Shri Vishnubhai Bapubhai Patel, Ahmedabad V. The Income tax Officer,Ward-8(2), Ahmedabad

ITA 2995/AHD/2011

• Counselvise Citation: 299520514 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Capital asset; Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE S/SHRI G. D. AGARWAL, VP AND S. S. GODARA, JM ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 VISHNUBHAI BAPUBHAI PATEL, 296, A/2, AMBICA UDYOG NAGAR, MAHAKALI CORNER, DUDHESHWAR, AHMEDAB AD 280004. VS INCOME - TAX OFFICER, WARD - 8(2), AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO. AASPP2581K APPELLANT BY SHRI DIVYANG SHAH, AR RESPONDENT BY SHRI M. K. SINGH, SR. DR DATE OF HEARING: 19. 5.2015 DATE OF PRONOUNCEMENT : .6.2015 O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS ASSESSEE S APPEAL FOR A.Y.200 8 - 0 9 , ARISES FROM ORDER OF THE CIT(A) - X I V , AHMEDABAD DATED 30. 09 .2011 , PASSED IN CASE NO. CIT( A) - XIV/WD.8(2)/82/10 - 11 , UPHOLDING LONG TERM CAPITAL GAINS ADDITION OF RS.9,71,675/ - IN PROCEEDINGS UNDER SECTION 143 ( 3 ) OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT . ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 2 2. THE ASSESSEE IS AN INDIVIDUAL. HE SOLD THE CAPITAL ASSET IN QUESTION ON 29.1.2008 F OR RS.12.75 LACS. HE DID NOT ADMIT ANY CAPITAL GAINS. THE ASSESSING OFFICER NOTICED TO THE SAME IN THE COURSE OF SCRUTINY . HE SOUGHT TO ASSESS THE IMPUGNED CAPITAL GAINS. THE ASSESSEE STATED THAT THERE WAS NO COST OF ACQUISITION FORTHCOMING THEREFORE COM PUTATION OF CAPITAL GAINS U/S48 OF THE ACT WAS NOT POSSIBLE. THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 23.10.2010 OBSERVED THAT THE ASSESSEE WAS A MEMBER OF AN HUF NAMELY BAPUBHAI H PATEL. ITS REGISTERED PARTITION BEFORE S UB - REGISTRAR TOOK PLACE ON 1 6.9.2005 AND THE ASSESSEE S WAS FOUND TO HAVE ACQUIRED THE CAPITAL ASSET IN QUESTION IN SAID PARTITION DEED. THE SAME STATED ITS VALUE TO BE RS.55,050/ - . THE ASSESSING OFFICER IN THESE FACTS WAS OF THE VIEW THAT COST OF ACQUISITION HAD TO BE TAKEN AS THAT ASCERTAINED IN THE ABOVESTATED PARTITION DEED. HE ALSO OBSERVED THAT THE ASSESSEE HAD NOT EXERCISED HIS OPTION REGARDING VALUATION OF HIS CAPITAL ASSET U/S.55(3) OF THE ACT. THE ASSESSING OFFICER ACCORDINGLY ADOPTED VALUE OF THE SOLD AS RS.55,050/ - U/S.49( 1)(II)(A) AND COMPUTED LONG TERM CAPITAL GAINS OF RS.9,71,675/ - . 