Dr. Francis Rajan, CHENNAI V. ITO, CHENNAI

ITA 3/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4029 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAGADEVAN
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Sale consideration of property below Jantri Value; Valuation report; Revised return
• Section: 50C

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC B BENCH, CHENNAI . , ! BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.3/MDS/2017 ( / ASSESSMENT YEAR: 2011-12) DR.FRANCIS RAJAN, 58, MUTHU STREET, SANTHOME, CHENNAI 600 004. VS THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 2(1), CHENNAI PAN: AEQPR6877L ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI M. KARUNAKARAN, ADVOCATE /RESPONDENT BY : SHRI SAGADEVAN, JCIT /DATE OF HEARING : 24.07.2017 ! /DATE OF PRONOUNCEMENT : 25.07.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-16, CHENNAI DATED 27.10.2016 IN ITA NO.4/CIT(A)-16/2011 -12 FOR THE ASSESSMENT YEAR 2011-12 PASSED U/S.250(6) R.W.S.143 (3) & 147 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS A PPEAL, HOWEVER THE CRUXES OF THE ISSUES ARGUED BEFORE ME ARE AS FO LLOWS:- 2 ITA NO.3/MDS/2017 (I) OUT OF THE 4 PROPERTIES SOLD BY THE ASSESSEE DU RING THE RELEVANT ASSESSMENT YEAR, THE GUIDELINE VALUE AND S ALE VALUES OF THE 3 PROPERTIES WERE SAME AND THEREFORE PROVISIONS OF 50C OF THE ACT IS NOT APPLICABLE. (II) THE GUIDELINE VALUE OF THE FOURTH PROPERTY WAS LESS THAN THE MARKET VALUE STATED IN THE SALE DEED, THEREFORE ONLY THE GUIDELINE VALUE HAS TO BE ADOPTED FOR THE PURPOSE O F COMPUTING CAPITAL GAIN INVOKING SECTION 50C OF THE ACT. (III) WITH RESPECT TO THE PROPERTY SOLD BY THE ASSE SSEE, WHICH WAS BEQUEATHED FROM THE MOTHER OF THE ASSESSEE BY W AY OF SETTLEMENT DEED, THE DATE OF ACQUISITION OF THE ASSET BY THE MOTHER HAS TO BE ADOPTED FOR THE PURPOSE OF IND EXATION WHILE COMPUTING THE CAPITAL GAIN OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 28.07.2011. SUBSEQUENTLY HE FILED REVISED RETURN OF INCOME ON 22.09.2011 ADMITTING TOTAL INCOME OF RS.8,48,090/- AFTER CLAIMING DEDUCTION U/S.54F OF THE ACT. THEREAFTER ON 21.10.2 013, THE CASE WAS REOPENED BY ISSUANCE OF NOTICE U/S.148 OF THE A CT AND FINALLY THE ASSESSMENT WAS COMPLETED ON 23.02.2015, WHEREIN THE LD.AO 3 ITA NO.3/MDS/2017 INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT A DOPTED THE SALE CONSIDERATION AS PER THE VALUATION REPORT AT RS.6,1 4,63,000/-. THE LD.A.O FURTHER ADOPTED THE MARKET VALUE OF THE ASSE T BEQUEATHED FROM THE MOTHER OF THE ASSESSEE AS ON THE DATE OF T HE SETTLEMENT DEED FOR THE PURPOSE OF INDEXATION AND ALSO DISALL OWED THE CLAIM OF DEDUCTION U/S.54F OF THE ACT, AND ACCORDINGLY COMPU TED THE CAPITAL GAIN OF THE ASSESSEE AT RS.17,24,670/. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO BY AGREEING TO THE VIEW OF THE LD.A.O. 4. AT THE OUTSET, THE LD.AR SUBMITTED BEFORE ME THA T OUT OF THE 4 PROPERTIES SOLD BY THE ASSESSEE, WITH REGARD TO 3 P ROPERTIES PROVISIONS OF SECTION 50C WILL NOT BE ATTRACTED BEC AUSE THE VALUE DISCLOSED IN THE SALE DEED WAS EITHER EQUAL TO OR M ORE THAN THE GUIDELINE VALUE FIXED BY THE STATE REVENUE AUTHORIT IES. FURTHER, WITH RESPECT TO THE FOURTH PROPERTY THE GUIDELINE VALUE FIXED BY THE STATE REVENUE AUTHORITIES IS LESS THAN THE VALUATION