R ROSALIN VASANTHI, SALEM V. ITO, SALEM

ITA 3242/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2669 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 26-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITA
• Assessee Lawyers: G BASKAR
• Keywords: Cost of acquisition; Fair market value; Valuation report; Capital Gains

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 3212/CHNY/2018 / ASSESSMENT YEAR : 2005-06 SMT. R. ROSALINVASANTHI, 85-A-1, NARAYANAPILLAI STREET, PERAMANUR, SALEM 636 007. [PAN: AHTPR 3945D] VS. THE INCOME TAX OFFICER, SALEM. ( / APPELLANT) ( &'( /RESPONDENT ) /. I.T.A. NO. 3242/CHNY/2018 / ASSESSMENT YEAR : 2005-06 SMT. R. ROSALINVASANTHI, L/H OF LATE A. SUNDARAMMAL, 85-A-1, NARAYANAPILLAI STREET, PERAMANUR, SALEM 636 007. [PAN: BAVPS 6443M] VS. THE INCOME TAX OFFICER, SALEM. ( / APPELLANT) ( &'( /RESPONDENT ) () / APPELLANT BY : SHRI. G. BASKAR, ADVOCATE & SHRI. I. DINESH, ADVOCATE &'() / RESPONDENT BY : MS. R. ANITA, JCIT ) /DATE OF HEARING : 10.12.2019 ) /DATE OF PRONOUNCEMENT : 05.03.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ABOVE ASSESSEES FILED THESE APPEALS AGAINST TH E ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-SALEM IN ITA N O. 179 & 181/08- 09 DATED 24.09.2018 FOR ASSESSMENT YEAR 2005-06, RE SPECTIVELY. :-2-: ITA NOS. 3212 & 3242/CHNY/2018 2. SINCE THESE APPEALS ARE CONNECTED, THEY ARE HEAR D TOGETHER AND BEING DISPOSED. IN THE RETURN FILED BY THE ABOVE A SSESSEES, THEY HAVE CLAIMED COST OF ACQUISITION AS ON 01.04.1981 @ RS.2 31.50 PER/SQ.FT. FOR THE LAND AND BUILDING AND COMPUTED THE CAPITAL GA INS. WHILE MAKING THE ASSESSMENTS, THE ASSESSING OFFICER, INTER ALIA, ADOPTED THE COST OF ACQUISITION OF LAND AT RS. 11.46 P/SQ.FT. BASED ON THE SUB-REGISTRARS GUIDELINE VALUE AND RE-WORKED THE INDEXED COST OF A CQUISITION. FURTHER, IN RESPECT OF COST OF THE BUILDING, THE ASSESSING OFFI CER REFERRED THE PROPERTY TO THE VALUATION OFFICER AND ADOPTED THE VALUE DETE RMINED BY THE ASSISTANT VALUATION OFFICER AND RE-WORKED THE INDEX ED COST OF ACQUISITION AND THEN DETERMINED THE LONG TERM CAPITAL GAIN IN T HE RESPECTIVE ASSESSEES HANDS. AGGRIEVED, THE ASSESSEES FILED APPEALS BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEALS. AGGRIEVE D AGAINST THOSE ORDERS, THE ABOVE ASSESSEES ARE ON APPEAL BEFORE U S. 3. WITH REGARD TO THE VALUE OF THE SITE, THE LD. AR SUBMITTED THAT THE AO IS NOT CORRECT IN ADOPTING THE VALUE OF SITE OF 9234 SQ.FT. AS ON 01.04.1981 AT A LOW RATE OF 5000 PER CENT BASED ON THE REGISTRATION DEPARTMENTS GUIDELINE VALUE INSTEAD OF ADOPTING TH