3. THE CIT(A) HAS UPHELD THE ASSESSING OFFICER S FINDINGS AS UNDER: ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 3 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS GIVEN BY THE APPELLANT. THE CLAIM OF THE APPELLANT IS T HAT THE CASE JAILS UNDER EXPLANATION TO SECTION 49(1). THE PROPERTY IS AN INHERITED JOINT FAMILY PROPERTY ACQUIRED LONG BACK BY THE FOREFATHERS FOR WHICH THE COST AND DATE OF ACQUISITION CANNOT BE ASCERTAINED. THE APPELLANT HAS ALSO RELIED ON THE CASE OF M ANDHARSINHJI P. JADEJA VS. CIT [281 ITR 19, GUJARAT].THE CLAIM OF THE APP ELLANT IS ON A WRONG BELIEF. IN THE CASE OF MANDHARSINH P. JADEJA, THE FACTS SHOW THAT THE PROPERTY WAS ACQUIRED BY HIM BY WAY OF CONQUEST AND, THEREFORE, THE COST OF ACQUISITION IN T HAT CASE WAS NIL AND ACCORDINGLY THE CAPITAL GAIN COULD NOT BE APPLIED TO THE CONSIDERATION RECEIVED ON ACCOUNT OF SALE. IN CONTRAST TO THIS, THE APPELLANT'S PROPERTY IS AN INHERITED PROPERTY WHICH WAS ACQ U IRED BY THE FOREFATHERS OF THE APPELLANT LONG TIME BACK AND THE APPELLANT HAD NOT MADE ANY EFFORT TO FIND OUT THE COST OF ACQUISITION TO THE PREVIOUS OWNER WHO HAS ACQUIRED THE PROPERTY BY ANY MODE OTHER THAN THE WILL OR INHERITANCE. THE APPELLANT IS TRYING TO TAKE REFUGE IN THE PROVISIONS OR SECTION 49(1 ) WHICH IS APPARENTLY MISPLACED. THE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY DOCUMENTARY EVIDENCE OR RELIABLE PROOF TC SHOW THAT THE COST OF ACQUISITION OF THE LAND TO HIS FOREFAT H ERS WAS NIL. THE COST OF ACQUISITION IS NOT MIL BUT IT IS NOT AVAILABLE WITH THE APPELLANT AND, THEREFORE, IT CANNOT BE TAKEN M THAT THE COST OF ACQUISITION IS NIL. ACCORDINGLY, THE CLAIM OF THE APPELLANT REGARDING EXPLANATION TO SECTION 49(1) I S , NOT ACCEPTED. THE APPELLANT HAS FURTHER SU B MITTED THAT THE PRACTICAL APPLICABILITY OF SECTION 55 SUB SECTION FAILS BECAUSE IN THE APPELLANT'S CASE, THE DATE OF ACQUISITION BY PREVIOUS OWNER (AS CONTEMPLATED U/S. 49(1) R.W. EXPLANATION) IS ROT AVAILABLE. THE ARGUMENT OF THE APPELLANT HAS - BEEN EFFECTIVELY DEALT WITH BY THE A. O. IN HIS ORD ER. THE A. O. HAS MENTIONED IN THE ORDER THAT THE PROPERTY WAS PARTITIONED BY A DEAL DATED 16/09/1975 AND REGISTERED WITH THE OFFICE OF SUB REGISTRAR OR, 19/09/1975 AND ACCORDINGLY, THE COS T OF LAND INHERITED BY THE APPELLANT HAS BEEN TAKEN BY A. O. AT RS. 55,050/ - . SECTION 55(3) READS AS UNDER: 'WHERE THE COST FOR WHICH THE PREVIOUS OWNER ACQUIRED THE CANNOT BE ASCERTAINED, THE COST OF ACQUISITION TO THE PREVIOUS OWNER MEANS THE FAIR MARKET VALUE ON THE DATE ON WHICH THE CAPITAL ASSET BECAME THE PROPERTY OF THE PREVIOUS OWNER' . ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 4 THE PROVISIONS OF SECTION ARE VERY CLEAR. THE A. O. HAS CORRECTLY APPLIED THE SAME AND TAKEN THE COST OF ACQUISITION AS THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF PARTITION. THE FAIR MARKET VALUE HAS BEEN DETERMINED BY THE SUB - REGISTRAR FOR THE PURPOSE OF VALUATION OF STAMP DUTY ON THE DATE OF PARTITION I.E. THE DATE ON WHICH THE APPELLANT BECAME