G.Srinivasan, CHENNAI V. ITO, CHENNAI

ITA 296/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7440 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-04-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: S MOHAN RAJAN
• Keywords: Cost of acquisition; Reason to believe
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D (SMC) BENCH: CHENNAI . , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER ./ ITA NO.296/CHNY/2017 /ASSESSMENT YEAR: 2011-12 SHRI G.SRINIVASAN, 16/22, SREENIVASA APARTMENTS, 2 ND CROSS STREET, TRUSTPURAM, KODAMBAKKAM, CHENNAI-600 024. VS. THE INCOME TAX OFFICER, BUSINESS WARD-II(1), 121, N.H.ROAD, CHENNAI-600 034. [PAN: AANPG 8700 G ] ( $ /APPELLANT) ( %&$ /RESPONDENT) $ ' / APPELLANT BY : MR.S.MOHAN RAJAN, CA %&$ ' /RESPONDENT BY : MR. B.SAGADEVAN, JCIT ' /DATE OF HEARING : 02.07.2018 ' /DATE OF PRONOUNCEMENT : 03.07.2018 / O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE WHICH IS DIRE CTED AGAINST AN ORDER DATED 26.10.2016 OF COMMISSIONER OF INCOME TA X(A)-2, CHENNAI, IT HAS TAKEN THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT(APPEALS) IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2. DETERMINATION OF CAPITAL GAINS THE LEARNED C.I.T. (APPEALS) ERRED IN ABDICATING HER JUDICIAL POWERS BY NOT PASSING THE SPEAKING ORDER AND MAKING ENQUIRY ON VARIOUS ISSUES CONCERNED WITH THE DETERMINATION OF CAPITAL INCOME VIZ. (A) DETERMINATION OF SALE CONSIDERATION. (B) DETERMINATION OF VALUATION AS ON 01.04.1981 IN R EGARD TO PURCHASE COST OF PROPERTY, EXPENDITURE UNDER SECTION 48 OF THE ACT; (C) INDEXATION BENEFIT; ITA NO.296/CHNY/2017 :- 2 -: (D) RELIEF UNDER SECTION 54 3. THE LEARNED CIT (APPEALS) FUNDAMENTALLY FAILED TO APPRECIATE THE EXPENSES INCURRED IN VACATING THE TENANTS AMOUNTING TO RS.48,10,000/- WA S LEGITIMATELY ALLOWABLE ON THE BASIS OF SUITS FILED BY THE TENANTS. 4. THE LEARNED CIT (APPEALS) ERRED IN NOT ACCEPTING THE VALUE RETURNED BY THE APPELLANT WHICH IS ABSOLUTELY CORRECT HAVING REGARD TO THE MA RKET CONDITIONS IN THE YEAR OF CONSTRUCTION AND NO TINKERING ON THE VALUE COULD BE MADE BY THE ASSESSING OFFICER. 5. THE LEARNED CIT (APPEALS) ERRED IN PARTLY ALLOWI NG THE CLAIM UNDER SECTION 54 OF THE ACT AND OUGHT TO HAVE DETERMINED THE ACTUAL INVESTMENT MADE IN ANOTHER RESIDENTIAL PROPERTY TO THE EXTENT OF RS.40,97,750/- DULY SUPPORTED BY E VIDENCE. 6. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIAT ED THE CLAIMS MADE BY THE APPELLANT BEFORE THE ASSESSING OFFICER PRAYING RECTIFICATION CLEARLY BROUGHT OUT MATERIALS IN SUPPORT OF DEDUCTION AND HENCE THE CIT (APPEALS) WENT WRONG IN CONFIRMING THE ADDITIONS. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUN DS. 2. GROUND NOS.1 & 6 ARE GENERAL IN NATURE AND DO NO T REQUIRE ANY SPECIFIC ADJUDICATION. 3. LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET, SUBMITTED THAT HE WAS NOT PRESSING GROUND NO.2. ACCORDINGLY, GROUND NO.2 IS DISMISSED AS NOT PRESSED. 