E FAIR MARKET VALUE. THE GUIDELINE VALUE OF LAND AS CERTIFIED BY THE S TAMP AUTHORITIES REGISTER AT RS. 5,000 PER CENT TILL 1983, RS. 5,50 0 PER CENT BETWEEN 1984-1985 AND RS. 25,000 PER CENT FROM 1986-1991 S HOWS THAT THE :-3-: ITA NOS. 3212 & 3242/CHNY/2018 VALUE ADOPTED BY THEM WAS TOWARDS AGRICULTURAL LAND AND THE VALUE SHOWN BY THEM FROM THE 1992 ONWARDS IT IS FOR PER S Q FEET, THEREFORE, THEIR VALUE DOES NOT REPRESENT THE CORRECT MARKET V ALUE. THEREFORE, THE LD. AR PLEADED THAT THE VALUE ADOPTED BY THE ASSESS EE MAY BE DIRECTED TO BE ADOPTED BY THE AO. ON THE VALUE OF THE SUPERS TRUCTURE, THE LD AR SUBMITTED THAT THE CIT(A) ERRED IN COMING TO THE CO NCLUSION THAT WHAT HAS BEEN SOLD IS THE VACANT PIECE OF LAND ONLY WH ICH IS FACTUALLY INCORRECT WHEN THE ASSESSING OFFICER HIMSELF HAS CO NSIDERED THE SUPER STRUCTURES VALUE AS ON 01.04.1981 AND DETERMINED THE VALUE ON THE BASIS OF VALUATION OFFICERS REPORT. THE VALUATION OFFICERS REPORT DATED 25.11.2008 IS NOT CORRECT WITH REGARD TO ADOPTING C ERTAIN RATES FOR SUPER STRUCTURE WHICH HAS BEEN DEMOLISHED PRIOR TO 25.11. 2008, BEFORE THE DATE OF HIS INSPECTION. THEREFORE, HIS REPORT SHOUL D NOTBE RELIED ON AS THE IMPUGNED BUILDING WAS NOT IN EXISTENCEATTHE DATE O F HIS INSPECTION AND HENCE HIS REPORT CAN NOT BE A SCIENTIFIC ONE. INV ITING OUR ATTENTION TO THE VALUATION REPORT WHEREIN A MENTION IS MADE THAT TH E BUILDING WAS CONSTRUCTED IN THE YEAR 1919 AND THE TOTAL AREA OF THE BUILDING WAS 200 SQ.MTS., HALF OF THE BUILDING WAS MADRAS TERRACE RO OF CONSTRUCTION AND HALF RCC CONSTRUCTION ETC AND SINCE THE IMPUGNED PROPERTY WAS FETCHING A RENT OF RS. 4,000/- PER MONTH AS PER THE RENTAL AGREEMENT DATED 06.03.1985, WITH A RENT ADVANCE OF RS. 2,00,0 00/- ETC, THE LD AR SUBMITTED THAT ON THE FACTS AND CIRCUMSTANCES, THE VALUE OF THEBUILDING :-4-: ITA NOS. 3212 & 3242/CHNY/2018 SHOULD BE WORKED OUT AS PER PART B OF SCHEDULE III OF THE WEALTH TAX ACT AND ACCORDINGLY PLEADED TO ALLOW THE RESPECTIVE ASSESSEES APPEAL. PER CONTRA, THE LD DR SUBMITTED THAT THE LD CIT(A) OBTAINED A REMAND REPORT FROM THE AO , FURNISHED A COPY TO THE ASSESS EE AND AFTER CONSIDERING THEIR REPLY ETC , UPHELD THE ORDERS OF THE AO AND HENCE HE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE IMPUGNED PROPERTY WAS AN ANCESTRAL P ROPERTY OF SHRI. S.A. THOMAS CAMINUS THROUGH A REGISTERED WILL DURING 197 9. ON 29.01.1995, MR. THOMAS CAMINUS EXECUTED A WILL IN FAVOUR OF HIS THREE BROTHERS. THE PROPERTY CONSISTED OF LAND MEASURING 9234 SQ.FT. AN D A BUILDING THEREON WHICH WAS RECEIVED BY THE ASSESSEE (MRS. A. SUNDARA MMA), HER DAUGHTER (MRS. R. ROSALIN VASANTHI) AND ASSESSEES SON HAVIN G 30% SHARE IN 1/3TH SHARE OF LAND AND BUILDING AT POLLACHI THROUGH A WI LL DATED 14.07.2001 EXECUTED BY HER HUSBAND SHRI. A. ROYAPPAN. THIS PR OPERTY WAS SOLD ON 13.10.2004 FOR RS. 1,05,00,000/- AND HENCE THE RESP ECTIVE ASSESSEES ADMITTED THEIR SHARE AS CAPITAL GAINS. WHILE COMPU TING THE CAPITAL GAINS, THE ASSESSEES HAVE ADOPTED RS. 231.50 PER SQ.FT. A S THE VALUE OF THE PROPERTY AS ON 01.04.1981 AND WORKED OUT THE INDEXE D COST OF ACQUISITION. WHEN THE AO PROPOSED TO ASSESSEE THE VALUE OF THE LAND ADOPTING THE VALUE SHOWN BY THE REGISTRATION AUTHOR ITY AND ADOPT THE :-5-: ITA NOS. 3212 & 3242/CHNY/2018 VALUE OF THE SUPER STRUCTURE AS PER THE VALUATION O FFICERS REPORT, THE ASSESSEE SUBMITTED THAT THE IMPUGNED PROPERTY WAS G IVEN ON RENT FOR RS. 4,000/- PER MONTH WITH A RENTAL ADVANCE OF RS. 2,00 ,000/- AND THEREFORE, IT IS PROPER TO ADOPT THE VALUE ON RENT CAPITALISAT ION METHOD AS PER THE PROVISIONS OF THE WEALTH TAX ACT. HOWEVER, THE AO DID NOT AGREE WITH ASSESSEES PLEA AND PROCEEDED TO COMPUTE THE CAPITA L GAINS BASED ON THE VALUE SHOWN BY THE STAMP AUTHORITIES AND THE VALUAT ION OFFICER. BEFORE US, THE ASSESSEE PLEADS THAT THE GUIDELINE VALUE DO ES NOT REFLECT THE MARKET VALUE AND BY THE TIME THE VALUATION OFFICER WENT FOR INSPECTION, THE PROPERTY WAS ALREADY DEMOLISHED AND HENCE THE V ALUATION MADE BY HIM CANNOT BE CONSIDERED AS A SCIENTIFIC ONE. ON T HESE FACTS AND CIRCUMSTANCES OF THE CASE, WEFIND MERIT IN THE SUBM ISSIONS OF THE ASSESSEE. THE EXISTENCE OF RENTAL AGREEMENT, THE R ECEIPT OF RENT AND RENTAL ADVANCE IS NOT DISPUTED. THEREFORE, WE ARE OF THE VIEW THAT THE VALUE OF THE LAND AND BUILDING SHOULD BE DETERMINED ON THE BASIS OF RENT CAPITALISATION METHOD. THE ASSESSEE HAS QUANTIFIED THE VALUE AT RS. 8,28,750/-, WHICH MAY BE ROUNDED OFF TO RS. 10 LAKH S. THEREFORE, WE DIRECT THE AO TO ADOPT RS. 10 LAKHS TOWARDS THE COS T OF ACQUISITION FOR THE LAND AND BUILDING AS ON 01.04.1981 AND PROCEED TO D ETERMINE THE COST OF INDEXATION ACCORDINGLY, FOR THE DETERMINATION OF CA PITAL GAINS IN THE RESPECTIVE ASSESSEES HAND. CORRESPONDING GROUNDS OF THE ABOVE ASSESSEES ARE ALLOWED TO THE ABOVE EXTENT. :-6-: ITA NOS. 3212 & 3242/CHNY/2018 5. IN THE RESULT, EACH OF THE ASSESSEE S APPEAL IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON THURSDAY, 05 TH MARCH, 2020 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 05 TH MARCH, 2020 JPV )&3454 /COPY TO: 1. ( / APPELLANT 2. &'( /RESPONDENT 3. 6 ) ( /CIT(A) 4. 6 /CIT 5. 4& /DR 6. /GF