THE OWNER OF THE PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS ASKED TO DECLARE THE CAPITAL GAIN ARI SING ON THE SALE OF LAND BUT AS HE DID NOT DECLARE THE SAME BUT SUBMITTED THAT THERE WAS NO COST OF ACQUISITION AND COMPUTATION OF CAPITAL GAIN W A S NOT POSSIBLE, THEREFORE, THE A. O. HAS RIGHTLY OBSERVED THAT THE APPELLANT HAS FAILED TO EXERCISE THE OPTION TO ADOPT FAIR MARKET VALUE U/S. 55(3) OF THE ACT. THEREFORE, CONSIDERING THE ABOVE DISCUSSION, THE ACTION OF THE A. O. IN MAKING THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF LAND IS UPHELD. THE GROUND OF APPEAL IS, THEREFORE , DISMISSED. THE APPELLANT HAS ALSO MENTIONED IN THE WRITTEN SUBMISSION DATED 02/09/2011 THAT WITHOUT PREJUDICE TO THE EARLIER SUBMISSIO N REGARDING THE CAPITAL GAIN, THE APPELLANT ACQUIRED THE HUF PROPERTY WHICH IS EVIDENT FROM THE DEED OF PARTITION DATED 06/09/75 AND, THEREFORE, VISHNUBHAI B. PATEL (HUF) IS LIABLE FOR CAPITAL GAIN AND NOT VISHNUBHAI B. PATEL (INDIVIDUAL). THE ARGUMENT HAS BEEN MENTIONED IN THE WRITTEN SUBMISSION AS GROUND NO. 2. ON PERUSAL OF THE GROUNDS OF APPEAL, FILED BY THE APPELLANT IT IS NOTED TH AT THERE IS ONLY ONE GROUND IN THE APPEAL FILED IN THIS OFFICE ON 23/09/2010 AND THAT GROUND DOES NOT CONTAIN ANYTHING ABOUT THIS PLEA. THE GROUNDS OF APPEAL HAVE NOT BEEN REVISED BY THE AP P E L LANT. A CCORDINGLY NO COMMENTS ARE OFFERED ON THE ALTERNATIVE PL EA T AKEN BY THE APPELLANT . 3. IN THE RESULT, APPEAL IS DISMISSED. 4. HEARD RIVAL CONTENTIONS. RECORDS PERUSED. THE ASSESSEE REFERS TO THE STAND ADOPTED THROUGHOUT THAT THERE IS NOT COST OF ACQUISITION ASCERTAINED IN THIS CASE U/S.49(1)(I) IN THE HANDS OF PREVIOUS OWNER FOR COMPUTING IMPUGNED ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 5 CAPITAL GAINS . HE HAS ALSO FILED TWO ADDITIONAL GROUNDS THAT STAMP DUTY VALUATION AS STATED ON THE PARTITION DEED (SUPRA) HAS BEEN WRONGLY ADOPTED AS FAIR MARKET VALUE AS ON THE DATE OF ACQUISITION OF THE PROPERTY. AN D ALSO THAT THE IMPUGNED LONG TERM CAPITAL GAINS HAVE BEEN WRONGLY ASSESSED IN HIS HANDS INSTEAD OF THAT IN CASE OF EPONYMOUS HUF. THE REVENUE OBJECTS TO ADMISSION OF THESE ADDITIONAL GROUNDS. W E FIND THAT COMPLETE RECORD IS ALREADY ON THE CASE FILE. AND T HE SE ADDITIONAL PLEAS ARE CONNECTED TO THE ALREADY PENDING ISSUE. WE ADMIT THESE ADDITIONAL GROUNDS ACCORDINGLY. 