4. THIS LEAVES US WITH GROUND NOS.3 TO 5 WHICH ASSA ILS DISALLOWANCE OF EXPENDITURE CLAIMED FOR VACATING TENANTS, DISALLOWA NCE OF CONSTRUCTION COST AND DISALLOWANCE OF CLAIM U/S.54 OF THE ACT, W HILE COMPUTING THE CAPITAL GAINS ARISING ON SALE OF A PROPERTY. 5. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL PLACED ON RECORD. AO HAD DENIED ASSESSEES CLAIM THAT THE VALUE OF TH E PROPERTY AS ON 01.04.1981 WAS RS.450/- PER SQ.FT., WHILE COMPUTING THE CAPITAL GA INS. ASSESSEE HAD SOLD A PROPERTY ITA NO.296/CHNY/2017 :- 3 -: MEASURING 9405 SQ.FT. WHICH HAD IN IT THE RESIDENTI AL HOUSE OF 1000 SQ.FT. AND COMMERCIAL SHOP OF 100 SQ.FT. LOCATED AT OLD MUNICI PAL NO.50 AND MUNICIPAL NOS.144- 158, 2 ND MAIN ROAD, SESHADRIPURAM, BANGALORE-560020. LD.AO WAS OF THE OPINION THAT THE VALUE OF THE LAND AS ON 01.04.1981 WAS ONL Y RS.168.67 SQ.FT. AND NOT RS.450/- PER SQ.FT. AS CLAIMED BY THE ASSESSEE. FO R THIS, AO RELIED ON A LETTER DATED 24.10.2013 ISSUED BY SUB-REGISTRAR, GANDHI NAGAR, B ANGALORE. AO ALSO DISBELIEVED THE VALUE AS ON 01.04.1981 OF THE BUILDING IN THE L AND SOLD CLAIMED BY THE ASSESSEE @ RS.200/- PER SQ.FT. AO WAS OF THE OPINION THAT THE VALUE OF THE BUILDING HAD TO BE CONSIDERED BASED ON THE VALUATION DONE BY DVO. LONG TERM CAPITAL GAINS WAS RE- COMPUTED BY THE AO AS UNDER: SALE CONSIDERATION (AS DETERMINED BY THE DVO, BANGA LORE : RS. 1,78,73,200.00 LESS: INDEXED COST OF ACQUISION (AS DISCUSSED IN PARA NO.5.7 ABOVE) : RS. 1,19,62,418.00 LONG TERM CAPITAL GAINS : RS. 59,10,782.00 DEDUCTION U/S.54 : RS. 18,94,100.00 TAXABLE LONG TERM CAPITAL GAINS : RS. 40,16,682.00 AGAINST THE CLAIM OF RS.59.91 LAKHS MADE BY THE AS SESSEE U/S.54 OF THE ACT, AO ALLOWED DEDUCTION ONLY RS.18,94,100/-. 6. THOUGH, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), IT SEEMS IT HAD NOT PURSUED SUCH APPEAL. THOUGH, THE ASSESSEE WAS GIVEN FIVE NOTICES FOR HEARING BY THE LD.CIT(A), NOBODY APPEARED. LD.CIT(A) CONFIRMED TH E ORDER OF THE AO. NOW THE SUBMISSION MADE BEFORE THE LD.AR IS THAT SUFFICIENT OPPORTUNITY WAS NOT GRANTED AND THE ASSESSEE COULD NOT BRING THE CORRECT FACTS BEFO RE THE LD.CIT(A). ACCORDING TO THE LD.AR, ASSESSEE HAD EVERY REASON TO BELIEVE IN THE DISALLOWANCES MADE THAT WERE ITA NO.296/CHNY/2017 :- 4 -: NOT ACCORDING TO LAW. I AM OF THE OPINION THAT CONS IDERING THE FACTS AND CIRCUMSTANCES, ASSESSEE CAN BE GIVEN ONE MORE CHANC E FOR APPEARING BEFORE THE LD.CIT(A) AND EXPLAINING ITS CASE. ACCORDINGLY, TH E ORDER OF THE LD.CIT(A) IS SET ASIDE AND THE APPEAL REMITTED BACK TO HIS FILE FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. ASSESSEE HAS TO CO-OPERATE AND APPEAR BE FORE THE LD.CIT(A) ON THE DATE FIXED FOR HEARING, WITHOUT FAIL. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 03, 201 8, AT CHENNAI. SD/- ( . ) ( ABRAHAM P.GEORGE ) /ACCOUNTANT MEMBER /CHENNAI, . /DATED: JULY 03, 2018. TLN ' %/0 10 /COPY TO: 1. $ /APPELLANT 4. 2 /CIT 2. %&$ /RESPONDENT 5. 0 % /DR 3. 2 ( ) /CIT(A) 6. /GF