MADE BY THE LD.DVO IN HIS REPORT OR AS STATED IN THE REGISTERED DOCUME NT. HE THEREFORE PLEADED THAT THE EXCESSIVE ADDITION MADE BY THE ASS ESSEE INVOKING 50C OF THE ACT MAY BE DELETED. THE LD.AR FURTHER S UBMITTED THAT ONE OF THE PROPERTIES ACQUIRED BY THE ASSESSEE WAS BY WAY OF 4 ITA NO.3/MDS/2017 SETTLEMENT DEED FROM THE MOTHER OF THE ASSESSEE AND THEREFORE FOR THE PURPOSE OF INDEXATION, THE DATE OF ACQUISITION OF THE MOTHER HAS TO BE ADOPTED AS PER THE RATIO LAID ON IN THE CASE MANJULA J. SHAH REPORTED IN 355 ITR 474, HOWEVER THE LD.AO HAD ERRO NEOUSLY ADOPTED THE DATE OF SETTLEMENT DEED AS THE DATE OF ACQUISITION OF THE ASSET FOR THE PURPOSE OF INDEXATION. ACCORDINGLY T HE LD.AR PLEADED FOR GRANTING RELIEF ON THE ISSUE. ON THE OTHER HAN D, THE LD.DR VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE R EVENUE AUTHORITIES. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE ORDERS OF THE REVENU E AUTHORITIES, IT IS NOT CLEAR IN WHAT MANNER THE VALUATION IS APPRAI SED BY THE LD.DVO WITH RESPECT TO ALL THE FOUR INDIVIDUAL PROP ERTIES SOLD BY THE ASSESSEE. IT APPEARS THAT THE LD.DVO HAD VALUED TH E PROPERTIES GROSSLY AND NOT ON THE BASIS OF INDIVIDUAL PROPERTY . THEREFORE, I REMIT THE MATTER BACK TO THE FILE OF LD.AO, WHO SHA LL OBTAIN THE VALUATION REPORT FROM THE DVO ON THE BASIS OF INDIV IDUAL PROPERTY AND IF HE FINDS THE GUIDELINE VALUE OF THE FIRST TH REE PROPERTIES SOLD BY THE ASSESSEE TO BE THE SAME OR MORE THAN THE VALUE ADOPTED BY THE ASSESSEE AS SALE CONSIDERATION IN HIS COMPUTATION, THEN DELETE THE 5 ITA NO.3/MDS/2017 ADDITION MADE BY INVOKING THE PROVISION OF SECTION 50C OF THE ACT BECAUSE IN THAT SITUATION SECTION 50C OF THE ACT CA NNOT BE INVOKED. HOWEVER, IF FOUND OTHERWISE PASS APPROPRIATE ORDER AS PER LAW AND MERIT AFTER PROVIDING THE ASSESSEE OPPORTUNITY OF B EING HEARD. FURTHER, WITH RESPECT TO THE FOURTH PROPERTY ALSO T HE MATTER IS REMITTED BACK TO THE FILE OF LD.AO IN ORDER TO OBTA IN THE MARKET VALUE OF THE PROPERTY FROM THE LD.DVO AND THEREAFTER COMP UTE THE CAPITAL GAIN BY INVOKING 50C OF THE ACT, IF APPLICABLE. WHI LE DOING SO THE LD.A.O IS ALSO HEREBY DIRECTED TO ADOPT THE VALUE A PPRAISED BY THE LD.DVO, IF IT IS LESS THAN THE VALUE STATED IN THE REGISTERED DOCUMENT AS THE MARKET VALUE, BECAUSE IN SUCH SITUATION THE MARKET VALUE STATED IN THE DOCUMENT WILL HAVE NO RELEVANCE AS PE R THE PROVISIONS OF THE ACT. I ALSO HEREBY DIRECT THE LD.AO TO FOLLO W THE BINDING RATIO LAID DOWN BY TE HONBLE MUMBAI HIGH COURT IN THE CA SE MANJULA J. SHAH REPORTED IN 355 ITR 474, WHEREIN IT WAS HELD T HAT WHEN PROPERTY IS ACQUIRED BY THE ASSESSEE BY WAY OF SETT LEMENT DEED THE DATE OF ACQUISITION OF THE PROPERTY BY THE SETTLOR OF THE PROPERTY HAS TO BE ADOPTED FOR THE PURPOSE OF INDEXATION, WHILE COMPUTING THE CAPITAL GAIN OF THE ASSESSEE WITH RESPECT TO THE PR OPERTY RECEIVED BY THE ASSESSEE FROM HIS MOTHER BY WAY OF SETTLEMENT D EED. THUS ALL 6 ITA NO.3/MDS/2017 THE THREE GROUNDS RAISED BY THE ASSESSEE BEFORE US ARE REMITTED BACK TO THE LD.AO WITH THE ABOVE MENTIONED DIRECTIO NS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON THE 25 TH JULY, 2017. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 25 TH JULY, 2017 JR % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. (-. / /DR 6. .0 /GF