAIN FROM SALE OF IMMOVABLE P ROPERTY WAS ARRIVED AT RS. 89,73,425/-. THE ORDER WAS A SUBJECT MATTER OF APPE AL BEFORE THE LD. CIT(A) WHO UPHELD THE ORDER OF THE A.O. THE ASSESSEE PREFERRED APPEAL BEFORE THE HON'BLE. I.T.A.T KOL. AND THE HON'BLE. I.T.A.T. 'A' BENCH KOLKATA VI DE ORDER DT. 07/05/2010 HAS RESTORED THE MATTER TO THE FILE OF THE A.O. 'FOR RE COMPUTING THE LONG TERM CAPITAL GAIN AFTER REFERRING THE MATTER TO THE VALUATION CELL FO R VALUING THE PROPERTY AS ON THE DATE OF SALE AND ALSO AS ON 1/4/ 1981 ' ADHERING TO THE DIRECTION OF THE LD. I.T.A.T , REFE RENCE WAS MADE TO THE VALUATION CELL, I.T. DEPARTMENT, KOLKATA AND THE VA LUATION OFFICER III, I.T. DEPARTMENT, KOLKATA VIDE COMMUNICATION F. NO. 13/CG /VO-ILL/ITD/KOL/ 10-11/875 DT. 31/03/2011 HAS PROVIDED THE FOLLOWING VALUATION IN RESPECT OF THE IMMOVABLE PROPERTY SITUATED AT 82/1 NARASINGHA DUTTA ROAD, HO WRAH- 711101 :- A. FMV OF THE .PROPERTY AS ON 25/05/2004 RS.73, 26,350/- ITA NOS.287 & 404/KOL/2013-A-AM SRI ARIJIT CHAKRABORTY 3 B. FMV OF THE PROPERTY AS ON 01/04/1981 RS. 8,90,8 69/- THE VALUATION OFFICER-III, I.T DEPARTMENT, KOLKATA HAS PROVIDED A COPY OF THE SAID VALUATION REPORT TO THE ASSESSEE. 3.2 THE LEARNED AO AS PER THE DIRECTIONS OF THIS TR IBUNAL IN THE FIRST ROUND OF APPELLATE PROCEEDINGS REFERRED THE VALUATION OF THE PROPERTY TO DVO AS ON 1.4.1981 AND AS ON THE DATE OF SALE I.E 25.5.2004 AND COMPUT ED CAPITAL GAINS. WHILE COMPUTING CAPITAL GAINS, THE LEARNED AO DID NOT GIVE INDEXATI ON BENEFIT FOR THE COST OF ACQUISITION AS ACCORDING TO HIM THE PROPERTY GOT VE STED IN THE HANDS OF THE ASSESSEE ONLY FROM 1999 PURSUANT TO THE PROBATE ORDER. ON FIRST APPEAL, THE LEARNED CITA UPHELD THE ACTION OF THE LEARNED AO ON DETERMINATIO N OF FAIR MARKET VALUE AS ON 25.5.2004 BUT GRANTED RELIEF TO THE ASSESSEE IN RES PECT OF CLAIM OF INDEXATION BENEFIT FROM 1.4.1981 BY PLACING RELIANCE ON CERTAIN DECISI ONS. AGGRIEVED, BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WITH REGARD TO THE REVENUE APPEAL, WE FIND THAT THE PROPERTY HAD BEEN INHERITED BY THE ASSESSEE FROM GRANDMOTHER WHO HAD ACQUIRED IT BEFORE 1981. WE HOLD THAT THE INDEXATION COST HAS TO BE GIVEN FROM THE D ATE FROM WHEN THE ASSET WAS HELD BY THE PREVIOUS OWNER FROM WHOM IT WAS INHERITED. THI S IS SUPPORTED BY THE VIEW TAKEN BY THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF SMT.MIRA DEOGUN VS ITO REPORTED IN 117 TTJ KOL 121 DATED 3.8.2007 , WHEREIN IT WAS HELD AS BELOW:- '8.6 A CON-JOINT READING OF THE MEMORANDUM EXPLAIN ING THE FINANCE BILL, 1992 AND CBDT CIRCULAR NO.636 SHOWS THAT THE INDEXATION IS TO BE ALLOWED IN RESPECT OF PERIOD OF HOLDING OF TH E ASSET AND NOT IN RELATION TO THE INDIVIDUALITY OF THE