4.1 WE COME TO ASSESSEE S ARGUMENTS FOR TAXABILITY OF THE LONG TERM CAPITAL GAINS IN HUF S CASE RATHER THAN IN INDIVIDUAL S HANDS FIRST . WE P UT UP A SPECIFIC QUERY TO THE LD AR AS TO WHETHER THE SAID HUF HA S EVER SHOWN THE CAPITAL ASSET IN QUESTION IN ITS BOOKS OR ADMITTED IMPUGNED LONG TERM CAPITAL GAINS IN ITS CASE. HE HAS REPLIED IN NEGATIVE. NOR DOES HE PLACE ON RECORD HUF S RECORD SHOWING HIS ASSET S OWNERSHIP IN THE PAST. THE CASE FILE DEMONSTRATES THAT THE SAID HUF HOLDS A PAN ( PAGE NO.78 ) . THEREFORE, WE OBSERVE THAT THE ASSESSEE IS NOT ENTITLED TO SHIFT ASSESSMENT OF IMPUGNED CAPITAL GAINS IN HUF S HANDS . THEREFORE, THE ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 6 ASSESSEE S ARGUME NTS CHALLENGING ASSESSMENT OF CAPITAL GAINS IN HIS HANDS RATHER THAN HUFS FAIL. 5. NOW, WE COME TO NEXT ARGUMENT OF THE ASSESSEE CHALLENGING VALUATION OF THE PROPERTY ON THE BASIS OF PARTITION DEED DATED 16.9.1975. WE HAVE ALREADY NARRATED THAT THIS ASSET CAME FROM AN EARLIER HUF AFTER A REGISTERED PARTITION. THE VALUE OF THE TOTAL ASSETS WAS DETERMINED AT RS.2,67,750/ - AND THE IMPUGNED CAPITAL ASSET WAS VAL UE D AT RS.55,050/ - . WE REITERATE THAT THAT IT S A DULY REGISTERED DOCUMENT ENJOYING PRESUMPTION OF C ORRECTNESS. THE ASSESSEE ALSO FAILS TO REBUT CONTEN T S THEREOF THAT THE VALUATION OF THE EARLIER HUF ASSET WAS NOT PROPER. W E OBSERVE THAT IN ABSENCE OF OTHER MATERIAL ON RECORD OR ASSESSEE S EVIDENCE DEMONSTRATING ANY OTHER VALUE OF THE ASSET IN QUESTION, THE AUTHORITIES BELOW HAVE RIGHTLY ADOPTED THE VALUE OF THE ASSET SOLD AT RS.55,050/ - IN ACCORDANCE WITH THE ABOVESTATED REGISTERED PARTITION DEED. THE ASSESSEE S SECOND SUBSTANTIVE ARGUMENT ALSO FAILS. 6. NOW, WE COME TO ASSESSEE S LAST ARGUMENT REGARDIN G FAIR MARKET VALUE OF THE PROPERTY SOLD AS ON 1.4.1981 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. THE AUTHORITIES BELOW HAVE NOT GRANTED HIM THE BENEFIT OF APPRECIATION OF THE ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 7 ASSET S VALUE FOR THE PERIOD FROM 1975 TO 1.4.1981 IN COMPUTING LONG TERM CAPITAL GAINS. THE REVENUE FAILS TO REBUT THIS FACTUAL POSITION. WE DEEM IT APPROPRIATE TO OBSERVE THAT THE IMPUGNED ASSESSMENT YEAR IS 2008 - 09 . M UCH WATER HAS FLOWN DOWN THE STRE AM . THUS, INSTEAD OF REMANDING THIS ISSUE BACK, WE FEEL THAT LARGER INTEREST JUSTICE WOULD BE MET IN CASE WE OURSELF APPLY THUMB RULE ON THIS SUBJECTIVE ISSUE AND DIRECT THE ASSESSING OFFICER TO ADOPT FAIR MARKET VALUE OF THE ASSET SOLD A S RS.1 LAC AS ON 1.4.1981 AND RE - COMPUTE LONG TERM CAPITAL GAINS BY PASSING A CONSEQUENTIAL OR DER . WE ORDER ACCORDINGLY. THE ASSESSEE S THIRD ARGUMENT PARTLY SUCCEEDS. 7. THE ASSESSEE S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 19 TH JUNE, 2015 AT AHMEDABAD SD/ - SD/ - (G.D. AGRAWAL) (S.S. GODARA) VICE PRESIDENT JUDICIAL MEMBER MAHATA AND PRABHAT COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT ITA NO. 2995/AHD/2011 ASST. YEAR 2008 - 09 8 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, AHMEDABAD