ASSESSEE. FOR THE PURPOSE OF DETERMINING THE PERIOD OF HOLDING INTERMEDIATE TRAN SFERS ON ACCOUNT OF SUCCESSION ARE TO BE IGNORED. THIS PROPO SITION IS QUITE CLEAR FROM PARA 35 OF THE CIRCULAR NO. 636, DATED 3 1-8-1992 WHICH STATES THAT IF AN ASSET WAS ACQUIRED BEFORE 1-4-198 1 THEN THE MARKET VALUE OF THE CAPITAL ASSET AS ON 1-4-1981 IS TO BE TAKEN FOR ITA NOS.287 & 404/KOL/2013-A-AM SRI ARIJIT CHAKRABORTY 4 INDEXATION. IN THE PRESENT CASE THE ASSESSING OFFIC ER HIMSELF ALLOWED THE BENEFIT OF 'FAIR MARKET VALUE' OF THE P ROPERTY AS ON 1-4- 1981 TO BE COST UNDER SECTION 55(2)(B)(II) OF THE A CT. UNDER SECTION 2(49A) THE PERIOD OF HOLDING OF THE CAPITAL ASSET I N THE HANDS OF THE ASSESSEE WAS THE PERIOD COMMENCING FROM 16-4-19 58 TILL THE DATE OF TRANSFER. IT IS THEREFORE QUITE CLEAR THAT AS ON 1-4-1981 THE ASSET WAS STATUTORILY CONSIDERED TO BE HELD, BY THE ASSESSEE UNDER SECTION 55(2)(B)(II) READ WITH SECTION 2(49A) OF TH E ACT. IN OUR CONSIDERED OPINION THEREFORE, THE COST INFLATION IN DEX APPLI-CABLE FOR FINANCIAL YEAR1981-82 AND NOT TO FINANCIAL YEAR 1998-99 SHOULD HAVE BEEN APPLIED BY THE ASSESSING OFFICER. A SIMIL AR VIEW WAS TAKEN BY CHANDIGARH BENCH OF THE ITAT IN THE CASE O F SMT. PUSHPA SOFAT (SUPRA). IN THAT CASE HOUSE PROPERTY WAS INHE RITED BY THE ASSESSEE FROM HER FATHER WHICH WAS SOLD IN ASSESSME NT YEAR 1993- 94. THE FATHER OF THE ASSESSEE ACQUIRED THE PROPERT Y IN 1972 AND THEREFORE, THE ASSESSEE OPTED FOR FAIR MARKET VALUE OF 1-4-1981 TO BE THE COST OF ACQUISITION. THE ASSESSEE COMPUTED THE INDEXED COST OF ACQUISITION WITH REFERENCE TO THE COST OF INFLATION INDEX OF 1-4-1981 BEING 100 PER CENT. ASSESSEE'S FATHER EXPIRED ON 17 -2-1991 AND THE ASSESSING OFFICER ALLOWED THE INDEXATION OF COST WI TH REFERENCE TO THE COST INFLATION INDEX OF FINANCIAL YEAR 1990-91 AS AGAINST INFLATION INDEX OF 100 PER CENT. THE TRIBUNAL, HOWE VER HELD THAT THE ASSESSEE WAS ENTITLED TO COMPUTE CAPITAL GAIN BY AP PLYING COST INFLATION INDEX OF 1-4-1981. SIMILAR VIEW WAS ALSO TAKEN BY MUMBAI BENCH OF THE ITAT IN THE CASE OF MRS. MEERA KHERA ( SUPRA). CONSIDERING THE TOTALITY OF THE FACTS AND THE SCHEM E OF THE INCOME- TAX ACT RELATING TO TAXATION OF CAPITAL GAINS, WE A RE OF THE CONSIDERED OPINION THAT AS PER THE SCHEMATIC INTERP RETATION THE COST OF INFLATION INDEX SHOULD BE MADE APPLIED WITH REFE RENCE TO THE YEAR IN WHICH THE CAPITAL ASSET WAS FIRST ACQUIRED BY TH E PREVIOUS OWNER. IF ONLY FOR THE PURPOSE OF COMPUTING INDEXED COST O F ACQUISITION; THE DATE OF ACQUISITION BY THE PREVIOUS OWNER IS EXCLUD ED THEN IT WILL LEAD TO ABSURD RESULT. SUCH INTERPRETATION OF SECTI ON 48 WILL BE AGAINST THE INTENT AND OBJECT OF THE ENACTMENT AND WILL BE AGAINST THE OVERALL SCHEME OF TAXATION OF CAPITAL GAINS IN CASE OF INHERITED ASSETS. THE CARDINAL PRINCIPLES OF INTERPRETATION O F STATUTES IS THAT IF LITERAL MEANING OF THE STATUTE LEADS TO AN ABSURDIT Y THEN THE STATUTE SHOULD BE INTERPRETED IN A MANNER WHICH WILL RESULT IN HARMONIOUS INTERPRETATION WHICH AVOIDS ABSURDITY AND PROMOTE T HE OBJECTIVE OF AN ENACTMENT. WE, THEREFORE, DIRECT THE ASSESSING O FFICER TO RE- COMPUTE THE CAPITAL GAINS BY APPLYING COST INFLATIO N INDEX OF 100 PER CENT APPLICABLE FOR FINANCIAL YEAR 1981-82. ITA NOS.287 & 404/KOL/2013-A-AM SRI ARIJIT CHAKRABORTY 5 RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECE DENT, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CITA. ACCORDINGLY, THE GROUND S RAISED BY THE REVENUE ARE DISMISSED. 4.1. WITH REGARD TO THE ASSESSEES APPEAL, THE ON LY DISPUTE THAT NEEDS TO BE ADDRESSED IS THE DETERMINATION OF FAIR MARKET VALUE AS ON 1.4 .1981 FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAINS. THE LEARNED AR PLACED REL IANCE ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF VIVEK BOSE VS ITO IN ITA NO . 1236/KOL/2013 DATED 19.12.2013 WHICH WAS ALSO APPROVED BY THE HONBLE CALCUTTA HIGH COURT VIDE ITS ORDER DATED 20.8.2014. HE PLACED ORDERS OF BOTH VIDE PAGES 125 TO 135 OF HIS PAPER BOOK. IN THESE ORDERS, IT WAS HELD THAT REFERENCE TO DEPARTMENTAL VALUATION OFFICER (DVO) U/S 55A OF THE ACT FOR DETERMINATION OF FAIR MARKET VALUE AS ON 1.4.1981 COULD BE MADE ONLY WHEN THE LEARNED AO FORMS AN OPINION T HAT THE VALUE CLAIMED IS LESS THAN THE FAIR MARKET VALUE. ON THE OTHER HAND, THE OPINION OF THE LEARNED AO HERE IS THAT THE VALUE SHOWN WAS VERY HIGH OR IN OTHER WORD S, MORE THAN THE FAIR MARKET VALUE. FIRST OF ALL, WE CANNOT BRUSH ASIDE THE FACT THAT T HE LEARNED AO HAD NOT REFERRED THE CASE TO DVO FOR DETERMINATION OF FAIR MARKET VALUE AS ON 1.4.1981 ON HIS OWN VOLITION. INSTEAD IT WAS DONE BASED ON THE DIRECTIONS OF THIS TRIBUNAL IN THE FIRST ROUND OF APPELLATE PROCEEDINGS. IN-FACT, IT IS ALSO SEEN TH AT THE ASSESSEE HIMSELF HAD RAISED THIS ISSUE AS AN ADDITIONAL GROUND BEFORE THIS TRIBUNAL WITH A PRAYER TO REFER THE CASE TO DVO. WHILE THIS IS SO, THE ASSESSEE CANNOT HAVE AN Y GRIEVANCE OF THE FACT OF LEARNED AO REFERRING TO DVO FOR DETERMINATION OF FAIR MARKE T VALUE AS ON 1.4.1981. IF THE ASSESSEE HAS GOT ANY OBJECTIONS TO THE VALUE DETERM INED BY DVO, HE IS AT LIBERTY TO FILE THE SAME. BUT HE CHOSE NOT TO FILE ANY OBJECTIONS FOR THE SAME INSPITE OF SEVERAL OPPORTUNITIES PROVIDED TO HIM BY THE LEARNED AO WHI CH IS ELABORATED IN THE ASSESSMENT ORDER. MOREOVER, THE ASSESSEE OUGHT TO HAVE CARRIED THE MATTER FURTHER TO THE HONBLE CALCUTTA HIGH COURT AGAINST THE ORDER O F THIS TRIBUNAL IN THE FIRST ROUND OF APPELLATE PROCEEDINGS IN CASE IF HE HAD ANY GRIEVAN CE. WE FIND THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE IN THIS REGARD BEF ORE US. WE FIND THAT THE ITA NOS.287 & 404/KOL/2013-A-AM SRI ARIJIT CHAKRABORTY 6 DETERMINATION OF FAIR MARKET VALUE AS ON THE DATE O F SALE I/E 25.5.2004 BY DVO AFTER GIVING REDUCTION OF 15% TOWARDS VARIOUS ENCUMBRANCE S ATTACHED TO THE PROPERTY , CANNOT BE FAULTED WITH. IN THESE FACTS AND CIRCUM STANCES, IT IS ONLY JUST AND PROPER TO HOLD THAT THE REFERENCE MADE BY THE LEARNED AO TO D VO AT THE INSTANCE OF THE ORDER OF THIS TRIBUNAL CANNOT BE FAULTED WITH. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IN THIS REGARD IS DISMISSED. 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND WITH REGARD TO LEVY OF INTEREST U/S 234 A AND 234 B OF THE ACT :- 6. FOR THAT ON THE FACTS OF THE CASE, THE LD.CIT( A) WAS WRONG IN NOT CONSIDERING THE FACT THAT THE AO HAS M ADE PROVISIONAL ATTACHMENT U/S.281B OF THE I.T ACT ON 1 7.01.2009 WHEREAS HE HAS CHARGED INTEREST U/S. 234A & 234B UP TO THE DATE OF ASSESSMENT ORDER WHICH IS COMPLETELY ARBITR ARY, UNJUSTIFIED AND ILLEGAL. 5.1. IT WAS PLEADED BY THE LEARNED AR THAT THE LEA RNED AO HAS MADE PROVISIONAL ATTACHMENT U/S 281B OF THE ACT ON 17.1.2009 IN RESP ECT OF POST OFFICE DEPOSIT. ACCORDING TO THE LEARNED AR, THIS MONEY LYING IN PO ST OFFICE DEPOSIT WHICH WAS ATTACHED BY THE DEPARTMENT U/S 281B OF THE ACT WAS UNDER THE CONTROL OF THE DEPARTMENT AND HENCE THE SAME SHOULD BE CONSTRUED A S MONIES AVAILABLE WITH THE DEPARTMENT TOWARDS TAXES. HENCE THE SAME SHOULD BE DEDUCTED WHILE DETERMINING THE TAX LIABILITY AND INTEREST U/S 234A AND 234B OF THE ACT TO BE REWORKED ACCORDINGLY. THE LEARNED DR MERELY RELIED ON THE ORDER OF THE LO WER AUTHORITIES IN THIS REGARD. 5.2. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LEARNED AR ON THE ASPECT OF ADJUSTMENT OF MONIES AVAILABLE IN POST OFFICE TOWAR DS PAYMENT OF TAXES WITH CORRESPONDING IMPACT ON INTEREST CALCULATIONS. WE HOLD THAT THE MONIES LYING IN POST OFFICE DEPOSITS WHICH WERE THE SUBJECT MATTER OF AT TACHMENT U/S 281B OF THE ACT SHOULD BE CONSTRUED AS TAXES PAID BY THE ASSESSEE AND ACCO RDINGLY INTEREST U/S 234A AND 234 B ITA NOS.287 & 404/KOL/2013-A-AM SRI ARIJIT CHAKRABORTY 7 OF THE ACT HAS TO BE REWORKED ACCORDINGLY. ACCORDIN GLY, THE GROUND NO. 6 RAISED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 13-4 - 2016 1.. THE APPELLANT/ASSESSEE: SRI ARIJIT CHAKRABORTY 14/1 BEHARILAL CHAKRABORTY LANE HOWRAH 711 101. 2 THE RESPONDENT/DEPARTMENT: INCOME TAX OFFICER WAR D 46(1), 3 GOVT PL (WEST) KOLKATA 700 001. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 13-4 -2016 COPY OF THE ORDER FORWARDED TO:-